John Stossel: Is America Number One? (Video) and Transcript

Here is video from a special John Stossel did in the late 1990's. This program could air today and would still be relevant. The transcript for the show is here.

1913-2013 Pages In Federal Tax Reporter

Here is a graph of how the federal tax reporter has just exploded over the past 100 years. CCH (a tax research firms publishes how many pages are in the federal tax reporter. In 1913 there were only 400 pages in the federal tax reporter and now there are now close to 74,000 pages. What is interesting is that some people claim during the era of George Bush we had deregulation however the data doesn't support that has we had quite a large increase in the number of pages of regulation. I wonder what the cost of all the pages are?

20 Things You Didn't Know About The Koch Brothers or Koch Industries

1. Koch Industries has grown from $225 million to $115 billion (2013)
2. Charles Koch does yoga (he works an hour and half every day)
3. David Koch still works 10 hour days (despite being 73 years old)
4. David Koch in his playboy days was dating multiple women at a time and had three dates per day
4. All four Koch brothers have had prostate cancer
5. David Koch once owned a Ferrari
6. Bill Koch checked himself into rehab (1994 Vanity Fair article)
7. David Koch use to have a New Years's Eve party that Newsweek said was one of the best parties to crash
8. Charles Koch often reads books on tape when traveling to work
9. Bill Koch was married while also having misstresses
10. There are actually four Koch Brothers
11. The Koch brothers have a total of 7 degrees from M.I.T (Bill 3 including a PhD in chemical engineering, David 2, Charles 2)
12. David Koch has given $435 million away to the arts, sciences, and theater
13. 30% of Koch Industry workers are unionized
14. Even when Charles Koch was worth $1 billion he didn't have servants at his home 
15. Charles Koch gets haircuts from his wife
16. Charles Koch didn't get married until he was 37
17. The Koch brothers as part of their trusts were required to give away a large part to charity for 20 years
18. J. Howard Marshall II (married Anna Nicole Smith) was a shareholder of Koch Industries
19. Charles Koch still wakes up at 6:30 A.M.
20. Once Charles Koch had a meeting in 1968 that started at 4 P.M. on a Sunday afternoon and didn't end until midnight

Decline of America Through Debt: $109 Trillion Unfunded Liabilities and Debt (Medicare, Social Security, Medicaid, Etc)

In thinking about the economic condition of the United States I sometimes worry that maybe our best days are behind us as a nation. History has shown that empires can last hundreds of years before they collapse. When examining the data of the unfunded liabilities of the United States it is hard to see how the United States will continue to have a high standard of living.

In August 5^th, 2011 the United States lost its AAA credit rating. A credit rating measures how likely a country or company is able to pay back their debts. Although, the current credit rating is AA+ it is clear unless the government gets it act together we will be heading down the wrong path.

Currently the national debt for the United States is over $16 trillion dollars. This doesn't include the annual deficits we have been having which in 2012 was $1.1 trillion (I like how people are excited if the deficit is less than predicted even though it is a trillion dollars). The deficit was $1.3 trillion in 2011. The United States also currently has a very low interest rate on the debt at around 3%. However if interest rates increase to a more normal rate of 6%-7% than the interest payments required would increase from about $432 billion to $864 billion. However, our GDP (or how much we produce) is only $15 trillion. One might look at this and say “Gee we could pay back the debt in one year if we really wanted to”. However there are some problems with this. According to the 2012 U.S. federal budget the United States spent $3 trillion in just one year. What isn’t included in this estimation are unfunded liabilities for government programs.

The 2013 Social Security Trustees report shows that by 2033 Social Security won’t be able to pay out full benefits and will only be able to pay out 77% of benefits. Social Security has an unfunded liability of about $9.6 trillion. Medicare has an unfunded liability of about $39 trillion. Medicaid has an unfunded liability of $20 trillion.  Let’s not forget the newly created Obamacare which will is estimated to create a $17 trillion unfunded liability.

