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March 27, 2017

“No, you cannot have it”

This is an iron law of economics. All goods and services are rationed. This is true for health care too. There are no exceptions to this law. Thus, the First Truth of Health Care: No health care plan or system can ever be taken seriously unless it addresses, up front, how it will say “No, you cannot have it” to people who want it. At some point, someone has to tell the patient they cannot have whatever it is they want or need. The Truth About Health Care

Posted by gerardvanderleun at March 27, 2017 8:14 AM. This is an entry on the sideblog of American Digest: Check it out.

Your Say

Karl Denninger says:

Friday afternoon the Republicans "pulled" the AHCA without a vote.

This is the common way that the party in power makes sure you never get a recorded answer these days as to who opposes and who supports some piece of legislation: If there is no majority to pass it, they never vote at all.

If you think about it for a bit you'll realize that's the exact antithesis of representative government. Representative government not only "works" when it passes something it works when it fails to pass something too, and the list of elected officials who did and did not support something that fails to pass is just as important and maybe more-so than those who supported (or not) passed legislation.

But, now you simply have claims -- not votes. And remember folks, claims are not votes; if they had been (according to the polls) we'd have President Hillary right now.

Now let's talk about health care and "health insurance."

Let us remember that insurance is simply a math problem. That is, insurance is always and everywhere simply the expression of the formula [sum(p * c) + cost(operation of insurance company]

p = probability of having to pay a claim on a specific event
c = cost of the event

And of course "sum" is the sum of all the "p * c" components that exist for all the things you bought the insurance against.

Given this fact I will now demolish a number of lies that you've been told.

Health insurance should cover routine and expected events. Nonsense. If p = 1.0 then it is always cheaper to simply pay cash because [cost(operation of the insurance company)] is never zero. For something where p = 1.0 for all, or nearly all of the population you should never buy insurance for same since p * c = c! Again, just in case you missed it: Putting such an expense through an insurance company will never cost less money; it is always cheaper to pay cash. The only reason to force such expected and certain events through any third party is to hide the cost from you and remove competitive pressure so that someone can jack up the price or collude with others to do so on a grand scale (which is illegal under 100+ year old law in 15 USC, by the way) and steal your money. Period.

Obamacare is so expensive because men -- and women who have gone through menopause -- have to buy insurance that includes maternity care. There are dozens of variations of this claim run by politicians and "policy wonks" on the TeeVee; they simply change the condition and population to suit their audience. It's maternity when they're talking to men and senior women, it's prostate cancer when in a room full of 20 year old women, it's IVF or abortion when talking to a bunch of evangelicals. This is a lie because "p" for such an event for such a person being spoken to at the time is (obviously) zero.

Zero times anything is zero.

So what is the purpose of requiring such "mandatory benefits"? Simple: It reduces "p" over the entire population of people with policies. But since the total of those "p * c" computations is the sum of all of them for each individual the purpose of such mandates is to force you to pay for someone else's treatment for a condition you cannot possibly suffer.

To put it more simply: It's theft from those who can't have that condition occur and it's intentional obfuscation of the cost of said insurance for those who can. In short it's a lie told to the entire population; the exact substance of the lie depends on whether you're in the "can happen" or "can't happen" group but in each and every case whenever someone is forced to buy a policy that covers an event that cannot occur both the can and cannot groups are being lied to and one of them is being robbed.

This lie is intended to and acts to shut down any discussion of the real problem: Why is "c" so damned high?

Obamacare is so expensive because the "high risk" people are in the same pool as everyone else; the AHCA would "fix this" by putting back in place High Risk Pools and insurance costs would drop substantially for health people. True, as far as it goes. But there's a problem: The ACA, or Obamacare if you prefer, was written and passed because those High Risk Pools were collapsing! They were collapsing because by definition everyone in them had "p = 1.0" for something; they had cancer, diabetes, HIV or some other serious and usually-chronic condition that had already happened.

