USA, Inc. (Businessweek article)

[xu2006]

I saw this in Businessweek this week, and thought it might spark some conversation on the board. The actual text of the article starts on the second page (if you get bored with the background).

http://www.businessweek.com/magazine/content/11_10/b4218000828880.htm


By our rough estimate, USA Inc. has a net worth of negative $44 trillion. That comes to $143,000 per capita. Negative.


Medicare and Medicaid are the crushers for USA Inc. Excluding them and one-time charges, the "core business" shows a median net profit margin of 4 percent over the past 15 years. USA Inc.'s core operations were in surplus nine of those years.


If current trends continue, the CBO says, entitlement spending and net interest payments combined will equal all of federal revenue by 2025, just 14 years from now.


I hope it's clear by now that USA Inc. has a spending problem, not a revenue problem. Simple math says that balancing the budget purely by raising taxes would require doubling rates across the board, which would kill growth. That said, tax revenues probably have to go up a little.

[GuyFawkes38]

I find our health care system the most depressing aspect of this all.

In the US, we truly have some of the brightest, hardest working people on earth working in the health care industry. From brilliant doctors, administrators, researchers, ect..., there's a lot of brainpower.

Yet, our health care system is failing us. Even with a great labor force, the incentives are twisted and it's dooming the system.

here's an important graph:

http://www.project.org/images/graphs/Health_Expenditures.jpg

We have similar to lower life expectancy as the other countries on that graph.

I think an old economic theory is at work. There's a law of diminishing returns in health care spending. We are spending too much and it's affecting our prosperity. IMHO, doctor's wages are going to have to go down to a more modest international level.

[madness31]

Reasonable adjustments need made to healthcare very very soon or the adjustments will have to be drastic. Military spending also needs reduced to finance those future obligations or more realistically to prevent additional interest expense on new debt. The only meaningful cuts that can be made to the budget are Military, Social Security and Medicare/Medicaid. Everything else should be reviewed but they will amount to very little impact on the budget and future fiscal problems.

[bigdiggins]

I find our health care system the most depressing aspect of this all.

In the US, we truly have some of the brightest, hardest working people on earth working in the health care industry. From brilliant doctors, administrators, researchers, ect..., there's a lot of brainpower.

Yet, our health care system is failing us. Even with a great labor force, the incentives are twisted and it's dooming the system.

here's an important graph:

http://www.project.org/images/graphs/Health_Expenditures.jpg

We have similar to lower life expectancy as the other countries on that graph.

I think an old economic theory is at work. There's a law of diminishing returns in health care spending. We are spending too much and it's affecting our prosperity. IMHO, doctor's wages are going to have to go down to a more modest international level.

In regards to the spending, 28% of Medicare spending occurs in the final year of the recipients life. Unplug the machine already. Maybe we really do need death panels.

[GuyFawkes38]

In regards to the spending, 28% of Medicare spending occurs in the final year of the recipients life. Unplug the machine already. Maybe we really do need death panels.

In theory, that sounds cold, but perhaps reasonable.

In practice, someone nearing death wants to fight on and their family wants them to also.

[GuyFawkes38]

Here's an infamous chart (left axis is % of GDP):

http://www.urban.org/Images/310914_figure3.jpg

Some people argue that some technological advancements might ease the burden of health care. That's highly unlikely due thanks to Baumol:

http://en.wikipedia.org/wiki/Baumol%27s_cost_disease

[GuyFawkes38]

This is old. But it's still interesting.

The Obama administration claims that the Affordable Care Act reduces the national debt, while extending the life of medicare.

That claim can only be made if you double count.

Here's a leftwing website humorously trying to defend the claim:

http://wonkroom.thinkprogress.org/2011/03/09/double-count-199/


What Shimkus calls “double counting” is actually the “unified budget process,” which is the way Congress keeps track of its dollars. Here is how it works: the $500 billion dollars (which comes in over a period of 10 years) is credited to the Medicare trust fund, which receives a treasury security worth that amount that will be paid out in interest when necessary. The actual $500 billion, however, will remain in the general fund of the federal treasury and is counted towards deficit reduction. If the trust fund cashes in its bond (and uses it to extend the life of Medicare), then that money is transferred from the general treasury to the Fund. However, since the same $500 billion cannot be used to reduce the deficit and extend the life of the trust fund, treasury would have to find that money somewhere else. But, given the principles of unified accounting and trust fund accounting, that money is said to reduce the deficit and extend the life of the fund.

Here's a relevant youtube clip:

http://www.youtube.com/watch?v=ukaIZ7pmabo&feature=player_embedded

heh

[Blue Blooded-05]

The following is a 60 Minutes video that aired August of last year. I thought this was the most level-headed and honest perspective on end of life healthcare I have personally seen.

The doctor they interview is my hero. I love his suggestion at the end of the piece where he explains what we need to do to fix the out of control end of life healthcare costs: "Collectively, as a culture, we really need to acknowledge that we're mortal... Get over it... and start looking at what a healthy, morally robust way for people to die looks like."

Well said

http://www.cbsnews.com/video/watch/?id=6754650n&tag=related;photovideo

[Muskie91]

Public expenditures seem in line with other countries. They're raping the private citizen!


