Medicare Malady #11: "Free" Drugs Will Cost $2,000,000,000,000 By2030

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Medicare Malady #11: "Free" Drugs Will Cost $2,000,000,000,000 By2030

July 23, 2003 1 min read Download Report
The Heritage Foundation

A lesson from Econ 101: There's no such thing as a free lunch.

Another lesson from Econ 101, courtesy of The Heritage Foundation: There's no such thing as a free drug either.

If Congress allows Medicare to cover prescription drugs-making them less expensive for most seniors-the costs will be staggering. As Heritage economists Brian Riedl and William Beach show in a forthcoming research paper, such an entitlement would:

• Cost taxpayers $2 trillion through 2030 alone, with escalating costs thereafter.

• Mean today's 40-year-olds could expect their families to pay $16,217 in extra taxes until retirement.

• Mean babies born today would, by age 27, pay extra taxes averaging $1,125 per household in 2030. (That's on top of Medicare's payroll taxes and other taxes needed to cover future shortfalls in Social Security and Medicare itself.)

In short, adding a prescription drugs to Medicare would kill just about any tax relief in the future-a major factor for economic growth, jobs and general prosperity. "Responsible lawmakers who oppose substantial tax increases should look beyond the 2004 election and examine the burden that a Medicare drug entitlement will impose on future generations," Riedl and Beach write.

Read more of Heritage's Medicare research at

For more information or to receive an e-mail version of "Medicare Maladies," contact or call Heritage Media Services at (202) 675-1761.


The Heritage Foundation