–Debt-hawk solution to rising health care costs: Reduce health care insurance coverage.

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

The cost of healthcare is rising. Only the wealthiest can afford to purchase private health care insurance without big deductibles and low limits. Most people must rely on Medicare, Medicaid or employer sponsored insurance.

But Tea/Republicans wish to eliminate your “Obamacare” coverage (because it’s OBAMAcare) and reduce federal spending on Medicare and Medicaid. Meanwhile, the following is the future of employer sponsored insurance:

Wal-Mart trims health care coverage for some
From Yahoo News, by Anne D’Innocenzio, AP Retail Writer, On Friday October 21, 2011

NEW YORK (AP) — Wal-Mart Stores Inc., the nation’s largest private employer, is scaling back the eligibility of health care coverage offered to future part-timers and dramatically raising premiums for many of its full-time workers. Industry observers say the changes could have implications for millions of other workers, as more companies on the fence could replicate its moves.

The discounter, which employs more than 1.4 million workers, said the changes were forced by rising health care costs. All future part-time employees working less than 24 hours a week, on average, will not be covered under the plan, starting next year.

Premiums will rise for many existing workers, and the company will reduce by half the amount it contributes for each worker to help pay for health care expenses not covered under their plan.
“Health care costs are continuing to go up faster than anyone would like,” said Greg Rossiter, a Wal-Mart spokesman. “It is a difficult decision to raise rates. But we are striking a balance between managing costs and providing quality care and coverage.” He emphasized that Wal-Mart’s health care coverage remains “top tier” among its peers.

This is just a part of the opening salvo in the private sector’s drive to reduce business costs.

A number of companies have been looking for ways to cut health care costs and have been shifting more of the burden to their employees. The costs of employer-sponsored health insurance surged 9 percent this year, according to a report released last month by Kaiser Family Foundation and the Health Research and Educational Trust. But Drew Altman, president and CEO of the Kaiser Family Foundation, said that a big package of cuts from one company is unusual.

“While we do see increases in cost sharing, this is unusual and is outside the bounds,” said Altman. “I don’t think this will have a major impact on those who tend to do a little bit of everything to control costs, but it could provide more cover for other employers who are looking to move in that direction.”

What he calls “more cover” soon will morph into “the norm” as Walmart’s competitors (most retailers in America) and Walmart’s suppliers (most manufacturers in America) are forced to cut costs, to keep pace.

Still, only about 42 percent of overall companies offer health care coverage to part-time employees, according to Kaiser. About 28 percent of retailers don’t even offer health care coverage for its part-time workers, according to Mercer, a benefits consulting company.

Retailers, in particular, have been under more pressure to cut costs, particularly in labor, as they look to offset a slow recovery in consumer spending. Wal-Mart and other merchants have scheduled employees on duty during peak sales times while reducing staffing during lulls, for example.

But the latest moves underscore the increasing pressure that Wal-Mart is under as it works hard to reverse nine straight quarters of decreases in revenue at stores open at least a year, though it is seeing the trend reversing in the last three months.

With the economy still challenging, the discounter is under the gun to cut more costs and put those savings into lower prices for shoppers to remain the low-price leader. But for Wal-Mart’s own associates, many of whom mirror their own blue-collar customers — who live from paycheck to paycheck — that means they’ll have to shoulder even more costs while grappling with higher prices in the food aisle and at the pump.

So here are the facts:
1. Health care costs are rising; fewer people can afford full health care insurance.
2. People without insurance receive poorer care and are sicker
3. Private industry and hospitals are growing more limited in their financial ability to offer free health care coverage.
4. The federal government, being Monetarily Sovereign, has no such financial limits.
5. Reduced payments to hospitals, doctors, nurses, pharmaceutical companies and researchers will result in fewer and less effective hospitals, doctors, nurses, pharmaceutical companies and researchers.
6. When the money received by hospitals, doctors, nurses and pharmaceutical companies is spent, it stimulates the entire economy.

In summary: While there may be ways to cut health care costs without reducing care, the most realistic, long-term solution for America is a universal health care plan – Medicare for everyone – funded solely by the federal government. No deductibles. No limits. No donut holes.

Our Monetarily Sovereign government can pay for it. And if you believe federal deficits cause inflation, better look at the facts.

