Obama’s $2T refuted by healthcare industry; only $373B
Posted by Clyde Middleton
on May 15 2009 Filed under Politics.
You can follow any responses to this entry through the RSS 2.0.
You can leave a response or trackback to this entry
UPDATED – $1,310 billion total savings – I headlined the final year’s savings only. However, the feds pay about 34% of health care costs in this country. Against the total “savings” it then revises down the about the number I cited. Funny how things work out.
On May 11, I wrote a piece casting doubt on the Administration’s claim to have a “gamechanging” $2 trillion savings offered up by the healthcare industry (see Healthcare industry snookers Obama). The numbers did not make sense no matter how you sliced them. Now we learn why.
My mistake is that I presumed the Obama people actually knew the fundamental aspects of the deal. Guess not.
In an article entitled President of the American Hospital Association says the White House misstated deal, we learn this:
But in a conference call Thursday, President Richard Umbdenstock told 230 member organizations that the agreement had been misrepresented. The groups, he said, had agreed to gradually ramp up to the 1.5 percentage-point target over 10 years – not to reduce spending by that much in each of the 10 years.
How do those numbers work?
Recalling numbers from my article above, present healthcare spending is estimated at $2.38 trillion a year.
The plan is for reductions over the period of 2010 through 2019.
The healthcare industry now says that the “1.5%” reduction is an overall number which will be achieved over the life of the ten years.
Assuming simply 1/10th of that reduction each year, the total “savings” is $373.5 billion. $1,310 billion.
A far cry from a $2 trillion “gamechanging” pledge.
It seems the Obama folks jumped the gun big time. Will the MSM correct him?
Others talking about this:
Hot Air – Did Obama misstate the health-industry agreement?
Related Posts
- Healthcare industry snookers Obama
- Death by 1,000: Obama Healthcare Reform Bill: Mandatory Healthcare Insurance, Doctor Shortage and Illegal Immigrants
- CBO: Healthcare bill saves nothing
- Obamacare to ravage ski industry
- Obama Deals Death Blow to Auto Industry: States to Regulate Emissions and Fuel Efficiency
Short URL: http://libertypundits.net/?p=4117
The way this article is written is confusing. I would also add that while I am a supporter of the AMA, doctors are not going to be for any type of healthcare spending reduction that potentially takes money out of their pockets. In fact, many from the AMA have been quite vocal in opposition to the idea of universal coverage and as this proposal of $2T over 10 years, (regardless of the actual number) is potentially reflective of the direction of the Obama administration’s push towards a public option it is natural they would oppose it. Why would they be anything less than against it given their history?
I am all for the debate. I think we have to be clear about what we are communicating vs. spinning words for position’s sake. There is too much at stake in our country right now to speak intentionally with a lack of clarity.
Sorry it confused you. The numbers are clear – read my last article on it. I am not debating the healthcare plan – that’s for docs and patients – and I will as we know what is being proposed.
Right now, the Administration is claiming numbers – and they don’t add. So I am focused on that aspect of it.
I calculate a cumulative savings of 1.22 trillion
Assuming 7% annual growth, a principle of of 2.38 trillion, and a cumulative 0.15% reduction each year. The net savings are 1.22 trillion in 10 years. $2 trillion in savings would come at about 11.5 years. $1 trillion savings/year by year 15.
Assuming no growth and 1.5% on the net is $360 billion. Assuming 7% growth and 1.5% on the net is $770 billion. I can play with the numbers even more, but it seems like you really low balled it.
i = year
p = 2.38
b(i) = health care costs each year assuming 7% growth
a(i) = health care costs each year with 0.0015/yr cumulative reduction from 7%
net = total savings
A = 0
B = 0
for i=1:1:10;
a(i) = p*(1.07-i*0.0015)
b(i) = p*1.07^i
A = A+a(i)
B = b+b(i)
end
net = B – A = 1.22
You partially right, John. I cited the final year’s savings – my mistake. The total is $1,310 billion. But it still isn’t a savings of any kind that will inure to the feds, and it also is not $2 trillion. Good catch. Thanks.
Year by year
2009 – $0 billion
2010 – $4
2011 – $12
2012 – $26
2013 – $47
2014 – $75
2015 – $111
2016 – $158
2017 – $216
2018 – $287
2019 – $374
So do you think he’s going to spend more than $42 billion before he runs for re-election? Do you think the out years need to be adjusted for uncertainty?
The feds pay about 34% of health care costs in this country. Against the total “savings” it then revises down the about the number I cited. Funny how things work out.
http://www.cdc.gov/nchs/data/hus/hus07.pdf