Archive for July, 2012

American Medical Care: It’s Terminal

Saturday, July 28th, 2012

The final nail has been driven into the coffin of America’s medical care system (note it’s not healthcare because the system has nothing to do with health).

With the Supreme Court decision last week on ObamaCare, the US has taken its failed venture into socialized medicine, i.e., Medicare, and foisted it upon the general public, most of whom really believe they are going to get something for nothing.

It is as if the U.S. government doesn’t understand that doubling down on a losing bet doesn’t make it a winner. And let’s not forget that Medicare, which came to America as part of Lyndon Johnson’s “Great Society,” has been a tragic, unmitigated failure.

US medical care is the most expensive care in the world. Some say that is because it is the best. Nonsense.

The overall health of the average American is nothing to write home about. The average life expectancy for a person born in the U.S. today is 78.49 – significantly lower than for people born in Monaco, Macau and Japan, for example, which have the three highest life expectancies at 89.7, 84.4 and 83.9 years, respectively.

American medical care is the most expensive because too many Americans are stressed-out, overweight pigs at the trough and the free market is not allowed to act as a not-so-gentle reminder that health is our individual responsibility. If insurance companies were allowed to fully underwrite risk on an individual basis, a 300 pound smoker probably couldn’t get insurance which might act as an incentive to stop smoking and lose weight.

To add fuel to the fire, Medicare has resulted in an artificial demand for medical services since they appear to be free (or nearly free) for those over 65. Have a hangnail? Go to the doctor. Cold? Go the doctor. Just need someone to talk to? Go to the doctor. Dying and want to squeeze out another month or two of lying in a bed connected to machinery at a cost of a million dollars or more? No worries. Government is going to pay the tab.

In still another affront to the market, Medicare utilizes price-fixing, the same kind of conduct that would result in you or me being imprisoned. The government decides what it will pay and the medical providers have to accept it. The net-net has been to transfer costs from the public sector to the private sector which has increased the cost of private health insurance while disguising the real cost to the taxpayer.

Three health insurance programs—Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)—together account for 21 percent of the entire US budget (or did in 2011), to the tune of $769 billion. Nearly two-thirds of this amount, or $486 billion, went to Medicare. Even using the government’s numbers, it is estimated Medicare will be bankrupt and unable to pay benefits in just eight years, or, if you listen to Medicare’s own actuary, it will fail 4 years from now, in 2016.

The socialists don’t care. Their goal remains the same: to squeeze blood out of a turnip and to spend as if there is no tomorrow until there is no tomorrow. They don’t understand because they don’t want to understand.

However, it is not the socialists, but the so-called conservatives, who are the most disingenuous in criticizing American medical care. On the one hand, the neo-cons are up in arms over the Supreme Court’s decision in finding ObamaCare constitutional pursuant to the government’s power to steal (aka “tax”) but are silent when the subject is their own version of ObamaCare, or Medicare. Even the Republican Romney has made it clear that while he will try and repeal ObamaCare (in and of itself an ironic contention considering he invented it), he won’t touch Medicare. And, when he utters that wholly dishonest promise, you can hear a pin drop.

Even more pathetic than the politicians — none of whom have the guts to pronounce Medicare DOA — are those who are sucking the hind tit of socialized medicine today while raising hell over, well, socialized medicine.

How can Americans justify lining up for Medicare while being against ObamaCare? The most common response to this question? “I paid for it. I deserve it.”

The problem with that response? It is wrong. Charles Hugh Smith summarized the numbers as follows:

“Medicare tax is 2.9% of wages, 1.45% each for employer and employee. If the typical worker makes $30,000 a year for 35 years, then lifetime earnings are about $1 million. If we take the $40,000/year average, then that rises to around $1.4 million in lifetime earnings. The 2.9% Medicare tax thus totals about $30,000 to $40,000 in lifetime contributions for the average worker. The average benefits extracted from the system run from $393,000 to $525,000 (due to the benefits extended to non-working spouses, benefits for never-married people may be somewhat lower). Average annual costs per beneficiary run as high as $18,000, though expenses typically rise significantly in the last year of life.”

Medicare isn’t insurance. It is not something you fund with a willing counterpart taking the risk for a negotiated premium based on individual underwriting. Medicare is welfare, plain and simple. It is a government transfer program. Few receiving Medicare today paid enough to justify the government largess they are now receiving (or are hoping to receive).

Medicare is nothing more or less than a contemporary bread line for the sick and is destined to hasten the bankruptcy, and ultimate default by the United States.

