Showing posts with label Greed. Show all posts
Showing posts with label Greed. Show all posts

2025/04/24

Why are the world’s uber‑wealthy quietly snapping up off‑grid estates worldwide?

 Why are the world’s uber‑wealthy quietly snapping up off‑grid estates worldwide?


The helipad blades settle into silence far faster than my heartbeat does. I’m standing on a cliff‑edge meadow in Wyoming’s Gros Ventre Range, staring at a freshly poured concrete pad that looks suspiciously bunker‑sized. The estate agent—tanned, Patagonia‑puffed, impeccable teeth—whispers the builder’s name and the asking price with the same practiced reverence someone else might reserve for a Caravaggio. Before I can reply, he gestures at the snow‑dusted Tetons to our west and murmurs, “Views like that will outlive any market cycle.” He’s probably right, but the phrase that flashes through my mind is less poetic and more urgent: bolt‑hole.

We are living in a moment where uncertainty has become a lifestyle variable to be aggressively hedged—no different from currency risk or carbon exposure. For the “one‑percent of the one‑percent,” the hedge increasingly takes the shape of remote ranches, regenerative farms, private islands, and multilevel underground fortresses. And while Instagram keeps beaming us high‑gloss images of penthouse infinity pools, the truly transformational real‑estate action is happening hundreds of miles from the nearest Hermes storefront. According to the Knight Frank Wealth Report 2025, nearly half of global family offices surveyed plan to expand their allocations to “defensive real assets,” with rural land topping the wish list.

The shift isn’t just portfolio theory; it’s psychology. In private dinners and closed‑door Zoom rooms, I keep hearing the same cocktail of anxieties: geopolitical brinkmanship, supply‑chain fragility, and a climate system that now lurches from biblical drought to once‑in‑a‑century floods several times a year. “It felt irresponsible not to buy something self‑sustaining,” a Singapore‑based crypto founder told me after wiring eight figures for a 5,000‑acre Tasmanian property ring‑fenced by eucalyptus forests and satellite internet. I asked what finally pushed him over the line. “Watching container ships stack outside the port last year,” he said. “I suddenly realised my wealth was a stack of IOUs sitting on somebody else’s spreadsheet.”

If that sounds melodramatic, consider the evidence. Rural land values in the United States eked out a rise last year while almost every urban luxury index softened or slumped. The Bloomberg Family Office Survey tallies institutional farmland funds at more than US $16 billion—double the figure of three years ago. And then there’s the real‑world breadcrumb trail of billionaire purchases: Joe Ricketts dropping a reported US $160 million on Granite Creek Ranch near Jackson Hole; the secretive Flannery Associates amassing 60,000 acres of Solano County farmland for their speculative “California Forever” city; Peter Thiel’s slow‑burn quest to carve a James Bond‑worthy compound above Lake Wānaka in New Zealand. Even if only half the rumours around these projects are true, the shape of a pattern emerges.

The public‑facing logic is almost quaint. Buyers cite privacy, nature, maybe a dab of “regenerative agriculture” to cushion the optics. But spend enough time with wealth managers and a different vocabulary surfaces: redundancyresilience planningcontinuity of governance. One Zurich‑based advisor told me his clients have begun mapping properties against global water‑scarcity projections. Another in Texas says anything within a four‑hour drive of a private‑jet‑capable runway is now “Tier 1 inventory.” If the real‑estate market once hinged on location, location, location, today’s mantra, for some, is isolation, elevation, hydration.

Elevation matters because wildfire smoke and rising oceans don’t (yet) climb mountains. Isolation reduces the risk of civil unrest reaching your perimeter fence. Hydration—well, when the IPCC talks about “compound water‑related risks” across continents, a spring-fed creek suddenly becomes more precious than the most elaborate chandelier. That calculus is why a Colorado broker I trust saw bidding wars erupt over properties with verified aquifers, even in months when the broader luxury market cooled.

Lest we imagine this is all tasteful ranch houses and boutique vineyards, we should talk bunkers. In Switzerland, Oppidum’s “L’Heritage” series offers blast‑proof villas disguised under alpine meadows, price on application, queue out the door. In the US, Rising S Company claims 400 percent growth in inquiries since 2020. These aren’t the apocalyptic concrete tubes preppers fantasised about in the nineties; they’re more like subterranean Mandarin Orientals—wine cellars, bowling alleys, gene‑therapy suites. A handful of clients, I’m told, are shipping down entire seed libraries to ensure fresh arugula in year five of any hypothetical lockdown.

At the softer end of the spectrum lie “climate refuges” that double as status playgrounds. Private‑island sales rose nearly 60 percent during the pandemic, according to boutique brokerage Concierge Auctions, and the momentum hasn’t subsided. The pitch decks read like techno‑utopian travelogues: desalination plants, solar microgrids, drone delivery pads. One island development in Fiji promises an on‑site “medical concierge” partnered with a US teaching hospital—because medevac times are so 2019.

