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Monday, May 05, 2008

Granny Bashing

We probably can't say this enough:

Return of the granny bashers, by Dean Baker, Comment is Free: ...Last month a bipartisan group of prominent budget experts had a press event at the Brookings Institution where they argued that Congress had to make major cuts in Social Security, Medicare and Medicaid. They claimed large cuts in these programmes were necessary in order to prevent the explosion in the budget deficit that is projected...

While there are long-term fiscal issues facing the country, the real problem is not the budget and these core social insurance programmes. The real problem is that the United States has a broken healthcare system, which is projected to get progressively more inefficient through time.

Since roughly half of the country's healthcare costs are paid by the government, primarily through Medicare and Medicaid, the projected explosion in healthcare costs is also projected to lead to an explosion in government spending. If the healthcare system is never fixed, the burden on the budget will eventually be unsustainable, ... exactly as the Brookings contingent claimed.

However, it is crucial that the public recognise that the problem is healthcare costs, not a growing population of elderly. The two issues are easily confused, especially since most public sector healthcare costs go to provide healthcare for the elderly. ...

The country has always been aging - we are living longer - we can easily cover the cost of a growing population of retirees as long as the economy is healthy. With normal productivity and wage growth, our children and grandchildren will be able to support a larger population of retirees and still enjoy a much better standard of living than we do; just as most of us now enjoy a better standard of living than our grandparents, even though we support a much larger number of retirees than they did in their working years.

However, if healthcare costs follow the projected trajectory, then the cost of ... healthcare programmes will be unsustainable. Of course, in this scenario the rising cost of healthcare will also place an enormous burden on the private sector.

Per capita healthcare costs in the United States are already more than twice as high as the average in other wealthy countries like Germany, England and Canada. In the budget projections, per person healthcare costs will be four or five times as high in the United States ... by 2050. In this context, US firms will face an enormous competitive disadvantage if they pay for their workers healthcare costs.

If the companies don't pay for insurance, then most workers will face an enormous struggle paying for insurance costs... In either case, workers will have far less money to spend on food, housing education and other necessary expenses, if healthcare costs grow as projected. ...

If healthcare costs in the United States were brought in line with costs in other wealthy countries, all of which enjoy longer life expectancies than we do, then we would not be looking at scary budget projections 20 or 30 years down the road.

This suggests the urgency of fixing the US healthcare system. Healthcare reform is not only necessary to extend coverage to the uninsured, it is also essential for preventing our healthcare system from strangling the economy. ...

As the Brookings contingent said, the current path is unsustainable. And it is not acceptable to tell our parents and grandparents that they will just have to die because our healthcare system has made their care unaffordable.

That's one of the reasons some people care so deeply about the healthcare issue.

    Posted by on Monday, May 5, 2008 at 01:53 PM in Economics, Social Insurance | Permalink  TrackBack (0)  Comments (105)


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