ObamaCare isn’t different. It is just piling on. While the mechanism may be private insurance, there will be nothing free or free market about it. Government will use its heavy hand to influence, and ultimately decide both premiums and prices. The final tab for the assured deficit will make its way to the taxpayer.

Those who are pounding the drum, denouncing ObamaCare as if it was something new and hideous, are unimpressive. Where have they been the last 47 years? They have been enjoying it, knowing that someone else will ultimately have to pay their tab.

The frequently heard admonition that “we shouldn’t be passing this debt to our children,” sounds good, but means nothing. They are more than happy to pass the cost of their freebies to their children and grandchildren while crying crocodile tears and cursing big government.

Which brings me to the end, literally. One reason America is going to fail economically is simple and straightforward: No one is willing to take the pain for the profligate spending. The battle cry may be “Balance the budget!” But listen carefully. After the echo subsides, there is an almost imperceptible, but very real whisper, “. . . just don’t take away any of my entitlements.”

The patient has expired.


Whiskey & Gunpowder
by Jim Karger

July 5, 2012



Supreme Court Obamacare ruling = Layoffs

Saturday, July 28th, 2012

California small business owner: Health care ruling means outsourcing jobs, layoffs By Rose Corona, Published: June 28The Washington Post

Today, in a stunning 5-4 decision, the Supreme Court ruled on the constitutionality of Obamacare. This will now go down in my memory as was one of the saddest days for our country, for our individual liberty, our freedoms, and our way of life in America.

I am a small business owner, and I still believe, as do the dissenting judges, that this ruling gives the federal government far too much power. It strips the American people of their liberty and individual freedom. As some commentators argued before the ruling, “If they can do this, they can do anything to the American people.” The brakes are off, and I fear the Obama administration will put the pedal to the metal and push through even more distasteful mandates – sorry, “taxes” – to force us to follow the route toward Europe’s economic crisis. More importantly, the question looming over every small, medium and large business is now, “How will this affect not only my business, but businesses as a whole, now and in the future?”

First of all, in my business, the first step will be to start cutting costs and that means cutting jobs. With all the requirements that the government will be instituting, I will be minimizing my risk. For many, that will begin with the investment they have in their labor force.

If at all possible, I will be outsourcing those jobs that we presently do in house, such as accounting and payroll and anything else I can outsource to save labor costs. I am sure other companies will be doing the same. I predict that there will now be massive layoffs in the private sector in order to accommodate this legislation.

You will begin to see many businesses that offer any kind of healthcare eliminating it completely. Instead of providing access to quality healthcare, they will simply pay the fine or tax and let their employees fend for themselves. My labor force will be cut to the bone. That is the only way for my business to survive, although I am under the 50 employees exemption from paying the fine. I can see many companies fleeing this country to other locations in order to keep their businesses alive. I believe that they again have underestimated the American people. This fight is not over.

As the country has time to digest this decision, there is still work to be done. This ruling may become a rallying cry to those around the country who own a business or who have ever hired an employee or been one. Remember, if they can tax you on this, they can tax you for anything.

We must change this legislation or get rid of it altogether. Small business and the private sector are the backbone of this country; the backbone of our economy. As businesses again tighten their belts, more job losses will follow and the patience of the American people will begin to thin towards a government and an administration that has created and extended the economic suffering of the country.

President Obama’s legislation may have been upheld by the court, but now he must face a more furious court, the court of public opinion – and that one convenes in November.

Rose Corona is owner of Big Horse Feed & Mercantile, an equestrian feed and retail company in Temecula, California.

Obamacare rations by not paying specialists

Saturday, July 28th, 2012

CMS Proposes Primary Care Raises Funded With Specialist Cuts

Robert Lowe s….

July 6, 2012 — Medicare would reduce reimbursement for many types of specialists to fund sizable raises for primary care physicians in 2013, according to a proposed fee schedule that the Centers for Medicare and Medicaid Services (CMS) released today.

These reductions and raises are apart from the huge pay cut — now put at 27% — set for January 1, 2013, that is triggered by Medicare’s sustainable growth rate formula, and likely to be postponed by Congress.

Under today’s CMS proposal, Medicare pay would increase by 7% for family physicians, 5% for internists, and 4% for geriatricians. Most of this increased reimbursement would result from a separate payment that Medicare would make to physicians for coordinating a patient’s care for the first 30 days after discharge from a hospital, skilled nursing facility, or certain outpatient services. The fee, which will have its own procedure code, reflects the Obama administration’s push to reduce hospital readmissions caused by sloppy follow-up care. At the same time, the administration has made it an overall priority to improve reimbursement for primary care services, according to CMS.

