I Correct Schumer Fudging What Medicare Privatization Would Mean and He Pretends He Was Being Honest All Along

By Sam Husseini, an independent journalist based in Washington, D.C. and the founder of VotePact.org. Follow him on Twitter: @samhusseini

The new Democratic Senate Leader Chuck Schumer began his remarks at the recent “Hands Off Medicare” event by noting that he and Bernie Sanders — another speaker at the event — both went to James Madison High School in Brooklyn. Said Schumer: “Bernie was on the track team and they won the city championship. I was on the basketball team. We weren’t that good our motto was ‘we may be small — but we’re slow.'”

The quip turned out to be rather apt.

At the event, Schumer went on about about how privatization of Medicare would mean that doctors could charge what they wanted. I call him on this — he was totally omitting the role of the insurance companies — and he responded by basically pretending that he was saying that all along.

In contrast, Sanders in his opening statement railed: “The leadership of the Republican Party in the House, in the Senate and Mr. Trump have got to start listening to the American people not the drug companies not the insurance companies — not the billionaire class.” Similarly, Sandra Falwell of National Nurses United argued the U.S. needed to stop wasting “tax dollars by subsidize profit making health insurance corporations.”

In contrast, that wasn’t what Schumer was saying in his opening remarks at all. Like other speakers, he criticized Rep. Tom Price, Trump’s HHS nominee, who, like House Speaker Paul Ryan is a longtime nemesis of Medicare, but then he said the following: “Doctor Price seems to say we ought to let doctors run the whole show because he’s a doctor. There are some good doctors and there are some not such good doctors. We’ve all seen both. And too many doctors and other health care providers, without some oversight, will charge every senior as much as they can. That’s what privatization means: Let your doctor charge you whatever he or she wants. We don’t want that to happen.” [at 11:30 in the video.]

So, when question time rolled around [at 26:30], I asked: “You claimed just now that privatization of Medicare would mean your doctor gets to charge you whatever they want. That’s not my understanding, privatization of Medicare would mean that they would cut a deal with the insurance companies.” I also noted that his comments almost seem to minimize the role that the insurance companies, which he of course, along with other sectors of finance, takes a lot of money from — including Trump’s nominee for Treasury secretary, Steve Mnuchin, a former Goldman Sachs partner. (Indeed, four of Schumer’s top funders through his political career are in insurance and finance: Goldman Sachs, Citigroup, JPMorgan Chase & Co, Credit Suisse Group.)

So I asked: “Can you defend that remark?”

Schumer responded: “Yes absolutely. I can absolutely defend it. First of all of course it lets the insurance companies do what they want. —

Husseini: Right.

Schumer: But it also lets individual doctors do what they want and they’re going to tell the insurance companies together will get together and decide the price.

Sam: Right —

Schumer: Right now Medicare —

Husseini: So why did you —

Schumer: — No no no. I’m going to answer your question now please sir. Medicare right now sets limits on prices because it’s government run. Privatization means the private sector, both the insurance companies and the doctors, set the price without regard with what the patients can afford. OK. Yes.

Schumer tried to forestall a follow up with: “Yes, go ahead, next question!”

I noted, though barely audible on the video: “I trust you’ll include the role of insurance companies from now on.”

Basically, what Schumer wants to have happen is people to blame their doctors for all the ills — pretending that the insurance companies are not a huge part of the problem and threat. Only after confronted did Schumer acknowledge the role of insurance companies in threatening to privatize Medicare. His closeness to finance means that he can’t speak honestly about problems and threats even when he’s taking a reasonable stance of “Hands off Medicare.”

Still, it was somewhat satisfying to basically shame Schumer into talking about the role of the insurance companies. It illustrates that asking pointed, timely questions can change to course of a politician’s remarks on an issue.

But this highlights a real problem in the current setup of the Democratic Party. Sanders — whatever shortcomings he might have — is in the position of largely of bringing people in with his populist rhetoric as “outreach chair” for the Democrats in the Senate. But ultimate policy is largely determined by Schumer as minority leader, who is very closely tied to big finance and will act as a sophisticated apologist for it on the major issues at any opportunity.

Video of event:

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  1. Richard H Caldwell

    Sadly, Schumer is 100% akin to Clinton. I expect only ideas straight out of the neoliberal playbook from him and all the D leaders at party, house, and senate. Truly depressing to watch the D nomenklatura cling so desperately to their rice bowls. I do not see how the party can be reformed or retaken.

