Federal Reserve and Monetary Policy: Healthcare and Social Security

I was looking at Remarks by Governor Edward M. GramlichAt the Spring 2005 Banking and Finance Lecture, Widener University, Chester, Pennsylvania April 21, 2005
A First Step in Dealing with Growing Retirement Costs

and I got an epiphany. Non of these analysis takes into account the income distribution due to off-shoring. The US is NOT the only country going through this off-shoring of its labor force. Western Europe is off-shoring to Eastern Europe. Just take a look at Germany's unemployment rate. It is inevitable that the cost of the pills and technology will come down due to shear “bulk”. In general, the cost of goods and services have come down. We do not know what the future holds.

Health care, in the US , is going through a transition. Health care cost was broken down into tiny payments to the companies that provided it as a benefit. US consumers who have to provide out of pocket expenses for health care have no way of passing that cost on. This is due to off-shoring and its income distribution. The US went from tiny to big payments.

It is possible, if nothing is done, that the US health care system will become dysfunctional due to lack of critical mass. The only way to save the US health care system is to “Fissure It”. Remove the basic, low risk part of the system from the high cost, high risk sections. If the clinic is a low risk, basic health care provider then they pay a low insurance cost. As long as there is no “criminal activity” the state will guarantee the balance of any increase of insurance premium. The state finds a re- insurer.

Never mind, this is too simple for the powers on Capital Hill.