The Ticking Time Bomb
Under the best scenario: Medicaid costs as a percentage of state budgets will nearly double by 2030, from the current 20 percent to 35 percent.
Under the worst scenario: These costs will nearly triple, rising to 50 percent of the operating budget in one state, with long-term care making up one-half of the total.
Interesting one, two punch. The CBO admits the cost curve isn’t going to bend and Deloitte says the effect on state governments is going to be devastating.
Does anyone remember what President Obama’s number one reason for health reform was? The sine qua non for any bill he would sign? It was to control health care costs.
(You can be forgiven for not remembering.)
Number one reason was actually to bring affordable health care to everyone, namely, to bring down the costs. Now, the question is: has he succeeded? No, we still don’t have free-market competition in the health care sector.
I think it was economist Thomas Sowell that once made a statement to the effect that if something is not affordable individually, it is also not affordable collectively.
Yet, proponents of the new health reform law believe we can make health coverage more affordable my foisting much of the cost of taxpayers and employers.
Basically the political left has no idea how to control health care costs. As John Goodman has said on more than one occasion, all they know how to do is squeeze the providers and ration care. They do not believe in free market competition, rgomes, or in economic incentives or in entrepreneurship or in any other institutions that control costs in all other markets.
When Tennessee created the TN Care system several years ago, it was to cut costs. However, basically, did they not just create a “middle man” with the managed care companies between the medical providers and the patient? Since then, health care as a percentage of the state budget has skyrocketed as in your example. It seems that the MCOs have just grown rich and the patient now gets less medical benefits at an greater cost to the state taxpayers. How is that an improvement?
Anne is exactly right. As John Goodman has been explaining to America for a long time now, as long as a third party is incurring the costs of medical services, there is no incentive to keep those costs down. Make doctors compete on price by making the patient care what the doctor bill looks like. Get rid of the middle man. Costs will go down, and efficiency and quality will go up.
Folks:
Regarding ticking time bombs, this is the first time I have seen the word “crisis” used in a Governmental report.
From “Analytical Perspectives,Budget of the U.S. Government, Fiscal Year 2009, on page 187 “To assess the overall financial condition of the Government, it is necessary to examine the future prospects for all Government programs including the revenue sources that support Government spending. Such an assessment reveals that the key drivers of the long-range deficit are Social Security, Medicare, and Medicaid.
Without further reforms, by 2080, rising deficits would have driven publicly held Federal debt to levels well above the previous peak level relative to GDP reached at the end of World War Two. There likely would be a crisis that would force budgetary changes before that point could be reached, but the timing of such a crisis and its resolution are impossible to predict. Timely, comprehensive entitlement reforms could avoid such a crisis.”
Don Levit
Maybe Medicaid costs would moderate if the states would stop expanding it.
Linda, what a novel idea!
It seems to me that it will never be politically feasible for health care to be 100% free market (or even 50%). The only solution that I can see is to have a parallel market like the one in the UK where if you have the money, you can order any test or procedure that you want.
It’s the only way for the system to really work: rational, self-interested people saving money for potential illness.
And as the money gets tight, I predict more people will pay cash.