The Market Ticker
Commentary on The Capital Markets- Category [Health Reform]

Yes, you're going to die.

We all will die.

We have some choice as to how and where, but not the final outcome.  That's known in advance.

We have heard for decades about how "terrible" this part of medical care this or that might be.  That administrative overhead has grown here, there, and everywhere.  That cost is going up due to this, that or whatever.

The latest screamfest is about MACRA and claims that it will "destroy" Medicare doctor choice.  Like so many claims before it this one centers on trying to get you buy into the idea that all these "great plans" are really about pushing Grandma, in a wheelchair, down the stairs -- or off the cliff, as Democrats have repeatedly charged.

But nobody wants to talk about the truth.

The truth is that technology drives productivity, and productivity drives down cost.  It does so every time that the market is allowed to work. It is why you can buy a $35 computer today, right now, that is the size of a credit card, can run your house, browse the web or do all sorts of things that a computer costing a million dollars 40 years ago could not.

Oh, and did I mention that it requires less electricity than one 25 watt light bulb, where the former model 40 years ago required industrial power (and the power bill to match) along with forced air conditioning under a raised floor lest it literally melt down from its own heat.

You'd think medical care is exempt from this, but that's only because you live here in the United States.

Let's just take one example.  MRIs have been revolutionary in many areas of medicine.  By allowing imaging of soft tissue that was formerly impossible, along with having zero radiological exposure (that is, no risk of causing cancer or other problems as with an X-ray, CT scan or similar) they have brought precise diagnosis of maladies that formerly were nothing more than a guess.

But.... here in the United States they're expensive.  If you have allegedly "good" health insurance you might not think so, but in fact they are.  An MRI scan costs from $1,000 to $3,000 or so in the United States, and whether you pay it out of pocket or it is billed to some "insurance company" and thus is hidden in cost from you, that's what they cost.

We have US companies that make the machines used for those scans.  We also have doctors trained to read them, which is inherently part of it.  And, to hear the medical folks talk, they tell you these machines are expensive, trained radiologists are expensive, and, well, that's what it costs.

They're lying, they're bilking you, and they all ought to be in prison.




See, there is this little nation called Japan.  Japan is also a first-world nation.  Japan also has firms that make MRI machines. Japan has doctors, including trained radiologists.  And in Japan, you can walk into a clinic and get your MRI done for somewhere between $100-160.  In cash.

In the 1980s, when the first MRIs for clinical use were approved and entered service, scans were expensive everywhere, including Japan.  But over the last 30 years the price there crashed, as happens whenever the advancement of technology and productivity intersects with the market and unlawful, felonious interference is absent.

But wait, we're told -- that 10x, 20x, 30x price here in the United States is reasonable and necessary.

Sure it is -- if you support being bilked, price-fixing, intentionally buying up competitors and either shutting them down or raising their prices, "affiliating" all the centers with hospitals (at even higher prices) and more.

And all of this, I remind you, is illegal.  Not "a little" illegal either: Felony illegal.

So says 15 USC Chapter 1.

Said law is more than 100 years old.  It bans, under felony criminal penalty and ruinous fines, any act that restraints trade, forms monopolies, price-fixes and similar.  Trusts in restraint of import trade (e.g. prescription drugs) are also illegal, albeit at a misdemeanor level (15 USC Ch 1, §8)

We keep asking the wrong questions, and we do it because the media and political parties intentionally ask the wrong questions so as to keep us from asking the right ones.

The right question is: "Why do we need a thing called 'insurance' that is not actually insurance, and why aren't those who sell an intentionally falsely-labeled product or service all rotting in prison?"

You see, insurance is a thing you buy to cover your expense if an unlikely but ruinous event happens.  Medical care in the general sense is not unlikely.  Cancer might be unlikely, but prescription meds, a checkup or treatment for an existing condition are not "unlikely"; they are not only likely in the case of something you already suffer from they're guaranteed!

You cannot buy insurance on your house if it is already on fire.

Why can you buy "insurance" on your medical state to treat diabetes if you are already diabetic?

