Drugs, Profits and the Eternally Rising Cost of Health Care

This morning I awoke to this wonderful opinion piece in the New York Times called Drugs and Profits.  The article discusses a cancer treatment called Avastin produced and marketed by a company called Genentech.

Let’s breakdown the facts:

1. This drug is a treatment and not a cure for any type of cancer.
2. The following quote from another NYT article F.D.A. Rejects Use of Drug in Cases of Breast Cancer:
• However, Avastin did not prolong lives by a statistically significant amount.
3. Sales of this drug top $6,000,000,000 per year – that’s 6 billion dollars a year and it is, according to the above mentioned NYTs article, the worlds best-selling cancer drug.
4. Close to $1 billion dollars of those annual sales were to treat around 15,000 breast cancer patients.
5. The drug retails at about $90,000 per year for treatment but it is discounted to $57,000 per year for people who earn less than $100,000 per year.
6. The drug was approved for use against breast cancer as part of accelerated approval program back in 2008 but continued studies have failed to show that the drug  even prolongs life.  Note – that the drug would cure cancer is not even on the table.
7. Even if the FDA pulls the drug for breast cancer it will remain approved for treating a number of other cancers to the tune of over $5 billion dollars per year.

Imagine the following conversation with a doctor:

Patient:  “So will this drug cure me?”

Doctor: “No.”

Patient: “Will it help me to live longer?’

Doctor: “Not likely.  This drug can’t beat a placebo in helping patients live longer.  What that means is that I could feed you a sugar pill and tell you it would help you live longer and that would have a better chance of increasing your life simply by the hope it would give you than this drug will.”

Patient: “How much does it cost?”

Doctor: “$57,000 to $90,000 per year, depending on your income.”

I think you can imagine the conclusion of this conversation if the patient had to shell out the money to pay for this themselves.

But let’s examine things in the real world where doctors are enticed by pharmaceutical reps and the costs are covered by health insurance programs.

Patient:  “So will this drug cure me?”

Doctor: “Unfortunately there is no cure for cancer.  The best we can do is offer treatments and hope for the best.”

Patient:  “Will it help me live longer?”

Doctor: “There are studies that show that this drug, along with chemo therapy, helps to inhibit the growth of metastatic cancers but the exact effects of that on the patient are undetermined.”

Patient:  “How much does it cost?”

Doctor: “Don’t worry about that – this drug would be covered by your insurance, especially if you have Medicare and if you have no insurance Medicaid will cover it.”

Just to back up my little theater above here are some more quotes from the NYTs article:

Dr. Janet Woodcock, director of the Center for Drug Evaluation and Research at the F.D.A., said cost was not a factor. She said that Medicare and Medicaid would not consider changing reimbursement policies until a final decision was rendered.

Dr. Edith A. Perez, a breast cancer specialist at the Mayo Clinic, said she was shocked and saddened by the decision, saying the option should remain open to patients.

“It’s like any other drug I have in oncology,” said Dr. Perez, who consults for Genentech but whose fees go to her hospital, not her. “I never know if the patient in front of me will benefit.”

I don’t know how many people out there are not as stunned as I am that a drug that doesn’t cure and can’t even be shown to have a statistically significant effect on the life expectancy of a patient is the best-selling cancer drug in the world at around $6 billion in annual sales.  I didn’t even get into the side effects which are no walk-in-the-park either.

It costs $57,000 a year with a discount.

That is insanity.

A consumer who would have to pay for this out of pocket wouldn’t even consider this treatment.

But when a drug is approved by the FDA and thus covered by Medicare and Medicaid this then sets the stage for coverage by all other insurance companies, often by the state legislatures passing laws requiring the insurance companies that operate in their states to cover the drugs covered by Medicare and Medicaid.  These costs are passed on to our insurance premiums and Federal and state deficits which will ultimately come to us via taxation.

Of Republican Senate Hope-Fools and the Separation of Church and State

Last Tuesday in a debate with her Democrat opponent Chris Coons, Republican and Tea Party favorite Christine O’Donnell said “Where in the Constitution is ‘separation of church and state?’” once again showing what the mainstream press and establishment politicians knew all along: The Tea Party is full of nothing but racist conspiracy theory nut jobs and tax protestors.

Chris Coons, who is Ivy League educated like our esteemed President Obama, of course found this statement by O’Donnell quite laughable.  He and Wolf Blitzer exchanged knowing glances like two parents dealing with a three year old.  After all the separation of church and state is clearly written in the First Amendment:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

No question about that…

Consider this: 

The definition of religion -

“a specific fundamental set of beliefs and practices generally agreed upon by a number of persons or sects: the Christian religion; the Buddhist religion.” – dictionary.com

Definition of ‘belief’:

“confidence in the truth or existence of something not immediately susceptible to rigorous proof” – dictionary.com

Charles Darwin regarding his theory of evolution by natural selection:

Quoted from the book "On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life," 1859, p. 155:

"To suppose that the eye with all its inimitable contrivances for adjusting the focus to different distances, for admitting different amounts of light, and for the correction of spherical and chromatic aberration, could have been formed by natural selection, seems, I freely confess, absurd in the highest degree."

Fact

Molecular biology, biochemistry and genetics has already confirmed the even the tiniest bacterial cells are far more complicated machinery than anything built by man.  The idea that living organisms simply evolved randomly without any intelligent guidance is nothing short of a statistical impossibility.

Evolution exclusively by natural selection and random mutation as the origin of life and humanity as we know it is nothing more than a belief and, due to the complexity of even the smallest living organism, is about as close to impossible a belief as you can get requiring as much faith as believing God created the universe.

That living organisms evolve is not in question.  However ideas about how it happens and what drives and causes it to happen is definitely in the realm of religion – even when that religion is materialism.

Coons vs. O’Donnell on the First Amendment

Coons would support what legislators in several states have already done by outlawing the instruction of the idealist intelligent design theory of evolution in public schools while the materialist theory of evolution by natural selection remains sanctioned by the government.

