You Want to Fix the Economy? Then First Fix Healthcare

What is blindingly obvious to employers but apparently invisible to the average zero-business-experience mainstream pundit is this: if you want to fix the economy, you must first fix healthcare. If you want to pinpoint a primary reason why U.S. enterprises shift jobs overseas, you have to start with skyrocketing healthcare costs.

According to a report by the St. Louis Federal Reserve, real (adjusted for official inflation) wages have risen a mere 3% since 1970. (No wonder wage earners don’t feel wealthier; if we use a more realistic measure of inflation, we haven’t gained 3%–we’ve lost ground.)

But if we look at total compensation costs paid by the employer (health insurance, workers’ compensation, employer’s share of Social Security, etc.) we find that these costs have soared 60%. In other words, if these labor overhead costs had remained stable (i.e. gone up only as much as inflation), employers could have distributed raises of 60%.

These labor overhead costs are the reason why wages have been stagnant for 46 years, and the dominant overhead expense is healthcare insurance. Why has healthcare soared from 6% of GDP to 18% in four decades?

One reason is we have the worst of all possible worlds: we have a healthcare (what I call sickcare, because sickness is profitable but health is not) system in which for-profit corporations–cartels with immense political power–set the prices, and the government pays them.

If you set out to design a system that optimizes price-fixing, fraud, over-testing, questionable procedures, pharmaceutical advertising to a credulous public and opaque billing, a system with no real limits on prices, you’d end up with the American sickcare system.

If you think this system is affordable, sustainable, and a wonderful deal for employers, you need your head examined. Better yet, go out and get platinum coverage in ObamaCare and pay the entire monthly insurance cost yourself.

I have written dozens of substantial analyses of sickcare/healthcare over the years. Please start with these four:

Sickcare Will Bankrupt the Nation–And Soon (March 21, 2011)

Can Chronic Ill-Health Bring Down Great Nations? Yes It Can, Yes It Will (November 23, 2011)

America’s Hidden 8% VAT: Sickcare (May 10, 2012)

ObamaCare: The Neutron Bomb That Will Decimate Employment (February 22, 2013)

Then move on to these:

Why “Healthcare Reform” Is Not Reform, Part I (December 28, 2009)

Why “Healthcare Reform” Is Not Reform, Part II (December 29, 2009)

The “Impossible” Healthcare Solution: Go Back to Cash (July 29, 2009)

Healthcare: A Large-Scale Solution (January 4, 2011)

A Sustainable National Healthcare System: Prevention Only (August 20, 2012)

Why America’s Healthcare (Sickcare) System Is Broken and Unfixable (July 16, 2014)

While you’re gasping for breath, check out these charts. Let’s start with medical costs, which have outpaced inflation by leaps and bounds.

The costs of the federal healthcare programs, Medicare and Medicaid, are exploding: where are the trillions of dollars to fund these programs going to come from? Please don’t say higher taxes (tax levels above 20% of GDP trigger recessions) or borrowing more money (federal debt is already pushing $20 trillion):

After a head-fake down, health insurance costs are soaring again.

Our developed-world competitors manage to pay for their “socialized medicine” at roughly half the cost per capita (per person) as the U.S.

So you want a solution, right? The current system is not a solution, it’s a poisoned blade in the heart of the economy. Everybody knows this, just as everybody knows it’s unaffordable and unsustainable.

The solution? Let a 100 flowers bloom. Give consumers as wide a choice as possible, including government-run insurance programs. Don’t force anyone to join anything. Give employers and employees as broad a range of choices as possible–yes, including a government-run insurance program in which the government owns the entire operation–clinics, hospitals, drug manufacturers, etc., lock, stock and barrel.

The point here is we need real competition, but our current system guarantees there cannot be real competition. The for-profit cartels have captured the federal regulatory and funding agencies, and the last thing the cartels want is transparency and wide-open global competition.

