FUTURE SHOCK….“The combined net worth of Matt Yglesias, Kevin Drum, and Bill Gates is over $50 billion!” This statement is (a) true and (b) not very helpful.
Likewise for “The combination of Social Security, boomer retirement, and rising medical costs add up to a looming catastrophe!” Responding to a typically duplicitous Robert Samuelson column today, Mark Thoma explains:
Social Security is not the problem, it won’t take much to get it on solid footing, though the scare stories over the past several years have made many people believe otherwise (and Samuelson has helped to generate this false impression). The problem is not demographics either, though it certainly costs more to serve a larger number of people.
The main problem is rising medical costs….
Right. Social Security is solely a demographic issue, and its costs will rise by about 2% of GDP over the next 40 years before leveling out. Ditto for the demographic aspects of Medicare growth. That isn’t peanuts, but it’s not a catastrophe either. It’s pretty easily managable. Of these three things, it’s the explosion of medical costs that accounts for about 70% of our future budgetary problems.
Medical costs are rising all over the world, and to some extent this is inevitable. Richer societies have more disposable income, and healthcare is one of the first things people are willing to spend extra income on. And technology, which generally makes things cheaper in other areas, perversely does just the opposite in the healthcare arena, providing us with ever more (and more expensive) marvels for controlling the results of our own bad habits.
There are at least partial answers to this. We could change the incentives faced by doctors. A national healthcare system could cut down considerably on administrative costs and eliminate the insanity of providing routine healthcare via emergency rooms. We could put more emphasis on preventive care and lifestyle management.
What we shouldn’t do, though, is run around like headless chickens worrying about Social Security and boomer retirements. Healthcare is the problem. The rest is distraction.