When you get down to it for someone with a p=1.0 problem the cheapest way for them to be treated for that condition is to pay cash for it. The more hands the money goes through the more you spend in total. This is obvious to anyone who thinks about it for more than 20 or 30 seconds because nobody works for free. If you put the money through an insurance company with thousands of employees and big buildings all over the place then the total cost of such care goes up because the insurance company has to pay all of its employees and make a profit (no matter how tiny) or it is no longer in business! It would be far cheaper to simply stroke a check from Treasury instead of going through all sorts of convoluted arm-waving and cost-shifting such as Obamacare "subsidies" and insurance company mandates.

Here's the problem with simply stroking the check: As soon as you get rid of all the layers of obfuscation the cost is immediately exposed to everyone. I've already mentioned the lie told to both the people with the (possible) condition and not above when it comes to cost, so I'll focus here on a second lie: Let me remind you that right now the Treasury of the United States (that's everyone in the country, since we're all allegedly responsible for the debt and deficits accrued) spends $350-400 billion a year between Medicare and Medicaid on health services for people with just one condition: Diabetes. We can reduce that to nearly zero (that is, cut Medicare + Medicaid expense by roughly 25% instantly) by refusing to pay anything from public funds for those people who refuse to undertake a lifestyle change in the form of what they eat that has a proved track record of reducing the need for drugs to treat the far more-common form of that condition (Type II) to near-zero and at the same time dramatically reduces all of the complications (blindness, amputations, kidney disease and dialysis, etc) as well for both forms of the disease. In fact for most Type II diabetics making this change eliminates the condition entirely. Note that I did not say "cure" because if you go back to what you were doing you'll almost-certainly see the condition (poor blood sugar control) immediately come back -- but eliminating the condition eliminates all of the cost to the health system.

Remember, as I pointed out up above, that a big part of why Obamacare was written and passed was that the "High Risk Pools" were expanding in cost at an explosive rate. The states did not have the money to continue funding them and many people with some of these conditions were dying before they could get into the pools and thus access treatment due to delays in enrollment driven by lack of funds. So the lie here was twofold: Political debate on the cost of such treatments was refused as it was for everyone else up above and at the same time the fact that many of these conditions are not only due to voluntary action (e.g. IV drug abuse, unprotected anal sex or eating things once overweight that are known to exacerbate these conditions) in some cases, specifically those related to diabetes, the condition and its medical costs will disappear if the person in question changes what they eat -- in other words, they make a lifestyle change. In other words not only are we all having our money taken to pay for the voluntary decisions of others who "made a big mistake" (which is perhaps defensible on the grounds of compassion) we are also having our money stolen to pay for the ongoing voluntarily decisions of others who refuse to change and, if they did change, would see the condition and thus its cost disappear entirely. That is not compassion, it's pig-headed theft.

In short in order to prevent discussion of both the cost of said treatments and the role that voluntary actions of the sufferers, both causative and continuing have on the expenditure of funds politicians drove the spending through "health insurance" firms and thus made it even more expensive simply due to the middle man being present.

If there was little or nothing we could do about cost then we might all be able to stop here and, at least, take the insurance company costs out of the picture for those with p = 1.0 for some medical problem. But that's simply not true, which is why the larger lie, and the one that I listed first, is run on everyone instead of simply focusing on those with already-existing medical problems.

Why would you need health insurance if the following pricing was commonplace for the following routine medical things -- and remember to extend these representative samples to everything else in the medical field:

MRI: $275
CT scan: $167
X-Ray: $37
Mammogram: $142
Ultrasound (pregnancy-related primarily, I suspect): $94
A1c test (common for diabetics): $4
CBC (complete blood count; common for a lot of diagnostics): $3.13
Metabolic panel (common diagnostic as well): $3.50
PSA screening (common for men over 50): $7
3-Panel cholesterol (the cheap and common one): $3.94
Tetanus booster: $20
90 Prozacs: $1.98
30 Prilosecs: $1.44
30 Plavix (blood thinner; newer generation of Warfarin): $2.76
90 Zocors (which I'd argue you probably ought not take at all!): $2.16
These are not fantasy prices -- they're real. They're what you could have today, or darn close to them if we had a conversation about competitive markets in medicine. I didn't pull these numbers out of my ass; they're on a "concierge" site for a "direct care" practice in Michigan and none of them are being provided at a loss.

