The Obamacare fiasco might, unwittingly have caused a national focus on the profound incompatibility between the 20th century health insurance model and 21st century health insurance needs. Whether the web site is ever fixed or the President’s “un-kept” promise can be “re-kept” as former President Bill Clinton is urging, are all marginal to the underlying truth about whether insurance can work in an era when there are more of us over 60 demanding huge amounts of care than in any other single demographic cohort
It’s simple arithmetic, which President Obama seems to have forgotten: Insurance only works when the amount paid in is more than the amount paid out, a point made not too long ago by the venerable Martin Feldstein and reiterated to the President by none other than the CEO of Goldman Sachs, Lloyd Blankfein, when he remarked ““If the money doesn’t flow in, then the money doesn’t flow out.” Which is also why virtually every government on the planet is equally troubled by the 21st century health demands pressuring their insurance schemes.
From the UK--ground zero of national health--to China health insurance is broke. In the UK, a British citizen can now “opt out” and still draw on the system, which is another way of admitting the system that worked in the 20th century is unfit for the 21st. In China, a national goal embedded in its current five-year plan, is to bring over 90 percent of its care from its state-run institutions to the home. Nor is it surprising that Japan’s economic malaise – now running more than two decades – is correlated to having the oldest population on the planet; in a few years close to 40 percent will be over 60.
A 20th century insurance model cannot work in the 21st century that is overwhelmed by three profound drivers changing the basic economic and social dynamics of our time.
- An aging population with exploding health requirements.
- A huge growth in availability of innovative technology and medicines.
- The information revolution where more of us on the planet know about and demand to be treated by the medical innovation now available.
Apparently, President Obama and his geniuses didn’t get the memo about how markets function. Of course that’s not an excuse for taking America down an insurance path which is doomed.
