From Karl Denninger at market-ticker.org

Denninger is a goddamn genius.  The only reason he isn't president is because he can't stand bullshit and won't get his teeth fixed – and he is a math weenie – so no one understands what he is talking about, even though he posts the numbers and backs them up and is right.  He's always right.  Math doesn't lie.
Math isn't a required study in school anymore.  Nothing is.

 

I may be beating on a dead horse here, but this topic keeps coming up on the forum and I think it needs substantive expansion and more pounding of nails.

Look folks, this is mathematics at a “macro” (that is, “everyone's involved”) level.  The Federal Government went from spending $53 billion on health care (all forms) in 1980 to over $800 billion last year.  Private insurance costs have risen by some 9% annually for the last 30 years.  The Federal Government's spending has tracked this rate of expansion as well, which means that the commonly-held claim that this is all about “more elderly people on the government tit” isfalse; the working population is roughly constant in age.

The Republican Party (and the “Tea Party” contingent within it) have repeatedly stated that “nobody over 50” is going to have their Federal Government medical benefits tampered with.  Roughly, your life expectancy in the US is 85.  This means that if you're 50 today you have some 30 years of life left.

At a 9% escalation per year your medical costs — whether insurance or government spending — will multiply by a factor of 13.3 over the next 30 years.

That is, if you spend $600 a month nowassuming you did not get older or sicker, you would spend $7,980 a month in 30 years on your health insurance, or some $95,760 per year.

The Federal Government will spend not $800 billion but $10.64 trillion on health care at this rate in 30 years.

Neither of those things is going to happen; the money does not exist.

But this is the path we are on when you can demand a bypass, a hip replacement and $200 tests.  When the cost of Juanita the illegal Mexican, giving birth is forced upon you as an American Citizen.  When you may make lifestyle choices that severely impact your health and yet force someone else to pay for them.

If you keep believing in this, America, you are going to die sooner than you should, because what you believe in will not happen.

You therefore have two choices: You can either go “baaaaaaahhhh!” like a Sheep right up until the medical system collapses, at which point if you are dependent on it for a drug, procedure or device you will die or you can do what you can to change the course of your life and with a reasonable probability avoid that outcome.

That's all there is folks.  This is not about what someone wants and it is not about what you think you can demand.  It is about mathematics.

Let's talk about the cost picture for a minute.  I'm going to pick on one common test — HbA1c, used to measure long-term glucose control.  It is commonly used among diabetics to monitor not their instant blood sugar but how well they control it over time.  The test measures the amount of damage in the blood caused by excessive swings in blood sugar over the last four months or so (the normal lifespan of a red blood cell); once a cell is damaged in this fashion it remains damaged.  A “normal” range for a non-diabetic person is between 4 and 6%; diabetics with excellent control can approach normal but few achieve it.  Elevated values are very bad; levels over 7% are strongly associated with serious complications.

For an apparently-healthy person who is not attempting any sort of intervention for diabetes this test is far better in diagnosing trouble than a single fasting glucose test, since it checks damage over time as opposed to “at the present instant.”

Ok, so there's the background.  Now why do I bring this specific (and common) medical test up as an example?

That's easy: I can easily find prices for this as a lab test and outside the lab.

The lab price of this test is about $65 from my survey around the web of various medical labs.  But at WalMart I can buy two tests for $30 and perform the test myself at home in three minutes.

In other words the “doctor” price — where cost-shifting, monopoly behavior and other games are present is four times that of the competitive price in an open market.

Never mind the privacy issues — if I go to a lab the lab gets to choose who obtains the information.  If I have “insurance” then that data becomes part of my indelible record for anyone who has “a financial interest” in my medical care to look at forever.  If I buy the test and take it at home, I control who gets the information and on what terms since I paid for it with my own money and only one pair of eyeballs sees the result.

But on a cost-control basis, even leaving the privacy issues aside, why doesn't the local doctor's office simply buy these boxed products from WalMart and use them? They're approved by the FDA and as such they have to be “lab-style accurate” or they wouldn't be.  Both use blood samples so the testing methodology is the same.

