"The most significant threat to our national security is our debt," Admiral Michael Mullen, Chairman, Joint Chiefs of Staff, August 27, 2010

Tuesday, November 26, 2013

Understanding Obamacare as an Entitlement

Last week, we presented an essay entitled – Understanding Obamacare as a Mandate.

Today, using government figures and projections we share with you the dollars and cents aspect of the Patient Protection and Affordable Care Act of 2009 (Obamacare) as an entitlement program. As with any entitlement program, there are at least three levels of costs to be considered:
·         The cost to taxpayers of the legislation in providing benefits to the beneficiaries (obviously)

·         The cost to taxpayers of the legislation in added bureaucracy (not quite so obvious)

·         And the cost coming from all those new services and products mandated by the law and provided by the vendors and suppliers who lobbied vigorously for the law.  The costs of these mandated additions, which we all pay for as we go, can be very difficult to determine. Think about a new car purchase - how much of the cost is coming from government mandated requirements???
Here is the link to the CBO analysis of the cost of Obamacare:  http://www.cbo.gov/publication/4417
Here is a summary of the CBO cost findings:
·         For the ten year period 2014 – 2023 the increased cost for the new beneficiaries is $1.798 trillion or $180 billion per year
·         During that period, new taxes, penalties and other receipts are projected to be $435 billion or $44 billion per year
·         Obamacare will increase the number receiving Medicaid and free children’s health care (CHIP) by an estimated 13 million individuals (new beneficiaries)
·         CBO projects that added bureaucracy cost (second bullet point above) at HHS and IRS – the two implementing bureaucracies will range, over this 10 year period, from $10 – 20 billion.  These costs are not included above.
·         Obamacare includes significant cuts to Medicare that have been estimated, over the 10 year period, to total $700 billion.  We cannot find any good source of specifics about these cuts.  In the past, previous Medicare cost reduction projections have not been realized due to a failure of congress to enact them.
·         Obamacare also included tax increases – mostly on high income taxpayers and added excise taxes on certain manufacturers and insurers.  These taxes and fees are projected to total $569 billion over ten years or $57 billion per year.
·         Here is a chart showing the increased net costs (remember, the government does not consider taxes a cost because they are revenues to them) in a February 2013 analysis and updated in May 2013 estimates (chart sourced at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf )

Now, anyone carefully following this disclosure of costs, “savings” and new taxes/fees can readily see that something very significant is missing.  It is the third bullet point in our opening paragraphs.  Obamacare includes all sorts of new mandated required “essentials” that are not added costs to the government but are added costs to those buying health insurance with their own money or their employers.
Who is going to pay for all the added costs to cover the mandated essentials?  Well the government estimates displayed above include the costs for those on the dole – you know them as Medicaid.  But for all the rest – the 240 million citizens who previously were acquiring health insurance policies that met their needs – the risks they wished to cover; the co-pays they could afford; the out of pocket expenditures that met their budget and the limits they were comfortable with; now are forced to buy coverage for all sorts of things they never sought previously.  All those costs, for the 240 million, as their premiums rise  – those costs are not included above.  No one estimated those costs.
If you have been following the rise in the stock market you know that the second highest performing sector this year is health care - up over 35%.  Health care costs will rise – rise magnificently – and the vast but shrinking middle class, as usual, will pay.  The question is – can Obama blame the republicans for this situation?  The other question is – will PBS, NBC/Comcast and ABC; CNN, Fox and CBS continue to not tell the truth – Obamacare is a massive government mandate but most importantly, it is an even bigger entitlement program and the winners are health care service providers. The stock market knows.  It likes new entitlement programs.  The bigger the better.  We hope you invested in health care stocks - a while back - may even be a good idea now. 

Wednesday, November 20, 2013

Understanding Obamacare as a Mandate

Here is the list of “essential benefits” that a health insurance plan must contain to meet the standards of the Patient Protection and Affordable Health Care Act of 2009 (ACA) which is commonly known as Obamacare.

 The essential health benefits package must cover the following general categories of services:
·                      Ambulatory patient services
·                      Emergency services
·                      Hospitalization
·                      Maternity and newborn care
·                      Mental health and substance abuse disorder services, including       behavioral      health treatment
·                      Prescription drugs
·                      Rehabilitative and habilitative services and devices
·                      Laboratory services
·                      Preventive and wellness services and chronic disease management
·                      Pediatric services, including oral and vision care

Each of those categories is subject to the following:
The scope of benefits is to be determined by the Secretary of HHS and equal to the scope of benefits under a typical employer-based plan. Nothing shall prevent a qualified health plan from providing benefits in excess of the essential benefits package.  

