HEALTH COSTS & HISTORY

The current administration and congress has just run a $1.4 trillion budget deficit for fiscal 2009. We are being feed the line that this new health care plan (entitlement or in other words give away or here is a reason to vote for the democrats in congress and for Pres. Obama again next election cycle) will reduce the deficit by $81 billion over 10 years. To believe this you have to be blissfully ignorant about everything you know about Washington and government involvement in health care programs.

The democrats in congress and the President believe that a federal role in health care will make health care more affordable. The opposite has occurred. Here are a few facts:

• 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.

Let's now examine the record of Congressional forecasters in predicting costs. We will start with Medicaid, the joint federal-state program for the poor:

• The House Ways and Means Committee estimated that its first year costs would be $238 million. It hit more than $1 billion and costs have kept climbing since then.
• 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 when it was launched -- after adjusting for inflation.
• Currently the cost is $251 billion, up 24.7 percent 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 it would cost $12 billion in 1990.
• Its actual cost that year was $90 billion.
• 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 percent in 2009), so a program that began at $4 billion now costs $428 billion.

The lesson to be learned is that nearly all federal benefit programs grow relentlessly once they are started. 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.

Source: Editorial, "Health Costs and History;Government programs always exceed their spending estimates," Wall Street Journal, October 20, 2009.