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Tuesday, March 30, 2010

Obamanomics & Healthcare; 1st Installment

Here's a little democratic fuzzy math (Obamanomics) for you all:

Congress has appropriated $5,000,000,000 (5 billion) dollars to pay for direct medical care for a "temporary high-risk pool" of individuals that currently do not have insurance until the mandates for insurance take effect in 2014.

These individuals will purchase the insurance through the "government exchange program" adminsitered by each state.

The 5 billion dollars is above and beyond the premiums that will be collected for the new "affordable policies" that cannot be more than what the current market policies are.

Still with me--here's where the fuzzy math comes in?

In 2010 we will spend a little over $3,000,000,000,000 (3.05 trillion) in health care.

If 85% of the population have insurance and about 15% dont (about 30 million individuals), that means that those that don't have insurance will require 15% of the 3 trillion or about 450,000,000,000 (450 billion dollars) per year for health care expenditures.

However, congress has only appropriated 5 billion dollars or 0.16% of the total amount needed to pay for such care expecting to make up the rest or 98.14% needed from premiums collected with the stipulation that if the money runs out, then the Secretary of the Health and Human Services "will take such measures as to raise premiums, limit coverage, or create waiting lists".

Now let's say for the sake of argument that 98.14% of $450,000,000,000 is still pretty much $450,000,000,000--then that means they will need to collect 450,000,000,000 in premiums from 30 million people or about $15,000 dollars each ($1250.00/month).

But--since this is an "affordable plan" and the premiums cannot be more than what the market currently is, that means there are only two alternatives:

The first is that after they run out of the 5 billion plus whatever premiums they collect (which will take about a month), they simply limit care or deny coverage.

The second option is that the rest of us will be asked to pay for the shortcoming through increased premiums, taxes, or both.

What option do you think they will choose?

Furthermore, the above analysis makes the assumption that the "high-risk" pool will utilze the same amount of care as the "average"; however, since by definition, they are "high-risk" and presumably have pre-existing conditions, then that means they will actually utilize more care which, of course, will cost more!

John R. Vigil, MD (1988), MBA (2011)
Fellow, American College of Physician Executives


  1. This post was such a brain fart, I lost what your point was about 2/3 of the way. Stick to medicine, you have career as a journalist.

    1. Carrie,

      Let me guess, you flunked math and economics, didn't ya?

  2. Carrie,

    Sorry the math was too complicated for you to understand.

    Let me try to explain it slower and in terms you might understand.

    The Obama plan to cover 30 million uninsured with affordable healthcare and pay for their healthcare with only 5 billion dollars and whatever premiums they might collect from these individuals without rationing and/or without raising taxes on the rest of us is impossible when you consider the math.

    I'm sorry that such large numbers confuse you but the math is really simple arithmetic that you should have learned in grade school--it is not algebra, trigonometry, calculus, or even solving differential equations.


    John R. Vigil, MD

    1. Hey, even I could do that math, and you know ME John, not one of my best subjects.. LOL