Think about what you spend on "health insurance" today; whether you pay for it directly or you "get it" through employment. If you get it through your job then every penny of what your employer spends is money you could instead have in salary. Multiply the monthly amount your employer spends on health insurance for you by 12 and that's money you should receive in cash but don't because it's stolen and given to an industry that then charges you five to ten times the above through the so-called "insurance." In fact for most medications your co-pay is larger, often by ten times, the above prices!

Would you rather pay a $10 or $20 co-pay for that Plavix prescription or would you rather pay $2.76 cash?

If the answer is "cash" then can you please explain why you would then pay for said "coverage" at all?

So why are these medical procedures, drugs and similar so expensive now for most people? Why are you basically extorted into buying "insurance" either through your employer or directly? Why is now the law to run these charges through a company that has to make a profit and thus is guaranteed to drive up cost?

Simple: It prevents us from all having the two political discussions up above -- why are we being ripped off to the tune of 1,000%, that is 10x what we we ought to be paying for virtually everything health-care related and why should we pay anything for someone else's decision to continue a lifestyle choice that results in the expenditure of hundreds of thousands of dollars after they get the condition when they can change that lifestyle choice and eliminate not only the condition but nearly all of its expense?

We know that the pricing above, or similar to it, can exist for everyone in the United States right now. We know this because it does exist in the United States, right now.

We also know that health insurance companies and providers of health-related products and services are not immune from Anti-Trust law (15 USC Chapter 1.) We know this because that case went to the US Supreme Court in 1979 and the insurers and those conspiring with them lost. Specifically, it was ruled that "volume pricing" arrangements and similar were not "the business of insurance" and thus not entitled to protection from anti-trust enforcement under McCarran-Ferguson. We therefore know factually that the failure to bring said cases at the State and Federal levels from 1979 to today has been a political decision, not a matter of "not having" laws that could be applied. In other words both State and Federal law enforcement and the executive branches of government in both places have intentionally refused to enforce the law and by doing so have become willing partners in you being robbed out of $9 of $10, approximately, spent on health care.

We know that if the cost of health care came down by 90% almost everyone could and would simply pay cash for all routine expenses. Having a baby. Vaccinations. Annual checkups. An MRI for a sports injury. A CT scan for something serious that's suspected in your chest or head.

We know that if the cost of health care came down by 90% true insurance for serious catastrophes like cancer, a serious injury or a heart attack would cost pennies compared to what it costs today. If the cost of cancer treatment was $10,000 instead of $100,000+, and it would be if we locked up the monopolists that refused to stop playing their game of obfuscation and cost-shifting the cost of such insurance would be a fraction of what you spend today to insure your $10,000 automobile! After all, it's more-likely in a given year that you'll wreck your car than get cancer!

We also know that there would be circumstances under which costs would remain very high; "orphan" conditions are the prime example, simply because the number of sufferers is low and thus spreading the development cost of treatments becomes problematic. A condition that has 10,000 sufferers in the United States at any given time, for example, has a risk (probability) of 0.003% across the population. If the cost of treating that condition is $500,000 (because it costs billions to develop the drug and there are only 10,000 customers for it) then for $15 (plus a profit for the insurance company) you could buy insurance against that condition for life. Would you buy such "rare disease" insurance if, say, the "blended" cost was about $50/year to cover all such conditions? Some people would not, but if we had the political discussion on this point and decided that the choices were "buy the insurance personally, pay cash if it happens to you without it or suffer the consequences including your death for which there will be zero funds spent other than through private, consensual charity" would that not be a better system than we have today? It sure as hell would be a cheaper one and nearly everyone would fork up the $50! Hell, make that $50 something that is akin to the "Presidential Election Fund" checkbox on your 1040 except that it's an opt-out rather than an opt-in if you'd like; $50 for single or HOH, $100 for married and an additional $50 for each dependent. I'm ok with the mildly-coercive nature of that, considering the potential consequence of choosing "no."

