Best of the Week
Most Popular
1.Spain Ignores Scotland Lesson as Catalan Independence Referendum Could Spark Civil War - Nadeem_Walayat
2.Used Car Buying From UK Dealer Top Tips, CarMotion.co.uk Real Customer Experience - N_Walayat
3.Spanish New Civil War Begins as Madrid Regime Storm Troopers Quell Catalan Independence Rebellion - Nadeem_Walayat
4.Virgin Media Broadband Down, Catastrophic UK Wide Failure! - Nadeem_Walayat
5.Are the US Markets setting up for an Early October Surprise? - Chris_Vermeulen
6.The Pension Storm Is Coming To Europe—It May Be The End Of Europe As We Know It -John_Mauldin
7.Stock Market Crash 2018; Will it Prove to be Another Buying Opportunity - Sol_Palha
8.The Profoundly Personal Impact Of The National Debt On Our Retirements - Dan_Amerman
9.Stock Market as Good as it Gets; Like 2000 With a Twist -Gary_Tanashian
10.1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - Nadeem_Walayat
Last 7 days
Debt-Driven Consumer Economy Breaking Down - 23rd Oct 17
Next Wall Street Stock Market Crash Looms? Lessons On Anniversary Of 1987 Crash - 23rd Oct 17
This Super Metal Is Set To Soar By 300% - 23rd Oct 17
More New Record Highs As S&P 500 Gets Closer To 2,600 Mark - 23rd Oct 17
Another Minor Stock Market Top? - 23rd Oct 17
Bitcoin Hits $6,000, $100 Billion Market Cap As Helicopter Ben and Jamie Demon Warn The End Is Near! - 22nd Oct 17
Time for Caution in Gold Miners - 22nd Oct 17
“Great Rotation” Ahead; Will it Be Inflationary or Deflationary? - 21st Oct 17
The Trigger for Volatility, Rates and the Next Crisis - 21st Oct 17
Perks to Consider an Agent for Auto Insurance - 21st Oct 17
Emerging Megatrends Hurting Consumers - 21st Oct 17
A Catalyst of the Stock Market Bubble Bust - 21st Oct 17
Silver Stocks Comatose - 21st Oct 17
Stock Investors Ignore What May Be The Biggest Policy Error In History - 20th Oct 17
Gold Up 74% Since Last Stock Market Peak 10 Years Ago - 20th Oct 17
Labour Sheffield City Council Employs Army of Spy's to Track Down Tree Campaigners / Felling's Watchers - 20th Oct 17
Stock Market Calm Before The Storm - 20th Oct 17
GOLD Price Creates Bullish Higher Low - 20th Oct 17
Here’s the US’s Biggest Vulnerability in NAFTA Negotiations - 20th Oct 17
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

America, Land of the Poor, Home of the Sick

Politics / US Politics Sep 29, 2011 - 03:08 AM GMT

By: Submissions

Politics

Michael Finger writes: Thanks to a series of destructive government policies and incentives, a health care crisis has been steadily building in America for a generation or two. But the release yesterday of the Kaiser Family Foundation's annual survey reveals that the problem of unaffordable healthcare is becoming epidemic. According to the report, health insurance premiums have jumped nearly 10% in 2011 for the typical family, compared to a 3% increase in 2010. The average annual cost for family health insurance now exceeds $15,000 per year, about 30% of median household income!


At a time when the economy is essentially stagnant and the official inflation figures remain low, what could account for the dramatic price spike? It is no coincidence that the report covers a period of time when many of the provisions of the Obama Administration's Patient Protection and Affordable Care Act (Obamacare) have come into effect. I think we are seeing the initial impact of this law, which the Administration promised would reduce healthcare spending. Oops.

Like all pieces of legislation, Obamacare provided some perverse incentives that explain some of this year's outsized price increases. Starting next year, the new law will impose a system of price controls on health care services. Just like a city worker whose pension is determined by the final year's gross salary, these looming price controls have incentivized providers to boost prices as much as possible before they're "locked in." Since the recession has cut down on doctor and hospital visits, this anticipation, rather than rising costs, appears to be a main driver of price increases.

Once price controls take effect, there will be only one way for these companies to keep up with rising costs and a growing cohort of retirees needing care: cut the quality and quantity of service. As a result, recipients won't be paying more for health insurance, they'll just be getting less. So, to the extent that the insurers can raise prices in anticipation now, they may have to cut less in the future. Perhaps we should be thanking them.

Still, the increases are painful at a time of economic depression. Unfortunately, employers are hit even harder than individuals under Obamacare. For example, employers are now forced to cover the children of employees until they are 26 years old! Including healthy 20-somethings in the comprehensive, low-deductible plans offered to most established corporate employees is sure to drive costs up - even if it's a net benefit to insurers.

Businesses are also mandated to pay for preventive care at no cost to employees. While preventive care can lead to savings in the long-run, it does not necessarily do so. I know someone covered by such a plan who receives a twice weekly massage at no cost. Is this an investment in future health, or an unfortunate loophole in a law Speaker Pelosi said Congressmen should "pass... so [they] can find out what's in it"? Whatever the case may be, it's no longer up to employers and insurers to make these judgments, but rather bureaucrats in Washington.

By increasing federal intervention, Obamacare simply takes us further down the road to ruin. From the post-war tax laws that favored employer-provided insurance, to the Great Society's guarantee of healthcare for all retirees, to the 60 years of increasing regulation of doctors and hospitals, Washington has done everything to drive costs up and quality down.

A good case in point is the Clinton-era Health Insurance Portability and Accountability Act (HIPAA), which put doctors in a regulatory straightjacket. The law created rules about where patient charts must be stored, what type of computer systems doctors can buy, how life-saving research is conducted, and much more. The law also opened up a whole new avenue for patients to sue doctors and hospitals. Some argue that these laws are needed to protect medical privacy, but that is debatable. The point is that such blanket rules have no regard for practicality, cost, or individual circumstances.

Repealing HIPAA, separating insurance from employment, encouraging malpractice reform at the state-level, reducing regulations on hospitals, getting the state out of medical licensing, and reducing taxes for high income earners would all go a long way to driving down medical costs. But rather than improving market conditions, President Obama and his team are trying to force costs down with an iron fist.

Once Obamacare's price controls are in effect, rising inflation and a growing pool of elderly patients will drive the insurance industry to bankruptcy. Washington may then choose to bailout the major insurers and form quasi-governmental agencies, or they may take the opportunity to push for single-payer socialized medicine. By that time, doctors may have acquired all the skill and courtesy of typical DMV employees.

So, don't expect to see a major renaissance in American medicine any time soon. Instead, the future President Obama has created will be poor, sick, and old. Based on the Kaiser Foundation's report, it looks like we're well on our way.

Subscribe to Euro Pacific's Weekly Digest: Receive all commentaries by Peter Schiff and John Browne delivered to your inbox every Monday.

Click here to learn more about Euro Pacific's gold & silver investment options.

Michael Finger
Euro Pacific Capital, Inc.

Michael Finger is Communications Specialist for Euro Pacific Capital, a registered broker/dealer with 6 offices across the country.

Copyright © 2011 Euro Pacific Capital, Inc


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife