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Healthcare
is the biggest segment of our economy. In the debate over who should pay for
what or, increasingly, for whom, most people don't stop to understand just
how large a portion of our society's money is dedicated to healthcare.
For
some perspective, as a share of GDP, the U.S. spends about twice that of
other advanced nations. This is an important reason why the U.S. is
increasingly uncompetitive in global manufacturing. It is, for instance, the
most important factor (besides poor management) that General Motors and
Chrysler are going bankrupt.
Going
forward, the situation is guaranteed to get worse. The Obama administration
is committed to major reform to cover the 40 million people not now covered
by insurance. Once everyone has insurance, with many paying nothing at all
for coverage, patients won't care what it costs, and the system will quickly
spin out of control.
And
it's already out of control. I recently spent one day in the hospital due to
a broken arm, which cost on the order of $100,000. Remarkably, that
eye-opening amount still doesn't include the ambulance, the doctors, the
x-rays, the CT scans, or the anesthesiologist. I'm still getting bills. The
system is far more broken than is widely understood, unless you have had a
recent bad experience.
Projections
for healthcare are particularly problematic because of the demographics of so
many people born just after World War II. Soon, there will be less than three
people in the workforce for each retired person. That will result in huge
taxes on the few workers to supply the expensive end-of-life medical care for
the retirees (and it is in the latter years where medical expenses really
begin to rack up).
This
bubble was predicted and a government trust fund was set up. Unfortunately,
as is typically the case, the government couldn't keep its hands off the
money, and so it has already been spent. The outlook is not good. In fact, in
just over 10 years from now - by 2020 - the demands on the government for
Social Security and Medicare will get so high that they cannot be met. And it gets worse
from there.
It's a
safe bet, based on history, that the government will once again try to print
its way out of the problem - but all that will do is further destroy the
dollar and drive interest rates up even more. Just to be clear, this is not
just about a government program gone awry, but as much or even more so a
demographic problem - which makes it all the more intractable.
Don't
wait to be saved by the government; take your life - and your asset
protection - in your own hands. For example, by playing one of the most
obvious and inevitable trends and Bud Conrad's favorite investment for 2009. Click here to read the full report.
Bud Conrad
www.caseyresearch.com
Also
by Bud Conrad
Bud Conrad is the chief
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