Week in Review
Obamacare is not going well. The say it is. But it isn’t. The White House can all of a sudden give us a number like 8 million enrollees when they said earlier they couldn’t tell until the insurance companies tell them. And the other big question is this. Are these enrollees? Including all people who enrolled whether they paid or not? Or are these only the people who paid? Or are most of these people enrolling in Medicaid? Those who won’t ever pay? If that 8 million aren’t paying customers Obamacare is doomed.
So the financial foundation of Obamacare is likely very perilous. Where the sick and poor are probably signing up more than the healthy with money. And the delay of the employer mandate to sometime after the midterm election takes a bad financial foundation and makes it worse. For they can’t keep delaying the funding parts until after elections. Because someone has to pay for all of the subsidies. As well as the high cost of the old and sick. Which alone may bankrupt Obamacare (see Labour considers raising national insurance to fix £30bn NHS ‘black hole’ by Toby Helm posted 4/19/2014 on the guardian).
Radical plans to increase national insurance contributions to plug a looming £30bn a year “black hole” in NHS funding and pay the spiralling costs of care for the elderly are being examined by Labour’s policy review.
The Observer has learnt that the idea is among options being considered to ensure NHS and care costs can be met under a future Labour government, without it having to impose crippling cuts on other services in successive budgets.
Senior party figures have confirmed that a scheme advanced by the former Labour minister Frank Field – under which funds from increased NI would be paid into a sealed-off fund for health and care costs – is being examined, though no decisions have been taken.
Recent figures based on data from NHS England and the Nuffield Trust and produced by the Commons library suggest that NHS costs alone will go from £95bn a year now to more than £130bn a year by 2020.
Some have suggested that they designed Obamacare to fail. So they can get what they really want. Single-payer. Or national health care. Like they have in Britain with their National Health Service (NHS). Which is running an enormous deficit. Based on the above numbers it currently is 31.6% (£30bn/£95bn). Which is just unsustainable. But this is what an aging population will do. When you have more people leaving the workforce consuming health care benefits paid for by fewer people entering the workforce. Which should be a huge warning for the United States. Because they have an aging population, too.
At the current exchange rate that £30 billion comes to $50.37 billion. Is this what the US can expect? No. Because they have five-times the population Britain has. So their deficit will be approximately five-times as big. Or $251.85 billion. That’s a quarter of a trillion dollar shortfall PER YEAR. At least. And $2.52 trillion over a decade. So unless the Americans can somehow make their people less sick so they won’t consume health care resources the deficit alone for Obamacare will be more than twice the original CBO projection for the total cost over 10 years. Which means the Americans will have to do what the British must do. Increase taxes. Charge for some health care services in addition to these higher taxes. Or impose crippling cuts to services. Hello rationing. And longer wait times.
This is the absolute worst time to impose a single-payer/national health care system. Just as the baby boom generation fills our health care system in their retirement. It might have worked if we had kept having babies the way we did before birth control and abortion slashed the birthrate. But we didn’t. And now we have a baby bust generation stuck footing the bill for a baby boom generation. Fewer paying for more. And the only way to make that work is with confiscatory tax rates. Or death panels. Because you have to raise revenue. Or cut costs. There is just no other option. Or people can work longer, pay out of pocket for routine, expected expenses and buy real insurance to protect themselves from catastrophic, unexpected medical expenses. Which is actually another option. And probably the only one that will work.
Tags: aging population, baby boom, Britain, death panels, deficit, insurance, longer wait times, National health care, NHS, Obamacare, old and sick, rationing, Single payer
Week in Review
Those on the left settled for the Affordable Care Act. It’s not what they wanted. But they think it can, in time, give them what they want. Single-payer health care. Or a true national health care system. Like they have in Britain. Oh how the left would love to have a no nonsense National Health Service (NHS) in the United States. A system totally funded by general taxation. Because that would be better than Obamacare. And far better than what Obamacare replaced. Now those who think that are either lying to the American people. Or are completely ignorant to what’s going on in the NHS. For the highly esteemed NHS is on life support (see £10 each can save the NHS by Norman Warner and Jack O’Sullivan posted 3/30/2014 on the guardian).
A care and cash crisis is sending the NHS bust. In its present form, a shortfall of £30bn a year, or more, is expected by 2020. Paying off the nation’s deficit means five more years of further deep public expenditure cuts, whoever is in government. So, over-protecting an outdated, cosseted and unaffordable healthcare system inevitably means starving other vital public services, unless we choke off economic growth and worsen the cost of living with big tax increases. That might be worth contemplating if the NHS was offering brilliant care. But it isn’t.
