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Wednesday, October 21, 2009
US health care tab would grow under overhaul
By RICARDO ALONSO-ZALDIVAR
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The nation's medical costs will keep spiraling upward even faster than they are now under Democratic legislation pending in the House, a report from government economic experts concluded Wednesday.

Republicans said the report is a warning sign that health care legislation is likely to fall short of President Barack Obama's goal of "bending the cost curve" by slowing torrid rates of medical inflation.

The Obama administration immediately challenged the analysis, saying it is out of date because the House bill is being rewritten to bring costs under tighter control and will be merged eventually with other House legislation and a Senate bill.

"This is old news," said Nick Papas, a spokesman for the Health and Human Services Department.

The report from the Office of the Actuary, which does long-range cost estimates for Medicare, carried an unusual disclaimer, saying that it "does not represent an official position" of Health and Human Services or the rest of the administration.

Unlike previous estimates that have focused mainly on the legislation's impact on the federal deficit, the actuaries' report looked at total costs, public and private, over the next 10 years. It found that the nation's health care tab would increase somewhat more rapidly with the legislation than if nothing is done. The main reason: Newly insured people will seek medical care.

The nation's health care tab, now at about $2.5 trillion annually, is projected to approach $4.7 trillion in 2019 without the legislation.

With the legislation, national health care spending would be nearly $4.8 trillion in 2019.

Health care would account for 21.3 percent of the U.S. economy in 2019, slightly more than an estimated share of 20.8 percent of the economy if no bill passes. Economists have warned such increases are unsustainable.

"With the exception of the proposed reductions in Medicare ... (the legislation) would not have a significant impact on future health care cost growth rates," the report said. Moreover, it's "doubtful" that proposed Medicare cuts will stay in place, the analysts concluded.

Measures in the legislation to reduce cost may take 15 years to 20 years to deliver a savings dividend, the report said. Continued...

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HCR Share of Econ = 14.5% not 21.3%

Sorry Ricardo

But in this article you are mixing up two distinctly different things with your percentages..

1) The percentage increase in health care cost in 10years
2) The share ratio of health care cost to the overall US Economy in 2019

The 21.3% figure is NOT the share of health care cost to the U.S Economy 10 years from now. It is instead the estimated amount health care will cost beyond what we are paying in 2009 ..

In you article you state that Health Care cost will increase 2.1% per year over the next 10 years

Representing that mathematically:

1.021 ** 10 = 1.23099821 or 23% more than in 2009.

***** You mis-stated this number as its share of the US Economy

On the other hand..
The current rate of increase is 6% per year without reform.

(1.06 ** 10 ) = 1.79 or 79% more than we are paying in 2009 which probably maps to 20.8% share of the US Economy

To compute the actual share with health care reform assuming the the US Economy will be equal with or without HCR and using your numbers

2.5 Trillion assumed 2009 Health Care Cost

( 1.79 * 2.5 ) / UsEcon2019 = .208
Yields
UsEcon2019 = $21.51 Trillion

With HCR
( 1.23 * 2.5 ) / 21.5 = x
x = 14.5% Share of Us Economy2019

where x = estimated share in 2019 with HCR

This is roughly equal to less of a share than health care represents now....

---------
Ok ... I'm a Nerd.

Correction...
My assumption on our current system going up by 79% was misstated as ( if everyone was insured )

It should have been ( If the % of people are insured that are insured now )

------

Caught another mistake in this article

"
Health care would account for 21.3 percent of the U.S. economy in 2019, slightly more than an estimated share of 20.8 percent of the economy if no bill passes.
"

The 21.3 percent of the US Economy figure is Wrongly Stated ...

This number is actually how much more our projected annual health care cost will be 10 years from now

Using his numbers (1.021 ** 10 ) = 21.3%

The 20.8% figure for the % of hc cost to our overall economy however is stated correct but that number occurs after health care cost increase to 179% of what it is now.

-----

Please pull article or make the necessary corrections. You are literally comparing Apples to Goats.
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