Central to the argument for universal health care is that it would be cheaper than having a lot of uninsured people who get really sick and cost a lot to treat. One would anticipate that the health care costs of uninsured people would be higher than insured folk- after all emergency rooms are expensive, right?
A brief aside- my parents (children of the Depression) never took their children for preventative health care. We got a physical if we had to have one for athletics or summer camp but really only saw a doctor (or dentist) if there was a problem. They were middle-class well-educated people and trusted their judgment to determine if our coughs or aches elevated to the problem level. I don't know if they had health insurance or not, but I do know the cost of treatment was part of their decision-making process and I didn't see a doctor very often as a child. People who think about costs consume less.
Back to numbers- US News and World Report reports that uninsured people get less treatment and pay less, both out-of-pocket and total costs than insured folk. Out of pocket- $583 per year vs $681 (co-pays), total $1686 (paid and unpaid) vs. $3915. And they pay 35% of their total cost versus 17% of the total cost for insured people.
Wow. Let's assume various numbers bandied about are semi-accurate- 40 million uninsured, $2.5 trillion per year spent on US healthcare. One of the beef's with the current health care system is that we spend a large portion of our GDP on health care- about 13% versus about 6% for most of the rest of the first world. Assuming the newly insured (currently uninsured) folk consumed health care as the currently insured folk do universal coverage would cost the US economy an additional $1,000,000,000,000. That's a trillion, folks. Per Year. An increase of 40%- 13% of GDP to 18%.
Clearly, insuring everyone will cost way more than paying the load in the current system of the uninsured. But lets consider the other extreme- what if we abolished health insurance and everyone became uninsured. $3915 goes to $1686 per person per year and our total expenditure drops by 57%!! Suddenly US health care expenses are in line with world-wide numbers as a percent of GDP.
Saturday, October 24, 2009
Saturday, June 13, 2009
Average household income
Mean, median and mode. Basic statistical definitions that every numerically literate person knows. A little more esoteric is the difference between a normal distribution and a poisson distribution. A normal distribution is the symetrical classic bell curve while a poisson distribution is skewed by realities like zero and non-zero real things.
I've been adding up the losses the American public have suffered and based on my understanding of middle-class America had previously argued that middle-class net worth was basically wiped out by the recent economic downturn. I calculated losses of about 14 trillion dollars and my understanding of the number of American households at about 100,000,000. Doing the math led me to conclude the average American household had lost $140,000 in the last year and so had a "negative net worth."
Imagine my surprise when I read that household net worth in America- while dropping another 2 trillion or so in the first quarter was still $50.4 trillion! (caveat- numbers from the Federal Reserve) Now do that math- the average (mean) American household still has a net worth of $504,000! How does that number match with your reality?
The answer of course is our intuitive understanding of average is absurd in this case. I suspect that the mode is $0, the median is less, perhaps much less, than $100,000 but a mean of $504,000. The minimum net work of the 359 billionaires in the US is $0.4 trillion. Probably another 10,000 or so with net worth over $100,000,000 sucking up another 10 trillion. About 2,000,000 millionaires account for another $2 trillion. Reality is probably another 5-10-fold higher for these fortunate folk. Instead of minimum net worth numbers accounting for about $13 trillion, probably more like $60-100 trillion! Leaving the net worth for the rest of us at -$10 trillion to -$40 trillion! Those are big negative numbers folks! That's a mean household net worth for the non-millionaires in America of ($100,000)-($400,000). That also probably doesn't match your reality.
In fact, the vast majority of the stock/equity losses were suffered by the >$1,000,000 folk. Most of the non-millionaires still have jobs so their cash flow hasn't changed a great deal. The housing debacle hasn't really come home to roost as most folk haven't tried to sell their homes since they dropped half their value. Most of us have just re-ordered the next 20 years of our lives toward more austerity, longer work lives, and more servicing the people who own the means of production. We continue to willingly trade our work lives for current need fulfillment and some relief at the end when we're old and sick! Sounds like a tenuous system to me.
I've been adding up the losses the American public have suffered and based on my understanding of middle-class America had previously argued that middle-class net worth was basically wiped out by the recent economic downturn. I calculated losses of about 14 trillion dollars and my understanding of the number of American households at about 100,000,000. Doing the math led me to conclude the average American household had lost $140,000 in the last year and so had a "negative net worth."
Imagine my surprise when I read that household net worth in America- while dropping another 2 trillion or so in the first quarter was still $50.4 trillion! (caveat- numbers from the Federal Reserve) Now do that math- the average (mean) American household still has a net worth of $504,000! How does that number match with your reality?
The answer of course is our intuitive understanding of average is absurd in this case. I suspect that the mode is $0, the median is less, perhaps much less, than $100,000 but a mean of $504,000. The minimum net work of the 359 billionaires in the US is $0.4 trillion. Probably another 10,000 or so with net worth over $100,000,000 sucking up another 10 trillion. About 2,000,000 millionaires account for another $2 trillion. Reality is probably another 5-10-fold higher for these fortunate folk. Instead of minimum net worth numbers accounting for about $13 trillion, probably more like $60-100 trillion! Leaving the net worth for the rest of us at -$10 trillion to -$40 trillion! Those are big negative numbers folks! That's a mean household net worth for the non-millionaires in America of ($100,000)-($400,000). That also probably doesn't match your reality.
