Arnold Kling  

The Entitlement Outlook

PRINT
Effect of Unions... Congenitally Entrepreneurial...

Andrew Biggs writes,


Over the next 30 years, population aging is our main entitlements problem and it makes sense to seek solutions that are based on the problem we have, not the problem we want to have.

Beyond 30 years, it is "excess cost growth" in health care that is the main driver of the entitlement deficit. By "the problem we want to have," Biggs refers to the view that we have to worry about health care costs, not demographics. Even if one accepts the view that health care costs are a big problem for Social Security and Medicare, it is odd to imply that the solution is to expand government's involvement in health care.

Regardless of whether you are worried about demographics or the growing use of medical services with high costs and low benefits, raising the future age of eligibility for Social Security and Medicare would be a logical solution.


Comments and Sharing





COMMENTS (8 to date)
fenn writes:

Isn't the assumption of our ability to pay for these entitlements and sustain perpetual debt built on the presumption of an economy that grows forever?

How different is this from all the refinancing spurred by eternal growth of housing values?

kebko writes:

We've just mapped the human genome in the last decade. Isn't it just as silly to make policy decisions based on projections of health care costs 30 or 40 years from now as it is to make them on climate changes 100 years from now? Isn't there a decent probability that health care will eventually start to behave like electronics, where new technology serves to reduce costs instead of increasing them?
There are problems that we need to address, and the current health care system is a big mess, but isn't this the equivalent of making a 20th century transportation policy that is centered around manure removal?

Boonton writes:

Well there's two possible paths....costs continue to grow rapidly or costs level off. I'm not sure which is really better.

Rapidly growing costs indicates steady advancement. Look at today's pharmaceuticals. Tomorrow they will be generics. While the market for healthcare is not perfect, the fact is there is a preference for lower costs. HMO's, Medicare, insurance and private buyers simply will not pay premiums on drugs if they provide no additional benefit in the long run.

So if costs are rising tomorrow, still, it must mean that quality is rapidly improving. That doesn't seem like a bad thing even if it does mean a larger % of our income is taken up with health care costs (and why not? it's not like cable TV is 25% better today than it was 2 years ago!)

If costs are leveled off, well the good news is that the entitlement problems should be largely solved. But it might be somewhat depressing unless costs are leveling off because innovation 'maxed out' and all serious medical problems are cured.

Les writes:

Rather than raising the age of eligibility for Social Security and Medicare, why not privatize both?

Along with privatization, it may be desirable to:

1) provide free basic medical care vouchers at taxpayer expense for those unable to afford it, and

2) require all adults to contribute a fixed minimum percentage of income to private sector retirement accounts (limited to qualified stock and bond index funds) with the starting % of stock funds maximized and bond funds minimized, and the ending % of stock funds minimized and bond funds maximized).

Boonton writes:

2) require all adults to contribute a fixed minimum percentage of income to private sector retirement accounts (limited to qualified stock and bond index funds) with the starting % of stock funds maximized and bond funds minimized, and the ending % of stock funds minimized and bond funds maximized).

I don't think there would be any benefit to this beyond what you get with Social Security.

robert W. writes:

forget raising the age of eligibility for ssc benefits......the euthanasia lottery would be much more effective. after you turn 65, you get a number.....when your number comes up.....social duty calls!

Mark writes:

It's wonderful when people who see human beings as nothing more than numbers try to make economic policy.

Our 65 system that functions well?

You want to fund SS and Medicare?

1) Increase the withholding limit
2) Reduce Medicare benefits to Canada's already generous levels, which are 40% less than in the US
3) Means-test eligibility for medicare, and require premiums on a sliding scale

chuck writes:

The age to draw full social security is already set to go up for boomers. I was born in 1947 so it is age 66 for me, and it goes up with each further year. So what are we talking about here? Setting it at 80 now?

Comments for this entry have been closed
Return to top