Health Care System Collapse Predicted Every year now, pundits have predicted the collapse of the U.S. health care system.(1-4)One of these pundits isTommy Thompson, former governor of Wisconsin and Secretary of (HHS) Health and Human Services, who predicts collapse by 2013, mainly because health care costs are rising rapidly. Tommy Thompson says: "The first reason is that we spend about 16 percent of our GDP on health care...and by 2013 we'll double the expenditures; from $2 to $4 trillion -- from 16 percent to 20 percent of GDP."(1) Exactly when this predicted collapse will happen, I do not know. A collapse has been predicted every year for the past ten years, so I wouldn't hold my breath. One thing is for certain. This type of escalating cost cannot be sustained.
Above left image: Collapse of Building, Demolition of Pruitt–Igoe Date April 1996 U.S. Department of Housing and Urban Development Office of Policy Development and Research Courtesy of wikimedia commons.
Health Care Costs Skyrocketing
The predicted collapse of our health care system is based on increasing health care cost as a percentage of GDP. The US
Council of Economic Advisors predicts that by 2040,
healthcare spending will consume 35% of the GDP of the United
States.(see chart below, GDP = gross domestic product).
is simply impossible for us to carry an increasing financial burden of
increasing health care costs. The average family cannot afford it. In addition, the government cannot afford it. A large chunk of our national healthcare is Medicare and Medicaid, which as you know is paid from government revenues.
Although US tax revenue has been sufficient to pay the interest on our ballooning government debts interest payments. This may not last. The 2011
budget deficit is expected to top $1.6 trillion, and the true negative net worth of the federal
government is actually $76 trillion dollars, a number that is five times the 2010 GDP (gross domestic product) of the U.S., and exceeds the estimated GDP of the rest of the planet by $14-15 trillion.(17)
Following our brilliant example, other countries have taken on increasing government debt, so this has become a global problem. When a country is unable to pay the interest or principal on its debt, this provokes a financial crisis, and brings us to the topic of global financial collapse.
Global Financial Collapse Imminent
The recent example of Greece illustrates the global banking crisis. Over the years, the banks have loaned the Greek government billions of dollars. Because of slowing economy and "hard times", the Greek government does not have the tax revenue to pay back these bank loans and, therefore, at risk for default. Rather than default on the bank loans, the Banks have patched together additional loans for Greece, described as "kicking the can down the road".
Left image: House about to collapse, courtesy of wikimedia commons.
A precondition for this band-aid of temporary loans, is the imposition of "austerity measures" involving a fire sale of public utilities, public land and government assets to pay back the Banks. This amounts to a massive theft of public assets by the Banks, which the average person on the street may view as a form of criminal activity. And that is why there were massive street protests in Greece (and also Spain for the same reasons). The street protests were done to make the statement that the people of the country repudiate this form of criminal theft of public property, they repudiate the massive public debt and would prefer to declare a default or debt moratorium. After all, debt represents a form of enslavement of the population. The elected officials however, are ignoring these massive demonstrations and have essentially sold out, and have acceded to the banks.(5)
Some pundits consider the events in Greece and Spain as a dress-rehearsal for what we will soon see in the United States. Some states are already following suit with bankrupt states like Minnesota and Illinois auctioning off public assets to pay state government debt.(5)
See the following three videos for more on this
Greece a Dress Rehearsal for United States
Debt deflation-On the Edge with Max Keiser-07-08-2011
Keiser Report: Europe's Neo Feudalism (E162)
When will this predicted global financial collapse ocurr? It could be next week , next year or next decade. I have no idea.
If 24 months ago, someone had predicted a catastrophic real estate price collapse, auto company bankruptcy, stock market decline, bank failures and rising unemployment, that person would have been called alarmist. At risk of being called histrionic, we are predicting that health care in the United States is in danger of collapsing within 24 months.
De Economist 1993 Volume 141, Number 3, 419-431, DOI: 10.1007/BF01717408
Health care system collapse in the united states: Capitalist market failure! Sam Mirmirani and Richard N. Spivack
Sunday, July 10, 2011 The Big Banks Are Waging Warfare Against the People of the World. Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.
(10) http://seniorjournal.com/NEWS/Medicare/2008/8-02-26-HealthCareSpending.htm Medicare News. Health Care Spending to Double to $4.3 Trillion by 2017; Boomers Drive Medicare. Increased use to double prescription drug spending as prices go down, generics grow
(11) http://blog.seattlepi.com/larrydonohue/2009/05/14/current-health-care-%E2%80%93-doesnt-pencil-out/ The Congressional Budget Office (CBO) reported that over the past 30 years, total national spending on health care has more than doubled as a share of Gross Domestic Product (GDP). The CBO projects that, if nothing changes, health care costs will rise from the current 16% of GDP to 20% by 2019. And if the GDP growth lags, the percentages could be exaggerated even more. Taken to the extreme, unabated health care growth could leave no capacity for other more enjoyable consumption.
(12) http://positiveimpactinstitute.com/category/healthcare/ An Open Letter to the American People On Health Care
(13) http://chartingtheeconomy.com/?p=526 Health Care Expenditures as a % of Gross Domestic Product
(14) http://ieet.org/index.php/IEET/more/4661 Key Trends of the Next 25 Years Ramez Naam Mar 25, 2011 For instance, the US Council of Economic Advisors predicts that, on current trend, by 2040, healthcare spending will consume 35% of the economy of the United States.
(15) http://specfriggintacular.wordpress.com/2011/04/15/national-debt-and-tax-revenue-1960-2011/ National Debt and Tax Revenue 1960 – 2011
Obama 2010 budget deficit now 5 times larger than nation's output
As the Obama administration prepares to finance a Fiscal Year 2011 budget deficit expected to top $1.6 trillion, the American public is largely unaware that the true negative net worth of the federal government reached $76.3 trillion last year. That figure was five times the 2010 gross domestic product of the United States and exceeded the estimated gross domestic product for the world by approximately $14.4 trillion.
According to the U.S. Department of Commerce Bureau of Economic Analysis, U.S. GDP for 2010 was $14.861 trillion. World GDP in 2010, according to the International Monetary Fund, was $61.936 trillion.
(18) http://www.foxbusiness.com/markets/2011/04/20/government-cash-handouts-exceed-tax-revenues/#ixzz1SCdCBFAY Government Cash Handouts Now Top Tax Revenues By Elizabeth MacDonald Published April 20, 2011
FOXBusiness U.S. households are now getting more in cash handouts from the government than they are paying in taxes for the first time since the Great Depression.
Households received $2.3 trillion in some kind of government support in 2010. That includes expanded unemployment benefits, as well as payments for Social Security, Medicare, Medicaid, and stimulus spending, among other things.
(19)danielamerman.com/articles/2011/medianA.htm As we will explore in this article, a more accurate and full accounting for 2010 shows that in one year, total unfunded government obligations rose by about $54,600 per (above poverty line) US household. Given that the median US income is about $50,200 per household, this means that new debts and obligations taken on in 2010 by the US government, when allocated on a per "solvent" household basis, reached 109% of the total income of the median family.
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