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Commentary on The Capital Markets- Category [Health Reform]
2017-02-27 08:20 by Karl Denninger
in Health Reform , 326 references
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Ok, it's not "technically" his health reform plan.  It's the Republican Party's, which I remind you is where the plan must in fact originate.  Politico got ahold of it, and it's a 90ish page hodge-podge "discussion draft" of changes to existing law.  I read it in the bar -- literally -- and quickly realized that actually understanding it would require my 4-screen Star Trek style monster computer at home so I could have six windows up at once to chase all the cross-references.

A person in the medical industry who I somewhat know and who I've talked with sent me an email when this piece first poked its head above water.  His "first blush" look?

"Looks like rationed death for the elderly."

My riposte?  With half the adult population overweight or obese, and the known association with required medical intervention for people in that group if we do not stop the medical monopolies now, and there is exactly zero that addresses any of that in the Republican "draft" it is in fact "rationed death" for half the American adult population.

If you're over roughly the age of 30 then you're odds-on to be in the that ration.

Worse, the "fiscal wall" that we will hit on present course, including if these scams are not terminated with extreme prejudice in the present tense, is now visible within the present Presidential term and when it is hit there will be tens of millions of Americans who will suffer horribly and many, likely 30-50 million, will die within five or so years of that time.  For those who are math challenged that count will be easily 20 times the total of all Americans that have died in all wars this nation has engaged in combined.

I identified this trend and the timeline in the 1990s when I ran MCSNet.  We were taking high single-digit to double-digit premium increases annually for employee health insurance and a quick look at the Treasury data said so was the government. A simple look forward with nothing more complicated than a calculator said this pattern, if it continued, would blow up the government, given reasonable economic growth rates, somewhere around 2020.  The ACA bought us two years of deferment in that growth rate, roughly, after which it resumed the same growth rate it had since the 1990s and now has clocked two more successive years of same.

Well?

This is the wage of the American public's refusal to demand that all of the illegal collusion, price-fixing, anti-competitive and deceptive crap in the entire health system be stopped, backing said demand with whatever is necessary to make it happen.

Trump is not only a willing co-conspirator in these scams he is intentionally and with malice sitting on his hands instead of putting a stop to them.

The executive has 100+ year old law it could employ tomorrow to shut every bit of this scam down and nobody, including the lobbyists and Congress, could stop him President Trump, like Obama before him is maliciously, each and every day, choosing not to do so.

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2017-02-20 06:00 by Karl Denninger
in Health Reform , 764 references
[Comments enabled]  

It seems some of the state AGs might be reading my postings.......

But now generic drug executives can expect to face tougher legal repercussions, as evidenced by two federal court lawsuits filed late last year—one in November brought by Eatontown, N.J.-based Heritage Pharmaceuticals Inc. against two of its former executives, Jeffrey Glazer and Jason Malek, using the Racketeer Influenced and Corrupt Organizations Act (RICO), and one in December that 20 states have filed against six companies, including Heritage, after a major antitrust investigation by the state of Connecticut.

Racketeering and Anti-Trust eh?  Gee, that's a good start.

Now go after the hospitals and diagnostic centers and you'll really make progress.

Let me give you a hint: It takes 30 seconds to find a bill from a hospital that has a 90% discount for a certain "insurance."

There's extortion ("buy this insurance or be bankrupted if you need our services") and incidentally an illegally-tied sale (anti-trust again) -- and probably Racketeering there too, since the hospitals are all doing basically the same thing and if you can find a couple of people who are "in on it", well....

This crap has been illegal for over 100 years and yet nobody has been willing to bring charges and suits.

Until now, and at the state level. 

WHERE IS THE DEPARTMENT OF JUSTICE, Mr. PRESIDENT?

Do it and you get your face on Mt. Rushmore.
Don't do it and you have a failed presidency.

(Yes, I'm aware of the short term economic impact from doing it -- and it won't be pretty.  However, that won't last long, and the intermediate impact will be growth rates we haven't seen since right after WWII.)

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It seems some of you folks think that Trump "somehow" said he was going to help you with drug costs (a component of medical care, but only about 15% of the problem.)

In fact there are some bloggers out there who are trying to find something "good" in the "news conference" yesterday on that point, and the meeting with the pharma folks.

