Alternate Universe

Over the past year, I have been following the health care debate closely. But only recently have I realized how ridiculous parts of the debate are. Well, that is not exactly true. It has just gotten more ridiculous since August.

Specifically, I want to highlight the lunacy of the debate on the cost of the legislation. Should it be $900 billion? $1 trillion? Deficit neutral? For some reason it matters to some people that it does not cost the extra $100 bn to give a lot more people access to health insurance.

What I think is missing from this debate is some perspective on the cost. One trillion dollars sounds like a lot of money; and it is. But that figure is over TEN YEARS. To put it differently, even if the bill is wildly more expensive—say 2x more expensive—and I think it will actually be less expensive, we would only be spending $200 billion / year. But we have an economy that has a Gross Domestic Product of $14.4 trillion. That works out to less 1.4% of our GDP. If it is only $100 bn / year we are talking about less than 1% of GDP / year to give health care to more than 30 million people.

To put this amount more into perspective, consider how much we are spending on military and defense. While this debate has been going on, President Obama signed a Defense Budget Bill, which authorized the Pentagon to spend $680 billion just this year alone. “The act authorizes $550 billion for the Pentagon’s base budget in fiscal 2010 and $130 billion more for the wars in Iraq and Afghanistan.” This is on top of the $654 billion we spent last year on defense. In two years, we will have spent more on the wars and defense than we will in 10 years on the health care bill. Even if you take out the cost of the wars, we will still be spending more in 2 years on defense than on this reform over 10 years. I never heard anyone really saying that the defense bill should be under $500 billion / year or some other arbitrary number or that it had to be fully paid for. In fact, the only real complaint I heard was that we were not spending enough on defense. Try to keep these numbers in mind when you think about the health care debate.


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