$1 Trillion: What Does It Look Like?
LINDA WERTHEIMER, host:
However you feel about the health care bill Congress is debating, it would accomplish one thing most people probably agree is good, extending health care coverage to almost every American. Of course, that comes with a price. And the cost according to the Congressional Budget Office is about a trillion dollars over the next decade. Here to talk about that number and what it means is David Kestenbaum from our Plant Money Team. Good morning, David.
DAVID KESTENBAUM: Good morning, Linda.
WERTHEIMER: So, I think a year ago, a trillion dollars would have given people a Sticker Shock, but after the financial crisis, maybe that number doesn't feel so big. How are we supposed to think about a trillion dollars?
KESTENBAUM: It is funny how things change. For me, I really just, I can't get my head around a trillion dollars. So I asked a guy who does this for a living - Bill Gale. He's an economist at the Brookings Institution.
Mr. BILL GALE (Economist, Brookings Institution): A trillion dollars is definitely a lot of money. Even if we're already now spending trillions of dollars on things like the financial bailout, the economic stimulus package and so on, we shouldn't get inured to the idea that just because we got to spend that, that it's not a huge amount of money.
KENTENBAUM: So, here's some comparisons that might help. So, the health care bill would be a trillion dollars over 10 years. So, that's about a hundred billion dollars a year. A hundred billion dollars a year is six times larger than NASA's budget. So, you can imagine creating another five NASAs.
WERTHEIMER: How would it compare to the Iraq War?
KENTENBAUM: A hundred billion dollars a year is roughly, ballpark, what we're spending on the Iraq War.
I think the best comparison is probably to look at what the government is actually spending on health care right now - on Medicare, Medicaid and subsidies - and that number is about a trillion dollars a year. So, adding a hundred billion dollars a year, that's, like a 10 percent increase in costs. So, 10 percent increase in what you get for that is pretty much universal health care coverage.
WERTHEIMER: Now, President Obama said in his news conference this week that not fixing health care would also be unacceptably expensive.
President BARACK OBAMA: If somebody told you that there is a plan out there that is guaranteed to double your health care costs over the next ten years, that's guaranteed to result in more Americans losing their health care, and that is by far the biggest contributor to our federal deficit, I think most people would be opposed to that. Well, that's the status quo.
KESTENBAUM: So, there are two challenges here. One is expanding health care coverage, and the bill definitely does that. Just about everybody would have health care coverage. But the second challenge is bringing costs down, and that is the train wreck that is down the tracks and we have to deal with that. Here is Kent Smetters, who used to work at the Congressional Budget Office. He's now at Wharton, the University of Pennsylvania's business school.
Mr. KENT SMETTERS (The Wharton School, University of Pennsylvania): If we limited every single government program - the military, the education, roads - everything except Social Security and Medicare, we would not have enough money left over to pay for Social Security and Medicare.
KESTENBAUM: And of those two - Social Security and Medicare - Medicare is by far the big dog.
WERTHEIMER: But David, aren't you're saying that you'd run into that train wreck whether you passed the Obama health care reform or you didn't?
KESTENBAUM: Yeah, that train wreck is coming, and the question is what does this bill do or what is the Obama administration planning to do down the road to help rein in the costs? 'Cause right now this is going to increase costs, adding more people to the system. And what the Obama administration says is that they do not have a clear plan at this point.
That is actually what Peter Orszag said this week. He is the head of the White House Office of Management and Budget. He said there is no complete plan.
Mr. PETER ORSZAG (White House Office of Management and Budget): It does not exist on Capitol Hill; it does not exist in the bowels of the institute of medicine; it does not exist in the Congressional budget offices; it does not exist here.
KESTENBAUM: So, the health care bill does take some preliminary steps to try to begin restructuring the system so doctors don't prescribe things that patients don't need to try and put more emphasis on preventative care. But if you ask the Congressional Budget Office, which is seen as the official arbiter here, what kind of savings is this going to get us, the CBO's take is that there's just not a lot of data on what works; it's not clear what the plan is, so at this point it's hard to say how much we will end up bringing down the cost of health care.
WERTHEIMER: David Kestenbaum is part of our Planet Money team. You can read its blog and download the Podcast at NPR.org/Money. David, thank you.
KESTENBAUM: Thanks, Linda.
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