Peter Schiff, You Are Wrong on Health Care in the U.S
Politics / US Politics Oct 11, 2009 - 06:26 PM GMTBy: Joseph_Rouse
The Market Oracle provides an invaluable service to the world. A visitor to the Market Oracle site is treated to a wide ranging scope of insight into financial and economic issues in virtual real time by insightful and accredited contributors. We are treated to contributions from the likes of Ron Paul, Peter Schiff, Mike Shedlock, Mike Stathis, Jim Willie and John Mauldin (to name a few). Market direction analysis by Nadeem Walayat is second to none. Peter Quinn’s lyrical musings on the tragic fate of the American society is always entertaining (notwithstanding my personal disagreement with some of Peter’s negativity).
The Market Oracle contributors possess one common point of view (with the exception of the esteemed Mike Stathis) regarding the present nationwide controversial issue raging within the borders of the United States: reforming the US national health care system.
To be fair, the contributors to the Market Oracle have been correct with respect to the US banking crisis, the US housing crash, and predicting the US market downturn well in advance. I had also been on the correct side of these issues, warning of a wide scale banking failure leading to a Depression in my book, “If Everyone were Rich, who would make me Dinner?”. My clients have (with tongue firmly in cheek) taken to referencing my book as the “modern day Nostradamus” with respect to predicting these events in an easily understandable format designed for those who are not financially learned.
The common theme provided by Mr. Schiff, Dr. Paul et al with respect to health care reform in the United States is that the US simply can not afford another massive entitlement program for it’s citizens. The theory espoused by these well learned individuals rails against the flaws of deficit financing of such programs. The central flaw in the arguments proposed by these authors is glaringly obvious but yet remain to date unsaid on the market oracle: The present United States Health Care System is not driven by free market capitalism.
While Mr. Schiff and Dr. Paul have been very clear on this site and others that a free market, unencumbered by government intervention is the panacea to the ills that plague the US Health Care System, they are missing the one glaring component of an efficient free market system absent in the US Health Care System: anti trust regulation.
The purpose of anti trust regulation in the United States is to prevent business entities from monopolizing industries and thus, fixing prices. The US Health Care System, specifically the US Health Insurance Industry, enjoys a rare exemption from anti trust rules in the US, thus enabling the US Health Insurance Industry to be controlled by a handful of companies that control and fix prices across the industry. The absence of anti trust regulation has created a monopoly of greed that has eroded the fragile wealth of the American citizen, and has become the primary reason for bankruptcy filings in the US.
Medical insurance premiums in the US now the equal of the average monthly mortgage payment. Never in the history of the US have medical insurance costs risen to such levels as they are today. In fact, the US spends twice as much on health care for it’s citizens when related to health care costs in other countries around the world. The lack of anti trust regulation permits the US government to turn a blind eye on the price fixing monopolization of the health care industry that is crippling the financial condition of it’s citizenry.
The absence of free market capitalism within the US Health Care System has created a monopoly that can not be dismantled overnight. Accordingly, the need for a direct competitor equal to the monopolistic size of the US health insurance companies must exist for any meaningful reform to take place. A public option, self funded by insurance premiums paid by the US taxpayer, is the only viable reform that makes sense at the present time. A public option is a compromise that keeps the health insurance industry solvent, but allows the presence of competition in the “not-so free market” of the US Health Care System.
To be clear, a public option is NOT an entitlement program. The notion of a public option is to provide a competitive balance to an industry that presently exists without competition, while funding the program with insurance premiums paid by the US taxpayer.
The US economy has shifted from a manufacturing economy to a service economy over the past three decades. A major contributor to domestic manufacturing costs is the cost of health care for it’s workers. As the US health care industry has risen to 20% of the overall US economy, these ballooning costs have led directly to the inability of US companies to compete on a level playing field with companies abroad. Accordingly, US companies have turned to cheaper imports to satisfy domestic demand and have shut down it’s domestic manufacturing concerns, leading to massive unemployment of it’s citizenry. The erosion of employment in the US has now bled over to the service sectors of the US economy, whereby simple customer service call centers are now being outsourced to other parts of the world, again increasing the intolerable state of the unemployed in the US.
Massive US unemployment has led to larger government programs that are paid with borrowed money, further contributing to the massive US deficit, weakening an already battered dollar, and leading, inevitably, to an impossible state of simultaneous inflation and deflation.
A first step in the effort to right the ship that is the US economy would be the implementation of a public option for the US citizen’s health care costs, while removing the anti trust exemption enjoyed by the US health insurance industry. Only upon these changes can the US begin to cure the ills that plague the US Health Care Industry, and by extension, the US economy. If there is any merit to the expression “So goes the US economy, so goes the world economy”, then it is the interest of all nations to see the US Health Care Industry cured.
By Joseph Rouse
http://www.federallyreserved.com
Joseph Rouse is a CPA living in Long Island, NY USA. Mr. Rouse is the President of National Tax Review Corp., and Allstaff Leasing Co., Ltd., providing tax, accounting and payroll solutions as well as financial advice to his clients since 1984. Author of "If Everyone were Rich, who would make me dinner", commened website www.federallyreserved.com in late september, 2008 to provide market direction analysis and opinion regarding today's turbulent financial matters.
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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