Saturday, June 13, 2009

Why Socialized Healthcare Will Sink America

It's ironic that folks who identify themselves as free market proponents lament Obama's plans for socialized healthcare in America. We already have socialized healthcare in the US.

There is very little that's laissez faire about the American healthcare system. The entire market is strangled by red tape, bureaucracy, and stupid rules.

Result: the least efficient healthcare system in the world.

A true representation of a laissez faire industry in America is high technology, which, by no coincidence, is constantly innovating and producing untold amounts of wealth for the US. We are fortunate that most of our elected representatives do not understand technology, and, thus far, have not been able to pass enough red tape laws to kill the industry.

Healthcare is a joke, and could very well be the final straw that bankrupts our government, if we do indeed go the way of national healthcare. For more on the current mess, let's turn to one of our favorite economic minds - Bud Conrad...

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Why Healthcare Is Killing America
by Bud Conrad, Editor, The Casey Report

Healthcare is the biggest segment of our economy. In the debate over who should pay for what or, increasingly, for whom, most people don't stop to understand just how large a portion of our society's money is dedicated to healthcare.

For some perspective, as a share of GDP, the U.S. spends about twice that of other advanced nations. This is an important reason why the U.S. is increasingly uncompetitive in global manufacturing. It is, for instance, the most important factor (besides poor management) that General Motors and Chrysler are going bankrupt.

Going forward, the situation is guaranteed to get worse. The Obama administration is committed to major reform to cover the 40 million people not now covered by insurance. Once everyone has insurance, with many paying nothing at all for coverage, patients won't care what it costs, and the system will quickly spin out of control.

And it's already out of control. I recently spent one day in the hospital due to a broken arm, which cost on the order of $100,000. Remarkably, that eye-opening amount still doesn't include the ambulance, the doctors, the x-rays, the CT scans, or the anesthesiologist. I'm still getting bills. The system is far more broken than is widely understood, unless you have had a recent bad experience.


Projections for healthcare are particularly problematic because of the demographics of so many people born just after World War II. Soon, there will be less than three people in the workforce for each retired person. That will result in huge taxes on the few workers to supply the expensive end-of-life medical care for the retirees (and it is in the latter years where medical expenses really begin to rack up).

This bubble was predicted and a government trust fund was set up. Unfortunately, as is typically the case, the government couldn't keep its hands off the money, and so it has already been spent. The outlook is not good. In fact, in just over 10 years from now – by 2020 – the demands on the government for Social Security and Medicare will get so high that they cannot be met. And it gets worse from there.

It's a safe bet, based on history, that the government will once again try to print its way out of the problem – but all that will do is further destroy the dollar and drive interest rates up even more. Just to be clear, this is not just about a government program gone awry, but as much or even more so a demographic problem – which makes it all the more intractable.

Don’t wait to be saved by the government; take your life – and your asset protection – in your own hands. For example, by playing one of the most obvious and inevitable trends and Bud Conrad’s favorite investment for 2009. Click here to read the full report.

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