It’s easy to feel pessimistic when scientists around the world are warning that climate change has advanced so far, it’s now inevitable that societies will either transform themselves or be transformed. But as two of the authors of a recent international climate report, we also see reason for optimism.

The latest reports from the Intergovernmental Panel on Climate Change, including the synthesis report released March 20, 2023, discuss changes ahead, but they also describe how existing solutions can reduce greenhouse gas emissions and help people adjust to impacts of climate change that can’t be avoided.

The problem is that these solutions aren’t being deployed fast enough. In addition to pushback from industries, people’s fear of change has helped maintain the status quo.

To slow climate change and adapt to the damage already underway, the world will have to shift how it generates and uses energy, transports people and goods, designs buildings and grows food. That starts with embracing innovation and change.

Fear of change can lead to worsening change

From the industrial revolution to the rise of social media, societies have undergone fundamental changes in how people live and understand their place in the world.

Some transformations are widely regarded as bad, including many of those connected to climate change. For example, about half the world’s coral reef ecosystems have died because of increasing heat and acidity in the oceans. Island nations like Kiribati and coastal communities, including in Louisiana and Alaska, are losing land into rising seas.

Other transformations have had both good and bad effects. The industrial revolution vastly raised standards of living for many people, but it spawned inequality, social disruption and environmental destruction.

People often resist transformation because their fear of losing what they have is more powerful than knowing they might gain something better. Wanting to retain things as they are – known as status quo bias – explains all sorts of individual decisions, from sticking with incumbent politicians to not enrolling in retirement or health plans even when the alternatives may be rationally better.

This effect may be even more pronounced for larger changes. In the past, delaying inevitable change has led to transformations that are unnecessarily harsh, such as the collapse of some 13th-century civilizations in what is now the U.S. Southwest. As more people experience the harms of climate change firsthand, they may begin to realize that transformation is inevitable and embrace new solutions.

A mix of good and bad

The IPCC reports make clear that the future inevitably involves more and larger climate-related transformations. The question is what the mix of good and bad will be in those transformations.

If countries allow greenhouse gas emissions to continue at a high rate and communities adapt only incrementally to the resulting climate change, the transformations will be mostly forced and mostly bad.

For example, a riverside town might raise its levees as spring flooding worsens. At some point, as the scale of flooding increases, such adaptation hits its limits. The levees necessary to hold back the water may become too expensive or so intrusive that they undermine any benefit of living near the river. The community may wither away.

The riverside community could also take a more deliberate and anticipatory approach to transformation. It might shift to higher ground, turn its riverfront into parkland while developing affordable housing for people who are displaced by the project, and collaborate with upstream communities to expand landscapes that capture floodwaters. Simultaneously, the community can shift to renewable energy and electrified transportation to help slow global warming.

Optimism resides in deliberate action

The IPCC reports include numerous examples that can help steer such positive transformation.

For example, renewable energy is now generally less expensive than fossil fuels, so a shift to clean energy can often save money. Communities can also be redesigned to better survive natural hazards through steps such as maintaining natural wildfire breaks and building homes to be less susceptible to burning.

Land use and the design of infrastructure, such as roads and bridges, can be based on forward-looking climate information. Insurance pricing and corporate climate risk disclosures can help the public recognize hazards in the products they buy and companies they support as investors.

No one group can enact these changes alone. Everyone must be involved, including governments that can mandate and incentivize changes, businesses that often control decisions about greenhouse gas emissions, and citizens who can turn up the pressure on both.

Transformation is inevitable

Efforts to both adapt to and mitigate climate change have advanced substantially in the last five years, but not fast enough to prevent the transformations already underway.

Doing more to disrupt the status quo with proven solutions can help smooth these transformations and create a better future in the process.

Editor’s note: This is an update to an article originally published April 18, 2022.

Robert Lempert, Professor of Policy Analysis, Pardee RAND Graduate School and Elisabeth Gilmore, Associate Professor of Climate Change, Technology and Policy, Carleton University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

President Joe Biden’s 2024 proposed budget includes plans to shore up the finances of Medicare, the federal health insurance program that covers Americans who are 65 and up and some younger people with disabilities.

His administration aims to increase from 3.8% to 5% an existing Medicare tax that’s collected on the labor and investment earnings of Americans who make more than US$400,000 annually. It also aims to reap some savings from having the government negotiate prices on more prescription drugs.

