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2017-01-22 09:53 by Karl Denninger
in Editorial , 595 references
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It seems there's a wee bit of "protesting" in the air.

Let me point out that we have this thing called The First Amendment.  It protects your right to speak your mind, and as part of that it also protects freedom of association.

But just as it protects that for you, it protects those same rights for everyone else.

So a bunch of people -- most of them women -- marched.  What the media didn't show you is who organized those marches and what they stand for. Let me give you an example; specifically, in Washington DC according to a tweet that was uncovered by Gateway Pundit (and which the person involved has since deleted):

I suppose you think it's a good idea if you're a woman to, oh, support someone who wants to see Sharia Law in the United States.

I mean, what could possibly be wrong with that?  Other than your daughter having her clitoris cut off by religious mandate, never being able to drive (by law) and having to wear a burka whenever out in public, that is.  Oh, and she can't go out in public without a male escort either.  Never mind that if you turn out to be gay you'll be thrown off a building, stoned or imprisoned and if not, but you are female, well, you can be forcibly married off as a child!

It's not like this woman has tried to hide her views.  She has not; she's posted over 84,000 tweets and a couple of minutes of investigation discloses that what may even be worse than her views on Sharia is that she may be engaged in taqiyya on a mass scale, which means there's utterly no way to know exactly what she stands for and intends at any given point in time.

I will (again) point out that it is impossible to claim to be for equality of the sexes and at the same time be Muslim.  It is a flat-out lie to claim to be for equality for gays and to be a Muslim.  You may be one or the other but you cannot be both, unless you have defined your own version of Islam -- and if you have, then I'd like you to specify exactly which of the 114 Surah in the Qu(ee)ran you have torn out and burned.

I'll stipulate for the record that there almost-certainly are Muslims (in fact there may be a lot of them) that do believe in equality of women, gay rights and similar.  Then again there are Christians (in name) who believe in abortion rights.  But just as many Christians would like to adopt a literal definition of the 10 Commandments along with Leviticus and Deuteronomy as law when it comes to abortion (and gays, for that matter) there is an equivalent position among Muslims when it comes to Sharia.

The fact is that if you have any attraction to or have promoted Sharia law anywhere then you are definitely not for equality for either gays or women because Sharia contains strictures that effectively enslave women and mandate that homosexuality is not only wrong it is to be illegal and punishable by severe sanctions up to and including death.  The same is true for a Christian who promotes Leviticus in the Christian Bible as the predicate upon which law should be enacted and enforced with regard to LGBTQ rights (along with those who practice drudism and other pagan faiths as well!)

So why in the Hell would this woman be involved in such a march?  I'll tell you why: She's terrified of Trump's view on Israel and his long-stated threat to move the US Embassy to Jerusalem.

There's a fair debate to be had on that and if you've read my column for any length of time you know full well that I'm no proponent of how we've conducted foreign policy when it comes to the Middle East. My 2016 Review ticker contains some of my thoughts on the matter, if you're so-inclined to look at them again.  But to co-opt a so-called "woman's march" that is in fact a "dump Trump" protest under false pretense, in this case because you fear what Trump may do for Israel (which I remind you is full of women too) is outrageous.

Now maybe you think this woman being involved in organizing the "march" -- and her duplicity -- is an "aberration."  It's not.

You see, it actually got worse yesterday.

Madonna performed at this "thing" in DC.

What did she say?

"I have thought an awful lot about blowing up the White House," the 58-year-old pop star said, before adding that she "knows this won't change anything."

What?!

Oh, this was a "peaceful" march, right?  With "entertainers" who think an awful lot about blowing up the White House?

Look folks, you're free to associate with people like that, just like someone's free to associate with the KKK, if they wish.  You're free to march in an event with such "entertainment" and organized by Sharia-touting people, wherever you did it.  Whether it's in DC, Traverse City, Chicago or elsewhere.  You're free to enjoy "entertainment" that, while on-stage, muses about blowing up the White House.  That's the beauty of the First Amendment -- you are perfectly free to associate with the most-outrageous speech should you so choose, right up to the line of making actual threats or conspiring to take criminal acts.

But I will tell you this: If you did so-march, if you did promote it, if you glowingly talked about it on social media or elsewhere or if you do it in the future I'm going to exercise my First Amendment Rights.

I'm going to tell you to **** off.

With prejudice.

My daughter is not your plaything, nor that of some Sharia Law advocate who would cut off her clitoris and favors a legal system that denies her any sort of human rights at all.

Nor will I have anything to do with events featuring organizers who have advocated for a legal system that imprisons and even executes gay people.

And I want nothing to do with anyone who thinks an awful lot about blowing up the White House, nor will I associate with anyone who believes that going to an event at which such a person is given a microphone and a hell of a lot of speakers and amplifiers to give voice to that opinion is a good idea -- or sticks around once that crap starts coming out of said speakers instead of immediately disavowing the whole thing and erecting their middle finger.

