Guest Post: Obamacare - The Neutron Bomb That Will Decimate The U.S. Economy

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

ObamaCare will act as a neutron bomb on the U.S. economy for systemic reasons.

Longtime readers know I have repeatedly explained why healthcare, i.e. sickcare, will bankrupt the nation. ObamaCare simply speeds up the coming collapse. Here are two of the dozens of entries I've written on sickcare: 

America's Hidden 8% VAT: Sickcare (May 10, 2012) 

Can Chronic Ill-Health Bring Down Great Nations? Yes It Can, Yes It Will (November 23, 2011)

I have also explained why ObamaCare's "fixes" are simulacra reforms that don't even address the systemic costs arising from the cartel-fiefdom structure of sickcare: 

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

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

Sickcare is unsustainable for a number of interlocking reasons: defensive medicine in response to a broken malpractice system; opaque pricing; quasi-monopolies/cartels; systemic disconnect of health from food, diet and fitness; fraud and paperwork consume at least 40% of all sickcare funds; fee-for-service in a cartel system; employers being responsible for healthcare, and a fundamental absence of competition and transparency.

Please glance at these charts to see how the U.S. healthcare costs are double those of competing nations on a per capita basis. Japan provides care for a mere 36% per person of what the U.S. spends--yet millions of Americans remain uninsured or underinsured.

If you set out to design a corrupt, inefficient, wasteful, unfair, deranged and unreformable system, you would arrive at U.S. healthcare/ObamaCare.

ObamaCare ignores the structural causes of our ill-health:

86% of Workers Are Obese or Have Other Health Issue Just 1 in 7 U.S. workers is of normal weight without a chronic health problem.

The Patient Protection and Affordable Care Act (PPACA), i.e. ObamaCare, is a neutron bomb for employment. A neutron bomb is an enhanced-radiation thermonuclear weapon that famously leaves buildings, autos, etc. intact but kills all the people, even those inside buildings. vehicles, etc.

ObamaCare will act as a neutron bomb on the U.S. economy for these systemic reasons:

1. It is immensely complex, and already-marginalized small business owners will shed employees or simply close rather than have to figure out what all those thousands of pages of regulations and statutes mean to the survival of their business.

2. ObamaCare's primary mechanisms of lowering costs, insurance exchanges and technocratic selection of "best care practices," do nothing to change the systemic flaws of sickcare.

Many other commentators have already outlined how ObamaCare is driving employers to replace fulltime workers with part-time workers to avoid having to pay outrageously expensive monthly healthcare insurance premiums.

I see this response as a Corporate-America strategy. Corporate America has the human resources infrastructure and financial heft to figure out compliance and exploit loopholes in the insanely complex law. Small business has neither the infrastructure nor the financial resources. Small business owners will rely on the same cartels that are currently providing insurance for guidance, and of course the ObamaCare offerings will suit the financial needs of sickcare cartels.

Once small business owners see the costs of their options, some may opt to pay the penalties and others may follow the corporate strategy of turning each fulltime job into two part-time jobs to avoid paying for coverage or penalties, but many will choose instead to call it quits: either downsize to a one-person/one-household business with no employees at all, or sell/close the enterprise and escape the burdens.

What the lobbyists and attorneys who wrote the Obamacare monstrosity do not understand (because they have no exposure to or experience in the real economy) is the fragility of most small businesses: costs keep rising but revenues are stagnant. The mental and financial stresses keep rising, and ObamaCare does nothing to mitigate either source of stress.

The inside-the-Beltway types who crafted this mess have no idea of the pressures facing legitimate (non-black-market) business in America, corporate and small business alike.

ObamaCare offers even more incentives for Corporate America to offshore operations, and it provides powerful incentives to millions of marginal small businesses to shut down or shed all employees.

I am not alone in simply not wanting to waste the time, money and energy required to understand the new law and its various impacts on my business. We will cling to our already insanely expensive private healthcare insurance, one of the few that has been grandfathered in: new self-employed entrepreneurs won't be able to buy the absurdly costly policy we have--they will be offered a range of even worse deals, with higher costs and less coverage.

3. Perhaps most cruelly, the bronze level of ObamaCare--the "affordable" care--is a mirage, a simulacra of insurance rather than actual insurance. Bronze level ObamaCare features deductables of around $6,000. In other words, you have to spend $6,000 before your insurance kicks in.

In an economy in which two-thirds of all households live paycheck to paycheck, this is the equivalent of no insurance. High-income sickcare lobbyists and millionaire politicos may look at $6,000 as no big deal, but for households with little savings or credit, that might as well be $60,000.

