US: Opinion Piece by Tyler Cowen offers Financial Solutions!

In an opinion piece published in the New York Times, Tyler Cowen a professor of economics at the George Mason University has debated on length about the ‘financial crisis’ US is currently facing. He said that much of it is due to the spending on entitlement programs and the situation is set to become worse as health care costs rise and the aged population increases.

 Cowen suggests implementation of means testing where full benefits are given only to the really needy while payment cuts are made to everybody else as a possible solution. He says that it is a better way of allocating benefits and thereby reducing needless spending on entitlement programs. Cowen also recommends the expansion of Medicaid while making it an absolute federal program rather than one which is partly funded by the states. He also calls in for limiting the growth of Medicare as limited resources would be more efficient in allocating health care subsidies to the low income groups, young or old. 

Cowen also says that by inducing the rich to pay for their own health care, there will be pressure to lower costs. However, the problem with means testing is establishing the parameters of who receives benefit and who doesn’t. Cowen writes that the time for action and the place for it is here and now if the economic policy is to be transformed over the next 15 to 20 years.