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Commentary on The Capital Markets- Category [Health Reform]

Buried toward the end of this article is an admission that I don't think Megan intended....

It seems as if states where insurers initially underpriced are now trying to move toward a natural price somewhere between $3,600 and $5,000 a year for a single nonsmoker. If that's the price of providing basic benefits, regulators cannot command it away by fiat; the best they can do is to force insurers out of the market.

If that's the price of providing these so-called "basic benefits" then for the average family the entire Health Care structure in this country is unaffordable, period, and must be burnt to the ground in some form or fashion (one would hope politically!) or it will collapse.

The median family pretax income is about $50,000 a year.  That means two adults and, on an average basis, one or two kids.

There is no possible way that "health insurance" that comes with a $6,000 deductible per year, per-person can be assessed against said median family to the tune of north of $10,000 a year; that's 1/5th of pretax income -- if nobody in your family gets sick!  If one of you does or has a chronic condition you can basically double that figure.

10% all in for said expenses might be affordable, but that's well under half of the so-called "market" price and assumes the kids cost zero, which of course they don't.  It also assumes you're a median family; half the nation is below that and that you're all healthy.

There is no answer possible through diddling the so-called "health insurance" marketplace.  The only means to address the problem is to radically attack cost of not "insurance" but rather the care itself.

I assert this is not impossible despite the claims otherwise.  In fact, I assert it's not even all that difficult from a technical perspective.  If we were to treat the provision of routine health care the same way we treat the provision of routine automobile care, where prices had to be posted, binding estimates before treatment were issued and anti-trust laws were fully enforced prices would fall like a stone.  If we then applied the same consumer protection laws that forbid price-gouging when there's a hurricane coming to those having a heart attack even most catastrophic events would be able to be insured against for less than the cost of auto insurance.

I understand that nobody on either side of the aisle wants to do this but this is no longer a matter of what you want.  It is now a matter of what we, as a nation, can afford and the left side of the aisle is now frequently pointing out that simply on the math the numbers do not add up.

You cannot deficit spend your way out of this trap because when you attempt that the value destruction is immediate and impossible to avoid.  You cannot tax your way out of this trap because there is no enough value available to be taxed.

Our current structure subsidizes 5 billion on this planet with our 330 million.  If we apply on a consistent basis the doctrine that when you own a thing you have the right to trade in and dispose of it as you wish while monopolies and restraint of trade are felonious rather than meritorious the cost of medical care in other nations might rise by 50% but it would fall by 80-90% here.

We must, as a nation, put a stop to this crap.

Here.

Now.

Today.

Period.

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Ready to throw the entire Congressional clown-car brigade and President out yet?

No?

You actually sort of like one or both?

Well good, then I hope you're willing to consent to this:

Major insurers in some states are proposing hefty rate boosts for plans sold under the federal health law, setting the stage for an intense debate this summer over the law’s impact.

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

So... about that so-called "affordable care".....

smiley

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Think about the premise here...

In the late 1990s, you could have taken what hospitals charged to administer inpatient chemotherapy and bought a Ford Escort econobox. Today, average chemo charges (not even counting the price of the anti-cancer drugs) are enough to pay for a Lexus GX sport-utility vehicle, government data show.

Hospital prices have risen nearly three times as much as overall inflation since Ronald Reagan was president. Health payers have tried HMOs, accountable care organizations and other innovations to control them, with little effect.

A small benefits consulting firm called ELAP Services is causing commotion by suggesting an alternative: Refuse to pay. When hospitals send invoices with charges that seem to bear no relationship to their costs, the Pennsylvania firm tells its clients (generally medium-sized employers) to just say no.

In other words, refuse to pay -- and instead take an amount that the firm comes up with as "reasonable", stick "paid in full" on the check, and send that in.

Now you'd think this would instantly result in the firm in question getting sued -- repeatedly.  But it doesn't, at least as far as this article says.

Why not?

Might it be because if such a case went to court then as part of discovery someone would get to lay out, in court, a pretty good argument that the billing practices of the hospital amounts to rank violations of both state consumer protection and federal Sherman, Clayton, Robinson-Patman or even Racketeering law?

I think it indeed just might.... so where are the prosecutors?

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Gee, yet no solutions.....

Billionaire investor Stan Druckenmiller said an aging population will present a “massive, massive problem” for the U.S. in 15 years.

“The young people are not going to be talking about cutting back,” Druckenmiller said Wednesday night in New York at an event hosted by Addepar, a technology company that provides software to financial advisers, fund managers and family offices. “There will be nothing to cut back.”

Druckenmiller, 61, has argued for several years that the mushrooming costs of Social Security, Medicare and Medicaid will bankrupt the nation’s youth and eventually result in a crisis worse than the financial meltdown of 2008. The government will have to reduce payments to the elderly, he said at the event.

Nope.

How do you do that when the elderly can outvote the younger people?

