Category Archives: Broken in the USA

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Life Expectancy vs HALE

Life Expectancy vs HALE

I recently read an ED OP in our local paper that was a reprint from a publication from a Minnesota paper. The writer was pointing out that while most EU countries were making positive progress to improve Life Expectancy, the US has been heading in the opposite direction for several years. The narrative stated that the CDC has placed part of the blame on drug overdoses and suicides. I did a bit of math on these areas and discovered that the increases in these areas has only had a minimal impact. The writer pointed out deficiencies in our health care system and noted increases in pregnancy mortality & heart disease, but again these numbers do not even come close to explaining away the problem.

My opinion is that the issue lies with our broken and extremely expensive healthcare system in combination with our inability (or unwillingness) to maintain our immune systems through regular exercise and moderation of caloric intake. Our healthcare system costs, on average, 2 ½ times that per capita average for EU countries. Yet, according to the World Health organization we only rank 31st in terms of quality of care. It is interesting that this is exactly the rank that the US has with respect to Life Expectancy, again 31st. You would think that since we spend so much on health care we should be getting the best?                                                                     I think it important to not be fooled by Life Expectancy as a true measure of quality. The better measure is one termed HALE (Health Adjusted Life Expectancy). Following is taken from Very Well Health: “How Is Healthy Life Expectancy Calculated? This is a bit complicated and uses lots of different data sources for each country. In a nutshell, the World Health Organization takes a country’s data like mortality rates and health status information and crunches them to look at things like how long people are expected to live with about 135 health conditions. The calculation looks at the mortality rate for different health conditions and adjusts it for the duration or severity of the illnesses.”

What this measures is your expectation of a healthy life span, not just how long we can keep you alive! Again, we fall far behind the EU and in fact we fall to 35th overall. The difference is significant. Currently our Life expectancy from birth stands at 79.3, but our HALE stands at only 69.1. Keeping us alive those additional 10 years is expensive and they are not our best years.

You might be surprised to learn that the following countries have a better HALE than the US: The United Arab Emirates, Slovenia, Malta, Maldives, Costa Rica, Chile & Cuba. Our HALE is equal to that of China.

Hidden taxes

Hidden taxes

We all aware of obvious of “upfront” taxes like sales, income, real estate, personal property and petrol taxes. What we many of us do not recognize are what I term “hidden” taxes. In a free market economy (a good thing) prices will adjust according to supply and demand and other market factors. In a competitive environment prices will tend to fluctuate. One example of a “hidden tax” is corporate income tax. Initially this appears as a good thing since companies make a lot of money and they should contribute to the running of the government. However, over time, much of this tax will be passed along to the consumer in pricing. So, who is paying the tax?                                                                                                                                                  My favorite “hidden tax” has to do with the cost of healthcare. Your elected representatives refuse to reduce this tax burden on you and this burden is much greater than the money you pay each year in income tax! Our current system for delivering healthcare is 2 ½ times the average of the EU countries and our overall quality of care is inferior.

“According to the IRS, Americans filed more than 150.6 million tax returns in 2015. During that year they also earned $10.17 trillion in adjusted gross income and had a total tax liability of $1.45 trillion. Some quick division means that the average gross income per return was $67,564 while the average federal tax hit was $9,655. That gives the average American family a federal tax rate of 14.3%.

However, the above figures above can be a bit misleading. Many low-income Americans actually have a negative federal tax bill thanks to the Earned Income Tax Credit. If you remove those returns from the equation then you are left with 99 million Americans who recorded an average federal tax hit of $14,654.” https://www.fool.com/taxes/2017/03/14/how-much-does-the-average-american-pay-in-taxes.aspx

The bottom line is that in 2015 the tax burden on families was $1.45 trillion while we spent $3.2 trillion on healthcare. Cutting this cost in half (which is possible) would more than cover our tax bill!

You ask why our costs are so high? There are several prior posts to this blog which detail the specifics, but to summarize it has to do which the many special interests that are profiting from the massive healthcare industry: Insurance administration & profits, obesity, RX companies (manufacturers & distributors), physician compensation, outrageous hospital charges and litigation.

This issue cannot be resolved by tweaking our broken system. We need to have the courage to admit that there are more effective system models out there and we should look at adopting the best features of systems that are effective and also provide a higher level of care. The only obstacle will be the special interests that are profiting for this massive “hidden tax” and their political influence is massive.

When a tax cut is not?

When a tax cut is not?

In order to have a perspective on this you need to view our country like you would your family. Admittedly the country is a quite large “family”. You are wanting to have more disposable income available but you can’t figure out where you can cut back on your current expenses. You hope that your income will increase over time, but you really do not have any guarantees. You decide to borrow money to fund this desire and you count it as extra disposable “income”. Is it really? Remember that you will eventually be required to pay back loan and to make matters worse you will have to pay interest on this “income”. You also decide that since you are the primary earner in your family that most of this extra income should be at your disposal and you will only share a small portion of this windfall with your remaining family members.        This is exactly how the tax reduction measure of 2017 worked for our larger family.  We decided to reduce our taxes by approximately $140 Billion a year, but we did not address reducing any of our expenses. The theory was that this money would be used by investors and consumers in a way that would boost the economy and offset this “loan” through new taxes on “incremental” income (resulting from a vibrant economy).  Initially it appeared that this theory might hold water (it did not when President Reagan made a similar effort). The GDP rate picked up during 2018 and actually reached 4% during one quarter. However, that appears to have been a very short-term reaction and 2018 should end up at 3%. This is a very good rate and at the top end of what most economists believe is sustainable. The 2 – 3% range is considered “healthy”. Higher rates have not been sustainable without fueling higher rates of inflation. The trick is to maintain a moderate, sustainable (2 – 3%) rate of growth. The projection for 2019 is 2.5% and 2.0% for 2020. While this is good is would be inaccurate to assume that it is the result of the tax rate adjustment.                                                                 “President Trump promised to increase economic growth to 4-5 percent. That’s faster than is healthy. Growth at that pace leads to an overconfident irrational exuberance. That creates a boom that leads to a damaging bust. The factors that cause these changes in the business cycle are supply, demand, capital availability, and the market’s perception of the economic future.” The average rate from 2000 to 2017 has been 2.25%, despite the 2008 disaster which was the result of prior loose banking regulations fueling a glut of unreasonable loans.            One other noteworthy item regarding the tax cut is the distribution of the approximate $140 billon of annual savings (actually borrowings). Who got the money? Middle & lower class tax payers (incomes under the $183,000) only received 1/3 of the total with the remainder going to the wealthy. Like my small family example, the wealthy have received the same benefit as my head of household! 010