Whatever the guise—bug‑out bunker or blue‑water idyll—the undertone is identical: you can’t outsource existential security, and the truly affluent have stopped trying. If that sounds like the ultimate luxury, it also echoes a darker mood. The historian Niall Ferguson once described our era as a “progressive era of maximum fragility masked by maximum complexity.” The richer you are, the more attuned you become to that fragility. It’s one thing to read about supply‑chain vulnerabilities; it’s another to watch your global logistics firm scramble for dry‑ice pallets so your biologics don’t perish en route to a clinic in Málaga.

Critics view the land‑grab as 21st‑century feudalism, a transfer of the most finite resource—land—into even fewer hands. There’s merit to the charge. Ask locals in Solano County, California, who woke to find their family farms surrounded by shell companies with billion‑dollar war chests and big, if blurry, visions. Ask Māori leaders in New Zealand’s South Island, where legacy stations are being subdivided into heli‑ski estates with minimal public consultation. Wealth has always bent zoning laws, but never has it bent them in the name of building private lifeboats quite so explicitly.

And yet, as a writer who has spent the better part of a decade interrogating both the promises and perils of self‑reliance, I recognise another dimension: the allure of autonomy. In a world where digital feeds compress every outrage into the same luminous rectangle, there’s something primal about owning enough land that you can stand in the middle of it and, for a moment, hear only wind. The tragedy—if we can call it that—is how unevenly distributed the option has become. Thanks to leveraged meta‑economies and compounding capital gains, the threshold for serious land acquisition has shot skyward faster than most urbanites’ wages. By the time you or I could save a down payment on our own chunk of prairie, some VC‑backed foundation has already erected a lithium‑ion battery farm on it.

Which brings us to Silicon Valley and its ideology of move fast and fix later. The same founders who once evangelised frictionless everything are now commissioning 200‑page resilience audits before buying Colorado ski chalets. They’ve gamified survival: EMP‑hardened servers, low‑e glass rated to stop a .308 round, heritage‑breed chickens for robust egg production. One prominent technologist—whose name you know from every home screen on Earth—keeps an “evacuation stack” consisting of a Gulfstream on annual retainer, a Montana ranch with two landing strips, and a Boring‑Company‑designed tunnel that may or may not tunnel all the way to a trout stream. Are these rational precautions or cosplay for the apocalypse? Perhaps both. But remember: the line between prudence and extravagance blurs when you can wire the cost of an entire county’s yearly budget before lunchtime.

Meanwhile, institutional capital is making the trend sticky. BlackRock, Nuveen, and Hancock have all announced expanded “natural capital” or “sustainable farmland” strategies. The returns are attractive—steady, inflation‑linked, non‑correlated—and ESG branding offers a halo that erases the optics of bunker chic. If you can claim that your 20,000‑acre almond orchard sequesters more carbon than a mid‑size city emits, who’s to begrudge the fiber‑optic cables humming beneath it?

Yet, for every billionaire buying hay meadows, there’s a rural resident worrying about being priced out of the only life they know. When median farmland values triple in little more than a decade—as they have in parts of the American West—teachers, nurses, and mechanics can no longer afford the ground beneath their childhood swing sets. A sociologist in Bozeman told me she has begun calling the phenomenon “climate gentrification,” only half‑joking that Aspenization now happens wherever the altitude’s high enough to escape both wildfire and flood. The carbon credit market only accelerates the process, turning topsoil into another tradable instrument.

What, then, does all this mean for the rest of us—the readers scrolling this on a phone made by yet another company headed for a remote parcel? The impulse might be envy, even resentment. But there’s another interpretation: the uber‑wealthy are, in effect, stress‑testing the limits of the modern nation‑state. If private desalination plants proliferate, perhaps governments will finally get serious about safeguarding public water infrastructure. If regenerative farms become chic enough to plaster across Architectural Digest, maybe we’ll demand the same soil health in the acreage that grows our bread.

I’m not naive enough to believe trickle‑down resilience is a given. But history shows that technologies birthed in luxury often become mass amenities—think of seatbelts, GPS, even the internet itself. Off‑grid microgrids, vertical farms, home battery walls—these may start as billionaire toys, yet the engineering leaps they spawn can (eventually) stoop to your suburban roofline. The question is whether the timeline of dissemination matches the timeline of crisis.

