Medicare is an unsustainable program; its enactment was, in my opinion, our government’s worst post-World War II mistake. If left in place, the program will inevitably swamp the budget and make both unprecedented deficits and massive tax increases inevitable.
Now Congress appears poised to make the problem worse by adding a prescription drug benefit estimated to cost $400 billion over the next ten years. Stephen Dinan, writing in the Washington Times, reviews the history of entitlement cost estimates and concludes that the real cost of the drug benefit will be far higher. When the intitial Medicare program, hospital insurance, was passed in 1965, it was estimated to cost $9 billion in 1990. The actual cost turned out to be $67 billion. Some entitlement cost overruns are even worse. The Medicaid hospital subsidy adopted in 1987 was projected to cost $100 million annually by 1992; the actual cost by that year was $11 billion.
The Medicare program is already a budget-shredding disaster. A study recently commissioned by the Treasury Department estimated that the present value of future Medicare costs exceeds the present value of future Medicare tax receipts by $36.6 trillion. The prescription drug benefit will only compound the problem.
My own preferred solution would be to get the government out of the health care industry altogether, by repealing Medicare, Medicaid and all other government programs relating to health care. But that approach is apparently no longer on the table, as millions of Americans have gotten used to the idea that they have a right to demand that someone else pay their medical bills.
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