Finally, I want nothing to do with any business, association, non-profit or otherwise that employs or maintains an affiliation with any person who does or did any of the above.

You see, this really isn't about politics.  It's about lack of reason, violence, and thinly-veiled threats.  It's about a bunch of sore losers who could barely contain their desire to blow up the White House because they lost an election.  It's about an organizer of said marches who would impose Sharia Law on everyone in America including the very women marching in the streets who were too damn stupid to spend 30 seconds checking out who was setting up the march in the first place and what they stand for, if she was able to.

You have to be a special brand of idiot as a woman to march under the banner of someone who, if they could, would mandate the cutting off of your own clitoris!

But that's what happened.

I'm thunderstruck to find that there is a larggroup of people in this country who are so blinded by their fury and hatred at losing an election that they would associate with someone that views condemning not only themselves but their daughters and those girls not yet born to sexual and personal slavery as not only acceptable but desirable.

Then as a cherry of additional insult (as if enslaving half the children in the country isn't enough) that event featured "entertainment" who mused about blowing up the President of the United States on stage at the event!

These are people I'm expected to associate with?

They're people I'm going to do business with?

They work at and run businesses that I will voluntarily pay money to in exchange for goods and services?

They're people I'm going to drink beer with?

And they're involved with various other organizations, including non-profits that wish to solicit me for donations and, when I die, bequests?

smiley

PS: Let's see if CNN provides the same wall-to-wall, all-day coverage of the March for Life in five days time.  After all, those people were excluded from this "protest", even though they, like these folks, are largely women and claim to be for actual equality of all.  What made them "unwelcome", you see, was that they extend that claim of equality to the unborn.

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2017-01-20 10:59 by Karl Denninger
in Editorial , 2404 references
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It is no longer a matter of words.

The transfer of power, which our nation has undertaken 44 times in succession using votes, words and oaths, has been completed.

You are probably feeling either elated, dismayed, horrifyingly pissed off or ready to commit suicide.

All of that is folly.

During the previous 8 years, which many believed was going to augur in a new age for America of equality and progress for all, you got none of the above.  The national debt, which I remind you only has value because you are willing to go to work in the morning and pay taxes, doubled during those eight years.  In "real" terms (if you believe government statistics -- that is, you don't buy food, fuel, medical care or anything similar) you have a lower income. There are nearly a third more people on food stamps.  Seven million more American live in poverty today than did in 2009.

You may be "thankful" for Obamacare if you couldn't get "insurance" before, but in point of fact you ought to be pissed.  You ought to be pissed off because you shouldn't need health insurance for anything other than a catastrophic event you could not reasonably foresee, such as cancer, and the cost of everything medical, including cancer treatment, should be anywhere from a fifth to a tenth of what it is today.

You may be "thankful" for more college loans but in fact you shouldn't need them at all.  You used to be able to flip pizzas to pay for college, and the reason you can't today is those loans.  Calculus, literature, physics, chemistry, history, political sciences -- these things have not suddenly gotten more-complicated or expensive by a factor of ten.

But no, this is not Obama's fault.  You can blame him for a lot of things, but not these.

That responsibility -- and fault -- is yours.

You cheered on the doubling of the national debt, a load that has added over $30,000 to the amount each of us is allegedly obligated to pay -- including yourself, your children and grandchildren.  You are responsible for that because you not only allowed it, you cheered it on.

You did not demand an end to medical monopolies; you instead said you wanted "insurance". You got Epipens at 1,000% of their price in Europe, insulin rising in price by nearly as much, a rattlesnake bite coming with a bill for $200,000 and more - along with crap "insurance" that, if something serious goes wrong, is still likely to bankrupt, kill you -- or both.  One dollar in five, approximately, spent in our economy goes to this scam today.  You could stand up and demand that everyone involved in this crap go to prison; after the first hospital administrator and pharma exec was indicted prices would collapse by 85% or more in an afternoon and you would no longer need "insurance."  But you didn't do that and still won't -- and thus you got stupidity like this.  You also have brain-stem class idiots making claims in articles such as this one, where clown-faced medical monopolist apologists prattle on about savings of "$7 billion a year" against a cost of $1,400 billion and claim it would be significant.

