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Commentary on The Capital Markets- Category [Health Reform]
2017-01-12 09:20 by Karl Denninger
in Health Reform , 983 references
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That goes for the rest of the so-called "analysts" as well.

Everyone is entitled to their opinion.

You are not entitled to your own made-up claims which you present as fact.

Again, the facts:

Last year the Federal Government spent $1,417 billion dollars out of $3,854 billion, or 37% of every dollar it spent, on Medicare and Medicaid.  This was a 9.3% increase over last year's expenditure of $1,296,731 (million), all-in.

But inside this figure are even-more damning numbers.

Payments to the health care trust funds were up 13.4% (!)

Spending on CHIP, the plan for poor kids, rose last year by an astounding 56%.  While the total spent was only $14.3 billion that rate of rise is utterly astronomical by anyone's measure.

Don't believe for a second that administrative expenses are under control, which is a claim often made for Medicare and Medicaid: They were up 32% last year for the primary hospital insurance trust fund.  No, that's not a misprint.

Hospital benefit payments for Medicare?  Up 8.4% -- the bright spot, believe it or not.

Medicare Part "D" (drugs)?  Sit down: Up 26.2% to a total of $95.2 billion.

Folks, at this rate of change within the next four years Medicare and Medicaid will consume just over $2,000 billion a year, or $2 trillion -- an increase of $600 billion a year in spending.  

No, it won't rise to consume that amount.

If it is attempted, and absent actual resolution that will be attempted, the federal budget and economy will detonate.

No, "bidding for drugs", as Trump said, will not fix the problem.  Last year Medicare Part "D" (drugs) spent $95.2 billion.  Yes, that was up 26% from the previous year, but the fact of the matter is that even if you cut that acceleration rate to zero the rest of the $1,417 billion would continue to accelerate, with hospital payments up by 8.4% last year.

You have to put a stop to all of the medical pricing games, the collusion and the rank violations of long-existing law found in the Sherman, Clayton and Robinson-Patman acts.

You cannot simply "negotiate" on the government side.  I remind you that outside of prescription drugs the federal government already mandates "reimbursement rates" for medical procedures including hospital charges on both the Medicare and Medicaid programs and yet that spending went up 8.4% last year anyway.

8.4% is wildly beyond even the most-optimistic view of economic expansion under a Trump administration -- and those optimistic views are unlikely to be met.  Some improvement is likely due to tax and regulatory reform but there is no way it's going to eclipse an 8.4% acceleration in spending.

Further, any attempt to do so on the "government" side for Medicare and Medicaid without forcing the private-sector side to adhere to the very same set of laws will simply cause the medical firms to shift the expense to those not on the government dole.

That's probably you.

If Trump does that then you get butt*****d.  If Price manages to get balance billing into Medicare (which he has formerly advocated for and in fact tried to get passed!) then every Senior will get butt*****d and as they get older and sicker, after being forced into Medicare, they will all have their entire net worth stolen.

If Medicaid is block-granted to the states then the states will have a fixed pile of money "given" to them but the mandate for Medicaid will continue and with a ~9% acceleration in cost not matched by the block grant every single state budget will detonate within five to ten years.

Medical spending is approximately 19% of total GDP today and 37% of federal spending last fiscal year.

The only solution to the problem is to take the ~$3.5 trillion "medical industry" and make it a $1 trillion a year industry by enforcing the Sherman, Clayton and Robinson-Patman acts against each and every actor in same.

Robinson-Patman, for example, states that any commodity (physical, standardized good) that travels in interstate or international commerce cannot have discriminatory pricing applied to it between buyers of like kind and quantity.  This quite-clearly applies to drugs and supplies used in medical care.

Whether you have "health insurance" does not change who the actual buyer of said drug is -- the actual consumer is you.  It is therefore quite-clear that to charge one person $20 for a month's supply of a drug and someone else $500 for the same one-month supply is an obvious and blatant violation.

So-called patient assistance programs are also rank violations of Robinson-Patman.

Those programs, which are often-cited by pharama companies, discriminate against some people and for others based on their income and insurance status for a buyer of like kind and quantity of a commodity -- in this case a drug.  Try charging one person $3,000 for a car and the next person $30,000 based on their car insurance company and/or income and see how long you stay out of prison.  Ditto if you were to try to charge a poor person $20 to change the oil in their car and the next person, who has a $100,000 income, $200.

