22 Apr 2007 That Billion With a ‘B’!

David Hogberg writes,

Think a single-payer health care system will save on costs? Connecticut might make you think twice:

In a year when legislators pledged to cure the state’s health care ills, the most ambitious plan of all would have the state fund coverage for everyone in Connecticut under age 65.But a staggering price tag – as much as $18 billion – left the plan on life support Monday, and legislators are virtually certain to pull the plug.

Since the Connecticut state budget is barely $18 billion, state taxpayers would see a doubling of their burden.What would a such a plan — one covering every American under 65 — cost the nation? Census data shows that Connecticut’s under-65 population is just over 3 million, while, in the United States as a whole, it is about 86 times greater, or 259 million. Thus, if Connecticut cost estimates are correct (government estimates on what new public health programs will cost almost always greatly underestimate those costs) and it would cost $18 billion to cover 3 million people, then a “back of the envelope” calculation (18 multiplied by 86) shows that it would cost about $1.548 trillion to cover all 259 million Americans.

That seems like decent savings over the $1.987 trillion the U.S. spent on health care in 2005. The problem is that the $1.548 trillion excludes people 65 and over who are on Medicare. In 2005 Medicare spent $342 billion. Added to $1.548 trillion it equals $1.890 trillion.

That’s a savings of $97 billion. Wow. You could almost fund Medicare for four months with that.