You did not demand an end to the insanity of educational "loans."  As a result your children are told they need to borrow $100,000 to study in college -- a pure act of robbery of not only the $100,000 but also all of the interest on it that they should have been able to keep with the knowledge they got from their education.  Even if the field they go into pays well enough to cover it you still screwed them out of a house or roughly five middle-class cars when you get right down to it.  In short you ****ed your kids in the ass on purpose, and some of you screwed yourselves at the same time by taking out "PLUS" loans. What's worse is if they take out those loans and then can't find work at a salary sufficient to pay it off (or worse, fail to complete their course of study for any reason at all, their fault or not) then they're really screwed because you also sat still while these loans were made "guaranteed" by the government and unable to be discharged in bankruptcy.  You could have demanded an end to all of that, and a 4-year bachelors degree could have been had for $10,000 all-in.  It still could happen today, if you cut the crap and both made and pressed those demands -- but you didn't do that either and still won't.

But the true sadness isn't over these issues, when you get down to it.  It's over something much more personal.

Ever see WALL-E, the Disney movie?

That's not a dystopian future -- it's we, the people of America right now in the present.  It's Netfux, Facehugger, Twatter, Snaphosed and more, all of which exist because you are exactly as pictured.

Folks, the problem isn't defined by either deplorable or anti-deplorable.

It's us.  It's this, both physically and as a matter of attitude.  I literally do not recognize virtually everyone that I knew just 20 years ago say much less in my youth -- physically, emotionally or mentally.  What's worse is that these people think there's nothing wrong with either their personal physical condition or their mental and emotional state in cheering on not only their own personal destruction but that of their children as well.

As a people half the country cheers today and half drinks in despair.  Yet statistically zero of the people today will demand that the use of leverage -- debt -- to bail people out stop here and now, and that the monopolists who steal from everyone, whether in the medical, educational or other industry all go to jail under long-standing federal law and that these scams end right here, right now, today.

That is all there is folks.  We've been on the path to hit the wall since the 1990s.  I saw it then, recognized it for what it was, and projected out the trend.  The wall then appeared to be around 2020 -- 30 years ago.  Obamacare moved the wall a few years out -- two, more or less, to be exact.

That's all.

Think about it. A 2,000+ page bill that literally re-wrote the book on what was and was not permissible in health care and health insurance managed to buy just two years of delay in what was foreseeable as an utter economic disaster 30 years ago.

But leave aside the economic disaster for something much-more important -- your personal disaster.

If you have not acted to mitigate or eliminate that disaster by now for yourself -- if you see any of yourself in that clip up above -- it may well be too late.  If it's not too late you're damn sure about to run out of time.

Simply put the people of this nation will not demand that Trump and Pence dismantle the medical monopolies and enforce the law.  As a result he won't do it.  Yes, he, Paul Ryan and McConnell will pass their bills, and will almost-certainly repeal Obamacare.  But they will do nothing to address the actual problem -- not in medicine and not in education.  Nor, for that matter, in anything else.

There is no "outrunning" this in the market.  There is only being independent of the medical scamdustry or having a deteriorating quality of life, ending in your death and bankruptcy.

Get your head out of the screen.  Peacefully and lawfully destroy the scamdustries embodied in "businesses" like Facefart, Netfux, Disney and anything associated with the medical mess.  Put the middle finger up more, but not over whether someone is Democrat or Republican, but whether the political class has expanded debt, expanded dependence, expanded the scam -- and that includes, sadly, literally all in the political class.

Could Donald J Trump surprise me?  Yes.  He has the balls to do so.  But then again so did, it appeared, Barack Obama -- and all he did was buy another two years and expand the scam.

If you expect more from Trump yet will not force him to deliver, just as you saw in 2009 when the infamous quote was made "Obama gonna pay my gas and mortgage", then the blame for what will come with mathematical certainty within the next four to five years rests with you.

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2017-01-14 12:55 by Karl Denninger
in Editorial , 6265 references
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This is the reason I'm giving up folks:

A new Rasmussen Reports national telephone and online survey finds that 88% of Likely U.S. Voters say it’s important for Congress and the president to have some sort of replacement program in place if they repeal Obamacare, with 69% who say it's Very Important. Eleven percent (11%) don’t think it’s important for them to have a replacement plan ready, but that includes just three percent (3%) who say it’s Not At All Important. (To see survey question wording, click here.)

Let me start from the beginning when it comes to insurance of any sort.

The cost of insurance is determined by the following arithmetic formula:

$ = p(event) * cost(event) + profit(insurance company)

This is not my opinion it is a mathematical fact.

Those who deny mathematics are idiots, frauds, thieves or all three at once.

Now let's ask a question: If you have just totaled your car what is the price of collision insurance on your car?

p(event) is 1.0 (probability of a collision) since the wreck already happened.

Therefore the price of said insurance will be the cost to replace your (now-totaled) vehicle plus a profit for the insurance company (without which it will not stay in business.)

In other words it is always cheaper in that instance for you to just go buy another car because you are paying the insurance company a profit for no reason at all.

