Guest Post: Obamacare Is A Catastrophe That Cannot Be Fixed

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Obamacare is a catastrophe that cannot be fixed, because it doesn't fix what's broken in American healthcare.

I just finished a detailed comparison of my current grandfathered health insurance plan from Kaiser Permanente (kp.org), a respected non-profit healthcare provider, and Kaiser's Affordable Care Act (Obamacare) options. I reviewed all the information and detailed tables of coverage and then called a Kaiser specialist to clarify a few questions.

First, the context of my analysis: we are self-employed, meaning there is no employer to pay our healthcare insurance. We pay the full market-rate cost of healthcare insurance. We have had a co-pay plan with kp.org for the past 20+ years that we pay in full because there's nobody else to pay it.

What we pay is pretty much what employers pay. In other words, if I went to work for a company that offered full healthcare coverage, that company would pay what we pay.

Kaiser Permanente (kp.org) is a non-profit. That doesn't mean it can lose money on providing healthcare; if it loses millions of dollars a year (and some years it does lose millions of dollars), eventually it goes broke. All non-profit means is that kp.org does not have to charge a premium to generate profits that flow to shareholders. But it must generate enough profit to maintain its hospitals, clinics, etc., build reserves against future losses, and have capital to reinvest in plant, equipment, training, etc.

As an employer in the 1980s, a manager in non-profit organizations in the early 1990s and self-employed for 20+ years, I have detailed knowledge of previous healthcare insurance costs and coverage. As an employer in the 1980s, I paid for standard 80/20 deductible healthcare insurance for my employees. The cost was about $50 per month per employee, who were mostly in their 20s and 30s. In today's money, that equals $108 per month.

In other words, I have 30+ years of knowledgeable experience with the full (real) costs of healthcare insurance and what is covered by that insurance.

Our grandfathered Kaiser Plan costs $1,217 per month. There is no coverage for medications, eyewear or dental. That is $14,604 per year for two 60-year old adults. We pay a $50 co-pay for any office visit and $10 for lab tests. Maximum out-of-pocket costs per person are $3,500, or $7,000 for the two of us.

We pay $500 per day for all hospital stays and related surgery; out-patient surgery has a $250 co-pay.

So if I suffered a heart attack and was hospitalized and required surgery, I would pay a maximum of $3,500 for services that would be billed out at $100,000 or more were Kaiser providing those services to Medicare.

(Yes, I know Medicare wouldn't pay the full charges, but if Medicare is billed $150,000–not uncommon for a few days in the hospital and surgery– it will pay $80,000+ for a few days in the hospital and related charges. All of this is opaque to the patient, so it's hard to know what's actually billed and paid.)

In other words, this plan offers excellent coverage of major catastrophic expenses and relatively affordable co-pays for all services.

The closest equivalent coverage under Obamacare is Kaiser's Gold Plan. The cost to us is $1,937 per month or $23,244 a year. The Gold Plan covers medications ($50 per prescription for name-brand, $19 for generics) and free preventive-health visits and tests, but otherwise the coverage is inferior: the out-of-pocket limits are $6,350 per person or $12,700 for the two of us. Lab tests are also more expensive, as are X-rays, emergency care co-pays and a host of other typical charges. Specialty doctor's visits have a $50 co-pay.

The Obamacare Gold Plan would cost us $8,640 more per year. This is a 60% increase. It could be argued that the meds coverage is worth more, but since we don't have any meds that cost more than $8 per bottle at Costco (i.e. generics), the coverage is meaningless to us.

The real unsubsidized cost of Obamacare for two healthy adults ($23,244 annually) exceeds the cost of rent or a mortgage for the vast majority of Americans. Please ponder this for a moment: buying healthcare insurance under Obamacare costs as much or more as buying a house.

