Here are the facts. Medicare is a critical program that helps people age 65 or older achieve health security. But it’s headed for a painful collapse. Independent experts and leaders in both parties agree that if we do nothing, Medicare will exhaust its trust fund in nine years, putting enormous pressure on the federal budget as health-care costs continue to rise. Unless we act, we’re moving toward a debt-fueled economic crisis, harsh cuts that affect today’s seniors and enormous tax increases that diminish the dreams of the next generation.

We can save Medicare, but we have to reform it so that it delivers the high quality we expect, at a price we can afford.

Medicare is one of the worst examples of forced cost-shifting at the point of a gun.  It creates monstrous distortions in the delivery of health care and, when coupled with a legal environment that permits behavior illegal in other fields (anti-trust exemptions, demands to provide service to those who cannot pay, including those who can’t pay by choice and explicit legal support for price-fixing across international boundaries) we have created a “free money spigot” that has cranked up the cost of health care at multiples of the general inflation rate while failing to materially improve the quality of care.

But compound functions like this cannot go on forever.  The solution is not “vouchers”, which simply shift the cost yet again, this time onto the back of seniors instead of the population generally.  Nor can we realistically exempt anyone 55 and older – the bulk of the boomers are in the bracket from 55-65, and they will enter the system over the next ten years.

We must fix the structure of health care in the United States. 

But neither the left or right is interested in doing this.  Fixing the structure of health care means telling the medical industry to stick it.  It means repealing EMTALA and forcing level pricing and billing for everyone, forbidding medical providers from forcing you to pay for Juanita’s illegal entry to the United States which she did for the explicit purpose of obtaining “free” medical care when she gave birth.  It means telling the pharmaceutical and device firms that if they are going to sell drugs in other first-world nations like Canada for $2/pill they cannot price-fix here, and that if someone buys those drugs in another nation and re-imports them, that’s perfectly legal.  It means having the conversation with the American public we needed to have two decades ago, explaining that Grandma cannot have two new hips and Grandpa a quadruple-bypass – we simply don’t have the money to provide one hundred million of those over a space of 20 years, and that’s what the current system is demanding we provide. 

It requires that we have an honest discussion about not only personal responsibility, but also a full and robust scientific review of what we’re telling people about diet and exercise.  Does everyone need that 30 minutes of moderate exercise at least three times a week?  Yes.  But is the “food pyramid” as currently constructed and promoted valid?  That’s a better question, especially in the world of engineered “foods” such as high-fructose corn syrup and other high-glycemic-index processed foods that do nothing about satisfying hunger but do plenty to fatten both waistlines and “food” company balance sheets.

Never mind the other problem we have with the medical industry – being sick is big business.  Especially if you’re “chronically” sick but the industry can give you a nice pill and make it all better.  For a while, anyway.  We have a diabetes epidemic in the United States but much of it is self-inflicted.  It’s easier to demand a $300/month prescription for some wonder drug (even with its risks and side effects) than to buy a $100 pair of running shoes and get off your ass, even though a huge percentage of Type II diabetics are 50lbs or more overweight and if they lose the weight their blood sugar will either come back into balance or they will be able to control it with older, generic medications that cost pennies.  What is our social responsibility as a nation to provide?  The running shoes, the $300/month pill, or nothing, since the solution is as close as the suffers’ pie hole?

None of this is easy and it sure as hell is tougher than simply running the common demagogue positions on the left and right.  The right wants to throw Granny down the stairs.  The left wants socialized medicine.  

The truth is that if we don’t cut the crap we’re going to wind up both ridiculously ill and broke.  Our nation cannot continue on the path we’re on.  We cannot “get our health care costs under control” while maintaining the system for health care as it exists now in the United States.

There’s no way to solve the cost escalation problem, with near-double-digit increases every year in actual cost, without shutting off the cost-shifting and changing the paradigm on how health care works in the United States.  EMTALA may have been well-intentioned but it has become of the biggest drivers in the escalation of hospital costs, rendering nearly anyone, even those who are insured, subject to instant financial ruin should they have a medical emergency.

The common tonics dispensed by the left and right sound good but they’re both wrong and time is running out to do the right thing.

Ryan’s plan isn’t it.

The Market-Ticker

This is a repost from the May 4 edition of MIRS News, with their permission. MIRS is a subscription-only service read by state capitol insiders. For more information or subscription inquiries, see www.MIRSnews.com.