The White House projects that these changes would generate an additional $650 billion in revenue over a decade. Some independent experts concur.

As economists who have long researched the Medicare and Social Security programs, we believe the president’s proposal is an important first step in opening the necessary debate on strengthening Medicare’s finances.

Part A’s precarious funding

Medicare consumes more than 15% of the federal budget. The program cost $975 billion in 2022, out of the government’s $6.5 trillion in total federal spending.

As anyone who has enrolled in it can tell you, the program itself is rather complicated. It’s divided into three parts, known as A, B and D, each of which relies on revenue from a different mix of sources.

Medicare Part A covers care delivered at hospitals and nursing homes, as well as home health care. Part B pays for doctor’s visits and outpatient procedures, and Part D pays for prescription drugs. There’s also Part C, a private insurance option, known as Medicare Advantage. However, its costs are included in the accounting for Parts A and B.

Part A is primarily funded by a 1.45% Medicare payroll tax on both employees and employers. When that tax and the program’s other tax revenues don’t raise enough money to cover Part A’s costs, the program dips into the Medicare Hospital Insurance trust fund to make up the difference. The trust fund, amassed from past surplus payroll taxes, currently stands at around $143 billion.

Without spending cuts, funding increases or a combination of the two, the Medicare program’s trustees have predicted in their annual report that the Medicare trust fund will be exhausted by 2028. The trustees are the secretaries of the Treasury, Labor and Health and Human Services departments, plus the Social Security commissioner. There can be up to two additional trustees, but those seats are vacant.

Medicare’s expenses are rising rapidly with the retirement of baby boomers, the large generation of Americans born between 1946 and 1964, and rising health care costs.

Should the trust fund be emptied out, the trustees predict that hospital benefits would have to be cut by 10%. But those cuts are widely considered to be politically unacceptable, as illustrated by statements from Biden and his predecessor, former President Donald Trump.

In addition to proposing an increase in the tax levied on the investment earnings of high-income Americans, Biden also proposes that these revenues be fully dedicated to the trust fund. Currently the government treats that money as general revenue that can be used for any government program.

2 very different scenarios

Unlike Medicare Part A, Parts B and D are funded largely by general federal revenue and by premiums paid by retirees.

Because the government is allowed to use general revenue to pay for them, the funding of Parts B and D isn’t jeopardized by the depletion of their trust fund – no matter how fast those costs rise.

Even without Biden’s proposed changes, official Medicare spending projections rise rapidly through the mid-2030s and then plateau as a percentage of gross domestic product.

However, those projections are based on a presumption that payments to hospitals are constrained as specified in the Affordable Care Act and that other spending constraints on physician payments are realized.

Unfortunately, history provides little assurance that lawmakers will maintain all of these requirements to restrain future payments to health care providers.

We say this because of what happened after 1997, when Congress approved the sustainable growth rate system, which was intended to limit the annual increase in cost per Medicare beneficiary to the rate of economic growth. Starting in 2002, Congress passed legislation year after year to override it – and only stopped doing that once it did away with the system altogether in 2015.

Reflecting this uncertainty, the annual trustees report features an alternative projection that is arguably more credible and more scary. It indicates that Medicare costs will grow much faster than the economy starting in 2036.

Competing demands

The Social Security program, a national pension program that primarily supports older Americans, faces similar funding shortfalls.

Its trustees anticipate that the Social Security trust fund will be depleted by 2035 without changes in funding, promised benefits – or both. In that event, Social Security benefits may have to fall by about 20% from anticipated levels.

Medicare and Social Security are the nation’s largest entitlement programs. Almost all Americans, if they live long enough, will eventually be eligible to obtain these benefits – regardless of their income or wealth.

While Americans do not yet agree on how to put these programs on a steadier fiscal footing, the math is clear.

Our elected representatives cannot avoid making hard decisions that involve increasing taxes, reducing benefits or both.

Dennis W. Jansen, Professor of Economics and Director of the Private Enterprise Research Center, Texas A&M University and Andrew Rettenmaier, Executive Associate Director of the Private Enterprise Research Center, Texas A&M University

This article is republished from The Conversation under a Creative Commons license. Read the original article.