Likewise, Sherman and Clayton make collusive practices of any sort that intend to or do lessen competitive pressure illegal.  The refusal to post a price, refusal to honor a claimed price or discriminating between consumers based on their health insurance carrier or status is quite-clearly intended to prevent meaningful shopping -- competition -- between providers of medical services (such as hospital services.)

To those who claim there is an exemption in these laws for such goods and services I challenge you to provide a citation to the law you claim exists.  Mccarran-Ferguson is not a valid example of same as regards drugs, incidentally, as that has already been litigated at the US Supreme Court and it was found that "pharmacy agreements" (to fix prices and charge differential rates based on "insurance") are not "the business of insurance."

Never mind that Mccarran-Ferguson provides no shield from state anti-trust statutes (only federal) and in fact the law explicit allows for said state laws by deferring to same!

We don't need new laws -- we need vigorous enforcement of existing, 100+ year old law.

Folks, it is this issue that Trump either must address now, in the first 100 days, or the rest doesn't matter.

If you're a Trump supporter then you need to be 100% on board with this and make damn sure he is held accountable to it because if he doesn't address this specific issue in this specific fashion then the rest of his agenda literally does not matter.  The federal budget will collapse and attempts to stave it off will at best buy a couple of years while forcing said collapse down on the states as well.

Again, there is no "halfway" measure that will work.  The only answer is to break up all of the medical monopolies and enforce all of federal (and state) anti-trust, anti-competitive and deceptive practice laws against every medical provider, whether it be a drug company, a pharmacy, a hospital, a practice, diagnostic centers and even individual doctors.

We either do this and return health care to a $1 trillion a year industry from a $3.5+ trillion industry or this nation dies fiscally, and if you currently suffer from a chronic condition that requires ongoing medical care or pharmaceuticals there is a good chance you will die physically as well.

This is not politics.

It's math.

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There's been zero major media coverage of this, but it has shown up on the web:

Steven I. Weissman, sent President-elect Donald Trump a petition to end predatory pricing in the healthcare industry. The petition, signed by more than 104,000 Americans, was delivered Wednesday evening to Trump Tower in New York City. It is the first petition of its kind, and the first one the president-elect has received regarding healthcare.

Weissman became the president of a Miami hospital when a friend, who founded the hospital, passed away. During his tenure as president, Weissman was able to get an inside look at how healthcare operates in the U.S., and, in his own words, it was “sickening.”

“The biggest problem in healthcare is that there is no pricing at all,” Weissman tells The Daily Caller News Foundation. “It is not a coincidence that the only product or service permitted to be sold in the U.S. without legitimate pricing, is the one which has imposed tremendous financial hardship.”

All of this is already illegal.

It is illegal in the State of Florida under 501.001 - 501.213 to engage in any sort of deceptive practice when it comes to any good or service offered to consumers.  There are additional particular provisions related to seniors, but the general framework is valid for everyone.  There is no exception in that law, nor in similar laws in other states, for any part of health care.

Not actually having a price or varying same based on method of payment without prior disclosure is a per-se and blatantly deceptive act.  Try it when offering oil changes to the public for their cars and see how long you stay out of jail.

Further, these practices are illegal under the entire body of 15 USC Chapter 1.  It is not possible for such an industry to maintain these practices without collusion and yet collision in fixing prices is per-se illegal under 15 United States Code.

It is further illegal to discriminate in pricing of commodities (that is, physical goods) sold, manufactured or used in interstate commerce between buyers of like kind and quantity.  This means drugs, medical supplies and hardware of various sorts, all of which are manufactured and shipped in interstate (and international) commerce cannot lawfully be priced differently between consumers of like kind and quantity of same.  That, once again, is long-standing law (Robinson-Patman) and part of 15 United States Code!  For what it's worth I shoved a several hundred thousand dollar purchase order up a major vendors ******* on exactly that basis when I discovered they were engaged in discriminatory pricing during my years in running MCSNet.  They folded and gave me the same price they had charged others for like kind and quantity.  I had to cut a purchase order with a committed delivery schedule that was rather larger in quantity than I would have preferred, but it was very worth it.

In point of fact this "petition" is amusing but in a non-funny sort of way on several levels.  First, it's hardly new; you can read my Ticker on this point, which in fact was the first that was put in the "Health Reform" category on the Ticker immediately after it was created in 2009.  Or, if you prefer, click here and start reading backwards on the timeline among those articles that remain available.

