How many people will Obamacare and AHCA kill?

Five separate people were bylined on a Center for American Progress post about how many people AHCA will kill. The post is quite long, but all the authors really do is take the CBO estimates of how many people will lose coverage under AHCA and then divide that number by 830. They do this because there is a study that shows that 1 person dies unnecessarily for every 830 people who lack health insurance.

I have duplicated CAP’s efforts here, but rather than focus only on the AHCA, I have also included Obamacare and single payer into the mix. One other difference is that I track cumulative deaths between 2017 to 2026 rather than reporting an annual figure for each year.

Under AHCA, nearly 540,000 people will die in the next decade because of lack of health insurance coverage. For Obamacare, it is a more respectable 320,000 deaths.

If you enjoyed this content, please subscribe to the People’s Policy Project patreon. In the next month, the PPP will have its own website full of gems such as this.

California Single Payer Costs Look Very Doable

In a prior post, I wrote about a report from the California Senate Appropriations Committee that estimated the cost of a proposed single payer system in the state. The report concluded that, under the single payer plan, health expenditures in the state would be around $400 billion per year, or 15% of California’s GDP.

Although many covered this as a ridiculously high figure, it is actually quite cheap relative to the US as a whole, which currently spends 18% of its GDP on health care. For those not reflexively afraid of large numbers, it is clear that this cost is definitely doable and is quite a bargain for the benefits the single-payer plan is said to provide.

After that report came out, a new, more detailed cost estimate was provided by economists at UMass Amherst. The methods in the UMass paper are mercifully easy to follow. The cost estimate basically works like this:

  1. Determine the current level of health expenditures in the state using the national health expenditure database. This includes spending on hospitals, physicians/clinics, pharmaceuticals, dental care, nursing homes, home health care, and insurance administration. This figure is $368.5 billion.
  2. From there, they determine how much health care utilization would increase under single payer. They assume that uninsured people would double their health care utilization and that underinsured people would increase their health care utilization by 15%. They inflate the spending of those groups of people by these percentages (adjusted slightly for the age composition of the two groups) and arrive at a new figure for total health expenditures in the state: $404.1 billion.
  3. From there, they determine how much savings a single-payer system could deliver over the current system. They estimate that savings on administrative costs would reduce total spending by 6.7%, that savings on pharmaceutical drugs would reduce total spending by 3.4%, that savings from switching to Medicare reimbursement rates would reduce total spending by 2.9%, and that savings on unnecessary services, inefficiently delivered services, prevention, and fraud would reduce total spending by 5%. In total, then, the cost savings trim 18% off the figure in (2), giving a final estimate of $331 billion, or 12.5% of GDP.

Needless to say, this cost is quite a bit lower than the one estimated previously by the Senate Appropriations Committee. If the costs really would just be 12.5% of GDP, then that means California’s health sector size would shrink to around the OECD average.

If the authors’ estimates are too rosy, it is probably because they underestimate how much utilization would increase.

They estimate that the uninsured would double their utilization based on data showing that uninsured people consume about half as much health care as insured people consume, which seems reasonable enough. Then they estimate that underinsured people are 36% of the insured population and that their utilization would increase by 15%, which was the high-end estimate from a paper about what happens when people are switched from a no-cost-sharing plan to a high-deductible plan. And that’s it. That’s all they did on utilization, which may not have been enough.

But in any case, even if their utilization estimates were massively too low, the plan is still affordable. The authors could be off by 20% and the plan would still be eminently doable.

Idiotic Commentary on California’s Single Payer Push

As I noted in an earlier post, California’s single payer plan is turning out to be shockingly cheap, if a recent report estimating its costs is to be believed. Sadly, the coverage of the plan so far is largely full of idiotic commentary that fails to think correctly about the costs associated with the plan, and so we get stuff like this CNBC article from Jake Novak.

When the estimates of the report were first covered by Angela Hart at the Sacramento Bee, she decided to divide the costs in the report by the state budget for reasons that genuinely elude me. The result was a headline and story noting that, after the plan, health care expenditures in CA would be greater than the size of the current state budget. Because the media is mostly just derivative of one another, this became the figure that took off among pundit types like Novak.

Because as the politicians in California just found out, providing government paid-for health care isn’t just expensive, it’s more expensive than everything else… combined.

But here’s the thing with this statistic. It’s already the case that government expenditures on health care in California are larger than the size of the state budget. You don’t have to do any sort of advanced snooping to see this. It’s right in the report Novak and others’ takes are responding to.

The report says that federal, state, and local funding of health care is currently $200 billion. And, as Novak notes in his piece, the total money allocated for the CA state budget is $179.5 billion. So governments in California spend 111% of the state budget on health care right now! Disaster! Panic! Impossible!

Aside from noting that the California health care sector is larger than the California state budget and then becoming apoplectic, the only other thing Novak does in his piece is confusingly pretend like the state of California cannot levy taxes on employers.

Novak notes that almost all of the additional money needed for a single payer system could come from redirecting payments employers already make to private insurers into the single-payer fund, but then has to this to say about how that’s ridiculous:

The study tried to be a bit more optimistic, noting that private employers currently pay between $100 and $150 billion per year to provide health insurance for their workers and hypothesizing that money “could” be made available to the single payer plan. But that assumes those employers and employees would be okay with choosing a government-run option instead of their private insurance.

Yeah, none of that is going to work.

I can’t tell if Novak is actually confused or being deceptive, but to state the obvious: it is not the case that the only way you can access this $100-$150 billion is by asking employers to choose to pay it into the single-payer system. There is another way to access it wherein you levy an employer-side payroll tax that forces employers to send the money into the universal state insurer. You know kind of like how the federal government levies Medicare payroll taxes already?

If the single-payer plan on offer in California costs as little as they say it does, it is so easily achievable as a fiscal policy matter that it’s almost laughable. Whether there are political hurdles to passing it, I can’t say. At present, the only major persuasive hurdle seems to be that those who write about it pollute the discourse with takes that are on par with perpetual deficit-mongering in their wrongness.