We can surmise that the reason for the above political refusal to have this discussion is due to both lobbying and the fact that should the law be enforced Health Care would drop from its present ~19% of GDP to 3% (it's historical figure prior to the monopolists pulling this crap starting in the 1970s and 80s) almost immediately. That would be a rough reduction of 15% in GDP which, I remind you, exceeds the 10% drop that economists call "a Depression." It would not last long because all of the money currently spent through this scam that no longer was would be freed up to produce other goods and services in the economy and the impact on reduction of cost for businesses would be immediate and immense. Further, the salary increases that would result from the embedded "health insurance" expense in an employee being removed (allowing it to be paid directly to you) would lead to a huge increase in consumer consumption in other areas. But make no mistake -- there would be losers: Lobbyists, overpriced or overstaffed administrators in health care and similar, and during the adjustment period GDP would indeed fall before rebounding. Find the politician that is willing to accept this without being forced -- good luck.

Finally, let me remind you that these are not particularly-new ideas. I've been talking about them since the 1990s when I was the CEO of MCSNet. I've been writing on them since The Market Ticker began publication. There are two simple legislative agenda items here and here (note the dates of publication), never mind the entire section in Leverage, that would immediately address virtually all of the above.

I have had a standing offer out to several current House Leadership members since 2011 and to several Senate staffers since not long after to come to DC at my expense to testify before an open committee hearing on the math in this regard and resolution of these issues.

There have been no takers in the last six years.

Among political commentators on "the right" the following have also refused to take this on:

Mark Levin
Glenn Beck
Michael Savage
Bill OReilly
Michelle Malkin
Laura Ingraham
Neal Boortz
Ann Coulter
Tucker Carlson
Judge Napolitano (despite the obvious nexus to law in 15 USC)
Judge Jeanine (despite the obvious nexus to law in 15 USC)
Oh, and this is not a complete list; it's just a list of people who, off the top of my head, have said zero despite, in many cases, my direct prodding. I will note that among the left there have no takers either; I simply don't have anywhere near as complete a list of them (there are far more left-leaning political commentators than right-leaning!)

So folks, when you get down to it, it's up to you.

You can look at the AHCA being pulled as "just another thing" and decide to ignore it.

You can try to ignore this too if you want, but it's truly stupid to do so:

That's from the US Treasury's own published MTS taken from September of each year (close of the US Government fiscal year) back to 1998. It is instructive to note that the blue line is an exponential series, and is expanding at about 8-9% a year, far beyond any rational projection for economic growth. It is also instructive to note that it is a mathematical fact that any two exponential expansion curves, where one is growing faster than the other, will eventually cause the destruction of the slower-growing one if the faster relies on the slower to pay for it. That's arithmetic and was the reason that I projected in the 1990s that this trend would bankrupt the United States.

Finally, it is worth noting that Obamacare, for all of its disruption and 2,000+ pages of obfuscation and horsecrap, managed to produce exactly one year of lower Medicare and Medicaid expenditures after which the former trend resumed almost-entirely unchanged. For those who claim it's all about people getting "older" that is the final lie I would like to demolish; the trend from FY 1998 to 2016 excluding the one-year decrease was 8.35% (all-in) and 8.64% (Medicaid), respectively. That is, Medicaid (poor people) spending expanded at a slightly-faster rate than Medicare (old people).

We either act on all of this as a nation now or it destroys the economy, it destroys the markets and it destroys both state and federal budgets.

My offer to both government and political commentators whether in the list above or not and irrespective of their political bent remains open: I will be happy to appear by voice, by video or in person to debate and discuss the facts in this regard.

If there's anyone willing to take it on, that is.

From here: https://market-ticker.org/akcs-www?post=231941

Posted by: ghostsniper at March 27, 2017 2:31 PM

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