Medicare Entitlement Crowd Out: We Told You So

Robert Moffit / December 15, 2010

Any time Congress creates a health care entitlement, it “crowds out” (i.e., displaces) private coverage, replacing private sector spending with increased taxpayer spending. The end result: Private spending and coverage contract while government entitlements, dependency, and spending grow.

Since the enactment of the Medicare Modernization Act of 2003, many conservatives in Congress and elsewhere have been impressed with Medicare Part D’s performance in delivering high-quality drug coverage through intense private competition. Private sector drug delivery is indeed a positive feature of the 2003 law. Nonetheless, the Bush Administration and the congressional leadership created a universal entitlement to prescription drugs in the Medicare program. According to the 2004 Medicare Trustee Report (page 108), the “estimated present value of Part D expenditures through the infinite horizon (is) $21.9 trillion, of which $10.8 trillion would occur during the first 75 years.” (more…)