The Dummy's Guide To Healthcare

Tyler Durden's picture

Initially presenting the potential problems of our current healthcare environment, the creator of 'the bears that explained Quantitative Easing' provides much food for thought on the unintended consequences of Obamacare (in all its 2700 page glory). For everything you need to know about how it devolved to this ("To understand healthcare in America, you have to think about bananas") and how to think about the new tax's potential implications (e.g. lower quality of service, capped hiring rates among employers), seven minutes well spent.

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DoChenRollingBearing's picture

I put up my own hit piece on Obamacare at my blog.  Because Obamacare is SO big and complicated, I could not cover all bases.  But, I covered some of them.

DoChenRollingBearing's picture

Thank you!  Bloggers depend on the kindness of strangers to read their stuff.

economics9698's picture

Obamacare is another entitlement program that will increase the size of the federal government.  Few people understand the economics behind this massive undertaking and the damage it will permanently cause the economy.

In 2011 the total federal, state, and local portion of the GDP for the USA was 41.9%.  In previous decades it was typically 36.9% up to 2006.  In 2007 the percentage jumped to 39.1% and has been above 40% ever since.  The federal portion of the GDP is 24.3% with the remaining 17.6% allocated to state and local governments. 

The USA ranks 7 out of 32 OECD countries for the size of the government sector.  Only Australia 35%, Estonia 38.1%, Korea 30.9%, Slovakia 39.4%, Switzerland 34%, and Turkey 36.3% have smaller public sectors.  Demark has the highest public sector, 59.3%. 

This is vitally important for long term economic growth.  Andreas Bergh of Lund University has shown that for every 10% of government consumption of the GDP economic growth is lowered 0.5% to 1%.  Over decades this can be seen when comparing the economies of the USA and the high tax European economies. 

The German purchasing power parity is only 79% that of a US citizen, $37,900 versus $48,100, France 73% and England 75%.  Past government consumption was limited in the United States to around 36% while in Germany 48% was typical and in France 52%.  Over decades the small differences add up to large discrepancies in living standards.

Currently in the USA 18% of the GDP is devoted to medical care.  With Obamacare a portion of the private health care market for employers able to afford it would remain private.  Federal and state governments through Medicaid, Medicare, Schips, VA, and other government programs currently control 47% of the health care dollar. 

With Obamacare a two tier system would quickly emerge.  Those with private insurance and those on the government run program.  An estimate of this would put the government control of the health care market with Obamacare up to 75%.  This would increase the federal governments control over the GDP from 24.3% to close to 30% of the GDP and total government consumption up to 48%.

In the post WWII history of tax collections for the federal government the most revenue collected as a percentage of the GDP was 20.6% in 2000.  This happened once in 67 years of tax collections.  Typical years the taxes collected were 18%.  Currently because of the poor economic performance only 15.4% of the GDP was collected in taxes in 2011. 

To cover the expansion in the scope of the federal government services massive tax confiscation efforts will be needed to pay for federal programs.  Going from 15.4% of the GDP collected in taxes to 30% by 2014 will create huge economic disruptions in the economy, massive unemployment and reallocation of workers never seen in the history of the USA.

economics9698's picture

Good video Tyler.  Good explanation of the third party payer system.  There I gave you a compliment.  Now I am going to spinner class and then hitting the JD.

A Nanny Moose's picture

Bananas. Fitting allegory for a Banana Republic.

Free Shit 2012!!!

GetZeeGold's picture




All your children now work for me.....undoing 147 years of Abe Lincoln's folly.


mjk0259's picture

Economy is already damaged by the cost of healthcare. US pays twice what most countries do per capita. And with it being employer provided, that's a huge cost that employers don't have to pay in other countries.

We spend a big chunk of our GDP on Afghanistan, etc. No benefit to average citizen unless you believe this is somehow preventing another terrorist attack.

Denmark has a higher self reported happiness factor than US. So do most other countries in Europe with high government spending as %GDP.

