October 24th, 2013
There is no doubt that President Obama’s health care system promises to fundamentally transform America. It’s been touted as the saving grace of the working class.
But how feasible is it really?
We know it’s essentially a wealth redistribution scheme that takes money from one group of people in the form of forced tax payments, only to shift that money into the pockets of those who didn’t earn it in the form of government subsidies to their health care premiums.
But like all universal programs, the promise of free anything only works so long as you don’t run out of other people’s money.
That being said, a basic analysis of how Obamacare premiums work across the spectrum of America’s wide ranging socio-economic population suggests that it’s dead on arrival.
Once the forced mandates take hold one of two outcomes become inevitable, as noted by The Market Ticker, whose Karl Denninger took a detailed look at the government’s county-by-county premium data.
The consequences of implementation will be disastrous.
Either the Obamacare system itself collapses under its own weight, or the U.S. economy falls apart because of the extreme burden being hoisted on those who are responsible for paying the bill.
Either way, we’re looking at an almost instantaneous collapse of one or the other.
It’s an exercise in basic arithmetic that those who failed to read the bill before passing it should have considered prior to pushing this on the American people by way of a new stealth tax… unless of course the further impoverishment of America is their ultimate goal.
There are several very interesting statistical facts that come from this.
First, if you’re “27″, the average premium is $266.20/month or $3,194.40 per year. How many 27 year olds have an extra $3,200 to spend on this? Remember, this is the price that virtually every uninsured 27 year old must be willing — and able — to cough up in order to prevent the model this system is predicated on from collapsing.
If those 27 year olds don’t show up, and they won’t, then the system collapses instantly. If they do show up because the government threatens them with fines the economy collapses as $3,200 a year exceeds the average 27 year old’s disposable personal income after mandatory expenses (e.g. food, shelter, etc.) Remember, there are always exceptions but these premiums are averages and over large pools of people the statistical averages are what matters — not the ends of the barbell.
It gets better. The “average” 50 year old premium, again, for single coverage, is $452.87, or $5,434.44/year. How many 50 year olds will find that attractive compared against what they’re paying now? Probably more of them, especially if they’re already sick. But how about the healthy ones?
Note two things as well on this account — these premiums are for non-smokers (smoker premiums are grossly surcharged with reports being 2x the above) and they do not account for anyone other than one person. If you are a single parent with kids (rather common) the premium on average is $610.23/month or about $7,300, and if you’re a couple it’s $647.86 (again, $7,774 annually.)
Now let’s look at the government’s own claims. First, the CPI index claims that health insurance is 0.656% of the family budget. What percentage of couples make $1.185 million a year? Why do I ask? Because that’s the alleged median income for a couple if you believe the government’s CPI numbers.
Next, while some people will get “tax credits” to offset these costs all that does is lard it up on the federal budget, because someone else has to pay that bill. In other words this is the true cost that will come out of your hide one way or another — either directly by paying, indirectly by taxation, or indirectly by destruction of your purchasing power.
Next, note that this is the “50 year old” premium but you have to be 65 to qualify for Medicare. The price will rise each year after 50 that you happen to be and there are already reports that if you’re 59 these premiums are understated by half. How many couples who are 59 and cannot qualify for Medicare yet have not $7,700 a year of extra money laying around but north of $15,000?
That’s what I thought.
Full Analysis at Market Ticker
The whole idea is predicated on the notion that you can indefinitely take from Peter to pay Paul.
But eventually Peter is going to run out of money and not be able to foot the bill, or he’ll simply refuse to buy into the scheme altogether.
Like everything else government, the new health care initiative will be a complete and utter failure.
The basic principles of mathematics will prove this to be true in coming months and years.
As Denninger notes, America will be “strangled and expire economically as a direct consequence” of the marriage of the State and Health Care industry.
The die has been cast.