FedUpUSA

Archive for the ‘Medicare’ Category

CBO Confirms Tickerguy’s Projections…..

Here’s the old sign again…

(Reuters) – Gvernment spending for Medicare, Medicaid and other healthcare programs will more than double over the next decade to $1.8 trillion, or 7.3 percent of the country’s total economic output, congressional researchers said on Tuesday.

In its annual budget and economic outlook, the non-partisan Congressional Budget Office said that even under its most conservative projections, healthcare spending would rise by 8 percent a year from 2012 to 2022, mainly as a result of an aging U.S. population and rising treatment costs. It will continue to be a key driver of the U.S. budget deficit.

That’s not going to happen, because it can’t.  That number would represent approximately 1/2 of today’s Federal Budget, incidentally.

The bad news is that it doubles again in another eight years.

This is the nature of all exponential functions folks.  Compound growth just is, and it is never, ever sustainable over the intermediate and longer term.  Yet we’ve played this game since 1980, with medical spending by the Federal Government expanding at roughly 9% for that entire 30 years.

What’s worse is that the bolded text is false — in the private sector insurance costs are rising at least as fast as they are in the government.  When I ran MCSNet in the 1990s we were seeing double-digit premium increases every single year, and this is still going on.  The only way to keep it under some resemblance of control was to cut back on the offered services in the plan, but on a “like-for-like” basis there was never a year during my time running MCSNet that we saw increases under 10%. 

Not once.

There is no solution to this problem that can be found with “reform” of Medicare and Medicaid.  The problem lies in the underlying medical system in this country and addressing it must happen there, not through things like Obamacare or changes in the government side.

The ridiculous growth in medical costs have come from ridiculous cost-shifting and obfuscation, along with a completely-unrealistic set of expectations.

Consider the cost of putting a man on the moon.  We can do it, but it’s ridiculously expensive.  Likewise, we can put men in space at the ISS, but on a per-person basis it’s ridiculously expensive.  Ditto for flying in a private jet — yes, you can do it, but it’s ridiculously expensive.

Now consider what would happen if everyone could demand and enforce via government a ride in a moon rocket, a month at the ISS, or the ability to walk into any executive airport and demand that the Lear sitting there immediately take off for Bermuda, irrespective of how much money you had in your bank account!

That’s exactly what we’ve done in the medical system.

Provenge is just one example.  Dendreon developed the drug for late-stage metastatic prostate cancer, a terrible disease.  Statistically it adds 4 months to your life, but costs $100,000.  So for about a quarter of a million dollars per person-year, you can have it — the problem is that you don’t need to have the quarter of a million bucks first, or choose to spend your own funds on the treatment.

Bypass operations and myriad other very expensive procedures, drugs and devices are also part of this problem.  Many chronic conditions have costs in the tens or even over a hundred thousand a year, yet your access to those treatments is not conditioned either by your lifestyle choices that led to the problem (or lack thereof) or your ability and willingness to personally spend the money.

The medical industry capitalizes on all of this and then adds both anti-trust exemptions and intentional forced cost-shifting onto the backs of those who can pay for those who can’t.  This is why the aspirin in the hospital costs $25 — you’re paying for Juanita the illegal immigrant who showed up last night in labor at 7-1/2 months, having drunk and drugged herself during pregnancy while receiving zero prenatal care, and pooped out a severely-underweight kid who’s now in the NICU and is in the process of running up a million dollar tab.  This happens every single day and it is why you can buy the same operation in India, performed by a US trained doctor with US medicines, devices, and operating room equipment with a hospital room that is equipped like a luxury suite in the Ritz-Carlton to recover in for 1/5th the cost of the same procedure here in the United States.

