Posts tagged ‘healthcare reform’

Mozilo and Healthcare Tan Tax to the Rescue?

Ideological trains came crashing together as the battle for comprehensive healthcare reform resulted in the whole enchilada approach of the Democrats winning over the baby-step approach advocated by the Republicans.  Thank goodness there is a savior to remedy the hefty $940 billion costs of the national healthcare plan…Angelo Mozilo. Not only will this mortgage tycoon (former CEO of Countrywide – the largest U.S. mortgage lender at one time) have his fat-cat wallet to fund multiple new healthcare taxes on the wealthy, but the government will also be collecting a new 10% tanning tax on all Mr. Mozilo’s bronzing sessions. Perhaps the CBO (Congressional Budget Office) healthcare reform cost saving estimates ($138 billion in the first decade) may come in even better than anticipated?

20,000,000 Tanning Sessions to Health

The public shouldn’t shed a tear for the real estate pain Mr. Mozilo endured – he still managed to stash a nice pile of dough before the mortgage walls came tumbling down on him. Given Mr. Mozilo’s timely sale of about $300 million in Countrywide stock before  the share price cratered, coupled with the $23.8 million retirement fund and roughly $21 million in deferred compensation (Minyanville.com), Mr. Mozilo should have enough money to cover about 20,000,000 tanning sessions by my calculation. That sounds like a rather large number, but I expect Mr. Mozilo will shrewdly negotiate a bulk discount for the sessions, even if the government disapproves of the asssociated lost tax revenues.

However, one major potential hurdle for Mozilo may be finding the adequate time for tanning. If the SEC (Securities and Exchange Commission) is successful in prosecuting him on the alleged securities fraud and insider trading charges, then he may need to petition for a tanning bed in the prison gym.

Unintended Beach-going Consequences

Although we all condemn the harmful side effects of skin cancer from sunbathing, let’s not completely dismiss some of the advantages, including the benefits of Vitamin D production. Other cited ailments benefitting from sunlight exposure include, eczema, arthritis, psoriasis, acne, season affective disorder, and depression. One of the worse afflictions suffered by beach-goers (male and female alike) is the tragic “pastiness” condition. One of the severe unintended consequences of President Obama’s tanning tax may indeed be the extreme ridicule unleashed on light skinned beach bums that are unable to afford the tanning tax (see photo below).

Toss the Drumstick

On a more serious note, I get the fact that the government wants to raise a substantial amount of money to cover an extensive healthcare bill like this one – either through taxes and/or cost cuts.  However, I think there are other areas in the healthcare food chain that need to climb higher in the national debate. Although, I’m OK with the tanning tax, I strongly believe there is more fertile ground in attacking obesity (see article on the Economics and Consequences of Obesity) and other costlier areas of treatment. The amount of money spent on managing obesity, and associated ailments, trounces the expenditures directed towards cancer by more than $50 billion by some estimates.  Dated data shows we are spending more than $100 billion dollars on obesity-related healthcare costs. One study estimates obesity costs in the United States will reach $344 billion by 2018.

Bolstering the severity of the condition, the CDC (Center of Disease Control) noted the following:

“More than one third of U.S. adults—more than 72 million people—and 16% of U.S. children are obese. Since 1980, obesity rates for adults have doubled and rates for children have tripled. Obesity rates among all groups in society—irrespective of age, sex, race, ethnicity, socioeconomic status, education level, or geographic region—have increased markedly.”

 

I realize the importance of a copper tone tan can have on the lives of millions of Americans, and I also recognize the tanning tax is just a small blip in the growing 2,200 healthcare bill signed into law. Nonetheless, the spotlight of the healthcare debate needs to focus on the highest cost silos (i.e., obesity). Otherwise, I’m not completely sure whether all of Angelo’s taxed tanning sessions will be enough to cover our country’s immense healthcare costs?

Related Article: Bill Maher Chearleads No Profit Healthcare

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

*DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds, but at the time of publishing had no direct positions in BAC or any security mentioned in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

March 24, 2010 at 1:25 am Leave a comment

Healthcare Reform: The Brutal Reality of Aging Demographics

The global population is aging and that is a bad trend for healthcare costs.

The global population is aging and that is a bad trend for healthcare costs.

There’s no question healthcare reform is required. The Economist’s cover story, This is Going to Hurt, addresses this problem head-on:

“Even though one dollar in every six generated by the world’s richest economy is spent on health—almost twice the average for rich countries—infant mortality, life expectancy and survival-rates for heart attacks are all worse than the OECD average. Meanwhile, because health insurance is so expensive, nearly 50m Americans, an obscene number in such a rich place, have none; those that are insured pay through the nose for their cover, and often find it bankruptingly inadequate if they get seriously ill or injured.”

 

The real question is not whether we have a problem, but rather how are we going to approach it? Estimates of the current healthcare congressional plans put estimates for reform between $1.2 trillion and $1.6 trillion over 10 years. I tend to side with George Will when discussions center on costs, “If you think health care is expensive now, just wait until it is free.”

One of the reasons healthcare costs are exploding is because of our aging demographics. The 76 million “Baby Boomers” are entering their golden years, and as a result are consuming more healthcare products and services. Because our system is so convoluted and opaque, true healthcare competition cannot flourish. Rather, patients expect a cheap “all-you-can-eat” smorgasbord of services without consideration of cost. Unfortunately, the aging trend of our global population (especially in the developed countries like the U.S.) has put our economy on track for a disastrous train-wreck.

The Economist’s article, A Slow Burning Fuse, crystallizes the aging trend into proper perspective by providing some interesting statistics.  At the beginning of the last century, in 1900, the average life expectance at birth was approximately 30. Today, the average life expectancy has more than doubled to 67 years (and 78 years in richer developed countries).

Read Full Economist Article, A Slow Burning Fuse

A second major cause of aging societies is the decline in number of children families are having. During the early 1970s, women on average were having 4.3 children each. Now the average is about 2.6 children (and 1.6 children in developed countries). What these statistics mean is that the taxable younger workforce is shrinking (growing slower), therefore unable to adequately feed the swelling appetites of the aging, healthcare-hungry global populations.

My solution would focus on the following:

Technology:  Yes, chopping down trees, wasting years of our lives filling out and storing library-esque piles of medical forms is so 20th Century.  

Consolidation of Insurers: And do we need dozens of different insurers on different billing platforms? Reducing inefficient and undercapitalized competitors down to a common technological digital record and billing platform makes common sense to me. Although I love competition, if I look at things like cell phones, cable, or even local grocery stores, there is a law of diminishing return whereby inefficiencies eventually outweigh benefits of competition. 

Fewer Late Life Benefits:  Nearly 30 percent of Medicare spending pays for care in the final year of patients’ lives, according to George Will. Does it really make sense to pay such a high proportion of costs for the last 1-2% of our lives? Other countries, including European ones, deny certain costly services for elderly patients. Does spending over $50,000 on certain cancer treatments for a few extra months of life seem equitable? If elderly ill patients are in the financial position to pay, then that’s great. Otherwise, at some point, the ethical question has to be faced – what is an extra month of human life worth?

Not really a rosy subject, but an important one. I’m confident we can solve these problems, if addressed immediately, or else future generations will be saddled with a more disastrous problem to heal.

Wade W. Slome, CFA, CFP®               www.Sidoxia.com

June 30, 2009 at 4:00 am 3 comments


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