NCPA - National Center for Policy Analysis


February 5, 1997

With Medicare fast on its way toward financial self-destruction in the early 21st Century, President Clinton wants even more benefits added to the federal health care program.

  • He wants to provide free preventive screening tests for a variety of illnesses.
  • His second proposal is to provide benefits to families of patients with Alzheimer's disease.
  • According to White House figures, the cost for these new programs would be $13 billion over the first five years -- rising sharply to $9 billion in the sixth year alone.
  • The administration contends these are modest programs whose cost can be accommodated by cutting Medicare's projected budget by more than $130 billion -- mostly through cuts in payments to doctors and hospitals.

But budget-conscious observers recall that many expensive Medicare programs began as "modest" ones. Home Health Care was supposed to be a small program; it now costs $16 billion a year. Kidney dialysis was supposed to be limited to 90,000 seniors; now 200,000 have signed up at $7 billion a year. This kind of expansion has finally taken its toll. Rudolph Penner, a former head of the Congressional Budget Office, warns "it's clear we are going to have to start cutting benefits" when the baby boom generation starts to retire around 2011.

Supporters of the preventive tests contend that they would actually save the system money by diagnosing health problems in the early stages and heading off associated health problems down the road. But studies from the Office of Technology Assessment and Rutgers University found that the costs of administering all the tests would outstrip any savings from catching and treating diseases early.

Critics say that adding these programs will lead to the addition of still more new benefits, resulting in ever expanding costs -- as has occurred with such programs as home health care, treatments for end-stage renal disease, benefits for skilled nursing facility care and hospice care.

Source: John Merline, "Planting Seeds of Fiscal Crisis," Investor's Business Daily, February 5, 1997.


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