This is all at the federal level we haven’t even gotten down to the state level, city, or county level. Joshua Rauh in this EconTalk podcast estimates the unfunded liability from state pensions is $4 trillion. Actually believe it or not New York city has the highest unfunded liability with $122 billion. Then you have cities like Chicago have an unfunded liability of $42 billion. 

So let's add it all up: 

Current U.S. debt: $16 trillion

States unfunded liability $4 trillion

Medicare unfunded liabilities: $39 trillion

Medicaid unfunded liabilities: $20 trillion

Obamacare unfunded liabilities: $17 trillion

Social Security unfunded liabilities: $9.6 trillion

Student loan debt: $1.1 trillion

Increase in interest rates: $864 billion

2013 projected deficit: $642 billion (will see if this comes true)

$109 trillion (or roughly 7 times our current GDP)

As Dr. Walter E. Williams points out the government spends $3.7 trillion per year. Now if you wanted to "soak the rich" and make them pay for the spending you could tax everyone making over $250,000 at a 100% tax rate and you could only run the government for 190 days. Taking the profits of all the Fortune 500 companies would run the government another 40 days and confiscating the wealth of the billionaires in the United States will allow the government run into the fall season. Clearly, we have a spending problem and not a revenue problem.  

John Goodman on Priceless Healthcare: The Problems With Healthcare

A while ago I finish John Goodman’s great book Priceless:Curing The Health Care Crisis. If you learn one thing about this book it is how to make healthcare more free market oriented. People forget the free market does not exist in healthcare like it does in technology, the grocery store, and other markets. People also forget that doctors and hospitals work for insurance companies. Goodman made some excellent points in the book. I wanted to share not only what I learned but my comments as well. 

Part of the problem with health insurance is that very few people are paying for their own healthcare. In fact, 90% of the costs is paid by someone else (government, insurance, company). It is interesting how doctors nor most health professionals can't tell you the price of tests, drugs, or other services. In fact Medicare has 7,500 different billing codes. According to Goodman there are actually Medicare 6 billion prices at any given time. Medicare by the way will go broke as the unfunded liability is around  There is actually something called the International Classification of Diseases which is now on its 10th edition (starting in 2014) and will feature over 68,000 codes. Some of the codes are bizarre including people who get sucked into a jet engine and contact with dolphins. The codes seem to dumb down critical thinking and decision making. The way I understand these codes is doctors have to explain to the insurance company why a patient saw them. The "code" is suppose to explain what the purpose of the visit was and then is used to determine how much doctors get reimbursed. There is plenty of fraud and abuse in these codes. There will be bill padding, up charging, kickbacks, along with other shenanigans.

How confused would people be if we had food insurance and went to McDonald's and had no idea what a burger actually cost? We should make healthcare single payer in terms of having the individual pay of course. I will talk later about how we can actually do this using a free market system.

Health insurance is a very bizarre market. Employers offer what is known as group health insurance. Due to HIPPA rules in group insurance everyone has to be offered insurance (regardless of their health condition, age, or sex). Health insurance is tied to unemployment which is strange. Part of the reason why so many people are uninsured is their health insurance isn't portable. Could you imagine how many uninsured drivers we would have if your car insurance was tied to employment? Actually if you think about it you actually need car insurance to utilize your health insurance. Despite what some people say the insurance market is highly regulated by each individual state and if an insurance company wants to raise rates they first must get approval from the state to do so. The average profit margin of the insurance companies like Aenta, WellPoint, and Humana is only 3.5%. Compare this to the rich profit margins of broadcasting which has a profit margin of roughly 69% or software companies with an average profit margin of 18%.  They are also told how much they can spend on "administrative costs" which is known as a medical loss ratio which requires 85% of their premium income on medical care and less than 20% on administrative costs. However, no one can seem to define what administrative costs precisely are. Could you imagine if bureaucrats were able to tell Wendy's how much they could spend on food?