    Bernie is right about revolution — I only hope it is a political revolution…

    1. Deloss Brown

      May I point out to you that Mrs. Clinton did not win the election? There was a lot of talk on NC about how she was the tool of the capitalists, etc. While I do not think we pointy-headed intellectuals who participate in this forum had much influence on the election, let me remind you that it’s over. Mrs. Clinton is not President. A real capitalist, chauvinist, racist, white-supremacist, lawless boob is going to be President. And he has the inclination and much of the ability to end our republican democracy and all of the human race, for that matter. A friend of mine recently received anti-Semitic responses to an anti-Trump Facebook post. I doubt that they would have come from a Clinton supporter.

      I applaud Sam Husseini for going after Chuck Schumer. This is a line of resistance which we should all take, and some Congressional staffers took the time to write it up in a manual (it’s based on Tea-Party style tactics). Its central tenet is: confront your MoC every time you get a chance and put him/her on the right path, or keep him/her on the right path.


      As a NYC Democrat, I have followed Senator Schumer, and been to his office, and he has been on the right side more often than not. It is our job to encourage him, and keep him there, and cries of “Oh, he’s as bad as Clinton!” are frivolous.

      1. Matthew cunningham-cook

        Right side more often than not? Lol korea fta, iraq war, carried interest loophole, patriot act, etc etc. Have you actually followed his voting record?

        1. Deloss Brown

          Yep. I’m thinking of his record during the Obama administration, ACA and ilka ilk..

          In any case, what’s past is done. Dancing up and down on the mistakes of our own party is not something we should waste time doing. We have four years to get through, we should live so long.

          Incidentally, did you bother to follow the link? It has to do with getting through the next four years.

          1. Me

            It’s not my party and people like you give me no reason to join your party, or want it to do anything but go the hell away. If we can’t criticize him or your corrupt party for the past, should we also use that logic with Trump and Republicans? Sure, he said some horrible stuff, but that was months ago, let’s move on. Surely nothing can be learned from decades of doing horrible things for corporate interests, selling out working people, or leading us into a war that was based on bullshit premises and lies from the get go. How also should we make sense of how we got here if we don’t critically analyze the past?

            “There was a lot of talk on NC about how she was the tool of the capitalists, etc.”

            Sorry, was that just the talk here, and elsewhere people thought differently? She was the most unpopular nominee in her party’s history, lost to the most unpopular major party nominee in history (with a disapproval rating of 60% at the time of the election), was thoroughly corrupt for decades, was central to dragging her party to the right and her largest donors over her career are corporate interests, corporate law firms, etc. Seems that the pointy heads here were correct, and her mindless followers should have ventured out of their bubbles and listened for once. I am not in the mood to dance though, since the people that have driven your party into the ground are still in charge and don’t have any plans to change anything. I’ll dance once they are gone, or I’ll dance when they’ve maintained their party and totally destroyed it. If nothing radically changes, I’d say that will happen by about 2022.

            Your party is collapsing across the country, it has been collapsing for decades now, and people like Schumer have led you here. I not only will look to the past to make sense of this, I am done with thinking of the future only in the context of presidential electoral politics. My prediction is that the neoliberal, Wall Street hack Booker will be your nominee in 2020. That will be the nail in the coffin for your party. One horrible party down, one to go.

          2. William

            Stick to your guns Delosss. A lot of people on this site seem to be convinced neo-liberalism is the epitome of evil governance. I don’t care for it myself, having lived through all of it( yes I am old). But it can get much much worse. We just took a big step that way. Let’s not throw away what limited tools we have to fix this out of moral posturing. This is politics. One must deal with politicians perforce, never a savory sort, morally speaking. But you gotta use what you got.

            1. Foppe

              Point is, “worse” has always been born from (neo)liberals who prefer continuing the status quo over politics that would make them lightly worse off materially in the short-term, and that would require them to not act according to the wishes of their financiers / (aspired) peer group / revolving door ticket.* It’s all fine and dandy to get worked up over how Trump’s “worse”, but that’s precisely the myopia — especially because it’s always accompanied by a habit of excusing the inexcusable — that gets us Trump.

              * The only exceptions followed from periods in which extra-parliamentary political pressure was applied from below; but even then, because of who writes the laws, it got the US nothing more radical than the ND, followed immediately by 50 years of Dems pushing McCarthyism in order to frustrate a repeat performance.

      2. 873450

        A “real” capitalist is not going to be President. An admitted “corrupt” or “crony” capitalist maybe, but not a “real” one. Even identifying him as “capitalist” is a misnomer. He’s an aspiring oligarch succeeding at it beyond his wildest dreams.

        Otherwise, agree with just about everything you posted.

