Financial topics

[Reality Check]

Policy prices that have already surged enormously

are going to continue to do so

This is not really true.

Not if you mean Premium Prices.

Increases in Premium Prices in the Private Insurance market dominating, Employer Based Private Insurance sub-market, have been non-existent or very moderate.

Increases in annual individual patient ( and family ) deductibles on the other had have been enormous
and are nothing short of a massive transfer of health care costs from employers to employees.

Media coverage of the much smaller individual private insurance market has demonstrated just how non-existent the Obamacare limits are on how high an employer, or a private insurance company, can raise annual deductibles and co-pays and still have insurance coverage that qualifies as ( quality, affordable health care ) under federal law.

[Higgenbotham]

Since about 2010, normal economic relationships have taken a back seat to ever larger monetary policy interventions. The correlation between reliable leading measures of economic activity and subsequent job growth and GDP has dropped not just to zero but to negative levels (see When Economic Data is Worse Than Useless). Similarly, extreme overvalued, overbought, overbullish syndromes, which throughout history have been closely followed by severe losses, have instead been followed by further speculative gains (he is referring to the stock market). The question is whether this reflects a permanent change in economic dynamics, or a temporary overconfidence about the effectiveness of monetary policy.

To address this question, a proper understanding of the credit crisis is essential. Much of the present faith in monetary policy derives from the belief that it was the central factor in ending the banking crisis during what is often called the Great Recession. On careful analysis, however, the clearest and most immediate event that ended the banking crisis was not monetary policy, but the abandonment of mark-to-market accounting by the Financial Accounting Standards Board on March 16, 2009, in response to Congressional pressure by the House Committee on Financial Services on March 12, 2009. The change to the accounting rule FAS 157 removed the risk of widespread bank insolvency by eliminating the need for banks to make their losses transparent. No mark-to-market losses, no need for added capital, no need for regulatory intervention, recievership, or even bailouts. Misattributing the recovery to monetary policy has contributed to a faith in its effectiveness that cannot even withstand scrutiny of the 2000-2002 and 2007-2009 recessions, and the accompanying market plunges. This faith is already wavering, but the loss of this faith will be one of the most painful aspects of the completion of the present market cycle.

The simple fact is that the belief in direct, reliable links between monetary policy and the economy - and even with the stock market - is contrary to the lessons from a century of history. Among the many things that are demonstrably not true - and can be demonstrated to be untrue even with simple scatterplots - are the notions that inflation and unemployment are negatively related over time (the actual correlation is close to zero and slightly positive), that higher inflation results in lower subsequent unemployment (the actual correlation is positive), that higher monetary growth results in subsequent employment gains (the correlation is almost exactly zero), and a wide range of similarly popular variants. Even "expectations augmented" variants turn out to be useless. Examining historical evidence would be a useful exercise for Econ 101 students, who gain an unrealistic sense of cause and effect as the result of studying diagrams instead of data.

http://www.hussmanfunds.com/wmc/wmc131021.htm

[Reality Check]

... for the
reason that you say: That the damage from Obamacare is already locked
in, and it will take a year or more for them to recover.

In regards to what I said,

I certainly did not mean to say that we were going to start getting better in a year, or ever for that matter.

What I meant to say is that the damage done to the Employer Based Insurance market, for annual policies providing benefits starting January 1st, 2014, were locked in when those plans were finalized in late 2012 and early 2013.

The damage that will be done starting January 1st, 2015, has been locked in already, or will be locked in during the next couple of months. Large companies plan in advance.

When I was looking a year out from now, I was anticipating things getting worse until at least January, 2017, but the current race to the bottom by big employers health plans, is locked in through at least January, 2016, even if Obamacare was repealed in it's entirety tomorrow.

When I talk about damage done, I am talking about the massive transfer of health care costs from the employer, to the employee. From the employer point of view this could be considered a positive reduction in benefit costs to the employer and a positive increase in profits.

I strongly disagree that large employers in the United States are going to reverse the higher deductibles and higher co-pays. Ever. They will blame these changes on Obamacare, in private, if pressed and will never take responsibility for rolling them back.