Then there’s defensive medicine.  You show up with a non-specific pain in the abdomen.  The doc checks what he can and rules out appendicitis (an immediate emergency) and a few other things.  Now there’s a problem — he has a list of a dozen things running around in his head that could be wrong with you.  There’s a 10% chance that one of the couple of really nasty ones (such as cancer) are involved but ruling them out will require $5,000 worth of tests.  The odds, however, are 90% that the problem is not serious and is something as simple as a mild case of food poisoning.  Who’s money and risk is involved in the decision as to whether or not to run those tests?  Today, the answer is that they get run every single time because if he doesn’t and you hit the bad dice roll you’ll sue (and win.) 

In short you’re not required to allocate the risk and cost on your own.

There’s no fix for Medicare and Medicaid, nor for the Federal budget, without resolving all of this.  And make no mistake folks, this will blow up and destroy not only the federal budget but privately-provided medical care as well within the next five years if we don’t stop it right now.

Here we go again….

Republican Rep. Paul Ryan plans to unveil a new Medicare proposal Thursday that would give future seniors the choice of purchasing private insurance coverage or staying in the traditional federal plan.

This will do exactly nothing.

Here’s the underlying problem that nobody is offering a legislative agenda to address: Medical spending in the Federal Budget has expanded at a compounded rate of 9% since 1980 and is projected to continue to do so.

The reason for this is that medical care generally in the private economy (e.g. health insurance premiums) is expanding in price at roughly that rate or better for the last 30 years as well, and as such so is the government side of it.

At present the government spends about $800 billion a year (up from ~$53 billion in 1980!) on medical care in all of its programs.  At 9% compounded rates of growth for the 50 year old by the time he reaches 85 (35 years from now) this spending is projected to increase to $16.3 trillion.

That obviously won’t happen — the entire federal budget is currently $3.8 trillion and the entire economy is $15 trillion.  If the economy grows at 3% annually every year for the next 35 years the economy will be $42 trillion in size; with the government being ~20% of the economy ($8.4 trillion) this would still leave medical care totaling twice the entire federal budget.

Again, that obviously won’t happen because you can’t spend more than 100% of something as a subset of that thing.

This has to be stopped — right here and now.

The expansion is being caused by the massive cost-shifts through all areas of the medical system.  As I detail in Leverage these cost-shifts are pervasive and outrageous — we effectively in America pay for the development of every advanced technology and treatment and subsidize government-run health care worldwide!  This is a very profitable model for pharmaceutical and device makers, not to mention all the other providers who look at the provision of these products as “cost plus” — the higher the price, the greater in dollars the “plus” percentage is.

There are too many points of debate to cover in one ticker on this; you can go back through my various points in this regard using the Archive function if you wish, or buy a copy of Leverage and read it for a more-succinct yet reasonably-complete treatment of the problem.

What we cannot do is continue to sit back and watch partisans like Ryan continue to lie through his teeth, along with the others in Congress on both the Left and Right.  If we do not get our arms around this portion of the Federal Budget in the immediate future it will lead to the destruction of the US Government and our way of life.

I know, I know, the market was up something like 800 DOW points this week, with two huge spikes – one probably on the back of a leak that Bernanke and pals were going to intervene, and the second (about 50 S&P handles) when they actually did.

Here’s the problem: Desperation is not a good reason to buy a market.  In fact, it’s a good reason to sell it.

And we were, my friends, talking about desperation here.

Anyone who thinks otherwise has rocks in their head.  And if you think what was done was a “bazooka” you’re dumber than a bag of hammers.  In point of fact the change in the swap rate did a gigantic effective nothing!

So why do it?  Confidence, basically.  No other reason.

Let’s not kid ourselves though.  The people who made the correct bet — that this was going to blow up in everyone’s face — got rammed last week.  That means their liquidity that they provided to the market is now gone, as it was lost to the handful of insiders who were told first before it happened, just like Paulson told his buddies that Fannie and Freddie were going to be destroyed.

So once again we have had liquidity taken out of the market by an attempt to lie, cheat and steal.  This is bad, not good, but if there was some fundamental change in the sustainability of the situation it might be worth it.