And finally, if you buy insurance on your house, and it burns down, you never pay another nickel in premium (on that house) -- now the insurance company pays you.  But get sick and watch what happens -- not only must you keep paying but when your "annual insurance birthday" comes along the price can change, and so can the services, and you must pay whatever the new price is or they stop paying your already existing claim for the event that already happened.


I've been writing on this since The Market Ticker began publication and in fact have been advocating on this point since the 1990s when I ran my Internet company -- the trajectory, where it was headed, when it was going to happen and the outcome was easily projected even then.  The number of "mainstream media" folks who want to have myself or others who have brought this up with facts and figures on the air, and the number of serious political discussions or debates on the topic over those last 25+ years?


The real discussion, which nobody wants you to ask, is why that MRI is $1,000 instead of $98 like it is in Japan?  You see, the $98 you could pay out of your pocket, and in fact with most "insurance" the $1,000 MRI scan still costs you more than $98!

What does that mean?

Simple: If there was no medical scam in the first place you wouldn't need or want today's version of "medical insurance" and thus you would never buy it.  You would instead be able to and would pay in cash.

There would never have been a "need" for Obamacare, there would have never been an outcry over health insurance, Medicare and Medicaid would not be 37% of federal spending, there would be no federal budget deficit, most of the Federal Debt would not exist and in fact there would be a multi-hundred-billion a year budget surplus, your spending power would be going up by about 2% a year instead of down by 8+%there would be no impending pension crisis nor would cities have gone bankrupt and more.

What you might buy, and companies would offer, is true insurance.  But since the cost of treating things such as cancer would also come down in cost by 80%, 90% or more the cost of insurance against those unlikely but expensive events would be reasonable to purchase.  You'd probably pay a couple hundred bucks for it -- yearly -- which is affordable for basically everybody.  And it you got sick?  The company would pay to "fix" it and you would not need to pay any more for the actual insurance against the event that already happened.  You might choose to continue to pay for possible future illnesses or injuries -- or you might not.  But irrespective of that choice your treatment for the already-occurred event would be covered.

How does it happen in this country, if it is to ever happen?


Not new laws, not new regulations, not more hand-waving by Democrats, Republicans or anyone else.

Prosecution under laws that are over 100 years old, exist now, could have been enforced 30 years ago, 20 years ago, 10 years ago, 5 years ago, 2 years ago, 1 year ago, yesterday, today and tomorrow.

Laws that neither political party will enforce.

Laws that neither a Republican or Democrat White House, which I remind you is where the power to enforce laws rests (in the Executive) has ever in the history of this insane mess enforced.

Laws that no State Attorney General, despite there being laws on most state law books banning these practices as well, along with general consumer protection laws that prohibit deceptive practices (and performing a service without discussing price first certainly would fit that description) has ever enforced.

Laws that, I remind you, neither Trump or Hillary has spent one minute discussing in this Presidential Campaign despite it being within either of their power, if elected, to direct their Attorney General to investigate, bring to Grand Juries and prosecute the rampant, outrageous and clear violation of these laws.

Would there be losers if this was to happen?

There sure would.  Anyone who says otherwise is crazy.

There would be a lot of out-of-work lobbyists, for one.

There would be a material increase in the cost of prescription drugs in other nations because level pricing would force same.  But while their prices would go up, perhaps by a lot, ours would collapse by 70% or more.  Why?  It's arithmetic -- there are 330 million of us and about 1000 million in the OECD world of them, plus another ~300+ million in the "developing" world with a middle class or better income.  We've been paying their bill for decades and the day we stop there is one pool with level pricing for all. Assuming no change in total revenue their prices rise by quite a bit but ours collapse by 70% or more -- in many cases that drop would be 80-90%.

There would be an immediate recession, and a deep one at that, as Health Care went from 19% of the US economy (where it is today) back to about 4%, where it was 30-40 years ago.  However, at the same time that would increase business productivity tremendously, reallocate those funds to production, businesses would flock to the newly-competitive United States and ultimately, within a year or two, we'd win big on both productivity and GDP.   But make no mistake -- there would be losers, and in the short term there would be economic pain, especially for those in the health care sector today.  Indeed, if you're a health "administrator" I hope you can do something else, since your numbers have grown by over a factor of 30 in the last 40 years and none of those additional administrators would still have jobs.

