The stimulus to which I allude will require no increase in appropriations, no new taxes, no new borrowing, and no creation of money by the FED or by the Treasury. And that is what is meant by "No Cost". As to the word "Stimulus" I must admit that it is more than a single injection into the economy like George bush did in 2001 and in 2008. In that true "stimulus" he borrowed a blob of money and sent it out as checks to all the people of the land. If such a one time injection is all that can be called a stimulus then the increase in purchasing power of the middle class which I propose may not quality.
But these details will be discussed below the fold.
For the purist it may be that a stimulus must also create greater prosperity in the longer term. That is part of the actual underpinning of the vaunted "infrastructure spending" mechanism for stimulus. And much like infrastructure spending the stimulus I am proposing will increase prosperity of the general economy in the future. But my stimulus will not increase the quantity of money in the economy nor the amount or quality of physical infrastructure. What it WILL do is address a "broken window fallacy" thus improving the economy for both the short and long term. For those who do not understand this Austrian fable I will expand briefly as follows: A boy throws a rock that smashes a window. The owner runs out and hugs the boy saying "Thank you young man. You just created a job for someone". It is the same sort of fallacy that says hurricanes and other disasters are good because they juice economic activity. But not for the boy and the rock we can imagine that the window repair man would better spend his labor installing double paned insulating windows or by installing solar panels instead of repairing single pane broken windows.
We will return to this discussion of the word "Stimulus" in the title but for now we need to proceed to the words "Trillion Dollars". Those words are, like all discussions of deficits and spending, a 10 year assessment. The Congressional Budget Office and the politicians like the 10 year horizon BECAUSE it creates huge numbers with which to scare the natives. Some can actually be convinced to throw virgins into volcanoes or have huge prayer sessions through the use of such "scary" sums. I admit it! I'm sensationalizing as is the political norm. The "Trillion" bucks is actually an understatement of what would be realized over the 10 year forecast. The the year by year figure based on CBO numbers is in excess of $100B.
The "Stimulus" is, quite plainly, the increase in disposable income of the vast middle class should they be ALLOWED to purchase their health care insurance through the Medicare system as opposed to being forced to give their hard earned bucks to the private insurance companies. And though many have proposed "Medicare Buy In", until now there has been no CBO assessment to support it.
Prior to the RyanCare proposal I had done my own research on how much the average middle class person would save with "Medicare Buy In". I had also raised holy hell about how our supposed representatives should call upon the Congressional Research Service (CRS) and/or the Government Accountability Office (GAO) to examine the figures and produce a report on the subject that would guide policy decisions. This prior research was documented in dkosopedia . And that page is under further construction at present to include much of what is in this diary concerning the report from the CBO in relation to "RyanCare". The conclusion of the CBO supports my statement that "The American people would save 17.6% on heath care costs (reflected in the cost of insurance) by using the Medicare insurance system as opposed to the private market. As a matter of fact, the CBO implies that the 10 year average savings is a minimum of 19.5%. The entire report is available as a PDF from here. The primary section of interest to us here is the section "Estimates of the Shares of Spending Borne by the Government and Beneficiaries" which begins on page 21 of the PDF. The figure below was "captured" from that section as were the blockquotes I have inserted after the figure.
A private health insurance plan covering the standardized benefit would, CBO estimates,
be more expensive currently than traditional Medicare. Both administrative
costs (including profits) and payment rates to providers are higher for private plans
than for Medicare. Those higher costs would be offset partly but not fully by savings
from lower utilization stemming from two sources. First, private health insurers
would probably impose greater utilization management than occurs in Medicare. Second,
private plans might restrict enrollees’ ability to purchase supplemental insurance
plans; enrollees would thus face higher out-of-pocket costs than they do in Medicare,
and that increased cost sharing would encourage lower utilization. On net, for a typical
65-year-old in 2011, CBO estimates that average spending in traditional Medicare
will be 89 percent of (that is, 11 percent less than) the spending that would occur if
that same package of benefits was purchased from a private insurer (see Figure 1).
Moreover, CBO projects that total health care spending for a typical beneficiary covered
by the standardized benefit under the proposal would grow faster than such
spending for the same beneficiary in traditional Medicare under either of CBO’s longterm
scenarios. For the period before 2030, the difference in projected growth rates
occurs primarily because CBO expects that the payments to providers in Medicare
will grow more slowly (especially under the extended-baseline scenario) than those in
the private market.
As a result, total health care spending for a typical 65-year-old in Medicare under the
extended-baseline scenario in 2022 would be 66 percent of total spending with a private
plan with the standardized benefit; in 2030, the figure would be 60 percent of
that benchmark. Total health care spending in Medicare under the alternative fiscal
scenario would be a larger share of total spending with a private plan—72 percent in
2022 and 71 percent in 2030—because payments to providers in Medicare are
assumed to grow at a faster rate than under the extended-baseline scenario.
