Universal Medical Coverage

Unless I am losing some of my memory (a distinct possibility) we are seeing a relatively large amount of attention devoted to the 2008 Presidential election at a very early time. As someone who tends to, at best, be distrustful of politicians I find this distressing. I suppose that the unusual circumstance of having neither a sitting President or Vice-president in the mix makes the discussion a bit more valid.

This past week I saw one candidate, Obama, who clearly has a strong appeal to the young folks make a pitch for universal health care. CNN reported: "The time has come for universal health care in America," Obama said at a conference of Families USA, a health care advocacy group. Obama was calling for coverage for all Americans by 2013.

While Obama may be somewhat of a media phenomenon the discussion about universal medical care is not about to go away. Senator Clinton framed such a plan during her husband's first term.

Two Really Big Problems

The notions that the government should be able to provide some sort of medical coverage for everyone is something that I personally find acceptable- in principle. It's (for me) a sort of "why not?" proposition. As always the devil is in the details and the details here are significant.

There are two enormous obstacles. The first is that in my opinion the Federal government is an incompetent bureaucratic entity. To reduce it to simple terms it cannot operate with anything approaching the efficiency of an HMO such as Kaiser Permanente. It is my predisposition to believe that expecting the Federal government to be able to do this is akin to believing in Santa Claus.

But that, frankly, is a minor point. Any discussion about universal medical coverage absolutely, positively must be deferred until a modus of solving two other things is up and running. Those things are Social Security and Medicare/Medicade.

Spending for Social Security, Medicare & Medicade amounted to 40% of total Federal expenses in 2006. The problem is not so much that as the present/future demographic of the American population. Baby boomers are nearing retirement. The birth rate has lowered.

At present 12% of the population is over 65. There are 5 people between 20 & 64 for each person 65 or older. According to the Trustees of Social Security in 2030 folks over 65 will make up 19% of the population and the ratio of those 20-64 to those 65 and over will fall to 3:1.

Superimposed on this is the rising cost of medical care. There is no reason to believe that the cost of medical care will stop increasing at a rate well in excess of core-CPI.

This problem is vastly complex and of monumental importance but I am sure of one thing. Until such time as Congress can frame and enact legislation to address the existing fiscal problems with Social Security and Medicare/Medicade suggesting that the scope of the problem be multiplied before a solution to the present situation is found is totally inane.

There is no "mojo" working here. You simply need to match the intake (taxes) with the spending. The real art is doing this without hurting the economy. The present system of doing this on credit is a further inanity.

Any system based on passing some massively dysfunction plan for the sake of obtaining votes should be punishable with the death penalty. I shall drop any discussion about solutions here and pick that up in a future newsletter.

There is a speech by Bernanke from just last week which details much of this at

http://www.usatoday.com/money/economy/fed/2007-01-18-bernanke-text_x.htm

---

Dick Lepre

Comments

[Richard VanDyk]

Re:
The first is that in my opinion the Federal government is an incompetent bureaucratic entity. To reduce it to simple terms it cannot operate with anything approaching the efficiency of an HMO such as Kaiser Permanente.

I've seen estimates for the overhead costs of healtcare in Western Europe countries to be about 10%.
This might seem high but pales in comparison to similar estimates for us that range in the area of 20-25%.
I am all for private competition but that is not what our "free market" economy provides. It tends to support corporate welfare to a large degree because the big lobby dollars ultimately funded by you and me support this. People are so against "welfare" for the poor but somehow turn a blind eye to the rampant corporate welfare that is so pervasive in our society? Perhaps because many of us have jobs created by this inefficiency?
I say if the Western Europeans can do it, so can we. We might have to cut back a bit on being policeman to the world
but it can be done. You should be ashamed to live in the "greatest country of the world" as many say when a basic human need such as access to healthcare can't be guaranteed to all.

You must be a Republican?

[Dick Lepre]

Richard,

You sort of ran away from me here. I said that IF we were going to have Universal Health Care we needed to first address the fiscal problems with other entitlement programs such as social security and medicare/medicade.

I also said that I found it acceptable and regarded it as a "why not?" proposition.

My suggestion is more about fiscal sanity as a necessary condition for the success of such a program.

If the essence of your post is diasgreement with my contention that Kaiser Permanente is an effecient model that is a seperate discussion. I have no information that Kaiser is somehow a beneficiary of "corporate welfare."

I am not disagreeing with you that there are stupid tax breaks which some folks in Congress get for corporations in their state or district but that really obfuscates my main point about the necessity of fiscal sanity and my opinion that we should first get social security and Medicare/Medicade correct before proceeding with universal health coverage.

[TFBECHTEL]

We could readily pay for it with our money WASTED in IRAQ!

[TFBECHTEL]

Its really easy. Get out of Iraq and use the money to help the US. Medicare is the most cost effective buyer and administrator of health care costs in this country -- no private insurance company comes close. Why not Medicare for all?

[Dick Lepre]

Some comments on comments.

Making this a political issue is silly. Medicare/Medicade takes in money and spends money and those two cash flows should balance.

My appeal here was to do that before addressing universal health care.

There is an additional demographic problem superimposed on this.

[John Rowe]

The recent dive in equities is of no concern to long-term investors. The price-to-earning ratios remain sensible and are improving. Ultimately, an investment is worth a multiple of the income it produces, nothing else. I suspect the sudden dive in equities had more to do with computer programs than changes in economic climate.
Periodically we need to shake the turkeys out of the market.