A close examination of lower-cost Obamacare options (Bronze) reveals that they are simulacra of actual healthcare insurance, facsimiles of coverage rather than meaningful insurance. The coverage requires subscribers to pay 40% of costs after the deductible, which is $9,000 per family. Total maximum out-of-pocket expenses are $12,700 per family. This coverage would cost us $1,150 per month, and considerably less for younger people.

How many families in America have $9,000 in cash to pay the deductibles, plus the $13,800 annual insurance fees? That totals $22,800 per year. If some serious health issue arose, the family would have to come up with $12,700 (out-of-pocket maximum) and $13,800 (annual cost of insurance), or $26,500 annually.

Is healthcare that costs $26,500 per year truly "insurance"? I would say it is very expensive catastrophic insurance in a system with runaway costs.

The entire Obamacare scheme depends on somebody paying stupendous fees for coverage which then subsidizes the costs for lower-income families and individuals. How many households can afford $23,244 a year for Gold coverage plus $12,700 out-of-pocket for a total of $35,944 annually? How many can afford $26,500 for Bronze coverage?

Recall that the median household income in the U.S. is around $50,000.

How many companies can afford to pay almost $2,000 a month for healthcare insurance per employee? Even if employees pay a few hundred dollars a month, the employers are still paying $20,000 a year per (older) employee.

If an employer can hire someone in a country with considerably lower social-welfare/healthcare costs to do the same work as an American costing them $2,000 per month for healthcare insurance, they'd be crazy to keep the worker in America, unless the worker was so young that the Obamacare costs were low or the worker was a contract/free-lance employee who has to pay his own healthcare costs.

Uninformed "progressives" have suggested that "Medicare for all" is the answer. Their ignorance of exactly how Medicare functions is appalling; recall that Medicare is the system in which an estimated 40% of all expenditures are fraudulent, unneccessary or counter-productive, where a few days in the hospital is billed at $120,000 (first-hand knowledge) and a one-hour out-patient operation is billed at $12,000, along with a half-hour wait in a room that's billed at several thousand more dollars for "observation." (Also first-hand knowledge.)

Medicare is the acme of an out-of-control program that invites profiteering, fraud, billing for phantom services, services that add no value to care, and services designed to game the system's guidelines for maximum profit. If an evil genius set out to design a system that provided the least effective care for the highest possible cost while incentivizing the most egregious profiteering and fraud, he would come up with Medicare.

Does Medicare look remotely sustainable to you? Strip out inventory builds and adjustments from imports/exports and the real economy is growing at about 1.5% annually. As noted yesterday in What Does It Take To Be Middle Class?, the real income of the bottom 90% hasn't changed for 40 years, and has declined by 7% since 2000 when adjusted for inflation.

Here is Medicare's twin for under-age-65 care for low-income households, Medicaid:

As I have observed for years, Obamacare and Medicare/Medicaid do not tackle the underlying problems of Sickcare costs in America. If you haven't read these analyses, please have a look:

Why "Healthcare Reform" Is Not Reform, Part I (December 28, 2009)

Why "Healthcare Reform" Is Not Reform, Part II (December 29, 2009)

Type sickcare into the custom search box at the top of the left-hand column of the main blog page and you will find dozens of essays addressing what's broken with American healthcare.

Obamacare is a catastrophe that cannot be fixed, because it doesn't fix what's broken in American healthcare. It is a phony reform that extends everything that makes the U.S. healthcare unsustainable sickcare.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/f7JqdNMLWs0/story01.htm Tyler Durden

The holiday table

After witnessing the Thanksgiving meal last week, it was suggested that a review of table manners and place settings for the holidays are in order.

Not gonna tell you who suggested the review or what retired firefighter The Wife said needed the review, but I think you can guess correctly.

Many things have gone out of style since those seven years my three brothers, my sister, and I spent growing up at 110 Flamingo Street. Unfortunately using correct table manners ain’t one of them.

read more

via The Citizen http://www.thecitizen.com/blogs/rick-ryckeley/12-06-2013/holiday-table

Santa Claus, USMC

Once again this December, I plan to pull at least one four-hour shift, and hopefully more, sitting or standing behind a table at a big box store on a Saturday or Sunday smiling at people passing by, wishing them, “Merry Christmas,” and offering lollipops free to kids.

