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Life Health > Long-Term Care Planning

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My best guess is that most current talk about the future of long-term care (LTC) and post-retirement health care costs is a little beside the point.

I think that medical research will advance rapidly, if we continue to have the kind of rich, high-tech world that can sustain private insurance markets. Scientists will find ways to prevent or cure Alzheimer’s disease, Parkinson’s disease and many other conditions that have plagued people in old age and sharply reduce the need for expensive LTC services.

But, what if I’m wrong, the professional forecasters are right, and the costs escalate?

And what if a lot of the aging baby boomers have a hard time finding jobs as discount store greeters, and they really do have to retire?

What happens then, when we’re living in the middle of the Long-Term Care World economy?

Yesterday, I was shopping at a bookstore and noticed that there were many more books about reincarnation and vegan cooking than about economics.

In the books about economics, few referred, even briefly, to insurance, pensions or any other form of long-term private or government saving. Some authors talked about long-term plans for spending, but never for paying for the spending.

One book, for example, “Governing the Economy: The Politics of State Intervention in Britain and France,” mentioned old-age pensions and health insurance exactly once, in a section on British social welfare benefits. The author never talked about how the British government thought it was going to pay for the benefits it had promised.

Paul Krugman, a Nobel Prize winning economist, makes budget hawks angry by writing in columns in The New York Times that budget deficits don’t matter.

Certainly, economists and actuaries have given some thought to retirement savings, but, when I look for papers on the macroeconomic effects of the aging of the population, I get the feeling that the economists have tended to wave a lot of important complexity away with phrases like “all other things being equal.”

Maybe Krugman is mostly right, or maybe he’s at least partly wrong, but do the other economists who might dissect his views for us have the ideas they need to even come up with systematic arguments about why they think he’s right or why they think he’s wrong?

Economists have certainly tried to think about the direct costs of aging, but how well have they accounted for the way the aging of the population hollows out the wealth we say we’ve accumulated?

On paper, the United States has a lot (maybe not enough, but a lot) of financial capital, and a lot of high-tech capital, but the supply of water works capital and the supply of human capital seem to be shrinking.

The sewer pipes keep breaking. The bridges are crumbling. What construction capital is available flows into shiny new cardboard office buildings and McMansions, not into repairing sewers and bridges.

Meanwhile, labor knowledge is another form of wealth, but young workers are so forcefully crowded out of the labor market that it’s not clear how they will learn the skills they would need to replace the workers leaving the labor market.

At the microeconomic level, many respectable older people have raided their retirement funds to pay their bills and keep their children afloat. They live in houses with mice in the basements and broken dishwashers. 

Do we have the kinds of economic models we need to understand Long-Term Care World now that we’re close to it, and it’s not just some mysterious realm we might visit a century from now?

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