To give raises to primary care physicians as well as nurse practitioners and physician assistants, CMS said that it has to lower reimbursement for other clinicians to achieve budget neutrality. The biggest losers in the proposed 2013 fee schedule would be radiation oncologists, who would take a hit of roughly 15%. Most reductions, however, are less than 5%, as illustrated by the following selected specialties.


Fee Change*





Interventional radiology










Vascular Surgery


* Change in total allowed charges under proposed 2013 Medicare fee schedule.

A number of other specialties, such as allergy/immunology, gastroenterology, general surgery, plastic surgery, and rheumatology, are slated for no change in Medicare reimbursement.

The proposed Medicare fee schedule will be published in the Federal Register on July 20. CMS will accept comments on the proposal until September 4, and the agency will issue a final fee schedule by November 1. The proposal explains the various ways in which comments can be submitted.


Monday, July 23rd, 2012

WRITTEN BY A 21 YEAR OLD FEMALE Wow, this girl has a great plan! Love the last thing she would do the best.

This was written by a 21 yr old female who gets it. It’s her future she’s worried about and this is how she feels about the social welfare big government state that she’s being forced to live in! These solutions are just common sense in her opinion.

This was in the Waco Tribune Herald, Waco , TX , Nov 18, 2011


Put me in charge of food stamps. I’d get rid of Lone Star cards; no cash for Ding Dongs or Ho Ho’s, just money for 50-pound bags of rice and beans, blocks of cheese and all the powdered milk you can haul away. If you want steak and frozen pizza, then get a job.

Put me in charge of Medicaid. The first thing I’d do is to get women Norplant birth control implants or tubal legations. Then, we’ll test recipients for drugs, alcohol, and nicotine. If you want to reproduce or use drugs, alcohol, or smoke, then get a job.

Put me in charge of government housing. Ever live in a military barracks? You will maintain our property in a clean and good state of repair. Your home” will be subject to inspections anytime and possessions will be inventoried. If you want a plasma TV or Xbox 360, then get a job and your own place.

In addition, you will either present a check stub from a job each week or you will report to a “government” job. It may be cleaning the roadways of trash, painting and repairing public housing, whatever we find for you. We will sell your 22 inch rims and low profile tires and your blasting stereo and speakers and put that money toward the “common good..”

Before you write that I’ve violated someone’s rights, realize that all of the above is voluntary. If you want our money, accept our rules. Before you say that this would be “demeaning” and ruin their “self esteem,” consider that it wasn’t that long ago that taking someone else’s money for doing absolutely nothing was demeaning and lowered self esteem.

If we are expected to pay for other people’s mistakes we should at least attempt to make them learn from their bad choices. The current system rewards them for continuing to make bad choices.

AND While you are on Gov’t subsistence, you no longer can VOTE! Yes, that is correct. For you to vote would be a conflict of interest. You will voluntarily remove yourself from voting while you are receiving a Gov’t welfare check. If you want to vote, then get a job.


USA: The Next Detroit

Saturday, July 21st, 2012

Socialism’s Reward

One of the most important things to remember about socialism – or coercion of any kind – is it fails eventually because human beings have an innate desire for liberty and a strong need for personal property rights. In fact, the origins of government lie in the need of agricultural communities to protect themselves from violence and theft. So it is particularly ironic that in more recent times, it is government itself that has more frequently played the role of bandit.

When you start taxing people at extreme rates to pay for socialist “benefits,” when you start telling them which schools their children must attend, when you start giving jobs away to people based on race instead of ability… you quash human freedom, which bogs down productivity and if continued for long enough leads to social collapse.

I find it perplexing that only 20 years after the collapse of the Berlin Wall, the West continues to implement laws that mimic all of the failed policies of our former “communist” foes. Our current president won the election by promising to “spread the wealth around.” But… truth be told… we don’t have to look to Eastern Europe or the Soviet Union to find a society destroyed by coercion, socialism, and the overreaching power of the State. We could just look at Detroit…

In 1961, the last Republican mayor of Detroit lost his re-election bid to a young, intelligent Democrat, with the overwhelming support of newly organized black voters. His name was Jerome Cavanagh. The incumbent was widely considered to be corrupt (and later served 10 years in prison for tax evasion). Cavanagh, a white man, pandered to poor underclass black voters.

