Lifetime Healthcare and Retirement Accounts (Future HSAs)
New topic 2016-03-23 17:06:36 description
Some ruminations about health financing, written while we wait for the Supreme Court to announce its decision on King v.Burwell.
FRONT STUFF: Health Savings Accounts: Planning for Prosperity; SECTION ONE: HSA and its Competitor, in Brief
Editorial material for book construction.
Healthcare Reform: Looking Ahead (2)
The way to make certain you have enough -- is to have too much.
Let me say at the beginning, what could be repeated in a summary: The present healthcare dilemma has three interlocked parts, scientific, financial, and political. The scientific component is capsulized by three symbolic life expectancies: in 1900: age 47, today: age 83, and fifty years from now: age 100. We're living a lot longer, and soon expect the population to divide into thirds (one third getting educated, one third retired, and one third working to support the whole population. It probably won't work very well. Most health reforms amount to finding some way to shift income from the working third to the other two thirds.
The main scientific problem in the past was to avoid dying too young. But the problem in the far future will be living too long, running out of savings. Right now we can imagine having both problems, and few can guess which problem to fear. Maybe there is enough money for one of those two life terminations, but we don't have enough money for both of them, for everyone. We would have to give up something else, like national defense. Let's try to use the same money twice, if we can.
Finance. The payment systems need to be more interchangeable for alternative uses. But be careful. This could seemingly lead to merging Medicare and Social Security (some day) into one interchangeable program. Interchangeability of funds might plausibly seek to be at the family level instead of over-reaching to the level of demographic groups of whole thirds of the population. We do need to devise ways to transfer from one stage of a person's life to another, Saving for a Rainy Day, as it were. Some solutions will inevitably turn into problems. Proposals to integrate all health care into one vertical single-payer medical system would likely clash with more useful integration of Medicare and Social Security. These arguments can possibly wait for a later time, but only if we recognize they remain undecided. Generally speaking, they translate into recognizing that it is easier to shift money than people. Governments regard such shifting with indifference, but we train children from birth to be possessive about their own money. And we elect politicians to see the difference.
Both the insurance spread-the-risk approach and the government pooling process skirt the difficulty there is not enough money to cover both possibilities for everyone. Either to borrow or insure, postpones repayment for a while, that's about all. Meanwhile, healthcare costs are subject to more sudden changes in greater ranges than the economy as a whole.
Finally, let's see if we can put these shifts to work, and get some extra money from investment income, with compound interest working its magic over the whole expanse.
Politics. Meanwhile, we move toward a time when voters who earn money aren't sick, and the sick voters don't earn money. But they all have a vote. Already, we conduct transfers of money on a scale people may rebel against. It must become their own money, in their own accounts, spent later on themselves -- rather than forced transfers between demographic groups. At most, we might try extending that to the family unit, and even that should be kept as voluntary as possible.
Constitutional equal justice tends to make political solutions resemble one-size fits all.
So that's the general nature of our problems. Healthcare does become less expensive in the long run, even though more expensive in the short run. And through recent advances of financial management, Health Savings Accounts can generate surprising amounts of extra money on their own, overall helping with the other problems. The abstruse issue of inflation also arises here, where you might not expect it, because if trillions of dollars eventually migrate into passive investments through Health Savings Accounts, the elderly will hold shareholder voting rights they would be unwilling to surrender. The course of further inflation, the main concern of the elderly, would shift toward the hands of savers, away from borrowers. Unfortunately, what the proper balance is, isn't yet clear.