Source:  http://www.naic.org/documents/committees_b_Exchanges.pdf

That’s the government speaking  – to be defined as we go along – mostly by HHS secretary Sebelius and her successors.   Here is a explanation of the ten benefit categories:       
  1. Outpatient Care - Most health insurance plans cover this already.
  2. Emergency Room Services - Most plans cover this, but may charge extra if you go to a hospital that's out of their network, or go without pre-authorization. Obamacare plans don't charge extra.
  3. Hospitalization - Not all plans cover enough of this huge cost. Most people don't realize that a day in the hospital can cost between $2,000 - $20,000 a day. If you have a high-deductible plan, or a plan with a low maximum, you may be surprised by how much you wind up paying out-of-pocket. 
  4. Preventive and wellness visits, as well as chronic disease management - Preventive care visits have no copay. Obamacare requires that all 50 procedures recommended by the U.S. Preventive Services Task Force be covered as preventive services. These include well-woman visits, domestic violence screening, and support for breastfeeding equipment and contraception. 
  5. Maternity and Newborn Care - Maternity care is categorized as preventive care, and must be provided without cost. Most young people who don't have insurance will find this is a needed benefit if they become pregnant.
  6. Mental and Behavioral Health Treatment - This includes treatment for alcohol, drug and other substance abuse and addiction. Patient co-pays could be as high as $40 a session, and the number of therapist visits could be limited.
  7. Prescription drugs - Most plans offer this at a cost. All plans listed on the exchanges will include coverage of at least one drug in every category in the U.S. Pharmacopeia. Whatever you pay out-of-pocket for drugs will also count toward your deductible, which is not true for all insurance plans now.
  8. Services and devices to help people with injuries, disabilities, or chronic conditions - Most plans cover services and equipment to help you recover from temporary injuries, like a broken leg. Obamacare plans will also cover goods and services to help you maintain a standard of living if you contract a chronic disease, like multiple sclerosis.
  9. Lab tests - Obamacare plans cover 100% of preventive tests, but not ones ordered if you've already been diagnosed with a disease.
  10. Pediatric care - Most plans do not cover dental and vision care, which is covered by Obamacare plans. 

We offer this information as a basis for both understanding ACA and providing the background to grasp the significance of this change on health insurance premiums going forward.  This federal government mandate, ACA, and its "essential benefits package" presented above must be funded.  It will be funded by those who remain able to pay their insurance premiums - for themselves, their families and all others who cannot or will not pay.  It is no different than any other federal government "entitlement."

Tuesday, November 19, 2013

Exit reality

We are no longer seeking “accountability” and “transparency.”  They left town shortly after the final election results were posted in the fall of 2008.  The minute it was clear that Barack Hussein Obama II won the presidency – the media went euphoric.  Actually it would be more accurate to say, “They fell in love and smoke got in their eyes.”

They were smitten.   To some it was a youthful crush – the inability to see/think/relate to reality.  Some indescribable force had taken over their reasoning.  All they could do was float around in a dreamlike unconsciousness and swoon.  To others it was full blown adult passion.  Uncontrollable abandonment of their principles, if any; their training, if any; their objectivity, if any;  their actions.  Surging, pulsing, physiological passion demanding consummation.  Constant, continual, immediate fulfillment of their overwhelming desire to be near him; with him; around him; physically and emotionally and totally.   In his space.  Gushing.  Fawning.
All ages.  But mostly the women.  And the gays.  And the blacks – 90+% of the blacks knew that deliverance had arrived.  Those of us who had doubts can well remember the scene – giddiness.  Silliness. High hopes with expectations of “getting our piece of the pie.”  We even wrote, back then, in hip hop –  rap style, exactly that thought.  Please go to:  http://thefundamentalsus.blogspot.com/2009/03/march-madness.html
Why bother rehashing the trip down memory lane to this moment in time?  The congress has failed us – the supreme court is neither.  Neither a court; most certainly not supreme except in its own imagination.   It is a joke.
In less than five years we now see a man with no skill set.  No principles.  Not even interest in the job.  Just hanging out – day at a time – prancing around to carefully managed audiences – spreading the same rhetorical nonsense that got him where he is.  He rode in on that horse called “rhetoric” and he darn well intends to leave on it.  What else can he do?
What happened to his supporters?  In the media?  Dumbfounded.  Stunned.  Unable to recover from their shock.  Unable to turn on him less they lose all that they believed in – hoped for – lived for.  What do they do now?  Hang out at their fancy parties and commiserate?  That is no fun.  Pull down an extra martini or two – on top of the normal three and pretend?  Depressing.  Double up on their sexual affairs?  Start writing the books about their disillusionment?  Wait for someone else to do the first one?  Too afraid to be honest?  Take the heat?  But don’t wait too long – don’t want to be the last book out, or even in the middle of the pack, describing the rapid rise and fall of hope and change.
In less than five years, it’s gone.  What happened?
It was never there.  And they don’t get it to this day.  It never existed.  There was never any reality to this adventure.  It all existed in their imaginations.  Reality exited.
Watching it all carefully, from the shadows, is an old woman, wondering, “How do I make it work for me?”
Dare she call it what it is?
Not a chance.  She doesn't know.

Thursday, November 14, 2013

JFKennedy (1917 – 1963) – may he rest in peace, please

TheFundamentals routinely does research and analysis of fiscal and financial matters for our essays.  In this process, we are dismayed at the gap between information, facts, figures and tangible results and the common belief.  We call the latter, this concept of “common belief” – mythology.  Sometimes, when we can specifically trace it to one or two individuals, we call it – propaganda.

