US health-care reform by numbers

We go behind the figures that have dominated debate on the Senate bill

The US Senate has voted in favour of the historic health-care reform bill today. The bill -- which some critics say has been heavily compromised and others say not enough -- must now be reconciled with a different version passed by the House of Representatives, a process that will begin in mid-January.

This landmark move follows months of political wrangling. It has been a process characterised by vicious partisan debate, wildly varying figures and exaggerated statements (remember the controversy over the NHS having "death panels"?). Here, we go behind the numbers to see what the costs will be, who stands to benefit, and what's been going on behind the scenes.

On 19 November, the Senate majority leader, Harry Reid, unveiled the health-care bill. He said that it would cover 94 per cent of the population, extending coverage to 31 million uninsured people, at a cost of $848bn over ten years.

Are there really 31 million people uninsured?

The number is actually much higher, but the question of which of these people are deserving of government assistance is hotly disputed.

According to the US Census Bureau, there were 47 million people who at some point had no insurance at all in 2009. That's more than 15 per cent of the population. However, the uninsured is a fluid group, and this oft-quoted figure includes the short-term uninsured -- those between jobs, or recent immigrants.

The non-partisan Kaiser Family Foundation found that 79 per cent of these people are American citizens (the remainder are immigrants). Two-thirds of those citizens are near or below the poverty line.

The figure of 31 million in the bill is less than the overall number of 47 million, because the bill is aimed at the long-term uninsured, and caters for US citizens only.

Republicans have disputed the figure, claiming that when you remove nine million non-citizens, about ten million covered by Medicaid or other contingency plans, five million childless adults (apparently not deserving of health insurance) and ten million who are a comfortable distance from the poverty line, the number of those actually uninsured is 10.6 million.

Where did the $848bn figure come from?

The Congressional Budget Office (CBO) cost element of $848bn given by Reid was cut down -- at least in part -- by delaying many elements of the bill from 2013 to 2014. The delayed elements include the establishment of insurance exchanges and subsidies for the poor.

But where is the money coming from?

This is a crucial difference between the bill in the Senate and the one in the House of Representatives. Let's deal with the Senate bill (the one voted on today). Most of the funding for this would come from a tax on high-end, or "Cadillac" insurance. It would be assessed for plans valued at $8,500 for individuals or $23,000 for families, with higher thresholds for high-risk workers and people living in states with costlier premiums.

There would also be an increase on Medicare payroll tax for top earners, with the rate rising from 1.45 per cent to 1.95 per cent for couples earning more than $250,000. A 5 per cent tax would be levied on elective cosmetic medical procedures.

What about the claim that health care will consume 20 per cent of GDP by 2017?

First, it's worth noting that the Centres for Medicare and Medicaid Services, which made this claim, said pretty much exactly the same thing in 2006 (slightly different figures, same conclusion).

It's not true. A study in the journal Health Affairs, published in August 2008, found that covering all of the uninsured within the existing private-based US health-care system would increase national spending on health care by $122.6bn, which would represent a 5 per cent increase in health-care spending, amounting to 0.8 per cent of GDP. It included the caveat that the details of the plan could push government spending higher.

Dr Leonard Rodberg, a US academic, gave testimony to the Congressional Forum on National Lessons for Health Reform in April this year. He argued that a single-payer national health insurance plan would not cost the US any more than it was already spending, while providing every American with comprehensive health care and building in mechanisms to contain future growth in costs.

On the subject of rising costs, the Kaiser Family Foundation found that family insurance premiums (currently paid partly by employers and partly by the employee) will average $30,800 by 2019, if increases stick to the average of the past ten years. This year, the average premium for a family policy offered at work was $13,300, up from $5,800 in 1999.

The money behind the scenes

America's lobby groups are notoriously powerful, and the health-care industry is a big hitter. It has spent hundreds of millions of dollars this year alone.

Most of this goes on donations to strategically important politicians. Senator Joe Lieberman, an independent who caucuses with the Democrats, has received more than $110,000 in donations from a single health insurance company, Aetna, this year alone.

There are six registered health-care lobbyists for every member of Congress.

Meanwhile, the Obama administration has been offering financial incentives of its own. The government will fund Medicaid, the insurance plan for the poor, in Nebraska -- led by Senator Ben Nelson, one of the most conservative Democrats -- at a reported cost of $100m.

It has also been reported that Vermont will receive $600m over ten years, while Massachusetts will receive $500m.

 

Follow the New Statesman team on Twitter

 

 

 

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

Getty Images.
Show Hide image

How the Conservatives lost the argument over austerity

After repeatedly missing their deficit targets, the Tories can no longer present spending cuts as essential.

"The age of irresponsibility is giving way to the age of austerity," declared David Cameron at the Conservatives' 2009 spring conference. Fear of spending cuts helped deny his party a majority a year later but by 2015 the Tories claimed vindication. By framing austerity as unavoidable, they had trapped Labour in a political no man's land. Though voters did not relish cuts, polling consistently showed that they regarded them as necessary.

But only two years later, it is the Conservatives who appear trapped. An austerity-weary electorate has deprived them of their majority and the argument for fiscal restraint is growing weaker by the day. If cuts are the supposed rule, then the £1bn gifted to the Democratic Unionist Party is the most glaring exception. Michael Fallon, the Defence Secretary, sought to justify this largesse as "investment" into "the infrastructure of Northern Ireland" from "which everybody will benefit" - a classic Keynesian argument. But this did not, he hastened to add, mean the end of austerity: "Austerity is never over until we clear the deficit."

Britain's deficit (which peaked at £153bn in 2009-10) was the original and pre-eminent justification for cuts. Unless borrowing was largely eliminated by 2015, George Osborne warned, Britain's public finances would become unsustainable. But as time has passed, this argument has become progressively weaker. The UK has cumulatively borrowed £200bn more than promised by Osborne, yet apocalypse has been averted. With its low borrowing costs, an independent currency and a lender of last resort (the Bank of England), the UK is able to tolerate consistent deficits (borrowing stood at £46.6bn in 2016-17).

In defiance of all this, Osborne vowed to achieve a budget surplus by 2019-20 (a goal achieved by the UK in just 12 years since 1948). The Tories made the target in the knowledge that promised tax cuts and spending increases would make it almost impossible to attain - but it was a political weapon with which to wound Labour.

Brexit, however, forced the Conservatives to disarm. Mindful of the economic instability to come, Philip Hammond postponed the surplus target to 2025 (15 years after Osborne's original goal). Britain's past and future borrowing levels mean the deficit has lost its political potency.

In these circumstances, it is unsurprising that voters are increasingly inclined to look for full-scale alternatives. Labour has remade itself as an unambiguously anti-austerity party and Britain's public realm is frayed from seven years of cuts: overburdened schools and hospitals, dilapidated infrastructure, potholed roads, uncollected bins.

Through a shift in rhetoric, Theresa May acknowledged voters' weariness with austerity but her policies did not match. Though the pace of cuts was slowed, signature measures such as the public sector pay cap and the freeze in working-age benefits endured. May's cold insistence to an underpaid nurse that there was no "magic money tree" exemplified the Tories' predicament.

In his recent Mansion House speech, Philip Hammond conceded that voters were impatient "after seven years of hard slog” but vowed to "make anew the case" for austerity. But other Tories believe they need to stop fighting a losing battle. The Conservatives' historic strength has been their adaptability. Depending on circumstance, they have been europhile and eurosceptic, statist and laissez-faire, isolationist and interventionist. If the Tories are to retain power, yet another metamorphosis may be needed: from austerity to stimulus.

George Eaton is political editor of the New Statesman.

0800 7318496