Stefan Gleason, President
American Lantern Press
Healthcare Costs Are Strangling Consumers: Here’s the Lesson
The most persistent and reliable “bull market” of our time hasn’t been stocks or housing or even gold. It’s been healthcare costs, which balloon year after year at a rate that always manages to exceed inflation – at least as it’s calculated officially.
Economic commentator and scientist Chris Martenson notes that the Bureau of Labor Statistics “only weights healthcare at 6.5% of the CPI, although it represents 17.6% of the total GDP. ” Moreover, while the government reported a 52% increase in medical costs from 1999 through 2009, Martenson calculates that over that same time period health insurance premiums rose by an incredible 131%.
Obamacare’s new rules and mandates for insurance companies, especially the provision requiring insurers to cover high-risk persons who have pre-existing conditions, will drive up costs even more.
Medicare “Insurance” Underpinned by Cooked Books
Medicare costs are also spiraling dangerously out of control. Only 13% of the program’s costs are paid by premiums collected from beneficiaries. You might assume that the rest is funded by Medicare payroll taxes. In fact, they pay for only 37% of the program’s costs. Fully 43% of Medicare’s budget comes from “general revenues,” which don’t even exist per se – that is, until they are borrowed into existence.
Medicare won’t go broke in 10 or 20 years as some are projecting. It’s already broke! Most Americans don’t know it because they are led to believe that a trust fund exists, which in reality is nothing but an IOU added to all the other trillions of dollars the government owes. Congress is (for now) able to borrow whatever it needs to cover revenue shortfalls and simultaneously disguise the true financial condition of Medicare and other programs through accounting methods that would be illegal if employed by private corporations.
The point here isn’t to make you panic if you’re on Medicare or soon will be. The point is to alert you to the need for some medical self-reliance so that you will be less dependent on Medicare (or insurance companies or the medical establishment in general) and less vulnerable to medical inflation.
We’ll keep you posted on strategies to cope with this gigantic area of costs for many of our readers.
Which Stocks Are Safe Right Now?
Billy E. writes: Granddad always said not to put all your eggs in one basket. Right now I have about 18% of my portfolio tied up in gold and silver and everything else in cash and CDs. I am really concerned about the cash when the dollar crashes. I am asking for some ideas, do I invest in any stocks like Johnson and Johnson, Intel, Walmart? Would I be wise to exchange dollars into the Swiss Franc or even the Canadian dollar? Any help would be greatly appreciated.
Seth Van Brocklin responds: Having so many “eggs” in cash and bank instruments leaves you highly vulnerable to a dollar and/or banking collapse. So, yes, you can better prepare yourself to weather coming storms through more comprehensive diversification.
You already have a pretty good foundation in precious metals, so converting some of your dollars into foreign currencies and shares of companies would be a logical next step. Unfortunately, now isn’t the ideal time to go shopping for stocks. Most U.S. stocks are overpriced.
Although they could conceivably get even more overpriced with the over-creation of currency, fundamental value in the general stock market is lacking at these levels.
Exceptions can be found, and some are in the healthcare sector. Johnson & Johnson (JNJ), Eli Lilly (LLY), and British-based GlaxoSmithKline (GSK), for example, offer relatively attractive dividend yields of 3.6%, 5.7%, and 6.5%, respectively. Also, some emerging-market countries with positive long-term fundamentals, such as India, experienced a sharp pullback recently that may represent a good buying opportunity.
In a dollar-crash scenario, foreign emerging markets and natural resource stocks should do well – though probably not as well as your gold and silver (our long-time favorite)!