Then of course there's the fact that Trump made a Supreme Court nominee announcement yesterday, completely blacking out any further debate or discussion over the pharma meeting, sending Trump's supporters into a frenzy of knob-slobbering while his opponents immediately went into a full-on temper-tantrum meltdown -- including Senators who had voted for him to be confirmed to the Court of Appeals about 10 years prior.  (I note for the record that such was done on a voice vote -- there were in fact zero Senators opposed to him in 2006 and as such no roll call was necessary!)

If you think the timing of these events was coincidence your IQ is smaller than my shoe size; distracting people from something important with an event that the announcer knows will steal all the oxygen out of the news cycle is a time-honored act by all political animals, and Trump is no different in that regard.

But just in case you missed the real news of the day here is what Bloomberg reported yesterday on the pharma meeting:

Drug company executives were also heartened by Trump’s promises of lower taxes, quicker regulatory approval, and help defending them against foreign countries that are able to charge less because American consumers pay more.

Got it?

Pfizer almost-immediately said they were not going to alter their pricing model or intentions as well, confirming this statement and got no pushback from Trump on same.

Pfizer's stock yesterday? Up. (They did announce earnings yesterday, which may muddle this for them.)

Merck?  Up.

Valeant? Up.

Roche? Way up.  (They have earnings this morning, so there may have been a leak.)

Novartis? Up.

Celgene? Up.

Detecting a pattern here yet?

I remind you that actually addressing these issues requires no new laws as 15 USC Chapter 1 is perfectly adequate, and that McCarran-Ferguson was attempted to be used to defend price collusion between pharmacies, drug companies and insurance firms in the 1970s, went to the US Supreme Court and the insurance and drug companies lost.

Held: The Pharmacy Agreements are not the "business of insurance" within the meaning of § 2(b). Pp. 440 U. S. 211-233.

(a) Section 2(b) exempts the "business of insurance," not the "business of insurers." Pp. 440 U. S. 210-211.

(b) A primary element of an insurance contract is the underwriting or spreading of risk, SEC v. Variable Annuity Life Ins. Co., 359 U. S. 65, but that element is not involved in the Pharmacy Agreements, which are merely arrangements for the purchase of goods and services by Blue Shield, enabling it to effect cost savings. Pp. 440 U. S. 211-215.

Being a United States Supreme Court decision that case is entitled to stare decisis, the principle in the law that what is decided, is decided.  In other words Mccarran-Ferguson, a law which does exempt insurance companies from most anti-trust regulation provided they are regulated by the states, does not extend to an "arrangement" for purchase of goods and services by said insurers.

THIS ISSUE WAS DECIDED IN OUR COURTS MORE THAN 30 YEARS AGO AND YET TRUMP HAS NOT SHOWN ONE INDICATION THAT HE INTENDS TO ENFORCE THE LAW IN THIS REGARD, JUST AS BARACK OBAMA REFUSED TO, BUSH REFUSED TO, CLINTON REFUSED TO AND BUSH BEFORE HIM REFUSED TO.

IF YOU WISH TO CLAIM THAT SUBSEQUENT LAW HAS PROVIDED RELIEF FROM THIS RULING TO MAKE THE ACTS OF THESE PARTIES LAWFUL THEN SHOW ME EXACTLY WHERE IT IS AND WHEN IT WAS PASSED.

Until you do your mandate and that of the mainstream press is in fact to show me and the rest of the nation where the first mandate of the Executive -- to enforce the law -- is occurring or even being contemplated when it comes to the financial raperoom that is our current US medical and pharmaceutical system -- a system that was challenged, went to the Supreme Court and was ruled unlawful as the claimed exemption does not exist.

You can't, I argue, because it is my considered position that no such evidence exists.

To those who are currently believing Trump is going to 'help' when it comes to medical care, Obamacare and the rapejob that is being done to you when it comes to the issue of cost of medical care in the United States let me point out that if you don't get your mouth off Trump's schwantz right now you're going to quickly discover that all you did was put spit on it so he and all the fine executives at Merck, Pfizer, Roache, Novartis, Celgene, hospital administrators, diagnostic centers, doctor's offices and others can shove it further up your ass.

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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.

Every.

Single.

One.

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.

Hmmmm....

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?

Zero.

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?

Prosecution.

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.

IT IS, IN FACT, A MATHEMATICAL CERTAINTY.

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.

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2016-08-23 17:08 by Karl Denninger
in Health Reform , 1600 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"...

Why?

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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