[Reality Check]

I'm still comparing what's going on now to what happened in 1974, when
Nixon's wage-price controls were spiraling out of control. Remember
that Nixon's controls were supposed to LOWER the inflation rate from
4% to 2%, but instead RAISED the inflation rate to 12%. There was no
intrinsic reason why the controls couldn't have continued a year or
two longer, but they were ended by massive POLITICAL pressure because
everyone, even their supporters, could see what was going on.

So there may be no intrinsic reason why Obamacare can't go on for
another year or two, but when I say it's coming off the rails, I'm
talking about a massive political collapse, because everyone can see
the disaster unfolding. When I said that I don't think Obamacare can
last more than another month, I said that because of the political
backlash, which is growing very rapidly. If the web site isn't
"perfect" on November 30, and I don't see how that's anywhere close to
being possible, then I expect the political collapse to be very rapid
after that.

This is a political and generational analysis, and if the politics and the generations were the same I would agree.

But they were not, and are not.

The U.S. Senators in 1974, had been elected in 1972, or before, and the Senate was full of the Greatest Generation and the Silent Generation. Baby Boomers were too young.

Only Baby Boomers born before November, 1947 could have been elected in 1972, so the House of Representatives was also dominated by the Greatest Generation and the Silent Generation in 1974.

Only the most junior members of the Nixon administration were Baby Boomers.

Today the Senate and House are dominated by Generation X and Baby Boomers with some Millennials as the most junior members.

Today the executive branch is dominated by Generation Xers including the President.

*** 1974 Death of Failed Wage and Price Controls ***

The party controlling the Executive Branch in 1974 were the Republicans with the decisions makers being The Greatest Generation and the Silent Generation. The Democrats controlled the House and the Senate.

The center of the Republican Party were traditional pro-main street and pro-wall street conservatives. Nixon was more pragmatic, and more self serving to himself, and willing to try things that he believe would work for his political goals.

When it became clear wage and price controls were working for neither the party, nor the country, the Republicans killed them by executive action and executive in-action. The vast majority of the Republican party was against them on ideological grounds anyway.

*** 2013 Failure of Obamacare roll out ***

The party controlling the executive branch is the Democratic Party. Democrats control the Senate and Republicans the House. The Democrats in the Senate led by Harry Reid have been politically kicking the House's A**.

The modern Democratic party is split between two ideologies - those that believe in the federal government taking over the delivery of Health Care directly and abolishing Health Insurance companies - and those that believe the government should indirectly control both the Health Care Industry and the Health Insurance companies via federal government regulation with the added benefit of being able to blame the industry and also obtain political contributions from the industry.

The Generation Xers who control both the Executive Branch of government and the Democratic party do not believe they will be held accountable for their actions or their statements. They were shocked by the 2010 elections and their solution was to stonewall, lie more, personally attack their enemies more ruthlessly, and avoid accountability at all costs. This worked well for them in the 2012 elections.

Given the generational differences alone, I see no possibility that the Democratic party is going to do anything but double down on lies, double down on personal attacks against anyone who disagrees with their political spin regarding Obamacare, and double down on doing whatever it takes to avoid responsibility for their own mistakes.

These politics worked for them in 2012, and they we be pushing for a repeat in 2014.

The current Generation X, President: Obama. Has had no problem with issuing executives orders that he has no legal authority to issue, and which also contradict existing federal law. Two Examples: The Dreamer Executive order and The Recent Executive Order delaying the Obamacare Employer Mandate for one year.

Any minor changes that Obama chooses to make, such as changing the law to allow people to go without insurance for five ( 5 ) months in 2014, rather than only three ( 3 ) months, without invoking the federal penalty of 1% of gross income, he will simply make without following the law. Obama has issued executive orders before, without any legal authority to do so, and it is more than reasonable to assume he can get away with it again. Executive orders "fixing" Obamacare minor problems ( such as keeping your own doctor ) and adding additional, unrelated government powers too Obamacare, should be expected as long as Obama remains in office.

Even if the Democrats lose decisively in the 2014 election, Obama can be expected to manage any changes to Obamacare by executive order for the remaining two years of his Presidency, without negotiating with anyone.

[aedens]

http://www.zerohedge.com/news/2013-11-0 ... wn-not-out

[Reality Check]

The exchanges seem like a good idea to me, including the
standardized policies.

My turn to ask: Everything OK ?

