Opportunity Cost: Studying Health Care's Sticker Shock

The new number is $849 billion. That is the cost the Congressional Budget Office has stamped on the health bill now in the Senate, which, spread out over 10 years, would provide medical coverage to some 31 million uninsured Americans. It's an awe-inspiring number, so how to make sense of such a whopping price tag? What about 849 thousand million? Or call it "just shy of a trillion"? It's stupendously difficult. That hasn't stopped Senate Majority Leader Harry Reid from trying: "It saves lives. It saves money," he said bluntly Wednesday night. Largely by way of increased taxes, Democrats argue that the legislation would in fact trim the federal budget by more than $100 billion. Undeniable though, is that any trillion-dollar program is a ridiculously huge undertaking.

That's not to say plans of such scale are unfamiliar. To compare, let's round the cost of the health-care bill to $85 billion a year and stand it up alongside some other massive spending projects currently underway:

War in Afghanistan
COST SO FAR: $300 billion ($33 billion a year)
According to the Congressional Research Service, the American war in Afghanistan through the end of 2010 will have cost Americans just about $33 billion a year, about a third of what health care would cost. However, since 2006, Congress has been allocating more and more funds for the effort (the request for 2010 alone is $73 billion), and should President Obama decide to deploy more troops (at an estimated cost of $1 billion per 1,000 soldiers), that number could continue to spike, and even surpass the sticker shock of health care.

Iraq War
COST SO FAR: $750 billion ($125 billion a year)
Dividing what has been spent thus far in Iraq by six (the number of years since the invasion) results in an astronomical figure: $125 billion annually. It's hardly a stretch to claim that health care would cost less than Iraq. Some, like Linda Bilmes and Joseph Stiglitz, have claimed that total costs, when counted after the fact, will top $3 trillion. But since spending peaked in 2008 ($141 billion), the war budget has dropped as violence receded and American troops began pulling out. At least in terms of funds from Congress, and despite the treasure already expended, expenses for Iraq are now ebbing.

Federal Stimulus Bill
COST: $787 billion
Eerily similar in cost to the health-care bill was the Obama administration's federal stimulus package that passed in February. (Like Bilmes and Stiglitz on Iraq, the Heritage Foundation claims that the real cost is somewhere above $3 trillion over 10 years.) At $787 billion, it was the largest move by the federal government to avoid a recession since the end of World War II and consisted largely of tax cuts and aid to states.

In one sense, comparing a plan to give health care to tens of millions of Americans to wars overseas or reviving a seizing national economy is a non sequitur. Health, war, economy—each must be argued on its own merits. Perhaps. But this raft of spending is driving a whopping national deficit that could well prove that so many initiatives and wars may not all be affordable. (The cover of the new Economist hauntingly reads, "Dealing with America's fiscal hole".) And if that moment is coming, then the comparison might well be all the more apt and make the setting of priorities all the more urgent.