Even wealthy countries need strict controls on government health programmes

U.S. Federal health programmes are out of control, and some method of reducing their cost has to be found. This means reducing the size of their planned growth – what liberals playing politics call "cutting their budgets." But it must be done.

A new report from the nonpartisan U.S. Congressional Budget Office examining 125 years of federal spending from 1950 to 2075 paints a chilling picture. (see chart)

  • In 1960, the federal government spent virtually nothing on health, while Social Security retirement benefits consumed 13 percent of federal spending and debt interest 8 percent – leaving almost 80 percent for national defence, public works, agriculture and everything else.

  • By 2000 Social Security had roughly doubled as a share of Gross Domestic Product and consumed 23 percent of the budget, while interest had gone up 50 percent and absorbed 12 percent of the budget.

  • But health spending had gone from nothing to 3.4 percent of GDP and 18 percent of the federal budget in a generation, and Medicare alone cost the economy as much as Social Security did in 1960.

    The future, however, is far worse.

  • By the year 2075, under current law, Medicare will rise to 9.9 percent of GDP and Medicaid will increase to 5.3 percent – while Social Security's long-term spending is flat after 2030.

  • In other words, these two programmes alone, neither of which existed in 1960, will just about equal the total size of the federal government budget that year.

  • Total federal spending will hit 42 percent of the nation's economy – something some European economies already match, but a figure that will create an America far different from the one that now exists.

    There are only two options: double taxes or "cut" spending.

    Source: Bruce Bartlett, senior fellow, National Centre for Policy Analysis, June 24, 2002

    For text http://www.ncpa.org/edo/bb/2002/bb062402.html
    For more on Growth of Government Spending http://www.ncpa.org/iss/bud

    FMF Policy Bulletin\25 June 2002

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