Germans have 79% purchasing parity of US? How did you get this? In Germany mothers don't usually work. People who do work often work 35 hours a week. Health care costs half as much as US. A big chunk of US GDP is financial engineering that actually produces negative wealth. Another big chunk is wars and weapons. German unemployment less than half US and a German high school graduate can actually make a decent living. Not so much US. All this with almost  no natural resources and surrounded by countries that they regularly had wars with. German auto worker makes more than US working for the same company.


US per capita income and standard of living has been either flat or declining for decades despite more people per family working.





economics9698's picture

I use the CIA world fact book for my GDP numbers or the OECD numbers.  The CIA web site is readily available. 

Watch the video and it does a excellent job of explaining why we pay 18% if the GDP in health care when it should be 12% to 14%.  Government interference in the marketplace with corporate health insurance, government programs pumping billions into the industry, and so forth.

The video did a great job; I think I will use it for my blog on health care.  What I posted above was my rough draft.   

mjk0259's picture

I don't believe the government interference in the marketplace is the problem. Already many doctors refuse to accept Medicare patients because the reimbursement is too low..

One reason we pay such a high percentage of GDP is because of the lack of the single payer system. About 30% is consumed by insurance companies. For example, I just screwed around for 4 weeks for a medical test for one of my kids between a  regular doctor, a specialist and the insurance company and the insurance company would not pay for it. Turns out it only cost $200. Each of those 3 parties probably spent that much screwing around arguing about whether it was necessary.


Medicare is rife with fraud partly because the government is largely prohibited from investigating it except in the most outrageous cases. Not that the record of the SEC inspires any confidence in this regard but this could be outsourced.


Likewise, drug companies have made it illegal for Medicare to negotiate lower drug prices which is what most countries do. If they did, it would stifle innovation? The most significant drug development in reducing medical costs since antibiotics was anti-ulcer developed in socialist Australia.



SteinRobyn17's picture

Everything in this video is asleep on the money. If Obamacare is not repealed, aggregate will disentangle absolutely as described. No one can altercate with what is presented here. Unfortunately, it doesn't amount one whit, because we accept been accomplished to amount activity aloft thinking. Activity will win the day, but "feeling" will never get you to these conclusions. The abstracts are cold-hearted, so they MUST be amiss ... or so we will be told.? I accept a actual bad activity about the future. Sarasota Florida Medicare Supplement

SteinRobyn17's picture

They are not talking about arcade about for the insurance. They are adage humans don't shop? about for cheaper medical casework because they alone pay their copay and the allowance aggregation has to aces up the rest. This agency humans are accommodating to get added abundant and added big-ticket tests than are all-important as it does not anon affect their finances.Best at Home Teeth Whitening

dognuts's picture

End end game in health care is to have everyone on Medicare.  I give it at most 10 years and everyone in the country will there.  One by one the insurance companies will stop coverage and you will be forced into Medicare.  Than just one more reason to rely on the government.  They know it.  Once this puppy start there's no going back.  

Just wait until you see the items we will be forced to buy in the name of national security. 


hedgeless_horseman's picture



...end game in health care is to have everyone on Medicare.

Really?  To be eligible for Medicare you must be 65 years old, or...


Before age 65, you are eligible for free Medicare hospital insurance if:

  • You have been entitled to Social Security disability benefits for 24 months; or
  • You receive a disability pension from the railroad retirement board and meet certain conditions; or
  • If you receive Social Security disability benefits because you have Lou Gehrig’s disease (amyotrophic lateral sclerosis); or
  • You worked long enough in a government job where Medicare taxes were paid and you meet the requirements of the Social Security disability program; or
  • You are the child or widow(er) age 50 or older, including a divorced widow(er), of someone who has worked long enough in a government job where Medicare taxes were paid and you meet the requirements of the Social Security disability program.
  • You have permanent kidney failure and you receive maintenance dialysis or a kidney transplant and:
    • You are eligible for or receive monthly benefits under Social Security or the railroad retirement system; or
    • You have worked long enough in a Medicare-covered government job; or
    • You are the child or spouse (including a divorced spouse) of a worker (living or deceased) who has worked long enough under Social Security or in a Medicare-covered government job.