Just look at the thousands of frail elderly people who get the care they need only by queuing in A&E and spending weeks in hospital – the most expensive and often the worst way to look after them. And let’s not forget that the NHS is sleepwalking through an obesity epidemic.
These are truths hidden from public view. Many politicians and clinicians are scared to tell people that our much-loved 65-year-old NHS no longer meets the country’s needs. Frankly, it is often poor value for money, and the greatest public spending challenge after the general election…
Our specialist hospital services should be concentrated in fewer, safer, better-equipped and more expert centres with 24/7 consultant cover and improved transport links…
A new integrated “National Health and Care Service” would pioneer a “co-producing” health partnership between state and citizen, with annual personal health MOTs agreeing responsibilities over the year for both services and the individual. At the heart of this relationship would be an NHS membership scheme, charging £10 a month (with some exemptions) collected through council tax for local preventative services to help people stay healthy.
This is one of several new funding streams urgently needed to renew impoverished parts of our care system but preserving a mainly tax-funded NHS that is largely free at the point of use. We have to escape the constraints of general taxation if we want a decent system…
Just 3.5% of the annual 500,000 deaths lead to payment of inheritance tax. We must expect the elderly, after their deaths, to contribute more. NHS free entitlements, such as continuing care, could be reduced or means-tested and hotel costs in hospital charged, as in France and Germany.
Britain has an aging population. Fewer people are entering the workforce to pay the taxes that fund the NHS. While more people are leaving the workforce and consuming NHS resources. So less money is going into the NHS while the NHS is spending more and more money on patients. Leading to a deficit that they can’t pay for without killing the economy. Or taking money away from other government services.
If the NHS was providing quality health care they could probably justify taking money away from other areas. But it’s not. The one argument for passing Obamacare was that it would reduce the burden on emergency rooms. But it’s not doing that in Britain. The wait times are so long to see a doctor or get a procedure that people are going to the emergency room (A/E in Britain) and waiting for hours instead of waiting for months. Further increasing costs and wait times. And frustrating patients.
So what is the solution to a failing national health care system? Close hospitals and make people travel further for treatment. And charge them £10 ($16.64) monthly in addition to some of the highest tax rates they already pay to fund the NHS. So, to summarize, to make national health care work in Britain they need to close hospitals, make people travel further for care, charge them more money and make them wait longer for treatment. Which is basically the argument against the Affordable Care Act. It would lead to rationing. And longer wait times. Worse, the quality of care will decline. As it has in Britain. As it will in the United States. For we also have an aging population. And we have about five-times the people they have in Britain. Which will make our problems five-times worse than theirs.
What’s happening in the NHS is no secret. Any proponent of national health care no doubt looks at Britain and their NHS. So they must be familiar with how it’s failing. Yet they press on for a similar system in the United States. Why? If it won’t improve our health care system why do they want national health care? This is the question we should be asking the Democrats. Why? Of course they will say Britain just isn’t doing national health care right. After all, they’ve only been doing it for 66 years. So what do they know about national health care? While we, the liberal Democrats will say, will get national health care right from the get-go. Because we are just so much smarter than everyone else in the world.
Of course the British could, and should, fire back with, “Yeah? How did that Obamacare website rollout go? You’d think that someone who is so smart that they could do national health care right from the get-go could actually build a sodding website that works.”
But, of course, they didn’t. And the website was the easiest part of Obamacare. A one and done thing. And if they couldn’t do that right do we really want these people anywhere near our health care? No. Especially when the British are struggling with national health care after trying it for 66 years. For national health care is apparently more difficult to do than building a sodding website that works.
Tags: Affordable Care Act, aging population, Britain, Democrats, emergency room, hospital, National health care, NHS, Obamacare, rationing, Single payer, wait times, website
Week in Review
The left likes to say we’re idiots here in the United States. Because every other advanced economy has national health care. Of course, every other advanced economy doesn’t have the best health care system in the world. No. That honor goes to the United States. And perhaps NOT having national health care is the reason why we have the best health care system in the world. For those national health care systems have their problems. Even the system north of the border the American left yearns to have. The Canadian single-payer system (see New B.C. seniors advocate to focus on needs of growing elderly population by ROB SHAW posted 3/19/2014 on The Vancouver Sun).
Isobel Mackenzie, a longtime Victoria seniors care administrator, was named Wednesday as the province’s first seniors advocate, more than 16 months after the office was first announced…
There are more than 700,000 seniors in B.C. and that’s expected to double to 1.4 million over the next 20 years…
Mackenzie said she’s not sure if her office will get involved in how hospital overcrowding is affecting seniors care, and sidestepped a reporter’s question at her press conference Wednesday about the case of an elderly man who had spent eight hours waiting in a hospital emergency room…
“Obviously, health care is a priority and home care – giving support to people so they can stay at their home and healthy,” she said.
