Veronique de Rugy: The Facts about the Government's Medicare Cost Projections

When it comes to the federal government, massive cost overruns are the rule, not the exception. In 1967 long-run forecasts estimated that Medicare would cost about $12 billion by 1990. In reality, it cost more than $98 billion that year. Today it costs $500 billion. In her latest appearance on Bloomberg TV, Reason columnist and Mercatus Center economist Veronique de Rugy explains the facts about the government's medicare cost projections by separating economic myths from economic truths.

Myth: The government's cost projections are reliable.
Fact: They aren't. No matter what government body does the scoring, it is almost always unreliable.

For additional information, see de Rugy's article "The Facts about the Government's Medicare Cost Projections." http://reason.com/archives/2011/06/03/the-facts-about-the-government

Category:

News & Politics

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• veronique de rugy
• bloomberg
• reason.tv
• reason foundation
• reason magazine
• reality check
• medicare
• government
• economics
• economy
• federal
• budget
• mercatus
• center
• myth
• fact

[98nafets]

So sick of hearing about how great the CBO's estimates are when defending Obamacare. How about just use common sense when it comes to these massive spending projects?

[trime1851]

Virtually all government cost projections are lies.

The objective is to fund the program or project. If the true cost figures were shown, it probably won't be funded. Government will never admit to error or mismanagement, and there will never be consequences to those that submitted and approved a dishonest proposal, Instead, whatever money is required to finish or sustain the effort will be requested as "essential" and the appropriations will be made. SAD.

[felpaluche]

it shows

[98nafets]

@eirefrance I'm not upset with reality, the facts are on my side. (See the recent study that stated Obamacare would cost 3 times more than previously thought of, and add massive amounts to the debt). I just get upset when people who believe they are informed because of what the media feeds them thinks anyone who disagrees is stupid.

[eirefrance]

@98nafets Ladies and gentleman, we have here an overly dense idiot who gets upset when the complicated subject called reality is presented to his drooling fuck of a mind.

[98nafets]

@eirefrance "Probably because the thing you're stupidly calling "Obamacare" like some kind of rote memory Palin zombie isn't a spending project."

Ladies and gentlemen, we have here another overly sensitive liberal who gets upset when you start labeling things based on their description.

[eirefrance]

@98nafets Probably because the thing you're stupidly calling "Obamacare" like some kind of rote memory Palin zombie isn't a spending project. But thats just my 'opinion.'

[jaymthegenius]

De Rugy is a beautiful lady :-)

[jaymthegenius]

@kristopheraugust In our capitalistic society even our so-called "poor" can drive from Boston to New York and keep a reasonable diet. Despite that, bad food is popular among the poor despite the fact that there is always an organic food store nearby or an organic section at their own food stores. Diet and environment are two predictors of success in life and intelligence. Increase awareness and access to information and they'll know why they shouldn't consume dye water masquerading as juice.

[UTubekookdetector]

When the gov't says "X will cost Y" just grit your teeth and get your wallet out. PS the CBO projections of ObamaCare being "deficit-neutral" are a case of garbage in, garbage out. Sebelius already admitted to Congress that they're double-counting those phanton $500 billion in cuts to Medicare. We all know the Dems have no intention of cutting or reforming Medicare.

[wye4379]

@wye4379 I'm reasonably sure the CBO doesn't do this (although I'm sure they know how), and it has nothing to do with them. It does however have everything to do with politicians wanting to sell us shit programs (bought with our money of course) without realistic estimations of their likely cost. Frankly its not surprising as almost all government accounting is a complete fucking joke (they get away with shit that would have made ENRON blush) so why should the projections be any different.

[wye4379]

@wye4379 This analysis should be run a lot of times (eg 10,000+) so that you are capturing all of the dynamic relationships within the model that are not readily apparent. After you have run this analysis you should take the results and plot them out on a bell curve (I'm assuming that they're "normally" distributed). You then need to assume that the cost of the program will be between 68% and 95% of the most expensive cases. This is a conservative estimate of the actual cost of a program.