Why American Healthcare is Headed for Collapse

While politicians debate a wide range of financial issues, the most dangerous threat to the United States economy is ignored as if it did not exist. The reason you don’t hear about this problem is that no one seems to know how to solve it.

I will briefly review this impending disaster and then provide some real world solutions. For the benefit of new members, the Life Extension Foundation® predicted today’s health care cost crisis back in the early 1980s. Our prophetic warnings were ridiculed at the time, but events over the past decade document the financial train wreck we fought so hard to prevent.

Discussions rage today about how to provide universal health care. Overlooked is the fact that the government will soon be unable to pay the medical costs it is already on the hook for. Not only do 40 million Americans depend on these government-funded programs, but these individuals have already paid for them with their Medicare tax dollars.

The Magnitude of This Issue

Very soon, Medicare will start paying out more in hospital bills than the premiums (taxes) it will collect. When that time arrives, the federal government will have to tap some other source to cover this gargantuan unfunded liability. One obstacle is that the federal government is over $11 trillion in debt and is projected to run trillion dollar deficits for the next several years. If these numbers sound high, they pale in comparison to Medicare’s unfunded liability of $34 trillion.

To put this in perspective, the government collects only about $2 trillion each year in total tax revenue (including Medicare premium taxes).1 There are virtually no reserve funds left to pay promised Medicare (and Medicaid) benefits. The government is relying on the money it takes in each day to cover its enormous Medicare cost burden.

As the country ages, Medicare will devour huge chunks of US economic output and eventually overwhelm every other item on the federal budget. While politicians stick their heads in the sand and disregard this issue, no one can argue against the math showing a financial disaster of unprecedented magnitude.

Medicare Scams

The government points to rampant fraud as one reason behind Medicare problems. It is estimated that 20% of every dollar Medicare pays out goes to criminals who submit claims for nonexistent or bogus services. For example, it was recently discovered that Medicare paid out $100 million for wheelchairs, canes, prescription drugs, and other items prescribed by dead doctors.2 In other words, people working at doctor’s offices pretended their doctors never died and falsely billed Medicare for medical treatments that were never rendered.

The government brags when it cracks down on Medicare fraud, but they only catch a fraction of the crimes perpetrated. The reality is that the living con artists defraud Medicare out of far more than dead doctors do.

What the government does not like to admit is that another 20% of Medicare dollars are paid out in the form of overpayments to those with political connections. What companies do is lobby Congress to enact legislation mandating that Medicare pay inflated prices for certain products and services that can be obtained for a fraction of the price on the free market. This enables those who are politically connected to grossly overcharge Medicare because Congress mandates the inflated expenditures.

How inflated are the monies Medicare pays out? Take for example, an oxygen concentrator, a device that delivers oxygen through a tube to patients with respiratory illness. You can buy one new on the open market for $600. By law, Medicare is only allowed to rent these devices at a price that winds up costing $7,142 over a 36-month period. Medicare covers 80%, so it spends $5,714, while the patient has to pay the other 20%, or $1,428.3 Under this absurd system, Medicare and patients can pay ten times the free market price it would cost to buy the device new! (Think how much money would be saved if the devices were bought used?)

Perhaps the most expensive politically-induced overcharge is for prescription drugs. Under the Medicare Prescription Drug Act that Life Extension® vehemently battled against, Medicare is required by law to pay full retail drug prices.4

The Medicare Prescription Drug Act was largely written by pharmaceutical companies and passed under intense pressure by pharmaceutical lobbyists (refer to the August 2007 issue of Life Extension® magazine for the sordid details).5 Medicare will pay out hundreds of billions of dollars for drugs that could be obtained for far less in a competitive-bidding system, something that the Medicare Prescription Drug Act prohibits.

The Generic Drug Rip Off

Once a brand drug comes off patent, generic equivalents emerge, but they cost far more than they need to because of FDA overregulation.

Take the drug finasteride (Proscar®), for example. It came off patent in the year 2006, but at the end of 2008 chain pharmacies were charging about $90 for 30 tablets (a one-month supply). All it takes to make this drug is to put 5 mg of finasteride into a tablet that dissolves in the stomach. Vitamin companies do this every day with nutrients, but the FDA does not allow them to freely do the same thing with drugs.

We checked on the cost of buying finasteride and making it into tablets. The free market price for 30 tablets is only $10.25, which includes independent assay of the ingredient quality, potency and tablet dissolution—and a reasonable profit margin. It is against the law, however, for GMP (Good Manufacturing Practices)-certified vitamin manufacturers to be able to offer low-cost generic drugs. This prohibition must be lifted as America can no longer afford to subsidize those who are politically connected while the country is driven into insolvency.

Finasteride is a drug that not only helps relieve benign prostate enlargement, but that may also reduce the risk prostate cancer.7-9 Widespread use could save Medicare lots of money in expensive prostate treatments. Those who follow Life Extension®’s other recommendations would be expected to reduce prostate cancer risk even more.

As evidence mounts about the prostate cancer risk reduction associated with drugs like finasteride, more companies are competing to make it, but its average price at chain pharmacies is around $86 a month—a staggering eight times higher than what its free market price would be!

Please note that generic prices tend to wildly fluctuate. In this case, as more competitors entered the market, chain pharmacies did not substantially lower the price of finasteride. In some cases, the opposite occurred, and by the time you read this, the price could be different.

