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Health Alert | Memories

by John Goodman

Dr. John Goodman is the president of the National Center for Policy Analysis

At the National Journal Health Blog, Marilyn Serafini asked, “How much does health reform really cost, what elements are worth it, and what are the best and worst options for paying for it?” She invites bloggers to compare the current situation with the passage of Medicare and Medicaid in 1965. [link] Here is part of my response:

Here are five lessons from the Medicare and Medicaid experience:

The cost of Medicare and Medicaid was way beyond what anyone predicted. The reason: failure to realize that when any good or service becomes free, people will consume more of it.
Once started, these programs are extremely hard to curtail. If we ended Medicare today - collecting no more taxes and allowing no more accrual of benefits - we would still owe $33 trillion in benefits already earned! (Results of new NCPA study.)
Looking indefinitely into the future, the Trustees have calculated there is an unfunded liability (promises made over and above expected premiums and dedicated taxes) of $85 trillion - almost six times the size of the entire economy.
According to Amy Finkelstein, although Medicare was financially important to the elderly, it created no discernable health benefits in terms of reduced mortality. [link]
Despite no measurable health benefits, the explosion of spending on these two programs forced up prices for everyone else. In fact, HHS’ own internal estimates suggest that every $1 of additional spending buys 57¢ of higher prices.

“Memories Are Made of This”

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