American Gridlock by H. Woody Brock

Author:H. Woody Brock
Language: eng
Format: epub
Publisher: Wiley
Published: 2011-12-08T16:00:00+00:00

These findings reinforce the understanding that the Social Security funding crisis can be resolved by a combination of relatively painless policy changes aimed at reducing benefits and raising revenues. All that is missing to implement these is leadership.

Conclusion

This concludes our overview of the entitlements crisis. Health-care spending is by far the most serious issue in this debate. I have tried to demonstrate that we can achieve the goals both of expanded coverage and reduced total expenditure (as a share of GDP) provided that an all-out attack is made on the supply-curve of the market. In this context, we have seen that more conventional remedies like “bending the cost curve” and outright “cost control” either have no meaning, or else do not amount to solutions at all.

What matters is total expenditure control, and this is best achieved by shifting out the supply function more rapidly than the demand function. During all the debates about health care over the past five years, I have never once seen this point raised. To be sure, there are those who preach the need for more supply given the looming shortage of physicians that we confront. But it is not enough to propose increasing supply. It is the supply curve that must be the object of discussion. This is not simply an opinion, but rather a deduction from elementary economic principles, as I stressed earlier.

In the case of Social Security, the problem is both lesser in size and much easier to fix. There are several sets of reforms, any one of which would make the program solvent throughout the current century. But one thing is for sure: We are living longer, and we are all going to have to work longer too.

Finally, in keeping with the spirit of this book, I hope most readers will agree that there is nothing Right wing or Left wing in the health care and pension policies that I have proposed. Rather, it is glorified Common Sense 101 and is thus consistent with the fundamental thesis of this book.

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