To paraphrase Upton Sinclair, "It is difficult to get a man to understand something, when his healthcare depends on his not understanding it."
Earlier this week, I was asked to share some insights with a couple of foreigners as to the reality of healthcare in America. Our discussion provided me with another opportunity to write a healthcare article for ZeroHedge readers. Statistically, about half of Americans reading this article are going to strongly deny and/or dislike its message, for the very same reason that about half of American readers did not get much value from the last one, because they are sucking on the government tit.
If you have Medicare, Medicaid, VA, TriCare, Obamacare, or another subsidized private insurance because you or a family member are employed by the federal, state, or local government, including police and fire, say, "Socialized medicine!"
Once again, it is important to define terms at the start, but only three definitions this time, instead of twenty-two:
- Health Insurance
- Entitlement Programs
Politicians, insurance companies, and the media do a great job of mixing up these three terms and confusing the issues. This is, of course, intentional. I am going to clarify them for you.
Healthcare is the services and products a patient receives from healthcare providers. Using the bilateral elbow fracture patient from my earlier article as an example, the patient received services and products from a surgeon, anesthesiologist, hospital, and possibly a pharmacy. As I illustrated, the costs paid for these services are almost always negotiated/determined by a third party, either the government or the insurance company, and not the patient nor the healthcare providers. I also illustrated that the actual costs paid by the third party are essentially never the exorbitant amounts shown on the medical bill.
Health insurance is an insurance policy which is purchased, either as an individual or via an employer as a part of salary, to share the risk of possibly having to pay for healthcare. Our example is a typical Aetna Health Benefit Plan for an individual working stiff, with a monthly premium of $550, a $5,000 annual deductible, and 20% coinsurance after the deductible is met. The cost of the policy (premium) moves inversely to the amount the patient pays (deductible plus coinsurance). Maybe the biggest benefit to having health insurance is that the medical providers have agreed to accept a discounted fee (allowable) from the insurance company or government entity.
Entitlement Programs such as Medicare, Medicaid, VA Healthcare, Obamacare, and Social Security Disability are legacy government vote-buying schemes and attempts to justify higher federal taxes and bigger government. Medicare was enacted to buy the votes of the elderly and justify higher federal taxes and a much bigger socialist government. Medicaid was enacted to buy the votes of the poor and justify higher federal taxes and bigger government. VA Healthcare was enacted to buy the votes of veterans of banker wars and justify higher federal taxes and bigger government. Obamacare was enacted to guarantee profit and eliminate competition for the big insurance carriers, buy the votes of the gullible, and justify higher federal taxes and a much bigger socialist government. Social Security Disability was enacted to justify higher federal taxes and bigger government, and to buy the votes of malingerers and a very few disabled voters not otherwise covered under Worker's Compensation or private disability insurance, such as AIDS patients and the stars of My 600 Pound Life. Entitlement Programs are not healthcare insurance, although they may have some features intended to make them appear similar, such as the Medicare's $185 deductible and 20% coinsurance. I would argue that all entitlement programs are, by definition, socialist.
I understand that some people still hold on tightly to the quaint little notion that they paid into the Medicare and Social Security system for all of those years, so Medicare and SS Disability are not entitlements, but rather some kind of pre-paid insurance scheme. Well, I ain't no actuarial, I can't even spell E.L.R., but I know a ponzi scheme and outright theft when I see it. So, although we, our parents, and our grandparents, might have been sold a political Bill of Goods (Social Security and Medicare Trust Funds), what our government has actually delivered to us and our children, after all of the looting and money printing to buy even more votes, is nothing short of theft.
Just under half of the people in America have their healthcare covered by an entitlement program, or are a government worker with top-shelf healthcare paid by the taxpayers and debasement of the dollar. However, if we include the tens of millions of illegal immigrants receiving healthcare under EMTALA, arguably another entitlement program, it is likely that the truth is that far more than half of all the people in America are now entitled to healthcare. These numbers dovetail nicely with the fact that about half of Americans have private health insurance which they purchase or receive as part of their salary.
My first point of analysis should start to become obvious about now. But let's throw in a few more pieces of the puzzle before spelling it out. Just under half of the households in America pay no income tax. More than half of the households in America receive some form of government benefit each month. It is a safe assumption that, by and large, the half that receives a government check each month is, essentially, composed of the same people that pay no income taxes and rely on an entitlement program for their healthcare.
In politics and sociology, divide and rule (or divide and conquer) is gaining and maintaining power by breaking up larger concentrations of power into pieces that individually have less power than the one implementing the strategy. The concept refers to a strategy that breaks up existing power structures and prevents smaller power groups from linking up.
Therefore, on average, each person in America paying income taxes and paying for health insurance is also paying for his or her entitled alter ego over in the other half that is not. This means that, at a hypothetical minimum, healthcare in America is costing 200% of what it otherwise might cost if every household was paying its fair share. Double. However, as you will see, it is actually much, much, higher than 200%. Why?
The first reason is the inefficiency inherent in any government run program. In my twenty years of experience, government health insurance in the USA operates at about one third the efficiency of private health insurance, and I am being generous. I am also taking into account the efficiencies, inefficiencies, and redundancies of private vendors running government entitlement programs.
