2003 July 07 Monday
Robert Samuelson On The Growing Burden Of Old Age Entitlements

Robert Samuelson sees the Medicare drug benefit as making a bad situation even worse as old age retirement entitlement costs will saddle younger generations of Americans with much higher taxes and fewer government services for themselves.

Almost everyone ignores the long-term consequences of short-term actions. Even without a drug benefit, Medicare spending is projected to more than double by 2030 -- the result of more retirees and persistent increases in health costs. The new drug benefit adds roughly another 20 percent by 2030, says economist Jeff Lemieux, who did forecasts for the National Bipartisan Commission on the Future of Medicare.

Unfortunately, this estimate too is probably low. The congressional drug plans are so confusing -- and possibly unworkable -- that they invite future expansion.

The big inter-generational shafting is something that is rarely discussed in American political debates. The pyramid scheme has run so long that many liberals have decided that it must be indefinitely sustainable and that to think otherwise and impose reductions in future benefits now is heartless and cruel. Also, the liberal press loves medical entitlements because they favor nationalized health care. Most old folks and most of those soon to be retired are more worried about what they will get than what the long term consequences will be.

Am I being unfairly harsh to liberals and old folks? I don't think so. Most of the arguments that seek to defend the current course we are on with old age entitlements have at their base the assumption that the will of the people as expressed thru elections in representative democracies can not possibly be incredibly wrong. If the elected officials grant some desire the wisdom of the people has spoken. It is acceptable in our era's political discourse to say that this or that dictator is evil and doing terrible things. It is fair game to find huge character flaws and misjudgements in individual elected officials (especially if they belong to the opposite political party). But the voters as a whole manage to avoid the amount of criticism they deserve mostly because of a widely embraced mystical belief in the wisdom of the masses. Surely the masses couldn't be incredibly wrong or incredibly unfair could they? Yes, they could and they are.

There will be no big reform of Social Security or Medicare. These programs will be managed in crisis mode with growing numbers of retirees voting to increase taxes on those who are still working each time either program starts to run out of money. There will be rises in the eligible retirement age. But those rises will come too late to prevent a long running crisis in old age retirement program funding as the pyramid scheme becomes unsustainable.

Share |      By Randall Parker at 2003 July 07 02:24 AM  Economics Demographic


Comments
Fly said at July 7, 2003 9:14 AM:

FuturePundit documents the amazing progress occurring in the medical and biotech fields. It seems clear that the world will be quite different by 2030. Are predictions of a future Social Security/Medicare nightmare meaningful considering the technological and social changes coming?

Here's a different scenario. Better technology leads to more effective and cheaper medical intervention using highly refined drug and stem cell therapy. The cost for this treatment rapidly drops due to scaling efficiencies of drug development. It shouldn't cost much more to treat the entire populace than it does a rich minority. (Unlike non-drug treatments whose costs are covered by Medicare now and don't scale.) Guaranteeing an enormous market for these drugs by helping seniors and poor with co-payments should accelerate development. In the long run total medical costs might even decline as diseases are cured rather than slowed or arrested.

New technology may delay or reverse mental and physical decline so more people will defer retirement. Retirement might be viewed as a personal choice. As people live longer in good mental and physical health few people (young and old) will be willing to support a growing elderly leisure class. Social Security retirement benefits will be reduced. A senior wanting more could go back to work.

The world is changing so rapidly that setting major political policy by projecting today's medical cost structure ahead for the next twenty-five years may not be wise.

Randall Parker said at July 7, 2003 10:56 AM:

Fly,

Yes, eventually rejuvenation therapies will reverse aging and increase useful working life. But when? If that is how we are going to save our working age adults from becoming slaves working to support a massive old age retirement home economy then we ought to be working much more vigorously now to develop rejuvenation therapies.