    1. hemeantwell

      I appreciate that level of attack. I was trying to muster up something more wordy, but “toad” is really all Schumer merits.

      1. Ivy

        Does that make Schumer voters toad-lickers? They might be excused for other acts based on their hallucinogenic state ;p

  2. Carolinian

    One hates to agree with Schumer but he’s right that it’s the doctors and the anything but nonprofit hospitals who have the whip hand here. After all “your money or your life” is a pretty convincing sales pitch for medical services and, as Dean Baker is constantly pointing out, the doctor lobby has made sure that no cut price foreign competition will be stepping in to undercut their money stream (foreign trained doctors must do residency here). Given the huge prices it really isn’t surprising that insurance companies have taken to gaming the system and seeking any excuse not to pay.

    That said, one doubts that Schumer is advocating the only real solution which is for the government to take over the whole thing.

    1. ChiGal in Carolina

      Not the docs so much as the bureaucracy in both hospitals and insurance companies. See managerialism at the Health Care Renewal blog, often linked to here at NC

      1. Cry Shop

        Insurance companies have been buying up hospital and medical services groups like hot cakes once PPACA hit the ground. It’s a clever way to get around any profit limitations, and thanks to the profit guarantee, they can keep pushing up rates as fast as they can. So it’s not doctors, and in some ways it’s not insurance companies, but rather the system was set up to be gamed from the start. It’s the golden rule of capitalism, profit above all, meets a corrupt government.

        1. run75441

          Yes that is true, insurance companies have been actively looking for alternative ways to be more profitable. At the same time, hospitals have been buying up each other as well as clinics to grow in size to negotiate effectively with insurance companies. The over riding factor in both is the lack of controls on the entire commercial healthcare industry (hospitals, phama, doctors, med supply mfg. etc.).

          It does not look positive for something else more effective to come out of the next 4 years as Repubs will not go forward and are more apt to go backwards.

      2. Carolinian

        Our doctors make double or more what their counterparts make in other first world countries. It may be true, as Yves says, that the AMA isn’t what it once was but their past lobbying has a tremendous effect on how our medical system operates now. Of course doctors often pretend to be above it all and not even know what their prices are. Right.

        As I’ve said here before my mother once worked in the chemistry dept of a local college. When she would ask the pre-meds why they wanted to become doctors they would invariably say “for the money.” That’s anecdotal, but lets not pretend that medicine in the US is all about altruism. The whole system, not just the hospitals and insurance, is illogical.

        1. Bill Smith

          Isn’t it true in those other first world countries that the state pays their doctors college & medical school tuition? Here, the doctors graduate with some pretty big loans that need to be paid off. Basically because of the accounting, the difference isn’t quite a large as it looks.

          1. Vatch

            This web site says that medical school in Germany is no longer free, but it’s still very very cheap. 500 to 1500 Euros per year. So a new doctor might have $7000 in debt after four years of medical school. That’s quite a difference from the 6 figures that an American might owe.


            Also, I suspect that premiums for physicians’ liability insurance is much higher in the U.S. than in other places

            1. Carolinian

              Six figures owed versus a lifetime six figure salary. One reason our medical schools are so expensive is that the teachers are also doctors and make quite a lot.

              As some commenters below point out the medical honey pot has attracted the financial sharks and doubtless many doctors now wish their profession had not long ago made it so much about money. I’m not claiming MDs are bad people, just that the money angle corrupts. In many small towns like mine the largest business is health care. Once we had factories.

          2. baldski

            Their residencys are paid by Medicare. If they do not treat patients with Medicare then they should give back the money.

          3. uncle tungsten

            Sorry Bill Smith the difference is huge. Single payer is the way to go and the reluctance of the GOP and Dems to go that way is because they are in bed with the thieves. The USA is a land of vultures and their prey as far as the economic policy is concerned, the benefit of other policies is moot.

            Obama’s legacy is the legacy of the klutz and lost opportunity. Trump will be likely known as Obama’s cousin when it comes to making capital work for people not just corporations.

      3. John

        The Docs have largely been punked by the MBAs in corporate management. Sure, they make good money but are on a tight leash from their corporate overlords. And it’s getting tighter every day. Once ‘ go die’ becomes the health care norm for the prols, they will be reduced to the role of vets for an industrial cow herd.

      4. jrs

        I’d say the hospitals and pharma. The problem with insurance isn’t so much the cut they take, although they do take a cut but it’s not a huge part of the cost, but that much of health insurance borders on fraud (as in having no idea what one’s coverage even is).

        1. John Zelnicker

          @jrs – The insurance companies add about 35-40% to the cost of healthcare. That’s a pretty huge part of the cost.