4. As many others have pointed out, the income levels that divide receiving a Federal subsidy from not receiving a subsidy are begging to be gamed. If $62,000 is the line in the sand that qualifies your household for a hefty subsidy on health insurance, the incentives to adjust earnings to fall just below $62,000 (or whatever the number is for the locale and household size) are immense.

People respond to the incentives and disincentives they are presented with, perverse or otherwise. The lobbyists, toadies and apparatchiks who wrote and passed ObamaCare could not have stuffed the bill with more perverse incentives if they had set out with that as their primary goal.

The neutron bomb has gone off, unseen by politicos and the Elites who wrote the bill. It is already undercutting fulltime employment, and it will soon add momentum to the free-fall erosion of small business growth and employment.
The strip malls and office parks will still be standing; there just won't be many employees in them.

Of related interest:

About Your $3.16 a Day Healthcare Insurance Plan... (February 21, 2013) MirageCare

What If ObamaCare, Too Big To Fail Banks and the State Are All the Wrong Sized Unit?(February 25, 2013)

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the not so mighty maximiza's picture

limit corn syrup to just candy you would reverse the trend

Occident Mortal's picture

America should copy the UK system.



DaddyO's picture


Surely, you jest...


King_of_simpletons's picture

I believe this system of care is called "Exceptional Care".

MissCellany's picture

Because there are so many exceptions to getting care?

Occident Mortal's picture

In the UK nobody gets turned away. Ever.

Controversially, even illegal immegrants get free heart bypass surgery if they need it.


And the whole system still costs less than HALF of US healthcare per capita.

Gene Parmesan's picture

Who pays for everyone's healthcare? Who pays for the illegal immigrant's heart bypass surgery (hint: it ain't free)? How's the quality of care? Do you really believe that government is capable of running industry - any industry - better than the private market is?

icanhasbailout's picture

There's the "black swan" you have been looking for, folks.

johnQpublic's picture

baxter the dog got his obamacare

whats not to like about a system that will insure a dog that has basically no income

Indian_Goldsmith's picture

What decimated the American culture? I bet it was Feminism

CheapBastard's picture

So...I should skip that BOGO Krispy Kreem Deal?

Herd Redirection Committee's picture

Feminism, was that where they turned families on each other, and married women against career women?

NoDebt's picture

Months ago, there was much gnashing of teeth about "where is all the new Treasury issuance going to come from for the Fed to continue buying under QE??"

To which I said:  "I present you with your solution:  Obamacare."

I still stand by that opinion.

August's picture

IMHO you can run a society based on Deism, but not on Atheism. As to Agnostiscism, I just don't know.

Feminism itself was the reaction to a public acceptance of the male "Rat Pack" ethos as laudable, and cool.

DoChenRollingBearing's picture

We all now see what a disaster Obamacare is.  I wrote in June 2012 that it would be so.  What I did not foresee is that it would be so poorly done, even its website.  Now we see the terrible results, and we've only started!

"How's that Obamacare Working Out for You?"

Kirk2NCC1701's picture

They got WOG* Swans too.


* Westernized Oriental Gentleman.  Often, but not always, used in pejorative terms.  E.g. "Mr. X is a WOG" is not pejorative.  Although you can probably tell by the non-Anglo last name.  "X is a bloody WOG" is pejorative.

Occident Mortal's picture

The Brits pay for it.


But even when they are patching up illegal immegrants they still pay less than half of what Americans pay per capita.


I don't think it's perfect, but the empirical evidence doesn't lie.


UK health care costs less than half of US healthcare and Brits are living 2 years longer on Average.

Better care, less expensive. Sounds shit right?

Lost My Shorts's picture

Take your socialist facts and stuff them up your marxus.  We make our own reality around here, and in our reality, your facts aren't facts.

aerojet's picture

Are doctors making bank in the UK?  In the US, we are making doctors rich.  And hospital administrators are getting even richer.  The US is a lobbyist society--this was covered here on ZH this week--you don't compete with other businesses, you hire lobbyists to work on directing funds and positive outcomes your way.  This is what ObamaCare is all about, the lobbyists bringing home the bacon.  Whether or not anyone receives treatment is not their concern at all.

MachoMan's picture

There are an incredible amount of doctors not getting rich at all...  The biggest piece of the pie is going to administrators...

aerojet's picture

It doesn't matter who pays if that cost can be laundered through enough levels, you see?  If it isn't clear who pays, then "everyone pays" can be ignored as a fundamental problem.  It's like they come and break your legs, and then you have to figure out how to get by in that crippled state, but it's just "part of doing business" now, a cost that was added that further impairs your own ability to do anything else.  But hey, fuck the powerless little people, right?

