AP fact-check’s White House claim on health care savings

Using a simple example, the Associated Press fact-checks the Obama administration’s claim that Obamacare will cause health care expenditures to decline by 9 percent per insured person.

Consider an imaginary country with just three citizens, Peter, Paul and Mary. Peter has health coverage but Paul and Mary are uninsured. Peter spends $1,000 on health care, but Paul and Mary can only afford $500 apiece because they lack coverage. Total national spending: $2,000. National spending per insured person: $2,000.

Now suppose a law gets passed to expand coverage. Paul gets insurance, but Mary remains uninsured. Now Peter and Paul are spending $1,000 apiece. Paul spends more than when he was uninsured, so total national health spending goes up to $2,500.

But because more people are covered, spending per insured person goes down to $1,250.

It’s a simplistic comparison, but would you call that a savings?

Another point: In this example, health care spending and the use of health providers actually increases as more people get coverage. This is almost certain to happen in real life under Obamacare, not only driving up real expenditures but also making it more difficult for people with less generous insurance (example: Medicaid and traditional Medicare) to see a doctor. Obamacare does nothing to deal with the expected influx of care-seekers.

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