Bicycle Repairman's picture

Are you being intentionally dense?  I just wrote up the 2022 eligibility requirements:

1.  USA residency

2. A pulse.

There.  I also simplified things, as well

GetZeeGold's picture



Gonna need a Doctor with a pulse willing to help you.....that ain't gonna happen.


Bicycle Repairman's picture

That's right, so be sure to write your congressperson.

AustriAnnie's picture

There is Medicare and Medicaid.  (medicare for over 65, medicaid for everyone else)

ATM's picture

The entire system will have blown up before then. In 10 yrs there will not be a US Dollar being used as currency. It will have imploded and a new money will be used. That also means that our government will have collapsed as well. Obamacare or no Obamacare does not matter at this point. We have reached the mathematical point of no return. The debt cannot be serviced without real economic growth but you cannot have real economic growth while servicing the current debt load.

It is on to a debt death spiral and nothing is going to stop it. I feel that all of these socialist type laws, all the big brother invasions of privacy are to try to condition us for the new system but it will backfire on TPTB who are doing these things to try to come out the other side in fully charge. They will not.

Long-John-Silver's picture

When the governments money dies so do it's laws. The USA has already exceeded the time this happens for all governments. I hope I live to see the reset happen.

Bicycle Repairman's picture

How many times have Latin American countries devalued and issued new currencies?  Did the countries or even the governments disappear?  Nope.  Did the underclass or entitlements disappear?  No and typically, no.  But somebody will get completely bent over.  Guess who?

economics9698's picture

What ends up happening is you pay $13 for a Big Mac meal and $23 for a spaghetti dinner with no drink.  Crime quadruples and people kill each other all the time.

Bicycle Repairman's picture

I don't know about the food, but the crimes will happen.

mjk0259's picture

Really? I keep reading that fewer and fewer doctors accept Medicare because it pays too low. So if you actually want a doctor you can see you still have to pay. Wish that was not the case.


Freddie's picture

Quite a few fux posting here voted for this in 2008.


Chaffinch's picture

Cut military budget by 98%. Cut cost of Big Government by 99%. Cut insurance companies 100%. Cut banks 99%. Cut lawyers 99%. Too much of our resources going towards blowing people up and politicians and paper pushing / button pushing. Cut the bureacracy and concentrate on caring for sick people. Use taxes to educate doctors for free and hire qualified doctors at max $100,000 a year and provide free health care. Cut politicians salaries to $50,000 max until US debt reduced to zero. Only those with a vocation need apply. (And for those seeking to enhance a politician's $50k salary with bribe money, just dare to try it -zero tolerance!) When US can reduce $16 trillion to zero then think about paying doctors a bit more, but in the meantime only hire those happy to cure sick people for a reasonable professional salary.

Scrap the PPT and put them in jail. Scrap derivatives. Scrap naked short selling. Jail Corzine, Dimon and Blankfein. Re-create stock market on a capitalist model, so that it can operate as an efficient distributor of capital.

Scrap fiat because politicians can't handle the temptation inherent in paper money they can just print.

Spastica Rex's picture

Only medical insurance is corrupt.


vato poco's picture

"Just as any conscientous shepherd cares for the health of his flock (before he delivers them to the slaughterhouse), so it is with your friend & shepherd Big Brother and you!"

King_of_simpletons's picture

Obamacare = Ponzi scheme, just like social security and medicare.

With an aging population & declining birthrates, the whole kaboodle will collapse.

vast-dom's picture

"We don't care if you don't eat your banana, we only tax you if you don't buy it."


old naughty's picture

Wait, why does no big pharma fit into this?

I guess I am the dummy.

Dr. Richard Head's picture

Beacause the Republican-controlled House and Bush administration took care of them back when Bushcare Medicare PartD was put into place. 

Plymster's picture

I junked you because you don't have enough HAs.

hedgeless_horseman's picture



Excellent work!  Everything in the video is spot on.  I have had two employees tell me, today, that health insurance premiums will be going down.  I explained why this is not true.  Not only because of supply and demand, but also due to the inflation tax to pay for other people's free lunch healthcare. 

