As usual the lie factory continues here -- and this is from someone who knows better.

Social Security, Medicare and Medicaid benefit millions of Americans, but are major drivers of our national debt, which has skyrocketed to more than $21 trillion. If every U.S. taxpayer was billed for an equal share of that debt, we would each be charged about $400,000.

The cause of our out-of-control national debt is rooted in current and long-term obligations of these three big entitlement programs, due in large part to rapidly rising costs and an aging population.

Again, let me reference this Ticker, just one of dozens I've written over the years, that points out the truth: There is no crisis in Social Security.  There is a problem which can be addressed, but the problem was caused directly by tampering with interest rates within The Fed and Congress along with allowing millions of able-bodied people to claim "disability" -- and some of them have been documented to have run marathons while allegedly "disabled."

Nonetheless Social Security is fixable without a large amount of pain.  Why?  Because it is a progressive tax-based system (you get more back in benefit for the first dollar you pay in via taxes than later ones), it holds a relatively large body of bonds which by design were constructed to allow "pig-in-python" style bursts of baby creation (ala The Boomers) as the designers anticipated that happening (along with "busts" at other times) and the tax rate is, in relative terms, high.  (12.4% of all wages earned up to the cap -- you only  "see" half of it as a payroll deduction -- unless you're self-employed!)  Further the boomer pig in the python will start to recede in ten years -- 2028 -- as boomers start dying and so will their outsized proportion of the "draw" on said system.

In other words the conflation of Social Security, Medicare and Medicaid is an intentional lie that is repeated for political purposes and any politician or other policy "wonk" who does so deserves to be destroyed as his or her intent is to wreck this nation on a permanent fiscal basis by generating enough screaming among seniors to guarantee the actual problem is not addressed.

The entire problem with our budget lies in Medicare and Medicaid.  The reason is multi-fold but is focused in the following places:

• The Medicare tax rate is 2.9%, (1.45% each for employer and employee), or less than one quarter of that for Social Security.  Yet last fiscal year Social Security spent $1.03 trillion while Medicare and Medicaid spent $1.46 trillion with approximately $1.15 trillion being Medicare.  In other words Medicare assesses taxes at less than 1/4 the rate of Social Security yet pays out more money.
  
  
• Medical spending as a percentage of the national economy has increased by a factor of five since Medicare was put into place. Medical spending was approximately 4% of GDP in the 1960s; at 4% of GDP Medicare was sustainable indefinitely as its tax receipt projections were approximately correct in covering expected expenditures.  Medical spending is almost 20% of GDP today, or five times as high in percentage terms.  Yet the Medicare tax rate has not advanced at all.  It would have to be five times what it is today, and advance at the rate of medical spending generally indefinitely into the future, to be solvent.
  
  
• If is not possible to "catch up" now even if you immediately made the Medicare tax 15%, which would be higher than Social Security, because those who are retired now didn't pay the higher rate and the bonds were not bought with their funds.  As such it is flatly impossible to fix this on a prospective basis through higher taxes.  IT CANNOT BE DONE BECAUSE TOO MUCH TIME HAS PASSED WITHOUT DOING IT OVER THE LAST 30 YEARS.
  
  
• Medicaid is even worse because there no tax assessed to cover it.  That is, Medicaid is a "pure" entitlement and last year spent approximately $400 billion.  You get it because you're low-income, not because you paid into it while working and now need it.  For this reason you cannot fix Medicaid with any sort of targeted, employment-based tax because there isn't one and the regressive nature of such taxes means people will leave the workforce to avoid paying same and then collect it.  In fact that has happened now and continues to this day.

By 2040, Medicare, which funds health care for people 65 and older, will cover 88 million enrollees and the cost per enrollee by then is estimated to more than triple. Medicare’s hospital insurance program, known as Part A, can only pay full benefits through 2024, according to the program’s trustees.

Why will it triple on a per-person basis?