Standing up on that Wyoming cliff, I ask my agent what the owner did for internet redundancy. Starlink, of course. Two dishes, one pointed south for redundancy, a backup LTE tower if SpaceX ever falters. And power? “Eight hundred kilowatts of ground‑mount solar,” he says, then laughs softly: “That’s bigger than the local utility’s peak load.” It’s hard not to feel the absurd contrast: a single family’s retreat wired better than some developing‑world cities. But I also feel, prickling at the edges, an understanding: Everyone hedges with the tools they have. For the billionaires, the hedge is land. For you and me, it might be community, skill‑sharing, a raised bed of tomatoes on a balcony hedge‑fund managers wouldn’t look twice at.

Still, the land story will roll on because capital always seeks the next under‑priced arbitrage. When enough fortunes reposition from REITs to ridgelines, policy follows. Witness Chile’s move to restrict foreign water rights, or Portugal’s cap on golden visas tied to rural property. Even New Zealand, for decades the poster child of blank‑cheque safe havens, slammed the door on most offshore house‑hunters in 2018. That hasn’t stopped the wealthy; it has merely made the deals more labyrinthine—trusts inside LLCs inside bespoke funds run out of the Caymans.

The future, then, may look less like an exodus from cities and more like a portfolio ballet: keep the Mayfair town house for opera season, the Singapore pied‑à‑terre for ease of banking, but redirect serious generational wealth into acreage beyond drone range of any protest march. We’ll see new hybrid lifestyles emerge—kids schooled in urban International Baccalaureates Monday to Thursday, then flown to a high‑altitude homestead stocked with quail eggs and VR headsets for the long weekend. Social scientists will have a field day parsing the psychological split between where I work and where I survive.

And if you’re wondering whether this is all just a fad, remember that in matters of wealth preservation, perception has a tendency to make itself real. When enough capital assumes the world is unstable, it funds the very architectures that anticipate instability—armed gates, private fire brigades, autonomous farms. Paradoxically, those fortifications can erode public faith in common institutions, nudging everyone closer to the dystopia the wealthy have already priced in.

I drive away from the ranch as the sun bleeds into the Snake River valley. The agent stays behind, no doubt prepping for the next client arrival. In the rear‑view mirror the concrete pad shrinks until it’s just a pixel of raw grey in a sea of gold. I’m struck by how little it takes to make a landscape feel unsettled—one helipad, one perimeter fence, one buyer who can afford to bet against the rest of us. But the larger truth settles in my chest as the mountains fade: even if we can’t all buy sanctuaries, we can choose what kind of world we want to live in. The uber‑wealthy are building theirs. The rest of us can still build ours—but the clock is ticking, and the ground under our feet is getting pricier by the minute.

2025/04/07

Trumps Tariff Inspiration

 A User’s Guide to Restructuring the Global Trading System

 November 2024 

 Executive Summary 

 The desire to reform the global trading system and put American industry on fairer ground vis-à-vis the rest of the world has been a consistent theme for President Trump for decades. We may be on the cusp of generational change in the international trade and financial systems. 

 The root of the economic imbalances lies in persistent dollar overvaluation that prevents the balancing of international trade, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, it becomes increasingly burdensome for the United States to finance the provision of reserve assets and the defense umbrella, as the manufacturing and tradeable sectors bear the brunt of the costs. 

 In this essay I attempt to catalogue some of the available tools for reshaping these systems, the tradeoffs that accompany the use of those tools, and policy options for minimizing side effects. This is not policy advocacy, but an attempt to understand the financial market consequences of potential significant changes in trade or financial policy. 

 Tariffs provide revenue, and if offset by currency adjustments, present minimal inflationary or otherwise adverse side effects, consistent with the experience in 2018-2019. While currency offset can inhibit adjustments to trade flows, it suggests that tariffs are ultimately financed by the tariffed nation, whose real purchasing power and wealth decline, and that the revenue raised improves burden sharing for reserve asset provision. Tariffs will likely be implemented in a manner deeply intertwined with national security concerns, and I discuss a variety of possible implementation schemes. I also discuss optimal tariff rates in the context of the rest of the U.S. taxation system. 

 Currency policy aimed at correcting the undervaluation of other nations’ currencies brings an entirely different set of tradeoffs and potential implications. Historically, the United States has pursued multilateral approaches to currency adjustments. While many analysts believe there are no tools available to unilaterally address currency misvaluation, that is not true. I describe some potential avenues for both multilateral and unilateral currency adjustment strategies, as well as means of mitigating unwanted side effects. 

 Finally, I discuss a variety of financial market consequences of these policy tools, and possible sequencing. 

 Stephen Miran, Senior Strategist 

 Stephen Miran is Senior Strategist at Hudson Bay Capital. Previously, Dr. Miran served as senior advisor for economic policy at the U.S. Department of the Treasury, where he assisted with fiscal policy during the pandemic recession. Prior to Treasury, Dr. Miran worked for a decade as an investment professional. Dr. Miran is also an economics fellow at the Manhattan Institute for Policy Research. He received a Ph.D. in economics from Harvard University and a B.A. from Boston University. 