Last month, I exposed how Americans are egregiously overpaying for generic drugs. I asked members to log on to our Legislative Action Website to protest this fleecing of consumers’ wallets, private insurance, and Medicare by pharmaceutical interests. An overwhelming number of Life Extension® members sent letters to Congress urging that the law be changed to allow lower-cost generics to be sold in the United States.

The Real Problem

Despite inappropriate disbursements that Medicare makes based on private sector fraud and political corruption, the main culprit behind Medicare’s eminent collapse is the demographics.

Like Social Security (which is nowhere near as broke as Medicare), the federal government forced workers to pay premiums (taxes) for their Medicare “insurance.” Private insurance companies are required by law to maintain reserves in order to pay out future claims. The federal government, on the other hand, has been running a Ponzi scheme and has exhausted virtually every penny. The government is now on the hook for $34 trillion of liabilities. No one knows where the money will come from for these future Medicare/Medicaid disbursements.

Partial Solutions

If you are curious as to why Congress has failed so miserably in overseeing Medicare, look no further than the political contributions and lobbying efforts made by those who benefit by scamming the Medicare system. Partial reform will happen when free market forces are allowed to compete for Medicare dollars, as opposed to the bureaucratic albatross that now exists.

One problem is that Medicare will only pay for FDA-approved medical devices and drugs. As we know, this means that Medicare recipients are forced into overpriced therapies that are laden with side effects. Treating drug-induced side effects results in the expenditure of even more health care dollars. To make matters worse, the efficacy of certain FDA-approved drugs is so mediocre that patients sometimes live only a few months longer by taking them. The cost to Medicare for these drugs can easily exceed $50,000 per patient. Complementary physicians who prescribe unapproved cancer therapies that cost a fraction of FDA-approved drugs are subject to criminal prosecution.

So we have a system in place today in which progressive doctors are persecuted, while those who sell dangerous and often ineffective therapies receive protection and payment from the federal government. People without the financial wherewithal have no choice, since Medicare will only pay for what the FDA claims is safe and effective. Conventional medicine’s goldmine will end when Medicare exhausts its ability to pay.

A group of FDA scientists recently revolted against their superiors and went directly to Congress.10 The reason was that they were told by their superiors to certify new medical devices as safe and effective, when the clinical testing data showed the opposite. This is just one example of how the FDA contributes to today’s health care cost crisis by allowing dangerous products on to the market that Medicare then pays for.

One Way to Slash Medicare Outlays

Low blood levels of vitamin D are associated with increased incidences of virtually every human disease.11-14

In 2007, I petitioned the federal government to mandate vitamin D supplementation in Medicare-eligible individuals in order for them to be eligible to receive benefits.15 I proposed that the government require that people must have a minimum blood level of 32 ng/mL of vitamin D or they would be denied coverage. This would force aging people to take this ultra-low-cost supplement, which in turn would drastically slash the incidences of the most common aging-related disorders.

Optimal vitamin D blood levels are over 50 ng/mL, yet most Americans’ levels test far below 30.16-19 By mandating basic vitamin D supplementation, Medicare might regain some of its solvency, as it would be paying out far fewer medical expenses.

A study published in the New England Journal of Medicine evaluated blood levels for vitamin D in intensive care unit (ICU) patients.20 The average serum vitamin D level was only 16 ng/mL. All patients with undetectable levels of vitamin D died.

Patients with the lowest vitamin D blood levels had the most severe organ dysfunction and the most adverse outcomes. The predicted mortality (death) rate was:

It costs Medicare about $2,674 a day to care for ICU patients, and some of them linger for weeks or months in this expensive hospital setting.21 Mandating optimal vitamin D levels could slash the number of Medicare patients requiring ICU care.

Harsh Realities

While common sense solutions exist, the aging population will challenge the solvency of Medicare unless something radical is done to keep humans healthy.

Mainstream medicine bases its financial projections on lots of aging people contracting cancer, vascular disease, and dementia. Today’s medicinal “industry” does not want any interference with their income stream and have no incentive to institute preventive programs.

The public is more health conscious today than ever. The problem is that too many people continue to abuse their bodies with excess intake of dangerous calories, cigarette smoking, and physical inactivity. Add to this the insufficient intake of nutrients such as magnesium, vitamin D, omega-3s, and it is no wonder that health care expenditures are bankrupting this country.22

Government Has to Fess Up to the Problem

To shock the public into a pro-active state, the federal government has to admit that they are not able to pay future Medicare claims unless aggressive steps are taken to prevent age-related disease. The public needs to know that if they don’t take personal responsibility for their health care, there may be no Medicare dollars available to cover their sick care.

The government needs to initiate mandatory warnings (that I would be happy to write) on the labels of all dangerous foods. People would be less likely to buy toxic foods if they were reminded about the risks associated with eating them. The government should encourage food companies to state truthful claims about healthy foods such as “eating broccoli reduces cancer risk.”

The main reason Medicare is facing insolvency is that too many aging people are getting sick. These diseases of aging are preventable via a wide variety of lifestyle alterations. It will require a sustained governmental public relations campaign to hammer in the need for Americans to follow healthier lifestyles.

Alternatively, lifting the ban currently in place that precludes the dissemination of truthful health information about a wide variety of foods, hormones, nutrients, and even certain drugs would make a significant positive impact on the aging population, which in turn would help resolve the catastrophic Medicare cost crisis we now face.