    2. sd

      A doctor doesn’t get to decide your treatment, your insurance company does. It’s the insurance company that decides you get 3 months of treatment when your doctor wants 6.

      1. Me

        The insurance companies are also insanely inefficient and as long as they are central to this health care system, our system will also remain inefficient. There’s only so much that can be done to cut down on the waste as long as they are around.

    3. cm

      it’s the doctors and the anything but nonprofit hospitals who have the whip hand here

      Hospital networks, yes, but doctors no.

      Unless they are the top 10% and can demand only wealthy 1%-type cash-only patients, doctors have to join an insurance network to get patients. The insurance companies then dictate virtually everything the doctors can/must do.

      According to the insurance network agreement, once a doctor has been paid for a service, six months later (or more) the insurance company can change their mind, decide they overpaid, and demand the money back (by underpaying subsequent claims). As someone else point out, insurance dictates the drugs, procedures, cost, tests and compliance with the wonderful ICD-10.

      It is a pity medical school doesn’t have a Business 101 class where this is spelled out the first year. The business realities of being a doctor are ugly.

    4. TheBellTolls

      Yea the providers and insurers feed each other’s greed. See the spotlight investigation of Partner’s from a few years ago.

    5. JTMcPhee

      The whip hand is hugely attached not to doctors and hospitals, but to insurance companies and Big Pharma. The vasty most part of medical costs (outside of that apparently impossible to measure actual cost of what I as a nurse would call CARE) seems to be the looting by what ought to be called UNsurance. — because you as a “patient/consumer” (itself a pair of sick category designations) are

      – UNsure whether your doctor will be “in plan” or even your narrow network will have ANY “providers” in it, or if he or she will even stay in the practice of medicine.
      – UNsure whether the meds you need to keep on working and “stay sane” will be “on formulary” and at what “tier,” a list that differs significantly from UNsurer to USsurer.
      – UNsure whether a med or procedure will get past the gatekeepers both in-house at the UNsurer, and/or at all the contracted “utilization review” second-level storefronts.
      – UNsure whether your doc and his staff will be willing or able to overcome the presumption against nono-coverage that is the UNsurance companies’ default, willing or able to press through the walls of thorn bushes and phone chutes and ladders that guard against a “positive decision” to pay for needed (and yes, because too often thanks to the sick incentives many docs are all just about pills and procedures and billing, driven by UNsurance and Big Pharma and the corruption by profit forces of Medicare.
      – UNsure how far behind you are on claw backs for supposedly “paid” bills.
      – UNsure what your premiums or deductibles or out-of-pockets for copays are and will be.
      – UNsure how far you might be from medical bankruptcy.
      – UNsure when the UNsurance corps like BC/BS et al will complete the privatization and absorption of all the hospitals, clinics and doctors, closing the profit loop hard and fast.

      And there’s lots more of UNsureness to UNsurance, of course. The biggest being the CERTAINTY that the power structure that takes such good care of the UNsurance and Big Pharma types will continue to screw the” UNsured” who believed Obamacare was going to to “fix” all this UNsureness.

  3. FireRabbit

    My thought is…if Medicare is better left as public to be protected and regulated by the government against price hikes etc…then why isn’t the same logic applied to Obamacare…it seems to me that the argument could apply..

    1. run75441

      PPACA is regulated pursuant to the MLR for what % can be administrative and what % must be actual care and the ratios for smokers and the elderly.

  4. Uahsenaa

    If you want to see what privatized Medicare will look like, you need go no further than the “modernized” Medicaid scheme now underway in Iowa. From the Des Moines Register:

    During a Statehouse hearing last week, a Democratic legislator asked executives of the three companies if they planned to ask for big raises in their payments for next fiscal year. They declined to answer.

    “We really just don’t discuss those things in public settings,” Cheryl Harding, who is Iowa president for AmeriHealth Caritas, told Sen. Joe Bolkcom of Iowa City.

    The article also notes the $127 million Branstad just offered the insurance companies as a bribe to keep the scheme going, this after he tried to claim the privatized system would save fantasy number of dollars. The companies themselves suggested cutting costs by drastically limiting what drugs and procedures are covered.

    Welcome to the brave new world! It’s already here…

    1. Punxsutawney

      In other words the answer is “Yes, we do”.

      “The companies themselves suggested cutting costs by drastically limiting what drugs and procedures are covered.” Please give a hand to the real “Death Panels“, insurance companies.

  5. Rodger Malcolm Mitchell

    What everyone, including Sam Husseini, has not mentioned is that our Monetarily Sovereign government could eliminate FICA and still fund Medicare for every man, woman and child in America.

