Wednesday, July 2, 2014


A single thought conspired and overwhelmed the synapses of my being the other day: Costs! Everywhere you look nowadays there are diatribes from famous and not so famous, from intellectuals and those who call themselves intellectuals, from business people and those who have never created or operated a business and from politicians. The lingering tormented flame that attracts all these disparate beings also, I fear, will burn them.

1.       “We are running out of money!” well yeah its true! If you spend more than you earn eventually the debt will bankrupt you. No, that concept is on the decline because “experts” proclaim that we cannot run out of money because we are the innovators and the creators (by we, I mean the USA). But dare I ask about the $17.6 Trillion debt? and the $16.8 Trillion of Goods and Services (GDP)  things become a bit fidgety.

Balanced to the GDP
To counter that the argument posed by the Federal Reserve is to “Print” money. They have absorbed $4 Trillion of bad mortgages and “bad assets” on their Balance Sheet, so that the financial instruments; banks etc. can strengthen their wretched flailing liquidity ratios. Some day of reckoning will have force the FED to unwind those bad assets into the Main Street market place and when that happens what do you think will follow? Hyperinflation of course! More paper money chasing less goods and services and thus pricing those items will be at record high prices. And meanwhile the politicos to boot want to just “Give, Give, Give” to their constituents so that they themselves can be reelected to the “Bennies hall of fame” –free care, free savings, free pensions. This art of giving has to be combined with some art of taking from the earners and there lies the fly in the ointment. When does a hard-working worker tire of this confiscatory drain?

2.       “Healthcare costs are so high!” Agreed!. Okay now let us dissect that little nugget to its essence of quarks and leptons. 30% of healthcare is directly related to administrative costs. You know the kind that tells you whether you can care for the patient or not based on some obscure guidelines of population medicine correlational science data. The cost of healthcare in the United States based on Dan Munro’s article  in the Forbes was $3.8 Trillion in 2012! If we were to reduce the administrative costs, eliminate most of the intermediaries, between patient and physician,s we could easily eliminate close to $1 Trillion. “Oh No, that cannot be done!” will be the cry from the vested interests of the intermediaries. But real reform is painful and agnostic!
The demographics of the United States is changing; currently 65 and older account for 13.6% and will grow to 20.4% of the population even as the total population also continues to increase at a steady clip. And older Americans have a higher per capita expenditure of healthcare dollars. So do the math.

And as the public funds continue to pay for the healthcare expenses increasingly the problem becomes obvious to anyone with a set of eyes and a brain to go with it! The skinin the game is being coddled by the politically engineered false safety net.
With CMS spending close to $1 Trillion dollars in elderly healthcare, although the agency reports 7-8% in administrative costs some suggest that figure to be in the neighborhood of 30% accounting for all fixed and variable costs. That then brings sustainability into question especially as the labor force shrinks and consumption increases.

Reforms with weak measures and countermeasures will lead to no reduction in expenses:
BTW that cost also includes stuff like RAC Audits, Denials, Authorizations and other bureaucratic misnomers necessary to keep the paper-pushing vogue in vogue.

Merely polishing the old paradigm will not work! Decreasing the burden of unnecessary costs and revisiting the concepts of how to manage as a profitable country would necessitate a reorganization of the hierarchical tall organizational structure into a lean-mean horizontal structure that fosters real innovation and not window-dressed words emanating from silver-spooned mouths.

Tort Reform is not likely when Congress is occupied by the Lawyers and they are shrewed enough to fund their lobbyists with their earned largess. That by the way according to some would eliminate over utilization and duplication of CYA services and reduce the costs by some 2,4%! That percentage translates to $55.6 billion of which $45.6 billion annually is the cost of defensive medicine. 

3.       Business Costs: The cost of doing business, any business- the core of the economy, by any measure has gone up. The Cumulative Regulatory costs in loss of productivity and Employment are huge, Meanwhile “the Regulatory Compliance Costs in 2008 were $1.863 Trillion.

The stranglehold of a regulatory bias, which by its very nature and being, threatens the potential for any future success lays bare the increasing probability of societal failure. Those that love regulations to protect them from the evils of witches, shamans and snake-oil men fail to recognize the risk of such protection.

So the rallying cry from all walks of the expressive, political divide is muted by the facts that exist today. Costs rise not solely as a consequence of inflationary pressures but from all the nuanced politically forged and well-entrenched ideology of excessive, obtrusive and overwhelming managerial interventions. While the initial intent may have been noble and the desire to “do no harm” a desire, the continued extension of reach can only lead to greater harm to the economy.
 In reality human kind has a keen interest in Liberty and with it an accompanying cling to the Instruments of avarice that feed it the safety measures against the risks of risk-taking, innovation and creativity.  Espousing the latter wretchedness on the grounds of finding comfort in a cocoon, sheltered from the many vicissitudes of life itself leads to the ceremony of perilous circumstance, of servitude and a longer term harm to living itself.
Let us remind ourselves that we must control our own individual destinies. We must shape our own individual futures and we must above all cherish the freedom and liberty of being the Unum in ePluribus unum.:

“What light is to the eyes - what air is to the lungs - what love is to the heart, liberty is to the soul of man.” Robert green Ingersoll

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