 Please direct enquiries to research@hudsonbaycapital.com 

2025/01/05

What the science of predators tells us about the morbidly rich | Opinion

 What the science of predators tells us about the morbidly rich

Opinion by Thom Hartmann

Nature and economics share some fascinating patterns, one of which explains why Donald Trump is about to become president and how the morbidly rich have appropriated over $50 trillion from working class people since the 1980s. Scientists use something called the Lorka-Volterra equations to explain how predators and prey interact in the wild.

These equations show us that animal populations rise and fall in predictable cycles — when there are lots of rabbits, fox populations grow, but as foxes eat more rabbits, the rabbit population shrinks, which then causes fox numbers to drop, allowing rabbits to multiply again.

Incredibly, this back-and-forth pattern mirrors what happens between the wealthy and working classes in our economy and political systems over the past 100 years.

Think about a forest ecosystem. When rabbits have plenty of grass to eat and safe places to hide, their numbers grow. As rabbit populations increase, foxes find it easier to catch prey, so they have more cubs and their numbers grow, too.

But eventually, the foxes become so numerous that they start catching too many rabbits. The rabbit population crashes, and soon after, fox numbers follow suit because there isn’t enough food to go around. This creates a natural cycle that repeats over and over, unless something comes along to change the rules of the game — like a new predator, a disease, or human intervention.

This same pattern plays out in our economy and political system, though we often don’t recognize it.

The working class, like the rabbits, create value through their labor and create demand — which drives economies — through their purchases of goods and services. They make products, provide services, consume both, and thus keep the economy running.

The wealthy class, like the foxes, extracts value through ownership, investment, and control of resources. When the system is balanced, both groups can thrive. But when it gets out of balance, trouble follows.

To see this pattern in action, look at a remarkable period in American history called the “Great Compression.” From 1900 to 1980 (with the brief exception of the Roaring Twenties), particularly after the New Deal, something unusual happened: the gap between rich and poor actually shrank for roughly 80 years. Working people saw their wages go up and their living standards improve.

This happened because new rules and institutions — including labor unions, Wall Street regulations, anti-monopoly laws, and higher progressive income taxes — kept economic “predators” (morbidly rich individuals and corporations) from taking too much from economic “prey” (working class and poor people).

Just like a healthy forest needs the rules of nature as expressed in the Lorka-Volterra equations to keep any one species from taking over, these progressive policies put into place by FDR created balance in the economy, and thus political harmony across the nation.

The specifics of those rules were comprehensive and carefully designed. The highest income tax rate on the wealthiest Americans was 90% in that era. Labor unions were protected by law and represented about one-third of all workers, meaning two-thirds of workers had the wage and benefits equivalent of a union job (union employers set local wage and benefit floors). Banks were strictly regulated and couldn’t engage in risky speculation with ordinary people’s savings.

Monopolies were broken up when they became too powerful; the Supreme Court blocked the merger of two shoe companies in the 1960s because the new combined company would control 5% of the shoe industry (today Nike has 19%).

Those rules didn’t prevent people from getting rich, but they did ensure that extreme wealth accumulation was harder and that workers received a fair share of the value they created.

The results were impressive. Between 1945 and 1980, when workers produced more, they earned more. A single breadwinner could support a family, own a home, buy a new car every few years, take a vacation, send kids to college, and retire with dignity and a pension.

Social mobility was high, meaning children regularly achieved higher living standards than their parents. The wealth created by the economy was shared more fairly than ever before.

The rich still got richer, but at a slower, more sustainable pace that allowed everyone else to prosper too.

But this balance didn’t last. In 1971, future (1972) Supreme Court Justice Lewis Powell wrote a memo that changed everything. He urged American businesses to fight against unions, environmental protections, and other rules that limited their power, crush the labor movement, and put corporations and rich people in charge of the commons.

This memo wasn’t just idle speculation; it became a blueprint for action. Business leaders and fossil-fuel billionaires created new think tanks, funded academic programs promoting so-called free-market ideology, and invested heavily in lobbying and political campaigns.

When Ronald Reagan became president in 1981, he started dismantling the rules that had kept the morbidly rich economic predators and their companies in check. He turned loose the foxes on the rabbits.

This era, which we might call the “Great Predation,” saw a dramatic reversal of the trends that defined the Great Compression. From 1980 to 2024, the wealthiest Americans extracted over $50 trillion from the working class, according to studies such as the Rand Corporation’s 2020 report on income redistribution.

Productivity continued to rise, but wages stagnated, and wealth increasingly concentrated at the top. The predators were thriving, but the prey — working-class Americans — were being systematically drained.

