Back to Basics

How much will the H.R. 3200 cost?  Historically, the cost estimates of every medical program implemented by government has cost more, often significantly more.  Massachusetts passed a universal-coverage plan in 2006, which required all residents to have health coverage and gave subsidies for lower-income uninsured families.  Sounds like the plan the government wants to pass for the country.  The plan was estimated at $472 million for 2008, yet the actual figures for that year were $628 million.  They made some assumptions that proved incorrect.  They assumed that as more people joined the system the premiums would go down across the board.  They further assumed that as more people became insured the number of people visiting the emergency room would drop dramatically.  They assumed this would save them money.  It backfired!  None of these things happened and the health care reform that was supposed to save money has cost more money than expected!

Similar budgetary problems have been seen in Federally run programs.

When Medicare, Part A was established in 1965, covering the hospital insurance portion of the program, the cost was estimated at $9 billion annually by 1990.  The actual spending in 1990 for Part A was $67 billion.

In 1967 the new Medicare program was estimated at $12 billion for 1990.  The actual Medicare spending for the program in 1990 was $110 billion.

A universal entitlement to kidney dialysis was enacted in 1972 at a cost of $100 million for 1974 and actual spending was $229 million for that year.

The DSH program established in 1987 which states use to provide relief to hospitals serving large numbers of Medicaid and uninsured patients was estimated at a cost of less than $1 billion in 1992.  The actual cost for that year was $17 billion.

When Medicare’s home care benefit was changed in 1988 the projected cost for 1993 was $4 billion.  The actual cost in 1993 was $10 billion.

In 1988 a catastrophic coverage benefit was added to Medicare to become effective in 1990.  The cost estimates for this program were initially $5.7 billion and then raised to $11.8 billion, and even the revised number they estimated might be too low.  The program was repealed before it could take effect, largely due to the cost estimates.

The State Children’s Insurance Program in 1997 appropriated $40 billion to states over 10 years, with estimates of $5 billion a year once it was implemented.  By 2006 all unspent reserves were nearly exhausted and Congress appropriated an additional $283 million in 2006 and $650 million in 2007.

Bill H.R. 3200 is estimated at a cost of $1 trillion over the first 10 years and $2.4 trillion over the first 10 years of full implementation.  With the track record of the government grossly underestimating the cost of medical programs, one can only guess what the actual cost will be.  The country already has serious financial problems with spending in the first 8 months of this administration greater than all presidents combined.  The country just cannot afford to invest that amount of money on a program that has been proven in one state not to obtain the desired results at a significant increase in cost.

Information for this article was obtained from the Joint Economic Committee Report dated July 31, 2009.