Speaking of insurance President Barack Obama promised people that if they liked there plan they could keep it. However, employers may just drop employees as employers can always just just pay the $2,000 fine/employee if the employee amount is greater than 50 employees. The Congressional Budget Office predicts that 9 million will actually lose their healthcare insurance. In terms of cost Avik Roy at Forbes does an excellent job of summarizing the costs of both California (64% to over 160% increase) and the Ohio Department of Insurance which recently said they were going to be increasing premiums 88%. People fail to realize that since insurers will be forced to insure people with above-average risks they will recoup that money by charging healthy people higher premiums.

The average wait time for the emergency room (ER) has been increasing in recent years. In 2009 (the last year for which data is available) the mean wait time was 58 minutes (which is a 25% increase from 2003). Some patients wait and die in the ER. In 2008, this happened to Michael Herrara of Dallas, Texas who waited 19 hours at Parkland Hospital Retail and died waiting for care. Compare this to retail clinics (for-profit) which are often open around the clock, post prices online, and often have little to no wait time. This may explain why retail clinics have had a four fold increase with an estimated 6 million people using a retail clinic in 2009. What is even more surprising is that 91% of patients are satisfied with retail clinics. The only free market hospital in the country is the Oklahoma City Surgery Center which posts prices and one of the only free market doctors (Dr. Michael Ciampi) posts prices online, Even the Cancer Treatment for America posts success rates online.

When looking to other countries it seems the United States actually does have a decent quality healthcare system despite what critics like Michael Moore say. The problem with world rankings is that they take into account things that have nothing to do with healthcare. For instance the fact that Americans kill each other more, have more fatal car crashes, and other events distract from the quality of medical care. Another example is when the United States calculates things like infant mortality we count all births instead of other countries which use more liberal measures and only count the infant dead depending on various factors which would artificially make their infant mortality statistics look better.

Canada which touts its "free" healthcare isn't so free. Canada also outlaws private insurance. Of course Canadians are paying for healthcare in the form of longer wait times. The wait times in Canada are horrendous. 10% of patients wait more than 8 hours in the emergency room. 25% of Canadians wait more than 4 months to see a specialist. No wonder why close to 30% of Canadians find the length of wait time for a specialist unacceptable. Canada is also behind on medical technology as well. According to Goodman, the United States has 1,000 PET (positron emission tomography) units while Canada has only 24 units. This technology is used to diagnose cancer. What is astounding is that even the people uninsured in the United States get more access to medical treatment than other countries. In the United States even the uninsured get more preventive care in Canada (prostate exam, mammogram, etc). Also doctors in the United States typically spend more time with patients than nearly any other country.

British National Health Service found after 30 years access to healthcare was better than when the program started. Speaking of Britain in a survey that came out a few months ago 40% of people who work for the National Health Service wouldn't even recommend it to their family or friends!

The United States is also facing an increasing in shortage the number of drugs available. Data from the University of Utah shows there was a shortage of 74 drugs in 2005 and by 2010 increased to was 211 drugs. Some of these drugs are used to treat serious and life-threatening conditions. There are a few reasons why these drugs are in such short supply.  A program known as the 340B program requires drug companies to give 23% rebates on brand named drugs and a 13% rebate for generic drugs to providers that treat a large number of people without means, clinics treating Medicaid patients, and hospitals and clinics in the Public Health Service, etc. Another reason why there is a shortage is because the FDA after 2010 began heavily regulating drug manufacturing plants. As can be seen on page 11 of this House Oversight Committee report the number of FDA warning letters to manufacturers increased 155% from 2010-2011 and 250% from 2009-2011.

