"It"s A Crisis Situation": One Chart Explains Why Obamacare Is Locked In An Inescapable Death Spiral

Ever since it was signed into law in 2010, defenders of Obamacare have dismissed staggering surges in annual premiums by highlighting only the rates paid by those fortunate enough to receive subsidies.  In fact, last year we wrote about Marjorie Connolly"s, from Obama"s Department of Health and Human Services, response to the Tennessee insurance commissioner"s fear that the exchanges in his state were "very near collapse" after a staggering 59% premium surge:

“Consumers in Tennessee will continue to have affordable coverage options in 2017. Last year, the average monthly premium for people with Marketplace coverage getting tax credits increased just $2, from $102 to $104 per month, despite headlines suggesting double digit increases,” said Marjorie Connolly, HHS spokeswoman, in a statement.

We"re unsure whether Connolly"s comment was just propaganda intended to defend a failing piece of legislation or an intentional, blatant admission that the Department of Health and Human Services just doesn"t care about the majority of Americans, the so-called 1%"ers, who are facing debilitating increases in healthcare costs simply because they manage to live above the poverty line.  We"ll let you decide on that one.

Be that as it may, as the Miami Herald points out this morning, roughly half of all Obamacare participants, nearly 9 million people in aggregate, don"t qualify for the subsidies that Connolly praised and have been forced to absorb debilitating premium increases for the past several years.

Meanwhile, the pie chart above from 2017 doesn"t count the 1,000"s of unsubsidized "millionaire, billionaire, private jets owners" making over $50,000 per year who have already been forced to drop their healthcare coverage because it was simply unaffordable...a move which the Reiter family in Florida was forced to consider for 2018 after the premiums on their policy surged 54% to a cost of $40,000 per year.

As open enrollment for Affordable Care Act coverage nears the deadline of Dec. 15, and Florida once again leads all states using the federal exchange at healthcare.gov, Heidi and Richard Reiter sit at the kitchen table at their Davie home and struggle to piece together the family’s health insurance for 2018.

 

The Reiters buy their own coverage, but they earn too much to qualify for financial aid to lower their monthly premiums. For 2017, they bought a plan off the exchange and paid $26,000 in premiums for family coverage, including their two sons, ages 21 and 17.

 

Keeping the same coverage for 2018 would have cost the Reiters $40,000 in premiums, a 54 percent increase. So they selected a lower-priced plan that covers less but costs $29,000 in premiums.

 

“That’s more than a lot of people’s mortgage payments,” Richard Reiter said. “For me, it’s a crisis situation.”

Of course, while the Herald attempts to blame the Trump administration for Obamacare"s continued premium hikes in 2018, we would just remind everyone once again that premiums surged an average of 113% across the United States during Obama"s last term...

But sure, it"s all Trump"s fault.

Financial Tyranny: "We The People" Are The New Permanent Underclass In America

Authored by John Whitehead via The Rutherford Institute,

Americans can no longer afford to get sick and there’s a reason why.

That’s because a growing number of Americans are struggling to stretch their dollars far enough to pay their bills, get out of debt and ensure that if and when an illness arises, it doesn’t bankrupt them.

This is a reality that no amount of partisan political bickering can deny.

Many Americans can no longer afford health insurance, drug costs or hospital bills. They can’t afford to pay rising healthcare premiums, out-of-pocket deductibles and prescription drug bills.

They can’t afford to live, and now they can’t afford to get sick or die, either.

It’s a gamble any way you look at it, and the medical community is not helping.

Healthcare costs are rising, driven by a medical, insurance and pharmaceutical industry that are getting rich off the sick and dying.

Appallingly, Americans spend more than any developed country on healthcare and have less to show for it. While Obamacare (a.k.a. the Affordable Care Act) may have made health insurance more accessible to greater numbers of individuals, it has failed to make healthcare any more affordable.

Indeed, health care in America has become just another way of making corporations rich at consumer expense.

This is how the middle classes, who fuel the nation’s economy and fund the government’s programs, get screwed repeatedly.

We’re living a financial nightmare.

We have no real say in how the government runs, or how our taxpayer funds are used, but that doesn’t prevent the government from fleecing us at every turn and forcing us to pay for endless wars that do more to fund the military industrial complex than protect us, pork barrel projects that produce little to nothing, and a police state that serves only to imprison us within its walls.

If you have no choice, no voice, and no real options when it comes to the government’s claims on your property and your money, you’re not free.

Consider: The government can seize your home and your car (which you’ve bought and paid for) over nonpayment of taxes. Government agents can freeze and seize your bank accounts and other valuables if they merely “suspect” wrongdoing. And the IRS insists on getting the first cut of your salary to pay for government programs over which you have no say.

Unsurprisingly, the government has used its tax powers under the 16^th Amendment to the Constitution to advance its own imperialistic agendas and the courts have repeatedly upheld the government’s power to penalize or jail those who refused to pay their taxes.

All the while the government continues to do whatever it likes—levy taxes, rack up debt, spend outrageously and irresponsibly—with little thought for the plight of its citizens.

If Americans managed their personal finances the way the government mismanages the nation’s finances, we’d all be in debtors’ prison by now.

Still, the government remains unrepentant, unfazed and undeterred in its money grabs.

While we’re struggling to get by, the police state is spending our hard-earned tax dollars to further entrench its powers and entrap its citizens.

For instance, American taxpayers have been forced to shell out $5.6 trillion since 9/11 for the military industrial complex’s costly, endless so-called “war on terrorism.” The 16-year war in Afghanistan, which now stands as the longest and one of the most expensive wars in U.S. history, is about to get even longer and more costly, thanks to President Trump’s promise to send more troops over.