Reagan dramatically cut taxes on the morbidly rich. He, Bush, and Trump stripped away business regulations and Republicans on the Supreme Court stopped enforcing antitrust law. Unions lost their power when companies — with the support of Republicans on the Court — were allowed to fight them more aggressively.

Even Social Security and Medicare faced pressure, though they largely survived (although Republicans have already half-privatized Medicare with the Medicare Advantage scam, and are now talking about doing the same with Social Security).

While workers kept producing more, their wages barely grew. Instead, nearly all the new wealth went to those at the top. The predators were thriving, but their prey — ordinary working Americans — were being squeezed dry.

The changes were dramatic and far-reaching. CEO pay skyrocketed from about 30 times the average worker’s salary in 1980 to over 300 times by 2020. In some industries it’s thousands of times more, and in the companies of some billionaires like Musk, Zuckerberg, and Bezos, their income is hundreds of thousands or millions of times greater than their workers.

As a result of five corrupt Republicans on the Supreme Court giving the morbidly rich the absolute power to own politicians and put unlimited money into elections, the predation of the morbidly rich has gone into hyperdrive. The most obvious example of this recently was Elon Musk purchasing the White House for Trump with a bit more than a quarter-billion dollars, an amount that was basically pocket change for him.

More than half of Americans now live paycheck to paycheck, despite the country being richer than ever. Young people struggle to afford homes, start families, or save for retirement. Medical debt has become a leading cause of bankruptcy. Meanwhile, both the number of billionaires and their aggregate wealth have exploded, with some individuals accumulating more wealth than entire countries.

This pattern follows the same logic as those predator-prey equations. During the Great Compression, government rules acted like environmental protections, helping the middle class grow strong and creating a healthy consumer economy.

The wealthy still benefited, but couldn’t take too much. During the Great Predation, those protections disappeared. Without limits on economic predators, working people’s share of the pie began to shrink, just like rabbit populations fall when foxes have free rein.

But here’s the catch: just as foxes eventually run into trouble if they eat too many rabbits, extreme concentration of wealth creates problems for the wealthy too. When middle-class consumers struggle, the whole economy becomes unstable.

We see this today in several ways: young people can’t afford to buy homes or cars, leading to weak demand in key industries. Consumer debt has reached record levels as people try to maintain their standard of living. Social and political unrest grows as people lose faith in the system. We might be approaching a breaking point, and the 2024 election is a major warning.

The signs of strain are everywhere. Major retailers struggle as their customer base loses purchasing power. Tech companies lay off thousands despite record profits, trying to squeeze more value from fewer workers.

Young people increasingly reject capitalism altogether, correctly seeing Reagan’s version of it as a rigged game. Political polarization has reached dangerous levels as people search for someone to blame, resulting in the rise of demagogues like Trump, Vance, and Musk. And the steady stream of oligarchs rushing to Mar-a-Lago to kiss Trump’s a--.

The good news is that we can learn from nature about how to restore balance. In healthy ecosystems, predators and prey find a sustainable balance through natural mechanisms and occasional external interventions. In our economy, we know we can create this balance through smart policies because we already did it once for almost 80 years.

We need modern versions of the rules that worked during the Great Compression: Fair taxes, strong worker protections, and limits on corporate power. We also need new ideas, like universal basic income or profit-sharing, that can help distribute wealth more evenly.

Some specific solutions are already being tested around the world.

Worker representation on corporate boards, common in Germany, helps ensure companies consider employee interests. Public investment banks, like those in South Korea and Japan, can direct capital toward social needs rather than just private profits. Alaska’s Permanent Fund shows how natural resource wealth can be shared with all citizens. These examples prove that alternatives to pure billionaire predation are possible.

Just as predators play an important role in nature by keeping prey populations healthy and genetically fit, wealthy individuals and corporations can contribute positively to society through investment, innovation, and job creation.

The key is ensuring they do this in a way that strengthens the whole system rather than depleting it. This necessitates high taxes on extreme wealth, requirements to reinvest profits in workers and communities, and new forms of corporate ownership that share gains more broadly.

Looking ahead, our challenge is to move from predation to partnership like America did in the 1930s and Europe did in the 1950s. We must recognize that everyone’s prosperity — including that of the wealthy — depends on having a healthy middle class.

Creating this balance isn’t just morally right; it’s necessary for the economy and our political system to function well. By learning from both nature and history, we can build an economic and political system that works better for everyone, breaking free from the harsh cycles of boom and bust that have defined the past few decades.

The path forward requires both political will and innovative thinking. We must update our understanding of how modern economies work and be willing to experiment with new forms of regulation and wealth sharing.

The alternative — continuing down the path of unchecked billionaire predation — risks destroying the very system that creates wealth in the first place. Just as ecology teaches us that diverse, balanced ecosystems are the most resilient, economics shows us that broadly shared prosperity creates the strongest foundation for sustainable growth and political stability.