Unfortunately nothing at that level has changed.  And what needs to change is quite simple: Governments cannot continue to spend more than they take in via taxes.  That’s the beginning and end of it.

The discussion that must take place — here in the United States, in Europe, in Japan, everywhere — is the same.  Whatever services the people want they must pay for with current taxation.  Not taxes tomorrow (e.g. “Payroll tax cuts paid for over 10 years”) but right here, right now, in taxes, and that which the people refuse to pay for in current taxes government must not spend.

That is, these governments must not only stop deficit spending they must cut spending below parity with taxes because tax receipts are going to decline when the deficit spending stops and the artificial support ends!

I don’t think most people have any idea exactly how bad this really is.  In 2000 we could have cut the size of government by something like 10 or 15% and been ok.  In 2007 it was about 20%.

Today it is approximately half.

That’s bad.  Now let’s talk about what’s worse.

Federal “Health Care” spending for FY13 will be about $920 billion.  This on a cost-adjusted basis will likely go up about 10% annually.  Think it won’t?  Nice try: In FY 2012 the claim is $866 billion; the projection is for about a 7% increase.

Let’s use their projection – a 7% increase forward.

Now let’s run those numbers out 30 years.

Doing so puts health care spending at the federal level at $7 trillion in 2033.

Do you actually believe that anything approaching that can happen?

If so, you’re nuts.

By the way, if you think this is unrealistic in terms of the actual path we’re on let me point something out.  In 1980 the Federal Government spent $55.3 billion on health care.  That’s 33 years of time to FY2013 and an acceleration of cost to the Federal Government by a compounded annual rate of about 9% for every single year since 1980.

If you ignore the FY2012 and 2013 numbers and go off FY2010 it’s a bit worse — 30 years to get the same advancement works out to about 9.5%.

This is the point I made at Southerland and Miller’s Town Hall earlier this year: There is a more than 30 years history that says that this roughly 10% increase in cost is about what everyone is getting hit with and it is going to destroy the Federal Government unless we stop it right now.

Not 30 years from now, not 20 years from now, now.

That 50 year old person is not going to get his Medicare as promised. The government can’t provide it.

Why not?

Because when you’re half way to the maximum amount you can pay for something you have one doubling time left before you’re dead and at a 10% growth rate that’s 7 years.  We’re spending much more than half of what we can afford on health care at a federal level — we’re probably spending 75-90% of the maximum we can afford right here, right now, today. 

If we’re at 75% of what we can afford we have just three years before our government blows up.

And this, my friends, assumes that there are no external shocks such as, oh, Europe blowing up first.

Which it will.

We have to stop the insanity now.  Not in five years, not in ten, not 20 years down the road.  We cannot “bend the curve” on medical costs over a decade or more.

The mathematics control what can happen and what will happen if we do not act today — here and now.

For decades we were warned that when the Baby Boomers started to retire that this country would be facing a retirement crisis of unprecedented magnitude.  Well, that day has arrived ladies and gentlemen.  Back on January 1st, the Baby Boomers began to retire and more than 10,000 of them will be retiring every single day for years to come.  Most of them have not saved up nearly enough money for retirement.  At the same time, private sector pension plans are failing all over the place, hundreds of state and local government pension plans from coast to coast are woefully underfunded, and the Social Security system is on the road to complete and total disaster.  A massive wave of humanity is hitting retirement age at a moment in history when the U.S. economy is coming apart at the seams.  We do not have the resources to keep the promises that we made to the Baby Boomers, and most of them have not made adequate preparations for retirement.  What we have is a gigantic mess on our hands, and millions of Baby Boomers are going to find retirement to be very bitter and very painful.

A lot of younger Americans just assume that Social Security is enough to take care of the needs of elderly Americans.  But that is just not the case.

Have you ever tried to live solely on a Social Security check?

It is not easy.  The truth is that those checks are just not that large.

The following comes directly from the Social Security Administration….

The average monthly Social Security benefit for a retired worker was about $1,177 at the beginning of 2011.

