Socialized Medicine Is Coming 40 comments
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Using the Government's own audited financial statements, the Peterson Foundation calculated the Federal Government’s total accumulated liabilities for Medicare and Social Security. As of the third quarter of 2008, the Federal Government had $56.4 trillion in total liabilities and unfunded promises. The future liabilities of the two progams equate to $184,000 per capita.
Social Security
The Social Security nightmare is the most often mentioned as the biggest problem facing the Government. The Old-Age, Survivors, and Disability Insurance program (Social Security) is actuarily unsound. A better fix would be to replace Social Security with an actuarily sound program. That's a topic for another article.
Medicare
The Social Security mess, while huge, is not the biggest problem: it can be fixed with slightly higher taxes and less benefits. Medicare is far scarier - because it will be far more difficult to fix. The Medicare shortfall threatens to bankrupt our country. The Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, in their 2008 Annual Report, warned that over the next 75 years, the government will need to find an additional $36.3 trillion (in 2008 dollars) above and beyond what is already budgeted for beneficiaries.
There are only two classes of remedies that will close the Medicare funding gap. The classes are either to: Reduce Expenditures, Raise Funding or a combination of both.
| Reduce Expenditures | |
| Ways To Reduce Expenditures | Pros And Cons Of This Solution |
| Automate records and find other cost savings. | Government hype. |
| Nationalized Healthcare - (Fully Socialized Medicine) - Nationalize the healthcare system and Medicare goes away | Whether or not the electorate will accept nationalized healthcare remains to be seen. |
| Partially Socialize Medicine - some of Medicare's expenses disappear. | The current administration is already moving towards Socialized Healthcare. Look for a patchwork of programs cobbled together. |
| Cut Benefits (Reduce Level of Services Provided) | A major cut in benefits is political poison, but a few cuts can be made. |
| Raise Eligibility Age | Politically unpopular, but doable. |
| Lower Reimbursement Rates. | Pay the Doctors less. This is hard to do in a free market for labor. |
| Means Testing - Make more people ineligible for Medicare. | Already being done. Expect more of the same. |
| Ways To Raise Funding | Pros And Cons Of This Solution |
| Socialized Medicine. (Repeated from above) | This creates a more expensive problem. The beauty of this is that it gives the Government an excuse to impose a new tax to pay for the new program. This may be the endgame, but it is too radical - don't expect this to happen too soon. |
| Raise Payroll Taxes or Create New Payroll Taxes. | Raising the percentage paid in Medicare taxes paid by the worker (or employer). This is politically unpopular and discourages workers from working and/or employers from hiring. |
| Raise other Government Taxes - use the proceeds to fund Medicare shortfalls | Least likely. Like all other tax raising schemes this is politically untenable as well as fiscally unsound. If taxes were raised to draconian levels, tax evasion would become rampant and government collections would come up short. Taxes will certainly go up, but not to the confiscatory levels required to meet future obligations. |
| Massive Federal Borrowing - an commonly used solution to problems of the past. | The US Government's borrowing costs due to buying by the Cetnral Banks of China and Japan. Over the past decade, due to the declining dollar, the US Government has had a negative real rate of interest. Given these generous terms, the U.S. government will borrow as much as it can as long as it can. |
| Print Money | Already happening, but not because of budget shortfalls. Keep printing and our creditors will start demanding higher interest rates. When the interest on the debt becomes unmanageable, the government has no choice but to monetize the debt by printing money. |
Conclusion Of Remedies
The government will employ a combination of the most feasible solutions outlined above. Look for a reduction in benefits and new socialized medicine programs. Also added to the solution mix will be an increase in federal borrowing, the printing of money, and an increase in inflation.
Inflation is taxation without legislation.
- Milton Friedman
Crazy Patchwork Quilt
The current Medicare Program is overly complicated. This is evidenced by the hotlines set up to counsel baffled Seniors after the most recent changes to the program. Socialized medicine is most often used by the poor, the uneducated or the elderly. These are the least sophisticated of consumers, yet in order to obtain healthcare, they are forced to decipher an extremely complex and complicated system.