In this way, the military industrial complex will get even richer, and the American taxpayer will be forced to shell out even more funds for programs that do little to enhance our lives, ensure our happiness and well-being, or secure our freedoms.

This is no way of life.

Yet it’s not just the government’s endless wars that are bleeding us dry.

We’re also being forced to shell out money for surveillance systems to track our movements, money to further militarize our already militarized police, money to allow the government to raid our homes and bank accounts, money to fund schools where our kids learn nothing about freedom and everything about how to comply, and on and on.

Are you getting the picture yet?

The government isn’t taking our money to make our lives better. Just take a look at the nation’s failing infrastructure, and you’ll see how little is being spent on programs that advance the common good.

We’re being robbed blind so the governmental elite can get richer.

This is nothing less than financial tyranny.

“We the people” have become the new, permanent underclass in America.

It’s tempting to say that there’s little we can do about it, except that’s not quite accurate.

There are a few things we can do (demand transparency, reject cronyism and graft, insist on fair pricing and honest accounting methods, call a halt to incentive-driven government programs that prioritize profits over people), but it will require that “we the people” stop playing politics and stand united against the politicians and corporate interests who have turned our government and economy into a pay-to-play exercise in fascism.

We’ve become so invested in identity politics that label us based on our political leanings that we’ve lost sight of the one label that unites us: we’re all Americans.

As I make clear in my book Battlefield America: The War on the American People, the powers-that-be want to pit us against one another. They want us to adopt an “us versus them” mindset that keeps us powerless and divided. Trust me, the only “us versus them” that matters anymore is “we the people” against the police state.

We’re all in the same boat, folks, and there’s only one real life preserver: that’s the Constitution and the Bill of Rights.

The Constitution starts with those three powerful words: “We the people.”

The message is this: there is power in our numbers.

That remains our greatest strength in the face of a governmental elite that continues to ride roughshod over the populace. It remains our greatest defense against a government that has claimed for itself unlimited power over the purse (taxpayer funds) and the sword (military might). As Patrick Henry declared in the last speech before his death, “United we stand, divided we fall.”

This holds true whether you’re talking about health care, war spending, or the American police state.

Bernie Sanders' "Medicare for All" Is 'Good For None'

Recently, Senator Bernie Sanders unveiled a single-payer healthcare plan called “Medicare for All.”

Sanders titled his approach for nationalizing one-sixth of the American economy as “Medicare for All” in order to offer a template for his vision of the U.S. healthcare system.

Unfortunately, using Medicare as the template for the nation’s healthcare system is a little like using the production model for the Lada, the “people’s car” of the former Soviet Union, as the blue-print for the U.S. auto industry.

The “Medicare for All” proposal would transition millions of Americans to a Medicare-style system over the course of four short years, all the while promising to expand benefits, eliminate deductibles, and cut costs. If that sounds too good to be true, it is.

The assumption that Medicare can be a long-term, sustainable model capable of absorbing quadruple the number of current enrollees is flawed from the start.

Medicare covers approximately 57 million Americans and is projected to cost nearly $700 billion this year. Revenue for the Medicare trust fund is generated via beneficiary premiums, which Sanders wants to eliminate, and general tax revenue, which he wants to increase. According to the 2016 Medicare Trustees Report, the Medicare trust fund faces a “substantial financial shortfall.” In fact, the report forecasts that within 12 years the trust fund will be depleted unless further legislation is enacted. Sanders’s proposal would place a significant burden on an already financially shaky system.

Another aspect of Medicare on which the senator’s plan relies is its provider-fee structure. Medicare reimbursement is significantly lower than the reasonable and customary fees routinely charged by those providing care. Providers make up the difference by shifting costs to non-Medicare patients. By moving all Americans to “Medicare for All,” Sanders’s plan would artificially set provider fees well below market levels. Payments below the cost of doing business would likely result in fewer providers as physicians and hospitals are forced out of business and fewer new providers enter the market. Providers that remain would essentially become government employees. From a patient perspective this would mean longer wait times, less control over healthcare decisions, and lower quality of care. Think of it as the disruption caused by Obamacare but on steroids.

Lastly, the senator’s plan makes the case that eliminating the private healthcare insurance industry and utilizing a Medicare model would mean lower administrative costs resulting in substantial savings. While proponents for single-payer healthcare cite a lower percentage spent on administrative costs, the calculation of these percentages is skewed by significantly higher beneficiary spending. On a per-capita basis, however, Medicare administrative costs are nearly equal to private insurance. This despite a greater number of private insurance providers, variability in their administrative efficiency, and higher marketing and promotion costs.

The good news in Sanders’s “Medicare for All” plan is that it has no chance of passing.

The bad news: It now partially fills the vacuum created by a collapsing Obamacare and the absence of market-based reform alternatives.

As a healthcare option now or in the future, “Medicare for All” would be good for none.

College Students Rejoice! Bernie Sanders Introduces Long-Awaited "Medicare For All" Bill

After successfully leveraging promises for far-left policy reforms into a competitive challenge against frontrunner Hillary Clinton during the 2016 Democratic primary (forcing Debbie Wasserman Schultz to intervene on her longtime friend"s behalf), Senator Bernie Sanders has finally introduced a long-anticipated piece of legislation: His bill to create a single-payer health-care system, or, as his supporters know it best, “Medicare for all.”

As expected, the proposal would offer the same suite of medical benefits required for some insurance plans under the Affordable Care Act and eliminate most out-of-pocket costs. Mr. Sanders argues that although taxes would likely rise to support the new system, families would save money by no longer needing to purchase health coverage, according to the Wall Street Journal.