Could you live on less than 300 dollars a week?

And keep in mind that the $1,177 monthly figure is just an average.  Many receive a lot less than that.

In addition, Social Security benefits have been seriously squeezed by inflation in recent years.  The cost of food and other basics has risen briskly and Social Security benefits have not.

Today, many elderly Americans have to make a choice between buying food, heating their homes or buying medicine that they need.  They simply do not have enough money to do all of them.

It would have been nice if all of the Baby Boomers had been busy saving money for retirement all these years, but that just did not happen.  In fact, the Baby Boomers as a group are trillions of dollars short of what they need for retirement.

So why doesn’t the U.S. government step in to help them out?

Well, the reality of the situation is that the U.S. government is flat broke.  The federal government is now over 15 trillion dollars in debt.  During the Obama administration so far, the U.S. government has accumulated more new debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

Lawmakers are already looking at ways to make the Social Security program less costly.  No, the federal government is not going to be riding to the rescue.

In fact, it will be a minor miracle if the Social Security program is able to survive until the end of this decade, and it will be a major miracle if the Social Security program is able to survive until 2030.

As for myself, I do not believe that I will ever see a single penny from Social Security, and many other working age Americans feel the same way.

Retirement is supposed to be a fun time, but sadly most Americans that are approaching retirement age are not going to have any “golden years” to look forward to.

Rather, millions of elderly Americans are going to find the years ahead absolutely agonizing as they struggle just to survive.

The following are 25 bitter and painful facts about the coming Baby Boomer retirement crisis that will blow your mind….

#1 According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#2 According to a recent poll conducted by Americans for Secure Retirement, 88 percent of all Americans are worried about “maintaining a comfortable standard of living in retirement”.  Last year, that figure was at 73 percent.

#3 A study conducted by Boston College’s Center for Retirement Research has found that American workers are $6.6 trillion short of what they need to retire comfortably.

#4 Today, one out of every six elderly Americans lives below the federal poverty line.

#5 On January 1st, 2011 the very first Baby Boomers started to retire.  For almost the next 20 years, more than 10,000 Baby Boomers will be retiring every single day.

#6 At the moment, only about 13 percent of all Americans are 65 years of age or older.  By 2030, that number will soar to 18 percent.

#7 Right now, there are somewhere around 40 million senior citizens.  By 2050 that number is projected to increase to 89 million.

#8 Back in 1991, half of all American workers planned to retire before they reached the age of 65.  Today, that number has declined to 23 percent.

#9 According to one recent survey, 74 percent of American workers expect to continue working once they are “retired”.

#10 According to a recent AARP survey of Baby Boomers, 40 percent of them plan to work “until they drop”.

#11 A poll conducted by CESI Debt Solutions found that 56 percent of American retirees still had outstanding debts when they retired.

#12 A study by a law professor at the University of Michigan found that Americans that are 55 years of age or older now account for 20 percent of all bankruptcies in the United States.  Back in 2001, they only accounted for 12 percent of all bankruptcies.

#13 Between 1991 and 2007 the number of Americans between the ages of 65 and 74 that filed for bankruptcy rose by a staggering 178 percent.

#14 What is causing most of these bankruptcies among the elderly?  The number one cause is medical bills.  According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States.  Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.

#15 Public retirement funds all over the United States are woefully underfunded.  For example, it has been reported that the $33.7 billion Illinois Teachers Retirement System is 61% underfunded and is on the verge of complete collapse.

#16 Most U.S. states have huge pension obligations which threaten to bankrupt them.  For example, pension consultant Girard Miller told California’s Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities.  When you break that down, it comes to $22,000 for every single working adult in the state of California.

#17 Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management have calculated the combined pension liability for all 50 U.S. states.  What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds.  That is a difference of 3.2 trillion dollars.  So where in the world is all of that extra money going to come from?