Around 40% of the cost of the current mess is paperwork going back and forth between all the players; a one-stop shop would eliminate about 90% of those needless expenses right from the start.

Look, if the federal government offered a civilian equivalent of the Veterans Administration with its own pharmaceutical manufacturing divisions, do you really think it would cost more and be any more inefficient than the insane mess we have now?

If it did cost more, then nobody would use it and it would go away.

In a truly competitive healthcare system, cash would be king. Please read this before passing judgment:

The “Impossible” Healthcare Solution: Go Back to Cash (July 29, 2009)

We don’t just deserve an affordable, sustainable healthcare system–we’re doomed to bankruptcy without one.

My new book is #6 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book’s website.

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  • sometime

    a very informative article. Isn’t that something. Compensation cost paid by the employer have risen 60% and wages to the employer 2% since 1970. All because of GOV. And the author is right. No wonder jobs have shifted else where……away from the US…..Gov policies are destroying the US. have already brought the us to a third world country status….also, bet there won’t be much change for the better either after the elec….Lunatics run the asylum….and until that changes, all bets for better days ahead are off.

  • Know the TRUTH about the Government Health Care Bill H.R.3200 – Key Points

  • How Government Solved the Health Care Crisis!

    Today, we are constantly being told, the United States faces a health care crisis. Medical costs are too high, and health insurance is out of reach of the poor. The cause of this crisis is never made very clear, but the cure is obvious to nearly everybody: government must step in to solve the problem.

    • diogenes

      Yes, this video merits widest viewing. “Who is that man behind the curtain?”

  • Do not get sick ‘AFTER JUNE’ on the Reservation? Why?!

    • purrsun

      We’re all Indians now. Rationing? AKA Croak Panels?? In July, family member developed pneumonia – few days after gall bladder surgery. ICU treatment panel plan Rejected by Blu Cro$$. After twenty-six days of billable services, TOD recorded at 11:43. Oh, yeah, just turned 40.

      • Yes, we are and this why I went and found this years ago for anyone with an open mind who could put two and two together. I never believe the faux free press. Never!

        • purrsun

          People sacrifice financially to access benefits promised by “best available” ins coverage, e.g. long-term acute care facilities. But in serious cases, Only Upon Approval. Bottom line IS . . . bottom line. How’s that for making one feel like a commodity? Who can replace a beautiful daughter? And Who is supposed to be overseeing industry while they “operate”?

          • You first have to know the American government history like the video I have posted below for any understanding to begin with ▼. How Government Solved the Health Care Crisis!

          • ICFubar

            Canadians were polled a decade or so back who they thought was the Greatest Canadian, living or dead. The result was the Father of Canadian Medicare and the inspiration for modern Canada before the bankers took over in 1974, Tommy Douglas.


      • “We’re all Indians now.” Man, how true.

      • ICFubar

        I once remember coming across the stat that one American goes bankrupt every thirty seconds due to health care costs.. Whether or not this is a true figure it still points to a problem of epic proportions for the American economy. It is my belief that health care, like the armed forces, water, electrical, sewer, government and other essential services must remain or become socialized, or in other words run by the public in the public’s interest.

  • Feb 26, 2014 ObamaCare: What You’re Not Being Told

    My special thanks to Chief Justice Roberts, because without you none of this would have been possible.