Logan said the government tried an “experiment” of providing funding to United Way but they’ve been “overloaded with requests.”
All of the advanced economies share something in common. They all have an aging population. Thanks to birth control and abortion people in the advanced economies stopped having babies after the Sixties like they used to have. Which is why the seniors are now the largest growing sector of the population. We have fewer people entering the workforce to pay the taxes that support a greater number of people leaving the workforce. And thanks to modern medicine, these people are living long into retirement. Which is why Canadian hospitals in British Columbia are overcrowded. Which lead to longer wait times and the rationing of care. Things common with national health care. And these things are only going to get worse as their aging populations age further.
This is the future of Obamacare. For the Affordable Care Act is already proving unaffordable to those who have to pay. And people are losing the health insurance and the doctors they liked and wanted to keep. A lot of doctors are opting out of Obamacare. Leaving fewer in the system to treat a larger number of patients. Which will, of course, lead to longer wait times and the rationing of care. Just like in Canada. And in every other advanced economy with a national health care system. Which is why the United States is the only advanced economy without a national health care system. Because Americans don’t want longer wait times and the rationing of care. And they don’t want the Affordable Care Act.
Tags: advanced economies, Affordable Care Act, aging population, British Columbia, Canadian single-payer system, doctors, hospitals, longer wait times, National health care, Obamacare, overcrowding, patients, rationing, seniors, single-payer system, wait times
Week in Review
The Keynesians were applauding Shinzō Abe’s economic plans for Japan. To end the never-ending deflationary spiral they’ve been in since the late Nineties. His Abenomics included all the things Keynesians love to do. And want to do in the United States. Expand the money supply through inflationary monetary policy. Devalue the yen to make their exports cheaper. Lower interest rates into negative territory. Quantitative easing. And lots of government spending. The kinds of things that just makes a Keynesian’s heart go pitter pat.
They kicked off Abenomics in 2013. And how are things about a year later? Not good (see Japan’s deficit hits record as economic growth slows posted 3/9/2014 on BBC News Business).
Japan’s current account deficit widened to a record 1.5tn yen ($15bn; £8.7bn) in January, the largest since records began in 1985.
In further bad news, the country’s economic growth figures were also revised downwards…
The sluggish growth and growing deficit come just before a planned sales tax increase, scheduled to take effect in April.
They did weaken the yen. Making it worth less than other currencies so those currencies could get more yen when they exchanged their currencies to buy those Japanese exports. Of course, when Japanese exchanged their yen for those other currencies they got less of those other currencies in return. Requiring more yen to buy those now more expensive imports. Thus increasing their trade deficit.
Japan is an island with a lot of people. They have to import a lot of their food, energy and natural resources as they have little on their island. So the weaker yen just made everything more expensive in Japan. Which, of course, lowered GDP. As those higher prices reduced the amount of buying their consumers could do.
Japan’s greatest problem is her aging population. And they have just about the oldest population in the world. As the youth have slammed the brakes on having children. So you have massive waves of people leaving the workforce the government is supporting in retirement. And fewer people entering the workforce to pay the taxes that support those retirees. Which, of course, forces higher tax rates on those remaining in the workforce. Further reducing the amount of buying their consumers can do. And no amount of Abenomics can change that.
Abenomics did not deliver what the Keynesians thought it would. Because Keynesian economics (aka demand-side economics) just doesn’t work. If it did Japan never would have had a Lost Decade to begin with. For it was Keynesian economics that gave Japan that asset price bubble in the first place. Which burst and deflated into the Lost Decade.
What Japan needs is a return to classical economic principles. Focusing more on the supply side. Lower tax rates and reduce regulation. Let the market set interest rates. Restore the policies that introduced ‘Made in Japan’ to the world. They need to make their capitalism more laissez-faire. If they do they can create the kind of economic activity that just might be able to support the generation who created the ‘Made in Japan’ label in their retirement. But you must have robust economic activity. So robust that lower tax rates can produce greater tax revenue. The supply-side economics way.
Tags: Abenomics, aging population, Consumers, currencies, deficit, exports, government spending, imports, interest rates, Japan, Japanese exports, Keynesian, Keynesian economics, lost decade, quantitative easing, retirees, Supply-side economics, taxes, trade deficit, workforce, yen
Week in Review
The problem with national health care is that it is zero-sum when it comes to budgeting. There is one big pie of funding that they divide throughout the system to pay for all of its parts. But anyone who has ever paid attention to a budget debate in Washington has seen that there is never enough in the pie. And no one is ever satisfied with their slice of the pie. Worse, every department will spend every last cent in their appropriation lest they reduce next year’s appropriation by the amount of any unspent funds in this year’s appropriation. No matter how wasteful that spending is. Such as for conferences in Las Vegas. Or extravagant office parties at home.
