Your Lyin’ Eyes

September 11, 2013
Posted by Jay Livingston

What will drive health care costs up in the next decade?  According to the CBO,
  • Medicare costs will increase by $513 billion
  • Medicaid costs will increase by $303 billion
  • Obamacare costs will increase by $135 billion
(The CBO does not use the term Obamacare.  It prefers “Health insurance subsidies and related spending.” The full report is here.) 

Here’s a simple bar graph.

If you put the data on a graph showing the same increases over time, what title would you give to the chart?  If you’re the right-wing Heritage Foundation , it’s obvious.

Yes, the Heritage Foundation looks at the chart and finds that the blame for the increase in healthcare spending goes to Obamacare.*

Who are you going to believe – the Heritage Foundation or your lying eyes? Healthcare costs may be driven to $1.82 trillion, but Obamacare, accounting for less than 10% of that, will not be doing much of the driving.

(HT: David Leonhardt)
*The huge irony in all this is that Obamacare, like Romneycare in Massachusetts, is based substantially on the individual-mandate model originally proposed by the Heritage Foundation. Heritage praised it in Massachusetts but now opposes it even to the extent of mislabeling their own charts.


Jennifer Nolan said...

I think the chart is pretty accurate in stating that Obamacare will eventually be the greater expense. Medicare is an automatic insurance when you're either 65 or suffer a permanemt disability and Medicaid is something that you need to meet standards to, whether it be no or low income BUT Obamacare is mandatory for the remaining people. Someone who works and makes a decent income still may not be able to afford to purchase a policy through their company and in that case will need Obamacare. Being unemployed may not qualify you for Medicaid but it will for Obamacare. Jen Nolan MSU SOCI309

Jay Livingston said...

I love it when MSU students read the blog. But I think we're looking at these graphs differently.

The CBO is estimating how much these different areas of healthcare will cost the government in 2023. Since the individual mandate requires people to have health insurance, Obamacare (and Romneycare) provide a subsidy for people who cannot afford insurance on their own. Right now, that cost is $0 since that provision doesn’t kick in till 2014. The CBO estimates that by 2023, it will increase to $135 billion.

As the Heritage graph shows, even in 2023, that $135 billion (the orange-colored slice at the top)will be nowhere near the amount that the government will spend on Medicare and Medicaid. Either one of those programs will be a greater expense than Obamacare. And the increases in those two programs over the next decade will also be much greater than the $135 billion increase in Obamacare.

Elvin Rodriguez said...

Due to its policies and insurance plan covers it is demonstrated that ObamaCare will drive the highest federal health care spending in the next decade. This chart displays an accurate government spending by 2023 and I agree that ObamaCare will be the most expensive health care plan in America. Starting from the bottom blue slice on the chart Medicare would be the least expensive due to its policies on only serving those of 65 and older or younger people with disabilities and/or end stage renal disease. Furthermore, Medicaid has very strict policies which requires verification on income and resources and so only those who qualify receive it. On the other hand, Obamacare benefits all who cannot simply afford health insurance. This affordable care act provides subsidiaries even to those living in poverty. Eventually anyone can afford a reasonable policy from their health care provider which will lead to ObamaCare being the most expensive federal health care system.

Jay Livingston said...

Elvin, Here are the projected costs for 2023:
Medicare $1,064 billion
Medicaid $554 billion
Obamacare $135 billion

So I am puzzled as to how you can say that " ObamaCare will be the most expensive health care plan in America." Medicare will cost the government nearly $8 for every $1 spent on ObamaCare.

Connor Seltz said...

To be honest after reading all of these responses I am mixed in how I feel about this issue that mainly my generation is going to have to face. I mean this mainly in the sense of our current healthcare system, we are (The US) one of the few remaining western countries who lacks universal healthcare, in this we face our biggest problem. As the BabyBoom generation slowly starts to leave the workforce we have the daunting task of paying for their retirement. This wouldn't be a large issue but there is one element that makes it a rather serious concern. This factor is that our workforce is not being replaced fast enough. So to face this problem of lessing funds we face a truly monumental decision. We either go to universal healthcare, adjust the rate in which we pay in to social security or find some sort of grey area in the middle ground of these two sides. However it plays out it will be interesting since it is a responsibility of both family and society to take care of the old.

George Okeke said...

Obamacare attempts to make "everyone" eligible for healthcare. Medicare tends to "favor" either the elderly or the young with special needs while Medicaid "selectively" chooses those who "qualify" for healthcare. The simply solution is Obamacare since it covers all the demographics despite the cost.

