James Pethokoukis

Politics and policy from inside Washington

Healthcare reform may cost $4 trillion over ten years

June 16, 2009

Here is another analysis of the Kennedy health plan, from consultancy HSI:

1) The plan lowers the uninsured significantly, to less than 1% of the population, but not without a cost of over four trillion dollars over 10 years.

2)There are no provisions in the legislation to offset this course. Even if the most generous estimate of the employer sponsored tax exclusion ($300 billion per year, including collecting FICA contributions from employers) where used and combined with fraud estimates and block granting all of Medicaid (acute and long term care), this would be a challenging proposal to finance with budget neutrality.

3) Finally, the public plans will be quite successful in recruiting large numbers of Americans.

4) They will also likely crowd out at 79 million individual contracts with existing private insurers.

My spin:  This analysis does not consider offsets such as taxes to pay for the program. But just how high would taxes have to go to pay for a $400 billion a year plan? Quite high. Even ending the employer tax exclusion still leave you with a deficit.

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