The whole issue boils down to control and whether we want to live as free people making our own choices in life or if we want to be impaired little serfs with some tiny percentage, say 5% freedom that isn't any threat to the machine.

Rylie's picture

Short answer is everyone pays the same know one is ever turned away.

Yes I think that the government can run health care better then the private industry. ObamaCare is a joke everyone knows that but other countries have better systems then the USA and its cheaper. France is Number 1  in health care rankings  the USA is 38.  The top 37 are government run, the USA also pays a lot more money for worse care.

I live in Canada we have about the same tax rate but we have health care provided by the government. I do not have to pay insurance and deal with premiums as people do in the USA. You argue that you should only pay for yourself, I guess you have never been really sick or have a family member get really sick. Why do the people of the US work their whole lives to save and retire, then get sick and live in poverty because medical bills had to be paid.

Why do you let corporations profit from your bad health?


rubiconsolutions's picture

"In the UK nobody gets turned away. Ever."

Right. And this is the result - I've been there. The lines and quality of care is dismal - If you think the model of excellence in healthcare is Britain than you have a very low standard for excellence. Finally, read this - "The NHS has reached its crisis point" -

Occident Mortal's picture

Yet on average Brits live 2 years longer than Americans. 

You value anecdotes more than the Macro data listed by the OP?


So Brits live longer and their healthcare costs less than half as much?

Let's just pretend this data doesn't exist shall we.

SgtShaftoe's picture

The United States has historically been the vanguard for advanced and safer medical procedures.  The UK NHS is as if you put the DMV in charge of healthcare.  Many people die unnecessarily.  Mortality rate in the US is not bad healthcare.  The US has some of the lowest mortality rates for procedures, but more are done.  Americans are fat and don't give a damn about their own health. 

Breaking the healthcare system in a new way is not the answer.  Healthcare in the US has been taken over by government and private interest groups since the 70s.  If you've spent any time at all reading zerohedge, you'd have come to the realization that scale of systems is a major enemy.  You'd also have come to the realization that there is no government intervention possible at this point with outright fascist results.  Have your state run system paradise at the local or county level and you might not do as much damage, but any changes nationwide will result in utter catastrophe. 

Net, the NHS is a bunch of Butchers.  That's why the UK is building out private hospitals at record rates.  NHS kills people, predictably and efficiently.

buyingsterling's picture

Britain is whiter, trimmer, works less hours, is less stressed, and is less cancerous than America, so the extra two years they live may have little to do with their pathetic health system. They control costs the same way all goverment programs do: rationing. In many European countries the elderly don't bother to call for an ambulance, they know it isn't coming.

Britain doesn't seem to care about its elderly residents who are dropping like flies for no good reason. Brits pay hundreds of billions/year for their .gov bureaucracy. Meanwhile, as many as 25000 UK residents/year die because they can't heat their homes in the winter. The goverment is now considering a 900,000 Pound plan (that's a million and a half bucks) to deal with this problem. They lose more to fuel poverty than America loses to murder, and we have 4x the population. If they targeted the 50,000 homes most at risk and gave each a $100/month subsidy for four months/year, the cost would be $20 million. If they saved 80% of those who would otherwise die, they would be saving each person for $1000/year. On second thought, that does seem kind of pricey. Never mind.

outamyeffinway's picture



You don't know what you're talking about. As you age, care is based on an "as-needed" basis. 60 year old needs a kidney, 6 year old needs a kidney: bye gramps. Been nice knowing you. You had a good life.

Republicae's picture

I would not even wish the UK's heath system on Obama!

This story from the Daily Mail, November 17, 2013..... reported last week that nearly 40% of National Health Service workers — doctors, nurses and paramedics — said they would not recommend their own workplace to friends or family who need care.

More than 101,000 NHS workers responded to a survey that asked them if they agreed with the following statement:

"If a friend or relative needed treatment, I would be happy with the standard of care provided by this organization."

While 63% said they agreed or strongly agreed, 12% said they disagreed or strongly disagreed while a quarter, reports the Daily Mail, "did not 'express a preference.'"

"That left 37% of staff who did not recommend treatment."

This finding is a significant indictment. Even worse, at two of the system's worst hospitals, only 35% said they would recommend care at their workplace, and 17% overall said they "did not think patient care was their manager's top priority."

