Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Old Age
New topic 2019-04-09 16:04:33 description

Insurance-Like Financial Retirement
There are other ways to support retirement, but most retirement plans before the public are based on the insurance model.

Here are some insurance-like ideas to add to the discussion. The longer we dither, the more we get driven toward ways to have many healthy people support the cost of a few sick ones, the insurance model. We need a better balance. Curing disease lengthens longevity, but it also provides more opportunity to get sick again. We can't be sure what that will do to overall costs. The possibility exists that research has first selected the low hanging fruit. That is, treatment and research for the few remaining diseases may become progressively more expensive, thereby increasing costs as fast as, or faster, than extended longevity reduces them. We are forced to gamble that curing common diseases will further reduce costs, knowing it may not. Among other things, we need to make extra longevity more worth-while.

The Economic Consequences of the Health and Retirement Savings Account

John Maynard Keynes invented the science of macroeconomics after the First World War, and since then everybody seems to hate the subject. But after proposing a radical change in medical finance which involves eighteen percent of the gross domestic product, it is time to reflect on where it might go.

Politically, a spread of Health Savings Accounts would make everybody an investor, and therefore more sympathetic toward investing. But the same idea was applied to affordable housing, and it caused a major economic crash in 2007, with real estate getting the worst of it. It taught us if there is a crash, it's hard to sell your house, so it's hard to move to a place where jobs are plentiful. So it follows if everyone is an investor, people will love you when the market is up, hate you when the market is down, but the worst part of it will probably be quite unexpected.

For example, executives are clearly overpaid because the stockholders are too remote to have their vote matter. A spread to stock index investing might reawaken legislation to give the stockholders more power, or it might stimulate the German system of placing union members on the board of what is often a family-owned business. It's hard to know what to think about that outcome.

My own prediction is increasing ownership by patients will act as a counterweight to drug and medical device prices, but will also restrain government regulation of those industries. The public wants low prices, but it will in time want higher profits in those companies. Perhaps some way can be devised to put those motives into balance for the benefit of all.

The same conflict exists with health insurance companies and other corporate medical enterprises. And yet, with the quick passage of the McCarran Ferguson Act, the insurance companies emphatically endorsed state regulation over federal for insurance. Would the public be the pawn of big corporations, or would the reverse happen? Hard to say, so we might as well just watch to see.


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