Unsurprisingly given Sanders’s well-known views on government spending, the 96-page bill offers no mechanisms to pay for the plan, which is expected to cost the federal government hundreds of billions of dollars a year. A Bernie spokesman said his office plans to release a separate white paper focusing on payment strategies, but as of now, no such plan exists.

While the bill’s chances of passing are infinitesimal (Republicans remain vehemently opposed), as the WSJ explains, the symbolism surrounding its introduction is actually quite potent.

As the Democratic party shifts further to the left, socialized medicine (Like they have in Canada!) is becoming a rallying cry for the party. Already, four of the top-polling contenders for the 2020 presidential nod have signed on to the plan.

“A health-care system as Mr. Sanders envisions it remains unlikely with Republicans in control of the White House and both chambers of Congress. But the idea has caught on with many Democrats since Mr. Sanders touted it on the 2016 presidential campaign trail; when he debuted a similar plan in 2013, none of his Democratic colleagues signed on.

Single-payer health care is becoming a rallying cry for many Democrats much as the seven-year promise to “repeal and replace” the ACA brought together Republicans.

At least four potential 2020 Democratic presidential contenders, Elizabeth Warren of Massachusetts, Kirsten Gillibrand of New York, Kamala Harris of California and Cory Booker of New Jersey, have all signed onto the plan.”

In a timeline chronicling the Democratic Party’s flirtations with single payer, the International Business Times explains how the idea of universal health-care coverage was first proposed by former President Harry Truman in 1945. After Democrats successfully created the Medicare and Medicaid programs during the 1960s, some progressive hoped to follow by extending coverage to all citizens. The idea slowly lost favor during the 1970s and 1980s, as Ronald Reagan criticized what he saw as “socialized medicine.”

But it was revived in 1992 when California’s once-and-future governor Jerry Brown campaigned on it during the Democratic primary. He was defeated by Bill Clinton who decided to institute reforms that preserved the existing private-insurance system after failing to muster support for “Hillarycare” – the Clintonian plan for a single-payer system.

Moving ahead to the Obama era, the former president famously flip-flopped on the issue, saying he “never supported single payer” even though there were records of him speaking favorably about the policy dating back to 2003, when he was a state senator in Illinois.

During the formulation of what would become Obamacare, some Democrats pushed to include a so-called “public option” in the bill – a measure for which the president"s support wavered. It was eventually killed by then-Democratic Sen. (and former vice presidential candidate) Joe Lieberman.

Which brings us back to today.  

If enacted, Sanders’s bill would begin extending Medicare-like coverage to people over a four-year transition period, with the eligibility age for the program—currently 65 and older—slowly lowered over time until it covers the entire population, according to WSJ. And while private insurers wouldn’t be permitted to compete with the government’s plan for basic coverage, consumers could purchase supplemental health policies.

The plan would also authorize the universal government health system to negotiate the cost of prescription drugs, an idea that conservative have said is tantamount to price fixing. The Sanders plan would also require abortion to be covered – an idea that will outrage evangelicals. Federal funds are presently prohibited from paying for abortions.

While hundreds of thousands of college students would probably rejoice at its passage (having free health-care coverage for life would certainly ease the psychic burden of not working), as author and former trader Nassim Taleb notes, “America is not Canada.”

As of Wednesday, 15 Democratic senators have signed on to support the bill. They are:

Tammy Baldwin (WI)

Richard Blumenthal (CT)

Cory Booker (NJ)

Al Franken (WI)

Kamala Harris (CA)

Mazie Hirono (HI)

Martin Heinrich (NM)

Kirsten Gillibrand (NY)

Ed Markey (MA)

Jeff Merkley (OR)

Brian Schatz (HI)

Tom Udall (NM)

Elizabeth Warren (MA)

Sheldon Whitehouse (RI)

Speculation about how Sanders will propose payment for the bill, which will likely be used as a template by Democrats in legislative battles for years to come, is already mounting. Here are a few ideas, courtesy of Axios.

• A 7.5% income-based premium paid by employers, which his paper claims will raise $3.9 trillion over 10 years. This would exempt certain small businesses.


• 4% income-based premium paid by households, which his paper claims will raise $4.2 trillion over 10 years. This would not affect low-income families.


• Savings from health tax expenditures, which his paper claims will raise $4.2 trillion over 10 years.


• Make the personal income tax and the estate tax more progressive, including limiting deductions for the wealthy. His paper claims this will raise $1.8 trillion and $249 billion over 10 years, respectively.


• "Establish a Wealth Tax on the Top 0.1 percent," which his paper claims will raise $1.3 trillion over 10 years.


• Add a fee on large financial institutions, which his paper claims will raise $117 billion over 10 years.

Of course, not all Democrats are so fond of Sanders’s plan. Shockingly, it’s least popular among the party’s leadership. Nancy Pelosi has said she wouldn’t endorse the bill because she’s focused on protecting Obamacare. Schultz’s successor, DNC Chairman Tom Perez, said something similar. In summary, single-payer has gained enough political momentum within the party to force its opponents to at least couch their position in an excuse.

Because if the 2016 election cycle taught the Democrats anything, it’s that they oppose populist movements at their own peril. 

Americans Spend The Most For Health Care, Still Die Young

The Organization for Economic Cooperation and Development just released its latest batch of data seeking to measure the quality of health care in each of its member states.

The rankings show that although the US spends more per capita on health care than any of the 34 other OECD member states, its average life expectancy of 78.8 years ranks is among the lowest found in the group, according to a Bloomberg analysis. 

According to the data, the US ranks near the bottom compared with its developed-country peers in prevalence of infant mortality and maternal mortality, as well as deaths from cancer and cardiovascular disease.

