Thursday, April 22, 2004
There is no free Medicaid lunch
[Brian Riedl, "So where is all our tax money going?," The Wichita Eagle, 16 April 2004.]
A popular view regarding federal Medicaid dollars is that the more states can get, the better. There are numerous holes in this argument, many of which have been discussed on this blog. One of the biggest concerns with this line of reasoning is the idea that "federal money is free money." Have you ever wondered who pays the bill for the money that comes from Washington? You do.
In this column, Heritage Foundation fellow Brian Riedl provides a breakdown of an average 1040:
Frustrated taxpayers who dutifully completed their 1040s this week likely asked themselves an understandable question: Where is all this money going? And they deserve an answer.
The federal government is projected to spend $21,671 per household in 2004 -- the most since World War II and $3,500 more than in 2001. Tax revenues will reach $16,981 per household through a combination of the income tax, payroll tax, gas tax, estate tax and assorted business taxes typically passed on through higher prices and smaller investment returns. The remaining $4,690 represents the deficit per household, which will be dumped in the laps of our children.
Of that $21,671, below are the health-related spending portions:
Social Security and Medicare -- $7,165. The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of these costs. Although there were once 15 workers per retiree, the retirement of the baby boomers will leave only two workers to fund the benefits of each retiree. By 2030, the added costs of that burden are projected to reach what would be $5,200 per household in today's economy. In 2050, that additional tax would climb to $13,500 per household. The unpredictable costs of the new Medicare drug benefit could add thousands more to each household's tax bill.
Low-income programs -- $3,479. Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. In line with economywide health care trends, Medicaid costs are rising 10 percent per year. Other low-income spending includes: Temporary Assistance for Needy Families, food stamps, housing subsidies, child care subsidies, Supplemental Security Income and low-income tax credits.
Health research and regulation -- $619. Health research spending has doubled since 1998, and nearly all of that spending growth has been concentrated in the National Institutes of Health. This category also includes the Food and Drug Administration and dozens of grant programs for health providers.
Taxpayers themselves will have to answer a final question: Are they getting their money's worth?
[Brian Riedl, "So where is all our tax money going?," The Wichita Eagle, 16 April 2004.]
A popular view regarding federal Medicaid dollars is that the more states can get, the better. There are numerous holes in this argument, many of which have been discussed on this blog. One of the biggest concerns with this line of reasoning is the idea that "federal money is free money." Have you ever wondered who pays the bill for the money that comes from Washington? You do.
In this column, Heritage Foundation fellow Brian Riedl provides a breakdown of an average 1040:
Frustrated taxpayers who dutifully completed their 1040s this week likely asked themselves an understandable question: Where is all this money going? And they deserve an answer.
The federal government is projected to spend $21,671 per household in 2004 -- the most since World War II and $3,500 more than in 2001. Tax revenues will reach $16,981 per household through a combination of the income tax, payroll tax, gas tax, estate tax and assorted business taxes typically passed on through higher prices and smaller investment returns. The remaining $4,690 represents the deficit per household, which will be dumped in the laps of our children.
Of that $21,671, below are the health-related spending portions:
Social Security and Medicare -- $7,165. The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of these costs. Although there were once 15 workers per retiree, the retirement of the baby boomers will leave only two workers to fund the benefits of each retiree. By 2030, the added costs of that burden are projected to reach what would be $5,200 per household in today's economy. In 2050, that additional tax would climb to $13,500 per household. The unpredictable costs of the new Medicare drug benefit could add thousands more to each household's tax bill.
Low-income programs -- $3,479. Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. In line with economywide health care trends, Medicaid costs are rising 10 percent per year. Other low-income spending includes: Temporary Assistance for Needy Families, food stamps, housing subsidies, child care subsidies, Supplemental Security Income and low-income tax credits.
Health research and regulation -- $619. Health research spending has doubled since 1998, and nearly all of that spending growth has been concentrated in the National Institutes of Health. This category also includes the Food and Drug Administration and dozens of grant programs for health providers.
Taxpayers themselves will have to answer a final question: Are they getting their money's worth?
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