|1 year Subscription to Real Estate Investor's Monthly
|Distressed Real Estate Times
|How to Get Started in Real Estate
|How to Buy Real Estate for at Least 20% Below Market Value
|How to Order|
Copyright 2012 by John T. Reed
So I will just discuss the big picture here.
We thought Obamacare was unconstitutional on a number of counts like violating the commerce clause and vagueness. But the U.S. Supreme Court upheld it.
Then the Republicans said don’t worry they would end the extremely unpopular law when they retook the White House in 2012. But Obama got reelected.
So it will take full effect, except on Obama allies who got exempt.
America used to be a nation of laws, not people. Banana republics were nations of people not laws. The world cited Nixon resigning as evidence of that and were impressed. Those were the days.
Now America operates like the banana republics. If your guys are in power, you can ignore the law. And if you were opposed to the guy in power, you’re screwed.
Obama and the Democrats are socialist. They want a socialist nation which means the government owns everything.
But they are Fabian Socialists. That is, stealth socialists. Fabian socialists realize that the public in general does not accept socialism. Too many embarrassing attempts at it like the Soviet Union, Communist China, North Korea, Cuba, Eastern Europe. The people who hate it most are those who lived under it.
We have a lot of socialism in the U.S. already, namely:
• public schools
• Social Security
• Postal Service
• Veterans Administration
• public housing projects
• Indian reservations
How are those working out for you?
So Fabian Socialists disguise the fact that they are socialists using new phrases to replace the ones that the public have figured out are socialism. For example, the definition of Marxism—“From each according to his ability; to each according to his need”—had to be changed to “Progressive income tax; government safety net” to avoid conjuring up images of Lenin and Marx.
“Socialized medicine” had to be changed to “single payer.” (The federal government is the single payer. In North Korea they have single-payer everything—and a black hole of the only absence of lights on earth when viewed from satellites.)
Barack Obama is in favor of single payer health care. That is, when it comes to health care, he is a socialist.
In that video clip, he says we may not get there immediately. That is another tenet of Fabian Socialism. Rude, non-Fabian socialists want to achieve socialism overnight by violent revolution. Fabians believe in the salami-slice or boiling-frog method of achieving the goal of total socialism. Fabians want socialism overnight, but they figure they will get there faster if they slip it in gradually so those who oppose socialism either will not recognize it or will not be able to persuade their fellow citizens it is creeping socialism until it is too late.
It is now too late.
Obamacare is a salami slice. It move the nation toward socialized medicine and while pretending to preserve private sector parts of the health care industry, actually poisons them.
1. People will be required to buy health insurance or pay a tax fine. But the number are such that most healthy young people will just pay the fine.
2. Employers are required to provide health insurance or pay a fine. But the number are such that paying the fine is cheaper than providing the health insurance, the cost of which has been increased by many aspects of Obama care that force up the cost like mandatory insuring of preexisting conditions, marriage counseling, birth control, abortions, adults 25 and younger on parent policies, etc. The purpose and effect will be to force employers out of health care, which I actually think is a good thing, but also to force health insurance companies to get out of health care, which is bad.
3. Health equipment manufacturers were called to a meeting with the president along with other players. They were ordered to take a big cut in profits. They refused so they were hit with a big tax in the law. They are generally small and weak financially so they will be going out of business or offshore. We’re talking makers of the wonders of modern medicine like cat scans, MRIs, robotic surgery, etc.
4. U.S. health care is top notch but way too expensive because of too much government and private bureaucracy. Everyone thinks someone else is paying for it so they not only don’t know what the care they are buying costs, they don’t care. That is insane and is why the U.S. has the highest per capita health care costs. Obama’s solution is price controls. The federal government will simply order all doctors, nurses, and private sector players in the industry to accept far less in payment henceforth. Everyone in health care will be getting a big pay cut. Older doctors will retire or practice unregulated medicine in the U.S. (if allowed) or abroad or they will leave medicine. They have already been doing that and urging their kids not to go to medical school. That will accelerate to a great rate of departures that, combined with 30 million more people now being covered, will cause an emergency lack of doctors and nurses in America. That, in turn, will result in Obama letting zillions of foreign born and foreign trained doctors coming to the U.S. This has already happened in other countries with socialized medicine like the U.K.
5. Hospitals will go bankrupt or simply close because the cram-down low prices from the stingy single payer will not let them make an adequate return on investment. How many hospitals? I would expect all of them.
6. Pharmaceutical makers will stop research on new drugs because the federal government will drive the prices down. This is why drugs are cheaper in Canada, Mexico, and Europe. Those governments demand low prices. Drug companies make it up by charging more in the U.S. That is one of the reasons our health care costs are higher than other countries. The drug companies will, after initially ending research to create new drugs, ride the existing still under patent drugs until the patents expire then they will become generic drug makers or go out of business. I would expect the best will use their remaining patented drug profits to diversify into other field not covered by Obama care like veterinary medicine and agriculture. This will turn the drug industry into a limping gaggle of generic drug manufacturers who are expected to get by on bare bones prices and who will simply drain as much profit as they can out on the way to bankruptcy. We have already seen this with shortages of flu vaccines caused by the vaccines no longer being under patent and the FDA hammering companies for not high enough standards of manufacturing. Government has stripped away the private sector incentives one by one until there are not enough incentives to make the necessary quantity of low profit drugs. People are dying because of this. How many drug companies will go out of business? All of them.
