Tags: Healthcare Reform | carr | blog | health | care

Healthcare Spending Must Fall Sharply Under Supreme Court Ruling

By    |   Thursday, 28 Jun 2012 07:51 PM

We now know that a mandate is a tax, but that means nothing to those needing health care. The question now is how long the system can last after the Supreme Court’s ruling moved health care spending to the Ponzi scheme list.

The Congressional Budget Office estimates that minimum insurance coverage will cost $12,000 or more for a family choosing the least expensive option. Instead of spending that much, the family could just pay the tax of $2,085. Those making more than $104,250 would pay a penalty of 2 percent of their income. Unless a family earns more than $600,000 a year, the tax is less expensive.

With the best economic decision being to pay the tax, there will be less money available to fund health care. The tax could generate as little as $250 billion a year if every household opts out of insurance and makes the economically rational decision to pay the tax.

Last year, annual health care spending topped $2.6 trillion, about $8,400 for every man, woman and child in the country. Assuming Medicare is self-funding its $600 billion in spending, an incorrect but simplifying assumption, the shortfall the system now faces could be as much as $1.75 trillion.

In effect, the Supreme Court ruled that health care spending will be paid for by a tax or voluntary contributions. Some families will choose the voluntary payments but a majority seem likely to take the low-cost tax alternative. Unless the government can finance an additional $1.75 trillion in deficits, care must be rationed or the quality of care must decrease.

With the Supreme Court ruling, health care joins Social Security and Bernie Madoff on the list of multi-billion-dollar Ponzi schemes doomed to failure.

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