More Budget Cuts increase Wait Times to see Doctor in the National Health Service

Posted by PITHOCRATES - February 23rd, 2014

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.


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FT202: “You can’t indulge selfishness, narcissism and hedonism and expect the young to give up their life of consumption and gratification.” —Old Pithy

Posted by PITHOCRATES - December 27th, 2013

Fundamental Truth

The Generation that won World War II Sacrificed and Saved for the Future

The generation that lived through the Great Depression and World War II were a hardy people.  They knew a thing or two about sacrifice.  And going without.  For their wants often went unfulfilled.  And they were a skinny people.  As there was not a lot of food to eat.  First because of the Great Depression.  When people could barely afford to stay alive.  And then World War II.  Where the government rationed almost everything for the war effort.

So they spent little.  Saved what they could.  Got used to not having what they wanted.  And always worked hard for a better future.  Sound familiar?  No.  Of course not.  No one’s like this today.  That hardy generation survived the Great Depression and won World War II.  Making the world safe for democracy to flourish.  Their free market capitalism made a prosperous world of plenty.  So their children would never have to live in a world they had lived in.  As it turned out, though, that was a mistake.

Their children were not like their parents.  These baby boomers were not as hardy as their parents were.  While they struggled and went without the baby boomers didn’t.  The baby boomers became the Me Generation.  Because it was all about them.  They rejected the hard work and sacrifice of their parents.  And didn’t save for a better tomorrow.  No.  For them it was all about the here and now.

The Me Generation rebelled against their Parents and became Anti-Parents

The Me Generation didn’t save like their parents.  They spent.  Changing the economy forever.  From one made strong and healthy driven by private savings that banks converted into investment capital.  To a Keynesian one.  Where Keynesian economists viewed savings as economic leaks from the economy.  No.  Spending was better.  Consumption was better than saving.  Besides, what did we have to save for anymore with the Federal Reserve printing money?  And the government paying our way for us in retirement?

The Me Generation was only too happy to help transform the government from one of savings and investment to one of consumptionand gratification.  And they lived Life in the Fast Lane (by Joe Walsh, Glenn Frey and Don Henley, recorded by the Eagles in 1976 on the studio album Hotel California).   “Everything all of the time.”  And when that wasn’t enough there was cocaine to fill the remaining emptiness.  “There were lines on the mirror, lines on her face.”  Sometimes the drug use became so intense it interfered with another past time of the Me Generation.  Sex.  “He was too tired to make it, she was too tired to fight about it.”

So while their parents won the Second World War they were partying and getting high and having as much casual sex as their excessive drug use allowed.  And because of it the Seventies gave us a new drug in the Eighties.  Crack.  And a war on drugs.  As well as AIDS.  Thank you, Me Generation.  For rebelling against your parents and becoming anti-parents.  Destroying our past culture and traditions.  And our religion.  Just so you can have “everything all of the time.”  Right now.  Without ever waiting to gratify an urge or desire.

Obamacare will Fail because the Young won’t give up their Life of Consumption and Gratification

The counterculture (i.e., the anti-parents) movement then entered academia.  Took over the curriculum in our public schools.  And our colleges and universities.  Where they taught our kids that everything their parents told them was wrong.  That they are destroying the environment.  That American imperialism is the greatest threat to world peace.  That the Founding Fathers were rich white slave owners who wrote the Constitution to further their greed.  That free market capitalism is cruel, callous and unfair.  While government is kind, feeling and fair.

The Me Generation learned something valuable as they entered academia.  And government.  That there are a lot of young people who vote.  And because many of them grew up already rebelling against their parents they pushed these people closer to them.  The anti-parents.  Helping them to hold on to political power.  So they appealed to all the things young people want.  Such as sex.  By providing free birth control and access to abortion.  They attack Christianity and tell their students there is nothing wrong with their life of consumption and gratification.  And, of course, they favor decriminalizing drugs.  And are making great headway in that area with marijuana.  I mean, kids just love the Democrats.  For they indulge their every want and desire.  Without parenting them to sacrifice and save for their future.  Like their insufferable parents.

So our young have never been defined more by selfishness, narcissism and hedonism.  Always living for the moment.  Without a care in the world for the future.  Making even the Me Generation seem selfless.  Who lived in relative anonymity in their narcissistic world.  Unlike today’s youth.  Who can’t survive without Instagram, Twitter and Facebook.   And must share every iota of their existence with the entire world.  Because it’s all about them.  The world revolves around them and the pursuit of their life of consumption and gratification.  So it is rather ironic that the very thing that keeps Democrats in power—indulging in the youth voters’ selfishness, narcissism and hedonism—could deal such a threatening blow to their power.  For Obamacare to work they need these young voters to be more like their parents and less like the people they are.  Thanks to the Democrat indoctrination in our public schools, colleges and universities.  To sacrifice some of their wants and desires to help their parent’s generation.  To consume less.  So the people they rebelled against can have free medical care.

This is why Obamacare (the Affordable Care Act) will fail.  The young and healthy do not want to give up their life of consumption and gratification.  Which means they’re not buying health insurance.  Only the old and sick are.  Because they need health care.  While the young and healthy don’t.  So they are not going to buy costly health insurance policies that they feel they will never use.  Instead they’ll pay the lower-cost fine.  So they can continue to live their life of consumption and gratification.  That the Democrats told them all their life was what they should do.  Not to save for the future.  Or sacrifice.  For their parents.  Their community.  Or their God.  So the Affordable Care Act will fail.  Because you can’t indulge selfishness, narcissism and hedonism and expect the young to give up their life of consumption and gratification.


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Decriminalize Marijuana and the Kids will Smoke more and Eventually Vote Democrat

Posted by PITHOCRATES - July 28th, 2013

Week in Review

Teenagers typically vote Democrat.  In part because of the liberal bias in our public schools.  And in our colleges.  As well as in the mainstream media.  In Hollywood.  In television.  And the music industry.  These things do a lot to shape the way our kids think.  But there is another reason why our kids become Democrat voters.  Because it is the left that is handing out free birth control.  While their parents say ‘no’ the left says ‘go ahead.  Have fun.’  And then there is the push by the left to decriminalize marijuana.  Something else these kids’ parents say ‘no’ to.  While the left says ‘go ahead.  Have fun.’  Even if it may be harmful to them.  For what’s a few burnt brain cells in exchange for the youth vote (see Pot’s march toward mainstream by Alicia A. Caldwell And Nancy Benac, The Associated Press, posted 7/27/2013 on The Vancouver Sun)?

It is a moment in the U.S. that is rife with contradictions: People are looking more kindly on marijuana even as science reveals more about the drug’s potential dangers, particularly for young people…

Exploration of the potential medical benefit is limited by high U.S. government hurdles to research. Washington policy-makers seem reluctant to deal with any of it.

