The Death of Birth — Our Dismal Fertility Rates

Through Collapsed Fertility Rates, We Are Self-Exterminating

Universal Health Insurance and the Coming Crises in Transfer Programs

On September 17, 2007, Hillary Clinton announced her proposal to provide health insurance for every American.

Clinton is not alone in forwarding such a proposition. Democrats John Edwards and Barack Obama had already fielded similar initiatives. In addition, universal health care is mandated by states such as Massachusetts, while California’s Republican governor, Arnold Schwarzenegger, supports a similar idea. Republican presidential candidates, on the other hand, tend to focus on changes in the tax code, to allow individuals greater latitude in purchasing health insurance. It would be hard for a presidential contender not to address the problem of the medically uninsured. There is, however, a problem with plans to create any new transfer program…

The cost.

Clinton claims that $110 billion per year will cover the 47 million currently uninsured. That averages about $2340 per year or roughly $200 per month per person. A quick glance at the cost of insurance, when one is paying with an employer, will show this to be an optimistic estimate of the costs. My wife and I and her employer currently pay significantly more than this to cover us through her work.

But let’s give Clinton the benefit of the doubt and suppose that she can figure out a way to cover the uninsured with such atypical government efficiency. That still adds up, in just 10 years, to an additional $1.1 trillion – for a nation that is already bankrupt.

Unfortunately for Clinton and the others who are proposing such additional expenditures by the federal government, Alan Greenspan, former chairman of the Federal Reserve, has a new book, “The Age of Turbulence: Adventures in a New World.” As can be seen in this (unfortunately poorly transcribed) interview of September 17, 2007, Greenspan makes it clear that the biggest problem facing the US economy is our extant commitment to transfer programs, especially Medicare. To get an idea of how large the Medicare crisis is, consider the fact that the program’s budgetary insufficiencies will exceed those of Social Security. And according to the Treasury Department, whose general assessment is shared by many economists, Social Security faces a $13.6 trillion shortfall.

According to Greenspan, “we either are going to have to raise taxes very sharply or cut benefits by half.” He goes on to say that prudent policy “would be to adjust the longer-term now, not when it becomes a serious problem for people who have already retired and are told after the fact that they will not be getting the real Medicare that they expected.” We can address this problem in the near term — before we reach a crisis point — by raising taxes (a solution that Republicans generally loathe) and by reducing benefits (a solution anathema to Democrats). And that is just to address our current shortages, without additional entitlements.

A sad irony is that those in greatest need are those who will be hurt the most by the unfulfillable promises. These are the people whose votes are being purchased through such false hopes. People need to be more self-reliant, to care for their own health and to rely on each other rather than the government, which is already drowning in liabilities. A bankrupt US won’t be bailed out, because every other developed nation on earth faces financial crises as a result of collapsed fertility rates — fewer taxpaying workers to support the coming tsunami of retiring baby boomers.

Another irony is the fact that higher taxes, which will be necessary to cover even reduced costs of current programs, will mean that young workers will be less able to afford children. A dramatic increase in taxes may well send the nation into a feedback loop, in which higher taxes lead to lower fertility rates which lead to higher taxes and even lower fertility rates. The loop may become a spiral — a death spiral — and large, new, expensive government programs will only exacerbate the problem.

The idea of universal health insurance is certainly attractive. It would be wonderful for our society to provide such protection. Unfortunately, we are already broke. The longer we wait to raise taxes and reduce benefits, the harder the adjustment will be.

In the words of Alan Greenspan, “I think it’s unethical and immoral for a government when confronted with these types of events not to take action. What do we elect people for?”

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