Here's the answer: The entire medical system is built upon the premise of intentionally distorting price and cost-shifting on a massive scale, along with controlling you by denying you the right to control information about your own medical status and how it's used.  Since “profit” is typically a percentage of price this inures to the benefit of providers in the space.  And since there is no free market for these services — Juanita can “pop in” and pop out a kid, billing you indirectly for her care (along with Dear old Granddad who can do the same thing!) there's zero incentive to solve the problem.  If it becomes common knowledge that the test in the store is just as good as the one in the lab and you have to pay for one or the other what do you need the doctor's office for in performing that test?  You might need his advice on how to interpret the results but he loses the mark-up on the lab work and so does the lab, and now you control the data instead of him.

Never mind the other issues that arise in our massively-fraudulent medical system, such as with drugs.  Some people claim that other nations have a “better controlled” cost structure.  That may be true but a big part of how they achieve it is by forcing you, the American citizen, to cover the cost of development of new drug and device therapies!  In Canada, for example, Viagra is a couple of bucks a pill.  In the US it's $25 or so.  The drug is the same, the manufacturer is the same, and the price disparity is maintained by the drug companies getting laws passed making it illegal for you to import those Canadian pills into the US, forcing a price collapse in the United States. 

I've written about all this before in depth, and it figures prominently in Leverage as well.  But today I want to draw your attention to something very important — that avoiding the consequence of the collapse of the system is at least partially within your control.

We're not going to stop the stupidity folks.  There's been zero attention paid to this by any politician from the left or right, and in fact they're intentionally lying to the people on a literal daily basis in this regard.  This is not going to change and the system is going to collapse upon itself.  We are merely trying to figure out when, but if you're under 60 today it's a good bet you will live to see it.

When I pointed out the mathematical impossibility of what Steve Southerland and Jeff Miller were claiming (that nobody over 50 would see their Medicare changed) in a town hall meeting last year I was shouted down and told that I was out-of-order to state that they were lying in their claims.  The problem is that they were lying and they both knew it; it is never out of order to state the plain truth.  Mathematics is an exact thing and the record in this regard on Federal Spending is a fact, not supposition.  That this cannot continue is also a mathematical fact and since the lion's share of federal medical spending is in fact on Medicare it is mathematically inevitable that major reductions in that spending and the program itself will occur before those who are currently 50 die, if the program doesn't collapse entirely!

Every one of the people involved in this scheme and scam — some 20% of our GDP — are financial rapists and terrorists.  The entire corrupt system and its enabling politicians all deserve to have an asteroid fall on them when they go to the mailbox this afternoon.   Escaping from this corruption and outrage in its entirety is not possible.  Ultimately, you will have to either face your own mortality or become subject to the medical system's perversities. 

However, this doesn't mean you can't change the outcome between here and there in a positive fashion for you as an individual, because you can.

Let's start with the simple.  If you smoke, stop.  Right now.  Throw the cigs in the trash can and never buy or smoke another cigarette.  Ever.  It is the single-most productive thing you can do to change your health prognosis over time.  If you wish to keep smoking that's fine, but understand that you are likely to take years, and perhaps decades, off your life and you will not be able to force society to pay for whatever medical care you need as a consequence of this choice in the near future and beyond.

Second, look at this picture:

Which of these two men would you like to be?  One has a far greater chance of needing “intervention” by the medical industry some time in the next 30 years or so.  There's a roughly-50lb difference between those two pictures, and the change from #1 to #2 – 205 to 157, several pant sizes, a 42 suit jacket to a 39, along with two full shirt sizes (from XL to M in a T-shirt) and an inch of neck size in a dress shirt – took about nine months.  #1 was what I had been for more than a decade.  #2 is what I was when I was roughly 17, and am now again today.  The bad news was that several grand worth of business suits went to Goodwill as there was no reasonable way to alter them to fit.  The good news is that I haven't been in this good of condition since I was a teenager, and it's not just “being fat” (or not) — it's also how I feel.

To get from #1 to #2 I did two things: I cut the crap from going down the piehole — specifically, refined carbohydrates.  I also removed all manufactured fats from my diet (e.g. anything with the word “hydrogenated” on the label); if I want a “butter taste” on something (e.g. microwaved brussel sprouts, which I really like) I use butter,not Frankenfood. I also downloaded the program “Myfitnesspal” for my Android phone and started using it to log my weight, what I stuffed down the pie hole and how much exercise I was actually doing.   It works as it keeps what you're doing in your face.  It also has calorie and nutritional information for a lot of restaurant chain menu items which makes it easy to consult before you order when eating out — and that makes a big difference.  For those of you who just can't get rid of the crazy carb stuff, I understand from my research that you can do either low fat and high carbohydrate or low carbohydrate and high fat — both moderate protein (NOT high protein!) but you cannot stuff both high-glycemic carbs and fats in your body without becoming fat.  Since I just cannot deal with the idea of not eating steak or ribs, two of my personal favorite foods, the choice that I could actually live within was easy.

