Monday October 22, 2001
Seattle—
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Medicaid planners and
other advocates of government-financed long-term care often make their case in the
following way. "America's health care
financing system is grossly unfair," they say. "If
you have cancer or heart disease, Medicare will pay for nearly unlimited medical care. But if you are unlucky enough to have a chronic
long-term illness such as Alzheimer's or Parkinson's, you must impoverish yourself before
you can get any help from the government." Leaving
aside the myriad ways lawyers impoverish their clients artificially to get them Medicaid
nursing home benefits without spending down, the fallacy in this "fairness"
argument is clear. Medicare is far more
likely to disappear entirely in the future than a similar, broad-based government program
to pay for comprehensive long-term care is likely to appear. It just isn't going to happen.
Any doubts
one might have about this conclusion are removed by a new study on the global aging
crisis: "Global Aging: Threat to Growth." According to a press release from the Center for
Strategic and International Studies (CSIS):
"Aging
and depopulation in coming decades threaten to overwhelm social security systems and
undermine growth in the developed countries, perhaps leading to a new era of global
financial instability. To avert economic
crisis, nations should convert social protection schemes from pay-as-you-go [e.g. Medicare
and Medicaid] to market-based financing [e.g. long-term care planning products such as
insurance] while pursuing coordinated strategies to increase labor force participation and
enhance productivity, according to a majority report by the CSIS Commission on Global Aging.
"The
international commission, composed of 86 political leaders, business and nongovernmental
organization executives, and policy experts, outlined a multifaceted program of policy
reforms to social entitlements, private pensions, labor law, financial services, family
policy, immigration, civil society, and international diplomacy. The panel, chaired by former Japanese prime
minister Ryutaro Hashimoto, former U.S. vice president Walter Mondale, and former Deutsche
Bundesbank president Karl Otto Pöhl, offered 55 recommendations at a conference in Tokyo
on Aug. 29. The report can be accessed at
www.csis.org."
. . .
"'With
a high degree of consensus, the Commission found that the challenges of global aging are
fundamental, unprecedented, and potentially destabilizing to global prosperity. Urgent corrective actions are needed in order to
avert more painful consequences later on,' the report states. . . . The
Commission's recommendations, which had to be approved by 75 percent of its members,
include pension system reforms and economic restructuring.
"Pension
Reforms. To avert fiscal crisis and assure
the adequacy of global savings, the Commission called on developed nations to do the
following:
"*Gradually
replace pay-as-you-go financing with market-based financing, supplemented by a contingent
state guarantee of 'adequate' minimum benefits.
"*Gradually
reduce pension benefits where 'excessive' levels of income replacement preclude the need
for individual saving.
"*Establish
funded employer-sponsored pension plans in nations where they do not now exist; manage
them according to 'prudent expert' fiduciary standards without restrictions on
cross-border investment.
"*Increase
the pension eligibility age in correspondence with gains in life spans.
"*Encourage
the adoption of funded social security systems in the developing world.
"Economic
Restructuring. To promote economic growth in
an era of stagnant or shrinking working-age populations, the Commission called on
developed country governments to do the following:
"*Restrain
mandatory retirement.
"*Eliminate
incentives to retire or to remain jobless from social protection schemes.
"*Adopt
protections against gender and age discrimination in the workplace.
"*Increase
flexibility in labor markets by reducing regulations that prevent employers from
discharging workers and freely contracting with workers.
"*Integrate
immigration policies into a long-term strategy to assure adequate labor supplies. Make it
easier for non-native residents to achieve citizenship or permanent residency. Promote tolerance of non-native cultures or races.
"*Adopt
regulatory reforms designed to introduce or expand competition in sectors of the economy
where market forces are now limited-especially in services.
"*Provide
tax and in-kind benefits for child and elderly care.
"*Provide
financial support and favorable tax and regulatory treatment for research into industrial
and technological innovation and for the development of human capital."
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