  • ICFubar

    But what if the western Apex Elites, the western banking class and their entourage of subsidiary corporations, do not want to fix the American economy? Are we to suppose that this small group is so utterly stupid that they, with all their access to the best minds, do not understand the results of their policies rubber stamped by their hirelings in government? A large portion of the evil ideology they follow is the destruction of any opposition to their ascendancy to inventory and control the entire planet and all the resources on it, including all humans and the labor they can perform. This is being achieved incrementally, on many fronts and levels simultaneously, with one being the destruction of the middle class where a heritage of democracy loving populations exists. And while C.H. Smith may offer many valid points on the rehabilitation of the American economy it is my belief he understands the larger picture but fails to express what the driving force behind the economic malaise that is operating on a universal agenda is in this article. As for his conclusion that a belief in a competitive market in health care is attainable or in any other market we need only look at some critiques of capitalism to understand how this will work out and is working out. Essential public services. in the hands of the private for profit private sector have a more than highly likelihood of evolving to where we are today or worse if allowed to proceed to their natural conclusion. Like it or not on some political ideological basis some essential public services need to be socialized. Other services and production of goods need only be regulated to a point so the public is protected. environmental costs are not externalized and monopoly is disallowed, all on a world wide basis and we achieve a capitalism that works for the greater good. To leave the conduct of capitalism in the hands of those who have a stranglehold over the creation of money and capital is the folly we now find ourselves living with. How’s that working out for mankind?

    • sometime

      excellent thinking within this comment.

    • Zap

      “But what if the western Apex Elites, the western banking class and their
      entourage of subsidiary corporations, do not want to fix the American
      This is the answer……..they are not trying to fix anything, they are in the process of deliberately busting the West out. The central banker ponzi scheme has run it’s course and they have no other options other than world war or deliberately collapsing the western economies repudiating the debts and creating civil wars as a cover and a distraction. Central bank imposed negative interest rates, something that has never existed in all of financial history for the obvious reasons proves that they are at the end and willing to promote anything no matter how absurd to grab that very last bit of collateral from the middle class and pocket it before they implode the system.

      • ICFubar

        I agree with much of your comment. Greece is the experiment and testing ground for the foreclosure on western nation states by the financial class. I often wonder when the push back will finally occur? Maybe never, maybe next week, but eventually the people will have to go to war with the bankers.

  • diogenes

    When Democrats and Republicans in Congress united to pass obamacare over two thirds (67%) of Americans wanted a single-payer plan. Congress (both parties) ignored us because Congress (both parties) is wholly owned by the Wall Street hereditary predators who profit from private (now forced) “insurance” to agglomerate funds for use in their casino. The problem is not a “health care problem” it is a political problem deliberately created by an unelected, hereditary economic government that has usurped control of our country. The source of America’s “health care problems” is identical with the source of America’s failed democracy. Guess who?

    • Beautiful, right-on comment.

  • Tim Chambers

    Tell that to the many workers who don’t get health insurance and still make minimum wage and they will laugh in your face. What’s wrong with the economy is that it is run on a psychopath’s ruthless ideology, by people who prefer to loot their company treasuries and treat their employees like slaves. Healthcare costs are only a small part of it. Single payer national healthcare would go a long way to resolve the problem but hospitals would have to made public as well. The capitalist profit motive is the root of the problem.

    • You judge for yourself with this single link. June 13, 2016 Which Corporations Control The World?

      A surprisingly small number of corporations control massive global market shares. How many of the brands below do you use?

    • diogenes

      Pharmaceutical also emphatically need to be removed from the for-profit market-place. So do shelter, power and heat, communications, mass transit … public necessities and utilities, in short.

      The when the Preamble speaks of “life” (“life, liberty, and the pursuit …”) by “life” it means “livelihood”.

  • David S

    The video below entitled “How Government Fixed the Healthcare crisis, and your article discussing the need to return to cash (consumer driven) medical care are truly the MOST IMPORTANT and valuable things here. Anyone who seriously thinks that government (who caused the medical crisis we now face) can actually be trusted to fix it (though active changes rather than getting out of the way and allowing FREEDOM to undo their failure) has simply not payed enough attention to history or economic laws. This is not about what Americans think they want (after 12 years of government brainwashing and non-stop media propaganda). This is about looking at how the market, when left free of micromanaging regulations, has addressed various other parts of our societal needs, and seeing exactly how government has destroyed medicine through their interventions, collusion with doctors and groups like the AMA, and protectionist regulations that destroy competition. Great piece.