Hi, We're here with Carl Tannenbaum, chief economist of Northern Trust. Carl, great to see you.
Good to be with you.
So Congress was unable to make any progress with health care. What were the stumbling blocks?
Well, as it often is in budgetary matters, it was a matter of cost versus benefit. The benefits involve the number of people that would be covered by the Affordable Care Act or anything that might replace it. And the cost, obviously, is the cost to taxpayers and also the government of providing that insurance coverage. What was very clear from the outset is that if you wanted to save costs, you are going to be providing fewer benefits. And Congress was never able to agree on a way to balance the two of those things.
You've mentioned that the legislative discussion was misguided. What were you getting at?
I think it was absolutely misguided. Now, people feel very passionately about the Affordable Care Act-- or Obamacare, as it's known colloquially-- and it is important because it's currently covering about 40 million Americans. But there are 325 million of us, and we need to have a much broader conversation about health care than just the Affordable Care Act. And yet, somehow, we just can't get ourselves-- or Congress can't get itself-- to the point of having that broader discussion.
So some say single payer socialized medicine is the answer. What's your take?
That's an inflammatory term in many circles. But one of the things that I would observe is that in many senses, the United States already has socialized medicine. We have about 70 million people that are already covered by Medicare, a number that's going to grow as more and more of the baby boomers retire.
When people do not have insurance, they can go to the emergency room and get care. And the cost of that care gets borne by those of us who have insurance through our employers. So in a way, we do have a collective payer system without having the benefits of using that collection in order to hold down costs.
What would be the consequences of the status quo?
The projections are pretty scary. As more and more Americans do move on to Medicare and this becomes a public cost, health care-- which is currently 18% of our economy-- will expand to a projected 25% of our economy. And the cost of keeping up that care is going to absorb capital that could be used elsewhere potentially more productively.
So unless we can have a good honest conversation at the governmental level, demographics is going to make health care a big problem in the years ahead.
Carl, thank you for your time.
Good to be with you.