Monday, April 20, 2009

What's Driving the US Economy Over the Cliff?

The author of this piece put forth some provocative thoughts on what big picture issues we're facing as a nation. I don't think agree entirely but it's an interesting list.

"First, why do we let people retire too early and then expect them to live so long without working? In 1910, the average retirement age in the United States was 74. In 2002, however, the average retirement age was 62. Average life expectancy in 1910 was around 55, while in 2002 it was 77.

Throughout most of our nation's history, people were expected to work regardless of their age. Only over the last several decades has that changed.

Now it is assumed even if you are completely able-bodied and able-minded, you don't need to work and indeed you shouldn't be required to do so if you reach a certain age and certain number of years at one job. But that is crazy. We can't afford it. As people live longer, they should work longer, be productive longer, pay taxes longer, and be full participants in our nation's economy longer."

As a nation we live longer (at least for now, until Applebee's and SuperWalmart put us all in an early grave) and retire sooner. With an aging population, declining birth rates, stricter immigration, etc, this is a recipe for long-term financial chaos.

Second, why do most Americans spend so much of their health care expenditures in the last three months of their life? Fully 27 percent of Medicare is devoted to spending on end-of-life health (in other words, health care that doesn't work), according to the Journal of the American Medical Association.

Intensive care costs comprise 30 to 40 percent of hospital spending and may continue to grow as the population ages."

As a nation, we need to have an honest discussion on the value of end of life care. If 27% of Medicare costs are going to services that in effect don't work we need to rethink the system. Perhaps, develop some form of pain management to ease patient pain at the end, but as our country ages delaying this conversation only increases the likelihood of financial calamity in the future. However, it's also important to note that there are many, many people with a vested interest in making sure the system does not change - hospitals, employees, etc. - so it's not likely that any hard choices will be made.

Since, it's my blog, I get to edit out the two additional points that the author makes (too many pay no income taxes and it's more profitable to work for the government than to work in the private sector) which I think are not major contributors to our problems, but demonstrate the author's political slant.

Cheers!

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