It is usually not all that hard to figure out what the cost of an event is; given enough of a data set it's actually quite easy since an insurance company cares only about the average cost of the event across all of those people it insures of like sort and with like limits.  The hard part is the p(event) piece, and if you get that wrong as an insurance company in the wrong direction you will go bankrupt fast.  For this reason insurance companies pay actuaries quite a lot of money to get as close to the true value of p(event) as is humanly (and, with all the computers we have now, analytically and computationally) possible.

For this reason those who argue for "health insurance" for pre-existing conditions are either ignorant or worse, they are actual thieves who deserve to all be thrown in prison because what they are demanding is the ability to steal from everyone else.

That sounds harsh, and it is.

It's also absolutely true and if you actually adovcate and try to get enacted into law anything that forces such a paradigm on the public then you are personally a liar, a fraud and you deserve to go to prison as well for the crime of being an accessory both before and after the fact to their theft.

There is only one way that such a person, arguing for such a thing, can have a position that makes any sense at all.

He or she must argue for rationality in the cost of the treatment of such a condition.

Further, if such is achieved then "insurance" that covers same would be stupid since you then would simply be paying more for the treatment of said condition with the involvement of said insurance company than if you just paid for it yourself.

Let's take birth control.  Most women want birth control options available to them at least some of the time during their life.  The exceptions are (1) when you're too young to have children, (2) when you're too old to have children (you've gone through menopause), (3) you're not in or contemplating a relationship where having children is possible (e.g. you aren't dating anyone, don't intend to, or are in a lesbian relationship) or (4) if you desire to have children at the present time.  Any other woman would logically want to use some form of birth control.

But by mandating that "health insurance" provide such birth control as a "benefit" we now take p(birth control) and make it  [1 - ([number in options 1-4] / all women)]  If 20% of women are in 1-4 then p = 0.8 (instead of 1.0).  The problem is that you are now stealing from the women in groups 1-4 as you're insisting they pay in part for your birth control.  In addition, and much worse, you now have created an incentive to obfuscate the cost of said birth control and ratchet it up since you only get part of the bill.  That is exactly what has happened -- the cost of birth control in the United States is now five to ten times or more what it would be under capitalism and that 500+% increase is literally being stolen from everyone.

Birth control pills are extremely inexpensive where available over-the-counter -- under $15/month.  They typically cost double that or more here in the United States -- for the same drug.  Depo-Povera, the three-month hormonal birth control "shot", costs about  $1.50/vial wholesale in other nations and yet the "routine" cost for said shot here in the US for those without "insurance" runs around $60!

Are you really telling me that even poor people can't come up with less than $20 a month?

More to the point why isn't Depo-Povera $13.00 for three months, or about $4/month -- a 100% profit margin over wholesale cost for the drug + $10 for the 5 minutes to pay a nurse to stick you with the needle?  That's roughly a third of the cost of birth control pills and yet it requires no daily attention.

Yes, I understand Depo isn't for everyone just as birth control pills aren't.  But the fact remains that they work and are the choice of birth control that millions of women make.  By doing so under the "current system" those millions of women are getting screwed out of billions of dollars and forcibly screwing everyone else at the same time.

What all those arguing for such "mandatory" coverage are saying is that you think the drug companies and doctors should be able to charge your "insurance" $100 for something you can buy for somewhere between $13 and $25!  And guess what -- that makes your "insurance" cost more than the difference if you had just paid cash because $100 is more than $25 and the insurance company has to make money or it will go out of business -- so the price to you, through "insurance", when one includes premium, deductibles and similar, is more than $100.

Fact: Birth control pills, in a capitalist system, should cost less than 50 cents/day.  A Depo shot, in a capitalist system, should easily be able to be delivered for $13, or about 14 cents/day.  Even extremely-poor people can afford 14 cents, and if by some chance there are those who truly cannot we can almost-certainly transparently, through voluntary charity, manage to find that 14 cents in change laying around on the ground to provide it for them.

What's even worse is that since insurance is a regulated business and the states typically set the maximum allowable profit for an insurance company at 10% the only way for an insurance company to make more money is for whatever it "covers" to go up in price.

They thus have every possible financial incentive to get involved in business models that make the cost of medical care go up -- and no financial incentive whatsoever, ever for the cost to go down.

We have the mess we are in today in health care because the American public believes in and demands the mathematically impossible and nobody in the political class is willing to stand up and tell them that what they're demanding is impossible and, if they don't stop, our national economy, markets and all asset classes including all government support and assistance of any sort will be ruined.

