"The most significant threat to our national security is our debt," Admiral Michael Mullen, Chairman, Joint Chiefs of Staff, August 27,2010

Tuesday, June 26, 2012

An Inside Look at America's Health Care Bubble

Early on in our essay preparation and presentation, TheFundamentals displayed this chart:

And so, we asked the questions, “How can per capita spending on health care in the United States be so much higher than anywhere on the globe and yet not produce better results as measured by longevity?  How can America afford such excessive spending for no measurable, consequential results?   Could America’s health care system be loaded with overhead and other costly features that don’t do anything to cure ailments but rather treat ailments for the benefit of health care providers?”    

Here is a recent chart showing health care employment over the last 20 years:
FRED Graph

What do we learn from this chart?  Even during recessions (shaded areas) more and more people are employed in health care services – it has gone from about 8 million in 1990 to over 14 million now.  Way in excess of population growth.  By 2020, health care employment is projected to increase by at least 5 million more "workers."

One of the health care industry's most prestigious publications, the New England Journal of Medicine, has published an article that reaches some startling conclusions about it own industry.   We present a few quotes below (you can read the brief article at:  http://www.nejm.org/doi/full/10.1056/NEJMp1204891 )

“The goal of improving health and economic well-being does not go hand in hand with rising employment in health care.”

“Salaries for health care jobs are not manufactured out of thin air – they are produced by someone paying higher taxes, a patient paying more for health care, or an employee taking home lower wages because higher health insurance premiums are deducted from his or her paycheck.  Additional health care jobs leave Americans with less money to devote to groceries, college tuition, and mortgage payments…”

“There is, however, mounting evidence that our health care system could deliver better care without spending more and that there are tremendous opportunities for improvements in productivity – which suggests that the increase in resources devoted to health care has not generated commensurate value.”

“Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.”

Talk about stating the obvious – unless one is deluded or just dishonest.  The comments above are as applicable to health care spending as they are to education spending, generous state and city pensions and, the granddaddy of them all --  FEDERAL GOVERNMENT SPENDING.

A highly regarded professional journal looks at it own service industry and concludes  – “additional health care jobs leave Americans with less money” and “resources devoted to health care has not generated commensurate value” and “wildly inefficient jobs program.”  Something is badly wrong.  But can you imagine a SEIU or AFSCME or AFL-CIO newsletter speaking such truth?  Or a politician or bureaucrat who is fleecing the taxpayer with his or hers massive benefits and pension payments?  Think about the recently retired Daley of Chicago who managed to manipulate the Illinois and Chicago pensions to take over $180,000 each year!  And he is one of the lower paid fellows!!

Someone has to pay for it.  Bernanke does it with his bubble financing activities under the guise of deflation concerns.  Obama does it with his spending and then looks to Bernanke to buy the debt.  Krugman says its good economics.  Do more.  How much more debt they they need to lay on taxpayers?  Remember, only half of working Americans even pay federal income taxes anymore.  They are blowing bubbles. America is simply bankrupting itself in an orgy of fiscal promiscuity which manifest in bubbles – government spending, health care spending and education spending. 

We give the NEJournal of Medicine credit for an honest look and a self serving expose – we all know that this nonsense must come to an end and it is a lot easier to correct something before it collapses.   If only the Hollywood media would cover this story!  Where is anyone in the media on this topic?  Where is Romney?  Does he think he can win by not addressing issues such as ridiculous health care treatment programs that are bankrupting America?

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