Further, will you stop including Social Security in this description of the problem?  It's not the problem, and that Stan, like so many others, continue to include it tells me that something is very wrong with what is being propounded -- probably that he knows damn well where the problem is and thus how to address it but doesn't want to put that on the table.

It's really not complicated folks: Medicare and Medicaid are the problem, all of it.

Let's take the numbers right out of the MTS for last fiscal year.

Medicare tax receipts, last fiscal year and all-in, were $224 billion.  That's it.  Medicaid received zero since there's no tax associated with it.

But between Medicare and Medicaid last year $1,187 BILLION was spent, resulting in a deficit between spending and tax receipts of nearly a trillion dollars.  In fact last fiscal year the US Federal Debt increased by $1,085 billion which means that essentially all of the actual deficit was due to this disparity.

You got that folks?  The entire reason that we have a budget deficit -- all of it -- is that we are spending $963 billion more than we take in through taxes on Medicare and Medicaid.

THE ENTIRE PROBLEM LIES THERE, ALL OF IT.

Now to be fair, the Social Security system ran a $150 billion deficit last fiscal year too.  But $150 billion is chump change compared against $960 billion, and the latter is growing in payments far faster than receipts.

If you think you can effectively double the tax rate paid for Social Security, Medicare and Medicaid (that, I remind you, would mean that your actual tax rate for these programs would be 30% from dollar #1 for all wage dollars up to the FICA limit and then 15% for every dollar thereafter!) you're nuts.  That sort of tax increase would literally drive anyone in the middle income brackets and below into the poorhouse; it would be a doubling of the actual effective tax rate on those not making enough to pay federal income tax net of deductions and credits, for example, and would be a monstrous (30% or more) effective tax rate increase even on those with a $100,000 gross income!

That's simply not plausible to implement -- period.

Nor can you CUT Medicare and Medicaid expenditures by 80% (which you'd have to) except by getting rid of the need for both programs for everyone except those in abject poverty.

This means there's only one way to solve the problem: 

You must eliminate the need for Medicare and Medicaid for everyone that is not abjectly poor.

So how would you go about doing that?

What if you knew that scorpion antivenom that costs $30,000 a vial in Phoenix was $100 a vial in Mexico where it is made, just a few hundred miles south?  It is.

What if you knew that Sovaldi, the cure for Hepatitis C that costs nearly $90,000 for a course of treatment in the United States has a cost of approximately $1,000 in India and Bangladesh?  It does.

What if you knew that if you went to either Mexico or Bangladesh and bought 100 courses of treatment of either drug and brought it back into the United States to sell at a 100% mark-up, an act that (if replicated) would not only make you a nice profit but also instantly force down the price in the United States down to something reasonable, you would have your lawfully-purchased courses of treatment confiscated and you would almost-certainly be charged with a crime and imprisoned?  That's exactly what would happen.

What if you knew that an MRI that is often billed out at $3,000 in the United States can be purchased for cash for about $200, including the reading of the results by a qualified MD, in Japan?  This means that it is actually cost-effective for you to get on a plane, fly to Japan, have the test done and then fly back home as opposed to having it done at the MRI place around the corner! That too is true.

What if you knew that surgeries performed in an open competitive market were often available, even here in the United States, for 20% -- that is one-fifth -- of the price charged in other places just a few miles away?  Oklahoma Surgery Center anyone?

What if you knew that people are routinely billed hundreds or even thousands of dollars for a "consultation" that consists of a doctor who you never met and had not consented to treating you sticking his head in your hospital room and saying "Hello!"?  This happens literally every single day in hospitals across this country.

What if you knew that people often cannot get a quote on a procedure before it is performed and even if they do hospitals and other medical centers will frequently bill for other things without consent, even when it could have been provided, and then demand payment?  Such a practice in virtually any other business, such as auto repair, air conditioning and heating work and similar is a criminal act under state consumer protection laws, incidentally.  That happens literally every single day in medical centers and hospitals as well.

What if you knew that people were being billed for procedures that never took place in hospitals, such as being billed for a "trauma team activation" when no life-critical trauma occurred and in fact no such activation or care was provided? Such an act in other businesses, such as billing you to replace an alternator in your car that wasn't actually replaced is and is prosecuted as a crimeThis has been documented to happen as well.

What if you knew that common off-patent medicines are often "reformulated" in their inactive ingredients (that is, the ones that don't treat the condition) and then the former product discontinued, sometimes under government pressure, resulting in cost increases of 200, 300, or even 500% and the disappearance of inexpensive OTC alternatives?  This happens all the time with Albuterol being one such particularly-outrageous example; Primatine Mist, the OTC alternative, was forced off the market and the price of the prescription alternative roughly tripled.

What if, in short, you knew that medical care and so-called "health insurance" in this country is effectively a cartel operation that, in virtually any other industry, would be considered racketeering and prosecuted with thousands of people going straight to prison, firms being broken up or closed and those gouged having their funds returned?

