Philadelphia Reflections

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

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Reflections on Age Groups

Only the age group 20-65 contributes much revenue to health care, but health costs affect every age group. In fact, children and retirees probably run up more health costs than the group paying the bills. Obstetrics and terminal care are among the most expensive services which the medical industry provides, and absolutely everybody is born and will die. Therefore in modern society, one of the most essential services a nation provides is for some mechanism to transfer the medical costs of people who can't work, to other age groups who can. There's nothing hidden or underhanded about it, that's just the way things have to be. The fact that working-age people themselves have fewer illness costs than their dependents is an awkwardness of our present state of scientific advancement, but nevertheless, it makes working folks restless; it tends to destabilize the societal compact, and therefore it is a thing to obscure if we cannot remedy.

But since we cannot make it go away, the problem-solving approach is to make the transfers as painless as possible. It soon splits into two issues: how could we equitably transfer the costs of being born, forward into debt for later repayment? And, secondly, how could we transfer the cost of dying, backward into a debt openly anticipated by every working person? Insurance has already made a start on paying for coming death, so the hard part is to convince the eight-pound squalling infant that he must expect to pay for a birth he never asked for, plus nurturing that may appear to have been deficient? Multitudes of distraught parents of teenagers have decided these obstacles are too daunting and throw up their hands. The fact remains, however, that if we could find a way to do it, the reward would be 26 extra years of compound interest. In our way of calculating at 10%, that would be more than three doublings or eight dollars in return for one. Let's just day-dream a minute. If you have a child a dollar at birth, it would be worth $4000 at age 90. But if you gave him a dollar at age 26, it would only grow to $512 by the time he is 90. The difference is roughly $3500, per person, per dollar.

That amounts to $18 trillion extra dollars if you gave just one dollar to each one of the 4.5 million newborns in America, but at birth rather than compared with age 26, and held it at 10% interest to age 90. Don't bother to quibble about inflation or recessions, or wars, or cures for cancer. The staggering magnitude of the numbers should be enough to convince almost anyone, that it would make a big difference if we could find a way to include an extra 26 years to the remaining life expectancy of the child compared with attributing those 26 years to a child's parents. How in the world could we do it?

Instead of arguing about how much less than $18 trillion it would actually prove to be, because of all sorts of objections, let's agree that doing it would still amount to a ton of money. Let's assume that loans between parents and children are interest-free and that subsidies to poor people of much greater than a dollar are seriously contemplated by every single proposal for health care reform ever devised, and let actuaries and accountants devise proposals for the best way to do it. It requires us to consider lifetime health costs instead of just next year's costs, and it requires both a trustworthy institution to suggest mid-course corrections and a monitoring system which can keep a wet finger to the wind. And it requires an extensive and extended education program for the public, in order to make it inconceivable (as presently it is not inconceivable) that such enormous sums would attract dishonest custodians.

There's a second problem at the other end of life. For better or worse, we have an existing Medicare program which is working reasonably well. Changing it in any way encounters immediate resistance, and indeed changing anything else in the government arouses the suspicion that Medicare will be cut, pay for it.

The most generally accepted way of reducing Medicare costs is to increase the retirement age at least to age 70, and perhaps 75. For one thing, we must not allow a thirty-year vacation at the end of life to become a national entitlement, if only because eventually the rest of the world will figure out how to compete with such an unsustainable model

And finally, we must recognize that a growing proportion of the health costs of the nation are self-inflicted things like alcoholism and drug addiction, to say nothing of obesity and unwise nutrition

(expand the last three paragraphs)


Originally published: Friday, February 28, 2014; most-recently modified: Monday, June 03, 2019