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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Robert Fogel on Increased Longevity and Health Expenditures



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Robert Fogel, author of two of the most important books of the last century, has an information-rich op-ed in Bloomberg View. His conclusion is very much in tune with the view that we need to move to a limited defined contribution model for health entitlements:

The pressure to suppress health-care expenditures arises from the way that governments and businesses currently provide insurance in rich countries. These institutions need to provide a basic and affordable package of health services. Beyond that, they should offer additional policies at higher costs that provide upscale services (such as private rooms, the most expensive alternative procedures and medicines, the shortest waiting times, the fullest coverage of optional services, and access to physicians anywhere in the country, not just in local clinics).

Health care isn’t a homogeneous good, all of which is essential. There are large luxury components that may appeal to some but that aren’t necessary for sound basic care. It is, of course, necessary to provide medical care for those who are too poor to purchase it, but for those with more resources, shifting to private savings accounts for health services is an effective way to relieve pressure on the finances of both businesses and government.

The bulk of the piece is actually on life expectancy, and why we may experience a much longer increase in healthy lifespan over the course of this century than is commonly assumed by demographers:

One factor arguing in support of the optimists’ projections is the increasing span of years that individuals have free of chronic conditions. For those who reached age 65 during the first decade of the 20th century, the average age of onset of chronic disabilities was about 51. By the 1990s, however, the average age was more than 10 years later. Moreover, these disabilities are now generally milder, and many effective interventions to reduce their impact are available. The outlook for new and more effective technologies to deal with chronic disabilities through the marriage of biology and microchip technology is very promising. Indeed, some devices that combine living cells and electronics to replace failed organs are already at the stage of human trials. Somewhat further off, but even more promising, are advances in genetic engineering that will produce cures for what are now untreatable diseases. 

Biogerontological research devoted to expanding healthy lifespan is one domain where I’d like to see more public and private investment, with the additional public dollars shifted from health entitlements.  



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