Well, there's a damn good argument that this industry is chock-full of exactly that sort of behavior by virtually everyone in it!

Now let's look at what has happened not in gross dollar terms but in terms of GDP.  Health care has gone from a low single-digit percentage of the economy (about 3-4%) to roughly 19% today.

We have a $17 trillion economy and of that $3.23 trillion, roughly, is health care, $1.2 trillion of that spending is by the government and virtually all of it spent in deficit by devaluation of everyone's purchasing power amounting to roughly 6% per year, compounded!

If we broke up those cartels and both Health Care and Health Insurance were returned to being a competitive market the share of the economy would shrink from $3.23 trillion to about $640 billion a year.

Now let's think this one through -- there are 330 million people, roughly, in the nation today.  At $640 billion total per-person expense on medical care would drop to approximately $2,000 per-person from the $10,000 per-person spent today.

Nearly all people can afford $2,000 per year; if the threshold for "affordability" is 10% of your income all-in, anyone who makes $20,000 a year or more could afford it where right now you need to make $100,000 to reach that threshold.

Further, with even the cost of catastrophic events dropping by 80% you would be able to buy catastrophic insurance for the few instances where you can't afford the out-of-pocket for a small amount of money -- and that comes out of this $2,000 per-person cost!  In other words it would be about as expensive as a basic automobile liability policy to have catastrophic health insurance -- about $75/month.

The screamfest about things like "birth control" are an intentional fraud by those advancing such arguments; you can buy, for cash, birth control pills for under 50 cents a day.  In many cases for drugs like this, along with common antibiotics, the co-pay is higher than the cash price for generics!

Resolving this situation would effectively allow the removal of Medicare and Medicaid from the federal budget even though it would not actually go away.  It would instead be limited in accessibility to those who are under the poverty line and between that restriction and cost reductions it would fall in expense by about 90% in the Federal Budget.

Simply restoring The Rule of Law to the medical and insurance industry  instantly and permanently ends the federal deficit and in doing so would result in a roughly 6% improvement in every citizens' purchasing power every single year thereafter, compoundedbecause the purchasing power destruction that inevitably and immediately is caused by deficit spending disappears.

That benefit goes to everyone, rich and poor alike and as a consequence will massively benefit the economy as a whole over time.

Who loses?  The medical and insurance company cartel members.  Yes, their income would decrease - - a lot.  And?  These people are a small minority of the population and more to the point the "service" funds they consumed could then be spent in the production and purchase of goods, which improves the net wealth of the nation instead of simply shifting money from one person to another, and furthermore the cessation of purchasing power destruction would be of benefit to everyone -- including them.

You've seen me spend a lot of digital ink on this issue over the last six or so years but not one person in a public policy role wants to engage in this debate.  None.  Not in the Republican Party, Democrat Party, Libertarian Party or otherwise.  I was damn near run out of town in the Libertarian party for insisting that the party stop endorsing and supporting candidates that refused to take this on and in fact lied about it in their campaigns.  When it became apparent that the party had zero intention of addressing this issue, the issue that will destroy us economically without question, I left the party.

You'd think if any of these political types had a counter-argument that made sense they'd be happy to take me on and demolish me publicly in said debate (after all, it would be great for them, right?) but it hasn't happened despite multiple offers on my part, and that of a few others, to engage on this point.  I have made repeated offers to do so and in fact have offered in the past (and you can count this posting as a further offer) to travel at my own expense to Washington DC or anywhere in the State of Florida to engage in said debate.

Even people attempting to solve the problem through example, such as the folks running the Surgery Center of Oklahoma, can't get a functional debate going with either public policy people or the heads of traditional hospitals and insurance companies.

We all know why this is the case but sticking your head in the sand will not stop what Stan (and I, along with others) have outlined from coming to pass.  That can only happen by taking this issue on and focusing political energy virtually anywhere else is a waste of time both because this is a certain destroyer of our economy if it is not halted and halting it will take time.

How much time do we have?  I don't know where the zero barrier is on this from a fiscal point of view and neither does anyone else, but that it exists and that markets never let you reach it are both a certainty.

Every day we delay as a nation and a people is one in which the odds of an "accident" in this regard go up, and once our feet go off this cliff there is simply no clean way back on solid ground.

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You need no more evidenc for the blatant and outrageous actions of our medical industry than is found right here in this poster.

This is rampant across the entire medical system.  It is neither limited to Michigan nor to auto-related crashes, although it certainly is in play here in Florida (to a lesser degree) along with other states as well.

The pattern of conduct depicted here is trivially analyzed from the data available (where do you think they got it?) and ought to be felony-worthy for everyone involved, from the hospital administrators to the corporate entities that own the hospitals to the individual doctors themselves.

So..... where are the prosecutions under RICO?

They're missing, and intentionally so.

Come talk with me about the much smaller problems we face in this nation when you've put a stop to being financially raped on a daily basis for what amounts to 20% or more of every single dollar you earn and spend.

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