Comments on state proposal to spend $17,500 per person on health insurance

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Mar 16 2012
Bill Bianchi

Republican criticism of Governor Quinn's office for its handling of $7 billion worth of health insurance contracts awarded to Blue Cross Blue Shield and other insurance providers reveals the fiscal insanity of providing health care coverage through the 'free' private insurance market.

The contracts cover health insurance for more than 400,000 state employees, retirees and their family members according to Tribune reporter, Peter Frost, 3/09/12.

If the contracts are left to stand, the cost would work out to roughly $17,500 per person for insurance coverage, which is outrageously expensive coverage particularly for a state that is struggling to balance its budget.

For comparison, the rest of the industrial world spends roughly $4,000 per person for health care. In other words, to provide private market health care coverage, for 400,000 people, Illinois will spend over 400% more that what governments in Canada, England, Europe, Japan, Taiwan, Korea and Australia pay.

Even that comparison doesn't tell the whole story. The $4,000 per person spent by other industrialized countries includes the entire population. While the $17,500 that Illinois proposes to spend would not include people over 65, the most expensive age group who are all covered by the federal program, Medicare.

Meanwhile to help cost the state's financial deficit, the governor proposes massive cuts to the state's portion of Medicaid reimbursements. This means the working poor will get much less medical care so that the state can continue to subsidize private insurers.

Explanation of numbers used in the above comments:

All of my information about Illinois comes from the Tribune article. I calculated the $17,500 myself. Simply divide $7 billion by 400,000 people; it comes out to $17,500.

Maybe I should make that clear.

When dealing with global comparison I always use the figure of $4,000 per person as the average for the rest of the industrialized world. That's a little high, but I don't want people to think I'm shaving off something there.

I've attached the actual comparison of per person health care costs for 26 advanced nations of the OECD, the Organization for Economic Co-operation and Development. See Here.

I eliminated about 5 less developed countries (Mexico, Turkey, etc.) from the list so that we would compare only highly developed countries. Unfortunately the latest complete data is for 2008.

 

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