So we know it’s bad for the children.  But we really don’t know how bad.  For it is the only medicine (medical marijuana) ever allowed without proving the drug through clinical trials.  To make sure the drug works.  And it doesn’t cause irrevocable harm.  No pharmaceutical is allowed this luxury when bringing a new drug to market.  And we know how dangerous cigarettes and alcohol are.  But not marijuana.  No.  That drug we just accept on faith that it will cure us.  Besides just giving us a great high.

Opponents of pot are particularly worried that legalization will result in increased use by young people.

“There’s no real win on this from a political perspective,” says Sabet. “Do you want to be the president that stops a popular cause, especially a cause that’s popular within your own party? Or do you want to be the president that enables youth drug use that will have ramifications down the road?”

If anyone legalizes it will be the left.  Who are always attacking the right for hating children whenever they say we can’t afford to spend any more money.  But smoking pot harms kids.  And the left is okay with that.

“Having a regulated system is the only way to ensure that we’re not ceding control of this popular substance to the criminal market and to black marketeers,” says Aaron Smith, executive director of the National Cannabis Industry Association, a trade group for legal pot businesses in the U.S. See Change Research, which analyzes the marijuana business, has estimated the national U.S. market for medical marijuana alone at $1.7 billion for 2011 and has projected it could reach $8.9 billion in five years. Overall, marijuana users spend tens of billions of dollars a year on pot, experts believe…

In Washington state, the Liquor Control Board is drawing up rules covering everything from how plants will be grown to how many stores will be allowed. It expects to issue licences for growers and processors in December, and impose 25 per cent taxes three times over – when pot is grown, processed and sold to consumers…

Marijuana advocates in Washington state…have projected the legal pot market could bring the state a half-billion a year in revenue…

Decriminalizing marijuana will make it easier for kids to smoke it.  Because it’s easier to get things that are only illegal for people under a legal age.  As opposed to being completely illegal.  Kids aren’t legally allowed to smoke cigarettes but they do.  In fact, it is fair to say kids smoke more cigarettes than marijuana.  Because cigarettes aren’t completely illegal.  They’re only illegal for kids.

So cities suffering under the crushing costs of their public sectors are looking at a windfall of tax revenue by decriminalizing marijuana.  And don’t seem to have a problem of people spending more of their money on getting high instead of saving for their retirement.  Paying for their kids’ education.  Or putting food on the table.  It was the same thing when cities scrambled to legalize gambling.  Because they wanted the tax revenue.  Despite people gambling away money that they should have spent on their family.  No doubt these cities would be disappointed if more kids didn’t start smoking marijuana.  So that when they grew into adults they would already have a healthy drug habit the city could tax.  To help pay for the crushing costs of their public sectors.

Of course, the states and cities will never see those rosy projections of tax revenue.  Because when they “impose 25 per cent taxes three times over” they will raise the price of legal marijuana so much that it will benefit, not hurt, the black market for marijuana.  Even if the black market price is below the official taxed price.  Why?  Because people smuggling cigarettes from a low-tax state to a high-tax state don’t do the time drug dealers do when caught.  Encouraging more people to sell a legal substance illegally.  To cheat the state out of that tax revenue.  And pot smokers, especially the kids, will turn to the black market for their pot.  Where it will be even more readily available when the growing, transporting and selling of marijuana is no longer illegal.  Like cigarettes.  Which kids have no problem buying.

California steps back California’s experience with medical marijuana offers a window into pitfalls that can come with wider availability of pot.

Dispensaries for medical marijuana have proliferated in the state, and regulation has been lax, prompting a number of cities in the state to ban dispensaries…

In May, the California Supreme Court ruled that cities and counties can ban medical marijuana dispensaries.

A few weeks later, Los Angeles voters approved a ballot measure that limits the number of pot shops in the city to 135, down from an estimated high of about 1,000. By contrast, whitepages. com lists 112 Starbucks in the city…

In 2010, California voters opted against legalizing marijuana for recreational use, drawing the line at medical use.

But Jeffrey Dunn, a Southern California lawyer who has represented cities in pot cases, says that in reality the state’s dispensaries have been operating so loosely that already “it’s really all-access.”

“What we’ve learned is, it is very difficult if not impossible to regulate these facilities,” he said.

The people may have voted for marijuana in California.  But the people didn’t like living in a Cheech and Chong movie surrounded by stoners.  And seeing a pot shop every time they turned around.  Which is the last thing a parent wants.  To have it so much easier for their kids to smoke pot.  Or eat it.

A Denver-area hospital, for example, saw children getting sick after eating treats and other foods made with marijuana in the two years after a 2009 federal policy change led to a surge in medical marijuana use, according to a study in JAMA Pediatrics in May. In the preceding four years, the hospital had no such cases.

The Colorado Education Department reported a sharp rise in drugrelated suspensions and expulsions after medical marijuana took off.

“What we’re doing is not working,” says Dr. Christian Thurstone, a psychiatrist whose Denver youth substance abuse treatment centre has seen referrals for marijuana double since September. In addition, he sees young people becoming increasingly reluctant to be treated, arguing that it can’t be bad for them if it’s legal.

You decriminalize marijuana and, of course, kids will see that as an admission from the state that smoking pot can’t be bad for you.  So more kids use the drug.  Ending up in the hospital.  Getting suspended or expelled from school.  Or in drug rehab for a pot addiction.  But the left is okay with this.  Because, after all, it is the right that hates kids.  Whereas the left is the cool uncle that will let their niece and/or nephew smoke a joint.  Which is why the kids love the left.  They are always helping them do things their parents won’t let them do.

Legalization foes Opponents counter with a 2012 study finding that regular use of marijuana during teen years can lead to a long-term drop in IQ, and another study indicating marijuana use can induce and exacerbate psychotic illness in susceptible people. They question the notion that regulating pot will bring in big money, saying revenue estimates are grossly exaggerated…

They warn that baby boomers who draw on their own innocuous experiences with pot are overlooking the much higher potency of today’s marijuana.

In 2009, concentrations of THC, the psychoactive ingredient in pot, averaged close to 10 per cent in marijuana, compared with about four per cent in the 1980s, according to the National Institute on Drug Abuse.

So the left will sacrifice our children for money.  So they can pay for those costly public sectors breaking their budgets.  They won’t take on the public sector unions.  But they will sacrifice our kids.  Because kids don’t pay taxes.  Or vote.  Yet.  But when they do they hope they will remember their cool uncle when in the voting booth.

The baby boomers, who filled the theaters watching Cheech and Chong movies, look back to their days of pot smoking with nostalgia.  Thinking they turned out all right.  And so will the younger generation.  As they anxiously wait for the decriminalization of marijuana so they can buy more.  And smoke more.  Loving the high potency of the new stuff.  Not at all like the stuff they grew up smoking.  Which still fried their brains.  Providing a head start to what dementia will do to them as they reach their golden years.

Kids will on average start smoking at an earlier age.  More of them will smoke because if it’s legal it can’t be bad for you.  And they will be smoking a more potent marijuana than their parents smoked.  Accelerating the damage pot smoking will do to them compared to what it did to their parents.  But the left is okay with that.  Because it is the right that hates the children.  Not the cool uncle.  At least that’s how the youth vote will see it.  Which is all that matters to the left.


