Greenspan on the Real Fiscal Problem

Alan Greenspan makes an important point:

NEW YORK (MarketWatch) — Former Fed chief Alan Greenspan sent a message to Washington policymakers: Don’t think about naming him to another commission seeking to untie the Gordian knot of Social Security reform.

…Greenspan warned that retirement health-care costs are more of a problem for the federal government than fixing Social Security.

“Social Security will get resolved. The real fiscal problem is Medicare,” Greenspan said. “I’m fearful we have already committed more that we can afford.”

So it is time for a “Medicare commission?” the moderator asked, breathlessly.

Please no, Greenspan replied. “I could write the [commission’s] report in 20 minutes,” he said.

I’m sure that I would disagree substantially with the report that Greenspan would write about how to solve to the Medicare crisis. But he’s quite right that Medicare is the real fiscal problem, and that there are obvious solutions that do not take a rocket scientist (or even an economist) to figure out: Medicare benefits could be cut (that would be Greenspan’s 20-minute commission report), or, if that is not a popular option (which it won’t be, and shouldn’t be), then taxes could be increased to close the enormous Medicare funding gap.

My preferred solution to the Medicare crisis is different, though: I would advocate a complete overhaul of the nation’s health insurance system, for example by moving to a single-payer system. Properly done, such a move could generate enormous savings that would enable us to afford decent health insurance without large tax increases. Why not try for the best of both worlds?