“It has the fourth highest infant mortality rate in the OECD, the sixth highest maternal mortality rate and the ninth highest likelihood of dying at a younger age from a host of ailments, including cardiovascular disease and cancer.”

There’s also a surprising disconnect between how healthy Americans believe they are, and how healthy they really are.  

“The U.S. is the most obese country in the OECD, leads in drug-related deaths and ranks 33rd in prevalence of diabetes. Yet 88 percent of Americans say they are in good or very good health, according to OECD statistics. Only 35 percent of Japanese, who have the highest life expectancy in the OECD, regard themselves as healthy or very healthy.

Bloomberg attributes the gap to the America’s reliance on “voluntary” health insurance, saying that OECD countries that rely on public health-care plans have much higher life expectancy, presumably because patients in these countries are incentivized to seek preventative care.

“Unlike other countries in the OECD, the U.S. mostly relies on voluntary health insurance to fund health-care costs. Public health insurance, such as Medicare and Medicaid, accounts for 27 percent of coverage. By contrast, the 10 countries with the highest life expectancy depend on voluntary insurance for an average of less than 6 percent of their costs, and government spending for nearly half.”

Pharmaceuticals are of the biggest drivers of the US"s high health-care costs: The US spends more per capita on prescription medicines and over-the-counter products than any other country in the OECD.

The data arrive as President Donald Trump and Senate GOP leaders consider their next move in a battle to repeal and replace Obamacare. Their latest effort, a so-called “skinny repeal” bill that would’ve rolled back some of the more controversial aspects of Obama’s landmark health initiative was rejected by a one-vote margin when Sen. John McCain, who’s suffering from brain cancer, surprised his peers by voting “no” in an early-morning vote last week.

Health insurance costs are on track to rise much more quickly than inflation as Trump considers using executive actions to ditch key payments to Obamacare insurance companies if a repeal and replace bill is not passed. Insurers in five states requesting premium increases of more than 30%, using this “policy uncertainty” as an excuse the blame the president.

With so much “uncertainty” surrounding the future of health-care in the US, maybe Bernie Sanders will succeed in passing a single-payer initiative that he’s vowed to introduce. Of course, the tax increases that would be required to implement the legislation might trigger a few unintended health crises of their own once taxpayers see the bill.

The complete rankings can be found below:

New Study Finds U.S. Healthcare System Ranks Dead Last Compared To Other Developed Nations

As Republicans sit on the precipice of fumbling what will likely be their one opportunity to repeal and replace America"s failed Obamacare experiment, a new study just released by The Commonwealth Fund found that the U.S., despite spending more money per capita than any other country on the planet, has the worst healthcare system in the developed world.

The Commonwealth Fund focused on evaluating five main areas of the healthcare system, including care process, access, administrative efficiency, equity and health care outcomes and analyzed 72 indicators within those fields.  Of the 11 countries included in the study, the U.S. ranked dead last by a fairly staggering margin.

The United States spends far more on health care than other high-income countries, with spending levels that rose continuously over the past three decades (Exhibit 1). Yet the U.S. population has poorer health than other countries.

Timely and accessible health care could mitigate many of these challenges, but the U.S. health care system falls short, failing to deliver indicated services reliably to all who could benefit. In particular, poor access to primary care has contributed to inadequate prevention and management of chronic diseases, delayed diagnoses, incomplete adherence to treatments, wasteful overuse of drugs and technologies, and coordination and safety problems.

Even worse, aside from "care process," which tracks metrics related to preventative care and consistent engagement with the same family doctor over long periods of time, the U.S. scored last (or thereabouts) in every single category of the study.

Adding insult to injury, these poor results come despite the fact that America spends roughly 60% more on healthcare, as a percentage of GDP, than the other countries in the study...

...a metric that will only get worse when the study is updated again in 3 years as we"ve recently shown that healthcare premiums have surge roughly 100% since 2013 (note that the cost portion of this latest study ended with data collected in 2014).

Can anyone spot the outlier?

But sure, we should probably just leave everything as is...Obamacare seems to be working just fine.

2 Out Of 3 Patients Can't Afford Their Hospital Bills Thanks To Obamacare's Soaring Deductibles

We"ve spent a lot of time over the past couple of years talking about soaring healthcare premiums brought on by Obamacare. The price increases have been outright crippling for those forced to buy policies on the exchanges, up well over 100% over the past 4 years, on average, with some states up over 200%.

But premiums aren"t the only part of health plans that have soared under Obamacare.  For those people who are lucky enough to actually be able to afford a plan, you simply bought yourself the opportunity to cover even more of your healthcare costs out of pocket as deductibles have also soared.

In fact, a new study from TransUnion Healthcare reveals that 2 out of 3 patients (68%) couldn"t afford to pay their hospital bills in full in 2016, up from 49% in 2014.

A new TransUnion Healthcare analysis revealed a significant rise in the percentage of patients that didn’t pay their hospital bills in full. Approximately 68% of patients with bills of $500 or less did not pay off the full balance during 2016 – up from 53% in 2015 and 49% in 2014.

“There are many reasons why more patients are struggling to make their healthcare payments in full, the most prominent of which are higher deductibles and the increase in patient responsibility from 10% to 30% over the last few years,” said Wiik, author of the book and also principal for healthcare revenue cycle management at TransUnion. “This shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years.”

But that"s not even the worst of it, patient responsibility on 14% of hospital bills in 2016 exceeded $3,000, an obligation which only 1% of patients were able to cover on a timely basis.

- 63% of hospital bills were $500 or less; of those hospital bills, 68% were not paid in full in 2016.

- 14% of hospital bills were $3,000 or more; of those hospital bills, 99% were not paid in full in 2016.