Britain’s National Health Service (NHS) is straining under the cost of an aging population. More people are leaving the workforce than are entering it. Which means fewer people are paying taxes. Just as the number of people using the resources of the NHS is growing. Forcing the NHS to do more with less. Which has everyone complaining about their chunk of the NHS budget (see ‘Unprecedented’ cuts see GPs warn half of Britain will be unable to get appointments by Charlie Cooper posted 2/23/2014 on The Independent).
More than 34 million people will fail to secure an appointment with their doctor at some point this year, the GP’s professional body has claimed, blaming “unprecedented” cuts to funding for family practices.
The Royal College of General Practitioners said that the profession was “on its knees” and called for GPs to get a larger share of the NHS budget.
However, the Department of Health dismissed their findings – which would imply that more than half the UK population will miss out an appointment this year – as “complete nonsense” and accused the college of “sensationalising” the issue.
General practice has seen its share of the NHS budget – which totalled more than £109bn in England last year – significantly eroded in recent years, from 11 per cent in 2005/06 to 8.5 per cent in 2011/12…
“GPs and practice nurses want to provide high quality care for every single patient who seeks a consultation, and over the last decade we have increased the number of patients we see each year in England by 40m,” she said. “However [we] can’t keep doing more for less…”
“The GP survey showed the vast majority of patients are satisfied with their GP and rated their experience of making an appointment as good,” the spokesperson said, adding that GPs had been given an extra £50m to modernise services and stay open longer.
Whenever you want to see your doctor you need to make an appointment. In the NHS that could take a few weeks. Which is driving a lot of people to the A/E (accident and emergency departments). Because they are sick now. And don’t want to wait 2 weeks to see a doctor to get an antibiotic for their strep throat.
If you read the comments following the linked article you can get a feeling of what the British people think about the NHS. And an idea of what Obamacare may lead to. They love their NHS. But are exasperated by it. Some think the doctors are too greedy. But there isn’t a mad rush to become a doctor to relieve the doctor shortage. So whatever the pay is it isn’t enough to get people to join the profession. Which ultimately increases the wait times to see a doctor.
The problem is that aging population. People who remember a kinder and gentler NHS remember one before the baby boomers retired and overloaded the system. Who are living longer into retirement. Consuming more of the NHS’ limited resources than people did before the baby boomers retired. Had Britain (and every other advanced economy) not reduced its birthrate around the Sixties they would not have this problem now. But they did. So they are. As we will, too. And every other advanced economy with an aging population will. Making it a very bad time for national health care. Yet President Obama and the Democrats have given us Obamacare at precisely this time. Which is guaranteed to make health care in the United States worse. If you don’t believe that just read the comments following the linked article.
Tags: aging population, appointment, appropriation, baby boomers, Britain, do more with less, doctor, England, GP, National health care, National Health Service, NHS, NHS budget, nurse, Obamacare, patient, wait time
Week in Review
The United States Postal Service (USPS) is going broke. Thanks to email, texting and online bill paying. Making the USPS more and more irrelevant these days. And it’s not just the USPS having this problem (see Ontario mother with sick child urges Canada Post to keep door-to-door delivery by The Canadian Press posted 1/13/2014 on City News Toronto).
An online petition urging Canada Post to reconsider its decision to end door-to-door delivery in urban centres has garnered more than 120,000 signatures…
Canada Post announced some dramatic changes to its operations last month, including plans to phase out the age-old tradition of home delivery in urban areas. The company said that without postal carriers travelling by foot, it would save a significant amount of money…
The petition — posted on the website change.org — draws attention to anyone in Canada who has limited mobility, such as the elderly or disabled, and the possibly dangerous effects this change could have on their lives…
Hamilton said that Canada Post is trying to maintain service to all Canadians but that they need to find innovative ways to do it in order to remain self-sufficient.
Canada Post had projected an annual loss of $1 billion dollars a year by 2020 if they were to continue with the door-to-door delivery.
Part of the reason why Canada can’t afford to keep urban delivery is because they have single-payer health care. Which is pretty costly. Especially with Canada having what all advanced economies have. An aging population. Which means more people are leaving the workforce and consuming taxpayer benefits than there are people entering the workforce paying taxes. And with better health care people are living longer into retirement. Which forces tax rates higher on the working (i.e., the young and healthy) to pay for those not working.
It is interesting that the same people, the young and healthy, are the ones destroying Canadian Post. For they’re the ones emailing, texting and paying bills online. Which means they will have to raise taxes further on the young and healthy to support the older generation. Transferring more and more costs from the old to the young. Which is what happens in a socialist country. Generational theft. Costs keep rising so people have smaller families. Causing the population to age. And requiring ever higher tax rates on those in the workforce to pay for the growing numbers who have left the workforce.