2024/12/29

The Walmart Effect

 The Walmart Effect

New research suggests that the company makes the communities it operates in poorer—even taking into account its famous low prices.

2024/12/20

Seven reasons why Americans pay more for health care than any other nation

 Seven reasons why Americans pay more for health care than any other nation


Americans spend far more on health care than anywhere else in the world but we have the lowest life expectancy among large, wealthy countries.

A lot of that can be explained by the unique aspects of our health care system. Among other things, we reward doctors more for medical procedures than for keeping people healthy, keep costs hidden from customers and spend money on tasks that have nothing to do making patients feel better.

"We spend more on administrative costs than we do on caring for heart disease and caring for cancer," said Harvard University economist David Cutler. "It's just an absurd amount."

The nation's rising health bill affects just about everyone.

The amount working-age Americans spent on health insurance through the payroll deductions has jumped nearly three times faster than wages over the past two dozen years. Health bills are the leading cause of personal bankruptcy. And medical bills accounted for more than half of all debt on consumers credit records in 2022, according to the Consumer Financial Protection Bureau.

Public anger over high costs and poor results has been squarely focused on health insurance industry in the wake of the assassination earlier this month of UnitedHealthcare CEO Brian Thompson.

Massachusetts Sen. Elizabeth Warren said that while violence is never the answer, the public's frustration should serve as a warning for the health care industry, and in a Huffington Post interview last week cited the "visceral response" from people who feel "cheated, ripped off and threatened by the vile practices of their insurance companies."

But health economists say the entire health care systemnot just insurers, deserves scrutiny for runaway medical bills.

Health insurance companies took in $25 billion in profit last yearwhile hospitals collected an eye-popping $90 billion, Rice University economist Vivian Ho said.

"It's become quite clear how angry the public is with health care costs," said Ho. "I'm glad people are voicing their anger against insurers, but they should be directing equal anger against hospitals, particularly since so many are nonprofit."

Reason 1: Lack of price limits

U.S. hospitals have more specialists than do medical facilities in other nations. Having access to 24/7 specialty care, particularly for hospitals in major metro areas, drives up costs, said Michael Chernew, a health care policy professor at Harvard Medical School.

Patients have more elbow room and privacy here. U.S. hospitals typically have either one or two patients per room, unlike facilities abroad that tend to have open wards with rows of beds, Chernew said. He said differences in labor markets and regulatory requirements also can pack on costs.

Of the $4.5 trillion spent on U.S. health care in 2022, hospitals collected 30% of that total health spending, according to data from the Centers for Medicare & Medicaid Services. Doctors rank second at 20%. Prescription drugs accounted for 9% and health insurance − both private health insurance and government programs such as Medicare and Medicaid − collect 7% in administrative costs.

Most U.S. hospitals are nonprofit and get federal, state and local tax breaks. These nonprofits are expected to provide free or reduced-cost care to low-income patients as well as other community benefits. Federal law requires hospital to assess and stabilize every patient who seeks care in an emergency room, even if they can't pay their bills.

But research suggests many hospitals don't live up to their charity care and other community benefit obligations.

Johns Hopkins University and Texas Christian University researchers estimated the nation's nearly 3,000 nonprofit hospitals were spared $37.4 billion in federal, state and local taxes in 2021. That same year, Medicare filings show hospitals paid out $15.2 billion in charity care.

Chernew has proposed health care price caps to curb runaway health costs. Such caps might be used in markets where large hospitals control a significant share of a local health market, which allows them to demand higher prices from insurance companies who might not have other options.

Reason 2: Hospitals and doctors get paid for services, not outcomes

Doctors, hospitals and other providers are paid based on the number of tests and procedures they order, not necessarily whether patients get better.

The insurer pays the doctor, hospital or lab based on negotiated, in-network rates between the two parties.

Critics of this fee-for-service payment method says it rewards quantity over quality. Health providers who order more tests or procedures get more lucrative payments whether the patients improve or not.

"This is not the way health care should be delivered in our country," U.S. Rep. Vern Buchanan, R-Fla., said during a hearing in June exploring an alternative health payment called value-based care.

After the Affordable Care Act passed in 2010, the Centers for Medicare and Medicaid Services funded small programs that encouraged hospitals and other health providers to emphasize value over volume.

But the U.S. health system has been slow to adopt value-based care programs. Of 50 such models launched by CMS over the past decade, only six delivered health savings and two demonstrated improvements in quality, according to June testimony from U.S. Rep. Lloyd Doggett, D-Texas.

Reason 3: Specialists get paid much more ‒ and want to keep it that way

Doctors who provide specialty care such as cardiologists or cancer doctors get much higher payments from Medicare and private insurers than primary care doctors.

Some see that as a system that rewards doctors who specialize in caring for patients with complex medical conditions while skimping on pay for primary care doctors who try to prevent or limit disease.

