- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

The Impending Public Plan Spending Disaster

Posted By Conn Carroll On April 17, 2009 @ 11:53 am In Economics | Comments Disabled

In his Jimmy Carter-esque “New Foundation [1]” speech Tuesday, President Barack Obama linked health care reform and deficit reduction claiming: “If we want to get serious about fiscal discipline … we will also have to get serious about entitlement reform. Make no mistake: health care reform is entitlement reform.”

Problem is, Obama’s health care reform plan includes a Medicare-for-all like public plan that will “compete [2]” with private plans. The idea that the path to reduced health care spending must go through expanding Medicare is laughable. former Political Science professor at the U.S. Air Force Academy Jeffrey Anderson details why [3]:

Since 1970, our overall national health expenditures (NHE) apart from Medicare and Medicaid have risen 83 percent in relation to the gross domestic product (GDP). Meanwhile, the cost of Medicare has risen 304 percent versus GDP–and that is without even counting the relatively new Medicare prescription drug benefit. The passage of decades hasn’t notably improved the government’s performance: Since 1990, NHE apart from Medicare and Medicaid has risen 19 percent versus GDP, while the cost of Medicare has risen 57 percent versus GDP.

So, while the costs of American health-care have increased greatly in recent decades, such costs haven’t, by any stretch, increased evenly across the board. Since 1970, the cost of all health care in America apart from the two biggest government-run programs has not even doubled versus GDP. Over that same span, Medicare’s cost versus GDP has more than quadrupled.

And yet the president and the Democratic Congress want to adopt more Medicare-like programs to cut costs?

President Obama has a laundry list of small ball measures he claims will reduce Medicare’s costs, but like us, the Washington Post finds these proposals wanting:

He maintained yesterday that “health care reform is entitlement reform.” But the health-care savings he has identified are all directed to new health-care spending, and, even then, they cover only a fraction of the likely costs of a health-care bill — of what would become yet another entitlement program.

If the President is serious about entitlement reform, the savings his budget purposes for Medicare and Medicaid would be redirected back into those programs to restore their solvency [4] rather than spending those savings on expanding coverage to other programs. Medicare and Medicaid are giant entitlements, imposing enormous financial burdens on current and future generations.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/04/17/the-impending-public-plan-spending-disaster/

URLs in this post:

[1] New Foundation: http://www.businessweek.com/print/bwdaily/dnflash/content/apr2009/db20090414_849349.htm

[2] compete: http://www.foundry.org/2009/03/26/cap-wrong-again-public-plan-will-kill-not-create-a-competitive-health-insurance-market/

[3] details why: http://www.weeklystandard.com/Content/Public/Articles/000/000/016/385axoqj.asp?pg=1

[4] the savings his budget purposes for Medicare and Medicaid would be redirected back into those programs to restore their solvency: http://www.heritage.org/Research/Budget/wm2199.cfm

Copyright © 2011 The Heritage Foundation. All rights reserved.