- 10% of hospital bills were $500 to $1,000; of those bills 85% were not paid in full in 2016.

Meanwhile, the soaring deductibles are putting even more pressure on razor thin hospital margins and have caused a rash of closures since 2010.  Per CNBC:

The Affordable Care Act has given more people access to health care, but it has driven deductibles up, in some cases, making it harder for patients to pay, said John Yount, TransUnion"s vice president of product for the health-care division. Hospital margins are already between only 2 and 4 percent on average, Yount said, and that margin quickly narrows when more patients can"t pay their bills.

"What it means is as a patient takes on more responsibility, then it is likely that that debt, which is a component of uncompensated care, has a potential to increase for hospitals," Yount said. "It"s likely that as they provide services and their bad debt increases, it could be difficult to continue certain operations."

Since 2010, 79 rural hospitals have closed, according to the North Carolina Rural Health Research Program. Yount warned that number will continue to increase if more patients can"t pay their bills.

So fight on, Democrats.  Obamacare is clearly a piece of legislation worth saving.

"The Medical System As We Know Is Going To Blow Up... And Soon"

Authored by Howard Kunstler via Kunstler.com,

Think of the ObamaCare reform debate now playing in the US Senate as the final gurglings of polity that knows it is whirling around the drain. They’re pretending to attempt to fix a racket that comprises eight percent of the American economy. Yikes! How did that happen? At the beginning of the 20^th century it was one-quarter of one percent (.25 percent) of the economy.

Source: USGovernmentSpending.com

The standard explanation is that, first, Medicare jacked up overall healthcare activity in the 1960s, hauling in a customer-base of old folks who previously received no special treatment and were, generally, less well than non-old folk. Secondarily, technological innovation opened up so many new methods of disease control for everybody, young and old, that we’re able to treat more sickness in more complicated ways — and that drove costs up way further.

The greater part of the story remains neatly concealed within the matrix of rackets erected around the money-flows since the big cost bump-up in the 1960s, and these involve insurance companies, Big Pharma, corporatized doctors’ practices, hospital monopolies, and, of course, politicians on-the-take dividing amongst each other a colossal pool of grift that exists mainly for one simple reason: the cost of everything is hidden from public view.

Nobody has any idea what anything costs. Certainly not the patients, sometimes called “customers” or “consumers” — but really hostages. If you go into the hospital for a stent in the left descending coronary artery, nobody will tell you what it costs, starting with the doctors who have performed the procedure a thousand times. They can’t even estimate the cost (or won’t), though they could probably give you a pretty good ballpark number for the cost-and-installation of a new fuel pump on their BMW-28i.

Charges for medical care are never discussed with the patient. Doctors especially pretend to regard such a proposition as beneath the dignity of their profession, rather like British aristocrats regarded all questions pertaining to money in the Downton Abby scheme of things — a filthy business better left to the servants, like disposing of the table-scraps. Of course the “servants” in the hospital scheme of things are a fantastic hierarchy of dangerously overfed clerks overwhelmed by the anomie of spending countless hours typing fictitious numbers into their work stations. A more pointless life can hardly be conceived. If you ask the ones who “interface” with you at the check-out counter how your bill was toted up exactly, you will receive nothing more than a pitiless stare of contempt — which is actually aimed inward at their own existential quandaries, a pathological dynamic that perhaps deserves attention from the research funding troughs.

The cost of everything medical is worked out in a private rain-dance between the aforementioned manifold concerned parties on the basis of what they think they can get away with in any particular case. In hospitals, this is enabled by the notorious ChargeMaster system which, to put it as simply as possible, allows hospitals to just make shit up.

Any bill in congress that affects to reform the gross financial malfeasance in healthcare ought to start with the absolute requirement to publicly post the cost of everything that doctors and hospitals do, and enable the “service providers” to get paid only those publicly posted costs — obviating the lucrative rain-dance for dividing up the ransoms paid by hostage-patients who come to the “providers,” after all, in extremis. Notice that this crucial feature of the crisis is missing not only from the political debate but also from the supposedly public-interest-minded pages of The New York Times and other organs of the news media. Perhaps this facet of the problem never entered the editors’ minds — in which case you really have to ask: how dumb are they?

(The funniest claim about ObamaCare in today’s New York Times is the statement that 20 million citizens got access to health care under the so-called Affordable Care Act. Really? You mean they got health insurance policies with $8000-deductables, when they don’t even have $500 in savings to pay for car repairs? What planet do The New York Times editorial writers live on?)

The corollary questions about deconstructing the insurance armature of the health care racket, and assigning its “duties” to a “single-payer” government agency is, of course, a higher level of debate. I’m not saying it would work, even if it was modeled on one of the systems currently working elsewhere, say in France. But Americans have acquired an allergy to even thinking about that, or at least they’ve been conditioned to imagine they’re allergic by self-interested politicians. So, the current product of debate in the US Senate is just a scheme for pretending to reapportion the colossal flow of grift among the grifters.

Spare yourself the angst of even worrying about the outcome of the current healthcare debate. It’s not going to get “fixed.”

The medical system as we know it is going to blow up, and soon, just like the pension systems across the country, and the treasuries of the fifty states themselves, and the rest of the Potemkin US economy.

The Real Healthcare Crisis: Retiring Seniors Need $500k To Cover Premiums Even With Obamacare

As Congress spends the next week and a half, if everything goes well, wrestling over how they can screw up healthcare in America even more, perhaps they should take notice of a new study from HealthView Services which highlights the fact that the real source of the healthcare crisis in this country is rising costs.

As Bloomberg notes, healthcare cost inflation is expected eclipse overall inflation and Social Security COLAs over the next decade.