    That would solve the privatization problem, the ACA problem, the uninsured problem, and also stimulate economic growth while narrowing the gap between the rich and the rest. Not bad, huh?

    Instead, we pretend the federal government can run short of its own sovereign currency, so we develop these Rube Goldbergian plans to solve a non-existent problem.


    1. Jim Haygood

      We too could have 1,000-denomination bills worth 3 cents like our Venezuelan comrades.

      Printing our way to fabulous wealth is a time-tested strategy. But the austerian scrooges at Treasury want us to “struggle.” :-(

      1. paulmeli

        “We too could have 1,000-denomination bills worth 3 cents like our Venezuelan comrades.”

        What a load of crap. Hyperinflation isn’t caused by ‘printing money’, it’s caused by insufficient production which drives up prices due to excessive demand. Printing money in this case trying to ‘keep up’ with prices is the result, not the cause of the problem.

        As long as there is something for sale in dollars (labor, for instance) the government can buy it, especially when a quarter of our production goes unsold (or unproduced) and 20 million people remain unemployed or under-employed.

        1. Rodger Malcolm Mitchell

          “Printing money in this case trying to ‘keep up’ with prices is the result, not the cause of the problem.”

          Exactly correct. The “hyper-inflation” bugaboo (which never has occurred in the U.S.) has been used for decades by the rich to explain why social spending should be cut.

          It’s part of the Big Lie that Medicare, Social Security, and other social benefits are “unaffordable” and “unsustainable”, and FICA (and other regressive taxes) should be increased.

          Those who do not understand Monetary Sovereignty do not understand economics. Sadly, that includes almost everyone.

          The brainwashing of the populace has been complete.

          1. Elliott Gorod

            Sounds too good to be true
            As you may know Medicare Part D is funded 75 percent by the government and 25 percent by the beneficiaries
            The 75 percent increases the federal debt and is one of the largest unfunded liabilities facing the federal government
            There are many people who side with the trust fund perspective that Part D is fully funded because the government has no restraints in funding liabilities
            I guess there are 2 Entities now not subject to finite limits and the limits of nature

            1. paulmeli

              Another person that doesn’t understand MMT, hence arithmetic. The ‘many people’ should spend more time studying systems analysis instead of what amounts to religious dogma.

              Economics is an engineering problem. Following the pleadings of shamans (economists) has not been fruitful for the masses.

          2. Elliott Gorod

            Printing money to keep up with prices is caused by excessive demand
            Where is the excessive demand coming from – the top 10-15 percent of households?

            1. paulmeli

              “Printing money to keep up with prices is caused by excessive demand”

              Excessive relative to production. In a hyperinflation, excessive demand is created by insufficient production, like what happened in Wiemar Germany and Zimbabwe.

        2. djrichard

          Well actually hyperinflation is caused by printing money. What’s happening in Venezuela is no different than what happened in the Wiemar Republic: currency borrowing when there’s no “wall of worry”. In such cases currency speculators borrow currency hand-over-fist.

          Which is different than a public debt story: gov bonds of a country being sold to those that already have the currency – in particular the sovereign currency of that sovereign country. In that case, the Fed Gov is simply recycling the currency back into circulation. The bonds swap for the currency that is sloshing around in the hands of the winners (or their banks) that have hoovered it up from the rest of us losers. [Or same diff: the bonds swap for currency that is sloshing around in the hands of our trading partners that have hoovered it up from the US due to trade imbalances.]

          1. djrichard

            Correction to the parenthetical comment. I suggested that our trading partners have surplus currency due to trade imbalances. It’s actually the other way around: our trading partners create excess surplus of our currency in their hands in order to create trade imbalances.

            Which by the way is different than how the winners in the US create trade imbalances with us losers. In that case, they won’t employ us unless they get a profit; their profit is the trade imbalance with us. If it wasn’t for the Fed Gov recycling their surplus (their profit) back into the economy, we wouldn’t have much profit to give them. That is, there would be more balanced trade between the winners and the losers. Which is not what the winners necessarily want.

            Anyways, something to think about when the winners say there should be austerity. When they say that, they’re simply saying they want to slow the economy down, through less Fed Gov spending. Notice that the winners are not making lots of profit off us losers now-of-days. But who needs profit when you can simply generate inflation on assets (stock market, property). The winners are still winning, regardless.

            1. John Zelnicker

              @djrichard – Just curious, but how do our trading partners “create…our currency…”? Only the federal government can create our sovereign currency. (Bank created money doesn’t apply here as it has to be repaid so it can’t be surplus or excess.)

