In March 2010 I wrote a clear-headed and logical article on Obamacare.
Here is part of what I stated two years ago:
In the end, Obamacare will deliver more debt, less competition, more bureaucrats, less service, higher insurance bills, and an ever-climbing burden on the middle class.
After inflation, the new “rich” middle class will pay for the slackers — including their own offspring — who won’t be able to afford insurance because of ever-climbing college tuition bills and massive unemployment.
The rich will fly to Costa Rica or India to get top-notch resort health care from former Johns Hopkins doctors who simply return home for more pay and less red tape…
The young will pay the $450 fine to opt out, and then call an insurance company on the way to the hospital’s using the “no pre-existing conditions” exclusive hotline…
The working class will see its coverage cut entirely by their employers and spend countless hours with their sick, crying children, waiting in HHS offices for some type of certificate…
You can read the whole thing here.
People didn’t want to hear the truth, and I took some heat for telling it straight. I got quite a few irate responses…
Julius Feinleib wrote:
I hope you are not as sick as the vile bile you excreted in this article indicates. It would be a shame if you had to deal with your friendly insurance company to cover your sour-grapes spewing.
“Friendly insurance company”? That’s a good one, Jules.
DorianGray wrote:
Don’t listen to this drivel people! It’s so sad that these opinions are even being allowed to be heard. Well, I suppose everyone needs to be heard but such… small-mindedness! We’ve seen it all through this process, but it’s disconcerting that these people are giving investment advice. UNSUBSCRIBE!! Do not let these people poison your views of what’s great about what just happened. Go away Wealth Daily! Who needs your negativity?!
Heh.
Burt wrote:
Poor Americans, heading down the pommie and aussie road of 2nd rate service and government employees “running” the whole sorry mess into the ground. Meanwhile the chinese, vietnamese who do not have such a wonderful health care system will be forging ahead whilst you go belly-up and begging. Sad really, but Obama will see to it that America is well and truly f…..!!
Amen, Burt.
Giveaway to Insurance Companies
Two years ago, I assumed the insurance companies would be the net beneficiary of Obamacare.
After all, 40 million people who weren’t on the roles would now be forced to buy, and they were actively lobbying for the bill.
But the case study from the Romneycare health insurance mandate in Massachusetts is proving that isn’t the case…
The insurance companies didn’t win at all. People game the system. They will go on insurance just before they have a major medical expenditure — surgeries, cancer treatments, pregnancy and childbirth, and whatnot are predictable and scheduled — and quit after it’s over.
It’s called the pre-existing condition clause: Patients subscribe to insurance before a major health care cost and then cancel a few months later.
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People Aren’t Stupid…
As the Wall Street Journal reported in July of 2009:
Charles Baker, the former Massachusetts gubernatorial candidate and CEO of Harvard Pilgrim stated that Harvard Pilgrim had seen an “astonishing” uptick in people buying coverage for a few months at a time, running up high medical bills, and then dumping the policy after treatment was completed and paid for.
Harvard-Pilgrim estimated that between April 2008 and March 2009 about 40% of its new enrollees stayed with it for fewer than five months and on average incurred about $2,400 per person in monthly medical expenses. That’s about 600% higher than Harvard-Pilgrim would have otherwise expected.
Obviously, this costs the insurance companies more money. The cost is passed on in terms of higher premiums, lower profits, and poorer service.
While it is true that insurance coverage of more Massachusetts citizens has been achieved, any cost savings have been illusionary.
Premiums continue to climb at 10%-12% a year, and the fiscal strain ($2 billion) might bring an end to Romneycare at some point.
(You notice that Mitt doesn’t mention his crowning achievement as governor for the Bay State on the campaign trail.)
Health Care Sector Flat
The most surprising thing is that the market isn’t moving despite a great deal of news coverage that Obamacare is losing its Supreme Court trial.
The Associated Press said: “ObamaCare has a Disastrous Day in Court.”
Even the hippie bastion of liberal thought, Mother Jones, calls it a disaster:
Solicitor General Donald B. Verrilli Jr. should be grateful to the Supreme Court for refusing to allow cameras in the courtroom, because his defense of Obamacare on Tuesday may go down as one of the most spectacular flameouts in the history of the court.
And yet, after plowing through the twenty or so segments of the health care sector this morning, nothing is moving.
The major mover, the Wholesale Drugs segment, is up less than a percent — with HealthWarehouse.com (HEWA.PK) being the big winner (it’s up 12.28%). But it’s a penny stock, so it could have moved up on anything.
GE is down less than 1%, despite CEO Jeff Immelt going on all the talk shows and pumping Obamacare a few years ago.
Only one health care ETF (the one I mentioned in my original article), Dow Jones U.S. Healthcare Sector Index Fund (AMEX: IYH), has a hint of worry.
The fund saw $23.1 million dollars in outflows last week. That’s equal to 3.7% of its value. And yet the ETF is only down 0.15% this morning.
It seems impossible that the looming failure of the biggest piece of legislation in a decade wouldn’t move the market… but there it is.
To your health and freedom,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
