Expenditures for Health Programs Always Outpace Early Estimates
Government has a poor record of predicting the cost of health care programs. Here are some notoriously inaccurate forecasts of first year costs:
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And the Massachusetts Plan is just getting started. I like to think of Government plans like diesel engines, sometimes they take awhile to warm up, but from then on you can always count on them to run up the public debt.
Since it is a state program, I don’t think that the Massachusetts will threaten the frightening expenditure growth of Medicare and Medicaid, but if some of the current plans in Congress get passed, which resemble the Mass. Plan (exchange, individual mandate, guaranteed access, mandates), then we are in for a wild ride.
I noticed one interesting point to this analysis. These are programs for which the government has little control over demand. Yet it has estimating a cost far into the future. A case in point is the Hospital Disproportionate Share Hospital (DSH) fund. The DSH fund is essentially throwing money at hospitals for providing charity care. Hospitals have little incentive to vet which patients are truly needy, and collect from those that aren’t needy when the government is willing to spend billions on hospitals that treat indigent patients.
Fascinating chart.
[…] HT: John Goodman’s Health Policy Blog […]
It just isn’t in health care the federal government screws up estimates on….
Consider this Cato commentary from five years ago by Jenifer Zeigler…
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[…] I also say “at least” because there is historical evidence that the first year of all major government health programs have been significantly underestimated. Take a look at this graph from John Goodman’s Health Policy Blog: […]
[…] more, judging by the experience with Medicare and other programs, actual spending will be much higher than even these […]
Are these the projected and actual costs of the first full year of the program? Or are the projections/actuals some years in the future?
Bruce’s Two-Bits…
A good time to be a jihadist “Obama has already gone a long way towards ensuring that interrogators cannot use any technique that might reasonably be expected to extract information from hardened terrorists.”
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[…] | Expenditures for Health Programs Always Outpace Early Estimates Aug 20, 2009 by Devon Herrick Government has a poor record of predicting the cost of health […]