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2019-11-05 07:00 by Karl Denninger
in Politics , 179 references Ignore this thread
Can We Stop With The Stupid?
[Comments enabled]

First article of stupidity: Medicare for all will lower costs.

No it won't.  But it also won't add to costs as much as many of the scolds are claiming.  What it will do is shift costs from the private to the public sector.

Today if you have a "family insurance plan" through your employer you are being shorted $20,000 a year in wages as that's roughly what your employer is paying "on your behalf" to obtain it.  If you have a "single" plan (just you) it's about half that.  If you are making $50,000 a year in wages you're really making $60,000 but you don't see any of it.

Warren and others allegedly will "shift" this onto the Federal Government and then shift the funds your employer pay now into the government to pay for it.  Except it won't work like that because socialism is always more-expensive than capitalism.

Why is our medical care so expensive now?  Why can you get on a plane, fly to India and get Sovaldi (the cure for Hepatitis C) for under $1,000 for the entire 90 day course of treatment while here in the United States it costs forty to eighty times as much?  The reason is simple: You don't have to pay cash for it here, but there you do.  When people have to pay cash suddenly price matters.

You see this every single day in your life.  You drive past the gas station and there are three of them within a half-mile distance.  One has a higher price than the other two and, on a percentage basis, no customers compared to the other two.  The other two split the difference.  That happens frequently even when the difference in price is a literal penny a gallon; an amount that in my car amounts to less than 25 cents!  Nonetheless given the choice I will pay the 25 cents less.

All of the health care scam resolves around exactly this.  If every health provider, whether it be a doctor, hospital, pharmaceutical company or otherwise had to charge everyone the same price for the same goods or services consumed in a similar amount then were you able to choose you would choose and the guy who was a dollar cheaper would get all the business.

The problem with "Medicare for all" -- or any socialized medicine system -- is the same with all socialist systems: The price feedback mechanism from the customer to the supplier is removed since the customer does not pay the tab.

Any time the customer does not pay the check directly for any good or service this occurs; the only difference is in degree, not outcome.  You can only avoid this problem in market when everyone must post a price, must charge everyone the same price for the same thing, and the customer has to pay the price out of his or her own pocket at the time, whether they later get reimbursed (e.g. by an insurance company) or not.

 

Last fiscal year (ended September 30th) the Federal Government spent $1.576 trillion dollars on Medicare and Medicaid combined.  This is approximately 8% higher than last year.  This 8% annual increase has been going on for decades with very few interruptions.  The ACA "downward" shift for a couple of years has now been proved to be what I suspected, which was shifting some people from government-paid medical into forced employer plans.  But that's a one-off, not a trend change.

Medicare and Medicaid by definition do not cause any sort of price shopping -- that is, capitalism -- to occur.  The government pays whatever schedule they wish and the only option is for a provider to either take it or refuse all such patients.  But the government, in choosing the amount to pay, is of course subject to lobbying, which you know damn well goes on and at a furious pace.  That's what socialism is and does; providers of a good or service the government purchases have no incentive to compete when the end user doesn't get any benefit from choosing a cheaper alternative and in fact the incentives are exactly the opposite way!

How much are you overcharged?

Typically you are paying, and so is the government, 500% or even more than you would be for equivalent services if pricing was exposed, you paid the bill and everyone had to be charged the same price for the same thing.

Note that this change would not stop companies from offering "insurance"; indeed, there's nothing wrong with that at all.  But whether you have insurance or not is between you and the insurance company, not you and the hospital, doctor or pharmacist.  In addition said insurance company cannot set and negotiate a price; insurance is the business of making you whole after a bad thing happens, not price-fixing.  The medical industry has twice gone all the way to the US Supreme Court to try to get price-fixing under the rubric of "volume buying" declared legal and lost both cases.

The problem with Warren's and everyone else's plans -- including what Trump is doing right now (leaving the existing system alone) is that at 8% escalation the Federal Government cannot pay the check within the next few years.

Last fiscal year Medicare and Medicaid combined totaled 35% of the Federal Budget.

But far more-importantly they totaled 46% of all federal taxes.  Within the next five years -- by 2024 -- these two programs will try to spend $2.316 trillion, or 47% more than they spend now.

I remind you that this is just under a trillion dollars less than total tax receipts and both military and interest on the debt currently comprise just over a trillion, or an equal amount.  As debt rises so does interest expense.

In other words even though tax receipts will inevitably rise (they were up 4% last year) the compounding effect of interest and these medical program payments will outstrip tax receipts handily no matter who wins the White House in 2020.  This will inevitably lead to either severe rationing or a collapse of the federal government's funding capacity by 2024.

