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Obama lied about health care costs

By RICARDO ALONSO-ZALDIVAR
September 13, 2010

President Barack Obama: Yet another lie

When a government report found that President Barack Obama’s health overhaul would modestly raise the nation’s total health care tab, the White House responded with a statistic suggesting costs would go down.

Health reform director Nancy-Ann DeParle wrote on the White House blog last week that the same government report indicates spending per insured person will be more than $1,000 lower in 2019 because of the law — some 9 percent below previous projections.

“The act will make health care more affordable for Americans,” DeParle said.

It turns out that may be fuzzy math.

The head of the nonpartisan economic unit at Medicare that produced the original cost report says the White House number “does not provide a meaningful or accurate indication” of the effect of the health care law.

“The amounts quoted in the White House blog are not meaningful and cannot be used to calculate the change in health expenditures per insured person,” Richard Foster, Medicare’s chief actuary, told The Associated Press.

The Obama administration stands by its statistic.

It’s a dispute about numbers and how they’re bandied about by powerful people in Washington.

But you don’t need an economics degree to follow this one. All you have to do is remember your fractions.

The health care law expands coverage, reducing the number of uninsured by more than 32 million, although about 24 million will remain without coverage.

Still, the share of the population with insurance will go up by nearly 10 percentage points, to about 93 percent. And that makes a difference in the numbers.

If you divide total national health care spending by a bigger number of insured people, you get a smaller per-person result.

It’s an interesting statistic, but it doesn’t mean the problem of rising costs is solved.

“It’s not that it’s false, it’s just that it will be a little misleading,” John Allen Paulos, a mathematics professor at Temple University in Philadelphia, said of the White House number, calling it an “apples-to-oranges miscomparison.”

Consider an imaginary country with just three citizens, Peter, Paul and Mary. Peter has health coverage but Paul and Mary are uninsured. Peter spends $1,000 on health care, but Paul and Mary can only afford $500 apiece because they lack coverage. Total national spending: $2,000. National spending per insured person: $2,000.

Now suppose a law gets passed to expand coverage. Paul gets insurance, but Mary remains uninsured. Now Peter and Paul are spending $1,000 apiece. Paul spends more than when he was uninsured, so total national health spending goes up to $2,500.

But because more people are covered, spending per insured person goes down to $1,250.

It’s a simplistic comparison, but would you call that a savings?

Paulos said it would make more sense to first figure out the share of total national health care spending by people with health insurance, and then divide that result by the number of insured people — before and after the health care law.

The government hasn’t run that calculation.

Richard Kronick, a senior Health and Human Services official, said the Obama administration disagrees that its number is misleading.

“There are a number of ways to evaluate health care spending and the new law,” said Kronick. “Examining spending on each individual with health insurance is one useful data point.”

National health care spending is a kitchen-sink statistic that includes personal health costs of the insured as well as the uninsured, and such categories as research and development and medical infrastructure. In 2019, when the overhaul is fully phased in, the tab will be $4.6 trillion.

Foster says it’s acceptable to divide the number by the total U.S. population. In that case, per capita spending would $13,652 as a result of the law, and $13,387 without it.

The difference: just $265 per person more.

Copyright © 2010 The Associated Press

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8 Responses to Obama lied about health care costs

  1. FranB

    September 13, 2010 at 10:53 am

    This is what happens when someone is elected who has no business experience. Obama’s never run a business, never made a payroll, never held a job much over a period of two years. Now we’re stuck! Hopefully, on November 2, 2010, things will begin to turn around because right now the bad news just keeps on coming!

  2. Warren

    September 13, 2010 at 2:59 pm

    “Figures don’t lie, but liars figure. ” – Mark Twain

  3. Almandine

    September 13, 2010 at 5:36 pm

    And like all those liars, the end [supposedly] justifies the means.

  4. woody188

    September 13, 2010 at 7:58 pm

    The Peter, Paul, and Mary comparison is not anything like what our reality is or is going to be. In our reality and in today’s real numbers, Peter has insurance and pays $5,000 per year for it, Paul and Mary do not have insurance and take Medicaid paid for by taxes on their wages (if they have them) and don’t pay anything out of pocket.