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Aging Populations and State-Provided Health Care will Stress State Systems to Collapse

Posted by PITHOCRATES - June 16th, 2013

Week in Review

When people provided their own health care and retirement nest eggs it didn’t matter if the population was aging or getting younger.  For each person planned to take care of him or herself.  But when the government took over health care and retirement nest eggs the age of the population began to matter.  For when the state provides these benefits they have to pay for them via taxes.  And if the population is aging that is a big problem.  Because more people are leaving the workforce and consuming health care and pension benefits than there are entering the workforce to pay for them.

Which means the government has to increase tax rates on those paying for these benefits.  And when people are living longer into retirement it really throws a wrench into the state’s plans.  For it is requiring a level of taxation that simply isn’t possible.  And this is exactly what the baby boom generation is doing to advanced welfare states throughout the world.  It’s causing greater governmental expenditures.  Resulting in larger budget deficits.  And financial crises (see Our aging population set to put a heavy toll on our systems, and we’re not ready by Simon Kent and Shawn Jeffords posted 6/14/2013 on the Toronto Sun).

The first baby boomers began turning 65 in 2012, and by 2036, one out of every four of our neighbours will be elderly…

“We don’t have a health care system in Canada, we have an acute care system,” [Sharon] Carstairs [former senator and was the first woman to lead an opposition party in Canada] after becoming Manitoba’s Liberal leader in the ’80stold QMI Agency.

The very sick are cared for well but we don’t do a good job of keeping others at home and out hospitals and high-cost facilities.

“We’re using acute care hospital beds to hold thousands of Canadians who should be in long-term care or home care,” she says…

Canada has a “little bit of breathing space” for preparations to cope with aging boomers, but not much, suggests University of Toronto professor emeritus David Foot, one of the country’s most respected demographers.

“We need to get this right to prepare for that boomer onslaught,” Foot says. “We can have an excellent system if we choose to.”

Zero hour is 2027.

“The first boomer born in 1947 reaches 80 in 2027,” Foot says.

That’s when the critical mass, the largest bulge of the baby boom, approaches 80 and will require the most care of their lives…

Canada needs to train gerontologists, therapists, psychiatrists, palliative care nurses and specialists, replace the workforce of aging nurses and the army of some 3 million volunteers who currently provide the bulk of in-home care to seniors, say experts…

“The sheer number of baby boomers that will be drawing on the system will magnify and put pressures on the systems that has not been felt before,” he says.

Both the United States and Canada have aging populations.  And a baby boomer bulge coming down the pike.  It will make it very difficult in Canada.  And far worse in the United States.  For they have about 9-times the population of Canada.  And will have 9-times the baby boomer bulge.  Making it a very poor time for the state to take over more pension and health care spending obligations.  Which is exactly what the Americans did by passing Obamacare into law.

The United States is already suffering record trillion dollar deficits.  By the time Obamacare pays to train gerontologists, therapists, psychiatrists, palliative care nurses, specialists, etc., and builds nursing homes to handle the baby boomer bulge the deficit will soar even higher.  Unless there really are death panels in Obamacare.  Which may be the only way not to break the fiscal back of the nation.  Well, there’s that.  Or they could let people provide their own health care and retirement nest eggs like they once did.  And then the age of the population would be irrelevant.  For it basically comes down to these two options.  Either we pay for our own health care and retirement.  Or the government will have to figure out how to cut costs.  And how do you do that when the largest cost is caring for the very old and the very sick?  In a word, death panels.  Well, two words, actually.

Welcome to the brave new world of Obamacare.


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Bad Health Care in Obamacare will be as Inevitable as it is in the NHS

Posted by PITHOCRATES - December 29th, 2012

Week in Review

As Obamacare kicks off in January what can we expect from the greatest overhaul of the American health care system?  A step towards national health care?  Well, the best way to understand what’s in store for us is to look at a populous nation with national health care.  The UK.  Which has only 1/5 the population the US has.  Where bad health care in their National Health Service (NHS) is, to quote someone from the UK, inevitable (see Bad care is inevitable in the NHS by Harry Mount posted 12/24/2012 on The Telegraph).

… the appalling neglect of 38 patients at the Alexandra Hospital in Redditch is the logical result of the NHS’s untenable management structure.

Imagine if everything at Tesco’s [a British grocery and general merchandise retail store like Wal-Mart in Europe, Asia and North America] was free but rationed, and subject to delivery delays of several months. Then throw in the fact that there are no other free alternatives. You would have a nightmare on your hands – huge queues, attracted by the free goods, then further stretched by the long delays.

Imagine how the staff would then behave – harrassed by the limitless demand of customers, but also in a tyrannical position of monopoly power, because there is no alternative provider. They can be as rude as they like, knowing that the customer has nowhere else to go; knowing that, without their services – food in the Tesco’s case, life-saving healthcare in the case of NHS – you will die.

On top of all this, imagine that the government ran Tesco’s, with absolutely no previous skill or experience in running supermarkets.

This is not to say that the people in the NHS are bad.  It’s just that when you put good people in bad situations they tend to lose their empathy.  Because they are forced to deal with the shortages and rationing on a daily basis.  And are powerless to do anything about it.  For this is national health care.  Trying to do more with less.  The costs of caring for their aging baby boomers are overwhelming the NHS.  As the baby boomers have left the workforce and no longer pay income taxes.  And who are now consuming the lion’s share of their limited health care resources.  Less revenue.  And more costs.  A recipe for disaster.

This is the future of American health care.  Only with 5 times the population the shortages and rationing will be 5 times worse.  And if we ask someone who knows a thing or two about national health care what they think Obamacare will be like we can guess their answer.  Bad health care in Obamacare will be inevitable.  For if the British can’t negotiate the aging population problem at a 1/5 scale what chance do the Americans have at trying their struggling system at full scale?  It’s a recipe for disaster.  Heavy on the disaster.


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President Obama to Raise Taxes but it won’t Help our Budget Woes

Posted by PITHOCRATES - November 11th, 2012

Week in Review

It takes two things to make tax revenue.  Tax rates.  And economic activity.  For if you don’t have the economic activity it doesn’t matter what the tax rates are.  Because any given percentage of smaller amount of national income will be less than the same percentage of a larger amount of national income.  That is, higher incomes produce more tax revenue.  Not higher tax rates.  It’s simple arithmetic.  Something the Democrats talked a lot about in the recent campaign.  As if they understand this simple arithmetic.  Yet they don’t seem to understand that taxing a bigger pile of money produces more tax revenue that taxing a smaller pile of money (see Obama Wins 2012 Election: Why Your Taxes Are Going Up by Morgan Korn posted 11/7/2012 on Yahoo! Finance).

