Saturday, April 30, 2011

How to cut federal spending

Vote against HB126, which effectively nullifies the Affordable Care Act:

(Graph courtesy of the Kaiser Family Foundation, via Ezra Klein.)

According to this data, the American government spends more as a share of GDP on health than supposed bastions of government medicine, such as Canada or the U.K. (Ezra also helpfully notes that this does not include subsidies of employer-provided insurance, which are de facto government expenditures. Including this adds another percent of GDP to U.S. government health spending.*)

But I think this measure is too kind to the U.S. The more practical comparison is per capita spending:

The private/public spending proportions from the first graph, combined with the absolute spending levels of the second graph, allow us to calculate U.S. government health spending per capita. It's the second highest of the set, after Norway, at about $3500 per year. (Yes, this means we spend more per capita than France.) (If we include subsidies of employer-provided insurance, we almost match Norway— $4060 per year versus $4240 per year.)**

Of course, international comparisons generally find that we get poorer health outcomes for all of this spending.

If the American Care Act has an effect similar to the health care systems of these other countries, it seems likely that government spending will actually decrease. It's hard not to conclude that, contrary to Tea Party rhetoric, if the American Care Act is a government boondoggle, it's probably much less of a government boondoggle than the old system.

HB126 is currently retained in committee, meaning it'll be considered during the next legislative session.

* I took the estimate Ezra Klein cited from the Joint Committee on Taxation ($660 billion over 4 years) and divided it by 4. $165 billion is a bit more than one percent of U.S. GDP, which is approximately $14.2 trillion.

** The numbers come from multiplying the proportion of total health spending from the government (first graph) by the total spending (second graph). So, for example, for the U.S. estimate, 7.4/(8.5 + 7.4) × 7538 = 3508. To add employer subsidies, ((7.4 + 1.16)/(8.5 +7.4)) × 7538 = 4058.

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