I find our health care system the most depressing aspect of this all.

In the US, we truly have some of the brightest, hardest working people on earth working in the health care industry. From brilliant doctors, administrators, researchers, ect..., there's a lot of brainpower.

Yet, our health care system is failing us. Even with a great labor force, the incentives are twisted and it's dooming the system.

here's an important graph:

http://www.project.org/images/graphs/Health_Expenditures.jpg

We have similar to lower life expectancy as the other countries on that graph.

I think an old economic theory is at work. There's a law of diminishing returns in health care spending. We are spending too much and it's affecting our prosperity. IMHO, doctor's wages are going to have to go down to a more modest international level.

[GuyFawkes38]

Public expenditures seem in line with other countries. They're raping the private citizen!

Most of the other public systems on that graph cover a larger proportion of the country's residents than the US.

The percentage of GDP might be similar, as you noted. Regardless, the US public system is more inefficient because it's covering proportionately less people.

Of course, regardless, private US citizens pay a ridiculous amount on health care compared to most other 1st world countries.

[Snipe]

Here's an infamous chart (left axis is % of GDP):

http://www.urban.org/Images/310914_figure3.jpg

[/url]

Government healthcare is bankrupting the nation. Is it too early to look at Medicare and say that the whole program is a disaster?

It has been 45 years, look at that graph again. We can't pay for it.

At the time in the 1960s, certain people and political parties objected to Medicare. They claimed it would be a disaster. Certain other people from another political party claimed it wouldn't make that much of a difference in a fiscal sense. Who won that argument? Who? Please? Should we keep score?

What a bad idea.

In 1960, Medicare and Medicaid spending constituted 0% of GDP. Those programs simply didn't exist. Also in 1960 Ike was the last President to pay down some of the national debt. We haven't done so again in the last 51 years.

If you were allowed to go back in time and present these facts, do you think that a majority of people would have voted for Medicare? Now that we have Medicare, it is untouchable. Take it away and you would be taking away healthcare from poor old people!

But in the beginning they promised something completely different in terms of fiscal impact. I think they knew that if they just got it passed it would never go away, so they lied to people. You shouldn't trust politicians for that reason, especially the party that brought us Medicare. We are going bankrupt because of it. Thanks a lot.

Is Obamacare really going to save money? Does it matter? It is the same model. Once you pass it and give everyone healthcare you can never take it away. Otherwise you are taking away healthcare from poor black children. It doesn't matter what it actually will cost, once it is put into play you can never go back. That is why the only option is to kill it now. We need to learn our lesson from their lies on Medicare.

Look at all that spending. Imagine if we would have invested it in productive resources instead. Think of how high our standard of living would be today and in the future if those resources were dedicated to a productive capacity. Think of the higher wages and higher wealth that people would have attained without the government siphoning off a huge chunk. If you think about it long enough you can almost imagine a society that could afford to spend more on health care because they then had the money.

I bet my children get less health care spending as a percentage of GNP because today's seniors are going to get more. Now there is a trade off. That is what qualifies as "Winning the Future". We live in a world of scarce resources.

[Snipe]

I want to add that the money is in maintenance. We spend a bulk of our health care money maintaining people. The incentives follow the money, because Medicare dedicates itself to maintenance. So brilliant minds go into those fields. Does it have to be that way? No. We decided to dedicate a huge amount of money to maintenance and not innovation. So we get more maintenance and less innovation, even though in the long term innovation is best for all of us.

When the government pays all the money, the government decides how the game will be played. Was Medicare a good idea? What would life look like if we need even had it? Would we live in a cruel society that doesn't care about old people? Did people not care about old people in 1964? Or would we live in a better society with more innovation? Would we be in a better place now if we never had Medicare? I would bet that we would.

[Snipe]

Here's an infamous chart (left axis is % of GDP):

http://www.urban.org/Images/310914_figure3.jpg



http://farm4.static.flickr.com/3451/3771860397_0fa1de9729.jpg

I wanted to put these two graphs one after another.

In 1960 about half the cost of health care was paid out of pocket. The rest was picked up by insurance, charities and government. Notice the drop once that Medicare is past, it is about 10%. Today we pay around 10% of our health care costs out of pocket. Most people have no idea what the cost of their healthcare is, they never see the actual bills.

We used to pay for these things and demand value. We don't anymore. The government pays more and more.

Growing up I knew of a man that had a "Do not resuscitate" order because he didn't want medical care. He was concerned about the cost. They saved him anyway and sued and won. His goal was to give his life savings to his children, and he didn't want to spend money on health care at the end of his life.

With the government footing the bill, he wouldn't have to worry about that today.

We used to be our own death panels. If I had to pay $250,000 for something and I had spent my whole life getting that money, I would do a cost benefit analysis as to whether I want to spend my life savings or pass it on to my children. People used to make those decisions all the time. And when half the cost of health care was out of pocket, market forces made health care cheaper. Now only 10% is out of pocket, and you don't get a cash discount for avoiding the paperwork. The sad thing is you get charged more if you pay cash and don't have a good insurance provider to negotiate rates. Seriously, that is the case. It is the only field of play that a cash payer will pay more to my knowledge. We have self insured and you should see those hospital bills if you have a kid. They people that will pay the most have no insurance, so "out of pocket" is now a drawback.

