Friday, April 30, 2004
The consequences of importing socialism from overseas
[Anthony Gregory, "The Bankruptcy of Medicare," The Independent Institute, 27 April 2004.]
A little history lesson on the origins of Medicare provides some perspective on the situation we currently face:
At the end of last year George W. Bush signed the Medicare Modernization Act of 2003 into law in the name of “honoring the commitments of Medicare to all our seniors.” The bulk of the law provided prescription drug subsidies for the elderly, at an estimated cost of between $400 billion and more than $1 trillion over the next decade. Less than four months later, the Medicare’s Board of Trustees issued a report citing Bush’s subsidy as a major reason that the program would go bankrupt by 2019, seven years earlier than the board predicted last year.
As far as sound economics go, Medicare has really been bankrupt since it began in 1965. Since its inception, virtually every reform intended to fix it and keep it afloat has increased medical costs, decreased health care quality for the elderly, and created problems that politicians would use as excuses to pass new reforms.
Government health insurance for the elderly did not have its debut in America, but rather in Prussia in 1883 under the authoritarian regime of Otto von Bismarck. Bismarck invented mandatory health insurance and social security to keep his subjects subservient and dependent, to prevent the more leftist socialists from gaining popular support, and to help cover the costs of the Franco-Prussian War through payroll taxes masked as retirement savings accounts. His legacy had a huge impact worldwide at the turn of the century, as many countries began adopting similar programs.
In its first year, Medicare payments totaled $1 billion, but by 1971, the payments had already risen to $7.9 billion annually. Congress was surprised by the ballooning costs of health care services, and held hearings and established commissions to fix the problem, the first of several failed attempts.
Even with seven payroll tax hikes in twenty-one years, anti-“fraud” regulations, and other reforms, Medicare is still a disaster. Despite a $150 billion annual Medicare budget, today’s elderly now spend more than twice as much out of pocket than they did before Medicare was enacted, even after accounting for inflation. Seniors who try to circumvent the system by opting out of Medicare altogether must forego all Social Security benefits. Medicare has become morally, as well as fiscally, bankrupt.
[Anthony Gregory, "The Bankruptcy of Medicare," The Independent Institute, 27 April 2004.]
A little history lesson on the origins of Medicare provides some perspective on the situation we currently face:
At the end of last year George W. Bush signed the Medicare Modernization Act of 2003 into law in the name of “honoring the commitments of Medicare to all our seniors.” The bulk of the law provided prescription drug subsidies for the elderly, at an estimated cost of between $400 billion and more than $1 trillion over the next decade. Less than four months later, the Medicare’s Board of Trustees issued a report citing Bush’s subsidy as a major reason that the program would go bankrupt by 2019, seven years earlier than the board predicted last year.
As far as sound economics go, Medicare has really been bankrupt since it began in 1965. Since its inception, virtually every reform intended to fix it and keep it afloat has increased medical costs, decreased health care quality for the elderly, and created problems that politicians would use as excuses to pass new reforms.
Government health insurance for the elderly did not have its debut in America, but rather in Prussia in 1883 under the authoritarian regime of Otto von Bismarck. Bismarck invented mandatory health insurance and social security to keep his subjects subservient and dependent, to prevent the more leftist socialists from gaining popular support, and to help cover the costs of the Franco-Prussian War through payroll taxes masked as retirement savings accounts. His legacy had a huge impact worldwide at the turn of the century, as many countries began adopting similar programs.
In its first year, Medicare payments totaled $1 billion, but by 1971, the payments had already risen to $7.9 billion annually. Congress was surprised by the ballooning costs of health care services, and held hearings and established commissions to fix the problem, the first of several failed attempts.
Even with seven payroll tax hikes in twenty-one years, anti-“fraud” regulations, and other reforms, Medicare is still a disaster. Despite a $150 billion annual Medicare budget, today’s elderly now spend more than twice as much out of pocket than they did before Medicare was enacted, even after accounting for inflation. Seniors who try to circumvent the system by opting out of Medicare altogether must forego all Social Security benefits. Medicare has become morally, as well as fiscally, bankrupt.
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