U.S. retiree health-care costs are likely to increase at an average annual rate of 5.5 percent over the next decade. That"s nearly triple the 1.9 percent average annual inflation rate in the U.S. from 2012 to 2016 and more than double the projected cost-of-living adjustment (COLA) on Social Security benefits.

The premiums on supplemental insurance, also known as Medigap, that many people buy to cover costs that Medicare doesn"t, such as co-payments; on Medicare Part B, which covers payments for doctors, tests, and other medical services; and on Part D, prescription drug coverage. Here"s how your Social Security benefits are likely to stack up against some of those costs.

Shockingly, the reality is that a couple retiring today can expect to pay nearly a half million dollars in just insurance premiums over the course of the remainder of their lives.

For a healthy 65-year-old couple retiring this year with a future adjusted gross annual income of less than $170,000 after adding in any tax-exempt income, projected lifetime health-care premiums add up to $321,994 in today"s dollars.

Take a moment to appreciate that figure. It includes premium payments for Medicare Parts B and D, supplemental insurance premiums, and dental premiums. (The supplemental premium figure used is a national average, and premiums can vary greatly from state to state.)

Sadly, and shockingly, that doesn"t reflect the full range of likely expenses. Add in deductibles, co-pays, and costs for hearing, vision, and dental care, and the total rises to $404,253 in today"s dollars.

And, given the shocking inflation of healthcare costs in this country, the situation only looks worse for younger people.

Of course, excessively rising costs, for our legislators who may not be so good with the math, is usually the result of demand outstripping supply and/or perverse regulations that serve to distort free market forces.  In the case of Obamacare, we have both. 

As an example, before Obamacare many healthy young people, who we"ll refer to collectively as John Doe, chose not to even carry health insurance because it was a truly wasteful expense for them.  As it turns out, millennials can actually do some basic math and figured out that they didn"t need to spend $5,000 a year for an insurance plan when the odds are that they"ll get a cold one time, pay $150 to visit a doctor and $40 to buy some antibiotics.

But then Obamacare came along and forced John Doe to, not only purchase insurance, but to purchase a "souped up," expensive plan with all sorts of bells and whistles. 

Now, Democrats knew that that "souped up" healthcare plan was really just a thinly veiled tax on John Doe...he wasn"t supposed to actually use it. 

But John Doe, didn"t see it that way.  From his perspective, if he"s paying for a service, he might as well use it...and hence the demand issue.

Moreover, that simple example says nothing about the adverse selection bias created by Obama"s subsidies and exchanges where people with absolutely no "skin in the game" can get "free healthcare," courtesy of the millionaire, billionaire, private jet owners in the country, and consume as much healthcare as they want basically free of charge. 

To make a long story longer, the net effect of Obamacare was that it added a ton of demand to an already undersupplied healthcare market which is why healthcare premiums are soaring.  Perhaps, just maybe, basic economic principles actually work and more "skin in the game," rather than less, and more people making their own decisions, rather than less, are actually good things?  Just a hunch but we hear that a lot of work has been done on the topic.

Of course, we highly doubt that any of this will stop our politicians from turning the healthcare debate into a fued between young and old and the rich and poor...afterall sowing division is how elections are won...and lost.

Healthcare: "Insurance" Now Just Means Redistribution

Authored by Gary Galles via The Mises Institute,

Americans have been fighting over health insurance reform for ages. For example, 25 years ago, in 1992, over 200 congressional health care bills were introduced.

Unfortunately, while the rhetoric has focused on insurance, such as how many would supposedly gain or lose insurance if some change was implemented, that has not been the real issue. Income redistribution has. As Henry Aaron estimated that year, implementing a comprehensive national health insurance system would redistribute more income than any single national policy then in existence.

What Is Insurance? 

How do we know insurance is not the real issue? Because claimed “reforms” violate so many principles of insurance.

Insurance is about reducing risk in the face of uncertain events. But insuring things that would happen for certain, say annual checkups, offers no risk reduction — it offers no benefits to weigh against the added costs of insurance administration that must be borne — yet such coverage is frequently mandated.

Similarly, small health care risks are cheaper to provide for from modest levels of savings, rather than bearing insurance administration costs. If one’s own resources were involved, absent government interventions, they would not be insured at all. Only when others are forced to bear much of the cost would people want insurance to cover such things.

Administrative costs are not the only issue, either. The benefits from risk-reduction through insurance would also have to outweigh the cost of the health care. This is made especially difficult by the fact that the insurance itself induces over-consumption of health care services.

However, when most health care costs are borne by third parties rather than individuals themselves, there are many margins at which those individuals will want better care (e.g., better and more specialized doctors and hospitals, more costly newer drugs, tests and treatment utilizing the latest technology, etc.), as well as more care. Since that added care need only be worth what an individual pays, net of insurance coverage, much of it is worth far less than its cost to society, further limiting what people would voluntarily cover based on the principles of insurance.

Those considerations explain why lunch insurance does not exist. You will almost certainly eat lunch, which also involves relatively small expenses, so there would be little risk reduction. And if someone else would pay most of your bill, you would order far more expensive lunches than otherwise, raising the premiums that you must be charged to pay for it. The benefits don’t justify the costs, again unless others are forced to pick up a substantial part of the tab.

Also, insurance is about risk reduction that people value more than the premium they must pay for it. Thus, voluntary market insurance would not mandate coverage of things people had virtually no risk of experiencing. Teetotalers would not willingly insure for alcoholism treatment. Those sure they would never use drugs would not insist on addiction treatment. Yet government “reforms” are full of such mandates. And a quarter-century ago, before many current mandates were in place, it was already estimated that up to one-quarter of the uninsured population traced back to such cost-increasing government-imposed coverage regulations.