Legislative condemnation of one while sanctioning the other is exactly what the First Amendment is there to protect against.  Separation of Church and State does not mean the Government is to respect materialistic explanations over anything else.

Materialism as a basis for the origin of life and the universe and all its phenomena is far from proven fact.  People who believe that all life and living organisms are no more than meat bags animated by chemical reactions are as much taking a leap of faith and subscribing to a religion as are Christians, Jews, Muslims, Hindus and others.

Either outlaw teaching any of it in public schools because the government cannot respect one over the others or permit teaching it all in the name of freedom to exercise all religions.

When Republican O’Donnell told Democrat Coons"Talk about imposing your beliefs on the local schools. You've just proved how little you know not just about constitutional law but about the theory of evolution," she was actually right on the money.

Of Mosques and Men: A Conspiracy Theory

I have been watching in horror some Republicans loudly make an issue out of a mosque being built somewhere near Ground Zero.  The reason this horrifies me is because Republicans often come close in their platform to what we really need right now:

• Repealing this new health care legislation and bringing true reform to our health care industry by bringing true free market competition to this sector of our economy.
• Lowering taxes and getting government spending under control so that the people and private industry can get back to creating economic activity.
• Government support of the free market instead of falsely vilifying it.
• Respecting the citizens that empower them with rule of law that safeguards our Bill of Rights.

OK – so that’s not really the Republican platform-but they do seem to be the closest to it.  That is until some of their members decided to express themselves about the Ground Zero mosque.

The Ground Zero mosque is such a non-issue it is jaw-droppingly absurd how much press it is getting.  Is there any consensus of real citizens that give a crap whether this mosque gets built near Ground Zero?!?!? 

I get out and come in contact with a lot of people from various walks of life and there are plenty that are up in arms about the horrible health care legislation, the bailouts and the stimulus.  But I don’t know anyone who was going around saying “Muslims should not be allowed near Ground Zero”.

That’s how I come to my conspiracy theory.  There are some extremely influential interests that have attached themselves like parasites sucking obscene amounts of wealth from the American citizens.  They are able to do this by manipulating the power that has concentrated in Washington over the years even though their power is dwarfed by the voting and tax paying power of the American People.

How do they keep us from rising up and destroying them?  By dispersing us with the belief that we cannot reach a political consensus.  Right now there is the appearance of widespread discontent and intolerance amongst our ranks over this issue.  It gives the majority of us who understand the law in this country – private property, freedom of religion – the idea that there are others among us who don’t understand and are intolerant bigots.  And guess what these intolerant bigots are positioned with?  The policies we do agree on – real healthcare reform, lower taxes, less government spending and intervention.

Economics and Idiots

This past week it seems that the idiots in the field of economics have been particularly vocal.

Namely Nobel Laureate Paul Krugman demonstrated that winning a Nobel Prize basically shows that you are either well connected or duly shilling the appropriate political message.  Paul gleefully announces that unless we engage in more wasteful government spending (aka “stimulus spending”) we are heading for a terrible depression.  He uses the specious argument that it is spending that will prevent us from falling into a horrible abyss never to return for years and it is the government who is the right entity to do that spending.

President Obama in his weekly address announced how $2 billion dollars will be siphoned from the pockets of each and every tax payer into the coffers of two profit making companies so that they will grace us with their business.  Does this mean I will get some solar panels in return for my and my children’s investment in this?  Will I get some free electricity from that power plant?  Probably not and it begs the question “Why won’t the companies come and create these plants here on their own?  Is it because the fact is what they are doing actually isn’t profitable and thus we just spent $2 billion on businesses that will shut down after that money runs out?"

Paul Krugman and President Obama both know that we need economic activity but are sorely misguided on how to make it happen.  It seems they believe it is the governments job to create that economic activity and the way to do that is to spend.

Well lets take a look at our economy and the argument of “spend vs. don’t spend”.  We are being told that someone needs to be spending and since private citizens won’t do it then the government will borrow on our behalf and use force of law to make us spend.  The government spending will put money into the economy and voila – economic recovery.  Right?!?  Our government of about 500 bureaucrats are very highly educated and they know what the “industries of the future” are so they will spend this money well.  But don’t even worry about that – it doesn’t really matter what the money is spent on – just spend it.

Wrong.  Spending on things that do not add value to the economy will result in inflation and oxygen depleting tax burdens on the true engine of our economy.  That kind of spending will cause the economy to sputter and lose power and that is exactly the kind of spending that is most likely to occur when the government does the spending.

Does anybody think that a group of about 500 people will correctly use hundreds of billions of dollars to add the necessary value to an economy of 300 million people?  That these 500 people won’t waste the money or spend it on stupid things to help out their buddies?  They won’t bicker among each other trying to get money for their own special interests which will, in and of itself, waste not only money but time?  They won’t make mistakes and spend a couple billion on things that look good through academic glasses from Washington but in reality are useless?

What we need is spending on things that add value to the economy.  How do we do that?  Who is to judge what “adds value”?  If you are an Eskimo what would add value for you? Perhaps more portable and cheaper sources of heat and a sauce that makes arctic eel taste like ambrosia.  If you live Florida you want better air conditioning and a new sauce that makes gator taste like ambrosia.  In other words each and every individual makes those decisions and value is relative so 500 people will never ever be able to get it right for a population of 300 million people.  Sorry Barack and Paul.

So what should the government do?  Cut their own spending and “grant giving” to the point that we can eliminate both corporate and individual income tax and get rid of our sovereign debt.  Then stop making excuses that there isn’t enough regulation while not even doing the job of enforcing the regulation that does exist.  The economy needs stable rule of law and not a shifting landscape.  Remove those regulations that give advantages to certain interests and simply enforce an honest business climate.

It’s not hard and it’s not complicated.  In the end we the people are responsible for this mess because we do not hold our politicians accountable and we have been complacent.  But it is never too late.