              1. djrichard

                Their central banks print their own currency to buy the US dollar (e.g. from their exporters who have “imported” US dollars in exchange for goods sent to US). So basically a form of QE by their central banks, which stimulates their economy.

                And on top of that, it suppresses their currency from getting stronger in the face of imbalanced trade. Normally, an imbalance would mean there’s less demand for US dollars from their importers because there’s less demand for US goods. So dollar would get weaker and their currency would get stronger. In any case, whatever the exchange rate, the dollars would be bought by exporters and used for purchasing US goods, creating an equilibrium in the exchange rate and creating an equilibrium (balance) in trade. But with their central bank’s hands in the mix, they become part of that equilibrium. It changes the equilibrium for the exchange rate to whatever peg that the central bank wants. And it makes balanced trade an equation that includes “goods” purchased by their central bank. If their central bank bought factory goods from the US, no problem. But they don’t; they buy US debt.

                1. John Zelnicker

                  @sjrichard – Okay, so the foreign Central Banks create their own currency, not dollars (which is a bit different from what you said). They have to do this to buy the dollars that their local exporters don’t need to use to buy production inputs from US companies. If the Central Banks didn’t buy the excess dollars from their local companies, those companies would quickly go out of business since they can’t use the dollars locally to pay wages, taxes and purchase local goods and services.

                  You seem to be conflating foreign exporters and importers. The foreign exporters get dollars from their sales in the US. They need to exchange most of them for local currency to operate their business. The foreign importers spend dollars here, so they need to buy them from their Central Banks with their local currency. It is highly unlikely that any one firm has a balance of trade with the US. You say “the dollars would be bought by exporters and used for purchasing US goods…”. I think you mean importers in that sentence. The foreign exporters are selling here, not buying (as much). If the Central Bank intervenes in the exchange rate to set a peg, they are going to distort the exchange rate and most likely hurt their own local businesses, since they are not allowing their currency to float according to trade (im)balances.

                  The foreign Central Banks can’t buy “goods and services” from the US (for the most part), so they have to do something with the extra dollars that they can’t sell to the foreign importers who need them. These excess dollars held by the foreign Central Banks are used to buy US Treasury securities because there is nothing else they can do with them. What you call “US debt” is more accurately referred to as US Treasury deposit accounts at the Fed. Just like your savings account at the bank in which you put your dollars that aren’t needed currently, the foreign Central Banks put their currently unneeded dollars in a Treasury deposit account to earn some interest. The Treasury Dept. can pay them off at any time. It’s just a transfer of existing dollars from a Treasury account to a demand deposit account, so, no problem, and no new dollars need to be created.

          2. djrichard

            So if there’s any boogie man to public expenditure, it’s the boogie man of interest on Fed Gov debt.

            Sure interest is cheap now, but what happens when it gets higher? Well presumably that’s a function of inflation (private debt creation). I would argue that it’s precisely that currency inflation (increase in the monetary base) that ultimately ends up paying the increased interest on the public debt. After all, all currency is ultimately hoovered up by the winners, including any new currency generated through private debt creation. So if we need more currency to pay interest, we know who to sell the bonds to, to get that additional currency.

            [The boogie man isn’t hyperinflation. Unless of course the Fed Gov uses the populace’s own private debt capacity as a way to fund social spending. Which is what Venezuela is doing, by getting the populace to take on private loans. Once that becomes spiraling, then the currency speculators jump in and hyper-inflation becomes an issue.]

            1. John Zelnicker

              @djrichard – The interest rate on Treasury securities will only go up if the Fed wants it to. They control the interest rate, no one else.

              Inflation is not created by private debt creation. It is created one of two ways. Either the cost of basic commodities jumps up such as happened in the 1970’s and 80’s due to the oil embargo and subsequent price increases, or because there is too much spending (demand) for goods and services when the economy is at full capacity and cannot meet the additional demand. The latter cause has not happened in the US because we have never been operating at full capacity except for WWII, and price controls kept inflation from heating up during those years.

          3. Me

            “Well actually hyperinflation is caused by printing money.”

            Most money is not physical money. This has been the case for centuries. Most money is created by banks and banks creating money is responsible for most inflation. What you are saying is also not historically accurate.


            Michael Hudson, “Every hyperinflation in history has come as a result of the collapse of the balance of payments.”

            1. paulmeli

              “Most money is created by banks…”

              Also not true. Money created by banks accounts for about 45% of the dollars created to date if one follows budget flows.

