Selling a clunker

My friend Rudy Boschwitz was United States Senator from Minnesota from 1976 to 1991. I told a little bit of his story and expressed my high regard for him in the Standard column “The ambassador nobody knows.” Unlike so many defeated congressional officeholders who never return to their ostensible homes after leaving office, Boschwitz returned to the Twin Cities to work in the family business that he founded.

Last week Rudy teamed up with Minnesota’s Democratic former First District (Mayo Clinic) Rep. Tim Penny for an Investor’s Business Daily column on government-run health care. The IBD editors thought so highly of the column that they ran it twice, the second time “because of the importance of the information provided and also so it will be seen by [their] weekend-only readers.”

The column compiles information on the explosive growth in the cost of government-run health care. “ObamaCare plans to expand the government’s role in insuring the American people,” Boschwitz and Penny write. “The government is already the largest insurer in the health care business through Medicare. We are now told ObamaCare will save money.”
How did it work out with Medicare? “Medicare rose from $5.1 billion in 1968 to $436.0 billion in 2007 an astounding increase of 85.5 times over the 40-year period.” They ask whether Obamacare will do better and recall the famous Medicare projection of the cost of Medicare made by the government at the inception of the program:

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.

The Cash for Clunkers program presents a case study in a program of limited duration and capped cost with respect to which the government has been unable to estimate the effect of altered incentives or to make accurate projections. You’d think someone would get a clue. Selling Obamacare on the proposition that it will increase the quality of medical care while reining in the growth of the federal budget is an epic con job.

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