ABCs of Healthcare and Reform

The Numbers in Perspective

Reports about healthcare reform proposals mention amounts in the billions and trillions of dollars without much context of how much that really is.

Remember grade school math and the place value of numbers? A trillion is 1,000 times bigger than a billion, which is a 1,000 times bigger than a million, which is 1,000 times bigger than a thousand, which is 1,000 times bigger than 1.

So, a trillion is a 1 with 12 zeroes after it. But how much is that, really?

• If you counted 1 trillion seconds, it would take you 11,574,074 days, or just over 31,688 years.*
• If you flew 1 trillion miles, you would have to fly from the Earth to Neptune about 373 times.**

What does $1 trillion look like in perspective of the U.S. economy?

The U.S. Economy

The Gross Domestic Product (GDP)—or the value of all the goods and services produced in the country—of the U.S. in 2008 was $14,441.4 billion (Bureau of Economic Analysis, n.d.). When you’re talking about a thousand billion, you’re really talking trillions. So $14,441.4 billion is $14.4414 trillion, or $14,441,400,000,000.

The total annual spending on healthcare in the U.S. in 2008 was $2.4 trillion, or $2,400,000,000,000. This was about 17% of the GDP. By 2018, the total spending on healthcare is estimated to reach $4.4 trillion— $4,400,000,000,000—or about 20% of GDP (Centers for Medicare and Medicaid Services, 2009). This estimate does not take into account what would happen if a healthcare reform bill was passed this year.

The Trillions of Dollars for Healthcare Reform

When reports mention the cost of healthcare reform, what they are talking about is actually the 10-year cost without factoring in savings and revenue the bills will generate. For example, according to the CBO, the preliminary estimate of what H.R. 3200 (the House Tri-Committee Bill) will cost is about $1.042 trillion over 10 years.  That’s less than 1% of the estimated 10-year GDP. And again, this estimate was not based on the full text of H.R. 3200, nor does it take into account any amendments to the bill or savings or revenues generated by the bill. The net cost of H.R. 3200 would be far lower—and in fact might reduce the national debt. For more information, see “I heard that healthcare reform will cost $1.6 trillion. Is that true?”

A trillion over 10 years is a big number, but we have a big economy. When talking about the cost of healthcare reform, it’s important to keep the numbers in perspective.

 

*This was calculated using 60 seconds in a minute, 60 minutes in an hour, 24 hours in a day, and 365.25 days in a year. The extra 0.25 day in a year helps account for leap years.

** The Earth and Neptune are about 2.68 billion miles apart on average. The actual distance at any given time varies based on where the two planets are in their orbits.

 

Sources

Blumberg, L., and Holahan, J. (2009). Beyond the $1.6 Trillion Sticker Shock. The Robert Wood Johnson Foundation and the Urban Institute. Available at http://www.urban.org/health_policy/url.cfm?ID=411923.

Bureau of Economic Analysis (no date). National Economic Accounts. Current-dollar and “real” GDP (link). Available at www.bea.gov/national/index.htm.

Center for Medicare and Medicaid Services (2009). National Health Expenditure and Selected Economic Indicators, Levels and Annual Percent Change: Calendar Years 2003-2018. Available at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/proj2008.pdf.

 

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