Pay for Health Care Reform by Eliminating Insurance Industry Overhead

What's The Real Cost Of Health Care?

We can cover all Americans for less than one percent of GDP. The question is can we afford to do nothing? And I would argue absolutely not. Because if we don't start changing our health care system, we're gonna spend way more than that in excess cost over time.

by Deborah Franklin

"Trillion-dollar-price-tag" is misleading, some say /istockphoto.com

Words matter. As Congress tries to hammer out a deal to overhaul health care, the phrase of the day is "price tag." Most estimates put the cost of the plans under consideration at more than a trillion dollars.

But as NPR's Congressional Correspondent David Welna points out, it's important for reporters writing about the plans to put all those zeros in perspective. He writes:

These are estimates that cover a ten-year period. Better to say "the cost of the plan is a trillion dollars over the next ten years" than "the plan would cost a trillion dollars", which many people (I've asked) assume is the annual price tag of a healthcare revamping.

Averaged out over a decade, a trillion dollar healthcare scheme costs $100 billion a year. That's about a 4% increase over what's currently being spent on healthcare annually, whereas $1 trillion would be a 40% increase.

(Read past the jump for other ways to think of that cost)

NPR's Julie Rovner says Len Nichols, an economist with the New America Foundation, made the same point to her recently. Nichols puts the price tag at $1.6 trillion over ten years.

That's .8 percent of GDP over those 10 years. We can cover all Americans for less than one percent of GDP. The question is can we afford to do nothing? And I would argue absolutely not. Because if we don't start changing our health care system, we're gonna spend way more than that in excess cost over time.

Of course, not everyone finds comfort in that context.

John Goodman, an economist with the National Center for Policy Analysis, oft described as the "father of health savings accounts,"said this in his a blog post yesterday:

When all is said and done, the cost is still going to be about $1.5 trillion. The only real question is: Who is going to pay that cost?

Words matter.

So, what do you think?

What *is* the best way to frame how much these plans will cost?