Tags: aging population, Canada Post, door-to-door delivery, email, online bill paying, texting, USPS, workforce, young and healthy
Week in Review
Britain has had its problems with their National Health Service (NHS). Where national health care is proving to be unaffordable. Especially now that their population is aging. People are living longer into retirement and consuming more health care resources. While a falling birthrate is producing fewer new taxpayers to replace those retirees leaving the tax-paying workforce. Forcing them to raise taxes on those still paying taxes. Or cutting spending on those who aren’t paying taxes. Those consuming the lion’s share of their limited health care resources. Those retirees.
Those are the choices. And they are the only choices. Because when it comes to national health care it’s a zero-sum game. Either you take more from some to pay for others. Or you spend less on everyone to make those limited resources cover more people. Which is the great flaw in national health care. Because your health care depends on what others are willing or able to give you. Something that’s been happening ever since health insurance became an employee benefit. For before that you paid for your health care. And no one denied you anything. Because you were in control by paying your own bills. But then came the third parties. First the health insurance companies. And then the government. As always is the case when you introduce ‘middle men’ costs rise and efficiencies fall.
As health care became a benefit it required generational theft. Taking money from the young and healthy to pay for the old and sick. When health care became a right the generational theft grew greater. And when government took over the generational theft grew even greater. As government is notoriously less efficient than private health insurers. Requiring ever more money to provide the same level of health care found in the private sector. Which is why 2013 was not a good year for the NHS (see Was 2013 the NHS’s annus horriblis? by Nick Triggle posted 12/27/2013 on BBC News Health).
It has been a bruising year for the NHS in England…
It kicked off with the publication in February of the Francis Inquiry into events at the Stafford Hospital, which accused the service of betraying patients.
By the start of the summer, another 14 hospitals with the highest death rates were being hauled over the coals for their failings in their care…
As autumn came, another review – this time on complaints – was scathing about the attitude of the NHS to complaints.
The report, led by Labour MP Ann Clywd who had broken down on radio over the care given to her late husband, said there was a culture of “delay and denial”.
Of course, controversy has surrounded the health service before…
But that was about how the service was structured.
This year has been about the very basics – the quality of care – and so in that sense it has felt different…
According to Chris Hopson, chief executive of the Foundation Trust Network, the giant hurdle in the way of further progress is money.
“This is perhaps the trickiest position the NHS has ever been in,” he says.
“We are looking at a period of 10 years where money will be incredibly tight and what we are seeing now is a mismatch between what is being asked for and what is achievable.
The United States has an aging population just like Britain. And has the same problem paying for their health care as they do. Requiring ever greater amounts of generational theft. As Obamacare all but picks up our young by the feet to shake whatever money they can out of their pockets. Which begs the question if the NHS is such a case study in what not to do why did President Obama and the Democrats do the Affordable Care Act?
The answer is simple. Because Obamacare is not about health care. It’s about government power over one-sixth of the U.S. economy. For if it was about health care they wouldn’t have done the Affordable Care Act. Because of the lessons offered by the NHS. Lessons President Obama and the Democrats ignored when passing Obamacare into law. As they weren’t being honest with the American people. Because they want what the British have. Even if it reduces the quality of our health care. Which is obvious by their passing the Affordable Care Act despite all of their woes in the NHS. Which will soon be our woes.
Tags: Affordable Care Act, aging population, benefit, Britain, generational theft, health insurance, limited resources, National health care, National Health Service, NHS, Obamacare
Week in Review
This world isn’t what it used to be. Everywhere people are looking for others to pay their way. Or are so emasculated that living frightens them so that they run to government to parent them. Forever. What happened to those rugged men that entered the wilderness and built civilizations? Who asked not for help. All they wanted was to be left the hell alone. Because they were men. Rugged and fiercely independent. Who filled their speech with obscenities whenever they talked about any form of government or nobility. Because the government and noble classes were nothing but freeloaders looking for the good life they could force others to give them.
Today people have been so brainwashed by their government that they are incapable of doing anything without government helping them. It’s a wonder that they can wipe their bottoms after a poop these days. The growth of the nanny state has brought advanced economies to their knees around the world as the costs of their nanny states push them to the brink of bankruptcy. And still the privileged/frightened people ask for more (see Business groups oppose ‘made in Ontario’ pension plan by Dana Flavelle Economy and Madhavi Acharya-Tom Yew posted 12/17/2013 on The Star).
