Posts Tagged ‘Spending’

Health care drives federal spending.

For all of the discussion regarding the expected, astronomical growth of government in the coming decades, America’s fiscal outlook is predicated mostly upon one aspect of the budget: health care.  The above graph (originally found here) indicates that by 2050, federal health programs will cost more than every other function of the federal government (other than paying off our debt!) combined.  As Yuval Levin puts it, “The federal government will basically be a health insurer with some unusual side ventures like an army and a navy.”

Admittedly the graph is somewhat misleading on first glance.  Federal spending as a percentage of GDP is sky high right now, its present total surpassed only during World War II when we were busy killing Nazis and saving the world from real Fascists, not “fascists.”  Thus the mild decrease in non-health federal spending as a portion of our economy doesn’t keep the enormous size of current federal spending in perspective.

Presenting the net growth (in this case, the growth is negative) of all non-health federal spending in relation to the economy’s size masks the fact that some specific programs are projected to grow substantially beyond their current share of our economy.  At the same time, other programs, such as counter-cyclical “safety net” programs, will decrease in relative cost when the economy grows and employment increases.  However, the graph allows the naive individual to claim that everything besides health care as a share of our economy is shrinking.  But it’s not.  Some programs will grow, some programs will shrink.

Matt Yglesias presents our options (in quite biased terms) in light of the expected growth of health care costs:

1. Higher taxes.
2. Systematic change to the cost structure of American health care.
3. Abandonment of the government’s commitment to provide health care to the poor and the elderly.

The graph in discussion only shows how significantly America’s public health insurance programs promote deficits, debt, and federal spending.  Both parties can reasonably agree to shrinking health care spending, if only to a slight extent according to some, but the real problems are of public choice and ideology, not facts.