If you have or develop a rare or "orphan" disease you might be screwed.  Let's not mince words on this -- there are certainly things we can do technologically but we cannot afford to do for everyone, or even nearly anyone.  While you will be able to buy insurance against those calamities many people will not, just as many do not buy flood insurance now despite it being cheap if you're in a "no special risk" zone.  If you get flooded without flood insurance, or get an orphan disease without having insurance against it, you're going to be screwed.  And?  Life is a series of risks, some of which you can control and some of which you cannot.  You can insure against whatever you wish but you must not be allowed to take your choices and make them someone else's obligation.  That is how we got to where we are now, in short, and if we fix this that will end.

What if we don't fix it?

Then we all -- this entire nation -- economically die within the next few years. Not at some point in the reasonably-distant future, and not just a possibility either.


That's the choice folks, and if you choose not to decide -- if you choose to remain silent -- you are choosing economic if not personal, and painful, death.

View this entry with comments (registration required to post)

You remember Chelsea claiming that marijuana kills, right?

You may remember me pointing out that this means that Hillary, if President, would likely come into your state if it has or does legalize weed and start arresting people under Federal Law which has not changed -- a power I will remind you that the President has and can exercise without Congressional approval.

Well, you need wonder if I was pulling your leg no more.  Here it is, in her own words:

URSULA BURNS: So long means thumbs up, short means thumbs down; or long means I support, short means I don’t. I’m going to start with — I’m going to give you about ten long-shorts.

SECRETARY CLINTON: Even if you could make money on a short, you can’t answer short.

URSULA BURNS: You can answer short, but you got to be careful about letting anybody else know that. They will bet against you. So legalization of pot?

SECRETARY CLINTON: Short in all senses of the word.


I'll tell you why: Hillary Clinton is in the back pocket of all the big pharmaceutical companies.

In every state where pot has been legalized prescription painkiller use has gone down.

Who is opposed to marijuana legalization?  The pharmaceutical industry.  Why?  Because they'll make less money.  They simply do not care that marijuana is an effective means of not only countering a whole host of conditions but in addition when its used on a recreational basis it materially cuts the abuse of prescription opiods which at the same time reduces the number of people who are severely harmed or killed by them.

If you're a younger voter and think legalizing weed is a good idea, or if you smoke it now then if you vote for Hillary Clinton you are voting against what you believe, you are voting for more dead people from drug overdoses and you might even be voting yourself into jail.

View this entry with comments (registration required to post)

Right there folks.

Go ahead, click the link, upvote it.

Maybe it gets asked.  smiley

View this entry with comments (registration required to post)

2016-08-23 17:08 by Karl Denninger
in Health Reform , 1577 references

How many times will you hear crap coming out of your Tee Vee and various reps and senators before you drop everything you're doing, get off your ass, show up in DC and refuse to leave until everyone involved in this garbage goes to prison?

The EpiPen isn’t new; it has been in use since 1977. Research and development costs were recouped long ago. Nine years ago, it was bought by the pharmaceutical company Mylan, which then began to sell the device. When Mylan bought it, EpiPens cost about $57 each.

Few competitors existed, and for various reasons, that has remained the case. The device actually worked and saved lives. People needed it. Mylan raised the price. It also began to raise awareness.

"Raise the price" is sure a decent description... if you consider a 500% increase a "raise"...


No competition.

Or is there?

Yes, there is.  You can buy these over the counter virtually anywhere in Europe for about $20 each.  You can buy insulin over the counter in France for about the same price for a month's worth of supply.

And yet if you bring just one of either back over said border with you then you are breaking the law.  Bring a whole suitcase back and you're going to prison.

Yet if you did exactly that, were not put in prison and sold them, how many $600 (for a pack of two) pens would be sold in America?  Zero, because even if you charged $50 each (a $30, or 150% profit) you could make a hell of a business out of flying back and forth between any EU country and the United States doing exactly this.