The Lessons of Obama’s Deal

Just finished watching the PBS special Obama’s Deal on demand and I am now enlightened:

Big Pharma Trumps Big Insurance

That’s right people, in case you were curious, its OK to make Big Insurance your enemy but don’t f*ck with Big Pharma.  Just ask the Obama administration.  From an article published on the Fox Business web site published four days after the new health care (cough) reform was passed:

"I was unable to find anything in there that would cause me to have anxiety if I were a shareholder in a pharmaceutical company," said Ira Loss, a senior health-care analyst at the research firm Washington Analysis.

Of course not Mr. Loss!  Early in the health care reform process Obama’s administration made a deal with big pharma including:

1. Americans will be prevented from buying cheaper pharmaceuticals imported from Canada (or any other country).
2. Pharmaceutical Companies have been given 12 years exclusive rights on medications before alternative (a.k.a. generic) drugs can hit the market and bring prices down.
3. The Federal Government will be prevented from using its immense buying power through Medicare and Medicaid from negotiating lower prices on pharmaceuticals.

The last one is the real kicker.  That’s right folks, we gave a no holds barred route to pharmaceutical companies right into the pocket of every single tax paying American.  Consider the following from an article by The Center for Public Integrity:

Securing approval of the Medicare Prescription Drug Improvement and Modernization Act of 2003, legislation termed "historic" and "breakthrough" by PhRMA, is considered to be among the pharmaceutical industry's most substantial victories. The law yielded the first prescription drug coverage under Medicare — a benefit that according for 2006 through 2015 is likely to cost the government more than $1 trillion according to March 2006 Congressional Budget Office estimates. The legislation was passed after a sustained lobbying campaign in the states and in Washington, D.C.

But wait,  the plot sickens…

One of the law's controversial aspects is a provision that bars the federal government from negotiating price discounts with drug companies. An October 2003 study by two Boston University researchers found that 61 percent of Medicare money spent on prescription drugs becomes profit for pharmaceutical companies.

I have a feeling that the pharmaceuticals will be making a crap load more than $1 trillion over 9 years.  Oh – by the way – when the article says “will cost the government $1 trillion” they mis-spoke.  Legislation never costs the government anything – it costs the American tax payer. 

Interesting how legislation aimed at controlling the cost of healthcare aims at slowing the increase in insurance costs but does nothing to containing the much larger cost of prescriptions.  As a matter of fact, between the Bush legislation from 2003 and Obama’s vast expansion of it, everything has been done to ensure we will all be paying much more for prescription medications – even if you don’t take any!

When do we get the change we can believe in?

Boo Hoo for British Pensions or Any Other Investors in BP

You Have Got to Be Kidding

1. How ridiculous is it to hear British politicians and the PR about how we should go easy on BP because of all the pensions that are invested in BP and all the people they employ.

Here is where we can see true capitalism at work and can see how that is different from a free market system.  No matter what else you may have heard or seen defining capitalism in a positive free market light – capitalism is not the same as a free market.  Capitalism is the idea that money or capital rules.   It has the concept that you can accumulate money and then once you have it you can then put it in a bank or some other investment and get a return for being nice enough to give your money to someone else.  Your money will “work for you”. 

The sad and unfortunate truth is that money has never done a days work for anyone.  I invite you to lay a stack of 20’s on your kitchen sink and see if it will do the dishes for you.  True that you can take your stack of 20’s, go find someone who knows how to wash dishes and probably get them to do the dishes for you.  This is not the same as your money working for you – this is using your money to increase the amount of work that you can get done in a given period of time.  That is the correct use of capital and it involves responsibility on your end: You have to find the right person, ensure the job is done correctly etc.

British pensioners should have known that prior to this tragedy BP had over 700 safety violations at other facilities (vs Exxon that only had 1 in the same time period).  I am sure there were other signs of gross incompetence and negligence that the pensioners, their representatives and BP employees should have been on top of.

But they weren’'t and now they should suffer the consequences just like the banks and their investors should have.  In a truly free market, where those with capital are treated the same under the law as anyone else, there would be no caps or other legal protections on the damage claims against BP.  As a matter of fact if this were true the lawsuits from this could be enough to put BP out of business or cause enough serious harm that would be enough to deter any oil company from failing to take the proper steps to ensure something like this does not happen again.

Stealing My Freedom Softly with Entitlements

Reading this recent article about the situation in Greece is really a wake up call.  Greece just had its national sovereignty usurped by the European Central Bank.  The people of Greece gave up their democracy for early retirement, health care benefits, pensions, vacation bonuses, allowances and who knows what else in trinkets and niceties.

And what is the real kicker here?  That the Greek government in the name of helping to “manage the economy” and save the consumers from the evil of Capitalism became the biggest facilitators of greedy Capitalism by taking bribes and funneling business to the big companies that paid them.  The consumer who forfeited his/her rights in hopes that the government would take care of them gets royally screwed in the end.    A great quote from this article in Der Spiegel says it all

"Anyone who pays bribes to get a government contract can pad his margin with a few extra million," says one investigator. "The excessive prices are of course shouldered by taxpayers."

Here is how it works fellow Americans:  The government takes control of a market in the name of protecting it’s citizens from greedy corporate interests.  Something like…um…health care – just as an example.   Citizens are now paying for the services via a series of taxes and have totally lost control over where the money gets spent or how much gets spent on what. 

Now that control of the market is in the hands of a relatively small number of politicians the big corporations move in to bribe those politicians with hundreds of thousands or even millions of dollars to gain access to hundreds of millions to hundreds of billions of tax payer dollars.  Funds that used to be controlled by the hundreds of millions of consumers and had to be competed for now just requires the bribing of maybe a maximum of 60 Senators, a couple hundred Representatives and one President. 

But wait – the plot sickens…

Now consumers are being forced to overpay for some service and the real damage gets done.  With the politicians deciding how much the populace should pay for something and who they should pay it to they ALSO decide whether or not the citizens should borrow money to pay for it.  This now adds debt interest to the cost of services.

