Here is a shortened version of Michael Hudson’s warning to the elderly:
The most efficient way to finance care for the elderly – and pensions – remains pay-as-you-go planning. This is becoming difficult in a neoliberal political environment with shrinking economic growth and consequent demographic shrinkage. The horror story today is a Ukraine-like situation where the labor force has fled, leaving the elderly to be supported without much of a social budget. That is becoming the post-Soviet model, from East Germany to the Baltics.
The American situation is worse, because Social Security, Medicare and pensions are front-loaded by being financialized – paid for in advance. For decades, savings have been set aside in the form of stock and bond purchases. The problem is that when more workers retire than are contributing to the pension plan or similar plans, their prices will decline. This will leave the retirement plan under-funded.
As interest rates have been reduced to nearly zero since 2008 by Quantitative Easing by the U.S. Federal Reserve and now European Central Bank, pension funds and insurance companies have become desperate to meet their statistically required targets. They have turned to gambling on complex financial derivatives – and have lost heavily, because their managers are no match for Wall Street sharpies.
It may be appropriate here to note the monetary madness of the eurozone not having a central bank to monetize budget deficits to spend into the economy to help it grow. That is the proper function of a real central bank, from the Bank of England to the U.S. Federal Reserve System. European voters are being frightened by junk economics claiming that only commercial banks should create money and credit, not central banks. The reality is that central banks can create the money to fund health programs without inflating the economy. What would inflate health care costs, especially proper care for the elderly, would be privatization and a relinquishing of health policy to the large corporations best in a position to profiteer.
Danger of trade agreements raising the cost of drugs and medical technology
The technological medical revolution involves high rent-extracting opportunities, especially in treating the elderly. The Australian study cited above notes the dangers posed by the TPP (and hence also by its European version) to public health expenditure, especially health costs for the elderly. Designed largely to protect “intellectual property rights,” the proposed treaty aims to increase monopolyrent extraction by the pharmaceutical sector.
Provisions proposed for the TPP that have the potential to limit implementation of new food labelling requirements in Australia include the ISDS mechanism; the regulatory coherence chapter and technical barriers to trade chapter. Provisions in these parts of the TPP have the potential to restrict policymakers to regulate using the most effective public health nutrition instruments. For example, the food industry could argue that introduction of mandatory front-of-pack nutrition labelling would be a technical barrier to trade. Without strong compensatory intervention to improve consumer awareness of the relative healthfulness of foods, it is likely that there will be no change to current high rates of obesity, metabolic syndrome and non-communicable diseases. This would have a negative impact on health, particularly for vulnerable populations.
For starters, the trade agreement limits the ability of public or community pharmacies to bargain for lower drug prices. Also, any attempt at anti-monopoly legislation would require governments to pay the foreign producers or investors as much money as they would have earned if no “interference with markets” (that is, regulation of monopoly prices) had existed. This would sharply increase the cost of healthcare, and “many TPP provisions proposed during the negotiations are likely to be harmful to health.”
There is sufficient evidence which show that increases in the cost of medicines lead to greater patient copayments through the PBS, and that increases in patient copayments lead to lower rates of prescription use. Changes to prescription costs impact particularly on vulnerable populations who have less capacity to accommodate increased out-of-pocket expenses such as women, elderly adults, cultural and linguistic minorities, and low-income populations; people with chronic disease; geographically remote communities; and Aboriginal and Torres Strait Islander populations.
Many provisions proposed for the TPP had the potential to increase the cost of medicines. These were identified in leaked drafts of the intellectual property chapter; the healthcare transparency annex; and the investment chapter, which includes an investor-state dispute settlement (ISDS) mechanism. These provisions, if adopted, could be expected to lead to an increase in the costs of managing the PBS by delaying the availability of generic medicines, and constraining the ability of the PBS to contain costs. An increase in the cost of the PBS to government would be likely to lead to higher copayments for patients.
European sponsors of U.S.-style neoliberalism pose a threat of transforming European politics, and with it the structure of economies and society. Enormous sums of money are being spent on public relations, and to support politicians willing to shepherd corporate monopoly power against that of democratic government and voters. The most serious threat to European health care and care for the aging population in general is pressure from U.S. firms and diplomats to ram through the TTIP.
It is much more than a free trade agreement. Its “investor dispute” mechanism threatens to disenfranchise governments. The intent is to block them from protecting Europe’s economy, population and basic social philosophy that has developed over the past century of social democracy.
That is why so many of us in the United States also are fighting against this agreement. It has been a major issue in this year’s presidential campaign. Republican nominee Donald Trump has affirmed that the public option is by far the most economic. And Democratic contender Bernie Sanders has opposed Hillary Clinton’s support for her patrons on Wall Street and in the pharmaceutical monopolies. I hope that a similar fight will be waged in Europe.
Read the whole thing at:
And don’t miss the newly updated biography of Esther Vilar!