Further, here's other bad news:

09/30/201916,809,092,325,171.805,910,309,428,261.9822,719,401,753,433.78
09/28/201815,761,154,524,132.455,754,903,659,047.7821,516,058,183,180.23

That's right -- $1.203 trillion ($1,203 billion) was the deficit not the claimed $984 billion.  The difference?  The Treasury has $219 billion off its balance sheet, nearly all in the form of spending on Medicare.  But the facts remain that the money was borrowed and spent, and thus despite them holding same "off the balance sheet" the interest has to be paid and it still counts.

There is exactly one way to stop this, and that is to stop the socialism and monopolies.

I've had a plan out there to exactly that for quite some time -- which you can read here.  Of course this would mean the grifters on both sides of the aisle, including the pigface currently in office and those contending for the Democrat nomination would have to cut the crap, along with Congress.

That will only happen if you find your pitchfork and torch, and insist that it does.

But if you don't -- you, or someone you love -- and maybe a lot of someones will at best be impoverished and at worst will die.  In addition not only will the stock market crash so will all other asset markets and prices, never mind virtually all major city governments and their programs.

That's not politics -- it's math.

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Flappingeagle
Posts: 3339
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Quote:
But the government, in choosing the amount to pay, is of course subject to lobbying, which you know damn well goes on and at a furious pace.
I am making progress on convincing a liberal friend of mine that we need to greatly reduce the size of the Federal Government because it is nothing but a one-stop shop of corruption. All you have to do is make the necessary campaign contributions and then build a reputation as a soft landing place for ex-pols and their families and you get whatever you want out of the public treasury.

Congress is incentivized to create further graft and corruption, not to pursue reform.

Flap

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Tdurden
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I still believe that whichever power grab being passed off as WarrenCare or BidenCare, ObamaCare 2.0, etc, the obvious escape routes will be cut off. They will take a swipe at medical tourism next time around. Fedgov and it's corrupt corporate partners aren't going to tolerate the sheep side-stepping "glorious medicare for all(!)". It will be deemed to be "unfair" that some people can not just cut in line, but skip their line altogether. How will they do it? They'll just turn off your passport. They put the mechanism in place for that to keep guys behind on "child" support or taxes from leaving the country. Adding a medical reason to the list won't be hard now that we've had electronic medical records crammed down our throats.

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"I'd like to live just long enough to be there when they cut off your head and stick it on a pike as a warning to the next 10 generations that some favors come with too high of a price." -Vir Cotto Babylon 5
Click
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"That [real change that you can believe in] will only happen if you find your pitchfork and torch, and insist that it does.

But if you don't -- you, or someone you love -- and maybe a lot of someones will at best be impoverished and at worst will die. In addition not only will the stock market crash so will all other asset markets and prices, never mind virtually all major city governments and their programs."

I don't necessarily disagree with the above dire assertion; however, I expect some "markets" to actually go way up in the USA, e.g., things you'll find in "black markets".

In fact, there might even be a meltup in the Dow as socialism catastrophically fails on the federal, state and local level. I can see many potential scenarios in which the Dow continues to reach record highs. For example, Euroland is in a lot worse shape than the American Empire. If I lived there, I'd bailout and convert my money to U.S. dollars and the Dow. I'd also buy some gold and silver and other commodities... I don't think I'm alone in my thinking, so foreign money just might flood into the American Empire as the rest of the world collapses before we do.

Speaking of commodities. Food is going up, up and away... Maybe the smartest thing to do is get out that "pitchfork" garden hoe, broadfork, shovel and rake and learn how to grow your own commodities.

Tickerguy
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A True American Patriot!
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It's amusing to see someone believe that with those who buy things impoverished somehow corporations will have positive EPS and thus the stock market will keep going up.

This exposes someone who has had FAR too many hits on the bong.

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Winding it down.
Emg
Posts: 444
Incept: 2012-11-20

Canada
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Plus, once you get government healthcare, you then have to deal with crap like this:

https://www.breitbart.com/europe/2019/11....

Pay all your life for 'free healthcare' then be denied it when you need it because badthink.
Click
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Depends upon what you mean by "impoverished" and whether or not there is an abundant food supply. We have the most obesity of any declining empire in history. And lots and lots of "bongs" both metaphorical and literal. So, yeah, pass me the bong, german Trappist beer and some keto approved beef jerky. I'll sit and smoke a pipe with the Tuscarora (hemp gatherers) read another history book while you do the "math"...

Rome, the capital of the Roman Empire, provided universal basic income to an average of 200,000 people and a high of 320,000. And that's a low estimate. Rome was populated by just over a million people at its peak and under 50,000 when it finally hit bottom.

The Roman Empire didn't have a fraction of the technology, industry, military might and finance that does the American Empire, yet the rich got richer and the empire continued and the Roman Markets went UP and down and on and on for hundreds of years.