Simple -- we have an out-of-control medical racketeering set of enterprises in the United States, all of which are illegal under more than 100 year old law.  Years ago I wrote an article on Lilies explaining how exponents invariably screw anyone who relies on them for a long-term "growth" plan.  It's mathematics, not politics and mathematics cannot be evaded.  But far worse when you only think you see the tiniest bit of the problem coming you're nearly dead -- every time -- because of how exponential math works.  As such the la-la-la-la-la nonsense out of politicians on this and all related subjects has only one rational, society-preserving response: REVOLT.

Let's make this clear right up front: Neither the left's "Medicare for all" or the right's "Repeal and replace" mantras will do a damn thing about this, and 2024 is not far away.  I will also remind you that markets never let you actually hit the wall just as they did not in 2000 and 2007.

Once they suss out that the politicians will not fix it because the people are sticking their fingers in their ears and chanting for people like Trump and Occasional Cortex the market will dive.  Not a little, a lot.  This will force the naked swimmers in the pool above water level for their ugliness to be seen by all.

Again -- there is no tax change that can fix this.  The only means to fix it is to dramatically cut medical spending in the economy as a whole -- not cost-shift it, not make someone else pay, stop paying entirely right now, not in the future, not via some claimed "cost curve" bend in the future that never comes.

Medical spending as a percentage of the economy must collapse back to about 4% of the economy, or approximately one fifth of what it is now, and it must do so today.

This is not impossible, contrary to those who say it is.  As just one example we can take as much as $400 billion out of federal health spending per year right now, today, forevermore by simply addressing one self-inflicted, very damaging and expensive set of disease treatments: Diabetes.  

To those who claim that sort of action would be "cruel" I reply that it is the very opposite of cruel because not only does it take a huge whack out of the federal budget (and state pension expenses) it also will dramatically improve the life of those who suffer from this condition, including in many cases reversing it entirely!

Please explain how that is "cruel".  I'm waiting......

When it comes to surgeries (Hospital Part "A" stuff) may I point to The Surgery Center of Oklahoma which routinely, even when it has to buy supplies and drugs at monopolist prices which are 100-500% or more of a market price, manages to undercut the local hospital in your town by that very same 80% I cited as necessary?  Were they able to buy supplies and drugs at market prices it would likely be 90%.  Oh, and you're one twentieth as likely to acquire an infection in said surgery center as your local hospital because they can't bill you for the cost of fixing their own mistakes and as a result they're far more-careful than your local hospital is.

Incidentally those "mistakes" (negligence, mostly) kill 200,000 Americans a year and maim millions which does even more economic damage since a dead (or maimed) person either produces nothing or far less than they otherwise could.

In 2011, in my book Leverage, I laid out a means to fix this.  Through the years since I've fleshed it out a bit more, but the basic premise remains: 

• Enforce the damned law against all the medical providers, require them to post prices and charge everyone the same price for the same thing, thereby allowing competition into the game.
  
  
• Make illegal any sort of cost-hiding (such as the current practice of not being quoted a charge and then having your insurance company play the "explanation of benefits" game.)  This is illegal everywhere else in the economy with damn good reason -- it is, in every case, a criminal conspiracy as it intentionally screws some people who have no opportunity to shop or say no.  In other words you must get a bill and submit it to the insurance company yourself so you see the entire bill, and you must agree in advance to the charges.  When that's physically impossible (e.g. you're on your back having a heart attack) you cannot be charged more than someone who is conscious and able to give consent for the same procedure.
  
  
• Medicaid can be rendered unnecessary in its entirety by these changes (no, this doesn't mean poor people get no medical care -- see the text of the bill.  They in fact get superior care to what they get now.)
  
  
• Forbid drug companies from differentially-pricing across national boundaries -- either directly by law or by dropping the law that currently forbids me from getting on a plane, filling my suitcase with drug "X" in said nation and flying back to resell it in the United States.
  
  
• Forbid government (or care invoiced to the government on behalf of a citizen) from paying anything for medical care where a lifestyle change will provide substantially equivalent or superior outcomes.
  
