SOURCE: Milken Institute

Milken Institute

April 23, 2010 09:00 ET

D.C.'s Failure to Contain Medical Costs Could Deplete Gains of Middle-Class, According to Stephen Nyce and Sylvester Schieber in Latest Milken Institute Review

LOS ANGELES, CA--(Marketwire - April 23, 2010) -  Rising health care costs and wage stagnation are eating away at the middle-class living standard, argue Steven Nyce of Watson Wyatt Worldwide and Syl Schieber, chairman of the Social Security Advisory Board in the latest Milken Institute Review.

"The ballooning cost of employer-paid health insurance has claimed much of the gain associated with rising labor productivity in this decade," they conclude. "Unless Washington gets serious about containing health-care inflation, escalating medical bills could easily absorb all the fruits of the future productivity gains of lower- and middle-income workers."

This issue also includes articles from the following authors:

Len Burman, an economist at Syracuse University's Maxwell School, sums up Washington's addiction to deficit finance. "None of the scenarios in which Americans wake up one day and decide that enough is enough seem very plausible," he writes. "And that suggests it will take a traumatic event, a debt crisis that delivers a one-two-three punch in the form of inflation, deep recession and the collapse of the dollar, to alter the politics of deficit reduction."

Peter Reuter, an economist at the University of Maryland's School of Public Policy, contemplates the dilemma in reforming illicit drug policies. "It is easy to describe what rational people don't like about the War on Drugs: half a million drug prisoners... the transformation of Afghanistan, Burma, Bolivia and, arguably, Mexico, into narco-states," he writes. "But it is hard to describe what an unambiguously better drug policy would look like because every path has pitfalls."

Joel Smith, a principal in Stratus Consulting in Colorado, looks at how to help poor countries cope with the consequences of climate change. "Without an aggressive effort -- and a tolerance for error as adaptation projects get up to speed -- the challenges of global warming could become unmanageable in the developing world," he writes. "There could be widespread suffering from droughts, storms and the inundation of coastal areas. And what happens in developing countries could indirectly affect the developed world by increasing political instability and driving mass migration."

Also included: a cautiously optimistic take on Brazil's economy; a sobering view of Russia's future under Putin; an endorsement of U.S. railroads as a critical part of the answer to the nation's transportation system; a look at China's third attempt at a national health-care system; and an excerpt from Eli Berman's, "Radical, Religious and Violent: The New Economics of Terrorism."

The Milken Institute Review is sent quarterly to the world's leading business and financial executives, senior policy makers and journalists. Its editor is Peter Passell, former economics columnist for The New York Times.

About the Milken Institute: The Milken Institute is a nonprofit, independent economic think tank whose mission is to improve the lives and economic conditions of diverse populations around the world. (

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