              The correct way to phrase your statement s that most money in existence to date is owed to the banking system. That’s a different argument that does not address origination.

            2. djrichard

              Yea, just using “printing” in the generic sense.

              Basically the central bank and their channels-to-markets (the commercial and investment banks) are legal counterfeiters. Or less crudely, they’re the counter party to borrowers naked shorting the US dollar.

          4. paulmeli

            “Well actually hyperinflation is caused by printing money.”

            Wrong. The proximate cause of the two most well-known hyperinflations, Weimar Germany and Zimbabwe, were caused by collapses in production. No hyperinflation was ever caused by printing too much money, which implies that people were living high on the hog. In Germany people were starving for basic needs.

            1. Elliott Gorod

              Did the collapse in production have anything to do with collapse in demand?
              An earlier comment pointed the finger at lack of production as the cause of hyperinflation
              Production is not done in a vacuum
              That is why we have supply and demand
              The typical consumer is tapped out so supply should be lowered to fill the lower demand

              1. John Zelnicker

                @Elliot Gorod – “Did the collapse in production have anything to do with collapse in demand?”

                No, it didn’t.

                In the case of the Weimar Republic, production collapsed because the French occupied the Ruhr Valley of Germany where 80% of German industrial capacity was located. That made it impossible for the Germans to produce goods for export which they needed in order to acquire the dollars, pounds or gold which were required as reparations by the Versailles Treaty after WWI. Production of goods for local consumption also collapsed. There was no way for the existing level of demand to be reduced to match the paucity of supply.

                In Zimbabwe, Mugabe took most of the farmland from the white farmers and gave it to the natives who had no knowledge or experience with farming, leading to a massive drop in the supply of food and other essentials needed by the populace.

      2. BecauseTradition

        But the austerian scrooges at Treasury want us to “struggle.” :-( Jim Haygood

        The demand for fiat is artificially low in that only depository institutions may use it except for unsafe, inconvenient physical fiat, aka “cash”. Fix that and then greater quantities of fiat can be created for a given amount of price inflation in it.

        Not only the demand side of fiat should be fixed but also the supply side by forbidding the central bank to even create fiat EXCEPT for the monetary sovereign, e.g. US Treasury.

      3. sharonsj

        We don’t have to print our way out. We can merely give everyone credit out of thin air–just the way the Fed provided trillions of dollars to insolvent banks around the world.

      4. reslez

        Right, because there’s no middle ground between our current, really truly existing travesty of a health insurance industry and Weimar Republic style imaginary hyperinflation.

        1. jrs

          Well there’s the rest of the world and how they fund it (taxes ARE part of it – but they still spend less on healthcare overall for often better results). But that’s not exceptional enough for a truly exceptional country, to use existing models of how it is done by countless other countries. That’s like way too tried and true!

      5. Me

        You’re confused. We already spend more money than we have to for our health care system. About 16% of our GDP, twice the amount of Canada, and much more than any other OECD country. We could provide health care for everyone while spending less overall. Maybe you can explain how spending less in the aggregate would be inflationary or how using less dollars to pay for those services would lead to a collapse in the value of the dollar. Maybe change the definition of inflation? The poster above is referring to the fact that we could create money, debt-free, and could use taxes to deal with inflation. That is different than what we do now, which is to create debt-based money and have to tax in order to spend for programs.

        1. Bryce

          It is up to 17.8% of our GDP, or $10,000 per person now. The other top spending countries consume about 12% of GDP and get much better outcomes. We can cut our health expenses by 30% and receive the same or better care by making it more efficient. This would save us about 1 trillion dollars per year. With that money, we could balance our budget, fund infrastructure, tax cuts, etc. Healthcare is what needs fixing the most in this country, but it is one of the least understood issues and hardly talked about. These trillion dollars of waste eventually finds its way into the pockets of politicians, media companies, lobbyists, etc. to stop any change. Fear, misinformation, and an uninformed electorate are the enablers of our dysfunctional healthcare system.

      6. uncle tungsten

        The alternative Jim is to do Robin Hood for the public good. Tax the top 1% with a simple un-evadable system.

        Perhaps the USA could gut the CIA budget and create the public benefit budget. Then at least the USA political system might stabilize too. Certainly the public health circumstances elsewhere in the world would improve.

        1. paulmeli

          This. If we are to be horrified by deficits that is how to eliminate them without killing the economy. Tax away money that would never, ever be spent anyway.

    2. Roger Smith

      No way, didn’t you hear? Public healthcare will “never, ever” happen! And so it spoke!

