We'll Fix this Country If It's the Last Thing We Ever Do

As we close in on inauguration day it seems more and more likely that one of the first pieces of legislation that the Obama administration will push through will be a fiscal stimulus package. Consensus thought is that the package will focus on funding infrastructure build out.

Background: What Economists Yell About

Their are two schools of thought on stimulus. So called "Monetarists" believe that you can prime the economy's pump by handing out cash. This was the thinking behind the federal rebate checks. Monetarists essentially believe that consumption drives the economy. Either give people some cash or extend them credit and then sit back and wait for people's innate desire to spend money to kick-in. People start buying. Companies start producing. Voila, a bustling economy.

On the other side we find the "Keynesians" who take their cues from the famous economist John Maynard Keynes. Keynesians believe that an economy can be jump-started through government spending. That, essentially, the government can act as a giant consumer with infinite credit. People are unreliable. They might save the money.  We can head that problem off by just having government spend the money for us. Spend the money and you'll put people to work. Those people will have money. The money will burn a hole in their pocket and they will head immediately to the store. Companies start producing. Voila, a bustling economy.

While both Monetarists and Keynesians believe that getting money into the economy is the key to getting it moving and that government is capable of achieving this we find that the Monetarists are quickly losing credibility. The latest round of rebate checks had no measurable effect on the economy. The Federal Reserve has flooded banks with free money but banks are not extending credit (and consumers are not asking for credit) resulting in close to a trillion dollars washed up onto the empty shore of bank balance sheets. Meanwhile the Keynesian tut-tutting has crescendoed. They are now rolling up their sleeves and picking out wheelbarrows. The question seems to be not whether we'll see fiscal stimulus but what will it look like, how much of it will we see and when will we see it.

Note: There is a third school of thought that says that both the Monetarists and Keynesians are nuts. This is the so called "Austrian School" of economics. The Austrians say that business cycles are inevitable as long as the government interferes in the economy, which it does all the time although not in trillion dollar increments like when the R word starts getting passe around. The Austrians are probably right but the human condition pretty much dictates that people can't leave well-enough alone ("Doing Nothing is Not an Option"- House Majority Leader Steny Hoyer; "Doing Nothing is Not an Option" - George Bush; "Doing Nothing is Not an Option"- John McCain) so they are left shaking their heads, alone in the corner of the sandbox hoarding gold bars.

Who Should I Make Out this $850 Billion Dollar Check To?

The estimates on the size of the fiscal stimulus package are up to $850 billion. The reasoning is that there is no point in doing anything unless you do it at a scale large enough to make an impact. Fair enough, impact for better or worse I suppose, which leaves us with the question as to where to spend the money?

A recent conference of U.S. Mayors produced a list of "ready-to-go" infrastructure projects. (US Mayors Say Local Infrastructure Projects Are Ready-To-Go) but as pointed out by Ken Orski in a recent op-ed there seems to be a surprising need for new sporting facilities in America's towns (How Should The Infrastructure Stimulus Be Spent?). Obviously local governments can't be trusted to make decisions on where to spend the money.

Can Congress be trusted? Well, in the TARP bill (aka "the bailout") congress managed to tack $100 billion of pork towards pet projects. (Bailout Includes Pork and Goodies Like Tax Breaks For Dirty Energy). Now with newly elected officials we can be sure that they will look to this spending package as a way to quickly fulfill campaign promises without expending political capital. Add to this the number of recently exposed improprieties among congressmen from Alaska and New York (literally coast-to-coast graft) and we can definitively say - No, congress cannot be trusted.

How about business? The construction industry? Voters themselves? Frankly, no-one can be trusted. Well, even if you find people who can be trusted we still need people to make the right decisions. It's all well and good that the money isn't stolen but it can still be squandered.

Excuse Me Sir. I Would Like a New Street.

I live in two different states. One northern and one southern. One urban and one rural. Ironically both seem to need new streets.  Here are two examples from my personal experience that demonstrate that overspending is a universal problem.

