Monday, June 1, 2009

Be Prepared: A Compelling Message From Ken Coman

I have posted this with permission from my wise and sagely friend Ken Coman. In past posts I have exhorted you to look into gold, food storage, and real estate. Ken's message is poignant, timely, and should prepare all of us for the coming storm ahead.

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My Dear Friends,

I am writing to you because I think you will, at the very least, find value in what I have written. I hope you don't mind that I have chosen you to send this to. This is not a forward that I received, but something I have written that I hope, after you have read, you will forward on to others. You should know before reading this that I love our country and am very grateful to be an American. I believe so much in the liberties and principles that stirred, not only our founding fathers & mothers to sacrifice their lives to create such a land of liberty and potential, but all those since their time who have given of themselves to make America even better than the way they found it. It is this same love of liberty and belief in our ability to make tomorrow better that stirs me to send to you these thoughts. Those who know me best know that I believe in all people - including politicians. I worry however of the future of America and hope that what I have written below regarding health care reform will awaken within you some of that rational concern regarding the path America is on. Health care reform is a very important topic and a matter that will materialize into legislation this year. What I have written is not a slam on any party or person. It isn't a slam at all. It is an alarm - an alarm that people of all parties and opinions should consider.

Thank you for your friendship to me - however or whenever it was rendered.

Your friend,

Ken Coman


What is the Future?


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I attended a webinar this past week called "Health Reform 2009: Watershed or Waterloo?" It was put on by my broker and after sitting through it, my heart was broken. As a result, I was moved to a state of heightened concern and anxiety for the welfare of my nation. I will share why.

There are a few laws that simply cannot be argued with.

1. You need money to buy things
2. Money has to come from somewhere
3. There isn't an infinite amount of valuable money (See footnote 10)

Knowing how our Congress & President are in a hurry to pass major health care reform because of this new "Crisis," it seems that "reform" is inevitable. For some time now they have been selling the country this line:

1. Millions of poor & uninsured
2. Increasing costs
3. The government will give us the same health care that the President has

They use these three things as a premise to give them authority to step in and reform our system (See footnote 1). The word "reform" itself implies that the system has been in some criminal state and needs to be brought in line with higher norms and standards. I will admit that there are certainly some problems with health care - every American can. But, there are many pricing problems in America (I think the iPhone is too expensive for example. Everything Apple is too expensive for that matter) and we do not want or hope that the government will get involved. It isn't their role - they have no authority, implied or explicit, for price controls.

Here are the facts:

1. Millions of Poor & Uninsured

Of the 46 million uninsured Americans (15%) total (2007 numbers),
• 12 million eligible but not enrolled in Medicaid or SCHIP. < • 8.5 million have household incomes over $50,000. •Ć¢€¢ 9 million have household incomes over $75,000. • 9.7 million nnon-citizens (including 6 million undocumented aliens). • 8 milllion college-aged young adults (4.7 million are students). (See footnote 2) So, those that we should really be worried about are not those who are eligible but who choose not to enroll, those who make over $75,000 annually but choose not to purchase, or the undocumented aliens (I want them to have insurance but a government entitlement should be available only for legal residents within that government's jurisdiction). Those we should worry about are the 8 million poor college students and the 8.5 million with an income above $50,000 and below $75,000. 16.5 million is a lot less than 46.5 million. Half of these could be fixed by a federal mandate requiring parents to keep their children on their health insurance while in college or up to a certain age. The other half could be addressed by changing the requirements for medicaid. Woo-la. As far as access goes, health care is reformed. 2. Increasing Costs

Regarding rising costs, the facts are what they are. Costs are going up (See footnote 3).

3. The government Will Give us the Same Health Care That the President Has

The insurance that the government will offer Americans is not the same plan that they have. Certainly that was one of the parts of Senator Obama's message while running for president (See footnote 1). However, that was his plan. Congress will formulate their plan and that is the one that we will have to deal with. The main thrust on capital hill is not to give us the same plan as the President and Congress have but it is to create a National Health Plan - Universal coverage - and eventually a single payer system.

I know that sounds nice (in fact, it sounds really nice) but it isn't. As the benefits manager within a worldwide organization, I can tell you from experience that OUR health care system is the envy of the world (and the world does include Canada & Europe). People are legitimately sad to see our country taking the direction it is with health care. They know that it will downgrade the quality of care - not improve it (See footnote 4). The fact of the matter is that it will eventually downgrade care and create a rationing of care system. It is a fact. I will explain in a moment why.

For these downgrades, the President gave an estimate of $1.6 trillion dollars. I guess only with government will we pay more for less. If this were an accurate forecast of the expected cost, it would perhaps be the first time in government history that it were. Things always cost more - always - than what our elected officials tell us.