Obama has vowed to raise the top income tax rate for individuals to 39.6% and let the Bush-era tax breaks end for the highest income earners. The majority of Americans — those who are lower to middle class — could also see a 2% tax increase if Congress allows the temporary payroll tax holiday to expire at the end of the year…

Len Burman, a professor of public affairs at Syracuse University and a co-founder of the bipartisan Tax Policy Center, believes higher tax rates play just a small role in resolving the nation’s budget woes.

“In the long term [Obama] is going to need to raise taxes on more than just the rich,” Burman says in an interview with The Daily Ticker. “The budget problem isn’t going to be solved without broader-based tax increases, preferably done in the context of tax reform and also serious entitlement reform. We’re not going to be able to solve this on the tax side alone.”

After World War II our veterans came back home and started making babies.  Giving us the baby boom.  And the baby boomers.  Who entered the workforce about 20 years later.  Causing a boom in the tax base.  Resulting in a higher national income.  And higher tax revenues.  Which LBJ put to good use with his Great Society.  Giving us Medicare that cost a small fraction of our incomes in payroll taxes.  It was nothing in the grand scheme of things.  While the benefits were huge for our seniors.

So the welfare state exploded.  Thanks to that increasing tax base.  And those veterans making so many babies.  But then something happened in the Sixties.  Those baby boomers did not return the favor and continue the baby boom.  Instead opting to have fun instead.  Enter birth control.  And abortion.  Birthrates fell.  In time fewer people entered the workforce than left it.  Causing the population to age.  And the tax base to shrink.  All while those new entitlement programs continued to grow.  So fewer and fewer people paid for more and more entitlements.  A recipe for disaster.  A recipe for what we have today.  Entitlement spending obligations greater than the current tax base can afford.  And you can’t fix that with higher tax rates or new taxes.  You need a larger tax base (i.e., another baby boom).  Or entitlement reform.

It would take another 20 years for a new baby boom to produce new taxpayers.  So that leaves entitlement reform as our only choice.  And the only serious attempt to reform entitlements was roundly dismissed by the Democrats when Paul Ryan put his plan on the table.  Which was the only plan.  The only problem with the Ryan plan was that politicizing it would benefit the Democrats in the upcoming election.  So that’s what they did.  For winning elections trumps everything for Democrats.  Even saving Medicare.


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Rich Doctors say Tax Them More to Help Fund the Canadian ‘Obamacare’ System that Makes them Rich

Posted by PITHOCRATES - March 25th, 2012

Week in Review

People distrust rich people.  That’s why they want to tax them more.  Because they have more than enough money.  No matter what they say about earning their money or how they invest their wealth to create jobs.  People don’t want to hear any of this.  For they ‘know’ that these rich fat cats are lying just to keep from having to ‘share’ their wealth.  But whenever a rich guy says ‘tax us rich people more’ everyone hangs on to their every last word.  For if they are talking about raising taxes on the rich then these are not your typical rich.  They’re the good kind.  Like these doctors in Canada (see Tax us more, doctors urge (Are the lawyers listening?) by Michael Babad posted 3/22/2012 on The Globe and Mail).

A group of doctors is taking a page from Warren Buffett’s tax-the-rich call, urging the Canadian and Ontario governments to tax higher-income earners more…

Doctors for Fair Taxation plan to announce their scheme in Toronto this afternoon, calling for additional taxes on people earning more than $100,000. You’d be hit with an additional 1 per cent if you earn between $100,000 and $170,000, 2 per cent if you earn up to $640,000, and 3 per cent for up to $1.85-million. Above that it would be 6 per cent.

“We feel that this is a moral argument,” Dr. Michael Rachlis, who founded the group that so far boasts more than 50 physicians, told The Canadian Press.

“We cannot talk about throwing people out of work and cutting needed programs for people,” said Dr. Rachlis, an associate professor at the University of Toronto.

Wow.  Sounds very selfless, doesn’t it?  These rich guys asking to be taxed more to help their country?  At least on the surface it does.  But the question that begs to be asked is what are they spending so much money on that they have to raise taxes?  And when you learn what that is it puts these doctors into a different light.

Here’s an article from 2010.  About two years ago.  Talking about a budget crisis.  Where spending is out of control.  Spending that the Canadians just can’t sustain.  And where is this out of control spending?  Why, it just happens to be in the industry that pays these doctors.  Canada’s single-payer health care system.  Talk about coincidences.  These doctors asking rich people everywhere to help pay the nation’s bills.  Where the biggest bill is the one that pays these doctors (see Soaring costs force Canada to reassess health model by Claire Sibonney posted 3/31/2010 on Reuters).

Pressured by an aging population and the need to rein in budget deficits, Canada’s provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system.

Ontario, Canada’s most populous province, kicked off a fierce battle with drug companies and pharmacies when it said earlier this year it would halve generic drug prices and eliminate “incentive fees” to generic drug manufacturers.

British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit — an idea that critics say is an illegal user fee.

And a few provinces are also experimenting with private funding for procedures such as hip, knee and cataract surgery.

It’s likely just a start as the provinces, responsible for delivering healthcare, cope with the demands of a retiring baby-boom generation. Official figures show that senior citizens will make up 25 percent of the population by 2036.

Proponents of national health care in America blame the private health insurers, the pharmaceuticals and the hospitals for out of control health care costs.  What they say we need is a system like Canada.  Where they put people before profits.  And yet here they are.  The Canadians.  With a health care system suffering from out of control costs.  Which they are trying to fix with higher taxes.  Additional fees.  Even a little Americanization (that is, privatization).  Makes you wonder why we’re going forward with Obamacare while the Canadians are finding that type of a system is unsustainable.  Especially when our retiring baby boomers outnumber their retiring baby boomers. 

Canada, fretting over budget strains, wants to prune its system, while the United States, worrying about an army of uninsured, aims to create a state-backed safety net.

Healthcare in Canada is delivered through a publicly funded system, which covers all “medically necessary” hospital and physician care and curbs the role of private medicine. It ate up about 40 percent of provincial budgets, or some C$183 billion ($174 billion) last year.

Spending has been rising 6 percent a year under a deal that added C$41.3 billion of federal funding over 10 years.

But that deal ends in 2013, and the federal government is unlikely to be as generous in future, especially for one-off projects.

Wow.  Look at that.  Almost half of provincial budgets pay for the ‘free’ health care of Canadians.  Which is causing budget deficits at the provincial level.  And at the national level.  Well, up until 2013, that is.  When the national government is going to address their budget deficits by cutting their health care payments to the provinces.  Increasing the provincial budget deficits in the process.  Leaving the provincial governments to tax and spend more.  Or ration care and cut spending more.  Including doctor pay.  Could this have anything to do with those selfless physicians asking that their government tax the rich more?  Perhaps.

Brian Golden, a professor at University of Toronto’s Rotman School of Business, said provinces are weighing new sources of funding, including “means-testing” and moving toward evidence-based and pay-for-performance models.

“Why are we paying more or the same for cataract surgery when it costs substantially less today than it did 10 years ago? There’s going to be a finer look at what we’re paying for and, more importantly, what we’re getting for it,” he said.