The government solution to a problem is usually as bad as the problem. - Milton Friedman
A leopard doesn't change its spots. Rather than redesign systems from scratch, the US Government fixes problems by creating patches that address the problems of earlier fixes. Medicare and Socialized delivery of healthcare is about to get more baffling.
DISCLOSURE: No positions pertaining to Medicare. You should perform your own due diligence and consult with a professional before investing.
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Lately on the news, several people of a certain political ilk have been spreading the urban legend lies about the Canada healthcare system; The media needs to call them on these blatant lies and ask them for documented proof. The worse Is Senator Barrasso from Wyo,, he may have been an M.D. but I have caught him in three outrageous lies about Canada's healthcare system.
On Jun 15 01:10 PM WS1835 wrote:
> No offense to anyone, but this drive for "universal healthcare" is
> just cover for another political power grab. No different than the
> "cap and tax" proposal or the annual pushes for gun control and "tax
> reform".
>
> If you really cared about making basic healthcare affordable and
> accessible for everyone, all you need do is four things. First,
> get rid of state-by-state regulation of medical insurance and stop
> requiring the inclusion of "cadillac" services in basic coverage
> plans. Second, provide every citizen with a voucher for basic catastrophic
> coverage which is already available and relatively cheap. With national
> pooling, it would get even cheaper. Third, make all medical premiums
> tax deductible (not just employer paid premiuims). Fourth, get the
> government out of as much of the system as possible.
>
> The approach outlined above puts day-to-day medical transactions
> back into the hands of the consumer while still providing each citizen
> with a 'back-stop' against catastrophic medical costs. Any other
> approach will simply lead to nationalized healthcare, which is NOT
> an improvement.
>
> I agree that some major shift in policy is inevitable at this point.
> However, the USA has a choice of pursuing a loose, semi-market approach
> (Singapore) or a top-heavy, national bureaucratic morass (England,
> Canada). No system is going to be perfect, but in terms of service
> quality/cost I would lean heavily toward a system like Singapore.
>
>
> BTW, the same comments apply to social security as well. Friedman
> and Chile demonstrated how to run a sustainable old age pension system.
> The fact that the USA continues to perpetuate a 70+ year old ponzi
> scheme rather than develop a real pension system is all about politics
> and government control rather than economics.
On Jun 15 01:38 PM Steve in Greensboro wrote:
> If the U.S. nationalizes its healthcare, where will the Canadians
> get their medical treatment? Where will the rest of the world get
> their pharamceuticals?
I had one personal situation where I thought that I had grounds for a malpractice suit but decided against pursuing because in general at the hospital where it happened, I had received a very high level of care and that influenced my decision not to pursue a lawsuit in the one situation.
On Jun 15 01:13 PM WS1835 wrote:
> Sorry.....forgot to mention TORT reform. Another commenter cited
> that topic. It is a HUGE killer for medical costs, but in reality
> affects everything we do in the USA. A much bigger topic. All by
> itself, TORT reform would be a tremendous boon to the country.
I wish people in the U.S. who are critical of what they perceive the Canadien healthcare system to be, go up to Canada and interview several hundred people including Doctors, Nurses, Hospitals, etc. and get the facts before making comments that have no basis in fact.
On Jun 15 04:21 PM yellowhoard wrote:
> And then when Canadians get really sick they'll go where?
On Jun 15 06:47 PM whidbey wrote:
> The consensus seems to be to dread further government involvement
> in health care, Politicization of services is never workable . This
> not because there are not problems, but rather, because there is
> no government role in the deliverying or financing of health care.
> Witness Medicare.
>
> The Obama economic team has two of my former students at Chicago
> and I would hazard a guess that neither has sufficient background
> to make policy recommendations on Health Care. But competency is
> not an issue for ideologues. Pick a visible issue and run with it.......even
> if its over the cliff.
Canada's health care system is a disaster, with long wait times for treatment, doctor shortages, limited drug formularies and worse health outcomes.
If you like the U.S. Postal Service and the DMV, you will love nationalized healthcare.