Government inefficiency in healthcare is not limited to the USA, but is also clearly reflected (and in evidence) outside the USA, if one simply interviews, as I have, some of the tens of thousands of medical tourists traveling to America for healthcare from socialized medicine countries such as Canada, where inefficiencies result in long delays and significantly worse medical outcomes.
I estimate that the inefficiency of the government workers operating these entitlement programs in the USA increases the healthcare costs for our entitled alter ego by 300%, or three times. Don't believe it? Just talk to anyone that regularly does business with them, as I have. Also consider the salary and benefits of the typical unionized government worker, versus some troll working for $12.00 an hour and no benefits deep in the bowels of a for-profit insurance company.
The second reason our entitled alter ego costs us more than just 200% is a particularly powerful form of adverse selection. Just think for a moment about the characteristics and behaviors of your entitled alter ego, in general, versus the characteristics and behaviors of you, the average tax paying and premium paying American.
In general, the entitled alter ego risk pool is filled with old, poor, poorly educated, unemployed, sedentary, perpetually pregnant, and unhealthy people. The second risk pool is composed of younger, employed, educated, active, wealthier, healthier people. Healthcare for the entitled risk pool is essentially free. Shoot, my mother on Medicare goes to the doctor about every other month just to hear him say that she is not dead. Obtaining healthcare for the working stiff risk pool costs real money, however, in the form of big deductibles and coinsurance. I don't think I have been to the doctor in a decade or more. These cost discrepancies result in an enormous difference between the amount of healthcare "consumed" by patients in the two risk pools. My educated guess is that entitled patients use between 3 to 6 times the non entitled patient, and I lean toward the 6, although it might be even higher. So, for our exercise, I will use 5 times, and therefore the cost multiplier for our entitled alter ego goes from 300% to 1,500%, and we must still add the cost of his own non entitled 100%, for a total burden on the working stiff of 1,600%...16 times what it would cost to just cover himself.
You say, that sounds crazy? Do these numbers square with reality? Well, yes. Let us take a look. Here is the key data to verify our speculations.
The National Health Expenditure Accounts (NHEA) are the official estimates of total health care spending in the United States. Dating back to 1960, the NHEA measures annual U.S. expenditures for health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care. The data are presented by type of service, sources of funding, and type of sponsor.
U.S. health care spending grew 3.9 percent in 2017, reaching $3.5 trillion or $10,739 per person.
Sure, $10,739 may be the per capita cost obtained by simply dividing the total cost by the population. However, as our exercise clearly shows, this in no way reflects the truth of the matter when it comes down to actual individual "capitas" like me and you. The real cost of healthcare per tax paying and premium paying person in America, adjusted for government inefficiency, adverse selection, etc., would be 100% / 1600% or 1/16th of $10,739, which is $671.19 per year.
$671.19 per year...not per month. This is total cost, which means $0 deductible and 0% coinsurance.
Now, does $671.19 seem to you like a reasonable premium to pay for an entire year of health insurance? $55.93 per month? Well, that is what we just calculated healthcare in America would theoretically cost a young, healthy, employed, tax paying individual, if he or she did not have to pay for all those votes from the old, the poor, the veterans of banker wars, the malingerers, the very few disabled and their caretakers not covered by Worker's Comp or private disability, and now even the voting illegal immigrants receiving healthcare under EMTALA.
Now, simply compare that with a typical $0 deductible 0% coinsurance healthcare plan for an individual, which costs around $900 per month, or $10,800 per year. Hmmmm. Wait a minute! What is 1/16th of $10,800? $675 per year! Pretty darn close to $671.19 per year. Yes?
I am sure this information is all available for your inspection, somewhere in the fine print of Our Social Contract, which we all apparently have agreed to and signed.
"Social Security and Medicare are the bedrock of our social contract. Together, these safety net programs keep millions of seniors and people living with disabilities out of poverty."
So, dear ZeroHedge readers, when people tell you that the costs of healthcare in America are out of control, I hope you can and will develop an informed response, with the understanding that they actually mean the cost of health insurance and entitlement programs, not healthcare, and which includes premium, deductible, coinsurance, copay, non-covered items, and biggest of all, the cost of paying for our entitled alter egos, as about half of us are supposedly required to do under the terms of our social contract.
Speaking of paying for our entitled alter egos, and the costs of health insurance, now may be a good time for you to review a few more of my ZH articles.
Stop doing for others what they could and should do for themselves!
The one chart that proves Obamacare really is working (for the fascists)
You have health insurance, but you cannot afford surgery? You should have bought HUM stock.
If you are not yet totally disgusted, then I invite you to watch an episode of My 600 Pound Life. It is filmed here in Texas, and I am familiar with certain members of the production. Consider that almost all of these morbidly obese patients, and many of their codependent enablers, live entirely on government entitlements. To put it bluntly, they vote for a living. If you pay taxes, then you are paying for their triple cheeseburgers, housing, heavy duty moving equipment, emotional therapy, and healthcare.
She votes hard for your money,
So hard for it, honey!
She votes hard for your money,
So you better get to work!
After I finished this conversation with the foreigners, one asked me a question.
If you were President, how would you fix healthcare in America?
I chuckled and sighed, because it was clear that he didn't yet fully grok what he had just heard. My answer was that healthcare in America is not really broken. I am 100% certain that the USA has the very best healthcare in the world. The only thing that is broke are We The People that are paying for healthcare for all of the people.
Peace, prosperity, liberty, health, and love,