Thursday, May 28, 2009
Parts Is Parts
Over Memorial Day weekend, my brothers and I hosted a big hoopla for our father's 90th. He lives in south-central Kansas where the air is pure, the water clean and the politics slightly right of Kubla Khan but just left of Genghis. We grew up in the same small town where Pop still lives. We are three sons of the high plains, a phrase that sounds like a B-western singing group.
Our father is still a very active camper. He is an insurance consultant (part time), a church choir baritone, an independent resident of a retirement community and a daily golfer (unless there is snow on the ground, tornados touching down nearby or steady rainfall greater than one inch per hour). As much as he ever had them, he retains all of his marbles. Part of his longevity success has been the replacement of critical body parts: knees (both), hip (left), arterial stents (couple), urinary tract mechanical sphincter (original plus replacement) and so forth. Since he has been older than 65 for the past 25 years, Medicare has picked up the great bulk of the expense associated with his renewal projects.
Proving that the fruit doesn't fall far from the tree, I am having a brand new titanium and stainless-steel left hip inserted into my-own-fruity-self on June 1. The surgeon appears to be no older than 17 but he assures me that he is fully qualified, certified and insured. The good news for you readers who still pay taxes is that I am not yet old enough for Medicare to pick up the tab.
As some of you already know, if all of the Baby Boomers were asked to line up based on birthday and year, with the oldest at the head of the line, I would be right up at the front with the other January 1946 (year one of the 18-year generation) geezers while Barack would be way, way back in the 77,000,000 person queue. This line of Americans will begin to depend on Medicare for replacement parts starting year after next. I could have waited until then but my intake of Advil during that time would likely pickle my liver, yet another medical expense to present to the taxpayers. That, plus I am a sensitive, altruistic guy who wants to get back to pole vaulting soon, my exercise of choice.
New body parts are expensive. Multiply "expensive" by 77 million and you get a truly impressive number. How impressive, you ask? Let's see now, multiply the 7, carry the 2....hmmmm. Yowzer!
Medicare money, which comes out of the government's general operating budget, has a projected shortfall of $80 trillion. How big is $80 trillion you ask, your eyes glazing over like they always do when very large numbers are presented? Here's a nifty comparison: all of the personal property in the U.S., houses, land, office buildings, cars, mink muffs, Rolex's, lawn tractors, art, iPods, Wii's, etc. is valued at $50 trillion. Everyone in the country could sell everything that they own (to foreign buyers because we can't sell it to each other else we would still own it) to pay for Baby Boomer Medicare expenses and we would still be $30 trillion short. Sorry Barack, your new hip is on hold because the guys at the head of line used up the money.
The entitlement shortfall is not a problem that can be tweaked to a solution. Trimming around the edges, paring a few hundred million here and there, extracting a $2 trillion pledge that "we promise (but don't guarantee) to do better over the next 10 years" from the hospitals, doctors, big pharma, medical equipment manufacturers and insurance companies amounts to chump change. It's akin to asking the 800 pound gorilla to trim down to 768 pounds knowing that we don't have room for a gorilla of any size.
Here's one solution, immediately increase payroll deductions for Medicare by 134%. Don't care for that one? O.K., hows about we immediately decrease Medicare benefits by 53%? Not to your taste either? We could ask every other Baby Boomer to off themselves prior to their 65 birthday ("Ask not what your country can do for you..."). I'm sorry, but you and your elected representatives (those unique mammals that mysteriously lose their spines upon arrival in Washington) will have to make a selection from this list or come up with some combination of the three that equates to the same outcome.
Oh, wait, I forgot the fourth choice, reigning in medical cost inflation from its current rate of about 7% annually; perhaps, you know, keeping it in line with actual cost-of- living increases which are currently 1.3% per year. Heck, we should probably allow for 3% annual health care cost inflation just to keep the industry happy. What, you don't think that the health care players would be happy with revenue inflation of more than twice the rate of the actual cost-of-living increase? Why not? Greed? Wall Street demands? Stupidity? The public demand for Rolls Royce health care for the price of a Kia and leave the grand kids to pay the difference? These are, as some of you have likely noted, rhetorical questions, each of them containing a kernel of truth. This begs the question, why do we pronounce "kernel" and "colonel" exactly the same? Very odd, that.
Dealing with health care cost inflation is the biggest piece of the Medicare liability puzzle; not all of it but the largest by far. The solution(s) for what is best for the health care of all U.S. citizens at prices that reflect sustainable reality will be at odds with the financial interests of many in the health care industry and likely at odds with some of your self-interests. We can either (1) all dig our heels in and slowly be pulled into the abyss in this financial tug-o-war with the gorilla or (2) educate ourselves about the actual alternatives and support the ones that will work, even if we have to hold our noses, or better, make some shared sacrifice.
Observoid of the Day: Health care cost reform is not an ideological problem, it's a math problem.