I'm going to try to lay out the stresses pushing and pulling
on the
And I'm going to apply a bit of a curve to the analysis, to account for the uncertainty surrounding the banking sector. (By that, I mean that we don't know yet whether the private-sector crunch will abate, not abate, partially abate, or sectorally abate.)
In the medium term, the
As people age, they tend to consume more healthcare with
each passing year. In the
This is mandated consumption. There is a firm expectation that rationing healthcare for the elderly is not an acceptable social outcome. Therefore we need to fund the spending.
There is also a firm expectation that no one may receive a level of care that far exceeds what is available to people without wealth. We may argue this point until we're blue in the face, but I won't waste my time. Social justice is non-negotiable. Therefore, some amount of income redistribution is inevitable.
It's helpful to model the rise in health spending as a percentage over current consumption levels. It would be ideal if we could simply add future health spending on top of today's consumption. Given that, you could project roughly how much economic growth we would need.
The long-term average growth of the stock market (a proxy for nominal economic growth) is perhaps 6%, maybe a bit more. That's an encouraging number, but real (inflation-adjusted) growth has tended to be more like 3%. (At this moment, of course, the economy is SHRINKING at about a 6% rate.)
Real growth is a better match for health-spending than
nominal growth because health spending is mandatory. It doesn't respond to
price signals because healthcare in the
Therefore, under historic expectations, we'll face an inflation-adjusted gap in health spending, between its rate of growth and the economy's rate of growth. We'll need to fund this gap by displacing other consumption. Our standard of living will NECESSARILY fall by the amount of the gap.
How big a gap? Well, say an elderly population spends 10% more on healthcare than a young one does. (The percentage will rise to a peak in about two decades, as I said, and then decline again.) The spread between 10% and trend-line growth is about 7%. That's a rough working guess for the average decline in living standards we'll need to suffer. Our children will not feel as wealthy during their adult lives as our parents felt during theirs.
We can make this problem better by encouraging economic growth, by making the economy more efficient (productive), or both.
We can grow the economy organically, or by importing capital, or both.
Unfortunately, the pressures on the economy are toward shrinkage rather than growth. Part of this is structural, because the redistribution necessary to achieve socially-just health spending will reduce efficiency by weakening incentives to produce more. That's unavoidable.
However, there is also a stated desire by the new Administration to shrink the economy even further by aggressively reducing incentives to produce even more, in the form of higher taxes on business, capital, high incomes, and energy use.
The Administration has explained this policy in terms of reducing our dependency on capital importation. The role for the government in all of this is to effectuate the redistribution of healthcare spending, which would not take place in a free market. They need money to do this, which they can get by taxing or borrowing more domestically, or by borrowing the savings of other countries.
There is clearly a point at which foreign investors will be
unwilling to fund our external deficits. But it seems to me that a policy of
encouraging strong organic growth would actually make it much easier to fund
fiscal deficits, partly because more money would be available from the
The Administration disagrees with me, but they may change their minds after a few years of too-low growth. Or the people may decide to change the Administration.
Now the Administration is full of very smart people. They can read these tea leaves as easily as I can. There's thus at least a possibility that they've chosen the path of weakening the private economy deliberately. That could make sense if their goal is to make fully-socialized healthcare politically easier to achieve by discrediting free enterprise.
So the ultimate outcome depends on the rate of economic growth. We will see a necessary reduction of living standards as healthcare spending displaces non-mandatory consumption. If strong growth returns, the blow will be less painful. Otherwise, it'll be more painful.
The sad, very sad part is the our elected officials are not very open with the people. SO many people have no idea how other systems work. I fear that many people think a national plan means no out of pocket costs, no private insurance and minimal taxes.
Would people feel different if they knew that Germany taxes the employer about 7% and the employee 7%. That Germany has a system that private insurance purchasers get better service?
Would they feel differently if they knew Canadians have out of pocket costs; that drug coverage varies from province to province. Would they feel differently if they knew Canada has new insurance products that help people beat long waiting lines. "People who paid up to $1,400 each to reduce their wait times for MRIs and other diagnostic services"
Would they feel differently if they were told tales of the British NIH?
"Hard-up hospital orders staff: Don't wash sheets - turn them over
Cutting costs - Good Hope Hospital
Cleaners at an NHS hospital with a poor record on superbugs have been told to turn over dirty sheets instead of using fresh ones between patients to save money.
Housekeeping staff at Good Hope Hospital in Sutton Coldfield, have been asked to re-use sheets and pillowcases wherever possible to cut a £500,000 laundry bill."
Instead the media doesn't play it straight so that people can make well informed decisions but instead are presented with the idea that national health is a panacea, that somehow national health is free.
Eventually the masses will catch on but it will be too late. Any private system will have been dismantled and all that will remain is don't change the sheets just turn them over.