Government programs always exceed their spending estimates.
Washington has just run a $1.4 trillion budget deficit for fiscal 2009, even as we are told a new health-care entitlement will reduce red ink by $81 billion over 10 years. To believe that fantastic claim, you have to ignore everything we know about Washington and the history of government health-care programs. For the record, we decided to take a look at how previous federal forecasts matched what later happened. It isn't pretty.
Let's start with the claim that a more pervasive federal role will restrain costs and thus make health care more affordable. We know that over the past four decades precisely the opposite has occurred. Prior to the creation of Medicare and Medicaid in 1965, health-care inflation ran slightly faster than overall inflation. In the years since, medical inflation has climbed 2.3 times faster than cost increases elsewhere in the economy. Much of this reflects advances in technology and expensive treatments, but the contrast does contradict the claim of government as a benign cost saver.
Next let's examine the record of Congressional forecasters in predicting costs. Start with Medicaid, the joint state-federal program for the poor. The House Ways and Means Committee estimated that its first-year costs would be $238 million. Instead it hit more than $1 billion, and costs have kept climbing.
Thanks in part to expansions promoted by California's Henry Waxman, a principal author of the current House bill, Medicaid now costs 37 times more than it did when it was launched—after adjusting for inflation. Its current cost is $251 billion, up 24.7% or $50 billion in fiscal 2009 alone, and that's before the health-care bill covers millions of new beneficiaries.
Medicare has a similar record. In 1965, Congressional budgeters said that it would cost $12 billion in 1990. Its actual cost that year was $90 billion. Whoops. The hospitalization program alone was supposed to cost $9 billion but wound up costing $67 billion. These aren't small forecasting errors. The rate of increase in Medicare spending has outpaced overall inflation in nearly every year (up 9.8% in 2009), so a program that began at $4 billion now costs $428 billion.
The Medicare program for renal disease was originally estimated in 1973 to cover 11,000 participants. Today it covers 395,000, at a cost of $22 billion. The 1988 Medicare home-care benefit was supposed to cost $4 billion by 1993, but the actual cost was $10 billion, because many more people participated than expected. This is nearly always the case with government programs because their entitlement nature—accepting everyone who meets the age or income limits—means there's no fixed annual budget.
One of the few health-care entitlements that has come in well below the original estimate is the 2003 Medicare prescription drug bill. Those costs are now about one-third below the original projections, according to the Medicare actuaries. Part of the reason is lower than expected participation by seniors and savings from generic drugs.
But as White House budget director Peter Orszag told Congress when he ran the Congressional Budget Office, the "primary cause" of these cost savings is that "the pricing is coming in better than anticipated, and that is likely a reflection of the competition that's occurring in the private market." The Centers for Medicare and Medicaid Services agrees, stating that "the drug plans competing for Medicare beneficiaries have been able to establish greater than expected savings from aggressive price negotiation." It adds that when given choices "beneficiaries have overwhelmingly selected less costly drug plans."
View Full Image
Associated Press
A lesson for President Obama: Government programs always exceed their spending estimates. Yet liberal Democrats fought that private-competition model (preferring government drug price controls), just as they are trying to prevent private health plans from competing across state borders now.
The lesson here is that spending on nearly all federal benefit programs grows relentlessly once they are established. This history won't stop Democrats bent on ramming their entitlement into law. But every Member who votes for it is guaranteeing larger deficits and higher taxes far into the future. Count on it.
You don't get it Jim. These arrogant elitists just don't care what this does to the country. They have this warped belief that the US is the problem and needs to be brought down to the level of all the other socialistic driven systems that make up the rest of world.
They don't want to see that Cap and Trade and concentrating on Green energy systems has buried the Spanish economy.
They don't want to see that all of these European models that they are trying to emulate are trying to change or completely do away with the systems they have in place now because of the fact that they are too inefficient and too costly.
Michael Savage was right when he said that liberalism is a mental disorder.
Except that Liberalism is a mental disorder. Look at what you kooks are trying to do to our country, leading us down the path to socialism, socialized medicine and somehow thinking this is a good thing.
Look at your thoughts on states taxation, where you think you can fiddle around with taxes and produce just the right Goldilocks effect.
What we need is Freedom, represented by low taxes and minimal government.
Time after time states and governments that minimize taxes and reduce regulation (yet enforce laws) are successful.
6 comments:
Government programs always exceed their spending estimates.
Washington has just run a $1.4 trillion budget deficit for fiscal 2009, even as we are told a new health-care entitlement will reduce red ink by $81 billion over 10 years. To believe that fantastic claim, you have to ignore everything we know about Washington and the history of government health-care programs. For the record, we decided to take a look at how previous federal forecasts matched what later happened. It isn't pretty.