For example, here is the Massachusetts experience (See footnote 5):
Budgeted $460 million for 2007
Forced to budget $870 million for 2009

Medicare Projections (See footnote 5):
$3 billion/yr in 1965, est. $12 billion by 1990
Actual 1990 cost: $107 billion
Actual 2008 cost: $430 billion

The Iraq War:
Forecasted at $50 Billion, it could top $2 Trillion (See footnote 6)

Here are some more figures:

This year's National Debt: $1.8 Trillion
National Debt: Officially more than $11 Trillion. That is a whopping 13% of GDP (Economists say a nation can sustain about 3%. Annually alone, ours is at 4% - see footnote 7)
Medicare: Has not balanced its budget in more than 20 years…currently has a $38 triillion unfunded liability. Medicare has stated it will go bankrupt by 2017. Some projections are as high as $68 Trillion in unfunded liabilities. (See footnote 8)
Social Security:
  • $96 billion negative cash flow by 2020
  • $280 billion negative cash flow by 2025
  • $500 billion negative cash flow by 2030
I am not making this stuff up either (See footnote 5 or the banner at the top of this page).

If the President's projection is twice as accurate as MedicareĆ¢€™s projection, and only misses the mark by a factor of 5… The $1.6 trillion becomes $8 trillion over 10 yearss…60% as large as our current national debt.

Where will it all come from? We go back to our rules:

1. You need money to buy things
2. Money has to come from somewhere
3. There isn't an infinite amount of valuable money (see footnote 10)

The simple truth is we are heading into a future of total financial destruction. That is the direction this road we are on is heading. There isn't some magical pot of gold at the end of this storm - because there is no rainbow.
You can see that this plan for health care reform reveals that much moregovernment reform is needed before we can even begin to allow the government to reform health care.
And, after Congress' mad rush to pass this "critical" legislation for all 9 million people who need it, we will be forced, just a few years from now, to make cuts & to ration care for the whole nation. Why? Because of those rules. President Obama says that health care costs are the biggest threat to the long term financial security of the nation (See footnote 9). I say that health care reform is the biggest threat the financial security of the nation. You can't have everything you want with a fixed amount of resources and the government will be in a much sadder, much worse state than it is now. Someone with no credit and no money can't buy a thing. A whole nation with no credit and almost no money won't be able to either. This doesn't take into consideration the rampant inflation forecasted as a result of our bailouts either... We can have press releases and great speeches about the nirvana of health care reform, but, simply put, the numbers don't add up. When you add trillions of negatives to trillions of negatives to even more trillions of negatives, you get tens of trillions of negatives. When we finally are brought to account for that, no clever Enron financial reporting will be able to hide the black hole we have created. That press conference will be a terrible day.

Seeing these numbers and knowing what it certainly spells out for our future makes me almost cry out, "Who is doing this to us?! Can't they see that this is only going to leave all Americans stranded down the road? Can't they see that this is going to literally destroy the country we love?!"

This is so irresponsible. This is reckless. This kind of rash and foolish fiscal policy will lead to a true crisis & oppression of the greatest kind.

This should cause anxiety in every freedom loving American. I hope my cries become your cries as well - and that together, we can keep this catastrophe from occurring.

What is the future? On our present road it is to complete financial insolvency. Is there any other future than one of ruin? Not on this road.

How I love you America! What have your caretakers done to you?

Please Click Here to Write Your Representatives to Get us on a Better Road
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Footnotes

1. You can hear Senator Obama discussing these issues in the town hall presidential debate last year here:http://www.youtube.com/watch?v=-f2_p-fd2D4.
2. These figures can be found from the Federal Government athttp://www.census.gov/prod/2008pubs/p60-235.pdf
3. You can read more of this here: http://www.nchc.org/facts/cost.shtml at the National Coalition on Health Care.
4. Besides my own personal interactions with my colleagues in Canada and Europe, here is a great clip of several interviews worth watching:http://www.youtube.com/watch?v=BbHh86HkBhk.
5. Health Reform 2009: Watershed or Waterloo? A Lockton Benefit Group Webcast
6. http://www.nytimes.com/2008/03/19/washington/19cost.html
7. To see a graphically our national debt, click here: http://www.cnbc.com/id/30108264/?slide=12. To learn more about the amount of deficit we can sustain, listen to the podcast here:http://dateline.radioamerica.org/archives/1879
8. http://www.nationalreview.com/nrof_bartlett/bartlett200504280951.asp
9. http://www.cbsnews.com/blogs/2009/05/28/politics/politicalhotsheet/entry5046747.shtml
10. The government can certainly print up a near infinite amount of money, but there is a point beyond which the money does not have any more value. There is not an infinite supply of money with value.

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I think Ken's comments are outstanding. This message is so important. Unfortunately, I share this pessimistic view of our fiscal future. Readers might be interesting in The Coming Generational Storm for anther perspective related to the realities of the demographic time bomb that has just started to go off. Be prepared for what is to come.

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