Jersey City, NJ

Northern, Urban, Liberal, Multi-Ethnic, Low Income

A few weeks ago I opened the door of my Jersey City apartment to find temporary "no parking" signs stapled to telephone poles up and down my block. Later that week heavy equipment came rolling through tearing up the street followed by the tar truck and steamrollers. Now a few weeks later we have a beautiful newly macadamized street. Problem is, the old street was just fine.

I still have no idea why our street was picked out for new asphalt and with New Jersey virtually bankrupt one has to wonder how this project was green lighted. Now a few weeks later one can see the first potholes emerge after the winter plowing. Had this project occurred only six months from now you can bet that it would have fallen under the umbrella of the federal fiscal stimulus package.

Crozet, VA

Southern, Rural, Conservative, White, High Income

Also a few weeks ago I attended our annual district meeting in Crozet, VA. There we learned about the ongoing project called "Destination Crozet". Crozet is a small rural town, a satellite of Charlottesville. Crozet is like many small towns throughout the U.S. We have a post office, bank, library, pharmacy, grocery and a couple of restaurants. We also have several new subdivisions with $400k homes. For several years now the town has been in the planning stages for renovating the downtown area. There is one pragmatic reason for the renovation - we need a larger library. Mostly though it is an effort to make the town prettier and pedestrian friendly.

The question that has not been asked though is whether a new street is a good thing. Our new, more beautiful town will no doubt lure more transplants, inspire more development, increase sprawl and ultimately cause taxes to go up - just the things most residents wish to avoid. Meanwhile an abandoned school house that is just the right size for a new library sits empty waiting for a tenant. I would love a nice downtown. Everyone would love a nice downtown but when you really consider things, the renovation simply isn't necessary. Given the impending crisis that most municipalities will face in a deflationary environment such projects border on irresponsible. No doubt though that funds from the federal fiscal stimulus package might find their way into this project.

Bring on the Old Guys

I think there is really only one realistic way to maximize the effectiveness (minimize the ineffectiveness) of the fiscal stimulus package. A committee should be organized that will have the sole responsibility of vetting projects and assigning funds. Such a committee would need to be both impartial and sagacious. They would need to be committed. They would need to be immune from corruption, pressure, aspirations and regrets. I can think of only one way to achieve this - bring on the old guys.

A "wise man" committee would be composed entirely of individuals in their eighties. We would want those men and women with first hand knowledge of the depression and of the post-war boom, folks who witnessed the effects of the federal highway act and the space race, people who are ready to make judgments about the effectiveness of these efforts. Such individuals would be a ideal citizens for making critical spending decisions. Given their age and experience they would more likely than the rest of us to make decisions based on conviction, understanding and good intention. Ultimately these are the most important factors in decision making. One lesson we no doubt are all learning from recent events is that the "informed decision" is mythical. We have learned not to trust the experts. We have learned not to trust our leaders. They are fallible and generally operate from within a hazy cloud of non-information.

Our wise men need not be the Warren Buffet's of the world. Good candidates could be farmers, engineers, shop owners and teachers - people with grandchildren to consider. What we need most are individuals who can evaluate a project with one eye squinted and are willing to say, "Sorry son, this is just too much money and not enough oomph. Good luck to you."

Could You Spend $850 Billion If You Tried?

Ideally a high-council would make initial broad decisions on where to invest the $850 billion. How much should be allocated for energy infrastructure vs. roadways? Do we need more ports or a new air-traffic control system? The high-council would need to be composed of the most qualified and informed individuals. Possibly this council would contain some renowned octogenarians (Here is a list to consider: Slate's 80 Over 80) . Such broad decisions could be made quickly and then handed down to a lower councils who would make decisions by geography and category.

We would likely need a small army of people to make these individual project decisions. Assuming an average infrastructure cost of $10 million we could be looking at 85,000 individual projects to assign. Possibly only one in five presented projects is actually worth doing. So imagine having to sift through 425,000 projects! How long should it take for a council of six people to vet a $10 million dollar project? Let's say it might be reasonable to study, debate and decide on one project per week. We would then need 8,500 councils (51,000 people) to assign the money over the course of a year. That may seem like a lot of people however there are over 10,000,000 Americans over eighty so the spots shouldn't be hard to fill.