Roughly one dollar in five spent today in the United States goes toward health care.  This is double what other developed, industrial nations spend and virtually all of them have socialist health care systems. Capitalism always beats socialism because capitalism adds the motive to undercut your competitor(s) on price along with developing new means of efficiency that lower your cost, allowing you to earn the same margin while charging less money.  It is this motivation that has led to $200 TVs that weight 25% as much, use a fifth of the energy and have four times the resolution of a TV set 20 years ago that cost $800.  It is this motivation that has led to the development of $35 computers the size of a pack of cigarettes that are 200 times faster and have more than 1,000 times the memory of a $2,500 computer sold in the 1980s.  It is this motivation that has led to the development of $50 cellphones you can hold in your hand, have a $30/month "all you can talk" bill and run a week on a charge with 30 minutes of talking a day.  The same capability used to require a device the size of a small briefcase that cost $1,000, it weighed 20 pounds, had a battery that was good for an hour of talk time and cost $2/minute to send or receive a call.

I personally have owned all of the predecessor devices I mention in the above paragraph, and many of you have as well.  Medical care and technology should follow the same cost:benefit curve but it has not.  The reason is not because it is different than anything else.

It has not because the companies in the business of providing that care have colluded, they have fixed prices and they have otherwise employed tactics that have driven up the cost of care by a factor of six in terms of the percentage of our economy devoted to same while our actual health in objective terms lags our western peers over the last 40 years instead of that cost plummeting while quality and results skyrocket just as occurred in every other technologically-focused endeavor.

Why do people steal? Because it is easier to steal than to create -- or innovate.

Why do firms collude and lobby for the ability to use force to rip you off?  Because it is easier to grow your top-line revenue by doing so than to innovate and create, and it also has a more-certain outcome.

Capitalism only works when it actually exists. For an economic system to be capitalism you must have (1) the risk of failure, (2) the pressure of competition and (3) a level playing field in which anyone who wishes to can enter your line of business if they perceive that they can do whatever you do better, faster, cheaper -- or all three.  As soon as you can force someone to buy your product instead of someone else's (or you can prevent them from refusing to buy at all), you can price-fix, you can refuse to provide a price at all before someone is obligated to pay or refuse to honor a price you quote, you can form cartels and discriminate against buyers of like kind and quantity based on some third-party affiliation or status or you can deny potential competing entrants the ability to compete with you and any or all of those acts are not met with prosecution and imprisonment you do not have capitalism -- you have racketeering.

It is for this reason that 15 United States Code exists -- to protect capitalism by making illegal the formation of cartels, price-fixing and similar acts -- in other words, to make cheating and using force to block competing business entrants instead of innovating illegal.

For those ignorant of history 15 United States Code was passed in 1890 because multiple firms, including Standard Oil and Chesapeake & Ohio Fuel, among others, were engaged in the above set of acts and were screwing people who were dependent on their products.  The Clayton Act, passed in 1914, closed several loopholes that certain firms tried to exploit.  Robinson-Patman was passed in 1936 to explicitly outlaw price discrimination against buyers of like kind and quantity of goods.

To those who say that Health Care providers "aren't" engaging in acts that are rank and outrageous violations of 15 United States Code (Sherman, Clayton and Robinson-Patman, respectively) let's take health care and transplant it into the sale of, oh, cars and see if you still agree with your position.

Let's assume that a car dealer decides to sell poor people a Frobozz Max (we'll use a made-up make and model) for $3,000.  He decides to charge rich people $50,000 for the same vehicle.  He posts the $50,000 price as his "chargemaster" price for the car, but some people will get it for a lot less.  To figure out exactly how much you will pay you must tell him what sort of insurance you have and you must also sign a piece of paper allowing him to bill you anything up to and including the $50,000 before you can have the vehicle -- you'll find out how much it is only after you leave the lot.  The "middle class" guy will probably, provided he has the "right" insurance, pay somewhere around $8,000 for that car.  But, if he doesn't, he might get swatted for the entire $50k.

It would be very easy to sell that "model" of car sales to more than half the country -- everyone upper middle class and below -- wouldn't it?  It would be very easy to get elected running on that platform, right?  Here's a middle-class guy who is going to pay $8,000 for $24,000 worth of car!  That's a hell of a deal and only the "rich" will get soaked -- they can afford it, right?  That's exactly the model you have been sold and voted for and then once it was in place the medical industry ramped up the price so that instead of $8,000 you're paying $20,000 and the so-called "market" price is $300k instead of $50k -- but you're still getting "a deal" even as they expanded the "base price" by a factor of six!

But are you really getting a deal as "Joe Average"?

Think for a moment about how long this dealer will stay in business unless he colludes with all the other dealers -- or gets the government to force you to work with this model of car sales and force you to buy said insurance. Unless he does one of those two things someone will open up a car lot next door and sell a comparable vehicle for $25,000!

If both dealers cost of the car is actually $24,000 the first dealer with his differential pricing scheme and ramped-up cost model at six times what it should be will immediately go bankrupt.  Everyone who would be charged more than $25,000 will go to the second dealer and buy his or her car there, paying less.  The only people left at the original dealer's lot will be those who are getting the "poor person's price" which is below his cost.