#18 According to the Congressional Budget Office, the Social Security system paid out more in benefits than it received in payroll taxes in 2010.  That was not supposed to happen until at least 2016.  Sadly, in the years ahead these “Social Security deficits” are scheduled to become absolutely nightmarish as hordes of Baby Boomers retire.

#19 In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers.  According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.

#20 The U.S. government now says that the Medicare trust fund will run out five years faster than they were projecting just last year.

#21 The total cost of just three federal government programs – the Department of Defense, Social Security and Medicare – exceeded the total amount of taxes brought in during fiscal 2010 by 10 billion dollars.  In the years ahead expenses related to Social Security and Medicare are projected to skyrocket dramatically.

#22 The Pension Benefit Guaranty Corporation is the agency of the federal government that pays monthly retirement benefits to hundreds of thousands of retirees that were covered under defined benefit pension plans that failed.  The retirement crisis has barely even begun and the PBGC is already dead broke.  The PBGC says that it ran a deficit of $26 billion during the fiscal year that just ended and that it will probably need a huge bailout from the federal government.

#23 According to a survey by careerbuilder.com, 36 percent of all Americans say that they don’t contribute anything at all to retirement savings.

#24 More than 30 percent of all investors in the United States that are currently in their sixties have more than 80 percent of their 401k plans invested in equities.  So what is going to happen to them if the stock market crashes?

#25 A survey taken earlier this year found that 20 percent of all U.S. workers admitted that they had postponed their planned retirement age at least once during the last 12 months.  Back in 2008, that number was only at 14 percent.

Our politicians should have addressed the retirement crisis decades ago before we got to the point of being in debt up to our eyeballs.

It is being projected that the U.S. national debt will hit 344% of GDP by the year 2050, and the Congressional Budget Office says that U.S. government debt held by the public will reach a staggering 716% of GDP by the year 2080.

Obviously those figures will never be reached because our financial system would totally collapse long before then.

So what do we do?

We have tens of millions of elderly Americans that are completely and totally dependent on Social Security and Medicare, but those programs also threaten to bankrupt us as a nation.

Anyone that believes that there is a “quick fix” to these issues is being naive.

The “supercommittee” was supposed to address this problem, but they failed so spectacularly that they have become a national joke.

Sadly, most of our politicians just keep kicking the can down the road.  They hope that somehow things will just magically “work out”.

Well, the truth is that things are not going to “work out”.  The poverty level among the elderly is going to continue to increase.  Pension plans all over this nation are going to continue to fail in staggering numbers.  Social Security and Medicare are going to bleed more red ink with each passing year.

Something should have been done about this problem a long, long time ago.

But it wasn’t.

This crisis was ignored, dealing with it was put off time after time and all the doomsayers were laughed at.

Now the crisis is here, and we are all going to pay the price.

The Economic Collapse

Some day people will demand that commentary have some sort of intelligent basis behind it.

Yet, the current system is falling apart. Medicaid, which funds almost half of all paid long-term care, is under immense financial pressure. Few Americans have saved for their long- term-care needs in old age — half of retirees have less than $55,000 in financial assets, barely enough to pay for nine months in a nursing home, or two years of limited daily help from a home health aide. And hardly anyone buys private long- term-care insurance — only 7 million Americans own policies.

Despite the death of CLASS, the challenge of long-term care financing is not going away. So, how can we fix a badly broken system?

The best way is probably through universal long-term care insurance. Every major developed country on the planet — except for the U.S. and the U.K. — has already gone this route. Here, insurance could be offered by the government, or by private carriers in a regulated national marketplace (much like the Medicare Part D drug benefit or Medicare Advantage managed-care plans).

Utter nonsense.  Here we are with another “plan” to simply play ponzi for a few more years.

Health care has expanded in cost at an average of 7.9% from 1990 through 2010 for individual “coverage.”  Family coverage has expanded at 8.2%.

This is what you’re trying to “provide”, assuming the “young person” buys at age 25 and continues through age 65, a period of 40 years.  We will assume that the care today costs $4,000/month, which is well under the average actual cost, or $48,000/year.  In short I’m being “polite” about the numbers, giving you the maximum benefit of the doubt.