All this said though it has to make you think. Vetting all of those projects in a year almost seems optimistic. Even so, a project that kicked off in mid 2009 might see funding over the course of 3-5 years. The funding might not start trickling in until late 2009. It would take some months further for it to trickle down to the workers who could then start consuming. It would then take more months for the consumption to kick start the economy. So fiscal stimulus, if it does in fact jump-start an economy, might not do so until, maybe 2011 or 2012? By then the Monetarists will have caught their breath, armed themselves with a new set of arguments and will be tagged back into the match. The Austrians will still be shaking their heads and fondling their gold bars.

Prescription For Healthcare Reform

Healthcare: The Problem
Over the course of the past 30 years America's social contract has expanded to include health care alongside food, clothing and shelter. Yet according to the Census Bureau the number of uninsured Americans has reached an all time high. Meanwhile the cost of health coverage continues to escalate faster than the rate of inflation or GDP growth.

Demographics assure that this problem is not going to go away. Various estimates of the number of citizens over age 65 range from 64 million to over 100 million. The following chart estimates the number of individuals over age 65 and the number of individuals supporting them (ages 25-64) simply by extrapolating the current population.


Source: US Census Bureau. Method: Actual current US population projected at 5 year intervals to age 65-80 plus 10 million. 80 is the average lifespan. 10 million is the current number of individuals over age 80.

One would imagine that the cost of medicare would double since the number of seniors will double. However the problem is much worse. Healthcare under these conditions is "supply constrained". There will be far more patients than health care providers. Costs typically skyrocket in supply constrained systems. A recent example is the surge in the price of oil to $147 per barrel as supply became constrained in the energy system. Unlike energy however, demand is not curtailed in health care simply because costs go up. Demand is "inelastic". By 2020 we're knee deep in a bad situation.

So really the country has two problems related to health care: current & future.

Current: Cost is high. Insurance is difficult to get. Performance is poor.
Future: Costs will skyrocket.

This paper primarily focuses on addressing the current problem. Potential approaches to the future problem are included at the end of the paper. Addressing the current problems is considered a prerequisite to dealing with the demographic challenge.

What is the Dynamic of the Problem?

The "dining philosopher" problem is a well known dilemma in systems theory. An analogy for the problem is described as follows:

A group of philosophers sit around a circular table with a bowl of Lo Mein in the center. Separating each philosopher is a single chopstick so that, in order to eat, a philosopher must grab two chopsticks. If a philosopher grabs the chopstick on his right then his neighbor on the right cannot eat until that chopstick is returned to the table. Likewise the philosopher's neighbor on the left also cannot eat when our philosopher is dining. System theory addresses the condition when each philosopher at the table simultaneously grabs the chopstick to their right. They are all left holding a single chopstick and no-one can eat. This situation is called a deadlock and it is a good analogy for what is happening in health care.

The health care system as we know it in America consists of 5 groups:

• Consumers



• Employers (Including government as employer)



• Health insurers (Including government as insurer)



• Providers



• Malpractice insurers

As most observers will note, each of these constituent groups is growing hungry. Consumers are paying more and receiving less. Their chopstick is shared with employers who are in turn being squeezed by the rising cost of insurance. Health insurance company profits are sinking from increased pay to doctors and hospitals. Doctors and hospitals pay an ever increasing premium to share a chopstick with malpractice insurers who complete the circle, operating in a perpetual state of paranoia created by the angry, litigious consumers. The effect of this invirtuous circle is a kind of degrading stasis. Whenever one group inches a finger towards a chopstick they are quickly spiked by their neighbor. Costs go up, care goes down.

Breaking the Deadlock

In systems theory deadlocks can be dealt with in a couple of ways. One way uses what is called a "monitor". A monitor is an independent entity that arbitrates which person can eat in the deadlock. In the real world government could act as a monitor but there are risks associated with this. In the systems world deadlock avoidance through the use of monitors creates a problem called starvation. Very simply, a philosopher may hold on to the chopsticks for so long that no-one else gets to eat. Back in the real world this situation can easily occur through special interest manipulation, ineptitude or simply failed policy.