Ontario’s plans to introduce its own mandatory pension plan could put the province at a competitive disadvantage, business groups warn
“It will add a huge competitive disadvantage to the businesses in the provinces that opt to go down that road,” said Dan Kelly, president of Canadian Federation of Independent Business.
But labour groups and retirees are applauding the province’s move to fill the void left by Ottawa’s decision not to enhance the Canada Pension Plan at this time…
Federal finance minister Jim Flaherty and junior minister of state for finance Kevin Sorenson rejected growing calls to expand CPP [Canada Pension Plan]contributions and benefits, saying now is not the right time to hit employers with higher payroll taxes…
Business groups said they welcomed Ottawa’s decision, noting CPP contributions are one of the two biggest payroll taxes they pay. The other is employment insurance premiums…
Few dispute that Canada’s pension system is no longer adequate to meet the needs of an aging population. People are living longer and saving less, while fewer private-sector employers offer pension coverage at work, a trend that plagues many industrialized nations.
Why are people saving less? Two reasons. First, the more the government taxes away the less they can save. Second, with the government making promises they can’t keep (we will take care of you in your retirement so instead of saving your money spend it) why should anyone save anything for their own retirement?
Of course labor groups (the privileged) and retirees (the frightened) applaud this. Labor wants to give their members a better life than those outside their union. And retirees are living so long into retirement they’re living beyond their contributions into the CPP. And are all for a little generational theft to make up the shortfall.
The defined-benefit pension is a relic of another era. It doesn’t work anymore. If we would have kept having babies like we once did the Ponzi scheme may have kept working. But we didn’t. So the Ponzi scheme is collapsing. As they all eventually do. The rest of the private sector has gone to 401(k)s and other such retirement vehicles. Where we put OUR money away for OUR retirement. Where the government can’t get their dirty little fingers on it. This is the future of retirement savings. Because unlike defined-benefit pensions they are sustainable.
All government pension plans need to make such a change. Because once they do the age of the population will not matter. Because you are saving YOUR money for YOUR retirement. Those retired and those within a decade or so of retirement need to be protected from the folly of government in their retirement. But younger generations coming up need to provide for their own retirement. Because we can’t keep raising taxes. For all that does is send jobs from the First World to the Third World. Good for the Third World. But bad for the First World. And retirees.
Tags: aging population, Bankruptcy, Canada Pension Plan, CPP, defined-benefit pension, labor, nanny states, Ontario, pension, Ponzi scheme, retirees, retirement, taxes
The Scam of the Ponzi Scheme is that there is no Investment
A Ponzi scheme is a pyramid scheme. An investment scam. Here’s how it works. Say three scammers build an investment fund that they promise will return an 18% return on investment. A pretty good return these days. If they have 100 investors who invest $25,000 each that brings in $2.5 million into the investment fund. Now here’s where the scam comes in.
They pay each investor an 18% return each year. So their $25,000 returns $4,500. A return they can’t get anywhere else. An investment just too good to be true. Some take that $4,500 check and spend it on something special for themselves. Others leave it in the fund. While others beg to get into the fund. Of course they wouldn’t do these things if they understood what happened to the $2.125 million that the fund didn’t pay out to investors. That went into the pockets of the three scammers.
That’s the scam of the Ponzi scheme. There is no investment. The scammers collect the money people invest. Put aside some money to pay out as a generous return on investment. While keeping the rest. These scammers sit on top of the pyramid. And the more people that join the investment fund the wider the base of the pyramid gets. Pouring more money into the scam. Providing more money to pay out even higher returns on investments. Getter ever more people begging to get into the fund. While burying the scammers under an avalanche of cash.
Our Aging Population is sending the Health Insurance Industry into a Death Spiral
All Ponzi schemes share these characteristics. And one other one. They all fail. And the scammers go to jail. Why? Simple. The scam works as long as the base of the pyramid continues to grow greater than the top of the pyramid. As the base grows larger the scammers spend more money, though. Because there is more money to spend. And spend they do. Putting down deposits and paying on large mortgages and loans. Buying very costly things that have a voracious appetite for cash. So over time more money flows out at the top of the pyramid. Which isn’t a problem until money stops flowing into the bottom of the pyramid. Or begins to flow out. Because people want to use their money for something else. Like for a down payment on a house. And once the money flowing out of the bottom of the pyramid exceeds the ‘return’ on investment the fund pays those high returns on investments shrink and disappear. Exposing the scam.
This is what has happened to Social Security and Medicare. Thanks to an aging population. Women are having fewer babies than they did during the baby boom generation. So today we have fewer taxpayers entering the workforce who pay the taxes that pay for Social Security and Medicare. While the baby boomers are retiring and leaving the workforce. And living longer into retirement. Consuming far more money than they ever paid into these entitlement programs. So there is far more money flowing out of the top of the pyramid than is flowing into the bottom. Inverting the pyramid. And putting these programs onto the path to bankruptcy.