7. Because of socialized medicine in many other developed countries like Europe and Canada, the world has become dependent on the U.S. market to pay for research and development of new drugs and equipment. With no U.S. private sector heath industry any more, the entire world will find it has an end of innovation and medical progress as well as incessant and growing shortages of doctors, nurses, hospitals, drugs, and equipment. Canada and Europe could only play the demand-lower-and-lower prices game as long as the U.S. market would make up the profits the other countries ended with their federal price controls. We are imitating Canada and UK in Obamacare. But the problem is as with defense spending, Canada and U.K. could only get away with paying so little because the U.S. was paying so much. Remove the U.S., either in defense or health care, and that game no longer works.
8. Price controls always cause shortages that grow more extreme by the day ultimately to the point where the products and services needed can only be had in the black market or by leaving the country. There is now an absurd industry called “medical tourism” in which Americans and other affluent country citizens travel to far-away places like India and Thailand to get surgeries. Even after taking into account the air fare, the surgeries are still a fraction of the cost of U.S. surgeries. We don’t go to such places to buy groceries or cars or college educations. The travel expense obviously would make such “tourism” idiotically inefficient. But when government gets involved, idiocy is the rule.
9. Obama will meet the abandonment of the health care industry by the doctors, nurses, hospitals, equipment and drug bakers as proof the private sector is too greedy and all doctors will be federal government employees, all hospitals will be essentially VA hospitals by another name, and we will be using old pre-Obamacare equipment and medicines forever after like the Cubans who still drive pre-Castro U.S. cars from the 1950s. Castro also believes in single-payer everything.
10. Essentially, Obamacare takes over the entire health care industry from doctors and nurses to manufacturing equipment and drugs, operating hospitals and medical schools, and R&D. It does that by pretending to accept private sector involvement while deliberately driving out every vestige of private sector involvement by way of price controls that render the industry unprofitable and unattractive to its current practitioners.
Obamacare will do to heath care what government involvement did to public schools, Amtrak, Social Security, etc. Destroy quality and ultimately bankrupt them.
This is 1/6 of our economy. That is $15T ÷ 6 = $2.5 trillion of GDP. GDP is 100% private sector so Obamacare‘s destroying the private health care industry and turning it into another category of federal government expense will lower the GDP from $15 T to $12.5 T. That will also lower tax revenue by 1/6 or $2.4T ÷ 6 = $.4T. Government hospital and factories etc. pay no taxes. The loss of that $.4 T will raise the deficit by that much.
A reader says:
You state: "This is 1/6 of our economy. That is $15T ÷ 6 = $2.5 trillion of GDP. GDP is 100% private sector"
This is not accurate.
GDP = private consumption + gross investment + government spending + (exports − imports)
Flawed as it may be, the generally accepted definition of GDP counts government spending, no matter how inefficient or wasteful it is. [That means all government spending constitutes GDP growth other elements remaining constant. So if we do another stimulus we are “growing” the economy? Getting a little too Alice in Wonderland here for me.]
Our current debt-to-GDP ratio is $16.2T ÷ $15.5T = 105%, which is disastrously high and is why we are on the verge of hyperinflation. If you just wipe out private health care and its taxes, you get $15.5 T - $2.5T = $13 T of GDP. The national debt as of today would be $.4T higher without the taxes paid by private health care companies. So that takes the national debt up to $16.2T + $.4T = $16.6T. Recalculating the national debt-to-GDP ratio gives $16.6T ÷ $13 = 128%—which is about 10% below where Greece started needing bailouts.
Under Obamacare, if they are allowed, private health care companies catering to the rich will spring up in the U.S. In those, there will be no insurance. You just pay as you get care. They will give excellent care and great service like any normal business. They will not under any circumstances offer emergency care because of laws requiring emergency rooms not to turn anyone away.
If the U.S. federal government prohibits such rich people medical care, it will move offshore and so will the patients for elective or non-emergency procedures and tests. More medical tourism, probably in the Caribbean.
Emergency care, which generally must be given in the golden hour after symptoms appear, will be a government monopoly like Amtrak and will function as efficiently as Amtrak. People will die. Many rich people will leave the country to live where emergency medical care is like it was in the good old days in America.
Lack of competition and example to follow will be another effect. You know the Postal Service. It is going bankrupt as we speak. But it does a pretty good job, albeit with overly high payroll, benefits, and such. But what would the Postal Service be like if the federal government drove UPS, FedEx, Loomis out of business and forced everyone to use only the Postal Service? Without any private-sector competition, they would slow down and lower quality. With no private-sector companies in almost the same business, there would be no innovation or examples to follow or copy or private-sector employees for USPS to hire to improve USPS operations.
Obamacare will be the public housing-ization of health care and it will make health care much worse around the world because of the loss of the energy, drive, and innovation and competition of America’s private sector health care industry. Obamacare will provide free abortions, but with a ten-month waiting list.
Without private-sector innovation in drugs, germs will surpass the human race because they are still private sector. They mutate—mother nature’s innovation. We have to innovate to stay ahead of them. If we stop, they go ahead of us.
Price controls are a fast-acting destroying of worlds. What I describe above was already happening, Now, because of the Obamacare Supreme Court decision and the reelection of Obama, the private health care industry will be wiped out and we will be left with something like the Soviet or Cuban health care system. Wiping out any industry that comprises one-sixth of our economy would have a huge depressing effect on the economy and dramatically increase the prospects for sooner hyperinflation. Doing it to the health care industry will also adversely affect every human activity in America that depends on good health.
The American people who voted for Obama have no clue of the damage they have just done to themselves, their country, and the world.
John T. Reed