Lazy days of summer – a few random musings

While many are on vacations with children out of school, events in the world continue to happen. So, in no particular order, here are few random musings.

– The Donald continues to grab headlines with his bombastic opinions. He does not stand a chance of winning an overall election, as his petulance and prima donna act are not key attributes for the job. Ironically, the longer he is in the race, the better the chance for the Democrats to win the White House. A key reason is his GOP competitors need to get some chutzpah and tell him and the country that his opinions are divisive and unappreciated. If they don’t, then their silence condones his act as representative of their party platform.

– A much applauded provision is being introduced into Medicare that will allow reimbursement of end-of-life discussions with your doctor. Doctors favor this and it has bi-partisan support, as it did when it was included in the Affordable Care Act. Yet, people need to remember this is the same issue Sarah Palin called “death panels,” in her run for the Vice Presidency. She was wrong then and would be wrong again if she raises this point. This provision is a good thing.

– The state of Colorado has received acclaim for a program that has dramatically reduced the number of abortions in their state. By providing access to birth control and family planning to more low-income families, the number of abortions has not only been reduced, but their Medicaid budget has declined by $80 million per annum. Unfortunately, the conservative legislature may kill the program as it promotes teen sex. Folks, this measure is common sense, is working and is economical. Plus, these kids are going to have sex, as their temptations are even more when you were that age.

– Along these same lines, the Affordable Care Act has saved women over $1 billion in contraception expense. This provision has been very well received by women and is the same one which caused such a fuss when Hobby Lobby sued and won in court. This was after Hobby Lobby realized they covered birth control in their plan and took it out. Family planning and birth control are part of a solution to better health, abortions and poverty, as teen pregnancy or pregnancy out-of-wedlock, are correlated with poor health for mother and children, the number of abortions and poverty. It should not be lost that over 85% of American Catholic women go against the church’s position on birth control.

– I am not sure what is the best route for Greece, but they need to work something out where they can pay their creditors. Otherwise, the misunderstood vote of last Sunday, is moot. Yet, many view this as an “all or none” issue. Austerity or no-austerity. The answer has to be both, because austerity by itself can further cripple their economy and be a precursor to their demise. They need to invest in some areas which promote the economy and divest in others which are needed measures and the areas are less growth oriented. They need to play to their strengths. But, what the people deserve is honest answers and not political rhetoric. By the way, when a corporation is facing problems, they do the same thing – invest in growth areas and cut in non-growth areas.

– China is faced with a dilemma as the stock market crashes. They have a country of immature investors who are in panic mode as the market falls. The country leaders are telling stockholders it is your patriotic duty not to sell, but that is akin to shoveling water out of a sinking boat with a kid’s small pail. Unfortunately, the market will fall some more and stabilize, which is what markets do. The challenge for others is China has over built its real estate to grow its economy, but no one lives in these places. At some point, a reckoning has to occur and it seems to have arrived. What happens in China investments will have trickle down impact on the rest of the world, at first, and it could get worse if growth slows as a result.

But, what do I know? I am just one person looking for elements of truth in the news and making observations. One thing is for certain, the news must be read with some context, as sometimes the larger points can be missed. I would love to hear your thoughts on these and other issues. Until the next time….

Two Macro trends we need to heed

Since our public debate in political circles tends to focus on what donors want or who is winning the political “gotcha” game, I thought it might be important to repeat some comments about macro trends for which we need to plan ahead. Looking forward from a report sanctioned by the World Economic Forum (WEF) and Organisation for Economic Cooperation and Development (OECD) that was done in 2008-09 timeframe, several macro trends were identified by leaders in business, education, foundations, and governments. Two are highlighted below.

First, a key concern is simply demographic and it has and will shape our economy and budgets for some time. The world population is aging. It is getting worse here in the US, but it is much worse in places like Japan and Greece, e.g.  In fact, a key reason Greece is struggling today is trying to fund financial commitments made to people who have already retired. You can address the benefit commitments to future retirees, but much of the liabilities owed are for people who have left the workforce and being funded by fewer relative workers per retiree.

This is hitting the US in our cities and states and will continue to do so. Just count the number of states who are grappling with serious underfunding issues on pensions and seeing higher retiree medical costs. It impacts our federal Social Security and Medicare programs as well, but with the earlier retirement opportunities in state pension plans, the cost impact is exacerbated there. With the tandem problem of communities not growing due to suburban flight and poor planning, a number of cities have had to declare bankruptcy. This why it is critical for all governmental pension and retiree medical  plan sponsors to address the future issues now so costs can be spread and mitigated.

Second, a key macro trend that makes the above problem worse, not better, is we are an increasingly obese world.  Unlike the aging ranks, the US can lay claim to being the most obese country in the world. We are number one. This is one of the reasons we can lay claim to the most expensive healthcare system in the world. A former UK colleague, who helped companies with developing global health management plans, noted that the greatest export of the US is obesity. That was not meant to flatter us.

As a former actuary, I can tell you the medical cost rate for people in their fifties is generally 2 to 2 ½ times the medical cost rate of the average workforce.  The ratio goes up for older populations. Yet, as we have grown in size through obesity, we are even greater train wrecks waiting to happen. This is why it is critical we get as many people insured for healthcare as possible, so they can see doctors now, be prescribed treatment patterns, and attempt to ameliorate future health catastrophes. We spend a lot of time talking about and fighting cancers which is great, but heart disease will kill 10 times more people, especially women, who tend to ignore symptoms more so than men and wait longer to seek help. And, heart disease risk is heightened when patients are more obese.

There are other key macro trends noted within the WEF and OECD report. It is worth the read to understand other key drivers of our global economy. But, these two are overarching problems which we need to deal with now before they become worse, as the more we wait, the higher the cost impact.