To the degree people might take advantage of such a plan by requesting “too much” health service, even that “wasted” spending would pay for more and better doctors, hospitals and nurses, more and better drug and treatment research, and equipment – and stimulate the economy. Further, Medicare demonstrates that people seldom ask for too much service.

Medicare is a great model. A wonderful model. If Medicare did not already exist, the debt-hawks of both parties would fight to prevent it. Now, they merely fight to reduce this outstanding and beneficial plan.

All Americans, not just our wealthy who can afford any amount of health care, would be healthier, happier and live longer lives. Unlimited Medicare for everyone would help return America to its former status as the greatest nation on earth.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings


25 thoughts on “–Debt-hawk solution to rising health care costs: Reduce health care insurance coverage.

  1. You think healthcare is expensive now, if it was provided free by the government the cost of healthcare would skyrocket. The solution is to have a model similar to drivers insurance. The sicker you are and the more riskier your lifestyle the more it sould cost you for health insurance.


    1. It is provided free (almost free) by the government; It’s called Medicare, which works wonderfully, except it covers only older people. Your solution guarantees that poor sick people get no coverage — pretty much what we have now.


    2. The experience in all other Countries with government funded universal health care systems is that the costs are actually lower. One of the noteable things of the US system is how incredibly expensive it is, especially when you consider it doesn’t provide universal coverage. It’s something you notice as a tourist to America, listing the USA as a destination bumps up the price of your travel insurance compared to other western nations, and that is entirely due to the cost of medical coverage.

      I’ve said it before, but it still amazes me that Americans argue against this. It is something you want. It’s only the rent seeking corporations that stand to lose out if proper universal care were introduced.


  2. You seem to endorse a model that is MORE generous than that of the Brits. Their “death panels” limit coverage with a minimal threshold of efficacy for health outcomes. You seem to endorse treating even longshot therapies. I am concerned this “wasted” money is indeed ill-spent and would be better spent on other social good.

    Perhaps you’re merely saying that debt hawks worry excessively about waste.
    I would like to see Medicare stop paying for treatments with poor efficacy. Obama has supported research to determine efficacy rates, but it has been blocked because often ineffective therapies are highly profitable and guarded by lobbyists.

    (Fro the record, private insurers have death panels too. They’re called “accountants” and they decide when you’re going to cost more than future insurance premiums are likely to pay back. Not whether you’ll live, whether you’ll be profitable or at least acceptably cheap to rescue.)


  3. “I am concerned this “wasted” money is indeed ill-spent and would be better spent on other social good.”

    Even “wasted” federal spending is stimulative. And since there is no limit to federal spending other than inflation (which we easily can prevent), there is no need to save dollars for “other social good.” Yes, debt-hawks worry excessively about waste. They don’t understand Monetary Sovereignty.

    I much would prefer that “too much” money be spent on less-proven therapies, than to have someone die because the possibly effective therapy wasn’t allowed. Medicare already is too restrictive in my opinion.

    That said, I would settle for our current Medicare for everyone, except with no deductibles and no limits, i.e. no need for Medicare supplement insurance.

    Rodger Malcolm Mitchell


    1. Mr. Mitchell,

      I have no opposition to your argument that all spending is stimulative. “Wasted” money goes to doctors, hospitals, drug companies, syringe manufacturers,etc which spend it on their materials and labor, plus profit that goes to shareholders who spend or invest it, etc. (often investing in T-bills which kills the effect of the money in the supply, thereby curbing inflation once again but also putting brakes on the economy.)

      I went a step further in my concern to construct a better question. We might choose instead to build school amenities (gyms, performance auditoriums, observatories) instead of high priced low benefit therapies. Conceivably greater good and higher multiplier expenditures can be chosen.

      To have the government/reserve “buy” too much could elevate inflation which, if I understand you properly, can be controlled through interest rate increases. When interest rates increase, this makes money harder to get by private industry and thus stifles its capability of contributing to a private economy (which is assumed to be better than government directed.)

      Given inflation’s boundaries around government spending, does it not behoove us to respect the problem of waste and cost efficiency so that we will only stimulate enough to produce the 1 or 2% inflation a struggling economy requires so that private industry can have cheap money also and drive inflation to the healthy economy inflation levels of 4-5% seen during Reagan and Clinton’s boom years?

