Fiscal Cliff or Fiscal Abyss? An economist's view

CANADA: A giant amount like $205 trillion juxtaposed with transcendental meditation and a sharpened attack at real cost drivers in healthcare loads. That's how this economist-cum-ethics advocate interprets the current dilemma and debate on federal healthcare issues.

As he shares excerpts from his tentatively titled book ‘Resolving America's Economic Quagmire... individuals gaining inner fulfillment is the key', Ron Robins seems to be taking his deep concerns about America's economic and financial problems to a pragmatic level through his formula which is an interesting mix of economics and human consciousness or ethics.

Professor Kotlikoff calculates this fiscal abyss of the U.S. Federal Government as an astounding unfunded liability of$205 trillion. It equals a current debt of about $665,000 for every living American adult and child.

And most of this sum pertains to health care. The health care costs quagmire poses a financial deathblow to the U.S. economy and its citizens.

To avert this calamity, America's health care system will be revamped, Robbins outlines as he starts his latest post.

Notwithstanding Obamacare, one way will be to re-organize the health care system according to well-studied methodologies that show huge potential cost savings. While another way-garnering increasing attention-is by utilizing scientifically validated disease prevention interventions such as the Transcendental Meditation (TM) program. Also, many political leaders, economists and others, believe there will need to be substantial reductions in health care benefits as well, as the post explained.

Interestingly, by deploying the known methodologies and interventions inferred to above and written about below, it might not be necessary to reduce benefits yet still be able to cut health care costs a stunning 50-80 per cent!

Robbins highlights some major health care cost drivers like the increasing incidence of chronic disease in an aging population, relatively fewer workers to pay for increasing costs, exceptionally-high professional fees relative to other developed countries, a huge oversupply of services, equipment and administration costs and fraud factors.

He also notes that over half of Americans have chronic diseases. Yet, despite significant improvements in treatments for chronic diseases, their incidence and related financial costs continue rising dramatically.

Actual costs of America's seven most common chronic diseases-cancer, diabetes, hypertension, stroke, heart disease, pulmonary conditions and mental disorders-have been estimated at $1.3 trillion annually by Ross DeVol and colleagues, or about 10 per cent of gross domestic product (GDP). Their unique and original study quantified almost all related costs to employers, governments, and to the U.S economy. They say those costs could reach $4.2 trillion by 2023.

 

As he cites aptly, numerous researchers cite the growing incidence of chronic disease as mostly due to aging. However, many in the medical field also believe that more important than aging are the unhealthy lifestyles, diets, and behaviors of most Americans. And this is another area where the TM practice can be highly beneficial. Aside from its well-documented physical health benefits, TM creates an ‘inner fulfillment and self-sufficiency' that alleviates the desire for the kind of instant gratification (with bad lifestyles, diets, etc.) that cause much chronic disease.

Another argument he raises is that of relatively fewer workers paying for increasing health care costs. Between 2012 to 2050 the United Nations predicts the U.S. labor force having far fewer workers (aged 15 to 64 years) for every American over 65 years-down from 5 to 3 workers over that period. He also mentions exceptionally high professional fees compared to other developed countries and administration costs and fraud as major factors.

"American health care administrative costs (at roughly seven per cent of all health care costs) are roughly double those of other developed countries, says Mark Pearson, Head, Health Division, of the OECD. And the Federal Bureau of Investigation calculates that fraud costs the health care system about $80 billion annually-or about 3 per cent of all health care expenditures." Robbins highlighted in the blog ‘Enlightened Economics'

He advises that resolving the health care financial quagmire and avoiding its potential financial deathblow requires unparalleled changes to the health care system and Americans' attitudes about their health and health care. It requires reforming the health care system by implementing known cost-effective modalities. It means introducing scientifically validated cost-saving disease prevention programs such as the TM technique that create an inner fulfillment and self-sufficiency that engenders improved personal psychology, healthier lifestyles, diets, and so forth.

Implementing these recommendations could cut U.S. health care costs by 50-80 per cent and improve health outcomes-all without reducing benefits, as he reckoned.