Monday, July 11, 2011

Housing and Health

I recently read two articles that summarize two very complex topics - - our continued housing slump and our long term health care problems. 

The current issue of Bloomberg Businessweek has a primer on the housing disaster (The Housing Horror Show Is Worse Than You Think).  We are still in this vicious cycle of foreclosures, prices falling, and buyers remaining on the sidelines.  Three in 10 homes are now sold for a loss.  American homeowners have equity equal to 38% of their homes' worth, down a third since 2005 and half what it was in 1950.  The bottom line - -

" . . . loose lending practices seen during the housing bubble allowed 5 million renters to become homeowners, and that the market is in the protracted process of evicting this group."

The May 2, 2011 The New Yorker (The Financial Page - Bitter Pills) puts a clear focus on health care.  This is a great observation - - the U.S. does not have a spending problem per se, what it has is a health care problem.  Medicare costs increase 8.3% annually.  If they're not controlled, Medicare and Medicaid will eventually be by far our biggest expense.  Preventing that is the key to getting our fiscal house in order.  The last paragraph of the article gets to the clearly understandable point - -

"This makes a lot of people, and not just politicians, uncomfortable: people, on the whole, understandably like and trust doctors and hospitals.  They want to be able to choose their own doctors, and don't want them to drop out of Medicare because the fees are too low.  This is the fundamental dilemma: we're unhappy about about the rising cost of health care, but we're also unhappy about what we would have to do to curb it.  The ideal system, for most voters, would guarantee all seniors reasonable health care, stop the debt from getting out of control, and keep paying health-care providers as before.  The problem is that you can only do two of those things at once.  The debate between Ryan and Obama is a debate our which of the three we're willing to give up."

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