      I suspect that’s your plan (I have not read enough of your essays yet, I admit.) all along, but it seemed there was a troubling justification for spending for its own sake which beats no spending at all, but feeds conservative arguments unnecessarily. Is there no combination of prudent profligacy during a nigh-depression?

      P.S. I just LOVE that you reply to everyone and never shy away from a fight. You should be a regular guest on talk shows where every other guest seems to parrot the usual philosophies that do NOT take monetary sovereignty into account. Much education needs to be accomplished yet no one seems interested in supplying it.


        1. Thank you for the link.

          News outlets need to present this important counteraction in front of more people so we might move the population to understand the downside of low interest rates and expect them to demand more meaningful intervention (e.g. take advantage of the excess labor available to perform useful public functions on the cheap)


  4. If more people understood monetary sovereignty, then we could have a realistic discussion about this. Liberals (or whoever) could argue that every available therapy should be utilized if there is a chance that the patient’s quality of life could be improved. Conservatives (or whoever) could argue that such a system requires some form of copay to keep people from abusing hospital services (while dollars are unlimited, hospitals are not). Instead we get ignorant Republicans trying to destroy the very idea of universal health care, while weak Democrats try to appease them by simply whittling at it. Forget Occupy Wall Street, we need the economic discussion in this country to occupy reality.


  5. In every industry the government throws money at there is an inflation of prices of good and services in that industry. Good examples of this is healthcare, housing, and secondary education just to name a few.


  6. We’re in a bad place. 99% of the population does not know of or understand Monetary Sovereignty. MMT is gaining traction, but those guys kind of scare me. I’d prefer Bernanke as Fed chairman to Warren Mosler, because at least Bernanke knows how to prevent inflation. The only solution is for Dems to win big next year, which will allow them to do the kind of spending required for a healthy economy. Unfortunately, they’ll pay for it, thus offsetting any gains.


  7. i say do away with so-called “obamacare” and cut medicare and medicaid!!!

    what will happen?? the “medical industrial complex” would take a major hit and large numbers of health care providers and pharmaceutical companies would go out of business, cuz, in reality, medicare/medicaid is a subsidy to them.

    and then, lots of other businesses would go under, too, cuz they would then lose a large amount of consumers to illness and death.

    so, i think the government should just cut all spending, as these tea party fools would have them do and then we can watch as the economy and the society complete fall apart. then, it will be clear as day that government spending is absolutely necessary for prosperity and then it will all be reinstated and then nobody will ever listen to these tea party fools ever again!!


    1. Terrific article on secondary currency. I’ve been contemplating a city currency where I live. It would have an expiration date like a coupon but could be used over and over again at merchants that accept it.


  8. Rodger,

    On page 54 of your book, you write, “Federal taxation does not pay for goods, services…”

    On page 55 of your book, you write, “When taxes pay for goods and services…”

    Would you please explain? Thanks.


  9. Tyler,

    Funny you should ask, because I just finished telling a reader that there are things in that book, which was written 15 years ago, that I would say differently, today — and that is one of them.

    Federal taxes do not pay for goods and services though local taxes do.


    1. Can I take a stab at this?
      As T-bills are used to pay for goods and services (deposited at a bank which then transfers the money it “pays” for the T-bills to the bank which puts the cash balance in the vendor account.

      Taxes can be used to redeem some T-bills that have matured. In this way, taxes are “paying” for purchases made 30 years ago. Some T-bills that mature are rolled over into new T-bills and are NOT paid for with collected taxes.

      This may be simplistic or missing important steps, but it is the vision of the federal payment system I have in my mind from reading your articles.

      Perhaps Mr. Mitchell can provide correction and / or details.
      (for those of us who have not (yet) read his book)


  10. William, I understand you are trying to simplify, but in actual fact, taxes never pay for T-bills. Perhaps, look at it this way. Imagine taxes are zero. No taxes are collected from anyone.

    The T-bill buyer puts dollars into his checking account. When he buys a T-bill, his checking account is debited and his T-bill account at the Fed (similar to a savings account) is credited. No taxes involved.