Under the current system, doctors are chosen or approved by the American Medical Association to a 32-member committee which recommends values for medical services that Medicare then considers when deciding how much to pay doctors. Some have compared the idea of doctors setting their own payscale to the proverbial fox guarding the henhouse.

The health news publication STAT first reported that Robert F. Kennedy Jr., President-elect Donald Trump's nominee to become Secretary of Health and Human Services, is seeking to limit the AMA's influence over these medical billing codes.

Medicare payment rates not only determine how much taxpayers shell out for older Americans' health care, they set the base for health care prices. Private insurers typically use Medicare rates to decide how much they pay doctors and hospitals.

If such an overhaul resulted in more lucrative payment for primary care doctors who emphasize preventive care, it could help make people healthier and reduce costly spending on specialists, Ho said.

Reason 4: Administrative costs inflate health spending

One of the biggest sources of wasted medical spending is on administrative costsseveral experts told USA TODAY.

Although Medicare's official health care spending report doesn't calculate how much the nation spends on administrative tasks, Harvard's Cutler estimates that up to 25% of medical spending is due to administrative costs.

Health insurers often require doctors and hospitals to get authorization before performing procedures or operations. Or they mandate "step therapy," which makes patients try comparable lower-cost prescription drugs before coverage for a doctor-recommended drug kicks in.

These mandates trigger a flurry of communication and tasks for both health insurers and doctors, Cutler said.

Although medical records are computerized, too often medical computer systems don't communicate with outside organizations such as health insurers, Cutler said. That results in extra administrative tasks, when doctors attempt to get authorization from an insurer on behalf of a patient.

Such communication could be more seamless − and result in less busywork − if insurers could track patients records electronically, Cutler said

Instead, they often turn to calls and throwback technology such as fax machines.

"The only use of fax machines now are in medical care," Cutler said.

Cutler said government-run Medicare is a much more efficient operation. Doctors who provide care for Medicare patients are allowed to bill and collect payment in relatively seamless transactions without the same level of oversight that private insurance companies apply.

One drawback: Unscrupulous providers can more easily fraudulently bill the federal health program, Cutler said.

Reason 5: Health care pricing is a mystery

Patients often have no idea how much a test or a procedure will cost before they go to a clinic or a hospital. Health care prices are hidden from the public. And because consumers with health insurance often must pick up a portion of their bill, health care prices matter.

An MRI can cost $300 or $3,000, depending on where you get it. A colonoscopy can run you $1,000 to $10,000.

Economists cited these examples of wide-ranging health care prices in a request that Congress pass the Health Care Price Transparency Act 2.0, which would require hospitals and health providers to disclose their prices.

Under a law that passed Congress during Trump's first term and was enacted under the Biden administration, hospitals must disclose cash prices and rates negotiated with health insurers for a broad list of procedures in a computer-readable format so the information can be analyzed. The rule also mandated hospitals post estimates for at least 300 services so consumers can compare prices.

However, the consumer nonprofit Patient Rights Advocate said in a November report that just 21% of hospitals fully comply with the existing federal price transparency rule, down from 35% as of February.

Reason 6: Americans pay far more for prescription drugs than people in other wealthy nations

There are no price limits on prescription drugs, and Americans pay more for these life-saving medications than residents of other wealthy nations.

U.S prescription drug prices run more than 2.5 times those in 32 comparable countries, according to a 2023 HHS report.

 In one study of 224 cancer drugs approved by the Food and Drug Administration from 2015 through 2020, the median price for a patient was $196,000 per year.

Lawmakers have scrutinized prices of weight-loss drugs such as Ozempic and Wegovy. During a September hearing, Sen. Bernie Sanders grilled Novo Nordisk's top executive over why U.S. residents pay so much more for these medications than people in other countries. Although the amount consumers pay at the pharmacy is often discounted, Novo Nordisk charged $969 a month for Ozempic in the U.S. ‒ while the same drug costs $155 in Canada, $122 in Denmark, and $59 in Germany, according to a document submitted by Sanders.

Reason 7: Private Equity

Wall Street investors who control private equity firms have taken over hospitals and large doctors practices, with the primary goal of making a profit. The role of these private equity investors has drawn increased scrutiny from government regulators and elected officials.

One example is the high-profile bankruptcy of Steward Health Care, which formed in 2010 when a private equity firm, acquired a financially struggling nonprofit hospital chain from the Archdiocese of Boston. The chain is led by a former heart surgeon who collected more than $100 million in compensation and bought a $40 million yacht while employees at Steward hospitals complained about a lack of basic supplies, according to a Senate committee. Layoffs and hospital closings followed.

Private equity investors also have targeted specialty practices in certain states and metro regions.