By Jack Spencer (MIRS)

Where has the grassroots groundswell for budget cutting gone?

Six months after the 2010 elections, in which the conservative Tea Party movement played a heavy role, Michigan’s Republicans are having trouble mustering votes to make a 3.5 percent cut to the K-12 budget. The cuts would bring Michigan’s per-pupil spending rank drop from about 18th to 22nd nationally. It will fall about 26th to 30th when adjusted for regional costs.

Democrats and school districts have been very active in pressing their side of the issue in the news media and by contacting lawmakers directly. By contrast, the general sense has been that lawmakers are getting very little input on the issue from the kinds of grassroots conservatives that were so active last year.

Instead, lawmakers are getting deluged with phone calls, e-mails and letters from their local superintendents, school officials, teachers and parents, which has resulted in lawmakers backing away from the Governor’s proposed $470-per-pupil spending cut.

“In regard to activity, I suspect we have been very spotty on that issue,” Gene CLEM of the Southwest Michigan Tea Party Patriots. “We’ve kind of split off with some of our people focused on what’s been happening at the federal level. The most involved we’ve gotten in terms of the state budget was back when it was announced. There was a lot of attention on the pension issue and tax reform, but on the school budget issue . . . not really very much.”

Leon DROLET, director of the Taxpayers Alliance (MTA), told MIRS that issues like the state’s K-12 budget aren’t the kind that would generally attract Tea Party type conservatives.

“First, I’d say that most of them don’t know what’s going on with the School Aid budget unless they subscribe to MIRS or other publications that would give them that kind of inside scoop,” Drolet said. “I think most of the Tea Party folks and other fiscal conservatives at the local level would be more likely to focus on what Rick SNYDER proposes in terms of the overall budget and taxes instead of what’s going on with individual portions of the budget. I doubt very much that they would even know what Michigan’s per pupil spending level is.”

“They’re very aware of the concept of the national debt,” Drolet continued. “They’re aware of the concept of bringing the public sector in line with the private sector. I have little doubt that they’d tend to be four-square behind the cuts. But they’re not likely to know much about what’s going on with a specific year’s budget. They’d be more likely to find that out when they were getting ready to vote in next year’s primaries.”

Former lawmaker Jack HOOGENDYK of the Center Right Coalition of Michigan said he believes those commonly referred to as Tea Party conservatives aren’t very aware of education spending issues.

“They’re very aware of government spending, but not so much yet in connection with the realm of education,” Hoogendyk said. “I think to some extent it goes back to an old idea that, ‘Yet, we need to make schools more fiscally responsible and efficient, but my district is great.’”

Hoogendyk is currently working to get Right to Work legislation introduced in the Legislature (Se related story). MIRS asked him if it was reasonable to believe the state Legislature would pass a Right to Work measure, if it couldn’t even support the Governor’s K-12 cuts.

“I think it is,” Hoogendyk said. “Grassroots conservatives just aren’t that aware of budget specifics. They’d be far more likely to contact their Senators and Representatives on something like Right to Work.”

Inside Michigan Politics Editor Bill BALLENGER said it does not surprise him to hear that Tea Party activists have been less than active regarding the K-12 funding debate.

“You’ve got to remember, the driving force behind the Tea Party movement was deficit spending,” Ballenger said. “On the state level, we are required to balance the budget. That difference alone accounts for a lot. What actually happened in 2010 was that Republicans in Michigan won because their elections were nationalized. The Tea Party people were never much involved with state and local issues.”

Michigan Capitol Confidential

************************************

And, on a related note regarding RTW, this from the Michigan View/Detroit News:

The government can hit the limit and avoid a first-ever default because that can only occur if payments to bondholders are actually missed. And those obligations, the Republicans say, can be met with the tax revenue that will continue to pour into the Treasury, regardless of whether Congress raises the borrowing cap. All of the government’s other bills — including those for defense contracting work, office supplies and highway maintenance, and to cover federal employees’ paychecks — are secondary, they contend, and can be delayed or cut without panicking financial markets.

Ding ding ding ding ding ding

Winner winner chicken dinner!

Oh my.  For the first time I’ve seen the truth in a mainstream publication on this issue.

Brian Faler (the author), I owe you a drink.  Next time I’m in DC I’m looking you up.  You printed what nobody else would up until now.  THE TRUTH.

A growing number of Republicans are scoffing at warnings that failing to raise the U.S. debt limit would trigger a financial catastrophe. Treasury Secretary Timothy Geithner’s cautions are merely aimed at stampeding Republicans into lifting the $14.3 trillion limit, said Toomey.