I sold my all of my Dow holding two years ago. That might have been a mistake. Pass the pipe, please.
Hot-dog-guy
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BTW you can get the Hep-C cure delivered from India to the USA. Look for a guy called Mayur Shetty. He's your guy.
Aztrader
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Scottsdale, AZ
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How much are we pissing away to subsidize the ACA policies at 90% a pop?
Mr_clueless
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The really weird part with the US medical system is that cash pay costs more than what the insurance company pays. Hospital bills insurance $1000 and insurance pays them $100. But if insurance refuses to pay, I'm on the hook for $1000.

The system is unfixable. The only way to not get screwed is to have good genes.
Tickerguy
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@Mr_clueless -
Quote:
The system is unfixable.

It absolutely is fixable. You're just not willing to do what is required to fix it (nor is anyone else) -- and yes, that might be quite medieval, at least a few times until the industry realizes the people are serious.

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Winding it down.

Amused
Posts: 357
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I still never understand why something that is such a huge problem is always reduced to an either or problem.

This ends up being my problems with the arguments by the left and right, when healthcare is such a huge sector, there are lots of things like voluntary or elective procedures where it is clear that any socialization will completely **** it, be it LASIK or plastic surgery or dental work, it is better to have robust competition to drive down prices if you can have a highly functional market with multiple players in competition who are prevented by law from colluding and pricing fixing, the prices will naturally fall to the lowest they can with the most margin the providers can extract compared to their competitors.

Where I am ok with socializing is in areas where markets don't work. If I am unconscious I can't select the cheapest ambulance service. Or if I've been shot, am bleeding out, having a heart attack, etc, I can't shop around hospitals in my area for the ones that maybe meet all my criteria, because choice is missing from the equation.

I never saw how Federalizing it would be the solution, it seems the best model would be community and maybe even State owned triage systems, kinda along the model of a State Police or State National Guard.

Anything that is not immediately life saving would get you moved from the State national guard hospital to treatment in the private system.

That seems to me to be along the model our Framers designed it anyway, let each State figure it out. If one State wants Single Payer, cool. If another State wants a total Free Market and thinks it will work better, even if you are carrying around your chopped off arm looking for a quote, then cool, go live in the State.

That is incidental one of the reasons I am so pissed a Gavin Newsum. He decided to investigate the Oil Companies for price fixing...

THE ******* OIL COMPANIES!

The medical cartel is literally killing us and taking our homes and he goes after the ****ing oil companies for a nickel.

There should be blood.
Metric
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Tickerguy,

This is the best, most concise description of the problem that I've yet seen.

A major phase transition is unavoidable (doing the proper thing you suggest would itself be a major transition, but I doubt it will be so straightforward). I don't understand yet how it will play out. Suspect it will may also come with a complete revolution of the monetary system and/or political transformation of the (former) US, since these are also systems under high stress.

Stee_man
Posts: 251
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I'm glad this ticker puts the blame where it belongs. On congress and on the monopolies.

Let's stop helping people pretend everything can magically be fixed by closing the fed. Or auditing it, which is an even bigger joke. We don't need more data or new laws. We need to address our problems honestly, with rule of law for everyone equally.
Amused
Posts: 357
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Post Script:
I forgot to mention, as an example, the mental health system in Illinois used to be run by the State. If you had money and wanted better care, you could get private treatment in a private hospital, but for the elderly and poor, there were State owned and run mental hospitals.

My father was an orderly in the Elgin State Mental Hospital in the early 60s. He worked in the old age section, not the total wacko section, so it was really more of a retirement home for the senile and indigent that couldn't afford retirement communities or didn't have a family.

His job used to consist of doling out medications, giving injections and pills to the old guys, changing bed pans and playing a lot of pool with them. Apparently, most of the job was actually playing pool.

Illinois had a lot of old hustlers and that is how they passed their twilight years under his care.

I see the current filth that is on the streets of cities like LA, SF, Chicago, etc since the Mental Health system was 'reformed' and privatized and don't see how the 'socialism' was worse. He said they were happy and he never had a problem. Were they in the Ritz? No by no means, but they also were not ***** on street corners.

There has to be a mix where we can meet in the middle and solve these problems.
Gonewest
Posts: 152
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PacificNW
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Quote:
Gavin Newsum. He decided to investigate the Oil Companies for price fixing...


Someone must have missed their tribute payment.
Jduwaldt
Posts: 850
Incept: 2010-06-10

Orange County, CA
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I wonder if Gov Newsum is not investigating medical companies because he supports this report on the evidently drastic need to do something about overpopulation:

https://academic.oup.com/bioscience/adva....

Ignore for now the fact that the US would have a declining population if not for immigration.