I do that because I want them to give new toys or donate some money. I won’t pressure them to give, I won’t use guilt, and the kids get the lollipops free whether their folks give or not.

read more

via The Citizen http://www.thecitizen.com/blogs/david-epps/12-06-2013/santa-claus-usmc

SEC Officially Above The Law: Prosecutors Decline To Charge SEC Employee For Violating Internal Rules

Two weeks ago we wrote of SEC compliance examiner (yes, compliance examiner) Steven Glichrist who was arrested for being non-compliant with the SEC’s ethics requirement to disclose his financial holdings. “New York-based SEC employee Steven Gilchrist was charged with three counts of making false statements regarding the nature of his personal financial holdings. As WSJ reports, the 48-year-old compliance examiner at the agency, allegedly certified that his stock holdings were in compliance with the agency’s ethics rules, when in reality he had held shares of six companies that agency staffers are barred from holding. The SEC is “very disappointed that an employee allegedly made false statements to conceal prohibited holdings after being told by our ethics office to divest.” Fast forward to today when we learn that not only was the SEC not disappointed when another SEC employee was found to have flouted virtually the same rules, but that, inexplicably, federal prosecutors decided not to prosecute.

Why did this anonymous staffer somehow get an immunity from prosecution (and how is he or she any different from Gilchrist)? There is no immediate answer but for some hints we go to the WSJ:

The SEC has strict rules on the stocks employees can hold and goes further in its employee-trading restrictions than many other federal agencies. The rules cover a spouse’s holdings as well.

 

The watchdog’s office found evidence that the employee’s spouse owned stakes in entities “directly regulated” by the agency, which are prohibited, according to the report. The employee also didn’t disclose “the vast majority” of his or her spouse’s holdings through required agency channels, which include getting clearance to make trades through a computer system, the report said.

 

The report said there was evidence that the “senior officer” shared non-public information with his or her spouse. There was also evidence that the employee had worked on a matter that involved former employees of a company in which the spouse owned stock. The referral for the investigation came from the agency’s ethics office, the report said.

Ok, so he clearly broke pretty much every rule in the book, and doubly so considering who his employer is. So his actions surely would have been met with harsh punishment right? Wrong.

Federal prosecutors decided not to prosecute a Securities and Exchange Commission employee who showed signs of flouting rules restricting personal securities holdings, according to a new report from the SEC. The decision to not file charges came in the months before prosecutors charged another SEC staffer for similar alleged conduct. It’s unclear if the investigations of the two are related but the report sheds light on recent steps the agency’s inspector general has taken to investigate employee holdings.

 

Federal prosecutors declined to prosecute the employee and the watchdog’s office told the agency’s management of the investigation’s findings in early September, according to the report, which did not specify which particular U.S. Attorney’s office was involved. The agency’s administrative response to the investigation was “pending” as of the end of September.

 

It is not clear what role, if any, federal prosecutors played in the investigation. The SEC didn’t immediately respond to a request for comment on this and whether this probe is linked to the investigation of New York-based employee Steven Gilchrist.

What else is there to say here: the regulator in charge of enforcing a fair and honest “market” picks and chooses which of its employees should comply with the rules that the same regulator is supposed to enforce upon everyone else.

And some still wonder why no rational human being, who manages their own and not other people’s money, opts out of this manipulated, canterally-planned, algorothmic casino.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/V7qMK4tk0FI/story01.htm Tyler Durden

What We Saw at NYC's Fast Food Strike

Yesterday, Naomi Brockwell and I attended a demonstration
demanding that fast-food restaurants boost their minimum wage to
$15 per hour, or a little more than double the current federal
minimum wage. The strike, which was led by a group called Fast Food Forward that’s
affiliated with the Service Employees International Union
(SEIU), was one of more than a 100 similar demonstrations held
in cities across the country.

