Health care budget realities

February 10, 2009

Free Market Foundation

A pair of new reports on health care spending reveal that the U.S. can’t afford President Obama’s health care plan, says Sally C. Pipes, president and chief executive officer of the Pacific Research Institute and author of “The Top Ten Myths of American Health Care: A Citizen’s Guide.”

According to the Congressional Budget Office (CBO):

Total federal spending on Medicare and Medicaid will grow from $720 billion a year today to $1.4 trillion in 2019.

Taken as a share of the economy (GDP), government health care spending will increase from 4 per cent today to nearly 6 per cent in 2019 and 12 per cent in 2050.

If tax revenues as a share of GDP remain at current levels, additional spending on Medicare, Medicaid and Social Security will eventually cause future budget deficits to become unsustainable.

One might think the prospect of complete fiscal ruin would curb efforts to create yet another expensive entitlement programme, but that’s exactly what President Obama and Democratic leaders propose for health care reform more spending and mandates, says Pipes.

The centrepiece of Obama’s health care proposal is the “public option.” Intended to provide government insurance to those who cannot afford private coverage, the “public option” would expand existing programmes like Medicare and Medicaid.

Expansion of these beleaguered programmes would only add to our mounting deficit, says Pipes. For instance:

The CBO looked at one option that would expand Medicaid to higher-income patients and found that it would result in an extra $7.8 billion in spending over the next 10 years.

CBO’s estimate in this case accounts for only an additional 1.7 million people on the Medicaid rolls.

If we were to add every other uninsured American to government health programmes, taxpayers would be on the hook for hundreds of billions of dollars more.

As CBO’s reports make painfully clear, the federal government can’t sustain its current health care commitments, let alone additional ones, says Pipes.

Source: Sally C. Pipes, Health care budget realities, Washington Post, January 30, 2009.

For text: http://www.washingtontimes.com/news/2009/jan/30/health-care-budget-realities/

For CBO report: http://www.cbo.gov/doc.cfm?index=9924

For CBO report: http://www.cbo.gov/doc.cfm?index=9925

For more on Health Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=16

FMF Policy Bulletin/ 03 February 2009