Category Archives: Commentary

Obamacare Announces Yet Another Delay

After delaying Medicare cuts until after the election and then delaying the employer mandate, followed by delayed enforcement of a number of key eligibility requirements for the law’s health insurance subsidies, now comes word that another costly provision of the health law—its caps on out-of-pocket insurance costs—will be delayed for one more year.

Limits on out of pocket costs are good and bad for the consumer.  They are good in terms of limiting exposure to large expenses, but they also add premium cost to the plan – a LOT.

The administration is finally figuring out what the insurance industry has known for decades – you can’t have your cake and eat it too.

There are costs associated with all of these great benefits that Obama, Pelosi, Reid and other Democrats seem to think we can’t live without.  Money doesn’t grow on trees.  Policyholders are the ones who fund insurance contracts.  Those dollars don’t grow on trees, and every time you mandate more benefits, someone has to pay for those benefits, and that’s the policyholders.

Make that, the taxpayers.

Why the Democrats couldn’t see this coming is beyond belief.  They just had to rush something into legislation – anything, in order to claim a legislative victory.

Well, they got it.  And now we’re all going to pay for it.

Later, rather than sooner, apparently, as delay has become the name of the game in Washington.

Imagine that.

 

Healthcare reform: Winners and Losers (so far)

I will update this article as new info comes to light.
CDR
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Often, the most important thing to do during times of government intervention is to identify the unintended consequences. Unfortunately, big government has never been able to live up to its idealistic agenda. This health care reform will be no different. Now that we’ve had a chance to digest the legislation, here’s an overview of the winners and losers.

WINNERS

1. Health Insurance Companies. The recession created quite a dilemma for insurance companies. As consumers dropped their coverage the premiums were set to skyrocket among the remaining pool. Insurance companies were being forced to raise premiums by as much as 40% later this year because of the profit squeeze. That all changes now. With a government mandate to increase the pool by 32 million people, insurance companies like Wellpoint (WLP) and United Health (UNH) will benefit. Buy stock and profit, my friends.

2. Hospitals. Hospital occupancy will max out when we add 32 million people into the system. Hospitals will be expanding. Hospitals will see huge revenue increases. This is where the unintended consequence of government inefficiency will really manifest itself. Ideally, the government will try to squeeze profit margins of the hospitals but will this really happen? Will costs really get cut? If history is a reliable guide, costs will actually go up in the absence of a competitive market. Government will not be able to effectively allocate the resources, hospitals will be flooded with patients, and costs will be higher than anticipated for taxpayers. This is good news for companies like Tenet and Lifepoint.

3. Pharmaceuticals. These guys came out unscathed, literally. Doctors will prescribe and insurance will pay. Generics will become even bigger. Companies like Teva (TEVA) will thrive. Longterm, there is some concern about price controls being imposed against brand name drugs. It has happened in Europe – it easily can happen here. In the meantime, load up on pharma stocks.

4. Lawyers. The uninsured have high expectations as they head into the doctors office. The increased volume of patients should have coincided with tort reform but it did not. Too bad there isn’t a way to buy stock in litigation firms.

5. The uninsured. The 32 million people who now have access to health insurance are the big winners. President Obama risked political suicide for himself and for his party to get this reform. My perception is that Obama would have preferred to wait until the economy was further along in its improvement but he had to act now because of the November elections. Helping these 32 million uninsured is his stamp on U.S. history. The question is, can we afford it? Social security is a mess. Medicare and Medicaid are a mess. Can the United States afford another entitlement program? During times of economic prosperity we will be fine but what about the next big recession? The universal healthcare burden potentially could take us out.

LOSERS

1. Doctors. Doctors become de facto government employees. The unintended consequence is that they will be even more overworked and more underpaid. Their job description will change. It will include less time with patients and more time supervising nurses and Physician Assistants. Doctors will also be the direct recipients of the lawsuits Congress opted not to curb. Say goodbye to the good old days Doc.

Prepare to see an alarming number of physicians LEAVE THEIR PRACTICES while simultaneously, fewer and fewer students opt to attend medical school. This combination will create growing shortages of practitioners and longer and longer waiting lines for people who need medical care.

2. Previously insured patients. So, you like lines? Like when you when to the bank to make a routine deposit and you have to wait 40 minutes to see a teller? Great! You’ll love the effect of Obamacare!

