The attached graphic demonstrates the need for the conversation - - health care spending as a percentage of GDP outpacing education spending. The graph is just the tip - - 28% of Medicare spending is to recipients' final year of their life. To put our obligations to the past and our dreams about the future into perspective, remember that our entitlement spending equals India's GDP -- a huge component of our economic engine looking in the rear view mirror (The other problem we face is basically the reason Bernie Madoff is in prison - - since Social Security's creation in 1935, life expectancy has increased 26%, to age 78, while the system's normal retirement age has gone up just 3%, to 67).
How we manage Medicare and Medicaid is the biggest challenge the U.S. faces in terms of national solvency. Our ability to overall an out of control health care delivery "non-system" - - especially how we think and manage the end - - will directly influence and dictate our options regarding the need to make future investment decisions.
Health care delivery in the U.S. is a "non-system" -- where 2,500 pages of recent legislation didn't just turn it into an effective system. It doesn't meet any definition of a functional system nor does it actually operate at one on any level (By one measure, the correlation between life expectancy and per capita health care spending, the U.S. is an extreme outlier - - spending far more than any other country, with mediocre results for life expectancy) . Because of the "non-system" nature and status of health care delivery, we run into the following problems that fundamentally need to be corrected:
- No national health care goals.
- No organized leadership for improvements.
- Cottage industry structure.
- Defined benefit with no planning.
- No one owning enough of the pie to enforce change.
- Age 65 versus age 45 - - increases by a factor of 2
- Age 85 versus age 45 - - increases by a factor of 4
- Age 95 versus age 45 - - increases by a factor of 8