To Bloomberg: Would you please stop publishing utter and complete crap under the rubric of “opinion”, when said “opinion” is an argument for that which is mathematically impossible?

Alternatively you can explain how we’re going to pay (through any mechanism) $931,274 annually for each insured person 40 years hence to cover this “long-term care.”

The claims of “solutions” that are in fact the incessant selling of Ponzi Schemes must end right now.

Further, any government or private party setting up, maintaining or promoting such a scheme must face immediate prosecution as Ponzi schemes are illegal under existing law.

America, you’re being destroyed from within.  And you don’t even know it.  If you want to know why you lost your job, you better pay attention to what OUR government is doing to you…but not just to the poor American who is now unemployed, you Americans working are FUNDING the literal destruction of your fellow Americans’ jobs.  If you’re paying Medicare taxes (and all of us who are working are doing that), then you are directly kicking a fellow American out of his job.  How the hell can this be?  Well…..

Medicare and Medicaid money have been used to outsource American jobs, and US workers say they were fired and discriminated against by a healthcare insurance company funded solely by federal funds, according to a suit filed in Los Angeles Superior Court.

 By way of Molina, several billion of UStaxpayer’s dollars have gone directly to India without any benefit to theAmerican company or the US taxpayer,” the suit states.

The suit, filed on behalf of more than 50 employees, alleges Molina Healthcare Inc. used federal money, defrauded the federal government, failed to pay overtime, discriminated, terminated and violated numerous federal and state labor codes. Molina collected over $9 billion in federal funds in the last three years, the suit states.

‘Since 2006, Molina has spent a large portion of the taxpayer’s money to fire American workers and to hire an abundance of workers brought in from India.

The suit further claims:

… in or around 2007 and 2008, Molina terminated approximately 100 American workers in various states to make room for 100 laborers from India to handle all Molina’s US business operations involving Medicare and Medicaid claims … Molina then billed the US government for the cost it incurred by importing workers from India.

The suit, filed in Los Angeles Superior, alleges Molina used a H1-B visas to bring the workers into the US. “This case is not about illegal or undocumented workers,” the suit states.

To bring in workers from India, the suit alleges Molina used a Cognizant Technology Solutions, a California-based recruiting company, and further claims Cognizant “had to provide false statements to the federal government because Cognizant had to certify there were ‘no qualified United States citizens.” On Jan. 13, 2010, the US Dept. of Labor approved Cognizant’s application for 40 H1-B visa holders from India to work for Molina, in the middle of a recession when many American workers were seeking jobs.

Cognizant imports H1-B employees almost exclusively for India and leases said employees to United States employers … Cognizant has received billions of dollars through it’s business practices … and has displaced millions of of competent US workers from their jobs.

“The recession in the United States made it a virtual certainty that there were US workers available,” the claim states.  They were hired at $50,000 a year without benefits. To file the federal government claim, Cognizant certified that it searched and could find no qualified American applicants (or green card holders) to fill job openings for programmers and security analysts for the same pay.

On Jan. 14, the day after the application was approved by the Labor Department, Molina fired 40 workers – programmers, managers and security analysts, the suit states. Most fired employees earned between $75,000 and $100,000 a year with benefits. Employees listed in the lawsuit also claim the Indian managers allowed the celebration of India’s holidays, but not US holidays and ‘actively discouraged US workers from celebrating US holidays and traditions,” such as Fourth of July, Thanksgiving and Christmas, by assigning mandatory work that required working holidays.

The suit seeks unspecified damages against Cognizant, Molina and several Indian managers.

Your government is intentionally destroying American jobs to enrich certain preferential corporations and using taxpayer money to do so.  Are you beginning to understand WHO the criminals are?  And just to be clear, the politicians involved are both Republican and Democrat.

Wade Booth-Corona – FedUpUSA

Discussion (registration required to post)