Cowen on Medicare
I normally agree with Tyler Cowen on most things. Yet in an op ed in yesterday's New York Times and at his blog, he joined a group of people who (a) I like and (b) mistakenly believe you can solve the problem of rising health care costs by shifting them.
Tyler says (a) Medicare is on an unsustainable path and (b) we should means-test it. He is right about (b), as far as it goes; but that does not solve problem (a). It merely shifts the problem from an entity (the government) that potentially has tools to deal with it to people (seniors) who have few tools, if any.
Here's the problem: Health costs are growing at a rate which will crowd out all other consumption in the next six decades. At that point there will be no food, no clothing, no housing-only health care! Clearly this is an impossible path. Along the way, various population subgroups (taxpayers, seniors, etc.) can try to reduce their share of the pain by shifting the burden to others-like a game of musical chairs.
Yet, we will not get off the impossible path as long as no one-neither government nor seniors-is choosing between health care and other uses of money.