      One of the most amazing things about Syria to me is that they have managed to provide the public with healthcare and university education, and keep those programs running (with understandably diminishing quality) in the midst of decades long sanction and war. We must have it terrible hear if we cannot do those things….

  6. Faye Carr

    As usual, thanks for this. It’s frustrating to hear all the Democrats screeching about the new administration’s ‘attacks’ on the safety nets, cabinet picks, corporate endorsing policies, etc…
    When it’s been the D’s agenda as well.

  7. Mel

    What sealed the deal back in Saskatchewan was that under private funding, doctors could charge what they liked, whereas under public funding, doctors could collect what they charged. That brought the doctors around. The U.S. senator, a couple of years ago, who talked about paying doctors’ bills in chickens wasn’t kidding; that used to be a thing.
    But that was also in a world before the insurance companies had become the dominating players.

  8. Cojotz

    Perhaps a little history is in order here. Medical spending was only 5% of GDP in 1960 when households covered 56% of medical spending (aka between patients and their doctors). Ever since then, the percentages of spending shifted towards government spending (from 23% in 1960 to 43% in 2013) with the creation of Medicare and Medicaid, and towards the private business (from 14% to 21%). Here, doctors bill what they wish to get payed and insurance or Medicare/Medicaid will pay based on previously agreed rates.

    This does not take into account the technological and pharmaceutical advances in medicine (increasing costs), nor does it take into account the changes of most physician practices from sole or small group proprietorships to hospital or HMO salaried employees.

    What the author has uncovered here is that Schumer is siding with the insurance lobby to try and vilify the remaining private practice physicians. No mention of out of control drug costs, hospital costs, or administrative/shareholder costs of the private insurance industry.

    Healthcare reform is a foggy battlefield, and the winners will likely be those with the most expensive lobbyists without universal healthcare in the equation. The losers will most likely be both physicians and patients.

  9. d

    well before health insurance you paid for the care. but back then you were unlikely to even have care, since you were so broke that paying for it was impossible (unless you traded a chicken of course). also back then you were just barely surviving. unless you were well to do of course. dopes that mean insurance was a wonderful thing? no. just dont expect an business to be about any thing but making a profit off of you. and providers are the same. lots are good people, but its still for profit. but here is the deal. insurance companies dont want any of their customers to have claims, its why they quit wanting to provide policies to the elderly. its why they will quit on the individual market too. too mainy claims mean little to no profits. and the the scam that if only insurance could be sold across state borders will fix health costs, is gibberish. there are state today that allow this already, their rates arent lower. and insurance companies didnt rush into the new market, cause the costs of going into a new market are very high. they have build a new provider network without any paying customers and no leverage with providers (turns out health care is all local).

    1. Romancing The Loan

      Before modern health insurance in this country most people had doctors that were paid by their guild or social organization (Odd Fellows, Masons, Water Buffalos, etc.) through member dues to provide primary care to the members and their families. Those groups also fulfilled niches like life insurance.

      I have half-seriously joked to my new doctor friend with a half million in student loans that, should she ever wish to run from those loans, our community would be happy to support her in a similar arrangement via untaxable gifts of food, lodging, etc. in exchange for care.

      1. d

        except back then, the vast majority of us, were farmers, and were at best surviving. when just being able to eat is the best you can expect, health care is seen as a luxury, that you dont have

  10. ewmayer

    Sanders in his opening statement railed: “The leadership of the Republican Party in the House, in the Senate and Mr. Trump have got to start listening to the American people not the drug companies not the insurance companies — not the billionaire class.” — Only the Republicans need to do that? Really, Bernie? Talk about blinkered.

  11. Gaylord

    The populace in the U.S. is profoundly unwell — physically and mentally — and they’re getting progressively worse because the profit motive has taken over everything including the government. The patient is now in hospice without care nor any chance of recovery.

  12. ella

    ER doctor prescribe a med to keep patient out of ER, for uncontronable vomiting (norovirus). 15 tablets for $100.00, Silverscript medicare D. demanded doctor preauthorization before covering med. Pharmacy faxed ER doctor requesting preauthorization, ER doctors here do not provide preauthorization.

    Silverscript may have saved a few dollars but medicare would have paid far more if patient returned to the emergency room where the med would be given in IV to stop extreme vomiting.

    Fortunately, patient went to Costco and paid out of pocket for same prescription $36.00 instead of $100.00 out of pocket. The $36.00 was almost the patient’s co-pay with Silverscript.

    Summary, private insurance saved money by refusing payment. Patient without med from Costco would be back in ER where government via medicare pays cost. National pharmacy reports that insurers requiring preauthorization is becoming common. The med was anti nausea without a narcotic.

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