He marched with Martin Luther King down the streets of Detroit in 1963. (Of course, marching with King was the right thing to do… It’s just Cavanagh’s motives were political not moral.) He instated aggressive affirmative action policies at City Hall. And most critically, he greatly expanded the role of the government in Detroit, taking advantage of President Lyndon Johnson’s “Model Cities Program” – the first great experiment in centralized urban planning.

Mayor Cavanagh was the only elected official to serve on Johnson’s task force. And Detroit received widespread acclaim for its leadership in the program, which attempted to turn a nine-square-mile section of the city (with 134,000 inhabitants) into a “model city.” More than $400 million was spent trying to turn inner cities into shining new monuments to government planning. In short, the feds and Democratic city mayors were soon telling people where to live, what to build, and what businesses to open or close. In return, the people received cash, training, education, and health care.

The Model Cities program was a disaster for Detroit. But it did accomplish its real goal: The creation of a state-supported, Democratic political power base. The program also resulted in much higher taxes – which were easy to pitch to poor voters who didn’t have to pay them. Cavanagh pushed a new income tax through the state legislature and a “commuter tax” on city workers.

Unfortunately, as with all socialist programs, lots of folks simply don’t like being told what to do. Lots of folks don’t like being plundered by the government. They don’t like losing their jobs because of their race.

In Detroit, they didn’t like paying new, large taxes to fund a largely black and Democratic political hegemony. And so in 1966, more than 22,000 middle- and upper-class residents moved out of the city.

But what about the poor? As my friend Doug Casey likes to say, in the War on Poverty, the poor lost the most. In July 1967, police attempted to break up a late-night party in the middle of the new “Model City.” The scene turned into the worst race riot of the 1960s. The violence killed more than 40 people and left more than 5,000 people homeless. One of the first stores to be looted was the black-owned pharmacy.

The largest black-owned clothing store in the city was also burned to the ground. Cavanagh did nothing to stop the riots, fearing a large police presence would make matters worse. Five days later, Johnson sent in two divisions of paratroopers to put down the insurrection. Over the next 18 months, an additional 140,000 upper- and middle-class residents – almost all of them white – left the city.

And so, you might rightfully ask… after five years of centralized planning, higher taxes, and a fleeing population, what did the government decide to do with its grand experiment, its “Model City”? You’ll never guess…

Seeing it had accomplished nothing but failure, the government endeavored to do still more. The Model City program was expanded and enlarged by 1974’s Community Development Block Grant Program. Here again, politicians would decide which groups (and even individuals) would receive state funds for various “renewal” schemes. Later, Big Business was brought into the fold. In exchange for various concessions, the Big Three automakers “gave” $488 million to the city for use in still more redevelopment schemes in the mid-1990s.

What happened? Even with all their power and money, centralized planners couldn’t succeed with any of their plans. Nearly all of the upper and middle classes left Detroit. The poor fled, too. The Model City area lost 63% of its population and 45% of its housing units from the inception of the program through 1990.

Even today, the crisis continues. At a recent auction of nearly 9,000 seized homes and lots, less than one-fifth of the available properties sold, even with bidding starting at $500. You literally can’t give away most of the “Model City” areas today. The properties put up for sale last week represented an area the size of New York’s Central Park. Total vacant land in Detroit now occupies an area the size of Boston. Detroit properties in foreclosure have more than tripled since 2007.

Every single mayor of Detroit since 1961 has been a Democrat. Every single mayor of Detroit since 1974 has been black. Detroit has been a major recipient of every major social program since the early 1960s and has received hundreds of billions of dollars in government grants, loans, and programs. We now have a black, Democrat president, who is promising to do to America as a whole what his political mentors have done to Detroit.

Those of you with a Democratic political affiliation may think what I’ve written above is biased or false. You may think what you like. But there is no way to argue that what the government has done to Detroit is anything but a horrendous crime. You may think what I’ve written above is merely a political analysis. Perhaps so, but politicians drive macroeconomic policy. And macroeconomic policy determines key financial metrics, like the trade-weighted value of a currency and key interest rates.

The likelihood America will become a giant Detroit is growing – rapidly. Politicians now control the banking sector, most of the manufacturing sector (including autos), a large amount of media, and are threatening to take over health care and the production of electricity (via cap and trade rules). These are the biggest threats to wealth in the history of our country. And these threats are causing the world’s most accomplished and wealthy investors to actively short sell the United States – something that is unprecedented in my experience.


Porter Stansberry 7-21-12