Thread: The economic crisis hastens an entitlement crash.

Busting the Safety Net PDF

The economic crisis hastens an entitlement crash.

By Charles Hugh Smith
March 01, 2010 Issue

Three decades ago, angst over the looming insolvency of Social Security reached fever pitch. President Ronald Reagan responded by grasping the third rail of American politics long enough to add decades to the entitlement’s solvency by increasing the taxes employers and employees paid and by incrementally extending the age of retirement from 65 to 67.

In the years since, the sprawling Medicare/Medicaid system has replaced Social Security as the emblem of impoverished entitlements. Despite duly repeated warnings that the program is unsustainable—or perhaps as a result of those constant cries of “wolf!â€

Medical costs are still "all over the map." Minimally invasive surgical techniques hold the promise of dramatically lowering the costs AND recvovery time for numerous operations, so there should be a wider acceptance of these procedures. Of course, not all cases lend themselves to minimally invasive practices, but a lot of the holdup is simply inertia.

However, as those costs become lower ( and of course you have to factor in the cost of new equipment, which for some procedures is very high) I would not be surprised to see other costs being rapidly inflated to offset declining hospital revenue. Personally, I had an upper GI exam in 2002 and the cost was about $600. Six years later, at a different provider, this was charged at $2400. Why the big difference? I should a got a two for one because they did the other end, too.

To get more efficiency out of the new equipment that does minimally invasive procedures, perhaps they need to make use of them around the clock. I would bet there are other ways to shave costs----but realistically expect a backlash from whichever third party providers start losing the easy money. That seems to be in the nature of Americans.

Something else that would bring costs further down---and a few insureres have resorted to this tactic, but I have no idea how the feds would be able to do it---is to outsource medical care. "Medical tourism" is catching on as a way that many people significantly reduce their medical or dental expenses. There is even an excellent book "Patients Beyond Borders" that has numerous tips on just where to go to get the specific treatment you need at First World Standards but Third World Prices.