Obama's Health Care Claims

Obama later rephrased his $1,000 claim, and put himself on firmer ground. In his speech to the American Medical Association, Obama said the cost was paid not just in higher premiums but also in "higher taxes" and "higher health care costs."

Obama, June 15: Each time an uninsured American steps foot into an emergency room with no way to reimburse the hospital for care, the cost is handed over to every American family as a bill of about $1,000 that's reflected in higher taxes, higher premiums and higher health care costs.

Adding in taxes and health care costs changes the story. According to Hadley, "The savings that will accrue from covering the uninsured will be primarily in the form of lower taxes to pay for government-funded uncompensated care, not lower premiums for private insurance. These savings are a legitimate potential source of funding to help pay for expanded insurance coverage." The Kaiser study found that insured adults "spend about $350 per person through taxes, donations, and payments for private health care and private insurance to subsidize care received by the uninsured." That's close to Families USA's estimate of the average cost to insured singles. Kaiser didn't give a per-family estimate, but a $350 per person cost is generally consistent with a cost of $1,000 per family.

Comparison Shopping
In his speech to the AMA on June 15, Obama tried to put the cost of revamping the nation's health care system into perspective:

Obama: Making health care affordable for all Americans will cost somewhere on the order of $1 trillion over the next 10 years. That's real money, even in Washington. But remember, that's less than we are projected to have spent on the war in Iraq.
 
Iraq war spending may very well reach that point, but it hasn't yet. Funding for the war totaled $642 billion through the first part of fiscal year 2009, according to the nonpartisan Congressional Research Service. CRS estimated that by the end of September, when the fiscal year ends, the total will reach $684 billion if Congress passed a supplemental appropriation requested by the administration. (The House passed it June 16, and it moved to the Senate for debate.)

Beyond 2009, the Congressional Budget Office estimates that the U.S. will spend from $388 billion to $867 billion on war funding in the next 10 years, depending on how fast troops come home. CBO's numbers include money spent in Afghanistan and for enhanced security at military bases. So far, about 73 percent of total war funding has gone to Iraq.

Finally, we should note that Obama's health care estimate is just that – an estimate. And Washington estimates are often lower than what the true costs turn out to be in reality. It's worth remembering thatthe Bush administration once estimated that the Iraq war would cost only $50 billion to $60 billion, a small fraction of what the actual price is turning out to be.

Measuring Up
In both the Green Bay speech and the AMA speech, Obama said that the U.S. spends 50 percent more per person on health care than the next most expensive nation. Actually, data from the Organisation for Economic Co-operation and Development, which compares the health care of 30 industrialized nations, shows that we spend about 20 percent more per capita than Luxembourg, the next most expensive nation in 2006. The U.S. does spend 50 percent more per capita on health care than Switzerland, the next most expensive after that.

In the AMA speech, Obama went on to say that this spending didn't have a positive effect on our national health:

Obama: And yet, as I think many of you are aware, for all of this spending, more of our citizens are uninsured, the quality of our care is often lower, and we aren't any healthier. In fact, citizens in some countries that spend substantially less than we do are actually living longer than we do.

He's right on this one. The OECD countries with the highest life expectancy (Japan, Iceland, Switzerland, Sweden and Australia) spent, on average, half as much per capita on health care as the United States. According to the World Health Organization, Japan's average life expectancy is 83 years, compared to 78 for the United States, and OECD data shows that Japan spends 60 percent less per capita than the U.S. does. A 2000 WHO report ranked the United States No. 1 in per capita health expenditures, No. 37 on overall health system performance and No. 72 on level of health.

Sources
Soraghan, Mike and Walter Alarkon. "House approves war supplemental." The Hill 18 Jun 2009.

Herszenhorn, David M. "Estimates of Iraq War Cost Were Not Close to Ballpark." The New York Times 19 Mar 2008.

Belasco, Amy. "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11." Congressional Research Service 15 May 2009.

World Health Organization.  World Health Report 2000.  "Annex Table 1, Health system attainment and performance in all Member States, ranked by eight measures, estimates for 1997." 2000.

Organisation for Economic Co-operation and Development. "OECD Health Data 2006: How Does the United States Compare."

Hadley, Jack et al. "Covering the Uninsured in 2008: A Detailed Examination of Current Costs and Sources of Payment, and Incremental Costs of Expanding Coverage." Kaiser Commission on Medicaid and the Uninsured. Aug. 2008.

Families USA. "Paying a Premium: The Added Cost of Care for the Uninsured." Jun. 2005.

Families USA. "Hidden Health Tax: Americans Pay a Premium." May 2009.

© 2009