Guess what - banks make a lot of money off of lending money.  How much interest do you think a bank can make off of a couple hundred billion dollars?  As a banker,  wouldn’t it be nice if instead of having to convince a hundred million people to buy beyond their means and borrow from you to do it you just had to deal with a few hundred?  Even if you had to give them each a million dollars so they would take out a hundred billion dollar loan on behalf of the people of an entire country it would easily be worth it.

Another great quote from Der Spiegel:

“According to statements made by company executives involved in the payoffs, up to 2 percent of the revenues from the Siemens Hellas telecommunications division were paid to the two main political parties, the Panhellenic Socialist Movement, better known as PASOK, and the conservative New Democracy.”

In Greece now the austerity measures have to do with cutting back the retirement age, vacation bonuses etc.  For what?  To pay the debt that has been basically accrued by politicians giving money to corporations on behalf of their citizens for bribes.

Americans – lets not make the same mistakes.

Obamacare: Is it Socialism and What’s Wrong with Socialism Anyway?

I found this great image on the net (hopefully I am not violating anyone’s copyright).  Some people may think I am being harsh.  After all most reasonable people don’t sling such derogatory terms like socialism or communism around.

To judge whether or not something is socialistic or communistic one needs to go to the source and understand the philosophy, simply and succinctly:

“From each according to his ability, to each according to his needs.” – Karl Marx

There are two questions to be asked here:  “Does this policy adhere to the above philosophy?”  and “Why are socialism and communism considered derogatory anyway?”

The answer to the first question is obvious.  Obamacare levies taxes on people who make more than $250K, people considered able to pay, and gives it to families considered in need.  Socialism fact check – Karl himself would give this the thumbs up.

So it is socialism – what’s wrong with that? 

Pretty much anybody aside from the welfare mother portrayed in the movie Precious feels bad when they get something they know they didn’t earn.  Don’t believe me?  Go have someone give you money for nothing and see how it makes you feel.  Unless you are a flat out criminal you will feel like you now owe that person.  For sure if that person asked you for a favor you will feel a certain obligation to do it.

The uproar from the public over this bill and over socialism is that we all know you don’t get something for nothing.  Not even healthcare or insurance policies that cover pre-existing conditions and give unlimited benefits for life.   And when politicians give people something for nothing it always leads to slavery in greater or lesser degree.

An Actual Good Idea for Healthcare Reform Seen on CNN

That's right, I didn't believe it either.  My wife and I were watching CNN this morning when my wife proclaimed "they are going to give their thoughts on the healthcare reform".  My knee-jerk reaction was "they are just going to support the Obamacare plan".  The reality was a pleasant surprise...

It was Sanjay Gupta's show an he was interviewing a Harvard business professor who was strangely reminiscent of Julia Childs.  Anyway she starts off with the standard talking point of how there are 50 million uninsured people in this country and how much of a moral shortcoming that is for all of us.  We notice how the figure changes from 30 million to 50 million to sometimes less than 20 million depending on who is making the statement but I digress...  She praises the administration for the desire to cover these people and I braced myself for the worst - and to my surprise she starts talking sense!

Her next point is that Medicare and Medicaid is running a $30 TRILLION dollar unfunded mandate that will fall on those of us working today and our children and grandchildren.  Basically we put a train on the tracks, tied ourselves to the rails, pointed it in our direction and started it up hoping our children and grandchildren will arrive in time and with enough wherewithal to save us.  She accurately points out how the political realities of this country include the fact that current politicians will use entitlements like Medicare and Medicaid to give unfunded benefits today to get votes today.  They do this by borrowing money since they also don't want to raise taxes to pay for the entitlements which would similarly cost them votes.  My solution to that problem - don't allow government to engage in entitlements and that applies to any expansion of Medicare, Medicaid or any other subsidizing of health insurance under any circumstances.

Then she offers the solution - "consumerize" health insurance.  What is that you ask?  It means instead of insurance companies catering to employers they would have to cater to us - the consumer!   She makes an accurate point by comparing Switzerland to the United States in the right way:  Switzerland has 48 insurance companies while the U.S. has 15.  Note that Switzerland is about the size of Massachusetts.

So some things to know:
1. The problem with the cost of health insurance is not complicated - there is no competition among health insurance companies.  15 health insurance companies for a country of 300 million shows that there are regulatory blocks to competition that we need to remove.  That is economics 101.  When health insurance companies compete you win!  This will make health insurance affordable for the majority of people and bring about real improvement in the system.

2. Government funded health insurance will destroy our economy.

Until the debate turns to this simple point we are all losing and with that $38 trillion Medicare "train" charging at us we cannot afford to ignore this. Don't let the politicians screw it up just because they think some healthcare reform is better than no healthcare reform and they need to get it done before their term runs out.   Real reform based on the above costs us nothing, is easy to do and brings about meaningful change.

Medicare expansion - is it a great idea?

Right now almost one third of the Federal Budget is for Medicare and Medicaid and that quantity of spending actually comprises over 5% of our economy.  Just imagine that a full third of your tax burden right now is already going to pay for a program that most tax payers do not benefit from.  On top of that realize that conservative estimates put that 10% of Medicare and Medicaid payments are fraudulent.

We wonder why the U.S. spends so much on healthcare??  It is because the government basically forces us to!  Aside from the built in 10% fraud that is occurring in the Medicare and Medicaid system there is also all the money being spent on mental health drugs - drugs that treat illnesses for which there is no physical diagnosis and for which there is no cure, only limitless treatments with drugs.  If you don't think that is important consider this report about Medicaid expenditures in the state of Texas:

“According to a report on the state's Medicaid Vendor Drug Program, mental health drugs made up the largest category of expenditures among the top 200 drugs in 1999.  They accounted for nearly $148 million. Those costs have more than doubled since1996.”

“For the proposed 2002-2003 budget, lawmakers have increased by $1 billion theamount of money allocated to health and human services. A significant portion of that will go for medications,officialssaid.”

So if you are thinking all that Medicare and Medicaid money is going to treat people with broken bones, cancer, heart disease and things like that - think again.

