There's a lot of arguing about the cost of the public option. The plan put forward by the HELP committee, is expected to cost $600 billion. The numbers (plucked from extremely well researched thin air) by the GOP insist the final number will be well above a trillion.
But what does it cost us to not have a public option?
Some of the costs of not having a public option are simple to calculate, but immeasurable in value. Infant mortality rates in the United States are 6.37 deaths/1,000 live births. A sampling of other industrialized nations with public health care finds the United Kingdom at 5.01 deaths / 1,000 live births. Canada at 4.63. France at 3.41. If the United States infant mortality matched that of the United Kingdom, just under 6,000 fewer infants would have died in the United States last year. If we could match France around 13,000 fewer infants would have died.
Let's move to the other end of the spectrum. As of 2009, life expectancy in the United States is 78.11 years. Which sounds pretty good, until you realize it puts us one slot above Albania. For the United Kingdom, this number is 79.01 years. For France it's 80.98. For Canada, 81.23. for the United States, that means about 270,000,000 years lost compared just to the slightly better numbers of the UK. 936,000,000 years lost compared to Canada. Want to stick a monetary value on it? Say that just a fourth of these Americans in their golden years are pulling down 20 hours a week and getting minimum wage to wave you into the local big box or bag your groceries. That's $442 billion worth of time lost compared to the UK. About $1.5 trillion lost if those workers had lived as long as Canadians.
There are good things to be said about the American system. When you're in an American hospital, a very good level of immediate care makes you more likely to survive the immediate aftermath of a health crisis. Just had a heart attack? Hug that cardiac care unit close and you're 20% more likely to hang around than your neighbor to the north. However, a low quality of long term and follow up care erodes that difference over the course of a year. Sorry.
But those are only a few of the direct effects of the cost of health care that's distributed by wealth rather than need. There are indirect effects that are equally dramatic.
Millions of Americans are in what's called "job lock." They can't leave their jobs because they feel they can't get the same health insurance benefits on their own or at the next job. A new poll by NPR News, the Kaiser Family Foundation, and Harvard's Kennedy School of Government shows that one out of four Americans has experienced job lock, in the last couple of years, or someone in their immediate family has. That's despite legislation enacted six years ago to deal with the problem.
Having health care that, for most Americans, continues to be directly tied to their employment has one very clear cost: it makes people less likely to voluntarily leave their current job. Sure, COBRA is now available, but the cost of continuing health insurance on your own is enough to make it of questionable value. The complex and highly variable nature of coverage makes it almost impossible for the average consumer to tell which, if any, insurance plan available to them represents a reasonable deal. Many Americans decide to stick with "the devil they know" rather than face rising costs, the uncertainty of acceptance, and the fear related to going it on your own.
Describing something as complex as losses to the economy caused by job lock is difficult. A precise answer is likely out of reach for even the most detailed computer model. However, the scale of the problem is easily demonstrated with a very simple equation.
Wait! Don't run away. Yes, I did say equation and there are a few symbols lurking just ahead, but there's nothing here more complex than multiplication. And it'll be worth it. Trust me.
Here's that equation. W * L * E * S * V = N
Look like nonsense? Let's fill in the letters.
W = the total number of workers in the United States. According to the U.S. Bureau of Labor Statistics, that number is right around 155 million.
L = the number of people who would leave their current jobs if employer-specific health insurance was not an issue. The NPR value cited above is at the low end of numerous studies from the early 1990s through 2008 that have put this number from around 25% to as high as 50%. Let's assume that a lot of folks claiming they'd be out that door if only they could be sure of health care are daydreaming and use the lower value.
E = the percentage of people who, after leaving their current jobs, we would attempt to become entrepreneurs and start new businesses. The rate of US workers engaged in entrepreneurial activity has fallen recently, due mostly to exactly this issue. With an average policy running $12,000 a year, many people who would ordinarily try to launch something new, instead move to another position with some portion of the health care cost provided. As of 2008, the "entrepreneurial index" -- those people who when switching jobs decided to start their own business -- was around 10%.
S = the percentage of entrepreneurs who successfully launch a new business. Depending on the study, the percentage of new small business that hold on for at least five years is somewhere between 30% and 50%.
V = the value generated by the average successful entrepreneur. This is a tough number to figure, as businesses can add value to an economy in a variety of ways. Does that new service or product enable some other business to expand? What about the experience that workers get before moving on to another job? Raising property values near an active office. And, of course, salaries paid out to employees. As a starter number, let's use $100,000 per year. Don't worry, we can change it later.
So what does that give us? Well, 25% of 155 million is 38.8 million people swapping jobs. 10% of that is 3.88 million people trying to start up new businesses. If just 30% of those are successful, that's 1.16 million new businesses in the United States -- which is a pretty amazing number all on its own. Job lock is costing us a million new businesses, maybe even a million new businesses a year. And if each of those business contributes $100K to the overall economy, that's a boost of $116 billion a year. If each of those new businesses employed 5 people, it would replace all the jobs lost in 2009. And 2008.
'N,' the "No Public Plan" cost, the cost of the job lock created by health care insurance provided mostly through employers, is $116 billion per year. Use the same 10 year period that the health care plan costs are predicated on, and that's over a trillion bucks.
The trillion dollar job lock tax. That's what we pay now for not having a public option.