The standardized policies have exactly the same problems you pointed out in your posts about the wage and price controls.

Some small group of people, sitting around in Washington DC,

many of whom know nothing about the industry they are making up detailed rules for, are substituting their judgement for the judgement of the market, and also for the judgement of experts who do that for a living.

These individuals are subject to whims of their political bosses, and also to the whims of special interest lobbies who influence their political bosses, and often the special lobbies influence the individuals making the decision, simply because he/she, the special interest lobbyist, has expertise the individuals making the decision need.

For example: Habitual, long term, illegal users of heroine and cocaine, are entitled to the lowest cost premiums for their age group, on the other hand an individual of the same age, in perfect health is subject to a 50% increase if he / she has smoked cigarettes anytime in the last 10 years.

Another example: Annual Deductibles of $5,000 per individual per year, and deductibles of $10,000 per year per married couple, as part of a comprehensive health insurance policy ( not a catastrophic health insurance policy ) are considered insurance plans that provide ( quality, affordable health care ) according to federal laws and federal regulation. Just such a nameless group of people in Washington DC came up with those standards for Obamacare.

Winners and loser being chosen because of whims of the political elite in Washington DC, influence of the wealthy special interests, and ignorance on the part of a nameless federal bureaucrat located in Washington DC.

This seems like a good idea ?

[John]

I wasn't thinking of it that way. I was thinking more along the lines
of how my car insurance works.

Each year my policy comes with a cover letter containing a standard
list of things -- "compulsory bodily injury", "personal injury
protection," "property damage", "auto medical," "uninsured motorists,"
etc. There are about 20-30 of these. Each has a precise meaning, and
the cover letter lists the coverage limit in each category.

So it would be nice to have a similar cover letter come with health
insurance, listing about 20-30 categories, and the coverage and
deductibles for each. Whether you get a cheap policy or a cadillac
policy, the cover letter looks the same, except for the filled in
amounts. That would be nice.

[Reality Check]

Blue State - Best Obamacare State Exchange
Largest Individual Insurance Market before Obamacare
Lady With Pre-Existing Condition is Saved By Obamacare - Right ?

Before the Affordable Care Act, health-insurance policies could not be sold across state lines; now policies sold on the Affordable Care Act exchanges may not be offered across county lines.

Everyone now is clamoring about Affordable Care Act winners and losers. I am one of the losers.

For a cancer patient, medical coverage is a matter of life and death. Take away people's ability to control their medical-coverage choices and they may die. I guess that's a highly effective way to control medical costs. Perhaps that's the point.

Cancer Patient - Keeps Same Individual Insurance Policy for 7 years After Cancer - Loses to Obamacare
http://online.wsj.com/news/articles/SB1 ... 0423780446
or
http://www.fireandreamitchell.com/2013/ ... -obamacare

[aedens]

After you, I am fine and getting over a sinus problem lately.

[aedens]

http://www.foxnews.com/opinion/2013/10/ ... c-success/

http://patdollard.com/
My grievance is not political; all my energies are directed to enjoying life and staying alive, and I have no time for politics. For almost seven years I have fought and survived stage-4 gallbladder cancer, with a five-year survival rate of less than 2% after diagnosis. I am a determined fighter and extremely lucky. But this luck may have just run out: My affordable, lifesaving medical insurance policy has been canceled effective Dec. 31.

http://www.breitbart.com/Big-Government ... -Tea-Party

As you note correctly RC "Many different things could happen in the next 30 days."
With this many moving parts nothing will happen with the solution already in place decades ago.
http://libertyblitzkrieg.com/2013/10/30 ... -problems/

I lived in England – the NHS worked just fine, but now it’s being dismantled.
What Americans are already paying into Medicare would have them fully covered for life in any other first world country, without the immense bureaucracy..
The ACA is nothing less than a colossal tax levied upon the people. It’s also a data mining scheme.
http://jessescrossroadscafe.blogspot.be ... ssism.html
http://www.zerohedge.com/news/2013-11-0 ... -61-charts
http://traderdannorcini.blogspot.com/
http://www.eia.gov/todayinenergy/detail.cfm?id=13471
http://online.wsj.com/mdc/public/page/2 ... mdc_leader

keyword: tobin yellen stagflation bulldozing goldsmith