A second approach is simply to avoid the deadlock condition altogether by changing the system. In systems theory very often the philosopher's round table is an inadvertent design. Deadlock is a symptom that helps the designer become aware of a potential design flaw and fix it. In the real world this is analogous to our current "tempered" free market system. Ideally the market works efficiently but sometimes it works its way into an inefficient system. In the real world the designer is legislation which can inadvertently create this inefficiency but can also fix it.

A "Tempered" Free Market Solution

This paper argues that the deadlock can be eliminated (and overall economic cost reduced) through simple legislative action that:
1) Requires minimal government funding
2) Mimics existing citizen-oriented government solutions
3) Avoids excessive restrictions on business or citizens

(A basic assumption is that free market forces will lower costs. Backing for this assumption follows this section).

Breaking the described deadlock is the key to unleashing market forces. Namely, allowing consumers to deal directly with doctors. This is most easily achieved by removing employers from the circle. The expectation of employer provided healthcare is an anachronism from the days when one's company was as much a part of an individual's identity as his family, community or nation. Graduation-to-grave support included health care, a pension and a gold watch. Today, when the average worker changes jobs every 4 years it makes as much sense to get health insurance from your employer as it does to get home, auto or flood insurance.

Financial backstops modeled after the Fed, FDIC and the FHA would provide the catalyst for disrupting the deadlock, the likely effect being that employers will remove themselves from the circle.

Step 1 - Bring back insurance. Most people today have managed care, not health insurance. Insurance in its purest form protects individual citizens against catastrophic risk. Ensuring that protection should be government's first priority. A government sponsored catastrophic and chronic illness risk pool (CCIRP) is the simplest way to achieve this. Every citizen should be protected for health costs over and above a certain threshold. This stop loss would apply to individuals if they pay for their own medical care. If an individual is covered by a health plan then the stop loss would be to the benefit of the insurance provider. The model for this plan is the FDIC.

The CCIRP is the single most important step in lowering overall health care costs. Protected by the government (in much the same way the FDIC protects bank accounts) consumers would be able to make health care choices. Prior to FDIC consumers fretted about where to put their money. They made choices based on the security of the bank rather than the services of the bank. With CCIRP at their back, consumers could finally make a decision:
a) Pay doctors directly - manage my own health care
b) Sign up for managed care - convenience and group level bargaining power

With CCIRP in place employer will most likely recuse themselves from the responsibility of providing health insurance to their employees. This is a step forward for consumers. As a former employer of both a small company (50 employees) and large company (15,000) employees, this author can testify that employees are forced into one-size-fits-all managed care programs and that employees rarely have the ability to navigate the bureaucracy of insurance companies. Employees must often seek the aid of HR departments or "health advocates" in order to receive proper care. This is the furthest from efficiency.

Much better is a system where individuals can deal directly with and negotiate directly with doctors as they do with lawyers, mechanics, accountants and plumbers. Better to let consumers rate doctors on the Internet, share information, choose their hospital, choose their specialist and decide whether they are worth the extra money. The current cost of healthcare is increasing due to a number of factors:

A) Unnecessary treatment - "Standard of Care" has been implemented by the medical community largely to protect itself from malpractice suits (see Step 2). It is more difficult to get a second opinion when one must be reimbursed by insurance and since insurance will pay for the procedures patients are disincentivized from questioning unnecessary procedures.

B) Affinity for specialists - Health insurance provides the patient with the freedom to get the best treatment available. This is great for the patient but bad for the economy. There are a limited number of doctors. It is inefficient when a patient sees a doctor for simple aches and pains, colds, even preventative care. These procedures can be adequately performed by nurses, nurse practitioners, clinic workers among other lower paid and more plentiful health care providers. If one's copay is only $25 or $50 why not see a doctor or specialist? New businesses such as Walmart's in-store clinics point a light towards a more rational future for health care driven by consumer frugality.

