This year is the 50th anniversary of Medicare and Medicaid. Its a perfect time, therefore, to evaluate what these two programs have done and what they havent done.
For starters, we know that the creation of these programs marked a turning in point in health care inflation. Prior to 1965, health care spending bore a reasonable relationship to national income. People didnt generally talk about its being unaffordable and a great many people avoided health insurance altogetherchoosing to pay medical bills out of pocket instead.
For the past 50 years, however, real per capita heath care spending has been growing at twice the rate of growth of real per capita income. As a result, health care spending crowds out more and more of other consumption with each passing day.