The Spectacle Blog

Medicare All Grown Up, and Still Growing

By on 7.1.11 | 1:43PM

Avik Roy marks Medicare's 45th birthday with an explanation of how the program has expanded beyond its original mandate. The conclusion: 

When Medicare was enacted, the staff of the House Ways and Means Committee (which was responsible for estimating the program's costs and effects, since the Congressional Budget Office had yet to be created) projected that its cost would grow from under $5 billion in its first year to $12 billion in 1990 - accounting for inflation - because they expected that hospital-cost growth would not exceed wage growth from 1975 onward. Instead, Medicare expenditures grew at roughly 2.4 times the rate of inflation over that period, and in 1990 reached not $12 billion but $110 billion. By 2000, the program cost $219 billion. Last year, it cost just over $520 billion. According to the Congressional Budget Office, if Medicare is not reformed, by 2020 it will cost about a trillion dollars a year.

Why this happened is a subject for another time-but the simple answer is: it's easy to waste other people's money.

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