    When the T-bill is redeemed, his T-bill account is debited and his checking account is credited. Again, no taxes involved.

    The buying and selling of T-bills is a closed system, unrelated to tax payments.

    Rodger Malcolm Mitchell


    1. I follow that much. A soverign monetary power can issue these T-bills (or equivalent debt promissory) in the absence of taxes.

      Thank you so much for your time, Mr. Mitchell. Can you further verify my understanding?

      T-bill account at the Federal Reserve can be replaced with a cash balance at maturity.

      If the amount is deducted from citizens’ supply of cash (often referred to inexactly as wealth) at the same time, that is taxation.

      If the amount T-bill account is reduced to zero and the redeemer is credited without this simultaneous deduction, the government has increased the money supply by that amount. No actual dollar bills are printed, but an equivalent operation has taken place, AS IF the US Mint printed off sheets of Benjamins and handed them to you.

      Please forgive if my terms aren’t chosen precisely.


  11. William, you’re making it hard on yourself.

    Buying, then redeeming T-securities does not increase the money supply. And please remove the word “wealth” from your lexicon. No two people can agree on what that word means, much less measure it. It is as unscientific a word as you can find.

    Upon redemption, the T-bill account at the Fed is debited, not replaced with a cash balance. The checking account at the buyer’s bank is credited.

    And by the way, those sheets of Benjamins are not dollars. They are titles to dollars, similar to a house title. Just as a house title is not a house, a dollar bill is not a dollar. U.S. dollars have no substance; they merely are accounting entries.

    Rodger Malcolm Mitchell


    1. Kindly forgive if I’m not grasping all the concepts quickly enough.

      I get the purchase and sale of T-bills is almost a wash. (the interest on a T-bill being the only potential additional money into the economy.) The accounts just switch places. Got that.

      oops. Okay.
      When we place a T-bill in a bank’s account. This is the bank’s account AT THE FED. Just getting my brain around a bank having an account of its own. Not typically the way I (or others) think of banks.

      The reserve increases a bank’s T-bill account at the reserve by X dollars and directs the same bank to debit its own cash by the same X dollars, sending it to the bank of the vendor that the government is purchasing from.

      From THIS bank, the vendor can pay for supplies or salaries for workers.

      My apologies if you have explained all this in your book or other essays. I will gladly read links you send me to save yourself typing. (Assuming you’re still sporting enough to set me straight.)


  12. Bill, there is no functional relationship between T-bills and federal spending. The government can spend without “borrowing,” i.e. crediting T-security accounts.

    Think of it this way. The “sale” and redemption of T-securities is a closed system. It is not related to federal vendors. It simply is: Debit checking account / credit T-bill account. Then on redemption, credit checking account / debit T-bill account.

    Because it is a closed system, it is unnecessary. It could be eliminated, tomorrow. It is a relic of the gold standard days, when it was not a closed system.

    Rodger Malcolm Mitchell


    1. I don’t mean to be stubborn. Your problem (one I share in fields other than macroeconomics) is that you’re three steps ahead and struggling to relate the misunderstanding to what we have in our heads.

      The gold standard days are what we’re used to and monetary sovereignty takes a severe, necessary gear shift.

      To simplify transactions even more, the Fed increases the cash balance of Bank A with directions to transfer it to the vendors bank. The vendor’s account is then credited with this amount.

      No T-Bills at all.

      Is that what is meant by T-bills being unnecessary?

      Is that an alternative method of the government paying for services?
      Or perhaps I’m still missing essential points.
      Let me insure I have the simplest scenario straight first.

      Again, thank you.


  13. William,

    Don’t think of anything being “transferred.” When the federal government pays a bill, it sends instructions to the vendor’s bank to credit the account of the vendor. That’s it. The vendor has now been paid.

    Yes, there is a bunch of accounting clean-up involving the bank, the Fed and other balance sheet items, but fundamentally all that has happened is the vendor’s account has been credited, per instructions.

    None of the above has anything whatever to do with T-securities. They are an entirely separate process, not impacting in any way the Federal Governments ability to send instructions to vendor’s banks. Think of a giant wall between T-securities and bill payments, and ne’er the twain shall meet.

    Rodger Malcolm Mitchell


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