How long would Mylan sell them for $300 each ($600 for a 2-pack) if you started doing this?  15 seconds, which is how long it would take them to figure out that they'd sell zero of them if they didn't drop the price back to about $50.

Now note very carefully that absent government force it is blatantly illegal under 15 USC, with a ten year per count felony prison term, to attempt to monopolize, restrain trade or price-fix.  Therefore it is only because of the explicit, intentional and outrageous conduct of your own government that you are getting raped like this on a literal daily basis, and this issue, as I've repeatedly pointed out is not limited to EpiPens -- in fact, Mylan has raised prices on dozens of off-patent, generic medications by about the same 500% in the last few years and the only reason they get away with any of it is the above use of government force.

Note that while the law may prohibit you from bringing said things back from Europe under penalty of imprisonment nowhere in that same law does it exempt the makers from 15 United States Code -- in other words, said law and regulation prohibiting your reimportation doesn't grant them an exemption to 15 USC prohibiting restraint of trade or pricing-fixing.  If that law were ever to be enforced those executives would still go to prison and their firms would still be bankrupted by ruinous fines, in short.

That is exactly where they, and all of Congress, damn well ought to be facing right here, right now.

If you want to know why medical care is so expensive and you need the fraud called "insurance", if you want to know why Obamacare was "sold" to people and is now going to collapse, if you want to know why Medicare and Medicaid were sold as "necessary" and yet continue to bankrupt the nation the answer is right here.

You are paying roughly five times what virtually everything ought to cost when it comes to medicine, and the reason you are paying it is because every firm and person in the business either is wantonly violating the law (and nobody ever gets indicted or goes to prison despite doing so) or even worse they've conspired with the government so they can enforce what is an otherwise-illegal act of restraint of trade under penalty of throwing your ass in jail instead of theirs and yet the're still quite-arguably violating the law themselves!

Let me know when you're ready to cut the crap, America, because until you do en-masse and descend on Washington DC to demand and enforce that this garbage stop right here and now, with every one of the co-conspirators drawing 20+ years of hard felony federal time along with each and every one of the involved firms being dismantled from the millions of dollars of fines per count, with each person harmed being a separate count, you deserve to be screwed, blued, tattooed and finally dead as you continue, each and every day, to give your consent to exactly that.

View this entry with comments (registration required to post)

Is that the sun I see this morning?

It might be.

Look folks, I don't trust Trump.  Then again I don't trust politicians generally, no matter who they are, simply because they have a proven record of lying and yet while their lies are never punished ours are turned into felonies whenever those they empower are asking the questions -- including themselves!

So here's the challenge before us: As I've pointed out repeatedly in these pages since 2009 when the health care debate came into the forefront of American politics, and turned into Obamacare, we have only two choices fiscally as a nation:

1. Enforce the law against hospitals, doctors, pharmaceutical firms and those running clinics and diagnostic centers.


2. Our nation will be fiscally and, in all probability politically destroyed.

This is not hyperbole.  It is arithmetic.

Anyone denying arithmetic is not only a fool they're both a tyrant and a thief.

To those who claim to be "conservative" yet who have failed to act on this matter for the last three decades: You're liars, thieves, tyrants and unfit to be citizens of this nation -- you most-certainly are not conservative.  Deliberately subverting the rule of law, whether done by action or intentional inaction, disqualifies you on all counts.

To those who claim to be "evangelicals" or "Christians" yet who have failed to act on this matter for the last three decades: You are not Christian; no person who is can permit the sort of ravenous theft and fraud that has driven the expansion of this racket to nearly a full 20% of our economy.  You are Satanists to an individual and that's a fact. Either repent here and now or own and be proud of your serpent behavior.

The laws in question are very clear.  15 USC (collectively), otherwise known as the Sherman, Clayton and Robinson-Patman acts declare that attempting to restrain trade or fix prices is felonious at a federal level.  Further laws at the state level typically declare that it is a criminal act to, through any means, deceive people as to the cost of a good or service or bill them at a rate exceeding that quoted without their affirmative and prior consent.