Health insurance is little different. It just covers so much these days that insurance premiums have soared to pay for this ever expanding coverage. And the aging population just makes a horrible situation worse. The elderly are living longer and consuming the lion’s share of health care services. Further raising the cost of health insurance. Making it unaffordable to many. So people simply choose not to buy it in their youth when they are young and healthy. And wait to buy it later in life when they need it. Such as when they start raising a family. At which time they’ll try to find employment somewhere that has good health insurance. When they start consuming health care services. Creating adverse selection. Where only those who consume health care services buy health insurance. While those who don’t consume health care services (i.e., the young and healthy) don’t. Creating a death spiral. As there are no non-consumers of health care services subsidizing the high cost of the large consumers of health care services. So premiums rise. To allow fewer people pay for more. More people drop their insurance because they can no longer afford it. Shrinking the insurance pool. So premiums rise. To allow fewer people pay for more. More people drop their insurance because they can no longer afford it. And so on until the cost of health insurance equals the cost of the health care services. And the insurance market goes the way of every Ponzi scheme before it.
When Reality hits People in the Pocketbook they tend to Lose their Idealism
Enter the Affordable Care Act and the mandates. Forcing the young and healthy to buy insurance they won’t use. So they can use their premiums to pay for the old and sick. The greatest generational theft in history. Something the young and healthy see. And don’t like. For they are not running out and buying health insurance on the health exchanges. In fact the majority of the people to enroll thus far are the high consumers of health care services. Which is basically the opposite of the goal of Obamacare. The young and healthy may have supported President Obama and the Affordable Care Act but that was only in generalities. Yes, we should help those who don’t have insurance. And, yes, we should do something to save the environment. We should stop discriminating against the LGBT community and let them get married. In the abstract these are all noble goals. But when the reality hits their pocketbook then it’s no longer an abstract thing to feel good about. Especially when they can’t get a job with their college education because they had the misfortune to enter the workforce during the worst economic recovery since that following the Great Depression. The Obama recovery.
This is when youthful idealism turns into skepticism. As reality settles in hard. This isn’t raising taxes on the rich. Something they won’t have to deal with until much later in their career. This is in the here and now. When they stop hearing inspiring words from the president about what we can do if only we implement his policies. But only hear B.S. and lies. For if they had that youthful idealism they would be rushing to the health exchanges to buy health insurance to make the world a better place. But they’re not. And this has the left worried. Not just about trying to fix the broken Obamacare website. But will this skepticism spread to other items on their liberal agenda? Such as the fight against manmade global warming? They still want their carbon tax. And they’ve worked hard to get kids graduating from high school convinced that we’re destroying the planet and need to make polluters pay. If the young lose their faith on Obamacare they may just stop fearing global warming to the point that they may start driving big SUVs again.
In the abstract the youth will support many things. Until it starts hitting them in the pocketbook. And if we make the fight against global warming hit them in the pocketbook they would quickly become indifferent about manmade global warming. Even becoming manmade global warming skeptics. Perhaps even noting that the glaciers once stretched down from the poles to near the equator. And moved back towards the poles. Before there was any manmade global warming. Something that probably bothers them today but they’re not yet ready to question the left about manmade global warming. But if we made them buy insurance to protect themselves from the ravishes of global warming they probably would. The prognosticators can run off a list of calamities that will befall us from unchecked global warming. So actuaries should be able to put a cost on that. And set insurance premiums to cover the cost when the calamities of manmade global warming hit us. Putting these premiums into a Save the Planet from Manmade Global Warming Trust Fund. Just like the Social Security Trust Fund that has nothing in it but government IOUs. Let the youth start paying a monthly premium to save us from manmade global warming and see how soon they become global warming deniers. If we did this global warming insurance would probably sell as well as Obamacare. Because when reality hits people in the pocketbook they tend to lose their idealism. And this is the biggest fear the left has. Because they count on that youthful idealism to win elections. For once people lose their idealism they tend to vote Republican.
Tags: adverse selection, Affordable Care Act, aging population, death spiral, Global Warming, global warming insurance, Health Care, health exchanges, health insurance, idealism, insurance, insurance premiums, mandate, manmade global warming, Medicare, Obamacare, old and sick, Ponzi scheme, pyramid, pyramid scheme, return on investment, scam, Social Security, young and healthy, youthful idealism
Birth Control and Abortion hurt the Welfare State because Babies become Taxpayers
People typically have fewer children during bad economic times. Because you have to feed and clothe kids. Which is very hard to do during bad economic times. Especially if you lost your job during a period of high unemployment. Such as the Great Depression. Or if you’re going through a period of high inflation. Like during the Seventies. We can see this if we look at the birthrate over the years.
