The Monster That Devoured Washington

The enumerated powers of the federal government include defense, minting money, regulating commerce between the states and with foreign countries, and enforcing the laws. Fifty years ago the largest single budget category was defense and most federal disbursements were for things within those enumerated powers. You will search in vain for “health care” among the enumerated powers except under the catch-all category of “general welfare”. Now health care is the federal government’s largest single budget item as this article at the American Spectator observes:

A half-century ago, defense accounted for 45 percent of federal outlays at $405 billion. Medicare and health, combining for $45 billion, constituted five percent of the budget. Granted, the budget disparity occurred at the peak of the Vietnam War. But a review of federal budgets during non-war postwar years generally shows defense dwarfing health-related expenses.

The entity eating up the largest portion of the federal budget remains the well-fed Department of Health and Human Services, which devours roughly $1.1 trillion. Social Security ($1 trillion), Defense and the Veterans Administration ($900 billion), and the catchall category “everything else” ($1 trillion) each account for a smaller piece of the federal pie.

I don’t think that “general welfare” means what you probably think it means. I think that general welfare is to be distinguished from particular welfare. If Americans were living longer and were becoming healthier it would be arguable that all of that health care spending was justified. But those are not the case and, consequently, I don’t believe it is, at least not by the federal government.

Politicians are absolutely uninterested in controlling health care spending. There’s nothing in it for them. Too many people get angry when the treatment they want isn’t being paid for by someone else and that “someone else” is most commonly the federal government.

If you could put an absolute lid on how much the federal government could borrow, it would force politicians to become interested but you can’t. That would require a constitutional amendment, something else which politicians are absolutely uninterested in.

I don’t know how to solve this problem but I do know that it is a problem. I don’t think there’s any way to resolve it as long as the same companies, organizations, and individuals decide what care should be provided, decide when and how it should be provided, and decide how much it’s worth and the people receiving the care aren’t interested in how much it costs.

I also know that borrowing to pay operating expenses is a very bad idea but that’s what we’re doing. Most of the borrowing in the years ahead will be to pay for health care. Even if we cut our military spending to zero it still wouldn’t cover the difference.

4 comments… add one
  • steve Link

    Life expectancy female 1966- 73.9 years. Currently, 81.1 years.

    If and when we develop the political will to address this, it will still be hard, but I think it is doable.


  • Are you sure you really want to hitch your argument on the value of the next incremental dollar of health care spending on life expectancy?

    I think it will take a catastrophe to make change possible because the incentives all point in the wrong direction.

  • steve Link

    Life expectancy is a pretty crude measure, but it is fun to play around with. Link to discussion at Cowen’s site (Tabarrok). If you assume (the fun part) that half of that increase is due to improvements in health care, what many people believe, then we have added 3.5 QALY since 1966. If a Qaly is worth $100k, probably on the low side, you just added a lot of value. Tabarrok has already done the math, so it looks like it might be worth it. All just for fun of course.


  • That’s very weak analysis and, since Tabarrok is an economist, he knows better. Look at the name of his blog: Marginal Revolution. And yet he touts a static analysis. Those are incredibly poor assumptions.

    In real terms an appendectomy or getting vaccinated costs many multiples what they cost 50 years ago. Are we to believe that the QALY due to an appendectomy or getting vaccinated has increased by that multiple over the period? That’s absurd on its face.

    A better although still inadequate analysis would look at year over year changes and what we’re paying for them. I’m working on that just to show directionality. I’m confident that it will demonstrate compellingly that we should have stopped increasing our health care spending a couple of decades ago.

Leave a Comment