Wednesday, June 15, 2022

Americans In Survival Mode -- June 15, 2022

Updates

Later, 10:57 p.m. CT: see comments -- 

As a medical provider, here is my reasoning for medical staying low. If you are contracted to an insurance company or a PPO, they only allow for about a 3% increase in reimbursement per year. Our costs have gone up considerably more, but we have no choice other than to take a hit. We can break the contract with the insurance carrier, but patient loyalty is diminished during times of financial stress. Because many are living paycheck to paycheck, many would move on to another preferred provider. So I believe the picture in medical is not as rosy as data would have you believe. Scary times right now. Not only that, the supply chains are broken for many medical supplies and equipment. We are on a 16 week wait for one piece of equipment as we speak. 

Comment

This is what frustrates me. My wife's medical care and prescriptions are on auto-pilot. In other words, from visit to visit nothing has changed. The only reason she makes her semi-annual physician appointments is to get six months of prescription refills for an incredibly mild condition. She is charged $350 / fifteen-minute visit. Three-hundred fifty dollars to say "hi" to her physician and get a new prescription. Medicare allows only $125 or thereabouts for that $350 charge. There's no way this would cost $350 in Tijuana.

Speaks volumes about cost of medical care these days. Three-hundred fifty dollars to say "hi" to one's physician, get a prescription refill, and say "goodbye" in all of five minutes. Yes, I know, thirty minutes of checking in, filling out paperwork, having weight and blood pressure checked by a registered nurse, before seeing the physician. She could have her blood pressure checked by "the machine" at the supermarket.  I suppose all things being equal / being fair, that five-minute visit should now cost 1.087 x $350 = $380.

I don't have a lot of sympathy for Big Health. And, as you know, I practiced medicine for thirty years with the USAF.

Original Post

Americans in survival mode:

  • discretionary income being used to buy food and gasoline

ZeroHedge: US retail sales unexpectedly tumble in May. Link here or go direct to ZeroHedge.

  • another myth dead: the myth of the "strong US consumer."
  • along with the myth of "spare capacity."

Core inflation: definition at investopedia.  

Previously posted:

When talking about inflation, one needs to go through this chart, line by line.

Assuming it's accurate, a few comments.

First, for investors, it's an open-book test to figure out which sectors could be challenging as investment opportunities.

Second, things I don't see on the list:

  • electronics (televisions, computers, cameras, streaming services)

Third, two sectors that are usually at the top of "inflation lists": medical care and college tuition are now at the bottom. There may be explanations but different explanations for each.

  • the interesting thing folks never seem to consider: the US postage analogy
    • so what if US postage stamps increase by 100%: no one uses US postage stamps any more
  • likewise, the huge expenses -- in terms of dollars -- college tuition and medical expenses have gone up very little;
  • rents have increased but one can lock in monthly rents with 15-month leases;
  • "dining out" can be a very high-cost item and one most easily modified

Fourth, the "inflation list" cannot be reconciled / overlaid with investment sectors.

  • for example: "gasoline" and "vehicles, new and used" are at the top of the inflation list but unlikely that "oil" and "automakers" would be seen as similarly attractive by investors;
  • "semi-conductors" are spread throughout the inflation list; how does one invest?


2 comments:

  1. As a medical provider, here is my reasoning for medical staying low. If you are contracted to an insurance company or a PPO, they only allow for about a 3% increase in reimbursement per year. Our costs have gone up considerably more, but we have no choice other than to take a hit. We can break the contract with the insurance carrier, but patient loyalty is diminished during times of financial stress. Because many are living paycheck to paycheck, many would move on to another preferred provider. So I believe the picture in medical is not as rosy as data would have you believe. Scary times right now. Not only that, the supply chains are broken for many medical supplies and equipment. We are on a 16 week wait for one piece of equipment as we speak.

    ReplyDelete
    Replies
    1. Thank you, I appreciate that. What is really scary is that the White House and the US Congress (regardless of which party is in party) us these numbers to push their policies or make their case. I'm sure the current administration is crowing that their policies have kept medical inflation low.

      Delete

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