C) Technology - Technology can improve outcomes but also drives up cost. Should every citizen get a preventative MRI each year? This would probably save lives but is economic fantasy. A large amount of the annual cost of medical treatment is spent in the final days of individuals lives when "whatever it takes" to preserve the life is the standard of care. This is a difficult moral consideration for society but probably represents the Occam's Razor of the entire issue.

D) CPT code manipulation - Most doctors probably do not cheat the system but many play the CPT code manipulation game. Insurers pay a standard rate for procedures. Insurers also dictate how many of which procedure under which circumstances is covered. Doctors are not paid for their time. So to ensure that they make money doctors will sometimes prescribe tests that are unlikely to yield information simply in order to get paid the appropriate amount for their time. The doctor would not care either way but the net result is more tests paid for by the insurance company, higher insurance costs, and general inefficiency of the system.

Breaking the deadlock would allow doctors, consumers and insurers to reexamine and renegotiate these areas with the likely effect of lowered costs overall.

Step 2 - Tackle malpractice. Quality of healthcare is directly affected by malpractice's tightening grip on doctors. New regulations are necessary to prevent insurers from influencing doctors' practices. In return, government must provide attractively priced re-insurance so that the decision to insure a doctor becomes a simple "yes/no" risk assessment. New Jersey provides a model for government re-insurance which could be adapted to the national level. An assigned risk pool would ensure that all doctors have access to coverage and would provide a mechanism for bringing high risk practices to light. The model for federal re-insurance is the federal reserve bank. Like the fed rate, re-insurance rates would be adjustable up or down based on oversight of the industry. Adjustable rates would ensure profit for insurers and keep the assigned risk pool small.

Step 3 - Fill the gap. The author has as of yet been unable to identify the actual annual medical costs for an average family. No doubt actuaries have this information and use it to set rates and secure insurer profit. The reclusiveness of this data does hint at the problems created by the aforementioned deadlock. Even with this information though our healthcare is currently insufferable. One of the problems is that insurance companies are currently in two businesses, insurance and managed care, and doing neither well. The realignment described in Step 1 and Step 2 would promote a system where insurers could better choose which business they really want to be in. Consumers who choose "managed care" will pay their monthly HMO premiums while consumers who choose "insurance" will pay their own doctors having hedged their financial bets.

Suffice it to say that by definition the annual cost for medical care for the average family is lower than the cost of their insurance. On some years though, a family could get hit with expenses that, while not catastrophic, could threaten their financial security. An additional government program would bridge the gap between an affordable year and catastrophic situations. Low interest loans (adjusted per income) should be available to families to pay for health care costs. The FHA and federal student loan programs offer models that have been highly effective. More people own homes and attend college thanks to taxpayers lending to their fellow citizens. When illness strikes, such an institution would free families from the spiral trap of using home equity loans and credit cards to pay medical bills and would dramatically reduce the number of bankruptcies (50% per Harvard study) and associated costs to society and the economy of those bankruptcies.

Note: Health Savings Accounts were a step in the right direction but a round-about solution to the problem. The HSA requires an individual to anticipate their health care costs. This puts the cart before the horse. The HSA effectively makes health costs tax deductible for those with excess funds and good timing. The low interest loan is a simpler solution that meets the medical costs head on - by providing funding when the costs occur and to those who most need the help. The HSA also was meant to stimulate fee for service practice but it has failed to do so effectively because it does not touch enough consumers. It also attacks the wrong end of the problem - the fee for service end rather than the catastrophic coverage end. This paper's proposed solution of attacking the catastrophic coverage problem would be more effective at increasing fee for service. (While the HSA is still a nice tool and complements the proposed solutions in this paper, itemization of medical expenses would probably be better appreciated by the citizenry but would also likely create a steeper hit to federal revenues).

Results

With these three programs in place we will have made progress.