As it stands now medical research is far too oriented toward developing treatments toward specific illnesses. Very little funding goes into developing aging reversal therapies. Now, we are lucky to a certain extent because general advances in biotech that, yes, I do document on FuturePundit, will make it far easier to develop aging reversal therapies. But there are some key potential aging reversal therapies which currently are not even being worked on at all that need to be if we are going to get aging reversal therapies before the retirement of the baby boomers bankrupts the country. For instance:

  • Xenohydrolases to "throw out the trash". Use gene therapy to introduce enzymes that are used in lysosomes of other organisms (probably from fungi) that may be able to break down accumulated junk that our own lysosomal enzymes can't break down.
  • Gene therapy to move mitochondrial DNA to the nucleus.

If anyone else is interested in the possibilities to reverse the aging process then see my Aging Reversal archives on FuturePundit. Also, see Aubrey de Grey's web site at U Cambridge to learn about Strategies for Engineered Negligible Senescence (SENS).


Fly said at July 7, 2003 1:13 PM:

Basic research aimed at developing treatments for diseases such as organ failure (heart, liver, pancreas, etc.), mental illness (Alzheimer’s Disease), auto-immune diseases, and cancer should have direct application to delaying and reversing mental and physical deterioration. The biotech tools developed to treat diseases will be applied in rejuvenation strategies.

The first rejuvenation treatments might be discovered during attempts to cure specific aging related conditions, e.g. baldness or wrinkles. Common deterioration in mental acuity might be cured using treatments developed for dementia. Such partial rejuvenation based on patchwork fixes to specific conditions should be available in the next twenty years and not require major change in research priorities.

I applaud the efforts of researchers such as Aubrey de Grey and hope they receive more funding. (I look forward to reading about the Methuselah Mouse Competitions.) However I doubt that a breakthrough allowing me to live an extra twenty years will come from this research. (However the pay-off is immense so the long shot should be funded. Besides it is great basic research. I wanna know how this stuff works!)

In thirty years true rejuvenation therapy may not even be desired. Why be satisfied with restored youth when the technology allows bio-mechanical enhancement? Why repair your old system when a new one is so much better?

Rather than fight social pressure to provide more medical services to the poor and elderly co-opt those forces and let them carry you to the future you desire. The need to reign in spiraling health care costs could lead to increased funding for preventative health research. (Rejuvenation is the ultimate preventative medicine.) It might be an opportunity, not just a problem.

Randall Parker said at July 8, 2003 4:20 PM:

Fly, I agree that the disease-focused approach to the development of therapies will eventually lead to rejuvenation therapies. However, a direct approach to the development of rejuvenation therapies will yield quicker results. There are some rather low cost therapies that could be developed more rapidly such as Alteon's ALT-711 but too little money is available for these approaches.

Mental aging: We need the ability to get the junk out of cells. Tangles that accumulate outside of cells look like they will be amenable to vaccination-immunization therapies. But intra-cellular junk accumulated in lysosomes will be a tougher nut to crack. Eventually work in specific neuronal diseases may lead to the development of such therapies once the intracellular junk is more clearly seen as the cause of more brain disease. But until then the development of intracellular junk disposal therapies will go underfunded.

Biomechanical enhancements: Well, I want to keep my brain. Parts replacement for organs is acceptable. But I want to keep my original mind. That means therapies that can rejuvenate existing cells.

Patrick said at July 8, 2003 6:07 PM:

Why is it that so few science fiction futures involve a gerontocracy?

Any projection of the future that does not involve democratic dominance by those over the age of 65 needs to explain why not.

And I'm afraid I don't really see why anything short of the cheap ability to rebuild entire bodies as new (well maybe as 21 years old) will reduce medical costs. All other technologies have made vast improvements, and sure you can get the equivalent of say a 1900 $45 000 horseless carriage these days for about $1000 (see the streets of India). But peoples expectations keep going up.

Cheap replacement of entire bodies will happen. But not by 2030, and that's the problem date.

Randall Parker said at July 9, 2003 11:11 AM:

Patrick, The biggest flaw with science fiction placed in future centuries is that it contains physically old people. Aging will become fully reversible in the 21st century. Also, artificial intelligences will become commonplace.


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