By:

Dave Kingsley

Introduction

In the previous post, my colleague Kent Comfort presented a case study pertaining to the disappearance of middle-class wealth into the Medical-Financial-Industrial complex black hole.  Even frugal, hardworking individuals who believe they have saved enough for retirement often find their assets depleted quickly due to high-cost, industrial medicine.  In this and future posts, we will be explaining how wealth is being maldistributed in the United States and how the government-funded industrial-medical system is helping to drive wealth from the bottom 90% to the top 1%.

The shift in wealth and the influence of U.S. medicine on the flow of assets from the lower socio-economic classes to the wealthiest class is a threat to the economic system and socio-cultural stability.  According to the PEW Research Foundation, “The wealth divide among upper-income families and middle- and lower-income families is sharp and rising (https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality).

Since the 2008 economic crash, most of the growth in U.S. family/individual net wealth has gone to the upper 5 percent.  The share of U.S. wealth owned by the bottom 90 percent of the population fell from 33 percent to 23 percent.  Wealth of the top 1% increased from 30 to 40 percent (https://equitablegrowth.org/the-distribution-of-wealth-in-the-united-states-and-implications-for-a-net-worth-tax/). This macroeconomic factor not only an economic injustice, it is a threat to the U.S. capitalistic system and democracy.

You pay taxes, premiums, and out of pocket expenses to fund large reimbursements to insurers, providers, and vendors, i.e., the insurance, hospital, medical device, pharmaceutical, nursing home, and other ancillary medical services industries. And yet, health care in the United States can bankrupt you.  Indeed, many people have been bankrupted through exorbitant hospital and nursing home costs. 

If the money you would like to leave to your heirs disappears in the U.S. industrial medical system, you would probably like to know where it goes.  It doesn’t go back to the Medicare, Medicaid, Obamacare, and VA programs ostensibly paying for your treatment.  Those programs are replenished through federal and state taxes – with the heaviest burden falling on the middle and lower classes.

So where, other than treatment, does all that money you pay in taxes and spend out of pocket for health care go?  The simple answer is, it goes to shareholders in one form or other.  In the 1970s and 80s, the country decided that private enterprise, operating in a “free market,” would be the most efficient and effective medical care delivery system.  What we got was an inefficient, ineffective, corrupt, and far too expensive industrial medicine system that funnels your hard-earned assets into the pockets of high-net-worth individuals and ultra-rich individuals and families.

From Your Family to Their Family:  How Laws Have Been Engineered to Keep Upper Income Wealth Growing While Everyone Else’s Continues to Shrink

Wealthy individuals despise two things: taxes and inflation. In fact, Leona Helmsley was jailed for telling an ugly truth: “We don’t pay taxes, the little people pay taxes.”  By little people, she meant most of us who are not rich.  Hence, the wealthy purchase politicians that protect their wealth from inflation and taxes – “purchased politicians” include practically all elected legislators in both parties. 

Shareholders in the industrial medical system tend to be high-net-worth individuals ($30 million or more in assets) or ultra-rich families worth hundreds of millions and billions. Inordinately complex federal and state tax laws have complexified corporate and individual finances, which works to the advantage of owners and shareholders.  For instance, throughout the past few decades, the state of South Dakota has amended its trust laws and has become a haven for wealthy individuals and families seeking trust laws that protect their wealth from inheritance and other forms of taxation.

It future posts, we will be taking a deeper dive into how Medicaid and Medicare funds are fueling the flow of wealth up the SES ladder.  For instance, more of those funds are flowing into family trusts than people realize.  In fact, the amount of nursing home ownership by family trusts is extensive and unnoticed by the public.  We will expose which chains are funneling a considerable amount of revenue into family and individual trusts.

By:

Kent Comfort

Mary’s Story: This Could Be You!

Mary Beacher has just retired after four decades of working for a large regional printing company as a type setter. She went to work for this company two months after graduating from high school. It was the best employer in her town, and she counted her lucky stars that she was able to secure a job there. And she worked hard to be a dependable model employee.

When she first started working for the company, they had an employee pension plan that the company paid into on behalf of all workers. In the 1980s, that pension plan converted into a 401k account for each individual employee, with their pension accruals transferring over to this new financial instrument. Mary did not understand the nuances of this. She just trusted her employer to look out for her retirement nest egg when she would reach that time. Mary would receive a statement annually that showed the value of her personal retirement fund. And her excitement grew every year after about 30 years had passed, because the amount it had grown was very impressive to her.

When retirement day finally came, Mary learned she had just over $500,000 waiting for her to fund her way of life. She had always made a very modest salary, and she was not a financial expert in any way, so this seemed like more money than she could ever imagine she would need to support her modest lifestyle. She had no plans for moving away from the small community she had always lived in. Almost everyone that mattered to her lived there. Where would she go?

Three years into her new leisurely life, Mary had the misfortune of experiencing some serious health problems. Since she lived alone and her only daughter lived far away with her own family, Mary did not have any family close by to provide care and support, and she was not able to look after herself because of her ailment. Her doctor recommended she look into skilled nursing care at a local nursing home that was owned by a national chain. Her doctor’s reasoning was that since the facility was owned by a huge company, it must be safe. He had heard occasional complaints from families of residents, but nothing that alarmed him. As elderly folks are commonly inclined, she took her doctor’s advice and allowed herself to become a resident, hopefully for only a short while until her health improved and she could go back home.

Mary’s health did not improve. Some would say the primary reason for this was the environment she was in was depressing and she felt like no one was really watching out for her or cared about her. And sadly, she was more right than wrong about this feeling.

The biggest shock came when she learned that the monthly cost of her staying in this facility was over $10,000. She no longer had health insurance from her employer after she retired. She was enrolled with Medicare, but she was not eligible for coverage from that source because her case was not about rehabilitation. She was a skilled nursing client. She discovered she would have to foot the bill for her care on her own until all her funds were exhausted. Then she would qualify for Medicaid in her state because she could claim to be in a state of poverty at that point.

And that is the story about how the Mary Beachers all over America have their entire personal wealth extracted through health industry policies, all of which are legal. Mary’s personal wealth did not go into government accounts. It went into the accounts of the large, very wealthy corporations that own the senior care properties all over the country. And that money then flows to a very small number of wealthy families who own these corporations. Due to very favorable tax laws and policies, these families pay a lower percentage of taxes than Mary did when she was earning her salary at the printing company!

So, let’s recap Mary’s situation. Her hard-earned personal wealth, from four decades of being a trusted and loyal employee at a local printing plant, in a very short time period was transferred entirely to a wealthy family through the legal policies of the American health services system.

And this could happen to you as long as our policies and systems remain as they are today. But that is not the end of the story….

See: The Medical-Financial-Industrial Complex & the Maldistribution of Wealth in the United States by Dr. David Kingsley on this blog site.