If he can't make someone else pay the difference for all those "poor people" then he will be out of business in a day.

This is true for any line of work -- including medicine.  That such a billing system exists -- where different people are charged different amounts for the same thing not based on the quantity of their purchase (everyone who needs a given procedure only needs one, right?  Likewise anyone who needs a month's supply of a given drug) but rather based on what sort of "insurance" they have or how rich they are is proof beyond any doubt of collusion, restraint of trade and anti-competitive activity.

It is impossible for such a system to survive for a single day without such acts of illegal collusion or the use of force for the simple reason that if just one non-colluding entity in the market offers the same good or service but doesn't do that sort of thing then everyone who is being forced to pay above cost to subsidize those getting below cost will do business with the non-colluding entity and the party trying to use such a billing model will instantly go bankrupt.

Now let me remind you that all of these acts are against the law.  They are not just civilly against the law -- in many cases they're felonies and carry prison sentences.

If you enforce the law then the cost of health care, all-in, will drop by approximately 85% and that assumes no technological innovations have occurred in the interim 30+ years that would make it even cheaper!  Of course such innovations have occurred -- in medicine as elsewhere.

Let me give you one simple example of this outrageous behavior that is trumpeted in public statements and even advertisements on TV and elsewhere: So-called "patient assistance programs" from drug companies. Robinson-Patman (federal anti-trust law) says the following:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered

It does not say "it's ok to discriminate for someone in pricing if they're poor."  It does not say "you may soak the rich."  It does not say "you can charge $5/gallon for gasoline to someone who has a lot of money, and $1 to someone who does not."

Note that the law does say you can offer a quantity discount, provided that the discount rationally relates to the difference in cost of delivery of X .vs. X+Y.  So if I buy 1,000 of a given thing in a package you can charge me less per item than if I buy 10 of the same thing if the difference in price rationally reflects the difference in packaging and distribution costs.  This is why if I buy 5lbs of coffee from a particular supplier I can be charged $8.50/lb (for green coffee) and if I buy 10-25 lbs the price is $7.95/lb, and so on.

But you cannot charge customer X who needs 30 pills a month $20 and customer Y who also needs 30 pills a month $500 based on their income or the insurance they choose to buy (or not.)

Doing so is black-letter illegal.

For those who say that "insurance companies can do this" no they cannot.  That went up before the United States Supreme Court in 1979 when insurance companies tried to claim that under Mccarran-Ferguson (which allows limited anti-trust immunity to insurance firms -- and is the reason they can have and use things such as the CLUE database in their underwriting) a differential-pricing scheme was exempt from anti-trust law and they lost.

There is only one way to prevent the escalation of cost in the federal budget related to Medicare and Medicaid, not to mention the outrageous pricing decisions such as charging $2,000 for a course of treatment of a drug in one country and $80,000 here in the United States -- and that is to enforce the law and break all of these monopolies.

Every medical provider of any good or service, whether it be a doctor's visit, a drug, a procedure, a device or anything else must be required to have one price that is charged to every person equally, irrespective of how they pay or what sort of insurance (if any) they carry and irrespective of where such a product or service is sold, absent a reasonable difference related to the cost of delivery or manufacture in a given locale.  Such prices for each and every service, procedure, drug, device or anything else must be published and maintained where the public can verify that each person who receives like kind and quantity of same is charged the same price exactly as the local gas station is required to post a price and charge the same to each person who wishes to buy gas.

Any entity that colludes with any other to fix prices must be indicted, prosecuted and imprisoned in accordance with 100+ year old law found in 15 United States Code.

The customer, that is the person seeking care, is then free to compare price and quality of service, along with whatever their "insurance" will cover (if any of it) and decide which facility to utilize.  State anti-gouging statutes must be fully enforced for those instances where someone is unable to decide (e.g. they just got in a car wreck and are unconscious, they are having a heart attack, etc) while various EMS and other services that are caught "steering" people in such circumstances to higher-cost treatment options must be criminally and civilly charged.

Drugs are slightly more-difficult. Unlike the other components of anti-trust law (which explicitly include international commerce) Robinson-Patman could be construed to not apply across national borders.  However, should drug companies wish to continue the practice of differential pricing in different nations they remain exposed under the other elements of Sherman and Clayton until Congress repeals the reimportation ban or extends Robinson-Patman by adding "international" to "interstate", never mind existing case law where book publishers tried to prevent the resale of books bought overseas in the United States (and lost in the USSC.)

It will take about one day if these changes are adopted for the cost of medical care to collapse to a tiny fraction of what it is now.  With that collapse it will be unnecessary and undesirable for you to buy "insurance" against already-existing conditions because it will be cheaper for you to simply pay in cash.  For nearly everything you will be able to pay.