Other problems include trying to control independently set salaries for top hospital executives and doctors and rein in spiraling costs for new medical technologies and drugs.

Ontario says healthcare could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked…

The province has introduced legislation that ties hospital chief executive pay with the quality of patient care and says it wants to put more physicians on salary to save money.

In a report released last week, TD Bank said Ontario should consider other proposals to help cut costs, including scaling back drug coverage for affluent seniors and paying doctors according to quality and efficiency of care.

So the power of government inserted into the health care system has done nothing to lower the cost of medical procedures in Canada.  Makes you scratch your head, doesn’t it?  Because the proponents of Obamacare say that’s exactly what the power of government can do.  But in practice it has failed to do what these theorists say it can do.  Cut costs.  Through bureaucratic management.  And ‘turning of the screws’ on the medical device and drug manufacturers.  Despite this very practice NOT working in Canada.  Which means that the proponents of Obamacare think the Canadian bureaucrats simply aren’t smart enough to make their health care system work efficiently.  That the system of government-managed health care is a flawed system when it comes to costs and efficiency.  Or that government-managed health care is not about costs or efficiency.  But about the bureaucracy itself.  The control and power it offers the politicians.  And the votes it can buy them.

“Many of the advances in healthcare and life expectancy are due to the pharmaceutical industry so we should never demonize them,” said U of T’s Golden. “We need to ensure that they maintain a profitable business but our ability to make it very very profitable is constrained right now.”

Scotia Capital’s Webb said one cost-saving idea may be to make patients aware of how much it costs each time they visit a healthcare professional. “(The public) will use the services more wisely if they know how much it’s costing,” she said.

Wait a minute.  To fix the government-managed system they need to make the patients aware of the costs so they can choose wisely?  There’s a name for such a system.  We call it capitalism.  The very thing missing from government-managed health care.  And the very reason why government-managed systems (the Canadian health care system, the American Medicare/Medicaid programs, the UK’s National Health Service, etc.) fail to control costs.  And why Obamacare will fail to control costs.  Because they exclude the one thing that controls costs best from government-managed systems.  Capitalism.  Where people make spending decisions based on cost.  Which will never happen when someone other than the patient pays for the costs for the medical services a patient receives.  For no one ever asks ‘how much’ when they’re not paying the bill.

So when a rich doctor says to tax the rich more is this selfless?  Or selfish?  You decide.


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A Limping U.S. Economy gets no help from WTO Ruling, Inflation or Entitlement Spending

Posted by PITHOCRATES - May 18th, 2011

The WTO Rules against the US/Boeing in favor of EU/Airbus

Government subsidies are costly.  In more ways than one (see WTO Airbus ruling leaves both sides claiming victory by the BBC posted 5/18/2011 on the BBC News Business).

“This report confirms for decades the European Union… [has] provided massive amounts of market-distorting launch aid and other subsidies that are inconsistent with WTO rules.”

However, Airbus’ Mr Enders claimed the decision meant Germany, France, the UK and Spain could continue providing funding for Airbus via public-private partnership arrangements…

Earlier this month in a separate case, Boeing was found guilty of receiving over $5bn of unlawful subsidies from Washington.

Ever price a Boeing 747?  If you’re looking to buy one today it’ll set you back some $300 million.  Each.  It’s a big plane with a big price tag.  But it’s a money maker.  Once upon a time she ruled the skies.  It was every airline’s long-haul choice.  Because it could carry more people than anything else out there.  And the more people you pack into an airplane the more money you make.  Economies of scale.  That’s why the Concorde is no longer in service.  It didn’t make money.  Seating only 100 people it couldn’t charge enough in ticket prices to offset the great costs of flying it and make a profit.  So it was only a prestige thing for British Air and Air France.  And a toy for the super rich.

The 747 soon faced competition from Airbus.  First the A330 and A340.  Then the double-decker A380Boeing lost sales to Airbus.  And not always fairly.  According to them.  The consortia that made up Airbus (Germany, France, the UK and Spain) subsidized Airbus.  Thus making Airbus planes more cost competitive than those from rival Boeing.  Why does this matter?  Look again at the price of a 747.  It’s the biggest U.S. export product.  And in a nation with a declining manufacturing base and an increasing trade deficit, anything that reduces sales of Boeing planes hits their balance of trade hard.  So much so that even the U.S. government tries to subsidize Boeing to help them compete against Airbus.

With the WTO ruling, Airbus subsidies will continue.  Cutting more into U.S. manufacturing.  And increasing the trade deficit.  Not good economic news for the Americans.  Among other bad news.

Unemployment and now Inflation

Ben Bernanke has been trying to resuscitate a flat-lining U.S. economy with free money.  Hasn’t improved the numbers much.  The unemployment rate just went up.  The economy isn’t looking good.  And now this (see Inflation concerns dominate April Fed meeting by the Associated Press posted 5/18/2011 on the Los Angeles Times).

The Federal Reserve last month began debating how it should start reversing policies that pumped billions of dollars into the economy during the recession. Some members said the Fed might need to start boosting interest rates this year to guard against inflation…

Some members thought the Fed would need to start signaling that record-low interest rates would need to rise. A few members believed the Fed might need to boost its key interest rate or start to sell some of the assets in its portfolio later this year. Both moves would lead to tighter credit and higher rates on consumer loans.

Inflation.  Like the Americans didn’t have enough to worry about with a declining manufacturing base, a growing trade deficit, high unemployment and a recession that doesn’t end.  And if that wasn’t bad enough, entitlement spending just keeps piling on the woe in large deficits.  That adds to the debt.  Forcing the Americans to borrow ever more.  So much so that Standard and Poor’s took notice and lowered their outlook for the U.S. economy.  Not a good thing when you’re trying to sell treasury bonds.  Things are getting a little difficult in the United States.

Entitlement Spending Heralding the end of the Republic?

Thankfully, America has a representative republic.  Where there are responsible, disinterested wise people between the people and the treasury.  Because the masses don’t understand public finance as well as these wise people, the wise can step in and protect the people from themselves.  For as Benjamin Franklin warned, once the people learn they can vote themselves the treasury it will herald the end of the republic.  So they, the wise, will step in and address the entitlement spending problem.  Per the responsible, disinterested Founding Fathers‘ design (see Healthcare ills infect 2012-bound Republicans by Patricia Zengerle posted 5/18/2011 on Reuters).

The Republican budget plan passed by the House of Representatives last month would repeal the Obama healthcare law, scale back spending on the state/federal Medicaid healthcare program for the poor and implement the plan from Ryan, chairman of the House Budget Committee.

With polls showing two-thirds of Americans prefer to keep Medicare in its current form, Democrats have been rushing to take political advantage…

“Candidates already are capitalizing on this issue and using it to say Republicans are outside the mainstream,” said Darrell West of the Brookings Institution think tank.