  
• Force alleged "insurance" to actually be insurance.  What we now call "health insurance" is not insurance; it is a scam, a fraud under the law and a felony criminal offense in every single instance.  Actual insurance by the definition of the word is a group of people who pay a small amount of money into a pool in anticipation of a possible but not certain loss, and from which losses are then paid to those who suffer them.  By definition with insurance once you have a loss you no longer pay anything; the company pays you, and it is criminal fraud to buy an alleged "insurance" policy against either a certain or already existing loss.

Congress would have to act to put into place much of this.  But not all.  The President is the head of the Executive, which is in charge of law enforcement.  Myriad existing parts of the health system are breaking existing, in many cases 100+ year old, laws -- specifically related to anti-trust.  In the specific case of anti-trust these violations are not civil offenses they are criminal felonies.  As a result right here and now, today, the President could direct the US Attorney General to bring said charges tomorrow as could any State Attorney General, since every state legal code I'm examined has similar statutes to 15 USC Chapter 1.

The people of this nation have the ability to put a stop to what is otherwise going to be a certain collapse -- not just in asset markets but of the government itself.  This is not going to happen in 2024 when Medicare cannot pay it will happen before that date because in the history of the world markets have never allowed an actual end date to be reached before they throw up all over the impending disaster.  To expect otherwise is to claim that literally everyone in the world is stupid beyond words.

May I point out that when Medicare's funds are exhausted that $1.1 trillion dollar expenditure (and rising) from last year will be immediately reduced by 75%?  That's right -- they took in just $260 billion last fiscal year in Medicare taxes but spent four times that amount.  If you think the government can immediately add $800 billion to the deficit without interest rates spiking to 10% or more overnight -- which instantly crashes the markets and government both -- you have rocks in your head.

Exactly when the markets will blow up is not determinable in advance but that it will happen is an absolute certainty.  Once it happens there will be no orderly path available to the government or anyone else to stop or mitigate the damage since the entire problem with the market throwing up on such an event is that confidence in the ability and desire of government to address the issue will have been irretrievably lost.

I will remind you that in 2008 the housing sector and frauds in a small part of it, centered in a few "hot" markets such as Florida and California, caused the Stock Market to lose well over half of its value.  This was due to scams in perhaps 3% of the US Economy.

This blowup will be not in 3% of the economy but rather nearly 20% of it and thus will be six times as bad.

The market will not lose 50% of its value, it will lose 90% or more of its value.

GDP will not decline a few percent, it will decline 20% or more.

We will not lose a few million jobs, we will lose 20% or more of the jobs in our economy.

There will not be a couple of investment banks that fail; all of the money-center banks will fail as will all businesses that have any sort of material debt exposure.  That's every large bank, the majority of regional banks and more than half of the publicly traded firms in the United States.

There will not be a few people who lose everything -- homes, jobs, savings and retirement -- up to a third of Americans, or perhaps as much as 100 million people, will lose everything.

The odds that some sizable percentage of that 100 million people will turn to extreme and uncoordinated violence is very high.  A third of the nation may well end up hungry and homeless.  If you think the government will be able to control or put that down think again; the number of angry, willing-to-do-it individuals will be several times the size of the military and police forces combined while federal, state and local government ability to pay said forces will have collapsed.  How many cops will show up for work when their paychecks bounce and they know going to work means their family is defenseless?  How many members of the military will suddenly decide that the Constitution means something and orders be damned?  There's no way to know the answers to those questions in advance, but I assure you -- you're not going to like the answers.

You think this can't happen here?  Oh yes it can.  It has in many other nations, some with ridiculous amounts of very valuable natural resource -- such as oil.  Venezuela anyone?

If you think this is not serious enough to get off your ass now and demand resolving the problem with something as immediate and forceful as this law, backing up that demand with whatever is necessary to make it happen, and yes, I do mean whatever is necessary, then you are through your inaction giving consent to an all-on collapse of our society and government within the next six years.

The market's determination that you're un-serious and don't give a crap, at which point the option to address this problem peacefully and politically will expire, could come at any time including today -- and it is certain on the present path that the hard end-point will arrive before the end of Trump's second term when Medicare runs out of money.

This is no longer an abstract issue that is at some point "far off" in the future.

It must be addressed now.