The big problem is that all the growth in these various programs require ever larger revenues at the cost of the rest of the economy. An economy that is already showing signs of serious dysfunction. The money going to Medicaid and the other programs is money that is not going to wealth creation. They say that demography is destiny, but what is causing the demographics to change? I don’t think that it’s an accident that the demographics are the worst where the state entitlements are the most generous. There’s some psychological distortion that the programs create from both sides.
Let’s look at just one piece of that puzzle. James Capretta of the American Enterprise Institute has a very sobering summary of how Medicaid has metastasized into one of the largest and fastest-growing entitlement programs.
You should read the entire article, but if you’re pressed for time, I’m going to share two grim charts that tell you what you need to know.
First, we have a look at how the burden of Medicaid spending, measured as a share of national output, has increased over time.
What makes this chart particularly depressing is that Medicaid was never supposed to become a massive entitlement program.
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