Or not.  Some will take the low road.  And politicize the crisis for personal gain.  Even knowing full well that today’s gains could very well destroy Social Security, Medicare and Medicaid for future recipients.  This would be the polar opposite of the selfless Founding Fathers.  Who tried to build a nation that would stand the test of time.  Unlike the selfish of today who are just looking out for themselves.

The Here and Now versus Tomorrow

Everyone knows there is an entitlement spending problem.  And some are more than willing to trade a hard future for an easier today (see FEULNER: Saving the American dream by Ed Feulner posted 5/16/2011 on The Washington Times).

America is on the verge of becoming a country in decline – economically stagnant and permanently debt-bound, heavily regulated and bureaucratic, less self-governing and less free…

To get our fiscal house in order, we must address Social Security, Medicare and Medicaid, the three so-called “entitlement” programs that together account for 43 percent of federal spending…

Almost half of the federal budget is entitlement spending.  And it’s growing.  Baby boomers are now retiring.  Living far longer into retirement than anyone guessed.  And because they’re living longer into retirement they’ve consuming far more health care than anyone guessed.  They cannot sustain this spending.  It’s why GM went bankrupt.  It was those generous union contracts that did her in.  Pensions and health care.  Spent on people no longer working.  Now America is GM writ large.  And anyone who thinks it can end differently is in denial.

Edmund Burke reminds us to think of our time on this earth not as an individual and temporary event, but rather as a partnership “between those who are living, those who are dead and those who are yet to be born.”

Those in Washington are not looking to the past or the future.  Apparently, all they care about is the here and now.  And as long as they get theirs they don’t care about tomorrow.  If you listen closely, that sound you hear is the tears of the Founding Fathers.  Or the cursing.  For I understand that George Washington had quite the temper.


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Partnering with the Grim Reaper: Saving Medicare, Medicaid and Obamacare

Posted by PITHOCRATES - December 29th, 2010

Taxing the Young to Save Medicare for the Old

Medicare and Social Security make up the lion’s share of the federal budget.  The government is setting records for both deficits and debt.  And everyone is projecting both of these programs to go bankrupt.  A dim picture for anyone hoping to rely on either for their retirement.  And they’re worried (see AP-GfK Poll: Baby boomers fear outliving Medicare by Jennifer Agiesta and Ricardo Alonso-Zaldivar posted 12/29/2010 on the Associated Press).

A new Associated Press-GfK poll finds that baby boomers believe by a ratio of 2-to-1 they won’t be able to rely on the giant health insurance plan throughout their retirement.

The boomers took a running dive into adolescence and went on to redefine work and family, but getting old is making them nervous.

Now, forty-three percent say they don’t expect to be able to depend on Medicare forever, while only 20 percent think their Medicare is secure. The rest have mixed feelings.

The problem with both Medicare and Social Security is that they are both Ponzi schemes.  Scams by the government to make generations dependent on government.  And to funnel a lot of cash to Washington.  But the Baby Boomers mucked up the works.  Their free love in the 60s and use of birth control and abortion left their family tree a barren one.  The boomer generation of families with maybe 2-3 kids will support in retirement their parent’s generation of families with 10+kids.  There’ll be more people entering retirement than entering the workforce to pay for those retirees.

Here’s the math: when the last of the boomers reaches age 65 in about two decades, Medicare will be covering more than 80 million people. At the same time, the ratio of workers paying taxes to support the program will have plunged from 3.5 for each person receiving benefits currently, to 2.3.

And the numbers are worse.  Because Social Security will be covering those same people.  We’re approaching one working person supporting one person in retirement (Medicare and Social Security benefits combined).  Even Bernie Madoff’s great Ponzi scheme had a better ratio when his pyramid imploded.  It just isn’t sustainable anymore.  Something’s gotta give.  And by something I mean benefits paid out to people.

The government can’t balance its books without dealing with health care costs, and Medicare is in the middle. Some leading Republicans and a few Democrats have called for phasing out the program and instead giving each retiree a fixed payment — or voucher —to help them buy private medical insurance of their choice. The poll found doubts about the idea, and a generational debate.

Overall, a narrow majority (51 percent) of Americans opposed the voucher plan. But those born after 1980 favored it by 47 percent to 41 percent, while seniors opposed it 4-to-1. A majority of boomers were also opposed, with 43 percent strongly objecting.

And here’s the problem.  Those who don’t pay payroll taxes anymore (retirees) are all for raising taxes to pay for their current level of benefits.  No matter how much it bankrupts future generations.  And these people vote.  More than anyone else.  So for good reason they call Social Security the third rail of politics.  You touch it at your own peril.  Those with a lifetime of paying taxes ahead of them, on the other hand, would rather raise a family than support an individual in retirement.  Not only do they want to touch the third rail, they want to short it out.  But they don’t have the numbers.  Yet.

States to Make Steep Cuts in Medicaid to Stave off Bankruptcy

And we even haven’t talked about Medicaid yet.  This program is bankrupting the states.  It’s their biggest budget item.  And they can’t sustain it any longer (see Medicaid Pushes U.S. States Off ‘Cliff’ as Governors Seek Cuts by Christopher Palmeri and Pat Wechsler posted 12/22/2010 on Bloomberg).

Governors nationwide are taking a scalpel to Medicaid, the jointly run state and federal health-care program for 48 million poor Americans, half of whom are children. The single biggest expense for states, Medicaid consumes about 22 percent of their total $1.6 trillion in expenditures, more than what is allocated to elementary and secondary education, according to a National Governors Association report.

Talk about being stuck between a rock and a hard place.  You know that states aren’t going to cut education.  The unions won’t let them.  So they have to address the 800 pound gorilla in the room.  And cut Medicaid.

Governors are slashing Medicaid to close as much as $140 billion in budget deficits for the 12 months starting in July 2012, after eliminating $130 billion in gaps this year, according to the Center on Budget and Policy Priorities, a Washington-based research group. Spending is being cut even though state revenues rose for the three quarters ended Sept. 30, as the U.S. recovered from the longest recession since the Great Depression, the Nelson A. Rockefeller Institute of Government in Albany, New York, said in a Nov. 30 report.

“I don’t think most states want to sentence people to death,” said Judy Solomon, co-director of health policy at the Center on Budget and Policy. “But what we see is a pretty bleak picture of tough cuts made this year, and next year’s numbers look worse.”

The sad truth is that sick people are costly.  Dead people aren’t.  So you can see where this is going.  Rationing.

Spending on Medicaid nationwide rose 8.8 percent last year, the most since 2002, according to Kaiser. Nearly every state issued at least one new policy to cut program costs in the past two years, including benefit reductions, increased copays and lower reimbursements to health-care providers.

Cost cutting and reductions in benefits.  Rationing.  And you know where that will lead to.  More dead people.  Which is the only thing that will save Medicaid.  That, or federal contributions.

Every state has a unique formula for calculating the federal contribution for Medicaid. The 12 with the highest personal income, including California, New York, New Jersey, Connecticut and Colorado, typically depend on the U.S. government for about half their expenditures.

