Forget Obamacare. Maybe we should call the new health insurance program “Obama-Bail!”
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MARKET ROUNDUP
Here’s a quick recap of the important news of the day …
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  Stocks came out of the gate strong, with the Dow Industrials powering higher ahead of the release of the latest Federal Reserve board meeting minutes. Then stocks tacked on a few extra points afterward, thanks to the dovish tone of the comments. Total rise for the day: 159 points.I say that in the wake of blockbuster revelations in the Los Angeles Times today. The newspaper reported that the Obama administration modified certain provisions in the Affordable Care Act to allow for a backdoor, multi-billion dollar bailout of insurance companies! Specifically, insurers will potentially be able to collect billions of dollars from Uncle Sam if they agree to keep near-term premium increases tame … but end up losing money on the back end because the cost of providing care proves too expensive.
Here’s more from the Times …
“The stakes are high for President Obama and the healthcare law.
“Although more than 8 million people signed up for health coverage under the law, exceeding expectations, insurance companies in several states have been eyeing significant rate increases for next year amid concerns that their new customers are older and sicker than anticipated.
| “I may not have a Ph.D. in health care economics. But I sure know what I’m seeing in my everyday life — higher premiums …” |
“Insurers around the country have started to file proposed 2015 premiums, just as the midterm campaigns are heating up. Obamacare, as the law is often called, remains a top campaign issue, and big premium increases in states with tightly contested races could prove politically disastrous for Democrats.
“If rates go up dramatically, consumers may also turn away from insurance marketplaces in some states, leading to their collapse.”
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| Is the cost of Obamacare worth the benefits? |
Look, I’ve heard, seen and read plenty of arguments about the pros and cons of Obamacare. Backers say it’s helping get the poor and uninsured the care they need, and will ultimately help control spiraling health care costs. Opponents counter that it’s an out-of-control, wildly expensive and incredibly complicated program that puts yet another corner of the economy under de facto government control.
I may not have a Ph.D. in health care economics. But I sure know what I’m seeing in my everyday life — higher premiums, higher copays, higher deductibles, increasing co-insurance payments and more.
We just had our yearly benefits meeting here at Weiss Research. Our insurance advisor had some stark, blunt warnings about what he’s seeing in the marketplace: All the mandates, taxes and associated Obamacare provisions are driving costs and premiums much higher. That’s translating into double-digit premium increases throughout the marketplace, and it’s not going to get better anytime soon!
I’m on the cheapest plan my company offers, an HMO. I’m also fortunate that my employer is very generous in subsidizing care. That means in absolute dollars, I’m not paying much. But you want to guess how much my per-paycheck premium is going to increase next month on a relative basis? Try almost FIVE-FOLD!
Does that sound like a good thing for our economy to you? It sure doesn’t to me. Spread those kinds of increases around the American public and you’re talking about big money.
So what’s your take? Can our economy handle much higher health insurance premiums? Is the cost of Obamacare worth the benefits? Do you think insurers should be able to line up for multi-billion bailouts just like the banks did a few years earlier … or can that money be better spent elsewhere?
Let me know at the blog!
| OUR READERS SPEAK |
Lots of you were energized by the discussion on China and its relationship with our country. Reader Chuck B. notes the relative difference between the backgrounds of key Chinese or Russian leaders and leaders here, and how that can color policymaking decisions:
“Our politicians mostly begin as lawyers. The business of lawyers is predicated on looking for loopholes in law that may be used for the benefit of the lawyer and/or his/her client. As legislators or advisors, they make sure the laws they initiate have such loopholes that may be to their advantage if they lose their elected or appointed positions.
“In China or Russia, many politicians begin their careers in the military, though. They do not think in exactly the way that our politicians do. They are quite able, though, to use our laws to their advantage when dealing with our politicians — if they understand the laws correctly. That could lead to dangers our politicians may not be able to handle well. Wars can and do result from misunderstanding.”
And Reader Bill S. boils the tension between our countries down to a simple explanation:
“Come on guys, China is a Communist country. Enough said.”
As for flying, it sounds like many of you agree with my assessment — it is nowhere near as pleasant an experience as it was years ago. Reader Tom put it this way:
“Air travel better today? I started flying in 1965. I fly from South America or North America to Asia and back six times a year. Anyone who thinks that air travel is better today is just an idiot or someone who owns a lot of airline stocks or has some other vested interest in the industry.”
I couldn’t agree more! My wife and I flew back and forth from her home in Chicago to mine in Florida many times when we were dating long-distance. I lost count of how many fees we had to pay, how many times we dealt with bad service, and how many delays we experienced for one reason or another.
Heck, I once had the “pleasure” of being diverted to Augusta, Georgia, on a flight out of West Palm Beach. I spent several hours waiting there for an updated connection, only to eventually get bused to Atlanta. Since there were hundreds of others in the same boat, and since I was re-booked on a morning flight, hotels weren’t an option. So instead, I got to sleep on a bagel store bench, using my laptop bag as a pillow … before finally making it to Chicago the next day.
Good times for sure! If you’ve had any similar experiences — with lousy service, abysmal delays, or more, feel free to share ’em on the blog.
| OTHER DEVELOPMENTS OF THE DAY |
  The U.K. just reported a blockbuster retail sales number. That comes on the heels of other data showing a strong housing market, decent production, and increasing inflation. So basically throw out all that “low rates, more QE forever” garbage the Bank of England was spewing several months ago! It will probably be the first major developed-world central bank to hike rates!
Reminder: If you have any thoughts to share on these market events, all you have to do is hop on over to the blog and leave your comments.
Until next time,
Mike Larson
