The Arab Spring has given way to a sweltering summer. Much of the optimism in Egypt has gone stale; Libyan leader Moammar Gadhafi, now virtually surrounded, won’t go down until he is taken down; and the European Union has just joined the U.S. in an unbridled call for Syrian President Bashar al-Assad to stop attacking civilians with tanks.
Chaotic gyrations in the stock market and an unprecedented acceleration in gold prices reflect a crisis in confidence among the central pillars of our global economy. Japan is still contracting as it digs out of a tsunami of misfortune. Public outrage at China’s ruling party and its response to an accident on the highly acclaimed new rail system is symbolic of growing dissatisfaction with the autocracy. Germany and France have refused to back Eurobonds and signaled their unwillingness to shoulder the burden of dire finances on Europe’s periphery. There is a widespread sentiment that the eurozone experiment just isn’t working.
In the United States we have hit a low point in the belief that our political system represents the needs of the people. Partisan mudslinging and gridlock around the debt ceiling, which contributed to a downgrade by Standard and Poor’s, has benefited absolutely no one. As a result, no pundit now predicts a prompt return to solid economic growth or a sustained bull market. There is no question but that this will place further pressure on the national and state tax base and cause all eyes to focus on government budgets.
At the national level there are two elephants in the room, defense spending and entitlements, namely Medicare and Social Security. Leon Panetta, our old spy chief now at the helm of the military, just threatened that any further cuts to defense spending beyond those already agreed would "hollow out" our ability to maintain current commitments and to protect the nation. While early strategies of the next presidential campaign have focused on job creation, there is no question that health care spending by both the government and the military will come to the fore.
How does this affect Hawaii? On Thursday Gov. Abercrombie spoke about five elements to the impending storm that can upend our island economy. The first two focused on health care spending. He raised an alarm on the $14 billion unfunded state liability for government medical benefits and warned that soaring costs for health care "will swallow our economy and all the jobs and savings that go with it."
Abercrombie tells us that the solution is "to act immediately to contain these costs and keep our people healthy through prevention and good public health practices." This is sound advice but will not raise $14 billion to fund government medical benefits or stop health care inflation. Government payers might have little choice but to tighten up eligibility, restrict access to services and reduce reimbursement while increasing premiums and co-pays.
The human spirit has a way of rallying during challenging times. We are blessed to live in an island community that buffers us somewhat from global events. We are fortunate to live in the midst of a revival of Hawaiian culture and values. We are gifted by the aina, the kai, the moana and the blue sky. There will always be external events beyond our control, but we are the masters of our internal environment and of our relationship to our surroundings.
The Arab Spring has given way to a sweltering summer for the world economy. Watch out for a chill in the air this fall for health care at home. Stay warm inside. Together, we’ll get through this.
Ira Zunin, M.D., M.P.H., M.B.A., is medical director of Manakai o Malama Integrative Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Please submit your questions to info@manakaiomalama.com.