1) Our citizens' health would be protected.
2) Consumer direct access will increase options and work to lower costs by unleashing the free market.
3) Employers will focus on their core competency (alas, not HR!)
4) Managed care and insurance will be rationalized.
5) Unnecessary treatments will be reduced.
6) Doctors will be freed to operate as businesses to either maximize their profits or provide treatment on their terms.
7) Businesses will creatively address the needs of the consumer with innovations such as Walmart's in-store clinics.


Arguments

What About Preventative Care?

One anticipated argument against the solutions proposed in this paper is that they will reduce the practice of preventable care. It is often argued that preventative care is the key to reducing our country's health care costs. Indeed, "An Ounce of Prevention is Worth a Pound of Cure" is emblazoned into our lexicon. This is good advice for the individual but not necessarily a panacea for society. Prevention in fact increases the cost of health care as reported in the New England Journal of Medicine. Logically this makes sense. Prevention causes people to live longer which is the primary driver of health care costs (not obesity as is argued by many).

Nevertheless, it should not be the goal of government to reduce economic costs by hoping for shorter lives so the argument about prevention must be tackled head on. The thinking behind the argument is that consumers with access to insurance, low copays, free preventative treatments and incentive to seek such treatment are better off. One can argue this from a couple of different points:

1) One could make the same argument that we should subsidize healthy foods, gym memberships, lead paint removal, and other products that extend life. We do not though because of the economic cost and the intrusion into our citizen's liberty. Adults are capable of making their own choices. It is reasonable though to argue that the government should ensure these things for children as it does with healthy meals programs, phys-ed and lead paint legislation.

2) Employer provided health insurance is a round-about path to the solution. If citizens truly wish preventative health care to be government sponsored then the government can conduct awareness campaigns or fund health fairs which are in fact focused on preventative treatments that are proven effective and economical. (The annual MRI as an example of preventative care that is effective but not economical).

What About Wage Compression?

A second argument is that employees will only be squeezed further when they end up moving to fee for service. Currently employer paid health care is the one bright light in the entire system. Allowing employers to back out of this arrangement will lead to effective wage compression. This is certainly a risk but we are already heading in that direction. Employee contributions are increasing as are deductibles and copays even while coverage is decreasing. Yet employees have no bargaining power other than to opt out which is economically impossible under the current system.

One way to combat wage reduction would be to allow itemization of medical expenses. For families, currently average employee contributions to health insurance are $2,800 per year (pre tax) and employers pay $9,000 per year. So if employees bore the entire burden of $11,800
with 28% tax deduction the real cost would be $8,500 which is still considerable wage compression. Even if the costs of health care were reduced by say 30% due to efficiencies then this would still be $5,950 or about twice the current out of pocket to families. One could reasonably expect though that employees would hold the line on the $3,000 of potential wage compression.

Unions would of course be in a much better position to hold the line on wages either by negotiating continued managed care or negotiating a replacement salary in their contract. White collar professionals also continue to be well positioned for negotiation. Arguably, blue collar non-union professionals are not benefiting from the current regime and probably will be better served under the new system.

Finally, funding the catastrophic and chronic illness pool from an additional levied corporate tax might be the cleanest way to keep the score even and provide further encouragement for employers to break the deadlock.

A Theory of Government

The principles from which this solution are derived come from a theory of the scalability of large organizations. Large organizations benefit and suffer from their size. They benefit from achieving economies of scale through capital, buying power, manpower, etc. They suffer through inefficiencies of bureaucracy related to communication, disorganization and sluggishness. The federal government is the largest of all organizations and thus has the greatest economy of scale and also the worst bureaucracy - by definition. A theory of government that recognizes this can reveal principles that can be put into action, primarily promoting actions that benefit primarily from economies of scale while demoting actions that rely on building organizations.

The core economy of scale enjoyed by the federal government is the "Wealth of Nations". That is, the government has capital. The strength of capital is not necessarily in what you can spend it on but rather how you can leverage it. In this sense the government can be highly effective by acting as a financial backstop. The federal reserve, FDIC, FHA, FAFSA and the agencies proposed in this paper are all highly effective because they leverage the government's capital. These agencies are most effective when they remain lean and reduce their dependence on bureaucracy and organization building. As a model of government "backstopping" is an alluring middle-ground between socialism and laissez-faire directions.

