2005 April 17 Sunday
Health Care Now 10 Percent Of US Military Budget

Tim Weiner of the New York Times reports that military health care costs are skyrocketing.

The cost of the main military health care plan, Tricare, has doubled since 2001 and will soon reach $50 billion a year, more than a tenth of the Pentagon's budget. At least 75 percent of the benefits will go to veterans and retirees.

Over the next decade, a new plan for military retirees, Tricare for Life, will cost at least $100 billion, according to confidential budget documents, rivaling the costs of the biggest weapons systems the Pentagon is building.

That is for almost 9 million active duty and retired personnel and their dependents. So it works out to about $5500 per person and rapidly rising. Parenthetically, article illustrates why "cheap" illegal alien labor is not cheap. The taxpayers end up paying for their health care when they show up in hospital emergency wards and when they have children born here their kids are eligible for Medicaid and other government medical benefits programs that middle class and higher income taxpayers pay for.

Tricare for Life is a supplement to Medicare and, according to an accompanying graph, will cost about $13 billion per year by 2015. That is more than double the $6 billion it cost in 2004. So how much will it cost in 2025 or 2035? The article doesn't say but the answer seems obvious: many billions more.

Bush and Congress are on a binge to pile on more unfunded liabilities for the future decades.

The government's unpaid-for promises grew by more than $13 trillion last year, a sum larger than the nation's 2004 economic output, and they now surpass $43 trillion, said David A. Walker, comptroller general of the United States. Last year "was arguably the worst year in our fiscal history," said Mr. Walker, who runs the Government Accountability Office, the budget watchdog of Congress. "It seems clear that the nation's current fiscal path is unsustainable."

The US military is going to become a hollow force in future decades as its budget goes increasingly for health care.

The cost of military health care is now bigger than the Army's budget for buying new weapons, the Navy's budget for new ships and submarines, or the Air Force's budget for new planes.

The lack of money spent on acquisitions feeds the health care cost problem because old equipment requires a larger staff to do maintenance and newer equipment is more automated and requires fewer people to operate. For example, newer ships have smaller crews because of advances in ship design that automate more tasks.

The US military should be making a much larger push to replace high maintenance equipment and to develop tools and designs that automate work. By reducing human labor needs the extent of the rise in future costs of medical care for military workers could be reduced.

Also, the rising cost of health care for the military illustrates once again the value of developing technologies that automate the delivery of health care. Plus, measures to accelerate the rate of advance of biomedical science and technology could reap savings by producing treatments that prevent diseases and treat diseases more cheaply. But unfortunately there is no big push in Washington to look at health care costs as a problem to solve with acceleration of the advance of science and technology.

The budget of the rest of the US government will go increasingly to pay for old age health care and health care for poor folks (a large and growing percentage of which will be illegal aliens and their legal citizen children).

Edward Rubinstein has a handy table on medical uninsurance by immigrant groups and natives.

Here are the uninsured rates for various immigrant groups (Table 1):

The rapid escalation of ER usage by uninsured immigrants has brought financial disaster to many hospitals. Southwestern border hospitals lost hundreds of millions before the recent federal bailout. In LA County the cost of caring for illegals has diverted money from other services, forcing clinics, trauma centers—and emergency rooms—to close.

We can not afford to pay for an aging population, a strong national defense, and tens of millions of poor illegal aliens and their offspring.

Share |      By Randall Parker at 2005 April 17 02:50 PM  Economics Health


Comments
John S Bolton said at April 17, 2005 5:39 PM:

Over $5000 per person is close to the national average for medical expenses. If old people get half of this, as we are told, that leaves thousands of dollars for the young and healthy to have spent on them. If the foreigners here get thousands of dollars per person spent on them in medical care, that is more than all but a few of them would pay in taxes. They would not often have fewer than one child for every two adults, which would put all but a very few such foreigners above $3000 per adult per year, in these medical expenses. Median personal income of foreign born is only about $15,000 a year; how can their taxes cover even this one category of expenses? Learned men are not ignorant of this characteristic of today's welfare warfare state; yet they are enthusiastic to have multiplied the third world in our midst. Surely this signifies a vicious malice against successful humanity, on the part of those with such an enthusiasm, and who should know what they are about? Does it not require an establishment of state religion in the government schools, to generate the aggression sufficient to put such and such malice in the place where reason and morals should be?

Xixi said at April 18, 2005 5:06 AM:

Retired military have PAID for this health care by their years of service. It's not a freebee.

Engineer-Poet said at April 18, 2005 7:08 AM:

John S. Bolton:

Does it not require an establishment of state religion in the government schools, to generate the aggression sufficient to put such and such malice in the place where reason and morals should be?
All it requires is economic illiteracy and a misplaced sense of fairness.  (And quit the funnymentalist "secular religion" nonsense, it's not relevant here.)

Xixi:

Retired military have PAID for this health care by their years of service. It's not a freebee.
Medicare recipients have PAID, too; just nowhere near enough to finance what they're getting.  You can't dismiss an economic problem with a moral argument.

Randall Parker said at April 18, 2005 10:31 AM:

E-P,

I do not think the term "secular religion" is nonsense. A lot of people who have no religion about the afterlife still believe in a dogma in the same way that supernatural religious people do. I am increasingly convinced that there is some sort of genetic basis for the tendency of humans to enforce taboos and to demonize the political opposition.

Ned said at April 18, 2005 11:21 AM:

Social Security tax is currently 6.2% of earnings for both employee and employer, for a total of 12.4%. This is capped at a maximum earning level of $90,000 per year, for a maximum contribution of $11,600, whether you earn $90,000 or $90,000,000 per year. This is fair, since the person who earns $90,000,000 gets no more Social Security benefit than the one who earns $90,000. However, with the Medicare tax, employee and employer each pay 1.45% of earnings for a total of 2.9%, with no cap. Therefore, the person who earns $90,000,000 pays one thousand times more than the person who earns $90,000 but gets exactly the same benefit. Some deal, huh? So, in truth, some people do not pay the full cost of their Medicare benefits, but others pay far more than they are worth. The welfare aspect of the Medicare program is not discussed very much.

daveg said at April 18, 2005 11:33 AM:

Ned, what you say is true, but most people who make really big bucks are paid in ways other than salary. At some point it makes sense to funnel through a corporation and have it paid as profit. Lots of other way around this. So the 90 million figure is unlikely.

For example, doctors and lawyers will get paid some salary, but will also receive profit from the practice, which is not subject to this tax.

Bob Badour said at April 18, 2005 12:21 PM:

Xixi,

I don't think anyone begrudges medical care for veterans. I don't think Randall or anyone else suggested refusing veterans medical care. Randall apparently wants the DoD to treat the advance of medical technology as urgently it treats the development of new weapons systems.

In a sense, improved medical technology is a key technology for the military just as other logistical infrastructure is key.

If you read Randall's posts on his other blog, FuturePundit.com, you will realize that reducing the cost of military medical care will improve the lives of veterans--as well as everyone else--and have secondary economic benefits to the entire nation.

Imagine a world with a ten-fold reduction in cost for treating retired veterans because the veterans essentially remain young, healthy and active.

Imagine a military capable of saving a private with a bullet wound through his heart. Or some veteran of a future war stepping on a landmine who 15 years later is still able to play basketball on his regrown leg. Wouldn't that reduce the long-term cost of providing medical care to veterans?

George Gumballs said at June 3, 2005 6:53 PM:

Bob, just how much do you think it costs to grow a leg? I can tell you, it isn't cheap!


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