Chart shows government healthcare takeover

11 Sep, 2014 by John Seiler

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This chart shows how the U.S. government took over healthcare from the private sector — sharply reducing our control over our own health. And it began long before Obamacare/Covered California, which will increase the takeover even more. Even if you somehow can avoid direct contact with the government health-care system, it still exerts so much influence you’re affected.

Those who favor legal abortion say “women should control their bodies.” But in America, the government controls all our bodies.

As former Budget Director David Stockman wrote:

There is a huge irony in this. America is allegedly the greatest assemblage of shoppers on the planet, and the rise of low-cost shopping meccas like Wal-Mart, its kindred big-box and specialty retailers, and now Amazon, is striking evidence of this societal competence in consumer choice. But with this tremendous resource for efficiency and cost-containment largely banished from the health care system, we end up with an uneven battle between the cost containment regulations issued by bureaucrats and third-party payors and the plunder of the cartels which dominate the delivery machinery.

The destruction of consumer choice and the shopping prowess of Americans in the health care delivery system was made in Washington—-not because people are not competent enough to choose among doctors, treatments, and vendors. Specifically, it started with the IRS’ WWII determination that employer health plans were not taxable income—a fraught policy decision that inherently created a bias towards tax-excludable insurance coverage versus after-tax out-of-pocket payments.

By the 1960s, employer health coverage was already creating an inflationary bias in the system, and a perceived inequity in terms of access to health care by the aged and poor who by definition weren’t part of the employer covered population. That resulted in LBJ’s landmark Medicare and Medicaid legislation, and before long a second prong of price-insensitive health care spending was off to the races.

The post-enactment explosion of costs for these programs is well-known, but the actual figures nevertheless powerfully reinforce the point. By the time these programs were up and running in 1970, combined Medicare and Medicaid costs (including state matching) amounted to $15 billion and 1% of GDP. Thirty years later the costs had escalated to $375 billion and 5% of GDP. Today they cost $1.2 trillion and with WIC and related child health programs, the total is $1.4 trillion. Finally, even conservative projections which embody far less than the worst case for Obamacare, show that government health spending will reach $2.4 trillion annually or 10% of GDP by 2022.

It goes without saying that the health care needs of the poor and elderly did not rise from 1% of GDP to a prospective 10% of GDP over the course of 50 years. What actually happened was that Washington created an enormous insurance pool for an uninsurable service, and then invited the medical professions to morph into the beltway’s greatest crony capitalist lobby.

The American Medical Association, for instance, fell on its sword in opposition to LBJ’s original legislation. Yet by 2010, it sold its soul in support of Obamacare in exchange for a more doc-friendly regime, the very thing which will cause the cost of Obamacare to balloon in the years ahead.