On Jun 15 06:54 PM PhillyDan wrote:
> An another no-nothing heard from. Get your facts straight. The
> Canadiens will get their healthcare from one of the best systems
> in the World right in Canada. That is right!!! Before you write
> untruths, document your comments with facts. But you can't because
> you don't know "D" about what you are talking about.
is that a bad thing? there appear to be some corporations who think so.
as the system works now, access to medical care is limited by ability to pay cash, which is a form of rationing.
> jack
First, I want to thank Seeking Alpha for making my article an "Editor's Pick."
Second & Third, I want to thank everyone for their comments. I apologize for not responding sooner.
On Jun 15 11:35 AM Buckoux wrote:
>
> Quote: "We need a universal, subsidized plan that heads off intergenerational
> conflict by not allowing healthy young people to escape obligations,
> nor denying older people with preexisting conditions.... by Mad Hedge
> Fund Trader.
>
No. Health care is rationed. We ration it too. Economically. If you're middle class or below, and you're without insurance, you'll be bankrupted by your first major illness.
Yes, we CAN pay for this. Everyone else does. Resources are always allocated. We just make different choices as to their allocation. Or are you saying that Americans are simply too lame to accomplish a basic task which has already been accomplished by Cuba?
On Jun 15 12:35 PM Do The Math wrote:
> IT ISN'T GOVERNMENT'S BUSINESS TO BE IN HEALTH CARE.
>
> WE CANNOT PAY FOR THIS.
>
> Politicians are pushing to do this so quickly because they know it
> cannot stand under real scrutiny.
>
> It will give them enormous power over the citizens and over who is
> treated or not treated.
>
> Get the government totally out of health care and change it so the
> individual is responsible and can truly "shop the market". You'll
> see prices come down and better care.
>
> And quit making everyone pay for the uninsured illegal aliens. <br/>
>
> The politicians who claim the most concern for the uninsured can
> donate their personal money voluntarily to help the uninsured, like
> some of the rest of us do to help our friends.
(To Optionsgirl). You made several excellent points. Because Medicare, Medicaid and the Veteran's Administration are already facts of life, as some form of nationalized delivery of health care is already happening. Like it or not, the Government has a big role in health care. Given the current administration's and congresses' campaign election promises, Government's role is sure to increase over the next 4-8 years.
My article was not intended to be for or against having socialized medicine. The fact is, we already have it. My article was a discussion about the problems inherent in the current system, and from the Federal Government's point-of-view, how are they most likely to "fix" the problems while still meeting political objectives, how these fixes will affect future monetary and fiscal policy, and how this will affect the individual investor.
My key criticism was directed to the convoluted manner in which the Government has implemented socialized medicine. Namely:
"The current Medicare Program is overly complicated. ... Socialized medicine is most often used by the poor, the uneducated or the elderly. These are the least sophisticated of consumers, yet in order to obtain health care, they are forced to decipher an extremely complex and complicated system."
On Jun 15 03:28 PM optionsgirl wrote:
> No, you only gave 2 options, Living4dividends. The 3rd option is
> for govt to get out of the healthcare industry. Instead, they are
> going deeper. Let's not forget that the congress used the SS and
> Medicare funds to borrow, for years on end. They've eaten the cookies
> and now the jar is empty.
In my defense: As I said in my article:
"Also added to the solution mix will be an increase in federal borrowing, the printing of money, and an increase in inflation."
The Government's finances are of utmost importance to the investor and future retiree.
Suppose you were an Argentinian some years ago. Wouldn't you want to know how the Government was managing or mismanaging the economy?
On Jun 15 04:15 PM Random Number wrote:
> I read stuff on Seeking Alpha to help me make money through investments.
> This article is a total waste of my reading time and should be on
> a political discussion site, not this one. Don't let Seeking Alpha
> become another CNBC.
That is what is great about the Free Press. At least people can openly criticize things. I don't know if the media spotlight has had any effect yet, has anything has been done to fix the problems at the VA?
On Jun 16 10:29 AM jhm47 wrote:
> I have worked on an ambulance crew for over 20 years. The absolute
> WORST hospital that I visit regularly is the VA hospital. If this
> is an example of government run healthcare, we are in for a real
> mess. I wish all of you who are championing a government run system
> could see what I've seen. Uncaring doctors and nurses, unsanitary
> conditions, and run down facilities. Not what I want!