What would be a manager's focus, then? Saving money in a state-run system that can't tax enough to pay for the care it has promised?

Playing the bureaucratic game in a regime in which health care decisions are made by politics rather than by the patient and doctor working together?

One hospital within the NHS no longer subject to politics is Hinchingbrooke. The facility, located in Cambridgeshire, north of London, was privatized last year after, the Mail reports, being "on the verge of going bust."

Read More At Investor's Business Daily:

Lost My Shorts's picture

There is no more NHS in England.  (There is still in Scotland, Wales, and Northern Ireland.)  In England, the most of the facilities of the NHS have been privatized.  Funny how news is slow to get around.  It's still single payer, any failures are now failures of private contractors, so you will need to update your rhetoric of blame.

p.s. my source is behind a sign-up wall:


The End of the National Health Service

Excerpt:  "Although the term National Health Service and the NHS brand continue to be used, a National Health Commissioning System or NHCS is in fact a more correct term. What was largely a public service is being replaced by a network of public, private and charitable services, still funded mainly through taxation but each operating independently."

RiseOfTheMachines's picture

The daily mail is not a serious newspaper. My mother reads it because 80% of it's content is aimed towards older middle class women. Lots of stories about the Royals etc. It's more entertaining than informative. 

Laissez Faire policies result in the Law of the Jungle, that is not the way civilized cultures work. If you want to return to the Law of the Jungle then be prepared to be invaded and conquered by a more enlightened, organized and cohesive culture down the road.The existing system badly needs to be reformed. Tearing it down is not a solution as tempting as it seems. 

Maybe breaking up the US in to a handful of countries might work better to breakup the stranglehold of massive government. Have the country of the North East (Yankee Land), The South (Rebel country), The Central Plains, The SouthWest, The NorthWest and Texas. That would give you smaller government. Introduce competition between the regions regarding good vs bad government. 

On a different note the number of half mad people sleeping homeless around me in the US is very disturbing. These people need shelters and homes. It's not ok to have a society like this. Out of self interest it is upsetting. Maybe they are there as a warning to everyone else to stay in line ....... It doesn't make any sense to me but then again I've noticed how people here seem to be in fear of losing their job and health, with no safety net it keeps eveying quiet as mice.  

Occident Mortal's picture



Healthcare insurance only works when everyone pays the same flat rate.



Otherwise a whole bunch of people are incentivised to not contribute until their circumstances change. Which makes the whole show more expensive for everyone.


Look at the figures above, I'm not making it up.

Urban Redneck's picture

If everyone pays the same flat rate, no one is financially incentivized to live a healthier lifestyle.

Cugel's picture

And yet Americans have both the greatest financial incentive and the least healthy lifestyles.

666's picture

How did Americans survive before the Great Depression? There was no Social Security, Medicare or any other support systems. Look at pictures from then. People were not overweight, ate healthier non-packaged foods, worked manual labor jobs, did not know what diabetes is, etc. Our current diet and sedentary lifestyles are killing us, but our healthcare system does not recognize this. Instead, it has turned into a massive Ponzi scheme that feeds on itself, where big bucks are to be made by pushing pills instead of exercise and diet. Healthcare in this country has evolved into a new form of taxation where, you guessed it, the rich get richer.

JailBank's picture

In the near future I think you'll get the answer of how. When the money runs out or the money doesn't buy services anymore a lot of people will find out how to live without these things.

Withdrawn Sanction's picture

"Our current diet and sedentary lifestyles are killing us, but our healthcare system does not recognize this"

Oh, I think it does recognize this (at least the big pharma guys recognize it). After all, if you can keep a patient on _______ (statins, insulin, SSRIs, etc.) you have built a long-term recurring income stream.  Teach them how to be/eat healthy, where's the blockbuster drug in that?

"Do you take drugs, Danny?"

Herd Redirection Committee's picture

Treatment is profitable, because they just keep coming back.

A cure....  Hell, how do you even price a cure?  The patient gets better and never comes back?  Where's the profit in that?

If you'll excuse my attempts at thinking like a sociopath.

Kobe Beef's picture

A true sociopath would be engineering diseases and then selling treatments. If Monsanto or Merck isn't doing it yet, check back in a few years.

Tall Tom's picture

666 wrote, "How did Americans survive before the Great Depression? There was no Social Security, Medicare or any other support systems."


The answer is poorly. They survived and survival was paramount. They were NOT HEALTHY. The Life Expectancy for both sexes was 59.7 years in 1930. Today it is 78.7 years which is an increase of 31.8% and substantial.


