Saturday, January 21, 2012

The Pharma-Hospital-Insurance Complex

The exploding cost of healthcare -- as a percentage of GDP in the United States -- is a cancer that is out of control. As of 2010, it was 17.3% of GDP. It's projected to be 19.3% of GDP by 2019.

The bigger the healthcare sector, the more clout it has in government with respect to lobbying (i.e. bribery). The ObamaCare legislation was crafted behind closed doors -- all to benefit the industrial monopolies.

Since the Wall Street meltdown of 2008, the United States has been in a biflationary economy. The inflationary sector (i.e. healthcare) has the most money to bribe Congress & the White House. The deflationary sector (i.e. "Main Street") doesn't have this kind of clout. Hence, the federal government will favor the inflationary sector with the subsidies, mandates and monopoly protections. With more money being pumped into the overheated healthcare sector, this actually fuels the inflation of that sector; whereas money is being sucked out of the deflationary sector. This exacerbates the dichotomy between the two economies.

Government subsidies have the effect of fueling inflationary bubbles. It had happened with housing; it's now happening with healthcare. So when the healthcare bubble bursts, it shall be the aging Baby Boomers who will bear the main brunt. But who cares? The government? The old people will have their care rationed -- just "let them die."

Both ObamaCare and RomneyCare are immoral. They force citizens to sacrifice their hard-earned income unto middlemen -- insurance companies and government bureaucrats -- who will then control people's healthcare. This is what I term as demand-side, insurance-mandated healthcare. It favors the industry, not the consumers. Likewise, it discriminates against old people with insurance rates three times higher than those of younger people. (In Canada, the healthcare tax is based solely on income.)

The healthcare oligarchs are greedy. They not only get subsidies and the insurance mandate, they also get the government to provide them monopoly protection via certificate of need (CON) regulations. This guarantees huge profits because these regs eliminate competition. But with the aging of the Baby Boomers, this will spell disaster with runaway inflation -- or with prices capped, then severe rationing.

What's desperately needed is a new model -- supply-side, consumer-driven healthcare. This is how our foodcare industry is modeled after. There is a proliferation of supermarkets, people buy their own food with their own money -- no insurance required. A person who is poor, does not go into the store (demanding from the grocer) free food. Everybody is expected to pay -- including illegal aliens. Yet we do not live in a country of mass starvation.

So with healthcare, we need to allow for grassroots capitalism to flourish within the hospital /medical industry. With the aging of the Baby Boomers, there should be no problem, whatsoever, for a proliferation of medical clinics in our neighborhoods -- just like grocery stores. But this cannot happen with the certificate of need regulations limiting the number of hospitals/clinics within neighborhoods.

Likewise, the Ryan Plan talks of increasing competition for private healthcare insurance; but not for increasing competition of healthcare clinics and hospitals. This will still result in runaway inflation and rationing. The conservatives in Congress are just as retro in mindset as the progressives -- they're trapped in the mindset of comprehensive insurance (as the required medium) for access to routine healthcare. (The only difference is that the conservatives believe in private insurance, whereas the progressives believe in government insurance.)

Another problem with the Ryan Plan is that it isn't based on "free markets." The insurance will be subsidized. Hence (like that of the subsidies for low-interest loans via Freddie Mac), it will fuel an inflation bubble. Plus the government is then put into the position of picking winners and losers. (Politicians will decide which insurance plans qualify for the the subsidies .. and which will not.) This is a recipe for corruption.

The reason the insurance model worked okay during the previous decades was that the Baby Boomers were young, whereas the sickly old were few. The Ponzi nature of insurance (including Medicare) was in it's early, benign stage. Now that the Baby Boomers are getting old (with a scarcity of the young to support them), the Ponzi bubble is about to burst.


References: (CBS News Website) http://bit.ly/yVwltd

Monday, January 16, 2012

Canadian HealthCare

Canada has a population smaller than the state of California. Yet its socialized medicine is administered at the provincial level -- not at the federal level. (Whereas the United States, with its huge population, the ObamaCare will be administered at the federal level.)

Each province of Canada has its own version of "Medicare-for-all." In British Columbia, every individual (whose annual income is $28,000 or greater) must pay a flat-tax premium of $57.00 per month -- regardless of age. In Alberta, there is no premium, but merely a progressive tax based solely on income -- again no discrimination based on age. (Under ObamaCare, the mandated insurance will allow insurance rates to be three times higher for the 50's + age group versus the 20's age group.)

In all the provinces of Canada, the "Medicare-for-all" covers for basic healthcare, routine doctor visits and  emergency care. It does not cover optional procedures (like plastic surgery) nor does it cover prescription drugs (except for seniors, who do get drug coverage.) But employers often provide supplemental insurance. These employer-provided plans are often "Cadillac plans," where they can include things like massage therapy and fitness clubs.