Shannon Thierry, Sociology 309-01 said...

The information outlined in this post seems to make one point clear: our aging Boomers are going to put an enormous strain on our healthcare system (among other things). While Obamacare will undoubtedly cause an increase in healthcare spending, it will ultimately pale in comparison to the spending increase caused by the aging Baby Boomers, who are quickly becoming qualified to take advantage of Medicare benefits. And it cannot be understated what an enormous percentage of the population the Boomers make up, which is largely the underlying reason for the astronomical Medicare forecasts for 2023. So regardless of political stance on the subject, it stands to reason that an aging generation of Boomers are going to the put the largest strain on our healthcare system in the immediate future.

Kiersten Parks SOC 309-01 said...

I think the chart presented by the Heritage Foundation is a completely misleading representation of the data shown here. At first glance, or to anyone who may not know how or want to read this chart in detail, a very different conclusion would be made than what is actually true. First of all, the title of the chart sets a negative tone for Obamacare right off the bat. Also, the Heritage Foundation has used a type of chart that makes it appear as though Obamacare is going to be the main driving force in health care spending and that it will make up the majority of dollars spent. This, if we look closely or at the first chart titled "Increases in Healthcare Costs 2013-2023", is obviously not true. I think it's amazing and in this case, unfortunate how information can be twisted and rearranged in order to present a specific standpoint and attempt to persuade the public.

IsIs Rivers said...

I personally believe that health care is something that is universal. Health care is something that can't hurt the economy rather, something that can improve the life's of the working, poor and middle class. Health care is an essential part of living in the United States of America. I find it shameful that, Obama Care isn't the name that different companies refer to his health care plan as. When comparing the data, "Obama Care" doesn't increase compared to other health insurance. I think the chart presented by the Heritage Foundation is a completely misleading representation of the data shown here.When you take a first glance or to someone who unaware may not know how to read this chart in detail, a very different conclusion would be made. Lastly, Someone who isn't informed in terms of reading a baragraph, who misinterpret the data completely.

IsIs Rivers

Allie Akers Soc 309 said...

I agree with what Kiersten said, the Hertitage Foundation is making it seem like Obamacare is a bad thing, when it is helping millions of Americans improve their families and their own qualities of life. While the cost may be on the rise, that cannot be avoided as the cost of living is constantly increasing with time. Healthcare is way too important to not be without, and the fact that many Americans cannot afford it and will make the insurance the same price, being affordable to all, is a great thing in my opinion, although I really do not know much on the topic honestly.

Sophie Heinlein said...

It is amazing how our societal age gap is growing, and soon the strain will be on our up and coming working class. They will be carrying the elderly on their backs. This polarization of the old an young will be worse as the large number of baby boomers get older (and live longer) and the number of youth entering the world continues to shrink. While years ago there were a number of adults working to keep one elderly afloat, now it is almost one working adult to one elderly in need of care. Seems like a struggle to me. These charts of future costs of Obamacare, Medicare, and Medicaid illustrate these frightening facts of the future that are inescapable and rapidly approaching. What is appealing about Obamacare is that there is no discrimination of age/qualification. Too bad we couldn't adapt a health insurance system like that of Canada or France.

Sophie Heinlein SOCI 390-01

Unknown said...

After evaluating the charts, I'm thinking to myself there are so many different scenarios that could happen in 10 years. People are living longer and who knows what will happen with the economy. Another President will come into office and try to change everything. All this seems way to unpredictable to me. Another issue is that we all don't agree with Obamacare, i.e. Republican's vs. Democrats. So, how can we determine if the chart is correct and how much it will cost in 2023?
All I can hope for is affordable and good health insurance for all. Tori Sopelsa SOCI309

Anonymous said...

Medicaid and medicare has existed for years. Although both state insurances has helped many people who qualify for health care subsidy, lets face not many places are now accepting them, analyzing this charts the cost of Medicaid and Medicare will be so high by 2023 that I believe Obamacare might be a good chance to improve our health insurance future making it affordable and reasonable.Beyond the basic issues with the health care system, insurance companies have long been in need of regulation. Unfair and unjustified rate hikes, limited coverage and denial of health care based off of pre-existing conditions had been the norm until ObamaCare enacted provisions to curb these issues. Until ObamaCare made it illegal, insurance companies could even kick citizens off of their insurance for getting sick!. well hope this plan works.
Janice Latorre MSU soci309.