(source: Population Reference Bureau)
Bad economic times (Great Depression) fewer births. High inflation (the Seventies) fewer births. Of course, there was something else happening during the Seventies. Which followed the Sexual Revolution. Women were having more sex outside of marriage. But they were using birth control and recently legalized abortion to avoid having children. Women were liberated. The feminists were moving into careers once reserved for men. And because they were having careers they were not being stay-at-home mothers raising a family.
Also during the Seventies there was the zero population growth movement. Among many other movements. As the hippies turned antiestablishment. And anti-capitalist. Preferring a communal life. Where there was no greed or profits. Where everyone was equal and had an equal share. Like the communists enjoyed. Or, rather, suffered. The zero population growth movement protested against having babies. And the threat they posed to the limited resources of the earth. So they were quite happy to see the birthrate fall below the replacement birthrate (about 2.1 children per woman in the United States). Because below this rate future generations will be smaller than previous generations. Which will burden the limited resources of the earth less. But it created a big problem for those who wanted a large socialist state to provide cradle to the grave welfare. For babies become taxpayers.
Because of the War on Poverty it takes Two Incomes to raise a Family Today
We just emerged from a government shutdown that ended with an agreement to raise the debt ceiling. Why? Because they can’t raise tax rates high enough to pay for all of the government’s spending. At least not without putting most everyone below the poverty line after taxes. Which makes that declining birthrate a big problem. For the fall in the birthrate coincided with the expansion of the welfare state in the Sixties. As can be seen in the explosion in welfare spending following LBJ’s launching of his War on Poverty.
(source: The Heritage Foundation)
So just as women were having fewer babies so following generations would be smaller LBJ’s Great Society gave us a new expanding welfare state. That is, once our tax base began to grow smaller with each subsequent generation federal expenditures were growing larger with each subsequent generation. Resulting in higher tax rates on the smaller tax base to pay for it. And massive new borrowings to pay what our taxes won’t. As the government took more of our earnings away median household income stagnated.
(source: The Heritage Foundation)
If you’ve ever wondered why we can’t raise a family on one income these days this is why. It’s the growth of federal spending. Paid for with a growth in tax revenue. Leaving us less money to raise our families. Requiring that second income. This is what the Great Society gave us. And it’s what birth control and abortion gave us. But it gets worse.
This Year Adult Incontinence Pants outsold Baby Diapers in Japan for the First Time
The Sexual Revolution gave us a baby bust generation. Following a baby boom generation. Giving us an aging population. Where more people are leaving the workforce than are entering it. So more people are consuming taxes (Social Security, Medicare, Medicaid, etc.) than are paying taxes. Causing a massive wealth transfer from the young to the old. So an aging population makes it even harder to raise a family. Especially for the young just starting their families. Because of the higher tax rates on a shrinking workforce required to pay for that aging population. Which can lead to worse things than a collapse of the welfare state (see Why have young people in Japan stopped having sex? by Abigail Haworth posted 10/19/2013 on The Guardian)
Japan’s under-40s appear to be losing interest in conventional relationships. Millions aren’t even dating, and increasing numbers can’t be bothered with sex. For their government, “celibacy syndrome” is part of a looming national catastrophe. Japan already has one of the world’s lowest birth rates. Its population of 126 million, which has been shrinking for the past decade, is projected to plunge a further one-third by 2060…
Fewer babies were born here in 2012 than any year on record. (This was also the year, as the number of elderly people shoots up, that adult incontinence pants outsold baby nappies in Japan for the first time.) Kunio Kitamura, head of the JFPA, claims the demographic crisis is so serious that Japan “might eventually perish into extinction”.
This is the zero population growth movement on steroids. The Republicans in the United States shut down the government in an attempt to curtail federal spending. As the public debt is approaching 100% of GDP. Very dangerous territory to be in. But if you think that’s bad it’s far worse in Japan. As their public debt is approximately 214% of GDP. To support a massive welfare state. In a country where the taxpayer is fast becoming an endangered species.
This is the ultimate end of any democracy that learned it could vote itself the treasury. As taxes rise people cut back on their spending. And a big cost item is children. So we have declining birthrates in developed countries with expansive welfare states. And immigration problems. Immigrants who come for those generous state benefits. And governments that want to grant them citizenship. To make them taxpayers. To make up for that declining birthrate. And prevent their own extinction.
Tags: abortion, aging population, babies, birth control, birthrate, births, children, declining birthrate, family, federal spending, Great Society, Japan, kids, public debt, sexual revolution, tax rates, taxpayer, war on poverty, welfare, welfare state, zero population growth, zero population growth movement
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