Via my interviews with many Canadian citizens, medical clinics for "emergency care" tend to get overcrowded with young families having only minor ailments (like the common cold). Waits in Ontario can last for 3 to 6 hours.

Primary care doctors and surgeons (covered under the government) are forbidden to privately contract with patients. In other words, patients are not allowed to pay those doctors for personal care.

For things like hip-replacement surgery, it may be a wait of several months. But wealthier Canadians often travel to the United States or to Europe to privately contract with a hospital and pay cash out-of-pocket ... to "jump the line" and get instant surgery. (But doing that inside Canada would be strictly forbidden.)

When ObamaCare gets fully implemented in the United States, healthcare would become two-tiered. The U.S. citizens would be stuck in overcrowded waiting rooms; healthcare will be rationed -- especially for seniors. But the ruling class elites will be able to "jump the line" by traveling to Panama or Costa Rica for first-class healthcare down there. Whereas swelling numbers of ordinary Americans will be stuck in the U.S.A. within the Medicaid ghetto.

But ObamaCare will be worse than Canadian care, in that the 50's + age group would be discriminated by their age via the higher "tax" they'd be forced to pay (otherwise known as an insurance premium.) This reduces the saving potential for that age group as they approach retirement. They'd be trapped in poverty.

Whether it's Canadian healthcare, ObamaCare, RomneyCare or Medicare ... they all are based on the model of  "Third-party Payer." The ordinary citizen does not have an incentive to economize. Whereas the healthcare monopolies become hooked to this arrangement of easy profit, guaranteed by the government.

Under ObamaCare (and because of the "certificate of need" regulations), hospitals are going to be "too-big-to-fail" ... just like AIG and the investment banks of Wall Street. This will be horrible for the healthcare consumer. Welcome to our future nightmare.

Thursday, January 12, 2012

ObamaCare is Especially Bad for Older People

ObamaCare is very costly for the folks mandated to participate in it. Those costs become higher, the older you get -- especially for the Middle Class (whose subsidies are less). People who approach 65 years of age, the higher marginal costs would have a most severe impact .. because of their diminished opportunities for savings.

Kudos to Paul Gregory Matuszak and to Craig J. Casey .. who are among the smartest men in Twitter.

https://twitter.com/#!/pavelgregory
https://twitter.com/#!/CraigJCasey

Friday, January 6, 2012

Reihan Salam's Interview with Lou Dobb's on March 24, 2010

Reihan Salam, the coauthor of a book "Grand New Party," was a guest on the Lou Dobb's Radio Show, March  2010. The subject was about the health-care bill that had just been signed into law, back then.

5:26-5:40 Lou Dobbs: And this is the same President that has been out trashing, vilifying, demonizing insurance companies; but as a result of this legislation, more than $300 billion will be put in their pockets because of the individual mandate.

5:41-6:00 Reihan Salam: Yup yup yeah, I think that's absolutely right ... And I think that what we're likely to see, in my opinion, is that the individual mandate is going to get, quote unquote, strengthened ... Which means that you're going to see it get tougher ... You're going to see tougher, stiffer fines coming down the road ... And I think that, you know, it's likely that Republicans are going to be the ones doing that. I hope that's not actually the case.

6:01-6:02 Lou Dobbs: Why do you think it'll be Republicans doing that?

6:03-6:55  Reihan Salam: Well why? Because basically the Democrats had passed this bill that is unworkable ... And the Republicans are going to come in, they're going to find out that, you know, 'Guess what? ... We can't actually repeal this thing.' ... And so, you know Republicans who are cozy with the health insurance companies, just as you have got Democrats who are cozy with the health insurance companies, you're going to get a handful of them who are going to say, 'Well hey, you know we can do the health insurance companies a favor.' -- I'm not saying that's going to happen necessarily ... I'm saying it could very well happen ... And if you think that it can't, you're being na├»ve. I think that you're going to see all kinds of ways this bill is going to be fixed at the edges: that are actually going to strengthen the hands of the big winners from this ... Which are either the pharmaceutical companies or the insurance companies. The Pharmaceutical companies had spent tens of millions of dollars to get this legislation passed ... And they're breaking out the champagne right now because they know that it's a big win for them.

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My own commentary:

Fast forward to 2012. Why do you suppose Mitt Romney is a huge recipient of money from corporate donors? Why do you suppose Romney had recently stated his Massachusetts' Health Care Plan to be "conservative," particularly in reference to the mandate? Do you really believe that Mittens will fully repeal ObamaCare? (If Supreme Court rules the mandate to be constitutional, then Romney will have the green light to preserve the mandate, too.) That's why I very strongly oppose his candidacy.

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For the full podcast of the Lou Dobbs interview with Reihan Salam: http://bit.ly/wtqulp

For info on Reihan Salam's book: http://amzn.to/zIbcBw

On Twitter, Reihan Salam is @reihansalam or go to: http://bit.ly/wHKblx