Last year, the Federal Trade Commission sued U.S. Anesthesia Partners over its serial acquisition of practices in Texas, alleging these deals violated antitrust laws and inflated prices for patients. The federal agency also sued private equity investor Welsh Carson that funded these deals, known as "rollups," but a federal judge in Texas dismissed Welsh Carson from the case.

FTC Chair Lina Khan has argued such rapid acquisitions allowed the doctors and private equity investors to raise prices for anesthesia services and collect "tens of millions of extra dollars for these executives at the expense of Texas patients and businesses."

A National Bureau of Economic Research paper by researchers from Yale, Northwestern and the University of Chicago shows 18 metro regions where such serial anesthesiology acquisitions, known as "rollups," resulted in fewer provider choices and higher bills for consumers.

The tragic shooting of an insurance executive has highlighted the distinctive aspects of the nation's health care system.

Andrew Witty, the CEO of UnitedHealth Group, parent company of UnitedHealthcare, said in an op-ed Friday that the slaying of Thompson was "unconscionable." But he also acknowledged the flaws that so many Americans see in their medical care.

"We know the health system does not work as well as it should, and we understand people’s frustrations with it," he wrote.

Ken Alltucker is on X at @kalltucker, contact him by email at alltuck@usatoday.com.

(This story has been updated to add new information.)

This article originally appeared on USA TODAY: Seven reasons why Americans pay more for health care than any other nation

2024/07/11

SHIPT’S ALGORITHM SQUEEZED GIG WORKERS. THEY FOUGHT BACK

 SHIPT’S ALGORITHM SQUEEZED GIG WORKERS. THEY FOUGHT BACK

IN EARLY 2020, gig workers for the app-based delivery company Shipt noticed something strange about their paychecks. The company, which had been acquired by Target in 2017 for US $550 million, offered same-day delivery from local stores. Those deliveries were made by Shipt workers, who shopped for the items and drove them to customers’ doorsteps. Business was booming at the start of the pandemic, as the COVID-19 lockdowns kept people in their homes, and yet workers found that their paychecks had become…unpredictable. They were doing the same work they’d always done, yet their paychecks were often less than they expected. And they didn’t know why.

2024/05/14

Young People Finally Starting to Recognize the Super Rich and Not Oldsters Are the Problem

 Young People Finally Starting to Recognize the Super Rich and Not Oldsters Are the Problem

Now to the Financial Times sighting, that the young are finally realizing who their real enemies are.

When millennials first emerged, blinking, into the adult world in the 2010s, they quickly bonded over shared adversity….

It was a grim decade, but at least they had each other, and were united against a common foe in the shape of the wealthy, homeowning baby boomer generation…

as the targets of millennial ire increasingly recede from view, they may soon be replaced by another privileged, property-owning elite much closer to home: millennials who have benefited from family wealth….

In the UK and US alike, the average millennial had accumulated less wealth in real terms by their mid-thirties than the average boomer at the same age. But this aggregate picture obscures what is happening at the top end of the distribution.

In the US, while the average millennial had 30 per cent less wealth than the average boomer by age 35, the richest 10 per cent of the cohort are now about 20 per cent wealthier than their boomer counterparts were at the same age, according to a recent study by researchers in Cambridge, Berlin and Paris. Not all millennials are created equal.



2024/01/21

The Economists Who Found the Richest People of All Time

 The Economists Who Found the Richest People of All Time

Milanovic ends with Simon Kuznets (1901–1985), who after World War II noticed that income distribution was growing more equal not only in the United States but in other advanced industrial economies—the very thing Pareto had said could never happen. This reversed the trend toward growing inequality that had prevailed during the Industrial Revolution. Kuznets concluded that inequality followed a U-shaped curve, growing during the disruptive early period of industrialization but then shrinking after it matured. At some point, an industrial democracy would become so rich that productivity differences between industry and agriculture would diminish, a surplus of capital would drive down the rate of return, and society could afford to set aside funds for pensions and government programs like unemployment insurance. That was the mid-twentieth-century reality.

It didn’t last. In the late 1970s, incomes started growing more unequal, a trend that persists to this day. It took a while for economists to notice, partly, Milanovic says, because Kuznets had lulled them into complacency. But in 2014, Thomas Piketty came along to argue, in Capital in the Twenty-First Century, that r > g, where r is growth in capital and g is labor income or, more broadly, growth in the broader economy. The result is an ever-increasing concentration of wealth. The process has been reversed periodically by cataclysmic world events like the Black Death of the fourteenth century, which created a labor shortage that benefited peasants, and the two world wars of the twentieth century, which extinguished capital and finished off the aristocracy. But growing wealth inequality always resumed afterward. A cataclysmic event today on the scale of the two world wars would, of course, likely finish off human civilization altogether, leaving its impact on economic distribution moot.