For those possible catastrophic situations that haven't happened yet you will be able to buy reasonably-inexpensive insurance because the product of p(event) + cost(event) + profit will be small enough that the premiums will be affordable to virtually everyone, even those of very modest means.

Finally, for the truly indigent we can certainly keep Medicaid and, since this cost reduction will occur across the board we can also keep the promises made for Medicare both for today's Seniors and tomorrow's.  The cost of those programs will fall like a stone -- a more than 50% immediate reduction is assured, and instead of going up in cost every year as technology and productivity improvement will no longer be able to be stolen by said medical providers (since the price is the price for everyone including those in Medicare and Medicaid!) the cost of these programs will go down every year instead.

This is the only way out folks and it's one we must take now.  It cannot wait, it cannot be done tomorrow, we cannot "repeal and replace" with yet another scheme to try to keep the ponzi-based fraud and felony-laced medical system we have in the United States afloat.

If we do not do this now then the federal budget and all state budgets will collapse within the next 5 years.

Attempts to "negotiate" out of this may be able to buy another couple of years of time, but will not change the outcome.  That's the math, like it or not, and we have repeatedly squandered the opportunity to address the issue when it would have been far less disruptive (in terms of the short-term economic recession that will occur) all the way back to the passing of EMTALA in 1986.

We either do this now, and we demand as citizens that it happen without exception and backed by whatever action(s) are both necessary and possible to enforce that demand with both Donald Trump and Congress, up to and including a full general strike called across the nation, or we lose the financial stability of our federal government, our state governments and our way of life in America.

We are doomed to collapse as a nation because the fact is that you won't do it, your neighbor won't do it and as a result Trump won't do it and Congress definitely won't get behind him in doing it either because the medical and pharma lobbies will be completely destroyed if it happens and they know it.

Yet there is literally no other issue that matters to any material degree if we don't take care of this one -- right here, right now.

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2017-01-12 09:20 by Karl Denninger
in Health Reform , 1079 references
[Comments enabled]  

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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2017-01-09 05:00 by Karl Denninger
in Editorial , 595 references
[Comments enabled]  

The other day I was compelled to do something that made me rather sad -- I formally told someone who has been an associate of mine for many years to remove me from his distribution and contact lists.

The triggering event was a public, social-media statement that was predicated on (and included) a knowingly false statement of fact related to me -- which was in reply to my going after Trump and his appointment of Price for HHS.

Folks, we are where we are in this country when it comes to the impending destruction of our nation, our economy and our political system along with the federal budget and all programs funded by same as a direct result of people in this country on both sides of the aisle being willing to anoint their particular favored candidate God when he or she wins.

This in turn has allowed multiple politicians over the last couple of decades from both parties to engage in the literal******of the American people's pocketbook, wealth and future both in the areas of education, which is horribly bad, and worse in Health Care which, due to its size and government involvement threatens the future of this nation and our way of life.

We watched this with Obama, who came into office with great fanfare and expectation by half of the nation (and dislike by the other half) who then rammed Obamacare through a Congress he controlled in its entirety.  Now Trump is President and he also has a Congress he controls in its entirety.

On the educational side both parties have participated in turning college into an asset-stripping festival for both schools and lenders, destroying the personal value of an education for almost everyone -- and both parties have been equal participants.  Both parties, among other things, were involved in making student loan debt not dischargable in bankruptcy, both propped up Sallie Mae and ultimately bailed it out with even more policy changes and neither has done a thing to reverse either of those steps or the never-ending federal support of the cost-spiral and debt that has made post-secondary education a bad deal for the vast majority of young adults where it was formerly a good deal for virtually everyone.

It is one thing for an individual with no particular influence beyond their own personal friends to refuse to look at the arithmetic of a matter like this and act on it, or to dismiss one politician or party's malfeasance while aggressively disliking the other.  That's why we're in this mess but if you do that as an individual it is only through the collective acts of everyone like you that the harm occurs.

But if you are in any way involved in public life -- you're a member of the media ("organized" or "independent", doesn't matter), you've run for office or are now running for office or are in any other way in the public eye your acts are no longer simply the singular acts of an individual -- they now are intended to, and do influence others on a larger scale.  This is particularly true if you make any part of your living from those activities, and if it's your sole source of work-related funds then literally everything you gain from society is being gained due to a lie -- a lie that is screwing every American blind.

I can't sit for that nor associate with people who knowingly participate in it.  I didn't when Obama was President and I won't now that Trump will be.  I lost a bet during the campaign which I willingly and voluntarily paid off (I bet that Hillary would not be nominated, likely because she would get indicted first) and at no time did I believe she'd win (in fact I published my own expectations for the electoral college map shortly after the conventions) nor did I in any way support her personally or her candidacy.