The price controls reform proposals incorporate are also about income redistribution, rather than health insurance. Say that my age makes my actuarial risk six times that of my students. If, as Obamacare required, I could not be charged more than three times what they were, that does not reflect actual risks. Obamacare regulations simply force the young to subsidize the old. That rip-off of the young also explains why Obamacare threatened them with a penalty to force them to accept that bad "insurance" deal.

The mandate that insurance cover pre-existing conditions shows even more clearly that “reforms” were not really about insurance. Rather than pooling those with similar circumstances and risks, allowing the law of large numbers to reduce people’s exposure, it forces others to subsidize those who are already sick, while misdirecting their blame from government requirements to insurance companies who must charge others more to pay for them. Those sorts of after-the-fact possibilities are not offered in fire, automobile or life insurance. Similarly, casinos don’t let you bet once the roulette ball has stopped or the dice are still. Only government mandates can create such windfalls through health insurance. 

In addition, if health insurance reform truly aimed to benefit all Americans — rather than benefiting some by the intentional pick-pocketing of others — it would not have been “marketed” with so many lies, damned lies and statistics (See my article “Comparing Obamacare scams.”). Honesty would have sufficed if reform did what was being promised.

The health insurance debate has been so contentious in part because it has allowed massive income redistribution to be misrepresented as about overcoming market failures in health insurance. It helped sell Obamacare dishonestly and now portrays reducing massive theft from government targets as imposing heartless harm on others. Such misrepresentation may be able to produce misinformed political support, but it cannot generate policies that advance Americans’ general welfare.

Why Obamacare Was Doomed From The Start (In 1 Simple Chart)

Despite Obama"s promise of a socialist utopia whereby all of his snowflake, millennial supporters would jump at the opportunity to "spread their wealth around" for the greater good, his one crowning achievement that attempted to implement that vision, Obamacare, has proven to be a complete failure.  As it turns out, while millennials may be naive, they"re not stupid. 

While it may not have been readily apparent to the young Obama voters in 2008, most of whom would have blindly approved of almost any policy he put forward good or bad, Obamacare was always just a gigantic tax, via both off-market premiums and actual taxes (or "penalties" according to the Supreme Court), levied on young people to cover the expenses of older people. 

And perhaps nothing illustrates the cause of Obamacare"s epic failure than the following chart from the Washington Post which highlights the fact that the top 1% of health-care spenders use more resources, collectively, than the bottom 75% combined.  Slice the data a different way, and the bottom half of spenders all together rack up only about 3% of overall health care spending — a pattern that hasn’t budged for decades. 

In other words, the youngest people of this country are paying $1,000s of dollars each year for health insurance that they almost never use...and haven"t for decades.

As Tom Miller of the American Enterprise Institute points out, Obamacare solves precisely the wrong problem by taxing young people to provide subsidies to older folks who will then just consume even more healthcare and drive already astronomical healthcare prices even higher.

But Tom Miller, a resident fellow at the American Enterprise Institute, disagreed. He said that the study is based on quick and incomplete snapshots of health and argued that it is yet another way to divert from the health-care discussion we should be having: about how to rein in spending. Using this data to argue about where to get premium dollars from — from the pockets of the well or the sick — simply allows the system to grow ever bigger and prop up an even-more-expensive medical system.

“We all get diverted by hoping we can hide the bill under someone else’s pillow,” Miller said. “I think that’s the political argument you hear — these low spenders, we’re scared to death they might catch on to the fact they’re getting taken to the cleaners” by being forced to buy expensive health insurance they don’t need.

But, seemingly no amount of logic will ever convince idealists, like Marc Berk of Health Affairs, that young people somehow have an inherent obligation to "take care of people who are very sick."

“The key takeaway message really is most people are in good health; they don’t spend a lot of money, and yet it’s important to have them be part of our insurance system. If they’re left out of the system, we’re not going to have the funds to take care of people who are very sick,” said Marc Berk, a health policy researcher and contributing editor of Health Affairs who led the analysis.

And while millennials may shout their verbal support at liberal rallies, they"re apparently much less willing to demonstrate their actual support with their wallets.

America's #1 Again (In Healthcare Costs Around The World)

While the American Healthcare Act, President Trump’s first major legislative effort, is going to a vote in the House of Representatives on Friday - no matter what; for many years now, the American healthcare system has been flawed.

As Statista"s Feliz Richter illustrates in the chart below, U.S. health spending per capita (including public and private spending) is higher than it is anywhere else in the world, and yet, the country lags behind other nations in several aspects such as life expectancy and health insurance coverage.

You will find more statistics at Statista

USA, USA, USA!

Peter Schiff Talks Trumpcare: Different Plan, Same Problems

Authored by Peter Schiff via Euro Pacific Capital,

With his widely followed, and positively reviewed, address to Congress last week, President Trump showed how easy it could be to unite Washington around a big-budget centrist agenda on health care, immigration, taxes, infrastructure and the military. But the continued accusations surrounding his campaign’s alleged Russian connections, and the President’s conspiratorial responses, have insured that the battle lines have only hardened. However, anyone with even a casual concern with ballooning government debt should take notice just how easily both parties in Washington would agree to vastly expand the gushing red ink if a political truce can be brokered. Those fears should galvanize around the newly-issued Republican replacement for Obamacare.  If such a monstrous bill could successfully navigate Congress, we would find ourselves stuck deeper in a deficit deluge than we can possibly imagine. 