This brings us to the next point.  It seems that if you open the tax payers' wallets to health care expenditure it is certain that someone will reach in there an take it.

Stimulus Success

It has been great this morning listening to CNN commentators argue about whether the stimulus created jobs or not.  The point of these programs seems to be to discredit people who are saying the stimulus didn't create any jobs by bringing up isolated companies and how they got money and hired some people.  As usual what is considered the "main stream" media is way off the point.  I think even my 5 year old daughter could take $100 billion and wind up creating a bunch of jobs.  The question is whether this was effective legislation to fix the problems with the country's economy.

So really what do we know?  The net loss of jobs appears to have been around 6 million and the unemployment rate, even when taking a "rosey" view of it is over 10% right now.  We have a huge national debt and our entitlement programs like Social Security, Medicare and Medicaid are constant sources uncontrolled public expense that basically threaten all private citizens and businesses.  In other words anyone deciding to create a life or a business in this country knows they will automatically inherit huge expenses beyond their control.  Many states have saved public sector jobs with stimulus dollars - jobs that will wind up unfunded when the stimulus runs out.

In the end has our government done what it takes to address the underlying problems?  Did stimulus dollars just rob from Peter to give to Paul?  Did the $100 billion spent result in more in added value to the American people than $100 billion plus whatever interest will have to be paid on that money?

These are the questions that we need answered.

Left and Right - the Political Conundrum

As I have been getting myself more and more worked up reading about how Goldman Sachs and other bankers basically fleeced every single tax paying American right in our faces and how our government opened up OUR checkbooks making it all possible I think about the Enlightenment in France and the struggle of the common folk against the aristocracy.  That struggle ended with the people of France rising up and cutting the heads off of a lot of arrogant aristocrats in the bloodiest revolution known to man.

First - if you are not totally pissed at our politicians  who have sold their souls to banking and healthcare special interests you need to wake up.  Do you really think that defaults on what amounts to 20% of the subprime mortgage market that makes up only a quarter of the entire mortgage market was going to cause a total failure of the banking system?  By the way those are generous figures.  Folks, we were robbed by a scam and it was our elected officials, both Democrat and Republican, that provided the pipeline to suck the money out of our pockets and put it in the hands of these criminals.

Also, do you think that a several thousand page healthcare legislation that was crafted by healthcare lobbyist was ever going to benefit the people?  That didn't pass (yet) but it doesn't really matter because healthcare special interests already have enough political clout at the state level to continue to fleece us via our taxes and Medicare payments.

The coining of the terms Left and Right politics came from the Enlightenment period in France when the aristocrats sat to the right of the king and representatives of the people sat on the left of the king.  During that time period those on the left were tired of special treatment and benefits those on the right were receiving at the expense of the people.  Today we have a similar struggle.  There are special interests that use our elected officials to guide money from our pockets into their own and there are those elected officials in both parties that facilitate this activity.

Today political discussion likes to refer to Democrats as leftists and Republicans on the right but this is totally false.  Right now both Republicans and Democrats are on the right because they refuse to take effective action to break the stronghold of special interests.  Another misleading concept is that big government, socialism and communism are left wing concepts.  History has shown us that big government ALWAYS winds up serving special interests at the expense of the people.  Sometimes, in the case of communism, it is the politicians themselves who simply become aristocrats who use the state police forces to maintain their power.

Left wing politics would be politics designed to protect the rights and opportunity of all and favor none.  It could never enact entitlements as entitlements always take more from some and benefit more others thus favoring one public sector over another.  It also has the side effect of enslaving to a certain degree those that receive the benefits and starts to favor the politicians who give the benefits because they, as the "slave owners", now have a group of people who will vote for them to keep the entitlement they have grown dependent on.

Michael Smerconish & President Obama

I just have to sound off about Philadelphia talk show host Michael Smerconish and his interview with President Obama yesterday.

First off, Michael's radio show is one of the best talk radio shows on the air. Unlike Rush and Glenn Beck and these other guys - Michael actually has an honest point of view on subjects instead of simply being against everything President Obama and the Democrats are doing. He actually supported Obama during the election despite being a Republican. He falls into the category of "conservative talk radio" but that is not really accurate.

During the interview President Obama was asked about the government takeover of the car industry, banks and health care. In his answer the President made the statement about how the Government has done helpful things and cited the enactment of Social Security and Medicare as examples. He made the statement that people protested those as Socialism but now that they have it they scream anytime someone tries to get rid of it.

Precisely Mr. President! That is exactly the point! Social Security is about to go bankrupt and will inevitably lead to higher taxes. It is the biggest ponzi scheme out there - it works the same way Bernie Madoff's scheme worked. Medicare is in the same boat - well it's not a ponzi scheme but it has set us up for higher deficits and higher taxes. Both of those programs ARE socialistic and are now a huge burden on our society and are very difficult to get rid of. They are also huge political tools - politicians know they have a built in voting public in those people who are dependent on Medicare, Medicaid and Social Security. Why would we want more of that?

People were correct to protest those programs back then as they are correct in protesting further expansion of government sponsored entitlements now. These things are very insidious. Which brings us to the next point: is President Obama involved in some conspiracy to have government control every aspect of our lives? I don't know but I don't think so. Rather he is misguided.

It can certainly seem great when a populace turns over power to an intelligent and benevolent person and he does a lot of good with that power. Especially when he uses that power to do something you like! But what is often not looked at is after that power has been granted to an institution (like the Presidency) it opens the door to potential malevolent use of that power. Too often we see government programs seemingly meant to be helpful get used to the profit of special interests and the harm of the populace. The truly large special interests love socialism, fascism and communism - they all involve central political control of large amounts of people/markets. Such special interests already have politicians in their pockets and use the governments power to suppress competition and free markets that threaten their interests. As a matter of fact that is already happening in our health care system. There is no free market and insurance companies are being regulated already and one aspect of that regulation is that they are forced to cover certain medical procedures and drugs that are ineffective at best and profit motivated.