Lucky for the states that the federal government has money to spare.  Wait a tic, they don’t.  They’re setting record deficits and debt.  They don’t have the money.  Especially now that they’ve thrown Obamacare into the mix.  And the cost for this behemoth will dwarf Medicare and Medicaid.

States face the prospect of enrolling 16 million more people in Medicaid beginning in 2014 under the Patient Protection and Affordable Care Act, the health-care law Obama signed in March. It expands coverage to include certain childless adults under 65, according to Foley & Lardner LLP, a law firm in Milwaukee. The federal government will pay 100 percent of the increased expense for the first three years.

Well, perhaps not.  They’ll be sticking the states with some of those costs.  Poor states.  These unfunded federal mandates are killing them.  But they won’t be the only ones dying.  In three years time, when those federal subsidies expire, some of the current Medicaid patients may lose their heath care benefits.  And die.

Death Panels to Decide Life and Death

The problem with healthcare is that the raison d’être of healthcare is the very thing bankrupting it.  Providing healthcare to sick and dying people.  If the sick and dying would just hurry up and die these healthcare programs (Medicare, Medicaid and Obamacare) would be just fine.  If only there was some mechanism to encourage people to take a pill to manage pain instead of consuming expensive healthcare services.  I mean, they are only delaying the inevitable.  They should just suck it up.  And do the right thing.  After receiving something like, oh, I don’t know, let’s call it end of life counseling (see WSJ Opinion Death Panels Revisited posted 12/29/2010 on The Wall Street Journal).

On Sunday, Robert Pear reported in the New York Times that Medicare will now pay for voluntary end-of-life counseling as part of seniors’ annual physicals. A similar provision was originally included in ObamaCare, but Democrats stripped it out amid the death panel furor. Now Medicare will enact the same policy through regulation.

We hadn’t heard about this development until Mr. Pear’s story, but evidently Medicare tried to prevent the change from becoming public knowledge. The provision is buried in thousands of Federal Register pages setting Medicare’s hospital and physician price controls for 2011 and concludes that such consultations count as a form of preventative care.

No wonder they hid it.  Encouraging people to hurry up and die.  That’s something that doesn’t win you points at the PTA.  The law as written isn’t all that bad, though.  The panels are voluntary.  So far.  But everything Big Government has done started small.  They are, after all, the master of incrementalism.  And with out of control healthcare spending bankrupting Medicare and Medicaid, what do you think these panels will evolve into?

The regulatory process isn’t supposed to be a black-ops exercise, but expect many more such nontransparent improvisations under the vast powers ObamaCare handed the executive branch. In July, the White House bypassed the Senate to recess appoint Dr. Berwick, who has since testified before Congress for all of two hours, and now he promulgates by fiat a reimbursement policy that Congress explicitly rejected, all while scheming with his political patrons to duck any public scrutiny.

If there was nothing to hide they wouldn’t have hidden this provision so deep in the federal register.  But when you hide things, there are reasons you hide them.  So much for transparency.  And the most ethical Congress ever (of course an ethical Congress is a moot point when the executive rules by fiat).

Under highly centralized national health care, the government inevitably makes cost-minded judgments about what types of care are “best” for society at large, and the standardized treatments it prescribes inevitably steal life-saving options from individual patients. This is precisely why many liberals like former White House budget director Peter Orszag support government-run health care to control costs: Technocrats in government can then decide who gets Avastin for cancer, say, and who doesn’t.

When a government bureaucrat decides who gets life-saving medication and who doesn’t, that sounds like a death panel to me.  Because that decision has the power of life and death.  They can be as nontransparent as they want but the truth is pretty clear.  To control the out of control spending of Medicare and Medicaid (and, in time, Obamacare), they will be partnering with the Grim Reaper.  Because dead people don’t consume health care benefits.  And that is their biggest problem.  Consumers of benefits.

The Swedish National Health Care System Rations Care

So what about the social utopias of European Socialism?  Those advanced nations that have national healthcare?  Are they having these problems?  Of course they are.  In fact, their future is ours.  Here’s a small sampling of what to expect (see Man’s penis amputated following misdiagnosis posted 12/29/2010 in Science and Technology on The Local).

A Swedish man was forced to have his penis amputated after waiting more than a year to learn he had cancer.

The man, who is in his sixties, first visited a local clinic in Blekinge in southern Sweden in September 2009 for treatment of a urinary tract infection, the local Blekinge Läns Tidning (BLT) reported.

When he returned in March 2010 complaining of foreskin irritation, the doctor on duty at the time diagnosed the problem as a simple case of inflammation.

After three weeks passed without the prescribed treatment alleviating the man’s condition, he was instructed to seek further treatment at Blekinge Hospital.

But it took five months before he was able to schedule an appointment at the hospital.

When he finally met with doctors at the hospital, the man was informed he had cancer and his penis would have to be removed.

It remains unclear if the man would have been able to keep his penis had the cancer been detected sooner.

The matter has now been reported to the National Board of Health and Welfare (Socialstyrelsen) under Sweden’s Lex Maria laws, the informal name used to refer to regulations governing the reporting of injuries or incidents in the Swedish health care system.

Misdiagnosis.  And long waits.  National healthcare.  Where government bureaucrats cut costs and make doctors work long hours.  Not a very attractive offer for all those years of medical school.  So there’s a doctor shortage.  And, consequently, long waits.  In this case, 6 months to be advised he needed to go someplace else.  Then another 5 to get an appointment someplace else.  In the mean time the cancer spread.  This is what happens when you ration health care.

Is this the future you want?  It’s not the future I want.

The Third Rail of Politics is a Generational Thing

It’s a generational battle.  The young want to cut taxes (and benefits).  Because they’re paying those taxes.  And not consuming the benefits.  The old want to raise taxes and maintain benefits.  Because they’re not paying those taxes.  But are consuming the benefits.  Right now there are more old than young.  So you can guess who will win this struggle.  Bankrupting the future will help the politicians stay in office today.  So the old will win.

But there is a little irony in all of this.  To save these programs (Medicare, Medicaid and Obamacare), they need old people to die.  But once they do, the politicians will lose their political support.  The younger generation (whose future the politicians mortgaged) will then broom them out of office.  And they will be all too glad to short out that third rail once and for all.



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LESSONS LEARNED #40: “Big Government is more efficient when old people die sooner.” -Old Pithy

Posted by PITHOCRATES - November 18th, 2010

Big Government is a Ponzi Scheme

When it comes to government funding, birthrates and death rates are key.  Think of government as a great Ponzi scheme.  Ponzi schemes work when more people pay into the scam than collect from the scam.  Like in a pyramid scheme.  Those collecting benefits are the few at the top.  Those paying in are the many at the base.

An increasing birthrate means more taxpayers for each successive generation.  This keeps the base of the pyramid growing.  A steady or increasing death rate keeps the top of the pyramid smaller than the base.  A declining death rate, on the other hand, will flip the pyramid upside down.  Because the population at the top will grow larger than the population at the bottom.