On Jun 15 01:38 PM Steve in Greensboro wrote:
> If the U.S. nationalizes its healthcare, where will the Canadians
> get their medical treatment? Where will the rest of the world get
> their pharamceuticals?
The VA. The facts are that we had a government run program by a government that didn't think it should run anything. Did you really expect them to do a good job? They did the poorest job possible so that they could point to it and say 'Look, we are incompetant. We should privatize everything'. I am amazed that so many people fall for this.
Perhaps if we named it 'Freedom Care' you would hop on board.
Tort reform (loser pays) would be the biggest boost for healthcare that we could ever imagine. However, the trial lawyers are huge contributors to the dems. It will never happen just for that simple reason.
I happen to have several family members who are physicians. They tell me that they have to do many tests and procedures in order to undertake the simplest procedures. The reason is because they and their clinics/hospitals are scared to death of being sued by ambulance chasing attorneys.
A SINGLE PAYER system is what you are referring to, in which there is a centralized system where the government pays for health expenses as a social service, funded by taxpayer dollars.
Your rant lost credibility with me because you don't have basic definitions in order.
LOL, socialized medicine works well for some services... SOME. But some services end up being rationed to the point where you are on a wait list. Plenty of people die waiting. I'd prefer not to be one of them.
To each his own.
But what I do find funny is people think socialized medicine is free. Where do you think the money comes from? The people. I pay for it. Trust me, I pay for it. Too bad I don't always get to use it. I don't like paying for things I don't use but I have no rights to opt-out... I consider half of my high taxes to be a big health insurance premium. And boy, it is big. Yes, even bigger than health insurance in the US... So I really don't get why everyone envy's us for socialized medicine.
Wow! The article sparked a lively discussion. Many of the commenters brought up excellent fixes: reducing pharmaceutical costs and reducing/eliminating legals costs thru tort reform are two great suggestions.
I agree that the two fixes will help close the budgetary gap, but they will not close the huge funding gap. The government will still have a huge budgetary/funding/tax short fall.
On Jun 16 11:51 AM Emerald wrote:
> Consumers forget that the U.S. is not a true, free market for prescription
> drugs as we pay the highest prices versus the rest of the world.
> This comes from those same U.S. pharma companies that pay the lobbyists
> to keep the government from using its purchasing power to lower prices.
> You are subsidizing multi million dollar pay packages to CEO's who
> don't give a damn if the poor suffer. Aetna, Cigna, Blue Cross and
> United Healthcare have bloated and overpaid executives that fight
> a "free market" every chance they get. Their only concession is to
> the VA who can bargain for lower prices. (Fighting vets is bad PR.)
> They want to stop Americans from driving into Canada to buy the same
> drugs they manufacture. Let's have a true free market for a change.
> Canadians seem to be doing just fine and everyone else will continue
> to get their drugs from the same companies that will be forced to
> value engineer their businesses and cut out all the fat. Funny that
> all the major Pharma companies are now undregoing cost containment
> and revaluations across all business lins now that the pressure from
> proposed healthcare changes are on the horizon. It's about time.
> Note: I purchase my own high deductible health insurance on the open
> market.
Folks, the government could screw up and ham and cheese sandwich.
And if you loved the VA, you'll like Indian Health Services hospitals even more. Visit a reservation hospital once and tell me what kind of impression you get. It's not for lack of funding either.
I transport many veterans every day who opt for hospitals they must pay out of pocket for when their care at the VA would be free. What does that tell you? That maybe there's a cost associated with the "free" health care.
On Jun 16 10:29 AM jhm47 wrote:
> I have worked on an ambulance crew for over 20 years. The absolute
> WORST hospital that I visit regularly is the VA hospital. If this
> is an example of government run healthcare, we are in for a real
> mess. I wish all of you who are championing a government run system
> could see what I've seen. Uncaring doctors and nurses, unsanitary
> conditions, and run down facilities. Not what I want!