The New York demonstration had about 150 people, but the number
of actual fast food employees participating in the strike was
small. It was business as usual at every restaurant we dropped
by yesterday morning and, at a McDonald’s restaurant on 23rd
Street and Madison Avenue in Manhattan, employees behind the
counter said they had heard nothing about a strike.

View this article.

from Hit & Run http://reason.com/blog/2013/12/06/what-we-saw-at-nycs-fast-food-strik
via IFTTT

What We Saw at NYC’s Fast Food Strike

Yesterday, Naomi Brockwell and I attended a demonstration
demanding that fast-food restaurants boost their minimum wage to
$15 per hour, or a little more than double the current federal
minimum wage. The strike, which was led by a group called Fast Food Forward that’s
affiliated with the Service Employees International Union
(SEIU), was one of more than a 100 similar demonstrations held
in cities across the country.

The New York demonstration had about 150 people, but the number
of actual fast food employees participating in the strike was
small. It was business as usual at every restaurant we dropped
by yesterday morning and, at a McDonald’s restaurant on 23rd
Street and Madison Avenue in Manhattan, employees behind the
counter said they had heard nothing about a strike.

View this article.

from Hit & Run http://reason.com/blog/2013/12/06/what-we-saw-at-nycs-fast-food-strik
via IFTTT

Ronald Bailey Explains Why Vaccine Refusal Is Not Libertarian

VaccinationA significant proportion of
Americans believe it is perfectly all right to put other people at
risk of the costs and misery of preventable infectious diseases.
These people are your friends, neighbors, and fellow citizens who
refuse to have themselves or their children vaccinated against
contagious diseases. Reason Science Correspondent Ronald
Bailey explains why there is no principled libertarian case for
vaccine refusal.

View this article.

from Hit & Run http://reason.com/blog/2013/12/06/ronald-bailey-explains-why-vaccine-refus
via IFTTT

The Fed Turns 100: A Survey of the Critics

Submitted by Gergory Bresiger of The Ludwig von Mises Institute,

End America’s central bank because it caused the crashes of 2008, 1987, and 1929 and will blunder again.

That’s what many critics are saying about the Federal Reserve System (the Fed), which turns 100 on December 23. They note that on the Fed’s watch America has endured numerous bubbles, crashes, and inflationary cycles that have greatly devalued the dollar. The Fed, they say, has caused or aggravated several crashes.

“The Fed’s performance over the century has been abysmal, no matter how you look at it,” says Professor Joseph Salerno, a business professor and monetary expert at Pace University.

“If you say the goal of the Fed was to prevent calamities, then you have to say that it has been a failure,” says William A. Fleckenstein, a hedge fund manager and the author of Greenspan’s Bubbles.

Fleckenstein says he’s seen two bubbles over the past quarter century. He also believes that, under the Fed’s system of easy money, of interest rates of close to zero percent over the past few years that, “the Fed is once again creating a bubble.” The Fed should be abolished, he adds, because it has no accountability for its mistakes.

The length of the Fed’s charter is indefinite, said Fed sources, who would only speak on background. And that is generally the only way Fed sources will speak when asked about the bank’s current policies or historical record.

What is the Fed?

The Fed is a bank for banks that creates money. It is designed to be a lender of last resort to sick banks in times of crisis. And crisis is one reason why the United States finally returned to authorizing a central bank a century ago. (America had previously had a central bank in the 19th century, but its legislative re-authorization was vetoed by Andrew Jackson who railed against a central bank as the tool of moneyed interests.)

The Fed began with the goal of protecting the dollar. It was given the exclusive right to create money in 1913.

The Fed would “provide a means by which periodic panics which shake the American Republic, and do it enormous injury, would be stopped,” according to Robert Latham Owen, one of the authors of the original Federal Reserve Act.

Why was it given these powers?

