Medicare historical costs

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I went out to do some research and found this article in the CATO Institutes archive that had information on the original budget promises for Medicare to prove my point:

When Medicare was debated in 1965 (the year it was signed into law), business and taxpayer groups were concerned that program expenditures might grow out of control. However, single-payer advocates assured them that all seniors could easily be covered under Medicare with only a small increase in workers’ payroll taxes. The federal government’s lead actuary in 1965 projected that the hospital program (Medicare Part A) would grow to only $9 billion by 1990. The program ended up costing more than $66 billion that year.

Just three years after Medicare was passed, a 1968 Tax Foundation study found that public spending on medical care had nearly doubled in the first few years of Medicare. In subsequent decades, Medicare payroll taxes and general taxes have continued to rise to pay for skyrocketing health care costs.

Ok – so let’s see – 66 billion divided by 9 billion = 7.33 times what they estimated in 25 years.

Let’s take 1.6 trillion (partial costing) times 7.33 times = 11.733 trillion dollars. For 15 million insured.

Whatta bargain eh?

Now if everyone gets dumped off their private plans by employers – and 300 million must be insured by the same system you can now do this:

1.6 trillion x 20 = 32 trillion x 7.33 = 234.56 trillion in 25 years.

And that is IF their guess of 1.6 trillion is COMPLETE and CORRECT.

Wanna bet they’re wrong?

Look at the guess in 1965. Look at the guess for the prescription drug plan. It’s already skyrocketed. Social Security? 17 workers for 1 retiree then, 3 workers per retiree now.

The systems they design fail. Miserably. They are all hemorraging money and we are looking at massive tax increases just to fix what entitlements we already have in place – and they want to add this, unionized costs and environmental taxes on top of this.

Might as well land on a kitten with an 18 wheeler – that’s our economy with these three new bills if they get passed.

God Save Us.


2 Responses

  1. Am I wrong in the impression that the root cause of inefficient government spending is poor implementation by private companies causing huge over runs; and huge profits?

    I understand your concern. We differ in two key areas. The first is purely philosophical in that I think the welfare of the citizens of the United States is a constitutional right and there is nothing more pertinent to welfare than health. We need to pay this price first regardless of the cost to business.

    Second, I am hopeful the smart people behind the scenes right now are of the type that landed men on the moon. They are the first of the new generation of thinking and I believe they will succeed where others have failed before. Of course only time will tell.

    As for the numbers, neither of us have access to the numbers really needed to evaluate the costs and savings now and in the future. I yield to your discussion on this.


  2. Yes, John, you are wrong about the root cause of inefficient government spending.

    The root cause of inefficient government spending is that the government doesn’t have to make a profit, nor does it have to be efficient. Having seemingly bottomless pockets allows the government to drive private competitors out of business since the government can operate at a loss for decades before the collapse. The problem right now is that we’ve already been operating at a loss (read deficit spending and national debt) for decades. If we pile on all this new spending, the collapse could come very quickly.

    Before the recent government bailouts, private companies, unlike the government, had to be profitable to survive. This forced them to search for efficiencies to maintain profitability. If they failed to be efficient, they died.

    Politicians have a vested interest in projecting low costs for their pet projects in order to pass them into law. So for the administration to estimate 1.5 trillion dollars (that’s 1,500 billion dollars) to pay for their program is astounding, given their vested interest in low estimates.

    Finally, your hope that “the smart people behind the scenes right now are of the type that landed men on the moon” is nothing more than wishful thinking. People who are “behind the scenes” are not elected officials responsible to the people. Instead, they are faceless bureaucrats. Some of them are genuinely idealistic in their support of this catastrophic policy, but the ones who become powerful in the bureaucracy are those who are cynically shouldering their way to the top in order to feather their own nests. This has been true from time immemorial and it is just as true today.

    Count on it that if this nationalized health care plan passes, it will indeed cost far more than the 1.6 thousand billion dollar price tag the administration has put on it.

    How can we possibly pay such an enormous debt, on top of the existing federal and state debts owed? Taxes? The founders pointed out that a power to tax amounts to a power to destroy!

    Not cheerful,

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