Thursday, January 10, 2013

Four Charts For Foresight

If you are a regular reader of BeeLine you know I love charts.

Here are four charts that I came across in the last week I think everyone should see.  They give you some perspective based on hindsight but they also might help provide a little foresight on what has to happen to get things on the right track in this country.

Stephen Covey once said,

"The main thing is to keep the main thing the main thing."

If we have one main thing we have to do in the United States it is to grow the economy.  We need more people making and less people taking.  If we can do that it will take a lot of pressure off of our other problems, most particularly, our budget deficit.

The first chart from Calculated Risk shows how steep a climb we still have to make to do this.  This chart shows the percent of job losses in each Post WW II recession compared to the peak employment month.  As you can see, at almost 5 years into the recession that began in 2007, we still have 3% fewer jobs than we had then.

The other interesting thing to note is that in each recession since 1981 it has been taking longer to recover the jobs lost from the prior peak. My guess that technology is a big reason the recovery in jobs is taking longer. In 1981, it took about 27 months to recover the jobs.  In 1990, it took 32 months.  2001's recession set us back almost 48 months.  As jobs are cut in the recession, employers find other ways to get the job done when the recovery starts.  Increased productivity through improved technology is often used.  Recovering the jobs in this recession looks to be years away based on where we are right now.

The other three charts are from an article in Forbes titled "2012-The Year in Healthcare Charts" by Dan Munro.

If we have another main thing it is to reduce the cost of health care as a percentage of our economy.  The cost trends are simply unsustainable in the same way our federal government deficit is.

The first of these charts shows the % increases in Health Insurance Premiums compared to workers contributions, workers earnings and inflation.  You will notice that both premiums and workers contributions have vastly outstripped workers earnings and inflation since 2000.  Please note that since 2009 (when Obamacare was passed) the amount that workers pay for their coverage has outstripped premium growth.  Employers have had to increasingly place more of the burden for health care on their workers as costs have increased.  Obamacare does next to nothing to control health care costs and this will become more evident over time.  In fact, the mandates actually increase costs in many cases.

Credit:  Kaiser Family Foundation

I do not make annual predictions in BeeLine.  I have learned over the years to leave the future to the Lord.  I also have learned that I am much smarter using hindsight than foresight.  However, if I were to make one prognostication about 2013, I would suggest that the first open enrollment period with Obamacare's health care exchanges is going to be very chaotic.  As a result, I do not think I would want to be the HHS Secretary in October or November.  I do not see how the systems for the open enrollment period can be ready to handle what has to be done.

The second chart on health care compares per capital health care costs and life expectancy across 34 OECD countries using 2009 data.  This chart is from Mary Meeker's USA, Inc. financial report.  This chart really shows what an "outlier" is.  How do we remain competitive in a world economy with these higher health care costs compared to the rest of the world?

Finally, this chart that was originally developed by Carnegie Mellon University professor Paul Fishbeck,  compares our per capita health care costs by age olto Germany, UK, Sweden and Spain.  From this data you see that almost all of our excess health care costs are related to ages 60 and over.  Our costs at other age cohorts is similar to other countries.  Therefore, this would suggest that Medicare reform is absolutely critical if we are to effectively deal with our health care cost problems.

We should also be very concerned that turning more of the health care system over to the federal government (via Obamacare) may also be a path to further worsening our health care cost situation, not improving it.

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