That’s right.

Now listen up “Conservatives” and “Tea Partiers”: You just saw the truth in a mainstream media publication.  This means it’s no longer a “secret.”

Now tell the rest of the truth: Cutting deficit spending will decrease GDP.  It cannot be avoided.  We might like to, but we can’t.  We must accept the penalty that the frauds and scams of the last thirty years have put before us. 

We can, and will, survive doing that.  But we must do it, and we must do it now, because the longer we wait the worse the damage will be.

NO MORE DEFICIT SPENDING – PERIOD.

The Market-Ticker

The FSA (Free #$#t Army) on both the left and right have pretty-much guaranteed the outcome at this point in time, absent someone in Washington DC standing up and putting a stop to the destruction.

The problem with “the outcome” is that it is going to destroy the FSA folks – the brunt of this damage is going to go directly up the chute of the lower income American.  Those in the middle class or below, especially those over 50 including retirees, are finished unless the idiocy stops here and now.

That’s the dollar and assuming it closes here or below it will have decisively taken out of the 2009 lows. 

Below here lies just one more level – the last one.  The all-time lows from 2008, just before it all went to hell in the markets.

They knew what was coming in 2008 and decided to pull liquidity.  I’ve documented that; it was visible in the overnight liquidity markets and the NY Fed’s own published data.

Bernanke is now boxed in and so is Congress and Obama.  If they do not pull system liquidity back and force the dollar higher commodities will continue to ramp.  You saw what happened to gasoline last time in 2008, right?  It’s happening again:

The problem with fuel doing this is that oil is in everything.  It’s in food, it’s in plastics, it’s in everything you buy and use.  Tires, car dashboards, packaging and of course transport.  It’s an unavoidable cost and is insanely regressive, hurting the poor and working middle class the most.

Or how about corn?  You don’t need to eat, do you?

In 2007 and early 2008 I counseled forcing the banks to eat their cooking, even if it destroyed them.  That would have both permanently stopped the ramp and at the same time cleared the debt.  This was deemed politically impossible and so instead we did bailouts.  The stock market fell apart but found its footing when the Congress gave permission to the banks to lie about asset valuations via getting rid of mark-to-market accounting.

But we didn’t solve anything.  Instead, we shifted that credit guarantee to the United States government and away from the banks themselves.  The damage was given to all of us in the form of roughly $4 trillion in additional debt over the last three years – debt that we will now have to either pay off or default upon.  What’s worse is that the $4 trillion didn’t actually buy toxic assets or remove them – instead it papered over the damage by handing out “free money’ to people but the rotting dead fish in the form of those assets remains on the books.

So now we furiously continue to spend more than we make at the government level, since the Federal Government is the only entity left that can do so; everyone else’s credit has been cut off since they can’t pay.  The consumer has stopped being stupid, except for our youth who are being goaded into student loans they will never be able to pay back. 

S&P has correctly come to the conclusion that if we don’t stop this right now – with full implementation before 2013 – we will not be able to pay at all.  We will reach the tipping point, in their calculations, where interest is paid upon interest and the total debt grows even if you stop the deficit spending before that time.

Plans to stop in 30 or 40 years are not credible.  That’s what S&P said, if you read their release.  They also noted that both student loans and the Fannie and Freddie hidden liabilities remain in the system and remain toxic.  S&P hit on exactly the points I’ve been making now in The Ticker for four years.

So what are we to do?  We sit in the same place we sat in the early part of 2008.  Having come off a crazy market rally in 2007, we had a nasty drop.  Then, we saw a huge rally and people, including Bernanke, said it was all going to be ok.

Was it?

Where is The Fed going to get its bullets from this time?  Where’s the government going to find more ways to spend even more money?  Sure, they can “print” or “borrow” (really QE) more, but doing so simply drives down the dollar further and starves all the people under the median household income, which incidentally is about half the population.

We’re not headed for Greece folks – we’re headed for Egypt.

Enjoy the “rally” today, such as it is and for however long it lasts.  The entire move today is simple currency devaluation and is the expected outcome.  But while you’re trading in and out and making money on the ramp, consider this: How much is a burned-to-the-ground company’s headquarters – or government - worth?

If you think it can’t happen here, you’re wrong.  It not only can, it has in the past – and if we don’t cut the crap pretty much right now, it will again.

The Market-Ticker