RSSMedicare and Medicaid Spending Could Exceed Current Taxation Levels
The problem with the CBO Baseline is that the projection is based upon an assumption that has no historical basis. The assumption is that the growth in health care spending will decline to a growth rate that is 1% greater than GDP growth. In fact, the historical increase in Medicare and Medicaid spending has averaged 2.5 percentage points greater than the growth of GDP over the past 40 years. Using the historical rate of increase, Medicare and Medicaid alone would consume all tax collections by 2044 if the tax rate remained at the 2007 level of GDP (18.8%).
3 Responses to “Medicare and Medicaid Spending Could Exceed Current Taxation Levels”
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June 22nd, 2008 at 7:52 pm
This chart is disingenuous to say the least. In other charts, there is +$200 billion surplus projected by 2016, due to the expiration of Bush’s tax cuts. And the projected % of GDP will be much greater than the 18.4% so dishonestly inserted into this chart. Despite this site’s alleged connection to Perot, it looks like another NeoCon-Artist site.
[Editor - We do not claim that +$200 billion surplus in the chart you reference will occur. That chart states that tax cuts will expire among other assumptions. We also show more pessimistic projections made in other charts. Both optimistic and pessimistic projections have been made by our government. It's important to understand that there is a disagreement, even within our own government, regarding the future of the deficit.
The 18.4% tax rate shown here is, in fact, the historical average. The point of this chart is that its inadequate to cover spending if it continues to increase at the historical rate. So either spending must decrease, debt must increase or taxes must increase (as you imply).]
In another section, it’s claimed that “discretionary” spending is expected to decline in the near future. How? The biggest portion is our Defense Dept. Spending. Does anyone in their right mind think we’ll DECREASE defense spending? Are we going to withdraw from Iraq immediately? Are we going to stop all Corporate Welfare programs that come out of our discretionary spending?
June 29th, 2008 at 1:12 am
The government couldn’t estimate its way out of a wet paper bag.
June 29th, 2008 at 12:16 pm
There’s a tremendous amount of waste in our current medical system because the medical system has not taken advantage of automation and is to an astonishing degree still paper based. One of the reasons I supported the recent medicare reform bill that created Medicare part D was that it forces the transition to electronic record keeping and it rebalances treatment away from expensive surgeries to inexpensive pills. The previous regime, by paying just for surgery, twisted treatment incentives away from pills you had to pay for yourself (which weren’t much around when medicare was originally passed) and towards surgeries that the government would pay for.
We’re still short a few years of data to make definite conclusions but the preliminary stuff coming out hints that we should be cautious about long term predictions right now on medicare expenses.