Imagine a world where we offered people $50,000 to forgo a $100,000 treatment. Is that a cruel world? Some people would take the money and pass it on to their kids. Imagine the $250,000 treatments, you could make a pretty penny for your next generation by passing on that. But we don't let them pass on that. It is all or nothing and they pay it all to the doctors or don't pay at all. My dad was at the Cleveland Clinic for Cancer. It is debatable how much it really cost even if my sister saw bills totaling $250,000. I doubt my dad would have paid that with his own money. None of it was out of pocket. In that case, spare no expense.

Think about the incentives. What is going to drive costs down? What will make costs go up? When government pays the bills and people don't pay anything the costs go up. Look at the last 45 years of Medicare. If you are below 55, that Medicare will not be around for you.

It won't. We simply don't have the money. This country has been bankrupt for more than a decade, we are only just realizing it. We can't afford to pay our obligations. Thank God 75% of Mexican Immigrant families are on Welfare, because without that I don't know how we could pay the bills tomorrow.

[Snipe]

I find our health care system the most depressing aspect of this all.

In the US, we truly have some of the brightest, hardest working people on earth working in the health care industry. From brilliant doctors, administrators, researchers, ect..., there's a lot of brainpower.

Yet, our health care system is failing us. Even with a great labor force, the incentives are twisted and it's dooming the system.

here's an important graph:

http://www.project.org/images/graphs/Health_Expenditures.jpg

We have similar to lower life expectancy as the other countries on that graph.

I think an old economic theory is at work. There's a law of diminishing returns in health care spending. We are spending too much and it's affecting our prosperity. IMHO, doctor's wages are going to have to go down to a more modest international level.

I will buy you a beer if you can come up with the same graph circa 1960, when we used to pay our own bills. I would bet we spent more on health care than anyone but paid less as a proportion to GNP. Would love to see that graph.

[Snipe]

I can't stop posting!

Here I go again!

Ever notice that some Doctors are pricks? What ever happened to "Bedside Manner"?

Well, you don't pay them.

Ever notice that they make their rounds at 4 o'clock in the morning when you are not allowed to visit? Ever notice that? Ever notice that it is hard to talk to the Doctor of your ailing parent because he is never around? That is because you don't pay the bill. That is another tragedy. If I paid the bill, I demand satisfaction. If the government is paying the bill, they don't answer to you.

That is huge.

You enter a situation where they don't give a damn about you because you don't pay their bills. It happens all the time. You have to work to get a doctor to actually speak to you, unless you are connected. And if you aren't paying the bills, do they really care about the patient?

The Cleveland Clinic lost my dad. Didn't matter to them if I complained, I knew his room. But the therapist and Doctor didn't come by for a day because they "lost him". They didn't know where he was apparently. It was only a day, and it was a "paperwork snafu", but if you paid your own money you wouldn't pay for that day. And if people paid their own money I bet they would have listened to my complaints that he wasn't getting physical therapy. I felt like I was lost in the BMV trying to get him treatment, and Cleveland Clinic is one of the best medical facilities in the world.

A lot of Doctors are AWOL, and they are dicks when you try to track them down and interact with them. That wouldn't happen if you paid their bills.

[Snipe]

And yet another post!

A confidant of mine suggested at one point that we could have a new business model, one of a "Health Care Advocate".

A Health Care Advocate would track down your doctor and make sure everything was being correctly treated and addressed. If you are thinking the Doctor and staff should already do this you are correct, but they don't. A Health Care Advocate would make sure they get full service. I actually think it would be a decent service to pay someone independent of the hospital to make sure they are actually taking the care to provide your parent with full service.

Getting full service can be a full time job. My wife's dad had a stroke and she had to educate many of the nurses taking care of him, and speaking to the actual doctor in charge was a challenge.

The sad thing is that everyone who has been through the system with a parent that I have talked to generally thinks that having an independent "Health Care Advocate" is a good idea. You are going to get better service if you stay on top of them and they know you are watching. Somebody needs to be there when he rolls by once a day when you may not may be there. Questions can be answered and attention will be paid.

I propose a business model that harasses Doctors and hospitals into doing their job. Many people that I have talked to think it would be useful. I don't think that would be the case if you were paying the bill. If you were paying the bill, those doctors would pay a hell of a lot more attention to you. We have lost something in giving our government the role of health care provider.

[GuyFawkes38]

Great posts by Snipe.

No group of people have failed the American health care system more than doctors.

Doctors excessively run up the cost (which they happen to materially benefit from) and put all of the blame on the insurance industry.

Why is the American public buying this???!!! We spend more per person on medical care than the rest of the world without the benefits....and it's somehow the insurance industries fault because they aren't covering enough expensive treatments???!!!!. Does that sound logical?

I'm slightly optimistic about Obama care. It might take control out of the doctors hands who have abused the system for decades. That's what the rest of the world has done with generally more cost containment than us.