Speaking of costs what I learned in reading Goodman's book was that even "preventive care does not actually lower costs. This study done in Health Affairs showed that preventive care actually increases costs. The study showed 20% of preventive options actually lowered costs while 80% of preventive options actually increased costs. Something else I learned was the price of lab tests are 50-80% lower in hospitals compared and also available within one day. Wal-Mart has multiple drugs that can be purchased for only $4 for a one month supply (Wal-Mart has saved people $3 billion on prescription drugs as of March 2013)

What will even make things worse is a bureaucratic led Preventive Services Task Force which will decide who should or shouldn't get a mammogram, prostate exam, or colonoscopy. I am not a doctor but I do know everyone is different in terms of how they respond to drugs, treatments, and the side effects they receive. A cookie cutter top down approach is a pretty ignorant way to run healthcare.

As someone who is interested in technology even I thought electronic medical records (EMRs) would have done a world of good. These records started around in 2004. Recently one of my doctors learned the EMR system for one hospital but now is no longer seeing patients at a different hospital because he doesn't want to learn their EMR system. He told me he spent 12 hours just learning the EMR system for one hospital. President Obama years ago wanted to "invest" take $50 billion of taxpayer money over 5 years to look into EMRs and the results haven't been too great. This Washington Post editorial finds that after the Children's Hospital of Philadelphia added electronic prescriptions resulted in a threefold increase. The EMRs also add about half an hour more because part of the program is the person using them having to keep okaying hundreds of messages the EMR system might have. Even the New York Times published this article that showed that EMRs did not help doctors help increase productivity or quality benefits. 

Medicare and Medicaid are two more future train wrecks waiting to happen. The Medicare unfunded liability $89 trillion. Not to mention Medicare fraud is about $60 billion a year. Between both Medicare (for people over 65) and Medicaid (people with few resources) the waste is about $100 billion per year. Medicare is expected to go broke between 2016-2024. A survey from the American Medical Association (AMA) shows that about 20% of doctors are already reducing the number of Medicare patients they see. According to Goodman about a 1/3 of doctors don't take Medicaid patients. What is tragic is that children on Medicaid wait 22 days longer than children on private insurance. According to Goodman an experiment in Florida showed that when Medicaid enrollees could choose between private managed care plans the cost was lower and patient satisfaction was much higher than traditional Medicaid.People like to say how efficient and cost saving Medicare is. However, the facts tell a different story. Robert Brook at the Heritage Institute shows that actually private insurance spends less on administrative costs than Medicare (which is quite amazing given how much private insurance companies can spend is heavily regulated). 

Charles Koch Wall-Street Journal Interview on Koch Industries Purchasing Newspapers

It seems as if Charles Koch has confirmed that he is looking into purchasing a newspaper company.  In a Wall-Street Journal article released today. As I mentioned in this post I don’t believe Koch Industries is going to purchase newspaper companies to “control media”. Koch Industries will most likely buy the newspaper companies for what the companies are worth and try to make them profitable over the long term. Koch in a statement said that “there is a need for focus on real news, not news with an agenda or news that is really editorializing”. Koch Industries hired an adviser to look at possible media investments.  Charles Koch stated Koch Industries will not be paying a high price either. According to Koch “[Koch Industries] wouldn’t be interested in putting huge amounts of money in [newspapers] on the bet [Koch] can have a miraculous turnaround”. Koch admits there is a lot to learn about the media business.  Of course Koch Industries will only take on things that make economic sense.

It is interesting that there is so much opposition to having a company purchase a newspaper company.  Apparently, according to this story 50% of Los Angeles Times journalists will quit if the Koch brothers purchased the newspaper. Interesting if these people quit their job where else will they work? The print industry is a dying industry. Technology has reduced the price of data, information, and journalism. Even bloggers like me have been providing news to people (for almost nothing).  Some 500,000 people have signed a petition and protests have occurred in 12 cities to “Save Our News” from the Koch brothers.  I love how the protesters usually have never worked for the private sector and if they did it was “an awful experience”.

I personally don’t believe Charles or David Koch are trying to influence the editorial views of any newspaper they may purchase. If anything Koch Industries is trying to make an investment and assets at a low cost and trying to create value by putting those assets to a higher valued use.