Monday, August 24, 2009

50 years later we ask did we make a mistake

We are in the throws of a very heated health-care debate in the United States. Some think the system is broken and the government needs to control health care insurance. The opposition raises the question, can we afford the cost to have the government run the health care bureaucracy? Some would ask what track record does the government have in running health care? We decided to move the administration of Medicare to the states because the Federal Government couldn’t manage it. The government passed a Stimulus Package this year of $750 billion; so far we have spent less than $100 million. People blame the inability of the Washington bureaucracy to get the money out.

During the debate we have heard about health care in Canada and England and how good it is to the residents. Some say these two are great examples of health care for all. There is the joke that in Canada that your dog can get a hip replacement faster than the owner. In England the expansion of the private pay health care system seems to be driven by people who want a better quality of care than National Health Insurance can provide.

In an interview with CNBC, Peter Toogood, (yes that is his real name) head of investments for Old Broad Street Research of London, talked about the problems with National Health Service. He said that the health care program in the UK is “unfundable” longer-term. He said that when they started NHS 50 years ago they were figuring that people would live 65 to 70 years of age. He said, “What has happened is that the number of people who are living into their 90’s is placing an incredible strain on the financial resources of NHS.”

NHS says that the increasing demands on the health care system is more a result of evolution rather than a revolution in the UK. They never thought then that people would be living to such an extended age. Perhaps we need to ask in the United States health care debate about longevity as it relates to our health care system. It is clear to me that if we look back at the original intentions on Social Security nobody envisioned the number of people to be covered and the length of peoples lives.

Speaking of Social Security and health care, the trustees of the Social Security Trust Fund are currently contemplating no increase in benefits for the next two years. We do know that the people on Medicare Prescription Drug program will see their monthly cost go from $28 to 30 per month.

Barbara Kennedy, the former Congress Women from Connecticut, says that people need the cost of living adjustment. If the Trustees freeze benefits for two year those on benefits will have less to spend and will have to dip into their saving to make ends meet.

We are facing difficult decisions that have some long-term ramification if we get it wrong. At least one person in England thinks the problem was short-term thinking. As we discuss the issue of health care in the US we need to make sure that we look at the UK as the model analyzing what they did wrong so we don’t make the same mistakes and find out 50 years later.

Dan Perkins

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