Don't you think it is interesting that Big Pharma has already struck a deal with the current administration in terms of what will happen in health care reform? And guess what - part of that deal is to curtail competition!

We already know that the large special interests in that industry have infected both sides of the aisle. In the end they seem to be playing us like fools - damned if we take the currently proposed health insurance reform and damned if we stay with the same thing. They don't care. It is interesting to see both Democrats and Republicans accuse each other of being in Big Pharma's pockets. I guess that's the most honest thing happening out there!

Healthcare. Paul Krugman and Switzerland

Last Sunday New York Times columnist Paul Krugman criticized the U.S. health care system making statements about how great socialized medicine is in other countries like Canada, Britain, France etc. He even cited the health care system of Switzerland as being an improvement over the U.S. system.

I guess it is not obvious to these pedantic columnists that looking at systems being used in countries with one-fifth (or much less) the population of the U.S. might not be the brightest thing to do. Switzerland barely has a population larger than the Philadelphia metro region and certainly lacks the cultural diversity. That can be said of Canada, Britain and France as well which have larger populations but still don't come to more than 25% of the U.S. population. None of those countries touch the religious, ethnic and cultural diversity of the U.S.

Think about it - here one big fight with the public option is about whether abortions will be covered. Many U.S. citizens find abortion immoral and don't want the Government forcing them to pay for it under any circumstances. I am not expressing any opinion on that issue but this country was founded on freedom of religion and the separation of church and state. Wouldn't the Federal Government forcing a Catholic to pay for an abortion through tax funded subsidies be a violation of church and state? What about another "religion" in this country that promotes abortion because they want to control population explosions amongst the "undesirables" in society (take a guess who those are and if you don't believe me Google Margaret Sanger the founder of Planned Parenthood). Those interests won't rest if abortion is not covered by the government plan. One could argue that they are using the government to forward their "church". In other words we have many different cultural and religious factions and health care choices are often modified by religious belief and cultural preferences. Trying to get a consensus for a large federal insurance plan that all tax payers will be forced to contribute to is simply not possible.

So how do we deal with that? Well if instead of moving toward a more socialized system for health care we moved to a free market system for health care then you get to decide for yourself. The problem of skyrocketing health care costs can be directly traced as coming from the limitations on competition resulting from the current government regulation. Do we really want more of that?

Our nation is not like the European nations and was founded on principles that promote diversity and freedom of choice. I for one want to keep it that way. After all if you want European socialism you are free to move to Europe and enjoy the security they offer. Me, I'd rather have my freedom and that includes the freedom to choose where my money gets spent.

Health Care Reform: Real Change

Being bombarded constantly with the health care reform or more aptly - health insurance reform - I can't help but voice my frustration. Perhaps it will help me feel better. Now I am a bit of a radical and the change I propose would be real change. People are advocating for single payer insurance (where there is only one large insurance entity thus only one entity that pays health care bills) or continuing with the current multi-payer system. The real problem here is that both of those systems are still third party payer systems. In other words the person seeking health care is not the one paying for the service.

This is the root of the problem and we are not even looking in that direction! Believe me you do not want someone else paying for your health care. A third party by nature has in their main interest controlling cost. Health care providers like doctors are then put in the position of having to satisfy the requirements of the third party provider rather than the patient.

Why not set up health insurance just like any other insurance like life insurance where you can purchase fixed amounts of coverage based on what illness you might contract? Should you develop some illness you would receive a lump some payment to help pay for the costs of curing your illness. This would have a couple of effects: First it places a much greater focus on coming up with cures for illnesses rather than treatments. A patient would not be limited in any sense to where they seek treatment and payments to doctors would come in cash from the patient. This would save a ton of money in administrative costs. It also now makes the healthcare industry compete for payments from the party most interested in getting cured - the patient. Insurance companies can also manage their exposure to risk better - they will always know their exposure when someone gets an illness - which will help them offer better plans.

The last thing we want is the government to become the single payer for health care. Why? Because the government has the power by law to force us to pay for things we may not want. It is the only set up where healthcare costs can continue to explode and we would have to pay for it by law! Is that really a situation you want to be in? Factually it is "more of the same" of the system we already have in place.

So lets bring about real change for our health care system - don't bring about single payer or stay with any variation of third party payer like employer based group healthcare plans. ce.

Happy Independenc Day

It was an emotional moment last night as I watched the fireworks here in Philadelphia.

After all here is where around 225 years ago our Founding Fathers and the citizens they represented decided to lay their lives on the line to fight for freedom. What would you do today if you were asked to do the same? Many of these citizens had comfortable prosperous lives. They had children and various other comforts. The punishment for the "treason" they were about to commit was death.

As some of our politicians and various vested interests use public relations techniques to push us towards greater entitlements keep in mind that with all government provided entitlements comes a loss of freedom.

In the past two years, in both the previous administration and the current, we have seen the government apparently, and in our name, basically say that there are some companies that are entitled to succeed: various investment banks, AIG, General Motors to name a few. We watched the resulting government intervention that came as a result of the public outrage at bonuses these companies made, retreats they had planned, that they used their corporate airplanes and more. The intervention to "right these wrongs" of course cost us of a reduction of the free market.

Increasingly it seems we are pushed to believe that a government exists to provide an increasing number of entitlements to protect us from the risks of life. Currently the big one is health care. My understanding is that our Founding Fathers set up government to provide certain entitlements including: The right to choose and follow a religion of your choice, to speak your opinions and beliefs freely, to pursue happiness as you see fit. Inherent in these rights is that you might make a choice in religion that others don't agree with, you might say things that others don't like and you may make bad choices in your pursuit of happiness that result in illness, failure or death.