Here is an article written about Mr. Kennedy by an accomplished writer with some standing in the media world:   http://www.washingtonpost.com/opinions/robert-j-samuelson-the-jfk-fascination/2013/11/10/15ed8d30-48a3-11e3-a196-3544a03c2351_story.html?hpid=z2
Mr. Samuelson entitled his article – The JFK fascination.
Fifty years of fascination is long enough.  In America, as children, many of us retain a brief belief in various forms of fantasy offered by our parents, relatives and friends, as a form for them to keep alive the innocence and wonderment of childhood.  We know these beliefs as – Santa Claus, the Easter bunny, the tooth fairy and, up until a few years ago, Walt Disney productions.  Now it’s rap music characters, electronic games, an unattractive 20 year old girl and the fantasy twins – Obama and Bernanke.
Most of us grow out of this fantasy world; we have to.  We have to in order to survive.  The world does not pay us for teeth – keep them or lose them; there is no Santa unless you mean the vote buyers: Bernanke and Obama; there are no Tinkerbelle’s; no talking mice, ducks and goofy dogs.
Neither should there be nonsense about a young man brutally murdered by a miscreant with a gun the sights of which he was demonically able to line up with the young man’s head 50 years ago.
The mythology is not an accident and it is not the result of well wishing parents, relatives and friends seeking to bring joy and wonderment to youngsters as well as themselves.  It is a careful plan – well executed by a willing group of family members – who care more for their image than their country.  Once the mythology seed was planted by the circumstances, the manipulation took over.  The images were created and set by horrible actors and circumstances but the 50 year fascination is nothing more than propaganda promoted by politicians, media moguls and others who follow the simple logic of, “What’s in it for me?”
Sure we need heroes but we also need to survive.  He was not a great president. He was somewhere between middling and mediocre.” – RJSamuelson.  Almost makes one cringe doesn’t it?  To speak such sacrilege at this time of remembrance of all that could have been.  Blasphemy.  Desecrating the mythology of this heroic figure.
Well, Mr. Samuelson got it right.  The most significant consequence of Mr. Kennedy’s horrible death was five years of bad leadership, promiscuous governance and a very costly war all directed by his successor.  The LBJ legacy burdens America to this day.
We should mourn the tragic loss of the man but we should also, with definition and conviction, shun those who profit in any way from promoting it.  America is lost in the manipulation and malfeasance of those who profit from the book of America mythology.  The JFK fascination is but this week’s/months chapter in this growing volume of unreality replacing values; fundamentals; hard work; discipline.


Tuesday, November 12, 2013

Influence = Dollars = Deficits = Debt

It is staggering to see the power of Israeli influence on American governance; American foreign policy and the withdrawal of funds from the pockets of American taxpayers.  It is also almost heretical to even mention it.  This may explain why it is seldom discussed on TV, in print and by other media outlets and, in the one place where it should be front and center in debates – the American congress.

Here is an accounting of what America has provided Israel since its inception:
Source:  from an April 11, 2013 Congressional Research Service report titled "U.S. Foreign Aid to Israel". By Jeremy M. Sharp, specialist in Middle Eastern Affairs. 

Please note that most of this “aid” is for military purposes.  This is not humanitarian aid.
Here is a comparison of recent top aid recipients 2008 and 2012.  Since WWII, Israel has received more aid than any other recipient – substantially more.

As you know, America does not have this money – it is borrowed or just printed by Ben Bernanke, backed by bonds issued by Obama’s treasury department, delivered to the state department and electronically transferred to the recipients in many cases.  We don’t know much about where it goes after that.   Sometime taxes will need to be collected to settle the debt but today it is a simple Washington process – influence gets dollars which add to deficits that pile up as American taxpayer obligations.

Debt.  By the billions.

Wednesday, November 6, 2013

As Maine goes….

We use the first few words of the old saw – as Maine goes so goes the nation to head up this essay as a reminder that sometimes there can be a connection between what is happening to our entire country and what is going on within one state or, perhaps, a few.

What follows below is an informative chart of the bond ratings of the various 50 states from Standard and Poor’s over the period 2001 – 2012.  We offer this information for three reasons – one, informed Americans need to know and two, we doubt that you are going to get this information from a Hollywood media news report, even though we, at TheFundamentals, find this information of greater importance than news flashes about gay marriage, health care websites and government bureaucrats barricading public access to public owned facilities or propaganda pieces from Axelrod.  Here’s the chart:

There is a third reason why we offer this information – our president comes from Illinois.  He garnered his political  and governance education in Illinois.  Illinois is financially insolvent – they are not able to pay their current bills without borrowing money – meeting one of the key definitions of insolvency.  Several influential democrat party political powers are also from Illinois including senator Durbin, who has been a puppet for the Illinois (including Chicago and Cook county) machine politicians who have directed the Illinois bond rating collapse to the bottom of this chart.  It also is common knowledge that several California politicians exert great influence over fiscal matters in Washington DC.  They occupy the bottom rating of all 50 states.
These politicians do not concern themselves with bond ratings.  Obviously.  So the question we pose is this – as Illinois and California go, so goes the nation?
By the way, the hack politicians who ran Detroit into bankruptcy ignored bond ratings also.