Second, I “moved more.”  Google up “Couch to 5k” and do it.  If you can't do jogging for physical reasons (e.g. bad knees, hips or ankles) double or triple the distances and get a bicycle.  If you still can't do it for physical reasons then choose swimming (an essentially-zero-impact physical exercise) instead.  There are damn few people who cannot manage the physical requirements of swimming no matter how bad your joints and similar are and it is an excellent form of whole-body exercise.  I also found and bought a weight machine from a guy over in Destin who looked like he never used it. It needed a couple of cables replaced but was otherwise in pristine condition at a tiny fraction of the cost of buying one new.  I don't use it as much as I should, but it does get used and it matters.  I also found that it's easier on the joints of this old fart if I use the Vibram “Five Fingers” shoe-like things — it's basically running barefoot with a pad to keep rocks from embedding themselves in your toes, and with them you're forced into good form which stops the injuries (fancy that — the human body was designed better than all those crazy ideas from shoe companies?)  Beware that when you start using those, if you choose to, your calf muscles will complain loudly as they probably haven't been used extensively in years.

I'm not going to tell you that the “move more” part was easy.  It wasn't.  In fact, it was really hard when I started.  If you don't know if you have cardiac problems go see a doc and take a stress test first where he can watch your heart rhythm while you crank up the METS so you have a reasonable expectation you won't fall over and die when you begin.  That would be bad.  Starting out I couldn't run a mile without feeling like someone had hit me with a truck, but what I found is that the only way to keep from plateauing is to hit that wall and push through it — just a bit further, a bit harder pace, and then keep at that level of exertion on further workouts until it becomes not-so-tough.  Then push again.

Having gotten here I've found it's not hard at all maintaining what I've achieved.  I jog a couple of times a week and ride a bicycle for grins, giggles and fitness, usually putting in at least half an hour of “working out” in some form three to five times a week.  I live near the MidBay bridge and when the weather is nice I sometimes choose to ride over it to the Crab Trap in Destin for lunch — a roughly 15 mile round-trip, and an hour and a half including the time eat (on the beach, natch, so that's the reward.)  I can now crank off three miles at a 9 minute pace, a modest jog, without my heart rate going materially over 150 — I can talk with you while jogging in a reasonably-normal tone of voice.  Nine months ago all of that was impossible.

It's a choice folks and one you need to make now, because at the present pace we're a couple of years — maybe four or five at the outside — before the medical system collapses under its own weight.  You can't make these changes in a day — if you wait until it all comes apart it's too late. 

The politicians are all liars and they're going to sit back and watch you die as a consequence of your reliance on their lies.

If I, as a fat bastard pushing 50 years of age can accomplish this with nothing more than a decision to do so then anyone can in one form or another.  And yet when I look around at the Mall, at WalMart or just walking about the perception changes.  That first picture was what I thought of as “average” and I was about that in terms of American men.  Now I know differently — I was on my way to an earlier death and whether I wanted to admit it or not I was fat.  I might have been “average” for America, but on an absolute scale I was overweight and pushing toward obese — and that's a fact.

I know there are a million excuses as to why you can't do it, but just take a look at the picture above and then tell me again, with a straight face, that you want to be “Guy #1”.  You're lying to yourself if you do — you can do it, but don't want to, and thus far you've been able to get away with it because the government has always been there to “pick up the pieces.”

That day is coming to an end folks, and this aspect of being prepared is, for many Americans, far more important than any other.  If you're rich and dead you're still dead, so if you look like the left-side photo (or worse) take care of that issue first.

It's a new year.  Turn the new year into a new you and avoid, to the extent possible, what's coming.

90% of success is showing up.  Getting the math right is the other 50%.

-T
Aut viam inveniam aut  faciamaut viam inveniam aut faciam.
-Hannibal


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