In this country people can live better than anywhere else in the world. They are also free to make choices that will result in a pretty bad condition for them. It is true that our government does not provide the same level of safety as other governments. Do we a citizenry want it to at the expense of our liberty? Is it even capable of doing that or will we just lose liberty for not much more security than we currently have? Keep in mind that our government had all the regulatory power in place to prevent the banking fraud that is now causing our hardship. We spent (wasted) money on that regulation for the apparency of safety. To rephrase - money came out of your pocket, money you could have used to further your chosen pursuit of happiness, and went to attempting to guarantee your safety from a fraudulent banking system.

I will end with a quote from one of our Founding Fathers:

They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety. - Benjamin Franklin

Health care Reform and 3rd Party Payer System

A third party payer system is when the consumer is actually not the person directly paying for what they are consuming. The system works like this: You the consumer give your money monthly to someone else (like an insurance company) then you go shopping for something (like health care). You and the vendor come to an agreement on what you are going to get and the third party - the insurance company - actually pays the expense.

Imagine that you walk into a hardware store to buy a hammer. First thing you do is go see your home maintenance manager. He asks you why you are there. You explain to him that you need a hammer to drive some nails into a board, showing him pictures of the board to prove you are in need. He says fine and gives you a referral to see the hammer specialist.

You walk over to the hammer specialist with your referral slip. He shows you a selection of two hammers with wooden handles. You have a problem with that because wooden handles destroy trees which harms the environment and you want a hammer with a handle made from a new environmentally friendly material. The hammer specialist explains to you that your hardware insurance only covers the wooden hammer because there is a state law that requires all insurance companies to cover wooden handled hammers but not others.

In the end since the insurance company will cover the hammer with the wooden handle you take it and leave the store happy. You don't have to pay anything. It wasn't exactly what you wanted but the insurance covered it and you had no out of pocket expense. You also feel a small sense of satisfaction that the hardware insurance you have been required to carry by law finally got used.

You will never know actually how much was charged to the insurance for that hammer unless you put some effort into finding out. As a matter of fact you aren't even really sure how much you pay for hardware insurance monthly because it is a combination of payroll deduction subsidized by money you pay out in income tax and a series of other taxes you don't realize you are paying.

Through some inspection you discover that the hardware vendor charged $200 for the hammer and the insurance paid $75 for a hammer that normally would cost $10. The real cost to you was about $150 but because the costs are hidden from you through taxes you don't see this.

Another thing you are unaware of is that because there are a few centralized third party payers in the hardware world it is easier to regulate the market through legislation. Large companies in the market are able to lobby legislatures and other influential politicians to get them to make it law that their products have to be covered by the insurance companies. This is a great way for them to control the consumer who is being forced to pay into the insurance system.

The above ridiculous example is how health care works under the current third party payer system with the exception that, at least for now, we are not required to carry health insurance by law. But state governments and the federal government do use their authority as law makers to require insurance cover certain health care products and services. The consumer routinely does not pay directly for service or even know really how much it costs.

I guess it could be a solution to have the government further regulate health care. However what we really want is a system that gives the best health care possible in the most fair and efficient system. A suggestion is actually to create more of a free market system with the elimination of the third party paying system. I am proposing some regulation which would be to outlaw third party paying systems due to their lack of transparency to the consumer and great propensity for limiting competition. Instead one takes out fixed amounts of insurance to secure themselves in the case of illness. You can insure yourself for $20K worth of benefits if you contract cancer. If you get cancer the insurance company pays you $20k and it is up to you to spend it as you see fit. Now hospitals and care givers and others in the health care industry have to compete for your business.

One thing that is not given enough attention in the health care debate is why are costs so high. In any other industry competition results in better products, better service and lower costs. This is not happening with health care because the health care market is not a free market where suppliers and vendors need to respond to consumers. President Obama made an excellent point that the incentives inherent in our current system are mixed up. The solution is to put the consumer back into control by removing the practice of third party paying.

Healthcare Reform

Health care is an interesting debate. The question is that in this country is government regulated healthcare a good idea.

First thing is that it has to be stated that we currently DO have government regulated health care. For instance state governments have passed laws telling insurance companies what care they have to cover. As it turns out this actually makes the situation worse:

In some states, regulations make it impossible for individuals to purchase a low-cost plan that would provide only catastrophic coverage. In other cases, the benefit mandates and insurance rules might raise premiums to the point that insurance is prohibitively expensive for many people.

from an article The Effect of State Regulations on Health Insurance Premiums: A Revised Analysis. Interesting to note of course is that insurance companies are mandated to cover expensive medical treatments and drugs but none of the less expensive preventative measures. I am not saying it is the case in this country that powerful pharmaceutical and medical lobbies find it convenient and extremely profitable to be able to get state legislatures to force insurance companies to cover their drugs and treatments. I am not saying that...

So it should be clear that the current unworkable system is not a free market system - it is a government regulated system and that regulation can certainly be used by vested interests.

Health care is further complicated by the quantity of inaccuracies and unknowns in the field. A stunning fact is that 20% or more of sick people can be cured by a placebo. As a matter of fact an article in the Washington Post, re-published here, showed that a sugar pill is more effective than anti-depressants in managing depression! Here is another interesting fact:

America's healthcare-system-induced deaths are the third leading cause of death in the U.S., after heart disease and cancer.

The full article on that can be found here.

Given that we spend 15% of our GDP on health care vs. 8% to 10% in other countries considered healthier than ours it certainly doesn't appear that under the current system the money is being well spent.

So something is definitely crooked in the American health care system. I think one way a difference could be made would be to ensure that there is no mis-representation going on with our health care providers. We spend 1.5 to 2 times the amount of our GDP on healthcare than other countries that have lower mortality rates than we do?!?! Do you think there is some fraud in the system that when gotten rid of could lower our costs? Perhaps expensive less effective treatments are being marketed/lobbied for like crazy over less expensive more effective treatments. To wit - recently a court ordered a mother to have her son undergo chemo-therapy. Expensive and extremely doubtful in efficacy.

So the next thing we look for is who benefits from a wealthy country in poor health that spends 15% of its GDP on health care? Don't strain yourself too much on that one. The U.S. is home to more than half of the top 12 pharmaceutical companies and easily has the most pharmaceutical companies of any country. Make no mistake that they make a lot of money off of the current system.