Second, you can read the voluminous set of articles I've written on this point both before and since in which I have clearly delineated that these practices certainly appear to be in rank violation of both state and federal law and yet nobody goes to jail nor does the government at any level give a damn about you being raped blind by these firms. In fact they not only cheer it on they allow their court systems to be used in your pursuit if you don't knuckle under!  This is not small-ball either -- it constitutes almost one dollar in five spent in the economy today, or somewhere north of $3 trillion a year that is extracted with roughly 80% of it happening due to these practices.  If it's not worth prosecuting at a state or federal level when at least $2 trillion is stolen from you every year exactly how much has to be taken before it will be?

Third, you can contemplate whether passing another law will do a damn thing when nobody will insist on the enforcement of existing law that speaks to the same issue, the same point, and contains not only monstrous civil but felony criminal penalties as well.  This is a body of law that has been on the books in many cases (15 USC) for over 100 years and yet exactly zero hospital administrators have been charged nor have any of the so-called "networks", despite it being clear to anyone who has read said law that these practices are already illegal.

Finally, if you think Trump is going to do one damned thing about any of this you need to get your mouth off his Johnson because he not only won't he will actively make it worse.  We know this to be fact because his HHS appointee is one of the architects in Congress of the existing system and has attempted, in the past, to shove balance-billing, which is an artifact of said system, down the throats of those on Medicare -- that is, Seniors.

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2016-08-23 17:08 by Karl Denninger
in Health Reform , 1594 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.

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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.

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This is an interesting piece, but not because of the root numbers in it.

In 1940, entitlement payments, which include everything from disability payments to Social Security to Medicare, amounted to just over 20% of annual government spending in the United States.

Today, entitlement spending has swelled to nearly 70% of the annual federal budget.

Things are about to get a whole lot more complicated. The 20-year baby boom that took place after World War II is now beginning to result in a retiree boom.

For context, Druckenmiller points out that in 2030, the average age of an American citizen will be older than the average age of a resident of Florida today.

This demographic trend is going to create an entitlement spending catastrophe.

It doesn't have to, and the root of it isn't "entitlement spending", in the main.

Let's think this one through.

Social Security is funded by a "one in 8" tax, basically.  That is, about one dollar of every $8 you earn up to a given cap is confiscated before you ever see it.  You think it's half that, but it's not because the other half is paid "by your employer" and this fiction is maintained so you don't revolt.

However, your offered wage is reduced by that amount -- guaranteed.

So let's assume that we have a 2.5:1 ratio as is put forward.  That sounds horrifying, except that it's a temporary problem (it lasts 20 years, roughly), and then everyone involved in "causing" it is dead.  Further, there will be some that will "file late" for Social Security in an attempt to get more -- a strategy that only works if you live a very long time in terms of total funds, and lose their bet because they will die before the break-even is reached.  In fact, actuaries don't care if you make this bet because they know that on balance while some will win, some will also lose and it will all even out.

No, the problem here is not the "one in 7.5" tax for Social Security.  It is the one in 34 rate assessed for Medicare.

To put not too fine a point on it, Medicare and Medicaid (combined) are roughly double the outlay of Social Security and yet they are funded at a rate of less than 1/4 that of Social Security via taxation.

Further, Social Security outlays are indexed to alleged inflation, which is intentionally machined to show smaller than real figures, and thus there is a built in depression of Social Security obligations in real terms, especially over long (20, 30, 40+ year) timeframes.

Social Security itself is unlikely to go broke.  If it does "run out of money" 30 years hence there will be some reduction in benefits, but remember that even a 1% inflation "miss" against reality over 30 years turns into a 35% reduction in real expense.  In other words the "you'll only get 70% of your promised amounts" out of Social Security claims are probably dead wrong; you'll get the entire amount but it will be short in purchasing power by 30%.

The disability fund is another matter; that's bankrupt now and politicians have been stealing from the retirement fund for a while to cover it up.

On the other hand Medicare and Medicaid spending is going up at a radical rate compared to inflation, government-stated or not.  How bad is this?

Fiscal Year 2005, for example, spent a total of $652 billion.

Fiscal Year 2015 spent a total of $1,297 billion, or close to a clean double in 10 years.

This was not mostly-centered in Medicare -- that is, retirees.  Medicaid went from $182 billion to $349 billion, damn close to a double standing alone.  In other words it was across-the-board in all age groups served.

