oftwominds-Charles Hugh Smith

U.S. Lifestyle + "Healthcare" = Bankruptcy

How and why is the U.S. going bankrupt? Let me count the ways. There's the debt/housing bubble popping, the inexorable rise in energy and food costs, the trillion-dollar war in Iraq, the Pentagon and Homeland Security budgets, the pork spending, ethanol subsidies, and so on.
But the two 800-pound budget-busting gorillas in the room nobody wants to face are our unhealthy lifestyle and our unsustainable, dysfunctional "healthcare" system.

I know budget deficits and all that are boring so I'll just cut to the chase: Any expense which rises by 10% per year in an economy which grows 2% on average will quickly bankrupt the nation. Study: Employer health care costs expected to increase nearly 10 percent this year and next.
That is the very definition of unsustainable growth in expenses. Healthcare already consumes 16% of the U.S. GDP and will soon consume 20%: (National Coalition on Health Care)
By several measures, health care spending continues to rise at the fastest rate in our history. (emphasis added, CHS)

In 2007, total national health expenditures were expected to rise 6.9 percent — two times the rate of inflation. Total spending was $2.3 TRILLION in 2007, or $7600 per person. Total health care spending represented 16 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.2 TRILLION in 2016, or 20 percent of GDP.

In 2007, employer health insurance premiums increased by 6.1 percent - two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,100. The annual premium for single coverage averaged over $4,400.

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.

Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by 2008.

Premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 2000.

Can you say "train wreck"? How about "speeding off a cliff"? Nobody seems to be noticing, but the budget-buster which is pushing cities, counties, municipalities and government agencies to the edge of insolvency is skyrocketing healthcare costs. AC Transit to get an earful on fare hike ideas:

The (regional bus service) deficit comes mainly from a sevenfold increase in employee health care costs this decade."

Recall that labor costs make up about 75%-80% of all government and service-sector firms' expenses. How can any organization or enterprise survive a major expense which rises 7-fold in only eight years? Short answer: they can't.

So who's happy with the current system? The doctors? No way: Eyes Bloodshot, Doctors Vent Their Discontent (New York Times)

As a physician, I could empathize. I too often feel overwhelmed with paperwork. But my friend’s discontent seemed to run much deeper than that. Unfortunately, he is not alone. I have been hearing physician colleagues voice a level of dissatisfaction with medical practice that is alarming."

Meanwhile, back at the ranch, the elusive "cure" for so many of our ailments appears to be no farther away than our plates and the sidewalk outside:
Can Lifestyle Changes Bring Out the Best in Genes? New research shows diet and exercise may change how genes act.

A new pilot study shows that eating right, exercising and reducing stress may help keep chronic diseases at bay by switching on beneficial genes, including tumor-fighters, and silencing those that trigger malignancies and other ills."

Look, I'm not trying to beat up on everyone who doesn't exercise and who eats too much and/or eats poorly. It is a struggle not to cave in to the constant brainwashing via 24/7 advertising and marketing from fast-food and packaged food companies which profit immensely from the illness-creating American diet. And it's a struggle to get out there and get some exercise, especially if you live some place far from parks, without sidewalks, without safe bike lanes, etc.

I'm religious about exercise but I gained a few pounds this year when I visited Hawaii and let myself eat like a much younger person. (Yikes!)

Despite the temptations to do nothing, there is no other choice: we have to take responsibility for our own health. The longer we do nothing, the sooner the nation will go bankrupt, starting with cities, agencies and local government, followed by companies which either blow off their employee health insurance or go under.

Longtime correspondent UKC recently submitted an item posted on Karl Denninger's excellent Market Ticker forum--excerpts from Mr. Fisher's (of the Dallas Fed) recent speech regarding unfunded federal programs (Medicare and Social Security).

"Even the perception that the Fed is pursuing a cheap-money strategy to accommodate fiscal burdens, should it take root, is a paramount risk to the long-term welfare of the U.S. economy. The Federal Reserve will never let this happen. It is not an option. Ever. Period. No combination of tax hikes and spending cuts, though, will change the total burden borne by current and future generations.
For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. (emphasis added, CHS) The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight.
We know from centuries of evidence in countless economies, from ancient Rome to today’s Zimbabwe, that running the printing press to pay off today’s bills leads to much worse problems later on. The inflation that results from the flood of money into the economy turns out to be far worse than the fiscal pain those countries hoped to avoid.
How much would we have to pay if we split the tab? Again, the math is painful. With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four—over 25 times the average household’s income. "

The causal tie-in of our unhealthy lifestyle with that stunning unfunded liability was drawn by another poster to the forum:

"There is one thing that the cold-raw figures fails to capture making the situation actually far far more dire than he even states:
The OBESITY epidemic.
You hear about it all the time on the television and in the newspapers, yet to the casual and otherwise not directly affected, it sounds like a benign and inert phrase. Something for 'tomorrow'.
It is not!
I personally was a paramedic for nearly a decade some years ago, and that causes me to keep in close current touch with the shifts that are going in the EMS world and the hospital and health care environment in general.
I can tell you without a doubt, the obesity epidemic is a multi-warhead nuke with our society targeted for sheer financial destruction. NOTHING LESS. (emphasis added, CHS)
You have to add the compound multitude of health related issues stemming from so many obese people on top of the MILES HIGH tsunami of aging patients that are just now beginning impact the system to the point of utter breakdown.
And we're just getting started.
The Los Angeles County Commission on Aging estimates that by the year 2012, only three and a half years away, the number of citizens reaching 'healthcare system dependency' will add 6000 PER WEEK, JUST IN L.A. COUNTY, and the number will go parabolic north from that point forward into the future.
Each and every week, week in and week out continuously adding to the overall number of aging and compromised, medically dependent patients for at least 15 or more years before the pace of increase even starts to ease.
These are not simply patients aging gracefully in their rocking chair who just need a gentle assist to fetch their newspaper. Nothing will be farther from the truth.
These will be patients, whom after spending a lifetime eating gross amounts of unhealthy food in equally unhealthy quantities that will ultimately possess a literal alphabet soup of chronic, degenerative and VERY expensive conditions to treat. They will not only be consumers of medical resources but also need social and supplimental income support due to their conditions. Often times these conditions are accompanied by an early end to income earning capabilities and the resultant loss of productive tax contribution.
They will literally deluge the already crumbling health care system with infinite numbers of cases of cardiovascular disease and diabetes each of which creates it's own encyclopedia of resulting conditions.
Twenty years ago, specially constructed and equipped 'bariatric' ambulances were a rarity usually found only at teaching universities. They are now routinely dispatched every day all over the country to transport patients that are TOO HEAVY to be accommodated in a 1/2 ton capacity van. In most cases, a fire-engine crew must also be dispatched for manpower, as it often takes 6 or more responders to manage the patient.
What once took only 2 responders, now requires 6, more times than you can imagine.
You can quickly see that we're not simply talking raw, uniformed numbers affecting the ultimate condition of Medicare. We are in-fact talking a leveraging of sheer numbers of costly patients by magnitudes that would make the most aggressive hedge-fund manager blush in embarrassment.
We as a society have NOTHING close to the resources to address this problem, not even in the ballpark, not even on the planet or its nearby celestial universe.
Given the current state of our society it is very hard for me to imagine, given anything less than tectonic upheaval in the way we manage our health care system, anything other than a very very STEEP decline in either or BOTH of each of these two:
Our overall standard of living
Our expectation of medical care and life expectancy.
Both of which in my opinion, are certain to decline beyond our wildest imagination."

OK, here's where I would normally present a possible solution, but there isn't any in the form most hope or expect. The "solution" is to start acting like there won't be a Government Agency which will pay your medical bills. Because it is very clear that Medicare and most people's employer-paid coverage is unsustainable and will disappear or be cut so severely that it is the equivalent of disappearing. Maybe the government will be able to provide "palliative care," i.e. painkillers, and that's it.

Tweaking the system here and there by changing the parameters of who gets paid how much and which pills are allowed and which are not, etc., is truly re-arranging the deck chairs of the Titanic as the bow settles lower and lower into the cold, cold water.

Some smart people anticipate the Federal Government will nationalize healthcare as things deteriorate, but my question to them is: nice, but with what money? We're already facing a $100 trillion hole. Who is going to lend us $100 trillion? Even the Gulf Oil states don't have that much money, and why would they gamble on our ability to pay them interest, much less return their capital?

"Printing money to pay the bills," as Mr. Fisher of the Fed so eloquently pointed out, won't work, never has, never will. Hyper-inflation destroys the nation the money-press was supposed to "save," and Weimar Germany remains fresh in enough old minds not to be completely forgotten.

Although it might be lost on many present-day Chinese citizens, the wise "old ones" of that ancient culture held that food and medicine were one in the same; "disease comes in through the mouth." Many of you know cancer survivors who jettisoned the American lifestyle as part of their healing. Of course not all cancers are curable, and not all are lifestyle-related, but if food and exercise can modify gene expression, then the power of lifestyle should not be underestimated, either.

Whatever happens, we can safely predict the "healthcare"/illness-inducing-lifestyle system as it now stands will fall, and there won't be enough money, capital or resources to construct something this unsustainable and this ineffective again.

Three new Readers Journal essays (read all five):

The Principles of Trading Also Apply to Life (Harun I., June 19, 2008)

The State of Real Estate (don't buy that house just yet) (Jonathan Surridge, June 19, 2008) (PDF format)

We Will All be Better Off with Falling House Prices (Paul Tolnai, June 18, 2008)

New commentaries on diet/lifestyle and Something Amiss added:

Readers Journal commentaries week of June 20, 2008 Electric vehicles, long-wave cycles pointing to World War III, bikeways to L.A., Chinese goods and competition, something amiss and more.

Triage in the Upcoming War for (Energy) Independence (Paul Tolnai, June 9, 2008)

Compressed Natural Gas (CNG): A Peak-Oil "Bridge Fuel" (Matt Gaspar, June 15, 2008)