Obamacare attempted to rewrite the laws of economics by preventing insurance companies from charging high-risk customers more than low-risk customers. But to make this work without bankrupting the companies, all agreed that the young and healthy would need to be forced to buy insurance.  The flaw that doomed the law was that the penalties for not buying were too low to actually motivate healthy people to buy.  Consumers were charged just a few hundred dollars per year to forego insurance that would have cost many thousands. Given that they could always decide to get insurance in the future, at no added cost, the choice was a no-brainer. Without these healthy people keeping costs down, insurance premiums have risen alarmingly.

Ironically, the Supreme Court noticed this flaw as well. In sustaining the Law’s constitutionality, Justice Roberts argued that the relative lightness of the penalties was insufficient to compel anyone to buy insurance and, as a result, he considered them to be a “tax” that could be voluntarily avoided rather than a coercive penalty to force commercial activity. (Presumably had the tax been high enough to actually work, it would have rendered Obamacare unconstitutional – see my 2012 commentary).

However, the Republican replacement plan, which removes all taxes on individuals who don’t buy insurance, and all penalties on employers who do not provide insurance to their employees, will actually make the problem far worse.

The only reason healthy people buy health insurance is that they know that if they wait until they get really sick no insurance company will sell them a policy.  The same principal holds true for all insurance products.  You can’t buy auto insurance after you get into an accident. You can’t buy life insurance at a reasonable cost after your doctor has given you six months to live. The fact that your car is already wrecked, or your arteries already clogged, are pre-existing conditions that no insurance company would be expected to ignore.

Allowing voters the low-cost option to buy health insurance after they actually need it is very popular. It’s like promising motorists they can stop paying their monthly auto insurance premium and just buy a policy after they have an accident.  If the government were to require this, all auto insurance companies would quickly go out of business (unless they were bailed out by the government).

Obama’s solution was to use the penalties to force healthy people to buy insurance before they actually needed it.  As the years wore on, the relatively low cost of the subsidized exchange plans and the availability of those plans to anyone proved popular.  However, the mandates and penalties, as well as skyrocketing premiums for non-subsidized policies, were clearly unpopular. 

The Republicans have taken the “brave” political approach of keeping the parts that are popular (subsidized access, pre-existing conditions waivers, expansion of children’s coverage until age 26) and jettisoning those that are not (the mandates and the penalties).  The new plan pretends to offer a replacement to the Obamacare penalties by allowing insurance companies to charge a 30% increase to the premium for those who come back into the system after having previously allowed their coverage to lapse. But the problem here is that the premium increase is far too small to force anyone healthy to buy insurance. In fact, it is so low that any healthy person currently insured may decide to drop coverage.

The effect of this law, were it actually enacted, would be the death of the health insurance industry.  As the law removes the requirement that larger employers provide insurance, I believe that big companies would look to self-insure employees for routine care.  For example, employer and employees could pay into a common risk pool that would set their own deductibles and co-pays. For employees who incur medical charges in excess of the cost of an actual policy, the pool could provide funds to pay for outside insurance at the increased 30% premium. As a result insurance costs would be encountered only if there is a need.

Self-employed individuals would only buy insurance if the total cost was less than the tax credit provided by the new plan.  If they can’t find such coverage, they would likely buy a new form of insurance that this law may create: A policy that would pay for health insurance premiums if the user ever got sick enough to need them.  Such insurance would be very cheap, as the maximum exposure to the insurance company is only 130% of the premium for a standard health insurance policy.  

In the end, the only people buying health insurance would be those who can buy it for free using their tax credits and really sick people for whom insurance premiums are cheaper than their medical bills.   But as insurance companies lose money on the latter group, they will be forced to raise their premiums on the former.  This puts us right back in the box we are stuck in with Obamacare.

As premiums soar well above the amount of the tax credits, more people will drop out.  Unless the amount of the tax credits rises substantially, which will cost a fortune, all health insurance companies will eventually go out of business.  The end result will be socialized medicine, only it will be Trump not Obama that gets the blame.  It seems to me that this would be a political loser for the conservative cause. I would rather we go down in flames with Obamacare as then, at least, we will have a chance at a free market solution that could actually work.

The government has a very poor track record with containing the cost of a service when it gives consumers money to buy it. Think student aid and college tuition.   Plus the plan is constructed in a way that makes it ripe for potential abuse.  Whenever the government is giving away money, people always game the system to get it.  Think about the wide-spread fraud in welfare, food stamps, disability, and even cell phone credits. Trumpcare will be no different. Many people will buy catastrophic plans with extremely high deductibles just so they can pocket the difference between the tax credits and the costs of the plans.  If they actually incur a medical condition that results in a high out-of-pocket expense, they can just switch their coverage to one with a much lower deductible.  Such a switch may even be possible without the 30% premium for lapsed coverage.

If Trump and the Republican leadership can push this monstrosity through, despite the obvious mathematical shortcomings, look for them to make similar efforts on infrastructure and defense spending. All this adds up to uncounted trillions in new debt, and a giant step closer to the utter bankruptcy of the nation. But the real danger lies in the possibility that the law is voted down by conservative Republicans and Trump turns instead to Democrats.

In contrast to the former mission statement of the Republican Party, Trump believes that government solutions can work as long as they are “smart.”  The opening weeks of the Trump presidency were dominated by combative rhetoric, conservative and pro-business appointments, and nationalistic executive orders. And while this approach sent Democrats and the media into convulsions, it solidified the loyalty of Trump’s political base, and allows him to pivot toward the center if he wants. If he could peel off some “Red State” Democrats, he would be in a position to enact some of the biggest spending increases that the country has ever seen, even if fiscally conservative Republicans bolt.

If those conservatives defeat the new health care bill, Trump could look to partner with Democrats in a heartbeat. Of course, to get that support, he would have to make the current bill even more generous. Let’s hope that his self-inflicted wounds continue to prevent such an unholy alliance.