Thursday, May 14, 2009

US Government Faces Bankruptcy

Our government has spent all of the Social Security and Medicare surpluses. They weren’t spent on what they were allocated for, but they were spent. There is no problem spending money that is allocated further down the road; today you can always cover the amounts with the current budget. That is unless you run into a deep depression (and we know that that could never happen).

So what has happened, we are broke. The only way to fix it is to raise taxes. No one wants new taxes. Let’s propose new benefits for everyone like health care. The idea here, is that it is mostly money coming in with very little going out. The contributors are quite young. There is a 40 year lag time on having to pay out in real dollars.

The idea that Social Security, Medicare and Health benefits are undeniable benefits is absurd. These contributions are taxes. Your W-2 form shows what you paid where. It shows what your employer paid, but you paid that also (your employer figured it into your wage rate). The Supreme Court ruled Social Security taxes are taxes, the government can spend them as it sees fit.

Congress wants to offer us universal health care. Notice it is not free. They didn’t say that. They are going to charge you for it. Right now, you can get free medical care from any emergency room. What makes this different? Your paid wages will be subject to a health tax.

We can probably assume that 90 percent of those paying into the program are probably healthy and in very little need of health care. So from here the money is transferred to our over extended budget. At the same time you have to figure that all of those retired silver foxes on Medicare are relieved that their savings will not be wiped out by health costs. God Bless Congress in their infinite wisdom!

The shift of leadership to the Democratic Party didn’t change the seriousness of the problem, but now there is the chance that health care can be passed as a “benefit.” In actuality, Congress is raising our taxes without really figuring out how to pay these future benefits. The future will take care of itself, that’s what worries me with this Congress.

Obama needs the health care to pass. This benefit will take about $5,000 from each wage earner's yearly paycheck. We will have Universal health care and will probably have to wait 5 hours to see a physician.

We can’t borrow from other nations. Who will loan the government money at zero percent interest? My wife and I have gotten out of T-bills. We are putting our cash in a safety deposit box. We are not the least bit interested in interest rates of .17 percent. Give us a decent rate, and we might loan out our money.


desmosabie said...

An ER visit is super expensive! I paid $300 for those idiots to listen to my heartbeat and for fluid in the lungs and said "yea you probably cracked a rib, or two, there's nothing we can do." That was well worth $300. And thats not all! a few years later I went for an ear infection, $900, yes $900! for an on site big white pill (i dont know what it was) and 30 amoxycillin. I already knew it was an ear infection ! Of'course I told them it was continuation of a sinus infection, just give me the pill and send me to RX for amoxy.
ER is a joke ! Huge rip off !!!

Joseph Oppenheim said...

The country is broke. Obama needs the health care to pass. This will be a benefit that will take about $5,000 from each wage earner's yearly paycheck.
etc, etc...
Who wants to loan the government money at zero percent interest?<<<<<<<

1. We currently have the most expensive healthcare system in the world while at the same time far from the best results based on life expectantcy and infant mortality. One simple change, countries in Europe with better infant mortality rates predominantly use midwives. Doctors are only necessary for anticipated complicated births. I recommend the documentary film "The Business of Being Born".

So, even if taxes pick up more of a person's healthcare, the outlay from their pockets, taxes + direct costs will be less.

Plus, the universal healthcare will not be totally paid by the government. Currently, Medicare isn't, Medicare only pays about 80%of costs plus certain deductibles plus part of one's SS payments are reduced to pay for Medicare plus believe it or not, Medicare is optional. I have known people who have opted out. There will always be such an option for those who want premium care and can afford it. Etc, etc.

2. I and many others want to loan the government money. Indexed Treasuries and I Savings Bonds are still fine investments - protecting both against deflation and modestly against inflation. Plus, 0%-short term is fine since we currently are in deflation, though I prefer FDIC insured 5-yr CDs which pay up to 4% with modest early withdrawal penalties.

The US is nowhere broke. Tax levels are still modest compared with other industrial countries. Plus, there is still confidence in our nation's credit. Yes, the government's window won't last forever until we have plans in place to repay the current massive borrowing/spending, but there still is a window.

Remember, before this financial mess, poverty in the US was only about 10%. I'd say worst case now is about 15-20%, which means about 80% are more than solvent. Increasing income taxes for people with incomes greater than $235K is fine. Complaints are phony.


Anonymous said...

desmosabie said...

Hey Desmosabie--

You are spot on in your complaints about the expense of ER care. It is ridiculous, but there is a reason why your bill was so high.

The reason: the many people who come into the ER for treatment, and are destitute (unable to pay).

You paid for your ribs, and your ear infection ... and their ribs, and their ear infections ... and their (whatever else!).

The current healthcare system is broken. It blatantly ravages those who can pay for the many who cannot.