Sorry to confuse you with the facts.




No I do not support the ACA. I DO SUPPORT THE TRUTH and am tired of Satanic LIES.


Get thee behind me Satan. Make like a Tree and LEAVE, FUCKING LIAR.

Urban Redneck's picture

Facts are no fun, especially when an educated and knowledgeable person can fuck with statistics and when the unread masses believe the misguided notion that a person dying of old age dies younger when life expectancy is shorter...

We're one world war or flu pandemic away from achieving the same 59.7 year life expectancy that we had in 1930.

Moreover, since a significant number of the people who are dying today have not been made to suffer a cradle to gave GMO and corn diet and the normalization of obesity and diabetes-- we could well get back to a lower life expectancy even without war, plague, famine, or whatever other gifts the Pale Rider brings forth.

A couple centuries ago my great great great grandfathers were each knocking up their respective series of wives 20+ times and doing it well into what's now considered "retirement", so the wives had a lower life expectancy, and perhaps a fifth of the children died in childhood, and a bunch other kids died in various wars, but the buggers that made it to middle age also basically all made it into their 80's & 90's. So yes, the mathematical average age of death was lower, but that's math not truth.

Tall Tom's picture

You can deny Mathematics if you choose. You can approach life from the anecdotal Outliers on the Bell Curve if you shall choose.


But life was pretty crappy during the Great Depression. Those pictured people were not thin because of Physical Fitness. Most people were thin because of FAMINE...they went hungry.


You may not know about Hunger. I do not mean "skipping a meal". I mean "True Hunger".


People whom are MALNOURISHED suffer from compromised Immune Systems. There were no Antibiotics to ward off infectious disease. The Science of Disease Prevention was non existent. Polio ran rampant throughout the populations during the late Summer Months.


Americans have a rude awakening awaiting them. Oh I expect that Life Expectancy dramatically decreases as America STARVES TO DEATH.


You can deny Mathematics all that you want. I could not care less. You will not be able to deny the consequences of the Economic Collapse...which will happen.


Have you ever gone to Mexico? Did you ever notice how much larger Americans are when compared to them? Do you think that might have something to do with NOURISHMENT?


What is their Life Expectancy? They are just 20 Miles away from me. Why is it such a Drastic Contrast?


BTW...That Chart which I sourced differentiates between Race. Why were Black People's Life Expectancies significantly lower than that of Whites during the Great Depression? Can it be that they were not getting enough to eat?


Did you ever talk to your Grandfolks about what it was like? Mine told me of the misery and despair as the Great Plains turned to dust. Yes that was anecdotal. But the photos bear out and reflect the numerical data.


Few did well. Far fewer prospered. Most suffered tremendously. Many died young. That is the truth.

Occident Mortal's picture


Avoiding death is usually enough incentive.



Withdrawn Sanction's picture

You doubtless meant "postponing death."  One cannot "avoid" an inevitability; that's what makes it inevitable. 

Welcome to your first 2 weeks in fight club, Chatty Cathy.

Occident Mortal's picture

Yes, you are correct the US has a fantastic healthcare system because of semantic errors.

11b40's picture

I am incentivized because I happen to like being healthy.  That's not reason enough?

max2205's picture

Retail sales this dec through dec 2014 should be a puke feast...followed by govt stimulus schemes which will be too little too late

Reps will get back the senate. But they are morons as well

rubiconsolutions's picture

"Healthcare insurance only works when everyone pays the same flat rate."

Bullshit! So what you are saying is that someone who smokes, drinks to excess, is morbidly obese and has diabetes or heart problems because of poor eating habits should pay the same insurance rate as someone who eats healthy and exercises regularly and doesn't smoke. That doesn't make sense on any level.

"Otherwise a whole bunch of people are incentivized to not contribute until their circumstances change."

Again, bullshit. People are (or should be) incentivized to take care of their bodies to avoid the need for healthcare by having rates commensurate with their lifestyle. Insurance is a risk pool and was designed for catastrophic events. Instead, health insurance has been turned into a pool that everyone can swim in for everything from wellness programs to contraception to mani-pedi's.

Saying that everyone should pay the same flat rate is like saying that everyone should be paid the same regardless of the type or quality of work they do. That kind of thinking is precisely why this country is doomed.

Kobe Beef's picture

b-b-but EQUALITY! Human Rights! Social Justice! We're entitled to your earnings!

Yes, the USSA does not have a future. Good riddance to an awful lot of roaches.