In fact, the vast majority of the stock/equity losses were suffered by the >$1,000,000 folk. Most of the non-millionaires still have jobs so their cash flow hasn't changed a great deal. The housing debacle hasn't really come home to roost as most folk haven't tried to sell their homes since they dropped half their value. Most of us have just re-ordered the next 20 years of our lives toward more austerity, longer work lives, and more servicing the people who own the means of production. We continue to willingly trade our work lives for current need fulfillment and some relief at the end when we're old and sick! Sounds like a tenuous system to me.
Saturday, March 7, 2009
Consumer confidence
The Conference Board publishes regular survey results that it commissions to measure "consumer confidence." 50 is neutral, 100 is where consumer confidence was in 1985, the index was started in 1967. The February survey registered its lowest reading ever, 25.0.
Notable past numbers and geo-political benchmarks- Nixon's resignation- 91; Berlin Wall came down 115.1; Lowest during the Iranian hostage crisis- 50.1 (May, 1980), 9/11- 85.3; the low of the mid-70s recession- 43.2. "Whip Inflation Now"
In my business I talk with a cross-section of America. Increasingly, there seems a broad consensus that "the fix is in." People are increasingly feeling that the playing field is rigged and that crooks have made a lot of money (arbitragers, bankers, oil and gas) and most of us are just fuel for their game. "Buy and Hold" is wiping out our net worth.
Did I mention the stock market was flat- no gain between 1966 and 1983.
The only hope I have is the old wisdom that the market doesn't turn until all the news is bad and all the optimism is wrung out. I think we're there. Turn, market, turn.
The last year on the Mayan calendar is 2012.
Notable past numbers and geo-political benchmarks- Nixon's resignation- 91; Berlin Wall came down 115.1; Lowest during the Iranian hostage crisis- 50.1 (May, 1980), 9/11- 85.3; the low of the mid-70s recession- 43.2. "Whip Inflation Now"
In my business I talk with a cross-section of America. Increasingly, there seems a broad consensus that "the fix is in." People are increasingly feeling that the playing field is rigged and that crooks have made a lot of money (arbitragers, bankers, oil and gas) and most of us are just fuel for their game. "Buy and Hold" is wiping out our net worth.
Did I mention the stock market was flat- no gain between 1966 and 1983.
The only hope I have is the old wisdom that the market doesn't turn until all the news is bad and all the optimism is wrung out. I think we're there. Turn, market, turn.
The last year on the Mayan calendar is 2012.
Monday, March 2, 2009
A Billion
A Billion is... the number of emails sent in 5.3 minutes!
Now big numbers- Trillions
The market capitalization of the US stock market in May 2007 was about $15.35 trillion (13, 400 on the Dow). Since then the drop in the stock market has wiped out 7.5 Trillion dollars in capital, the drop in home values to date has wiped out about 5 Trillion dollars, planned for (worst case scenario) in the housing recovery plan is another 2.8 Trillion dollars lost. We have lost the equivalent of 80% of the market capitalization of the US stock market in two years!
Now bring some of this home. It's been said that most Americans biggest asset was their house. If this was true at the beginning of the fall and we assume the average time in a house is 4.1 years, and we assume that most people had between 0 and 20% equity in a home they purchased in the last 5 years, just the lost in home values (28%) has wiped out the "average Americans" net worth. On top of that with the drop in the stock market the "average American" now has a net worth the negative of what their positive net worth was two years ago.
From 1964 to 1981 the US stock market was FLAT! Since I'm turning 50 this month and have lost almost all of my net worth I'm financially screwed. Compounding works way better when there's positive growth! Thankfully, I enjoyed a few great years in my 40s. I may never be retired again.
Our only wealth is the relationships that we enjoy with people we love. These are times that test those relationships, nurture them and smile!
Now big numbers- Trillions
The market capitalization of the US stock market in May 2007 was about $15.35 trillion (13, 400 on the Dow). Since then the drop in the stock market has wiped out 7.5 Trillion dollars in capital, the drop in home values to date has wiped out about 5 Trillion dollars, planned for (worst case scenario) in the housing recovery plan is another 2.8 Trillion dollars lost. We have lost the equivalent of 80% of the market capitalization of the US stock market in two years!
Now bring some of this home. It's been said that most Americans biggest asset was their house. If this was true at the beginning of the fall and we assume the average time in a house is 4.1 years, and we assume that most people had between 0 and 20% equity in a home they purchased in the last 5 years, just the lost in home values (28%) has wiped out the "average Americans" net worth. On top of that with the drop in the stock market the "average American" now has a net worth the negative of what their positive net worth was two years ago.
From 1964 to 1981 the US stock market was FLAT! Since I'm turning 50 this month and have lost almost all of my net worth I'm financially screwed. Compounding works way better when there's positive growth! Thankfully, I enjoyed a few great years in my 40s. I may never be retired again.
Our only wealth is the relationships that we enjoy with people we love. These are times that test those relationships, nurture them and smile!
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