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. (and there's more here)
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