Gov't-Run Care Is A Study In Soaring Costs
By RUDY BOSCHWITZ AND TIM PENNY | Posted Friday, July 31, 2009 4:20 PM PT
This article appeared in Thursday's issue. We repeat it here because of the importance of the information provided and also so it will be seen by our weekend-only readers.
In considering whether to expand the government's role in the delivery of health care or in health care insurance, it is worth looking at Medicare and Medicaid.
These two huge programs already make the government the largest player in the health care industry. The profligate nature of these two programs should raise lots of doubt about the Obama program doing anything but "busting" the budget.
In 1968 total spending by the federal government was $178.1 billion dollars. Forty years later in 2007, total spending had risen to $2,728.9 billion dollars. So the budget of the U.S. increased in dollar terms 15.3 times in that 40-year span.
But all programs did not rise in unison. Some rose more, others less.
Outlays for Social Security rose from $23.3 billion in 1968 to $581.4 billion in 2007, an increase of 25 times. So Social Security drove the budget higher at a substantially faster rate than the budget rose as a whole.
ObamaCare plans to expand the government's role in insuring the American people. The government is already the largest insurer in the health care business through Medicare. We are now told ObamaCare will save money.
What kind of impact did Medicare, the first large government health insurance plan have in budgetary terms? Medicare rose from $5.1 billion in 1968 to $436.0 billion in 2007 an astounding increase of 85.5 times over the 40-year period. Will ObamaCare be better?
Fiscally Wreckless
Beware of government estimates about the future cost of ObamaCare. When Medicare was being considered in the mid-1960s, the government projected that the outlays for the program 25 years down the road would be $10 billion. Instead, in 1990, 25 years later, the outlays were $107 billion. Government estimates were off by a factor of more than 10!
Medicaid, the other large medical program currently in effect, outdid Medicare. Medicaid outlays in 1968 were $1.8 billion. In 2007 they had risen to $190.6 billion, an increase in dollar terms of 105.9 times.
And that is only the Federal outlay number. There is a roughly equal Medicaid amount spent by the states due to federal mandates.
Without those mandates we would not be reading about the large deficits that most states endure.
The idea of expanding the federal role in the medical arena is truly fiscally irresponsible. The claim that money will be saved through government competition with the private insurance system (with government setting the rules!) is the height of fantasy.
If 45 million Americans are now uninsured, that means 265 million are insured privately, and the government should not disrupt that. If the government becomes the insurer of most Americans, the impact on the budget would be absolutely awesome. Rationing of medical care that is so often mentioned would surely result.
Rich Will Provide
If in the 40-year span from 1968 through 2007 Social Security went up 25 times, Medicare 85.5 and Medicaid 105.9, why did the total federal budget increase overall only 15.3 times? What held the budget back?
It was largely defense. Defense outlays rose from $82.2 billion in 1968 (or 46.1% of the total budget) to $547.9 billion in 2007 (20.1% of the total budget). In dollars, that is an increase of a bit less than 6.7 times.
Yet on a recent talk show Rep. Barney Frank assured us that we can pay for these new medical programs by decreases in defense outlays and additional taxes on the "rich" — those with incomes exceeding $250,000, he explained.
Medicine over our lifetime has made extraordinary progress. New discoveries and advances continue to be announced almost weekly. Most — but not all — have occurred here in the U. S. where medicine has always attracted the best and the brightest.
The government has played a most significant role by funding research through the National Institute of Health to the tune presently of $30 billion annually. It is a proper role for government and among the best and most admired of programs that receives the broadest bipartisan support.
Will the best and brightest young people be attracted to a career run by government rules, regulations and financial dictates that may well frown upon individual initiative? Our fear is that they will not, and the extraordinary progress of medicine will slow.
That alone is reason enough to oppose the government's further immersion into the field of medicine.
Boschwitz, a Republican, served in the Senate from 1978 to 1991 and was a member of the Budget Committee throughout. Penny, a Democrat, served in the House from 1983 to 1995. Both are from Minnesota.
IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- Gov't-Run Care Is A Study In Soaring Costs (4 August 2009)
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