Let's start with the claim that a more pervasive federal role will restrain costs and thus make health care more affordable. We know that over the past four decades precisely the opposite has occurred. Prior to the creation of Medicare and Medicaid in 1965, health-care inflation ran slightly faster than overall inflation. In the years since, medical inflation has climbed 2.3 times faster than cost increases elsewhere in the economy. Much of this reflects advances in technology and expensive treatments, but the contrast does contradict the claim of government as a benign cost saver.
Next let's examine the record of Congressional forecasters in predicting costs. Start with Medicaid, the joint state-federal program for the poor. The House Ways and Means Committee estimated that its first-year costs would be $238 million. Instead it hit more than $1 billion, and costs have kept climbing.
Thanks in part to expansions promoted by California's Henry Waxman, a principal author of the current House bill, Medicaid now costs 37 times more than it did when it was launched—after adjusting for inflation. Its current cost is $251 billion, up 24.7% or $50 billion in fiscal 2009 alone, and that's before the health-care bill covers millions of new beneficiaries.
Medicare has a similar record. In 1965, Congressional budgeters said that it would cost $12 billion in 1990. Its actual cost that year was $90 billion. Whoops. The hospitalization program alone was supposed to cost $9 billion but wound up costing $67 billion. These aren't small forecasting errors. The rate of increase in Medicare spending has outpaced overall inflation in nearly every year (up 9.8% in 2009), so a program that began at $4 billion now costs $428 billion.
The Medicare program for renal disease was originally estimated in 1973 to cover 11,000 participants. Today it covers 395,000, at a cost of $22 billion. The 1988 Medicare home-care benefit was supposed to cost $4 billion by 1993, but the actual cost was $10 billion, because many more people participated than expected. This is nearly always the case with government programs because their entitlement nature—accepting everyone who meets the age or income limits—means there's no fixed annual budget.
One of the few health-care entitlements that has come in well below the original estimate is the 2003 Medicare prescription drug bill. Those costs are now about one-third below the original projections, according to the Medicare actuaries. Part of the reason is lower than expected participation by seniors and savings from generic drugs.
But as White House budget director Peter Orszag told Congress when he ran the Congressional Budget Office, the "primary cause" of these cost savings is that "the pricing is coming in better than anticipated, and that is likely a reflection of the competition that's occurring in the private market." The Centers for Medicare and Medicaid Services agrees, stating that "the drug plans competing for Medicare beneficiaries have been able to establish greater than expected savings from aggressive price negotiation." It adds that when given choices "beneficiaries have overwhelmingly selected less costly drug plans."
View Full Image
Associated Press
A lesson for President Obama: Government programs always exceed their spending estimates.
Yet liberal Democrats fought that private-competition model (preferring government drug price controls), just as they are trying to prevent private health plans from competing across state borders now.
The lesson here is that spending on nearly all federal benefit programs grows relentlessly once they are established. This history won't stop Democrats bent on ramming their entitlement into law. But every Member who votes for it is guaranteeing larger deficits and higher taxes far into the future. Count on it.
You don't get it Jim. These arrogant elitists just don't care what this does to the country. They have this warped belief that the US is the problem and needs to be brought down to the level of all the other socialistic driven systems that make up the rest of world.
They don't want to see that Cap and Trade and concentrating on Green energy systems has buried the Spanish economy.
They don't want to see that all of these European models that they are trying to emulate are trying to change or completely do away with the systems they have in place now because of the fact that they are too inefficient and too costly.
Michael Savage was right when he said that liberalism is a mental disorder.
Mark - try not to assign motivation. You are the last person who would know what makes a progressive tick.
Also - if you ever find yourself agreeing with, or God forbid, quoting Michael Savage, you need some serious self examination.
Except that Liberalism is a mental disorder. Look at what you kooks are trying to do to our country, leading us down the path to socialism, socialized medicine and somehow thinking this is a good thing.
Look at your thoughts on states taxation, where you think you can fiddle around with taxes and produce just the right Goldilocks effect.
What we need is Freedom, represented by low taxes and minimal government.
Time after time states and governments that minimize taxes and reduce regulation (yet enforce laws) are successful.
It is a mental disorder
Stoopid comments. Look what your side did when they held all the reigns of power. The Democrats are cleaning up your mess. God bless Obama!
Just because Keynes is too deep for you, don't dismiss his policies. The Know Nothings peaked in the 19th century.
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