Saturday, August 08, 2009

Cost estimates of new programs are far outrun

Obama's health care takeover will save money, he claims. What is the track record for the projection of future costs of programs enacted by Congress? Way low! Ex-Congressman Tim Penny and Ex-Senator Rudy Boschwitz at Investors Business Daily Beware of government estimates about the future cost of ObamaCare. When Medicare was being considered in the mid-1960s, the government projected that the outlays for the program 25 years down the road would be $10 billion. Instead, in 1990, 25 years later, the outlays were $107 billion. Government estimates were off by a factor of more than 10! Medicaid, the other large medical program currently in effect, outdid Medicare. Medicaid outlays in 1968 were $1.8 billion. In 2007 they had risen to $190.6 billion, an increase in dollar terms of 105.9 times. And that is only the Federal outlay number. There is a roughly equal Medicaid amount spent by the states due to federal mandates. Without those mandates we would not be reading about the large deficits that most states endure. The idea of expanding the federal role in the medical arena is truly fiscally irresponsible. The claim that money will be saved through government competition with the private insurance system (with government setting the rules!) is the height of fantasy. If 45 million Americans are now uninsured, that means 265 million are insured privately, and the government should not disrupt that. If the government becomes the insurer of most Americans, the impact on the budget would be absolutely awesome. Rationing of medical care that is so often mentioned would surely result.

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