The threat in question re: Medicare and Medicaid is that they grow to
absorb about ten percent of GDP.
On top of everything else, that would propel the U.S. from the bottom of
OECD countries to
closer to the top, in terms of total taxes as a share of GDP (around
40%). Taxes have never
been higher than about 30%. YOu couldn't finance the expansion with
debt because debt &
interest would blow up.
The downside of spending that much is that much of it would be wasted,
going by current
evidence. Problem is that cutting waste can entail cutting worthwhile
spending too.
The most interesting finding floating around, coming from a few liberal
and conservative
econs (Robert Hall and David Cutler), is that for all the waste the
extent of health
care spending is worthwhile in terms of health/longevity benefits, and
the sticky
point, aside from filtering out unnecessary treatment, is how it gets
paid for.
Michael Perelman wrote:
Tyler Cowen is my favorite conservative. Sometimes I
actually agree with -- not very much, but sometimes I
do. Today in his New York Times article he advocates
means testing for Medicare. He acknowledges the
possibility that means testing will make Medicare a
welfare program, causing it to lose support -- but he
suggests that things are so dire we do not have
another choice he does not seem to take seriously Mark
Thoma's suggestion that single-payer could create
substantial cost savings.
I am not sure how big a threat Medicare really is.
Any sane political system would find massive savings
in the defense budget, but sanity is a scarce
commodity. Taxes on the very rich and taxes on purely
speculative activities could go a long way to
supplement Medicare. Unfortunately, such policies
will not be discussed outside of third-party politics.
http://www.nytimes.com/2008/07/20/business/economy/20view.html?em&ex=1216699200&en=79692570ab41cad4&ei=5087%0A
-- Michael Perelman
Economics Department California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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