Former Federal Reserve Chairman Alan Greenspan called for the wealthy to pay more in Medicare copayments than average Americans as one way to address the looming financial stress on the system created by the baby boom generation reaching the age of Medicare eligibility.
The maestro of the nations financial policies for more than 18 years through the administrations of four U.S. presidents also said to forget about eliminating financial bubbles unless the medical profession finds a way to change human nature.
Greenspan was the morning keynote speaker on the final day of the 2009 Healthcare Information and Management Systems Society convention in Chicago.
HIMSS CEO Stephen Lieber sat with Greenspan for a brief, public interview session following his keynote speech. Lieber noted that the cost of autoworkers healthcare adds more to the price of a car than the steel that goes into it, then asked Greenspan about the effect U.S. healthcare costs are having on the competitiveness of American companies in the global marketplace.
Greenspan refocused his response, saying that the looming healthcare crisis is more than a problem for manufacturers trying to keep pace with overseas competitors.
In the past, Greenspan said, even though healthcare as a fraction of gross domestic product had been increasing steadily, economic growth in the economy as a whole had been sufficient to accommodate healthcare spending increases and not impinge on other sectors of the economy. Meanwhile, though, the baby boom generation had been aging its way toward Medicare eligibility, creating a funding problem that for decades we have done virtually nothing about.
Now, and in the future, barring an unforeseen, massive increase in overall economic productivity, the baby boom problem, coupled with significant increases in individual longevity affecting the workforce and society, will bring that long period of economic plasticity to a close, Greenspan said. In its place will be a time of tough choices, and that time is close at hand.
If you cannot solve the overall funding, the competitive issue will be quite secondary, he said. The arithmetic is just inexorable.
Even if we had a completely free market in healthcare with no government-funded healthcare programs, there is no evidence that individual choices would create a lower level of spending, Greenspan said.
Ive always argued that the political solution to this is copayments of such a level that it eliminates Medicare subsidies of a certain income level, Greenspan said.
Another part of the mix will have to be rationing of healthcare.
We do, of course, ration healthcare now, he said. I remember when the MRI first came out; the demand was huge in comparison to the number of machines available. Physicians finessed that to make it work. We are going to have to ration in some way or another; but to do that, first, you have to remove the subsidies for healthcare from those who are more fortunate.
Greenspan received a standing ovation at the end of the session.