In an excellent article, Charles Blahous, one of Medicare’s Trustees, warns states of the dangers of the expansion of Medicaid. He makes many of the same arguments that I have been making for quite a while, his warning, as a Medicare Trustee, may finally cut through the background noise and get some people to actually pay attention. You can read the full Report by Mr. Blahous here: http://mercatus.org/sites/default/files/Blahous_MedicaidExpansion_v1.pdf
Mr. Blahous reminds me of Wilbur Mills who was the recognized congressional expert on Social Security during the administration of President Lyndon Johnson in 1964. Mills initially strongly opposed the expansion of Social Security proposed by Johnson and warned that the cost estimates were not wildly optimistic and in the long run such programs would bankrupt Social Security, a program he also felt was not sustainable.
Mills soon bowed to political pressure. As the Chairman of the powerful Ways and Means Committee Mills eventually delivered the bills expanding Social Security to include Medicare and Medicaid to Johnson. In a recorded call to President Johnson, Mills, House Speaker – Carl Albert, and Wilbur Cohen – architect of much of Social Security and Medicare legislation, said,
“…I think we’ve got you something that we won’t only run on in ’66, but we’ll run on from hereafter.”
Mill’s continued to warn about the risks to the economy of the program but in the end he rationalized as it was good for the Democratic Party. He argued that social security itself was not sustainable and that the expansions would bankrupt the country. Mills was correct in his analysis although his time frame was optimistic. He projected that Social Security, Medicare and Medicaid would cost only $12 billion by 1979. By 1979 the total federal cost of the Social Security Acts (including Medicare and Medicaid) topped $1 trillion (in 2010 dollars). And it is important to note that Medicaid is both a federal and state program and federal costs represent only about one-half of the actual spend.
The rest as they say is history!
(If you want to hear the Johnson tapes, they are available online at, http://www.lbjlib.utexas.edu/johnson/archives.hom/dictabelt.hom/content.asp You can easily search the archives. They are a fascinating glimpse into the backroom deals, pressure tactics and outright intimidation that can be wielded by any presidential administration.)