There are other laws that also bear on this matter, including laws prohibiting extortion (the obtaining of something, particularly money, through threats or force) which facially appear to be violated thousands of times on a daily basis by the medical and insurance industries. Then there are laws that prohibit discriminatory pricing; the usual means of getting around this is to claim that the "chargemaster" price is the actual price but that then turns the so-called "negotiated price" on your EOB from the insurance company into a kickback to the insurance firm which is also prohibited in many cases and in those where it's not that's taxable income to the insurance company as debt forgiveness yet they have never been prosecuted for the outrageous level of tax evasion -- to the tune of over a trillion dollars of undeclared and untaxed income a year -- that such a scheme involves.

Hillary Clinton, should she win the Presidency, will not only refuse to address this problem she'll make it worse.  We know this because she, along with her husband Bill, tried to cram down our throat what is now Obamacare when Bill was in office -- an attempt to take a set of facially unlawful acts by an industry and compel compliance through the use of government force.

Trump has hinted at dismantling this scheme, but he hasn't come out with a full-throated intent to do so.

He needs to, and he needs to do it now, explaining why it has to happen and what will come if we both do and don't take that path.

To be clear, doing it will not be painless.  There will be an industry that is turned on its head and, for a short time, a nasty recession.  We must accept this, because in doing so we will take roughly 15% of the cost structure out of not only your personal life but also that of every business in America.

This will not end drug R&D in the United States or anywhere else.  It will cause prices to go up elsewhere in the world, in some cases by a lot, but it will also cause them to come down here in America by as much as 85%.

It will render paying cash for medical care, even fairly complex care, practical for most Americans.  For those events where it is not it will turn the cost of insurance into a bill similar to that which is paid for homeowners insurance on a modest home -- a reasonable and routine expense, since with the cost of care coming down by 85% so will the cost of insurance similarly fall.

It will permanently resolve not only the Federal Deficit and, over 30 or so years, the entirety of the federal debt, it will also permanently resolve the financial problems our state and local governments face -- threats that if not addressed will cause property and other taxes to rise to unpayable levels for most Americans.

By replacing the federal deficit with a 30-year unbroken records of surpluses it will also take the current ~2% loss of real purchasing power that you have suffered every year for the last 30 and turn it into a 2% compounded annual gain over the same amount of time.  You may not get a raise but you don't need one when you are gaining 2% in real purchasing power each and every year; over 30 years this will almost double your real buying power without a single penny of increase in your wages.

And finally the dramatic reduction in business cost will mean that firms will flock to both manufacture here and run their offices and administrative functions in the United States, freed from what is currently certain fiscal disaster that any reasonably-competent CEO can and has foreseen and thus is trying, in today's business climate, to avoid.

Will Trump do any of the above?

Maybe.  Or maybe not.

But unlike the other candidates he has hinted at it, and he knows where the problem is, because he's lived with it through the 1990s forward, as have I.  As a former CEO myself this was the issue I identified while running MCSNet that was guaranteed to destroy my company financially given sufficient time if it was not addressed.

Competitive pressures are always present in any business; they're a function of the market and part of the job is navigating them.  Arithmetic is not something you can navigate; you must face it and, if you cannot convince the political powers that be to change the underlying facts that lead to these disasters you have no choice but to move as much of your operations as possible away from the jurisdictions where these disasters will take place, lest your company be destroyed.

We have a choice in this country and the time to choose is now.  In 2009 my best estimate was that we had 10 years left before the fiscal pressures reached the point of doing critical and possibly irreversible damage.

It is now 2016, and that means we have less than four years remaining.

We either act now or we fail to act at all, and our decision determines whether the light that I see this morning is in fact the dawn of a new and better day..... or an oncoming train.

View this entry with comments (registration required to post)

Main Navigation
MUST-READ Selection:
The CERTAIN Destruction Of Our Nation

Full-Text Search & Archives
Archive Access
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.


The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media, to republish full articles, or for any commercial use (which includes any site where advertising is displayed.)

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.