After the Wall Street banking Panic of 1907 led numerous banks to fail, “there was a growing consensus among all Americans that a central banking authority was needed to ensure a healthy banking system and provide for an elastic currency,” according to the official Federal Reserve history.

But critics claim the Fed has made things worse. Subsequent problems were the result of Fed governors giving in to political pressure, providing elastic or “cheap money.” This is the controversial Fed policy of setting interest rates. If set too low, the rates will mislead consumers and businesses, causing them to borrow too much. And that can lead to a cycle of boom and bust.

That’s what many believe happened in 2007-2008 as millions of Americans were encouraged through cheap-money policies to use subprime loans to buy homes they couldn’t afford. But Fed critics contend that it had happened before.

For instance, interest rates were dirt cheap in 1972, which led later to an economic disaster as inflation jumped to 10 percent and interest rates went to over 20 percent in the 1970s.

“The consequence of the monetary framework of the 1970s was two bouts of double-digit inflation,” said Fed Chairman Bernard Bernanke in a recent speech entitled, “A Century of U.S. Central Banking: Goals, Framework, Accountability.” These 1970s events killed interest sensitive industries and destroyed many small businesses that couldn’t obtain credit.

These controversial money policies have lead to crashes, depressions, and recessions, including the crash of 1929 and resulting Great Depression, critics say. Some 10,000 banks failed between 1930 and 1933, according to Fed numbers.

“Tragically, the Fed failed to meet the mandate to maintain financial stability,” Bernanke said in his speech.

“Many people,” according to the official Fed history, “blamed the Fed for failing to stem speculative lending that led to the crash, and some argued that inadequate understanding of monetary economics kept the Fed from pursuing polices that could have lessened the depth of the Depression.”

One of the people blaming the Fed was economist and monetary historian Milton Friedman. He criticized Fed policies for triggering the 1929 crash and then causing a depression that lasted over a decade.

“Throughout the contraction, the System [the Fed] had ample powers to cut short the tragic process of monetary deflation and banking collapse,” according to The Great Contraction 1929-1933, by Milton Friedman and Anna Schwartz.

To Fed critics, the Great Depression of 1929 and the great inflation of the 1970s were part of a series of policy blunders that happened again in 2008.

“There never would have been a subprime mortgage crisis if the Fed had been alert,” Schwartz told the Wall Street Journal. “This is something Alan Greenspan must answer for.”

In Greenspan’s memoir, The Age of Turbulence, the former Fed chairman conceded that Fed actions leading up to the crisis were dangerous. He wrote: “I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk, and that subsidized home ownership initiatives distort market outcomes.” Still, Greenspan said he believes in the idea of every American having a home.

Economist Laurence Kotlikoff of Boston University says he’d give the Fed a C grade in its first century.

“It didn’t prevent the Great Depression or the Great Recession. It hasn’t fixed the core problems: opacity and leverage in the banking system,” Kotlikoff said.

“Central banking has a poor record but other methods do as well,” adds Jeffrey Gundlach, the manager of the Doubleline Total Return Bond Fund, which invests in mortgage backed securities. Gundlach has been very critical of cheap money policies of the Fed and predicted the crash of 2008. He believes the government should balance the budget first and then consider the Fed’s future.

Other critics, in reviewing the Fed’s record are harsher. They say it is time to end the Fed, in part because it favors certain banking interests.

“The Fed is an instrument of crony capitalism,” warns Hunter Lewis, a money manager and the co-founder of Cambridge Associates, an investment advisory firm.

“The Fed should be abolished because its legal monopoly of the money supply renders it an inherently inflationary institution able to create money at will and without limit,” says Salerno, noting that the value of a 1913 dollar is now five cents.

“History and current experience,” Salerno adds, “reveal to us that groups endowed with a legal monopoly over any area of the economy are prone to use it to the hilt to enrich themselves, their friends and allies.”


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ujqWHzi6v24/story01.htm Tyler Durden