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February 04, 2008
Are Baby Boomers Driving Us Toward Healthcare Collapse?

By BLR Founder and CEO Bob Brady

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In December 2007, the EEOC issued regulations allowing employers to offer lower health insurance benefits to retirees age 65 who are eligible for Medicare. This was roundly condemned by readers of The New York Times as just another example of corporate greed and Republican insensitivity. The AARP quickly joined in, threatening to sue the EEOC to have the regulation withdrawn.

In contrast, most on the "employer" side of the issue (including SHRM and several labor unions) see the wisdom of allowing this discrimination on the basis of age. Without it, fewer employers will offer this insurance, and we will have more people without it.

The contrast between the two groups could be an indication of the beginning of something very large.

In his recent book, The Age of Turbulence, Alan Greenspan makes dire predictions about the future of Medicare. As Baby Boomers age, we will require more and more services, but the number of younger people working to support us will be fewer. The cost pressures, in his view, will be so severe that some kind of adjustment is inevitable. It could be inflation or higher taxes, or it might be lower benefits for all or a reallocation of benefits among income groups. (Lower benefits for higher-income people.) Nothing good. To keep the system going, we will need compromise.

Is this EEOC regulation the kind of compromise that we will be seeing more of? What will be next?

One of my pet theories is that health care (along with education, particularly higher education) is one of the few areas of our economy that has not faced foreign competition. Coupled with the fact that most consumers do not pay for their own health care directly, we end up with a "perfect storm" of economic trouble. There is no alternative for service, and few consumers care how much it costs.

Health Care vs The Economy?

Especially in America , we accept, almost as an article of faith, that everyone is entitled to the best possible health care, regardless of cost. I certainly feel that way. It is summarized in the statement, "as long as you have your health, what else matters?"

But there is a dark side to this. Any strength taken too far can become a weakness, and it could be that our "belief" in health care could lead us to a place we don't want to go.

To get some perspective on this, consider another book. In Collapse, Jared Diamond looked at different civilizations that faced great crises because they put severe strains on their resources. To survive, they had to change not just what they did but what they "believed" in. Some were successful, others weren't.

It was hardest for people whose practices were rooted in "values-based" behavior. The people of Easter Island felt their statues were so important that they chopped down all the trees to transport them, leaving no wood for canoes or trees for birdlife. The Norse settlers on Greenland were so convinced that fish were unhealthy and pork essential that they overgrazed their pasturage. In other cases, such as Iceland and New Guinea, they figured things out and made significant compromises to their "beliefs" in order to survive.

It doesn't take tremendous imagination to see health care in a similar light. We believe in it so we will spend almost anything to stay healthy.

Unfortunately, if we spend a greater and greater portion of our economic resources on health care, at some point we end up crippling other parts of the economy. Will health care--and our near-religious belief that everyone ought to get everything--end up being the "belief" that causes the "collapse" of the American economy?

I don't think so, but compromise is going to be required. Serious compromise. We will get some benefit by squeezing productivity gains from providers, suppliers and users, and it is important to get universal health insurance in some form. But we can't kid ourselves that these will solve the underlying structural problem. There are lots of us old folks heading toward Medicare and not enough youngsters working to pay for us. We in HR are going to be at the center of this storm as we try to align and rationalize our needs with our resources.

Anyway, that's my e-pinion. I'd love to hear yours. Email me at

P.S. I hail from the "eye" of the perfect storm of Baby Boomers - born in July of '46, nine months after Dad returned from the South Pacific. We've driven demographics all my life, and we're getting ready to let loose again!

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