That's a 7.2% growth rate which far exceeds alleged inflation -- inflation allegedly was up 20% over the same 10 years, or an annual rate of about 1.8%.

In other words that segment of the economy as spent by the government went up at a rate four times that of general prices.

Need I remind you what happens any time two exponential growth curves have a different growth rate?  Go look at Leverage; there's a damn good reason that this is covered in the front of the book because if you don't understand and deal with it nothing else matters.

This, and only this, is the cause of all of the federal debt expansion, pension fund problems both private and public and the detonation that will occur in the federal budget and forward liabilities unless it is stopped and reversed.

Note carefully that we spend as a nation roughly double as a percentage of GDP what other developed, G20 nations spend on health care -- and virtually all of those other nations have socialized medical systems.

Socialism is always less-efficient than capitalism because there is no reward for innovation in a socialist system; you cannot take market share from someone else since market share is not a function of market success or failure.

This, in turn, means we're definitely overpaying by more than twice for medical care; we are in fact probably overpaying by as much as 80% across-the-board.

It is not hard at all to find examples of people being billed 10 or even 100x a price in another nation for a given thing.  It is cheaper for me to fly to Narita, Japan, round-trip, and have an MRI done there by more than 50% than the average amount charged for the same scan here in the United States.

While you can in some cases get that scan done for a few hundred bucks here they're all $200 or so in Japan, and most people grossly overpay here in the US.  Why?  Because of various practices that all amount to consumer deception, extortion, price-fixing or all of the above -- all acts that are supposed to be crimes.

Let's say you go to the ER "in-network" on your alleged health insurance.  While there some doctor sees you.  He isn't in your network and you get a bill for hundreds or thousands from him.  The hospital administrator should be imprisoned for allowing this along with the doctor who did it; you neither consented to such a bill nor in many cases had any ability to refuse, but the administrator could have required that said doctor be "in network" to be there or if not that he take the same reimbursement rate as if he was.  He didn't and thus they both took advantage of your "in extremis" situation to bilk you.  That's supposed to be illegal as a matter of general consumer protection yet not one person has gone to prison for it -- ever -- that I can find a record of.

Drug companies set prices by nation based on various things, including GDP and what they think their drug is "worth" in terms of your life or health.  It's illegal to restrain trade (15 USC, Sherman, Clayton and Robinson-Patman) yet that's exactly what they do, with the help of the Federal Government, in that if you get on a plane and buy a suitcase full of some drug at a much cheaper price to try to bring it back and both make a profit while dropping the cost here in the United States it is you rather than they who will go to prison.

It is virtually impossible to get a binding quote on a procedure from nearly all medical facilities in advance.  The notable exception are places like The Surgery Center of Oklahoma, which posts "all-in" prices.  I note that said prices are typically one third to one fifth of what is charged in hospitals that don't post prices, including hospitals in the same general area of the country.  Gee, I wonder why, and then one wonders why there haven't been thousands of criminal indictments and lawsuits alleging racketeering and extortion filed against the administrators and doctors in all the other hospitals.

Here's the reality folks, and it's a matter of arithmetic, not politics:

If we stop this right now the Federal Government would immediately and permanently run a roughly $400 billion a year surplus.  In other words your purchasing power would go up rather than down every year and the federal debt would slowly be retired at a rate of about a trillion dollars every three years.

In addition the "entitlement bomb" being discussed in the linked article would instantly and permanently disappear.  It simply would not exist; the short-term stress on Social Security would be manageable without material changes to the program due to the inherent understatement of inflation in the CPI used to link benefits and over the longer, indefinite time horizon the program remains stable.

Finally, were we to stop this keeping the Medicare impact on Seniors as it is today would allow Medicare to almost entirely disappear.  The reason is that Medicare is an 80/20 program; if the base cost of medical care decreases by 80% (and if we only equal the socialist nations it would fall by 50%; we can do better than that with capitalism) then exactly zero needs to be spent for the cost to an actual Senior to remain the same.  However, since we did promise such an 80/20 program keeping that promise is not an irrational act and thus some spending (about 1/8th to 1/5th of what it is now) would remain.  Likewise, Medicaid is currently basically-zero cost for beneficiaries; if the cost of care drops by the expected amount we might well be able to get rid of many of the beneficiaries entirely since they would be able to afford to pay cash.





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