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The .1% ROI on PPACA

July 30, 2011

CMS came out with an estimate of healthcare spending in 202o and opponents of PPACA have jumped on it to claim the law is raising, not lowering healthcare costs.

In fact the most egregious is Avik Roy at Forbes, a self proclaimed healthcare expert with zero background at any level of the industry. His analysis is simply dishonest, shallow and misleading.

CMS projects total US expenditures to rise from $2.6T to $4.6T or 5.8% annually compared to 5.7% without PPACA a whopping difference of $35 Billion.

THIS IS NOT A TYPO – .1% =$35 billion over a decade or $3.5B per year.

So lets look at the .1% from the perspective of an investment in America and what the ROI of  that is:

  1. 30-40 Million Americans with quality health insurance
  2. 300,000 lives will be saved by 2020 as no longer will 45,000 deaths occur annually for Americans without health insurance.
    1. The cost savings to society and social programs that would support the families of these victims alone will exceed the .1% let alone the human and family benefits
  3. No American can  be turned down for a pre-existing condition. 125 Million have at least one.
  4. High quality plans for all Americans that will eliminate medical bankruptcies (60% of all today)
    1. No annual maximums
    2. No lifetime maximums
    3. No exclusions/restrictions for pre-ex issues
    4. Preventive care for all to keep us healthier and reduce long term costs
  5. State based marketplaces that improve competition and options for small businesses
    1. Online enrollment, admin, communication in a common format will lower admin costs for businesses
    2. Allow employers to take advantage of federal subsidies for lower wage workers and contribute to coverage as well
    3. Insurers must accept electronic data for efficiency
  6. Consumer protection requirements on insurance companies, regardless of  the state:
    1. Operate at or above 80% or 85% for their medical loss ratios or provide rebates to customers
      1. This requirement forces insurers to get lean and mean  to maximize their profits and streamline operations and connections which will further cut transaction costs downstreamwith consumers, businesses and vendors/payors
    2. All rate increases be published online for review in a common format in all 50 states, including 10 that do no rate reviews at all today
    3. All plans use a common format to describe their details to make it easier to understand
  7. Accountable care organizations will be providing coordinated care for patients reducing duplication, errors and over treatment and using evidence based medicine to improve outcomes and lower costs
    1. Over 100,000 patients die annually die to improper care. How many will this save?
This is a partial list of the most obvious ROI for this modest .1% investment or increase in costs over 10 years.
Thats right .1%! That translates into a few billion dollars a year:
  • less than ethanol subsidies, or
  • tax breaks for hedge fund managers or
  • 10% of  the cost of oil company subsidies

none of which add anything to GDP or any ROI for the American people.

So what is the total ROI for the economy for this .1% investment?

CBO has never scored a dime of savings from reduced healthcare costs into their projections.

Nor has anyone put a price tag on the lives saved and the societal costs of lost wages, taxes, social programs for survivors etc.

Or the really important human costs of children growing up healthier, reduced infant mortality, families not losing loved ones , kids not losing parents et al.

4 Comments leave one →
  1. Charles permalink
    August 3, 2011 3:03 pm

    Total garbage! This health care bill that recently passed is nothing more then corporate welfare for the insurance companies, it along with part D medicare is shoveling tax dollars at the drug and insurace companies as fast as possible without any significant increase in actual benefit to consumers (sick taxpayers).

  2. August 3, 2011 1:07 pm

    I don’t where this plan helps those who straight-out cannot afford care. As usual, this government’s policy has been to give the middle class a tiny piece, give the poor a little crumb or nothing and then let the spoiled rich whine that someone besides themselves is “getting something” out of their invested tax dollars, which they then refuse to pay and on and on it goes.

    As a straight-out poor person, without the public option, this entire healthcare bill meant absolutely nothing at all; has zero effect and will not lift anyone in my world out of poverty.

  3. July 31, 2011 1:49 pm

    I would just like to add one additional perspective.
    What I see far too often is people struggling to get back into the work force because they cannot afford the cost of the medical care to treat the condition that is keeping them out of the work force.
    Anything that breaks down those barriers is an improvement for the American economy.


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