Big Government tries to keep as many people as possible dependent on government.  Lots of different programs attach lots of different people to the welfare state.  But when it comes to big numbers, old people can’t be beat.  The lion’s share of government assistance goes to them via Social Security and Medicare.  And they are the most politically active.  That means they vote.  And when they vote, they vote to keep their benefits.

Of course, this is a dual-edged sword.  Yes, old people can provide a loyal voting base to sustain Big Government.  But on the other hand, the cost of their benefits is growing so large that it is undermining the very foundations of Big Government.  How?  By the double whammy of a falling birthrate and a declining death rate.  For various reasons, fewer people are being born.  And old people are living longer.  This has flipped the pyramid in the great Ponzi scheme upside down.  The growth rate of those collecting benefits is greater than the growth rate of those paying into the scheme.

An Increasing Life Expectancy is Bankrupting Social Security

FDR signed Social Security into law in 1935.  The average life expectancy in 1930 was approximately 59 years.  The retirement age in the Social Security Act of 1935?  65.  That’s right, the average American would have been dead for 6 years before qualifying for Social Security retirement benefits.  That’s a 6 year cost cushion.  But not everyone died at 59, though.  So a lot of people lived to receive those benefits.  But one thing the actuaries were sure about then, this Ponzi scheme was going to be a big winner.  For Big Government.

The average life expectancy increased to approximately 70 years in 1960.  In other words, people were living approximately 11 years longer.  That 6 year cost cushion just became a 5 year cost exposure.  That’s a swing of 11 years.  The actuaries in 1930 never saw this coming.

Social Security had its first crisis in 1975.  To save the program, they increased payroll taxes and decreased benefits.  Another crisis came in 1983.  Now they started taxing some Social Security benefits.  Even taxed federal employees (who previously didn’t pay these payroll taxes).   And they would increase the retirement age for later retirees.

By 2000, the average life expectancy increased to approximately 77 years.  That’s another 7 years.  That’s a swing of 18 years from 1930.  A huge actuarial miscalculation.  The population was getting far older then the FDR administration ever guessed.  And, to make matters worse, the birthrate was declining.

A Declining Birthrate is Bankrupting Social Security

The birthrate (per thousand of population) had been declining from 1910 (30.1) to 1920 (27.1) to 1930 (21.3).  That’s about a 10% decline from 1910 to 1920.  And a 20% decline from 1920 to 1930.    Perhaps that’s the reason for the 6-year cost cushion they gave themselves.  They saw fewer babies being born.  Which meant fewer taxpayers would be paying for later retirees.

The birthrate fell to 19.4 in 1940.  Though it was falling, it wasn’t falling as much.  Only 9% from 1930 to 1940.  Then came the baby boom generation.  The birthrate in 1950 shot up to 24.1, a 24% increase from 1940.  More babies meant more taxpayers.  This birthrate held pretty steady in 1960.  No doubt the LBJ administration felt optimistic. 

LBJ exploded federal spending.  He added Medicare and Medicaid.  Made Social Security more generous.  And why not?  Things were looking up.  Birthrate-wise.

But it was short-lived.  The birthrate went from 23.7 in 1960 to 18.4 in 1970.  That’s a 22% decline.  The birthrate was 15.9 in 1980.  That was a 14% decline from 1970.  Or a 33% decline from 1960.  Birth control and abortion were taking their toll on the U.S. birthrate.  Fewer babies meant fewer future taxpayers.  And fewer taxpayers could pay for less government, not more.  The LBJ administration was wrong to feel optimistic.

The Selfish Baby Boomers Invert the Ponzi Scheme Pyramid

The baby boom generation has really thrown a wrench in the works.  The government used their spike in the birth rate as a baseline for future government spending.  But they screwed the government in the end.  Instead of being good little taxpayers by making even more little taxpayers, they stopped having babies.  They didn’t stop having sex.  They just stopped having babies.  It was the era of free love.  And ‘free love’ had no room for babies.

And it’s these baby boomers that are working themselves up to the top of the pyramid.  But being the selfish ingrates that they are, they’ve left no one to follow behind them to keep the Ponzi scheme going.  And to make matters worse, they’ll be living longer in retirement than anyone ever guessed.

It’s a perfect storm of sorts.  A declining death rate.  An even more declining birthrate.  And a huge chunk of the population about to go on the public dole.  But it gets even worse.  The boomers will be living longer in retirement because of huge outlays in Medicare spending to keep them alive.  In other words, the government is spending a fortune to make their financial problems worse.

Amnesty, Catholics and Dead Retirees May Save Social Security

They’re trying to fix things on the taxpayer side.  The Big Government legislators are desperate to give illegal aliens amnesty and citizenship.  To them it’s simple math.  More people equal more taxpayers.  And these taxpayers will be Catholic.  Catholics don’t use birth control and abortion like Americans currently do.  Their birthrate is less likely to decline.  (Approximately 1 in 5 of young children in the United States is Hispanic already.  They project that to increase to 1 in 4 within a few decades.)

On the benefit side, they’ve already raised the retirement age to 67.  And there’s talk about raising it to 69.  If more people die before they’re eligible to collect retirement, that’s a lot of benefits the government doesn’t have to pay.  They’re also talking about cutting the Medicare budget.  The less they spend, the more may die.  And dead people don’t consume Medicare benefits.

There’s no getting around the fact that old people are a huge drain on government.  Though they worked hard to get these people dependent on government, their continued living is becoming more of a burden than a benefit.  An increasing lifespan is anathema to Big Government.  Old retirees take more than they give.  Young workers, on the other hand, give more than they take.  The government needs more young workers.  And fewer old retirees.

(Social Security + Medicare) Spending = 2 X Defense Spending

To be efficient government has to minimize costs in relation to revenue (i.e., taxes).  And there’s an 800 pound gorilla in the room.  Old people.  Nothing can impact the budget more.  Even war.  Social Security and Medicare combined make up approximately 40% of the federal budget.  Defense spending is approximately 20%.  A blind man can see the gorilla.  Government needs these old people to hurry up and die.

And now add Obamacare to the equation.  Which will cover more people than Social Security.  The costs will be astronomical.  Social Security, Medicare and Obamacare will easily eclipse 60% of the total federal budget.  That kind of spending cannot be sustained.  Greece, France and Great Britain have proven this in the 21st century.

That’s some serious cost to contain.  And how do you contain that kind of cost?  You do what the Left says the private health insurers do.  Deny coverage to sick people.  And they will.  They’ll have to.  And with the power of life and death literally in their hands (i.e., death panels), they’ll be able to.  They’ll be able to maximize the number of young workers (by treating them).  Minimize the number of old retirees (by not treating them).  As well as minimize the number of undesirables who take more than they give (by not treating them).  Or even take more serious measures with those seriously ill or impaired (euthanasia).

Don’t think it can happen?  It’s happened in other Big Government states.  In fact, the Progressives even talked about the scientific benefits of eugenics and euthanasia here in the United States in the early 20th century.  To deal with undesirables.  So, yes, it could happen here.  Because it almost once did.


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