Get used to lines, lines and more lines. Adding 30 million consumers to a system that was already under pressure is an unworkable task. It could work if we simultaneously used stimulus money to increase medical capacity for 30 million new patients but I haven’t heard about that plan, have you? The quality of care will go down and the quantity of care will decrease in frequency as well. If you want an appointment, be prepared to wait several weeks – or months.

3. Industrials. Businesses are now forced to provide health insurance or else they will get fined. This is no big deal for companies who are flush with cash and have high profit margins (tech companies) but it is a strain on those who are struggling to compete internationally. We already heard from the CEO of Caterpillar (CAT) voice his opposition to the reform – CAT has already started laying people off as a direct consequence of this so-called “reform.” I expect we will hear more from similar companies who are now at a competitive disadvantage with overseas counterparts who don’t have the same health care requirements.

4. Taxpayers. Obviously the high income bracket will get hit along with investors but it would be naive to think that the burden will remain contained to these groups. Of course, costs come down dramatically. You know, like they have in Massachusetts. Ha! What a joke. Did nobody bother to look at the actual effects of mini-Obamacare in Ted Kennedy’s home state? Apparently NOT. Some – ok, many – uninformed people (including most members of Congress) seem to think that it’s all ok because big companies will be paying lots of the tax increases. Guess again. When a company has a tax hike, guess what happens? They increase the cost of their goods or services, meaning YOU and ME actually end up footing the bill indirectly, in addition to the direct tax increases we also will see.

5. The unemployed. The incentive to hire new employees just disappeared. Corporations will find loopholes to avoid the medical insurance requirement. We will see a rise in temp workers and contract workers. The day and age of full-time, salaried, employees is coming to an end.

And finally, the biggest loser of them all: People who buy their own individual health plans.

Seriously. Costs are going to SOAR on these plans, folks. Why? Because insurance companies are being required to “insure” all comers – that word is in quotes because it is no longer insurance. Now, it is socialized financial coverage. Being forced to ensure everyone with diabetes, everyone who had a heart attack 3 months ago, everyone who is obesely overweight, etc., dramatically increases the risk to the insurance companies. The only way to compensate – is to raise rates. But now they have the green light to do so.

Just watch. People like you (and me) who have paid premiums throughout the years are going to be the biggest losers in the lot. Our premiums will soar – through no fault of our own. And we are the ones who have been doing it right for years and years.

Obamacare – set to take us right down the toilet?

I love it when someone else says exactly what you’re thinking. That way, you can just quote that person and nobody is really mad at you.

In an article published on Fox News the day of the health care “reform” vote, Cal Thomas posits the implausible: That Obamacare will spell disaster for the country.

Highlights made by Mr. Thomas include the following:

  • Obama is not being truthful when he claims a $1.3 trillion reduction in the deficit.  Surely he must know that money “saved” from Medicare cuts will be spent elsewhere.  Only in Washington is a dollar spent considered a dollar saved.
  • The Gov’t plans to limit to ONE the number of tests your doctor will be allowed to run in most instances.  Why? On paper, this saves money.  In the real world, this leads to misdiagnosis and a reduction in the quality of care. Didn’t they say they were going to “improve” health care?
  • Forcing doctors to run less tests inevitably will lead to more, not less malpractice claims.  NOTHING is in this monstrosity of legislation to curb runaway malpractice insurance costs for doctors.
  • Obama promises you can keep your doctor, but what if your doctor is forced into selling used cars or something else?  More and more cuts in Medicare mean less, not more income.  They’ll want your doctor to see more and more, not less patients.  It all adds up to a recipe for disaster.  And who in their right mind amongst the talented will want to go into medical school now?   Look for a surge in enrollment – in MBA and law programs.
  • This national “plan” has already been tested – in Massachusetts, where it turned into a debacle.  Guess which state has the highest per capita health care? Yep.  Massachusetts.  Also the only state with mandated coverage.  See the correlation? According to an independent study by the Rand Corp., health care costs in Mass. are expected to double by 2020, increasing faster than 8% over the state’s GNP.  Brilliant.  Just brilliant.
  • Obama claims this legislation will increase jobs.  Caterpillar disagrees.  That company – one of the 30 Dow component companies – has already started laying people off in anticipation of escalating health care costs.  By its own estimates, the legislation will cost the company at least $100 million.  That ain’t chump change, not even for a Dow company.
  • It all kind of makes you wonder, doesn’t it? Just how many of those Democrats actually read the legislation before voting on it? Or were they just taking the Speaker at her word?