The first thing that needs to be understood about these numbers is that the savings to Medicare participants will happen regardless of whether we are speaking of a 65 year old person or a 60 year old person. That is so because the savings percentage is CAUSED BY "administrative costs (including profits) and payment rates to providers" being lower for those in the Medicare pool than for those in the private market". These savings will thus apply for all persons included in the Medicare system regardless of age. If we allow people who are 64 and 60 and 55 to be part of the Medicare union/group/system then both of these costs reductions will apply just as they do for those in the seniors part of the system.
The report details an immediate 11% savings that rises to 28% by the end of the 10 year period (in the "alternative baseline scenario" -- the LESS advantageous projection). For the "extended fiscal scenario" we see an increase in savings rising to 34%. So the worst case we see an average savings over the term at 19.5% ((11 + 28) / 2 -- the average)
Now we must convert this percentage of savings into actual dollars so as to arrive at the "Trillion Dollar" stimulus number. I will do that by averaging several sources for total cost of health care in the USA and the share of that cost currently addressed in the private insurance market. Some sources say that only 35% of the total is outside of the current public assistance arena formed by Medicare, Veterans Benefits, and Medicaid. The average estimated aggregate is 2.8 trillion per year. 2.8 trillion X .35 X .195 = is 186 billion per year. If we assume that 50% 0f the general public is bat-shit crazy enough to vote for Republicans then we can see that only the sane 50% will opt for the Medicare insurance policies. The remainder will continue to pay the "protection racket" its pound of flesh. So the "stimulus" in that case would by only .93 trillion (over ten years) as opposed to the full 1.86 trillion. I do not believe the "Trillion Dollar" claim to be overstated. That 19.5% of health insurance cost cures a lot of idiotology.
A word must be inserted here concerning PPACA. Because it is PPACA that accomplishes the subsidies for the old and young not yet on traditional Medicare where it is NEEDED. PPACA operates by taxing the wealthy so as to provide a subsidy to the lower income people (including early retirees). If we actually read the wikipedia article describing PPACA we find that it is funded primarily by NEW Medicare taxes on the rich and on those with "Cadillac" medical insurance (another version of "the rich"). This is a better approach than is the taxation of the younger wage earning people so as to support the older and the poor. Early retirees who live in modest accommodations, drive modest gas saving vehicles, and eat regular food cooked at home will be subsidized by PPACA based on their low income status. Such individuals also receive partial tax abatements on their homes. There is no reason why people cannot plan their retirement around home ownership and Medicare Buy In. Until the Republican/Clinton tax cut for the rich in 1997 the vast majority of Americans saw home ownership as a retirement vehicle as opposed to a stack poker chips. The point is that PPACA is a better way to manage subsidies than is a straight "Medicare For All" or "Single Payer" system if PPACA is coupled with "Medicare Buy In".
While it is true that within the current seniors program all ages pay and receive benefits equally, this would not be the case for the younger participants in "Medicare Buy In". Persons who are 64 years of age would pay more than those who are 60 simply because the real cost of medical care varies with age. The tax subsidy for seniors that exists in the current Medicare system is politically popular. That is to say that people not yet 65 years of age are willing to provide a subsidy to the retirees. That may not be so (and seems not to be so) in regard to those older Americans still short of retirement. The young and the healthy are not generally inclined to agree to pay even more than they are already paying for the heath care of older (yet not yet retired and infirm) people or for "the poor". The actual personal cost of medical care rises with age. That is a fact. An insurance system spreads the cost across a set of people having similar aggregate and per capital statistical costs. There is no "free lunch". "Shit happens". And an insurance system is nothing more than a system in which "grown up" people pay for "shit" as they go as opposed the when it "happens". It will not be possible to create a single rate for those 60 through 64 and those 55 through 59 because in each group, the private sector will siphon off the younger ages and all that is left in each "band" is the older, more expensive people. The idea of "Medicare Buy In" is to reduce the cost of medical care by allowing the participants to form a large "consumers union" in which savings are realized because "administrative costs (including profits) and payment rates to providers" being lower for those in the Medicare pool than for those in the private market". This is very similar to a labor union in that each individual in the union is an individual with different earning capacity based on competence. In the "Medicare Union" people share common goals and common savings but each individual must pay according to age. Collective bargaining still applies.
My source for the "2.8 trillion" aggregate cost of health care is an average of the following assessments:
US Healthcare Costs Approach $3T
US healthcare costs in 2009 totaled about $2.8 trillion, according to [pdf] a new study from Deloitte.
Expenditures in the United States on health care surpassed $2.3 trillion in 2008, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980.
Health care costs for a family of four rose again in 2011, with employees paying a much larger share of the rising expenses, according to a new industry report Wednesday.