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Politics : Formerly About Advanced Micro Devices
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To: d[-_-]b who wrote (587443)9/25/2010 1:03:17 PM
From: FJB1 Recommendation  Read Replies (1) of 1576951
 
Congress has a long history of dramatically underestimating Medicare costs. "At its start, in 1966, Medicare cost $3 billion," wrote Steven Hayward and Erik Peterson in a 1993 Reason article. "The House Ways and Means Committee estimated that Medicare would cost only about $12 billion by 1990 (a figure that included an allowance for inflation). This was supposedly a 'conservative' estimate. But in 1990 Medicare actually cost $107 billion."

This fiscal year, a recent Cato Institute report notes, Medicare is expected to cost $244 billion ($172 billion in 1990 dollars). Not only are the real costs of Medicare constantly rising; the ratio between the workers who pay for the program and the retirees who benefit from it is falling. "The number of elderly will soar 116 percent by 2040," says the Cato study, "while the number of workers supporting them will grow just 22 percent."

Economists Jagadeesh Gokhale and Kent Smetters estimate that the long-term imbalance between Medicare costs and revenues under existing law is something like $36 trillion, more than five times the current national debt. Given a problem of this magnitude, the gestures toward reform in the Medicare bill—limited medical savings accounts, higher premiums for beneficiaries making more than $80,000 a year, and a six-city experiment with private competition that's supposed to begin in 2010—are pretty pathetic.

reason.com
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