But that does not mean that Trump gets a pass from me on this issue, which is one that has no partisan boundary to it and if not attended to will destroy our nation.  Trump's nomination of Price for HHS is proof that he has zero intention of fixing anything related to the health care mess and in fact will enable the medical industry to screw you longer and harder, giving that screwing the force of law for Seniors through what is known as "Balance Billing" -- a practice Price has not only endorsed he previously tried to get it passed into law for Medicare recipients.

I remind you that Obama managed to buy two whole years of much-slower Medicare and Medicaid spending growth with his massive changes to the medical system including trying to force everyone into the scam via Obamacare.  Two years folks -- that's all -- and in doing so he made resolution of the problem much harder.

Trump's pick for HHS, Price, has previously declared an intent to try to stave off the collapse by literally raiding the entire net worth of every Senior citizen.  I don't believe he will get more than two (additional) years out of that stunt but if he was to pull it off that might delay the detonation until Trump leaves office -- eight years hence.

The Senate is well-aware of the issue.  A few years ago I was invited to a meeting of a handful of top aides to Senators to talk about the budget trajectory and its impact.  I pointed out that on the math there was only one area of the budget that mattered -- this one.  It is clear on the basis of simple arithmetic that we are screwed unless this issue is addressed and there is only one way to do it.  The people in the room did "get it" but bemoaned the political ramifications of taking it on and they have done nothing effective since, allowing politics to win over math -- for now.  This was during the time of the "debt ceiling" debacle -- several years ago -- an event that ultimately led me to tell McMorris-Rodgers to perform an anatomically-impossible act.

Listen to what they're saying today:

"I don't think we can just repeal Obamacare and say we're going to get an answer two years from now," he said Thursday on MSNBC.

"We haven't coalesced around a solution for six years, in part because it is so complicated,” he also said. “Kicking the can down the road for a year or two years isn't going to make it any easier to solve."

With Trump as president and fellow Republicans controlling Congress, the GOP indeed finally has an opportunity to repeal the law.

But nothing about revamping the nation's $3 trillion-a-year health care system will come easy, with congressional Democrats vowing the stop Republicans at essentially every step.  

The solution is to take that $3 trillion a year system and make it a $1 trillion a year system.  Doing that will resolve the entire federal budget deficit and debt problem, it will resolve all of the state and local pension issues related to retiree health expenses (that's most of it) and it will permanently end the depreciation of our currency, which screws everyone.  It will also make America far more competitive as a place to do business and thus attract jobs and firms here from other nations, going a long way toward addressing both offshoring of labor and our trade balance.

It is not only possible to do this it can be done, for the most part, using existing law.

There has been zero discussion or statements made about doing the one thing that will actually fix the problem: Enforcing 15 United States Code against all medical and health-insurance related firms.  We could start by enforcing Robinson-Patman, which federally bans price discrimination for buyers of like kind and quantity, against pharma firms and hospitals.  We could enforce the anti-collusion components of Sherman and Clayton against everyone, and indicting anyone who won't post a price and charge the same price to everyone without regard to how they pay. In short we could take the monopolists in both insurance and medicine out back behind the woodshed and offer them a choice -- either cut it out, right now, or go to prison under 100+ year old already-existing law and have your corporation ruined with $100 million per-count fines, and remind them that we will tally every person that gets screwed as a separate and unique count.

I remind you that Obama doesn't care that Obamacare is detonating because it is happening after he leaves office and likewise Trump will not give a good damn what happens after he leaves office -- even if it's only by a month or two!  I correctly forecast, on the math, that Obamacare would detonate and it is no surprise to me whatsoever that it is doing so now as he is on the verge of leaving office.

Why hasn't anyone from the Senate, including so-called "libertarian" Rand Paul, raised and pressed this?  Because doing so will mightily******off a whole bunch of K-street lobbyists and people in the "industry" that have been running federally-enforced financial******rooms for everyone in this country for the last 30 years.  Dismantling the screwing they have forced Americans into will mean many of those people lose their jobs, many more will see their incomes cut to a monstrous degree and in the short term a 12-15% hit to GDP will take place.  It won't last long because that output will be redirected into other, more-productive pursuits, but the short-term pain and blaring of "Recession!" in all the major media, along with a massive downward stroke in the stock price of every firm related to this scheme carries political risk that none of these people will take -- even if not doing so will destroy America financially and they all know damn well that it will with absolute mathematical certainty.

If my refusal to shut up about this issue and "give Trump a pass" means I wind up being labeled Deplorable, Irredeemable and all the Trump schwantz-gobblers attack me as well because I will not fall to my knees and take a turn on the Presidential knob then I guess I'll have to settle for a purring cat, my (now adult) kid and leaves on trees in the woods as my list of "friends."

So be it.

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