Feed Your Head Archive: 12/2/2009

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The Fix is In

Health Care Reform. Health Insurance Reform. What is it, really? Every argument for “Health Insert Word Here Reform” mentions the unsustainable path we are on. First of all, from what I have seen, there is nothing about Health in the reform coming out of Washington. What is clear is that the unsustainable path is cost. This would explain the change from Care to Insurance: reducing the cost of Care vs. Insurance are two distinctly different things, and addressing Care would mean reducing what we pay care givers; something the government already does with Medicare and Medicaid.

What costs are we talking about and costs to whom? The vast majority of people are happy with their insurance. They grouse about managed care and co-pays, but, for the most part, people with health insurance (including those with Medicare and Medicaid) are solvent and manage to stay out of bankruptcy. There are horror stories, but there are horror stories about everything from car loans to mortgages, to bank fees. Death and lack of treatment are not part of these costs: anyone in need of medical care without the means can get it at any hospital in the country thanks, again, to the central government.

The central government and state governments already control more than half of insurance costs through Medicare and Medicaid. Here is what they have accomplished: more than half of all doctors have opted out of both programs and both programs are headed to default. Given this track record, what is really going on? Clearly, we are not going to get better health or medical care with a government directed program. What we will get is a huge net inflow of cash to the central government under the auspices of paying for and controlling the cost of “universal” Health Care/Insurance.

What will really happen? We’ve already seen what will happen with Medicare and Social Security. Both of these programs are entitlements that we have paid for all our lives. Typically, a person will have contributed over $50K in a lifetime of work into Medicare and more than twice that into Social Security. At less than 5% interest from risk-free investment, that $50K should have grown to over $100K for Medicare and close to, if not greater than $200K for Social Security. And yet, both are rapidly going broke. Extrapolating from a 1989 study (http://content.healthaffairs.org/cgi/reprint/12/2/140.pdf) and adjusting for health care inflation, Medicare costs for an individual over the entire period of coverage from retirement to death would average less than $90K. Social Security lifetime costs for an individual who lives to 78 (average US lifetime) would average less than $150K. Yet both these programs are going broke. Why?

Quite simply, it was spent on other things. The reason that we are on an unsustainable path is best illustrated by Japan’s fiscal crisis, but is endemic to all industrialized nations. In the 60’s, all industrialized nations embarked on a progressive agenda that created social and environmental programs and entitlements without regard to sustainability. Most countries, including the U.S., spent money that should have been reserved (such as Social Security and Medicare) as if it were just part of the kitty. Remember, WE PAID FOR THESE “entitlements.” Japan did not dip into these funds. Japan’s national debt was 163% of GDP in 2007. At 5% interest, that means that Japan is paying over 8% of GDP just to service this debt. Looks bad, doesn’t it? Our debt is only 96% of GDP, meaning that we are paying a little less than 5% of GDP to service that debt. However, our problem is really greater than that. Having robbed from Social Security and Medicare to pay for other unfunded progressive programs and policies, we have betrayed our seniors and postponed the inevitable.

While the Japanese economy has been in economic malaise for nearly two decades now, its covenant with the elderly has been honored. The Japanese have made the decision NOT to address the issues of progressive environmental and social programs and have accepted the consequences of inaction. So this is where we stand: pass Health Reform or implement actual reform. If we pass Health Reform, we doom our children to decades of lost opportunity and our seniors to a retirement of broken promises and lower quality of health and life. If we reform government, eliminating unfunded programs and entitlements, we honor our contracts with our seniors and free our children to pursue their dreams in a land of expanding opportunity. It’s up to us, all of us, to do the right thing and pull the plug on non-productive government and fight for what is rightfully ours; what we paid for and what we were promised.

We can either address these failed progressive environmental and social programs, putting an end to them and the bureaucracy that sustains them or we can go the course of Japan. Right now, the fix is in: I think we’re turning Japanese.



  • Median Police salary: $50K
  • FBI agent base salary: $48K
  • Avg 2006 FBI overtime: $12K
  • 24/7 Army Sargent salary: $28K


  • Stimulus(2) Spending: $775B
  • Average Joe Salary: $50K
  • Stimulus/Avg Joe Salary: 15.5M
  • Total under/unemployed: 17M 
All numbers rounded to simplify comparison


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