Best of the Week
Most Popular
1.Election Forecast 2015 - Opinion Polls Trending Towards Conservative Outright Win - Nadeem_Walayat
2.UK Solar Eclipse - End Time Sign, Judgement Day, Doomsday! - Nadeem_Walayat
3.Gold And Silver - When Will Precious Metals Rally? Not In 2015 - Michael_Noonan
4.Preparing for the Next Stocks Bear Market - Forecast 2015-2016 - Gary_Savage
5.Is a Stock Market Crash Imminent? - David Eifrig
6.Gold Price Slumps as US Dollar Soars, What's Next? - Nadeem_Walayat
7.US Dollar Forex Pairs and Gold Chartology - Rambus_Chartology
8.Election Forecast 2015: The Day Labour Lost the General Election - Nadeem_Walayat
9.The ECB Should End QE Next Month - EconMatters
10.Silver Price Poised to Surge - Zeal_LLC
Last 5 days
Is the U.S. Headed for a Recession? - 1st Apr 15
Did The Fed Just Admit to Deep Uncertainty About Our Financial Security In Retirement? - 1st Apr 15
Gold Price Flat In Quarter In Dollars But 5% Higher In Pounds - 1st Apr 15
Financial Market Extremes: Expect Consequences - 1st Apr 15
Iceland Ponders Radical Banking Plan to Eliminate Fractional Reserve Lending - 1st Apr 15
How Traded Options Can Power a 300%-Plus Gain on Twitter - 1st Apr 15
You Can’t Afford Not to Invest in This Latest Yesla Technology - 1st Apr 15
Election Forecast 2015 - Coalition Economic Recovery vs Labour Collapse - 1st Apr 15
Bitcoin Price Down Move Still in the Cards - 31st Mar 15
No Body Understands Debt - Living in a Free-Lunch World - 31st Mar 15
Will Gold Win Out Against the US Dollar? - 31st Mar 15
Middle East Balance of Power Matures - 31st Mar 15
Ed Miliband Debate Election 2015 Analysis - Labour Spending, Debt and Economic Collapse - 31st Mar 15
Gold and Misery, Strange Bedfellows - 31st Mar 15
Why are Interest Rates So Low? Ben Bernanke, Confused as Ever, Starts His Own Blog to Prove It - 31st Mar 15
Don’t Celebrate the U.S. Housing Market Recovery Yet - 30th Mar 15
A Middle East Nuclear Holocaust - 30th Mar 15
Peak Gold? – Goldman Sachs Research Warns of Peak Gold Production - 30th Mar 15
With Yemen Burning, Arab Spring II Is Underway - 30th Mar 15
No FED Bets From the BIS - 30th Mar 15
Election Forecast 2015 - Debates Boost Labour Into Opinion Polls Seats Lead - 30th Mar 15
Economic Recovery, Geopolitics and Detergents - 30th Mar 15
U.S. Dollar, Commodities and the Gold Miners GDXJ ETF Analysis - 30th Mar 15
Stock Market Short-term Downtrend - 30th Mar 15
David Cameron Election 2015 Debate Facts Check - Employment, Immigration, Debt & Deficit - 29th Mar 15
Stock Market About Ready to Crash! - 29th Mar 15
Reflections in a Golden Eye - Gold Market Rejection, Repatriation and Redemption - 28th Mar 15
Stock Market Inflection Point - 28th Mar 15
Gold And Silver - What Moved Price? Bab el-Mandeb And Uranus Square Pluto. What?! - 28th Mar 15
Stock Market Investment Parachutes; Do You Have Yours? - 28th Mar 15
Peak Gold Misunderstanding, is Gold About to Run Out? - 28th Mar 15
Deflation Watch: Key U.S. Economic Measures Turn South - 27th Mar 15
The Hard-Earned Truth About Recreational Real Estate - 27th Mar 15
Bitcoin Price Still in Important Territory - 27th Mar 15
Stocks Bear Market Conditions - Index Market Range Warning - 27th Mar 15
BEA Leaves Q4 2014 U.S. GDP Growth Essentially Unchanged at 2.22% - 27th Mar 15
Brazil Economy Victim of Vulgar Keynesianism - 27th Mar 15
Gold to Fuel Silver Price Upleg - 27th Mar 15
Gold and Silver Stocks Will Rise Again! - 27th Mar 15
Risk of ‘World War’ between NATO and Russia on Ukraine as Yemen Bombed - 27th Mar 15
FOMC Minutes Turned The Gold Tide - 27th Mar 15
Sheffield Hallam Election Battle 2015 - Lib Dems Go to War Whilst Labour Sleeps - 27th Mar 15
Gold Effect On Mining & Shale Wasteland - 27th Mar 15
How Stock Investors Should Play the 2016 Presidential Race - 26th Mar 15
MidEast Energy Alert: Why the Crisis in Yemen Could Get Ugly Very Fast - 26th Mar 15
Stock Market Downward Spiral of Dumbness - 26th Mar 15
The Monetary Approach Reigns Supreme - 26th Mar 15
Stock Market Large Gap Down, Despite the Algos' Push Back - 26th Mar 15
Crude Oil Surges, Gold price Spikes as Middle East Tensions Escalate - 26th Mar 15
The U.S. Housing Market Recovery Is Fabricated Optimism - 26th Mar 15
Why Yemen Is The Next Saudi-Iranian Battleground - 26th Mar 15
The Crude Oil Price Crash and China Economic Slow Down - 26th Mar 15
Global Financial Markets Are More Distorted Than Ever Before - 26th Mar 15
One More Stock Market Rally and Then a Huge Drop Expected - 26th Mar 15
Danger Will Robinson - Stock Market Crash Warning - 25th Mar 15
Learn the Basics of Corrective Elliott Waves - 25th Mar 15
Why CNBC Is Hazardous to Your Financial Health! - 25th Mar 15
Will Your Retirement Accounts Survive The Coming Tax Code "Revolution"? - 25th Mar 15
US Dollar - Americas Phoenix - 25th Mar 15
California’s Epic Drought: Only One Year of Water Left! - 25th Mar 15
What’s Wrong With Silver? - 25th Mar 15
SPX Futures Appear Weak. WTIC and Gold May Be at Max Retracement - 25th Mar 15
We’re at the Dawn of a “New Energy Age” - 25th Mar 15
A Very Weak U.S. Economic Recovery - 25th Mar 15
Zero UK CPI Inflation Rate Prompts Deflation Danger Propaganda For Fresh Money Printing - 25th Mar 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Economy Still on Life Support

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


© 2005-2015 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

Free Report - Financial Markets 2014