It is also interesting that currently the debate is not about the cost vs. benefits of the treatments we are spending so much money on - it is about lowering the cost to the consumer for insurance coverage. What?!?! Anyone else thinking cart before the horse? Lowering the soaring cost of health care is not about lowering the insurance costs - those will go lower if the cost of the underlying care they have to cover goes down. That would happen freely competing market for health care - one we do not have. Some treatments have the advantage of the government making it the law that they have to be covered.

So trying to address the problem with a national healthcare program in a country with such a powerful pharmaceutical and medical lobby is folly. In the end we will end up paying as much or more of our production toward healthcare forcibly via taxes. This is in fact a dream for wealthy companies with powerful lobbies.

Another aspect is making the consumer accountable for their health care. Currently most consumers don't even know how much their healthcare costs them. "The insurance takes care of it." This is a terrible system - the doctor responsible for making you healthy doesn't even work for you. They work for the insurance company - after all it is the insurance that will in the end pay them. In turn the insurance company is told who and what to cover by state legislatures.

A better solution is a free market system where you can purchase dollar amount coverage for protection against getting certain illnesses. For instance you could purchase $20K in coverage in case you get cancer. If you get cancer your insurance company gives you $20K. It is now yours to spend on whatever treatment you choose to pay for.

Obama made a very intelligent statement - we have to change the incentive in health care. Now the incentive factually is that a person gets an illness that doesn't kill them but requires continuous treatment. With the above system which is more consumer based, treatments with higher success rates for curing what ails you will win out. After all you have $20K to deal with your cancer. You will seek out and spend it on the most effective treatment.

Read more on this type of solution...

Taxation with Unfair Representation

Our forefathers rebelled against the British Empire - put their lives and wealth on the line - because they were being taxed yet unfairly represented in the government that determined the rules under which they lived. Is the modern day progressive tax system any different?

Imagine a system where your tax bracket determines the weight of your vote: If you don't pay taxes you can't vote. If you are in the first tax bracket (lowest) you get one vote, the second two votes etc.

'Crazy!!' you say? Ok - think about this: Under our current system politicians have a vested interest in down-trodden people who are dependent on the government for money be it welfare or unemployemnent. People who are dependent on the government for sustenance or security are easy votes to get. We have set up circumstances where politicians benefit from a lack of success.

What would happen if we reversed this? Politicians benefit from promoting success. Every person who is so bad off they can't pay taxes is a lost vote. There is no benefit to having poorly educated people around who don't get paid well or have to depend on the government for money. Hmm...

The Recession is Over!

Thank goodness the 'worst recession since the Great Depression' is over! The Wall Street Journal has declared that the recession will end in September, CNN changed their slogan from 'America in Crisis' to 'Road to Rescue' about a month or so ago. Obama has changed his tone to one of optimism.

It all started after we let the Government borrow another $800 billion dollars because 'disaster was imminent' and we had to bailout what is apparently the American Aristocracy. Shortly thereafter the Fed Chairman stated that the recession would end this year. A message he repeated and then other media outlets started to fall in line.

I guess I am still a bit curious as to how 3 percent of the U.S. mortgage market caused the 'worst recession since The Great Depression'. It's not even that all those subprime loans were defaulting. I have read about the credit default swaps too and in the end it seems that all that was blown out of proportion too. Certainly there were companies that did some stupid things and brought themselves to the brink of disaster. Unfortunately it was also an election year and there was one party that knew the worse the economic picture was the more they would benefit. So bad economic news was inflated and since economic predictions are mostly self fulfilling next thing we know we really do have a problem because confidence dried up. Since the amount of cash in an economy is really a reflection of confidence that dried up and we enter a dwindling spiral.

So our elected representatives in both the Bush and Obama administrations answered this problem by scaring us into saving what must be some very well connected corporations. They gave those corporations hundreds of billions of our money which in the end appears to have been a thorough waste aside from preserving the fortunes of companies and their principles that really should have simply suffered the consquences of making bad decisions. We were nicely distracted by quibbling loudly about a couple hundred million in bonuses while hundreds of BILLIONS went unaccounted for.

I rant but it is good news that at last what is happening is what is really necessary to save this economy. For all that can be said about President Obama it is undeniable that he and his team are very good at public relations. Saving an economy is about changing a bad and insecure sentiment into one of hope and confidence. With hope and confidence then money flows back into the economy naturally and growth resumes.

Obama and his administration are also correct that to save the economy requires stimulating it with energy (a.k.a money). I think the main question here is whether or not it is the government that should decide where the money gets "flowed" or you and I. Under the current administration they have taken our money by taking out loans that we will have to repay via taxes and will spend it as they see fit. A small centralized group of people deciding how trillions of dollars are to be spent. A great set of circumstances for those that are currently well connected. Hence real change will not really be brought about.

There is also alot of talk now about inflation. Inflation will come about certainly if all the money that is dumped into the economy does not result in goods and services equivalent to or greater than that amount of money. History has shown that this is usually what happens when government does the stimulus spending. This is largely because the government only has as it's goal spending the money. They don't really ensure that the money results in added goods and services of at least equal value to what was spent. A certain portion usually lines the pockets of corrupt individuals, some goes towards projects that were not really needed or wanted and some may go towards things of actual value. There is nothing to say that the government couldn't do this correctly - it just seems that it has never happened that way.

In any case what does one do to participate in the recovery and not get screwed by inflation? This is actually simple - make sure you are producing goods and services that are of value. If there is inflation then your recompense for those goods and services will simply increase along with everything else. If a time comes when we are paying $10 for a dozen eggs it won't matter because people earning $40K a year will now be earning $400K a year. Another part of this is don't sit back apathetically letting the government waste this stimulus money. Those deals are done but Obama has promised transparency and we can hold his and the Congresses feet to the fire. Pay attention, monitor the websites that make public where this money is going. If it is used to add value to our country and its economy we really can come out of this in a much better situation.