Musings on Our Demographic Challenge

The first section of this paper outlined the current and future health care problems for the country. The paper primarily dealt with proposed solutions for the current state of health care but did not address the impending problems created by our aging demography. Although not as dire as Japan or Europe we still are in a pickle. Former GAO controller David Walker has brought this issue to the nation's radar screen but as yet we have not taken steps to address the issue. We can attempt to apply the theory of government illustrated in the previous paragraph to scope out potential solutions to the issue.

As illustrated at the beginning of this paper the issue is not just one of cost but one of supply. The ratio of workers to seniors will diminish which will drive up cost but more importantly the ratio of doctors to seniors will decrease which will create a supply constrained system. What is the cost of heart surgery when there aren't enough doctors to perform the surgeries? What would you pay to get the surgery if your life depended on it? This is an extreme example but certainly one can expect that the 5 minute visit with the doctor that we currently experience may be reduced to 1.5 minutes costing $200.

The cost problem is actually the easier one to deal with. The number of workers can be increased through relaxed immigration policies. We are currently producing babies at the same rate as the baby boom so it is unlikely that we will be able to encourage natural population increase (babies are already incentivized through the dependent tax itemization).

In fact, the boomer generation has the money to pay for their own health care and retirement. It is estimated that $41 trillion will pass from boomers to the next generation through the year 2052. $17 trillion will go to estate taxes, settlement and charitable benefits. $25 trillion will pass to heirs. Simply increasing the estate tax (rather dramatically) to recoup more of the $41 trillion would get the assets. Not an easy political feat but even still capturing these assets wouldn't do the trick because of the supply side problem. It will cost more than the boomers can pay because there won't be enough doctors.

So ultimately we can increase workers and we can collect assets but we can't solve the problem without more health care professionals. Leveraging our government as a backstop principle we could provide an incentive to today's youth to train for health care:
- Increase the availability of student loans for nursing and medical study
- Pay off student loans in return for clinic service (Programs such as sponsored by Bristol-Myers Squibb to send doctors to Africa in return for paying off student loans are oversubscribed - very popular with medical students)

The supply of doctors might also come from developing countries such as the BRIC (Brazil, Russia, India, China) nations. We might provide incentives for individuals to emigrate to the US to attend medical school or break down procedures so that doctors may work for periods of time with special accreditation. We might even consider allowing Americans to travel to other countries for their medical services paid by medicare, insurers or from HSA savings.

Some of the effects of this paper's current solutions will help to address the future problem. Business innovation (like Walmart's in-store clinics) is critical to increasing the overall efficiency of our system. Breaking the deadlock will allow niches to be exploited and will grease the wheels of innovation so that information technology and entrepreneurship can be employed, the $41 trillion as an incentive. Reevaluation of standards of practice will allow doctors to innovate, get efficient and redirect patients.

The theory of government can best be applied to medicare and medicaid programs. Earlier in the paper we suggested that insurers should decide whether they are in the business of providing insurance or managed care. Government might also do this analysis. Currently medicare and medicaid are both insurance and managed care. The insurance companies are not good at doing both. Government is probably worse. As explored earlier we can recognize that managed care is by nature a bureaucratic endeavor - an ill advised pursuit of government. Applying our theory of government and advice from this paper we could suggest that government get out of the business of managed care and focus on its core competency. One could anticipate private managed care providers competing for patients. Seniors could pick their managed care provider, the only difference being that payment comes from the government.

Or perhaps government could lower its overall costs through a matching program. Allow seniors to choose a managed care provider. Government will provide up to 75% of medicare payments towards patient choice. This would be a more politic way of saving money without cutting off well to do seniors entirely.
There are likely many ways that this theory of government can be applied to the health care problem. Possibly prescription drug costs. Hospital capitalization. Smart people should be armed with the concept and get creative.

If you like this idea you can vote for it at citizensbriefingbook.change.gov !