Small Biz Health Care Daily: Costs of GovernmentCare

The Wall Street Journal’s editorial page today provides a helpful reminder about health care reform and the runaway costs of Medicare. The original estimates when Medicare was passed in 1965 were gross underestimates:

“That year, Congressional actuaries (CBO wasn’t around then) expected Medicare to cost $3.1 billion in 1970. In 1969, that estimate was pushed to $5 billion, and it really came in at $6.8 billion. House Ways and Means analysts estimated in 1967 that Medicare would cost $12 billion in 1990. They were off by a factor of 10—actual spending was $110 billion—even as its benefits coverage failed to keep pace with standards in the private market. Medicare spending in the first nine months of this fiscal year is $314 billion and growing by 10%. Some of this historical error is due to 1970s-era inflation, as well as advancements in care and technology. But Democrats also clearly underestimated—or lowballed—the public’s appetite for ‘free’ health care.”

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council, added:

“According to the New York Times, Macon Phillips, director of new media for President Obama, suggested: ‘If you get an e-mail or see something on the Web about health insurance reform that seems fishy, send it to flag@whitehouse.gov.’ Well, here’s something: President Obama actually has been claiming that more government involvement in health care will reduce health care costs. That’s more than fishy. It flies in the face of common sense, basic economics and, as illustrated with the Medicare example, history. In reality, the expansion of government mandates, regulations and funding will jack up health care-related costs for individuals, families and businesses, as taxpayers and health care consumers.”