We used to pay for health insurance for all of our employees.  When the taxes increased with ObamaCare, we decided we did not need to pay twice, so we eliminated healthcare benefits and limited our companies (fired people) to below 50 employees.  Now, all those employees will have gone from getting free healthcare from their employer to paying a fine tax, and not having any healthcare benefits, because the fine will be less than the premiums.

Skateboarder's picture

Big bro Googs doesn't hire people over 40 cuz that's the ripe age when you become an increased liability. Their gameplan is in milking the shit out of a batch of 22 - 38 year olds and moving on to the next batch. An  older professor I had a few years ago, he said that his buddy, a brilliant guy with a PhD in Mathematics, got turned down by that shitcorp just for being in his late 50s. My professor friend will be an expert witness testifying in an age discrimination case against big bro.

hedgeless_horseman's picture



Below 50 is the number of employees, not the age, which exempts employers from providing healthcare under Obamacare.

Skateboarder's picture

Yeah, I know. I was just mentioning the kind of age discrimination you end up seeing in corporate hiring practices now because of healthcare costs. Young people are easier to mold, order around, overwork, and dispose...

i-dog's picture

I'm over 60 yet, for decades, I have aimed to only hire people between 24 and 32. Below 24, they generally don't have enough real world experience to properly apply their academic theories...above 32 they seem to think they should "manage" rather than "do"!

I also prefer to hire females, particularly in management positions, because males are generally just looking for ways to steal your customers and ideas and start up in competition with you (which just happened to me *again* last year...this time losing the whole freaking business and a seven-figure nestegg!).

It's my money and my business, so I'll hire who the fuck I want!

Junk away, entitlement pansies!

NOTfromSanFrancisco's picture



Wow!... 4 pluses and no junks...Bet you are disappointed... Or surprised...


darkpool2's picture

Please dont be such a moron. Dont blame the corporations when all they are doing is responding rationally to the framework imposed upon them.

A Lunatic's picture

They got it passed, it has passed the smell test of the SCOTUS. There is no telling just how far these fuckers will ultimately go in imposing their will on the taxpayers. Why not raise the "tax" to 2k..........3k......7k? Nothing would surprise me.

Dr. Richard Head's picture

Shifting 401k to US treasuries would probably fall under one vision of how far they will go.  Someone need to hold those bags of shit and the Fed is probably overfilling its diaper jeanie.

catacl1sm's picture

Ugh. I hate when then shit happens. Overfull diaper jeanie stinks!

Dr. Richard Head's picture

Capital Hill is the diaper jeanie and Congress is nothing buy suits fulls of shit. Someone needs to empty it now.

g speed's picture

DRH  --I've been predicting that since I started commenting on ZH and for much longer on WSJ sites. My take is a 10% one time tax on 401k cash and market value of equities/insurance plans--by the way that may be closer than we think the way "markets" are being pumped. Also look for an increase in withdrawal penalties above and beyond income tax, and a shortened time limit on mandatory withdrawal after age 72 to increase yearly earnings. 

Dr. Richard Head's picture

I had a debate with a liberal at my house regarding 401k's in general and I was trying to explain their lack of liquidity based on age restrictions for withdrawal, penalties, and taxes.  I also tried to show difference between nominal and real terms based on using gold and dollars as measuring stick.  I tried to explain counter-party risk of the firms that hold these 401K's, the respective insolvency of those firms, and used MF Global as an example. I tried to show him the fact that inflation adjusted terms of the "gains" he was talking about were real inflation adjusted loses.

I was told my talk was all to tin-foil hat for his liking. The power is strong in the matrix.

exi1ed0ne's picture

I've had a lot of conversations with similar outcomes. My belief is that on some level people understand the truth of the matter, but the realization is so horrible and would so totally destroy the pillars supporting their view of reality that they unconsciously recoil. It's not that it is exactly hard to see how things work, but their internal sanity safeguards prevent it.

You have to admit it's not easy to take that first step outta the cave. There are days where I wish the blue pill was still an option, but mostly I thank $deity that I was given a lucid moment and chose red.

ATM's picture

No one wants to hear that they are going to be a debt slave. It might interfere with that Jersey Shore episode their going to watch.