The current government proposal to 'fix' healthcare won't change this.

The same thing will happen, perhaps on an even grander scale, with more inefficiency, more invisibility, and *yes* much longer waits.

Did I say more invisibility? Yup. You just won't see your bill.

--Mojo the Mellow, MD

Jim in San Marcos said...

Hi Mojo

I agree ER is not a place to go if you are sick and have money. Go to Urgent Care. They are all over. You pay and then get treated. You'll be talking to a doctor in a half hour, no long wait.

The quality of surgery in this country is probably the best in the world. The rich fly here to have their surgery performed.

About 50% of our health care costs can be attributed to malpractice insurance. We still have the right to damages. That's about to end.

Anonymous said...

The reason infant mortality rates in Europe are lower than the U.S. is because in the U.S. no expense is spared for care regardless of how premature the baby is born and in what condition. In Europe, premies over 8 weeks and babies that are born but die within several hours are listed as "stillborn" so the statistics are bogus. On an apples to apples comparison U.S. baby healthcare blows away nationalized healthcare. Anyone who claims otherwise is spouting politics rather than facts.

Joseph Oppenheim said...

About 50% of our health care costs can be attributed to malpractice insurance.<<<<<

Medical malpractice tort reform is indeed on the table with current healthcare reform proposals to push for limits of non-economical damages due to medical malpractice.

By the way, many of the people who complain about such lawsuits, and sure they should be reformed, however the really important thing about them is that they actually give the little guy power over the powerful. Specifically, a low level nobody was able to bring a sitting president to court over a civil matter only a few years ago. There are few, if any, countries where the little guy has such power.

So, reform is coming, but reform is only really needed at the edges, limiting the punative awards against doctors, for example, not on tobacco companies, etc who really unnecessarily, sometimes criminally, add to our health costs.


Anonymous said...

do you not realise that in no other so called developed country are the population left to fend for themselves when fallling ill? americqan system is so wasteful-that is why it is liek dby corportates and their lackey. better system is european one and more cost effective too.
think how many ameercans go bankrupt jsut because of health costs!
and ytou call yourself evn a modern nation?

Jim in San Marcos said...

Hi Anon 5:47

There is nothing wasteful about American medicine unless you mean the government Medicare and Medicaid programs for the elderly.

The European system of socialized medicine fails in delivering health care to the masses. You want to see a real doctor without a long wait, you come to the US.

The US is getting some competition from India on some rather expensive procedures. A triple bypass is about $60-80,000 here. I was reading in Newsweek last year that the same operation in India with round trip airfare was under 42K. Competition drives down health care costs, government health care programs don't address that issue.

On 60 Minutes there was a segment on socialized medicine in Canada. If memory serves me, they said there is a 6 month wait for bypass surgery. Just the stress of waiting 6 months could kill you.

In this country you don't go bankrupt by not having the operation. You have the operation and then go bankrupt.

Any insurance plan or retirement plan will work. The trouble is a lot of people don't save for retirement or pay for insurance.

Socialized medicine and Social Security are the governments way of forcing you to pay in advance. You end up being overcharged and get back a lot less than what you are entitled to.

Socialized medicine means "Grab a number and wait." In this country if you have cash you go to the head of the line. If you're broke, you already have socialized medicine.

Shift said...

Where did this come from:
"About 50% of our health care costs can be attributed to malpractice insurance."

I simply do not believe this to be a credible number.

Where did this come from? I call BS.

Jim in San Marcos said...

Hi Shift

You could be right, I was referring to doctors that deal in major surgery and delivering babies. The average cost per year for liability insurance is over $100,000. A lot of doctors are refusing to pay the premiums. They put their assets in their wife's name and go bareback.

I will confess I am guilty of picking a number out of thin air, but it does sound reasonable.

From past experience of 20 years ago, I personally knew several doctors that wrote off over $100,000 to 160,000 per year in uncollectable debts and then there is the insurance premium on top of that.

Maybe I should have said that 50 percent of our costs is from what each doctor has to contend with as operating expenses.

Is there a Doctor in the house with a comment?

Anonymous said...

Won't happen. Read the articles and the comments.

Jim in San Marcos said...

Hi Anon 6:41

Thank you for the link. I thought for one moment that I was watching Saturday Night Live.

Anonymous said...

The problem with the health care system is not the number of uninsured, its a system that has become dependent on government aid and insurance. Health care is too expensive, whether its paid for at the time or through insurance. Simply having the government pay for it doesn't work, and increasing the taxes on the rich to pay for the health care of the poor is a crappy way to accomplish it.

Jim in San Marcos said...

Hi Anon 7:10

I agree completely, the problem is, I don't think anyone is listening, especially up on the hill.