The Affordable Care Act, or Obamacare, was advertised as costing $854 billion. This figure is based on “gaming” the Congressional Budget Office, disguising the true cost in the ten-year budget window. The latest CBO score reinforces that claim, now projecting the ACA will cost around $2 trillion for the next ten-year budget window while providing health care for no Americans since merely having an insurance card doesn’t ensure any doctor will take it as payment.
The Republicans then touted their ACA replacement as saving $337 billion in this huge new ACA expense, rather than savings from public health spending pre-Obamacare. If we are going to waste tax dollars while not providing health care to anyone, I’d rather waste $1.6 trillion than $2 trillion. But if we insist on spending this staggering amount of money, we could hypothetically spend it in a way that actually provides health care for the many Americans who supposedly desperately need it.
How About Providing Actual Health Care
Let’s use the $854 billion Obamacare was originally projected to cost, since that was the retail sales price for the proposal that, although through dubious methods, actually passed both houses of Congress. What can that buy? According to my research, the current cost of building a hospital is about $1 to $1.5 million per bed. The average cost to run a hospital is about $2,200 per bed per day, or around $800,000 per bed per year. Those numbers are the best I can find and a useful starting point for this discussion even if they aren’t perfect.
So, for reference, let’s use the Atlanta Veterans Affairs hospital as an example. The Atlanta VA has 466 beds and claims to “serve the healthcare needs of more than 130,000 enrolled Veterans living in 50 counties across northeast Georgia”. If we were to build another hospital of that size, let’s use $1 million per bed as the cost, since it’s a public hospital and we can get rid of some of the frills of some of the state-of-the-art, private research hospitals.
Let’s make it 500 beds to make the math easier, giving us a construction cost of roughly $500 million. And let’s say we want to reduce wait times and staff it really well, so let’s raise our costs to $1 million per bed per year. This would make the approximate 10-year cost of a new federally funded, 500-bed hospital $5.5 billion.
Spending $5.5 billion on a taxpayer-funded hospital would be a lot of money but, unlike changing the insurance system, would provide actual health care for approximately 150,000 people. For $550 billion, the government could build two new 500-bed hospitals in each state and run them for a decade, providing actual health care to approximately 15 million people.
But not every person needs hospital care. For the vast majority of treatments, an outpatient clinic will do. The cost on those, according to the numbers I have found, is significantly lower. This article pegs the cost of building an outpatient clinic at about $500 per square foot. This one puts the cost of running it at about $1 to $2 million per year.
Let use the average estimate for building and the high end estimate for running it for the same reasons we did with the hospital. A 20,000-square-foot outpatient clinic could be built for $10 million and run for about $2 million a year, giving it a ten-year cost of $30 million.
That means for $300 billion, the government could build 10,000 outpatient clinics, or 20 clinics for every congressional district in the country and Washington DC, and still be able to build another 1,200 or so clinics in poorer or underserved areas. Since this clinic serves 3,500 people in 10,000 square feet, we can assume we can serve 7,000 people in each of our government clinics. That means the outpatient clinics could serve 70 million people.
Add the hospital numbers to that and the government would be providing actual health care for a whopping 85 million people. Remember, now, much of the ACA debate has concerned the uninsured, who number about 29 million. This would serve almost three times that figure.
So What Does This Mean?
So for a cost of $850 billion—a huge number, to be sure, but equal to the original Obamacare estimate—the government can hypothetically provide actual health care for 85 million people for the next decade, without accounting for a single cent of potential revenue to offset it.
While these facilities may not bring in revenue, they would bring in significant cost savings. According to the Centers for Medicaid Services, Medicaid spending in 2015 alone was $545 billion and had an enrollment of 70 million people. So, assuming that both of those numbers stay flat (which they won’t), Medicaid spending would cost approximately $5.5 trillion in the same time period. The government could transfer our entire U.S. Medicaid population into these new federal hospitals and clinics and, on net, save more than $4.5 trillion over a decade.
Unlike Medicaid, which provides questionable to no health benefits and increasingly fewer doctors will take, these clinics would all be designed to take and treat Medicaid patients and anyone else who did not have the means to pay for care, or who decided their level of treatment wasn’t worth paying for. If a young invincible who didn’t buy insurance breaks his leg, he can get that fixed at a federal clinic. If someone is unemployed in middle age and comes down with pneumonia, now there is a place within driving distance she can be treated for free.
There are also the tangential benefits for everyone else. Moving this population, which tends to be the sickest in the country and a huge driver of health-care costs, to these federally funded facilities would free private hospitals to take payers. The costs to hospitals of people who receive care but don’t pay would be diminished, reducing the cost of patients they would have to pass on to paying patients. Emergency room waits would also be shorter and surgeries could be scheduled quicker, as patient populations are better spread out, leading to better health outcomes as well.
Let’s Get Some Perspective on Health Care
Of course, nothing like this would ever pass Congress and, even if it did, it’s questionable the federal government would be up to the task. It has proven fairly inept at handling a patient population of 9 million, so adding another 70 million or more would certainly strain the bureaucracy. Finding enough competent physicians to staff and run all these facilities would also be an issue.
Finally, as these would be funded solely with tax dollars, the quality of care would likely be lower than that from privately run facilities. But I’d have to imagine the health outcomes would still be much better when providing people with average doctors and facilities instead of great doctors but little actual access to care from subsidized insurance with unaffordable co-pays and hard-to-use facilities. After all, if Cubans can live to 79 despite the older facilities their broke government provides (regardless of what Michael Moore tells you), simply having access to doctors would be a big boon for these populations.
So, if lawmakers are determined to spend a trillion dollars on health care, this a hypothetical way to provide Americans with health care, while being cheaper than any health plan Congress has actually voted on. Also, under this plan if people like their insurance, they can keep it; if they like their doctor, they can keep her. And if they like having actual access to care, rather than a laminated card no one takes and $5,000 minimum to pay until their insurance kicks in, this will help with that.
I’m not saying that we should go this route or that the federal government should be spending a fortune on health care, or even make a comprehensive health plan. But if both parties are nevertheless intent to spend a trillion dollars on health care and enact a comprehensive health plan, this route could provide better health outcomes and massive savings by keeping government out of the insurance market.