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Gun Control: because what's the fun of being in the Majority if the Minority are able to defend themselves?
Your ignorance is someone else's superpower
I find Progressives these days explicitly choose to be ignorant. The complexity of today's world - which they helped to bring on - seems to be their excuse.
Oliver1655
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In the more worthless news and pointless token gestures department.

The (un)justice dept, is launching an anti price collusion task force. (yeah right)

https://www.newsmax.com/finance/streetta....

Where the f have they been for the last 30 years or so prosecuting the extortion and extraction rackets that should have been prosecuted as felonies under 15 USC Chapter 1 ?

Where are the high profile Hospital,Pharma,PBM,Ins. execs rotting in jail for running these rackets ?

Where are the ruinous fines of "$100 million per violation" if committed by a business ?

All this will be just be more worthless lip service with piddly ass token fines and slaps on the wrist without any "lock their ass up" results.
Cbracket
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In a government run HC system, doctors become mere employees. Salaries are a big target when costs escalate. When government promises to treat all comers, demand will expand to nearly infinity. Doctors will not want to work such long hours as now when their pay doesnt reflect their productivity. Few will also want to work in remote places. The brightest physicians will likely change to high paying careers like finance, where disease and actual lives arent concerns.

We will have to begin importing more turd-world doctors, AND launch government run BLT-QWERTY approved, physician training academies (like West Point, Air Force and Navy) where the specialists will be readied for deployment to government health clinics strewn about the US.

Treatments will surely be limited by age. The only thing missing from our future will be the actual soylent green.
Tickerguy
Posts: 159974
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Oh **** all that bull****. Seriously.

Just cut the crap. This is the talking point garbage that leads me to shut this ****ing place down.

Drink a gallon of pool acid.

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Winding it down.

Amused
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CBracket:
have you ever traveled the small towns throughout the country and noticed that there were lots of older Indian and Asian doctors that lived and worked there?

There used to be a special visa and green card status that the government gave to encourage doctors to immigrate and settle into underserved areas.

This happened in the 1960s and 1970s so o don't know what you are talking about, we already have insanely strict policies on doctors that immigrated here having to retake they're f****** residency.

it is insane, you can be the greatest neurosurgeon in the world be the highest rated doctor on the entire planet but if you try to come to the u.s. and get a green card you have to retake your residency again.

What is Free Market about that?

In a real Free Market and Global Economy they could come here and drive price down by adding supply and putting margin squeeze on the Cartels.
Amused
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I've proposed on this forum for a truly free market solution that has zero socialism but it doesn't go over well with the MAGA crowd.

Make the Cartels Eat Globalism they claim to love.

The US, CA, AU/NZ, GB and Western Europe all have similar medical standards to us. So we force a race to the bottom.

We say in Oprah's Voice: If you can pass the boards, You Get a Green Card, You Get a Green Card. No more retaking residency.

Want to see medical prices drop like a stone? Want to see the student loan system collapse instantly? And the colleges dependant on it?

Throw open the boarder to any Western Civilization Doctor and invite them in. That is Free Market Globalism.

Well that and Opening the Boarder on all Drugs and Devices.

You do those two things and the medical costs here instantly, overnight reach parity with the Western World Average.

Also a lot of dead weight gets trimmed.

But, Doctors are a protected class I guess. My neighbor that does yard work has to compete with the immigrants..
But the Doctors and Lawyers seem to be a special case for some reason...

Throw open the border to Doctors, Drugs and Medical Devices and let the Cartels fiddle with paper pushers and insurance claims while I pay $20 cash to the French or German immigrant doctor.

I'll tell you who wins Everytime in the end.
Mannfm11
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DFW, Tx
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Newsome investigating the oil companies for price fixing? How about investigating Newsome for tax ****ing? I'm was fed a video on climate change electricity in Australia. Prices tripled. Wind quits blowing over the entire country. Grid crashes. It clouds over, solar declines. Biggest exporter of coal on Earth. Australia is putting itself in the dark ages over a fiction. So is California. People are buying diesel generators, because the grid is failing and some can't afford to lose their current. Aluminum factory destroyed. Steel industry destroyed. In the meantime, China is burning all the Australian coal they can get and I bet they don't give a squat about Climate change. Everything the government touches goes to ****.

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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith
Krzelune
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LOL. I'm just ****ing amazed at the hyper-myopic thinking. It is like a fantasy to them.
Asimov
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Wouldn't it be nice if doctors (or people who actually DO MEDICAL CARE) salaries was the biggest concern? We could pay doctors MILLIONS a year, easily.

When paperwork producers cost more than the people actually doing the job, you know the government already controls everything anyway.

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It's justifiably immoral to deal morally with an immoral entity.

Festina lente.
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