The Healthcare Fix: Universal Insurance for All Americans.

• Author: Gokhale, Jagadeesh

The Healthcare Fix: Universal Insurance for All Americans

Laurence J. Kotlikoff

Cambridge: The MIT Press, 2007, 96 pp.

This book is about how and why a severe economic and financial crisis may well unfold in the United States within the next few years. The main reason: politicians have been increasingly profligate with the public purse--expanding government entitlement and nonentitlement spending, seemingly without regard for future economic consequences.

The main focus of the book is on the runaway costs in the health care sector--the main threat to future fiscal solvency and economic security. The book draws a clear contrast between the conventional view that higher health care spending properly reflects our collective preference to allocate more of our money to health care for retirees--versus the alternative--according to which today's decisions to increase pay-as-you-go retiree health expenditures expropriates resources from future generations.

The author has convincingly argued, here and elsewhere, that the intergenerational redistributive effects of current fiscal decisions--which may well bankrupt the nation--are underemphasized in public policy debates and ignored by lawmakers motivated more by their desires for reelection than by their duty as stewards of the nation's economic future.

The Healthcare Fix identifies three problems plaguing the U.S. medical care system: Many millions of uninsured people, escalating federal and state health care entitlement costs for Medicare and Medicaid, and increasing costs of employer-provided and privately purchased health insurance. The book's goal is to show how scrapping the current system and adopting a new Medical Security System (MSS)---could resolve all three problems--without raising taxes, to boot.

The main problem concerns accommodating the projected rapid growth in the health care sector's output share at a time when GDP growth is projected to slow because of slower labor force growth from baby-boomers retirements. The book describes its proposal as "radical but simple." It is, indeed, radical because it eliminates major government health care subsidies: Medicare, Medicaid, and employer tax deductions for health insurance expenses. But it is by no means simple because it envisions an even larger government role in determining the allocation of public health care dollars by adopting a universal health insurance system.

A significant expansion of government intervention is justified by...