    Now the government mandates that Paul and Mary have to have insurance or face fines and jail time. Neither can afford the $5,000 per year, so their taxes are taken to make up the difference. Say Paul can afford $2500 and Mary $1500. So taxes go up by $6000 to pay for Paul and Mary’s insurance. There was supposed to be a Medicaid offset and an end to that program, but that appears to be dying thanks to lobbyists.

    So now the insurance company gets $15,000 from Peter, Paul, and Mary, where before the insurance company only got $5,000 from Peter and Medicaid paid for Paul and Mary.

    Who’s the big winner in Obamacare?

    Now let’s say Peter is laid off. Now Obamacare will borrow from China to pay for Peter, Paul, and Mary’s health care and leave the payments with interest to their kids and grand-kids. Or the Federal Reserve will print the money out of thin air to pay for their health insurance and keep Obamacare in the black, causing further inflation of our currency and an eventual Federal default.

    Everyone loses except China and insurance companies. Yay for Obamacare!

  5. Carl Nemo

    September 13, 2010 at 8:08 pm

    Worse yet the inordinate cost and byzantine inefficiency of administering “Obamacare” is mind boggling and dysfunctional. It seems that businesses will be swamped in filing transaction reports for any amount in excess of $600 the same goes for gold bullion coin purchases and sales. The devil is in the details no…?

    Carl Nemo **==

  6. Pondering It All

    September 13, 2010 at 10:13 pm

    The problem with simple comparisons, is that they can’t accurately model anything as complex as healthcare economics in the US.

    “Paul and Mary can only afford $500 apiece because they lack coverage” is a pure fantasy: When people without insurance get a catastrophic illness (such as kidney failure), the taxpayers pay for 100% of their care! When their problem is not one of those “covered conditions”, then ERs are required by law to deliver care, and the hospital’s cash customers end up footing the bill. (Insured customers are charged the negotiated discount price.)

    Our national version of “Romney Care” has not even started yet, and already opponents are calling it The End of The Republic. That’s all pretty much BS: Anybody can make up their own “simple comparison” using the particular parts of the system they like (or hate) and then use it to flog their opponents.

    It’s going to take years to see how it really works (once all the laws and rules do kick in), and even then if something needs adjustment there’s no reason not to fix it. Meanwhile, having access to insurance that can’t exclude preexisting conditions and can’t kick you out when you get sick is going to be so popular that this HCR program will become the new “third rail” of American politics.

  7. Scott M

    September 21, 2010 at 4:46 am

    In his campaign web site, Obama said a “typical” family of four would see its health care premiums drop by about $2,500. Now that he’s president, those premiums are going to INCREASE, and it will probbly be more than $2,500.

    When Obama gave his speech on health care, he said, “I’ll leave it to congress to work out the details.” How can he even address the issue of costs if he doesn’t know the details (in which the devil resides)?

    Is Obama stupid or just a liar — or both? I vote for both.

    I am in favor of covering people with preexisting conditions. We have many people who are 50-plus and have lost their jobs. Most of them have at least some preexisting conditions. They won’t be able to afford to buy private policies.

    Why should we foot the health care bills for illegl aliens? They will swamp the providers every time they get a splinter!

    Obama is a fraud. He has overpromised and underdelivered. When his loyalists get their health insurance bills, they’re going to freak out because they bought Obam’s BS hook, line and sinker.

  8. Carl Nemo

    September 21, 2010 at 12:56 pm

    “Is Obama stupid or just a liar — or both? I vote for both.” …extract from post

    Worse Scott M, I think he’s lazy too. His only experience in dealing with problems is at the community level. He was simply a community organizer.

    Rumors say he was a lazy, disorganized U.S. Senator too. Methinks he’s “winging it” concerning his efforts as our “Mr. change we can believe in President”. He and his family are set for life even if he only holds office for a single term and he’s surely going to make a fortune on the speaking circuit as Bill Clinton along with any books published about his single term in office.

    I think he’s resigned himself to the fact he’s out in 2012; ie., if the Republic can survive that long under him and his coterie of retread appointees that can be directly linked to our current national travails. He’s surely not rocking the establishment boat by any means, but maintaining the status quo along with ‘value added’ for the shadowy corporatists that now own D.C. lock, stock and barrel… / : |

    Carl Nemo **==