Saturday, April 3, 2010

Doing the Math on Costs of New Health Reform Law

Here is the math on new $ 1 trillion health reform law, to be phased on over 10 years.

1. Where money will come from – 49% cuts, 51 % new taxes and fees.

In descending order of magnitude

 Cutting Medicare payments
 Cutting payments to Medicare Advantage plans
 Other savings from Medicare and SCHIP (state childrens program)
 Smaller payments to hospitals serving the poor
 Cuts in long term insurance
 Education cuts for doctors and other health professionals
 Higher Medicare taxes (households making over $1 million will pay 3/4 of new taxes)
 Fees on drug and device companies and insurers
 Penalties of businesses and individuals who do not comply with mandates

Conclusion - Medicare recipients, teaching hospitals, providers of drugs, devices, and insurance, and busineses and individuals who fail to follow mandates take the hit.

2. Where the money will go.

 47% - Increased federal spending premiums and cost-sharing subsidies for families making up to $88,200
 45% - Increased federal spending on Medicaid and SCHIP (mostly on Medicaid)
 4% - Small employer tax subsidies
 4% - Other

Conclusion - Subsidies for the poor and middle class who cannot afford care, current and new Medicaid recipients, and a fraction of small businesses get benefits, and the states which help shoulder costs of Medicaid, take much of the hit.


On balance, the new law is about adding costs to cover 32 million previously uninsured , saving Medicare costs, adding new taxes for Medicare recipients, wealthy households, drug, device, and insurance companies, mandated young and small businesses who previously chose not to pay health insurance, and increasing taxes and fees.

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