In the usual manner in which bad ideas become even worse reality, good chunks of what policy wonks here are calling “health care reform” are flowing out of academia. Arguably, the most pernicious of these is the notion that “the federal government can build on the success of Medicare.”
Lawmakers from both parties would have winced at such a brain wave ten years ago when both President Clinton and the Republican Congress, albeit using markedly different approaches, attempted to reform Medicare. What a difference a decade makes.
That the federal government’s program of medical treatment for the elderly is now considered a model for the rest of the population is a testament to the frequently unwarranted prestige given such nostrums when they emanate from the mouths and word processors of pedagogues.
Dan Mitchell throws some much needed cold water on this theme in a tax and budget bulletin from the Cato Institute. “The federal government’s ability to predict healthcare spending leaves much to be desired,” he argues. “When Medicare was created in the 1960s, the long-range forecasts estimated that the program would cost about $12 billion by 1990.”
“It ended by actually costing $110 billion that year, or nine times more than expected.” Mitchell is a senior fellow at Cato, a libertarian think tank.
“When Medicaid was created in 1965, it was supposed to be a very small program with annual expenditures of about $1 billion,” Mitchell reminds us. “It has now become a huge $280 billion a year burden for federal taxpayers.”
“Medicaid’s disproportionate share hospital (DSH) program is a sobering example,” Mitchell points out. “Created in 1987 to subsidize hospitals with large numbers of uninsured patients, the program was supposed to cost $1 billion in 1992, but actually cost a staggering $17 billion.”
There’s more: “The Medicare Catastrophic Coverage of 1988 was repealed after less than two years, part because some provisions were already projected to cost six times more than originally forecast.”
Malcolm A. Kline is the executive director of Accuracy in Academia [1].