Obamacare

The good news in the just released final Q2 GDP estimate soared by 4.6%, just as Wall Street expected, which was the biggest quarterly jump since 2011 Q4 2011, driven by gains in business spending, where mandatory forced Obamacare outlays led to a $17.5 billion chained-dollars increase in Healthcare spending to $1815.9 billion. Also helping were corporate profits which rose 8.4% in Q2, the most since Q3 2010, once again courtesy of adjustment in definitions (recall the IVA vs CCAdj change we discussed previously). 

What's the opposite of government efficiency? In a double-take-instigating headline, the federal government’s Obamacare enrollment system has cost about $2.1 billion so far, according to a Bloomberg Government analysis of contracts related to the project. BGOV’s analysis shows that costs for both healthcare.gov and the broader reform effort are far greater than anything publicly discussed. However, that pales into insignificance when considering health reform has cost American taxpayers $73 billion in the last four years... and counting.

Dr. Ezekiel Emanuel, brother of Rahm Emanuel, says that society would be far better off if people quit trying to live past age 75.  His new article entitled “Why I Hope To Die At 75” has the following very creepy subtitle: “An argument that society and families—and you - will be better off if nature takes its course swiftly and promptly”.  In the article, Emanuel forcefully argues that the quality of life for most people is significantly diminished past the age of 75 and that once we get to that age we should refuse any more medical care that will extend our lifespans.  This is quite chilling to read, considering the fact that this is coming from one of the key architects of Obamacare.  Of course he never uses the term “death panels” in his article, but that is obviously what Emanuel would want in a perfect world.  To Emanuel, it is inefficient to waste medical resources on those that do not have a high “quality of life”.  So he says that “75 is a pretty good age to aim to stop”.

• Thank you market Chief Risk Officer Bernanke/Yellen: Calpers to Exit Hedge Funds, Divest $4 Billion Stake (BBG)
• World stocks hit one-month low, caution ahead of Fed (Reuters)
• U.S. Efforts to Build Coalition Against Islamic State in Iraq, Syria Are Hampered by Sectarian Divide (WSJ)
• Time to throw away some more good money: Sears Borrows $400 Million From Lampert’s ESL Investments (BBG)
• Wildfires rage in California drought, hundreds forced to flee (Reuters)
• United Offers $100,000 Buyouts to Flight Attendants (BBG)
• Biggest Banks Said to Overhaul FX Trading After Scandals (BBG)
• You mean you have to pay? Administration threatens to cut off ObamaCare subsidies to 360,000 (The Hill)
• RBS Said to Dismiss Most of Team Overseeing Central Europe Debt (BBG) they will be hired by the ECB

If over the weekend we got some terrible economic news out of China, then overnight it was turn for a major disappointment in capital flows, when Chinese Foreign Direct Investment in August crashed by 14%, far below the 0.8% increase expected, attracting just $7.2 billion in FDI, and the lowest in four years. This once again sparked fears of a Chinese hard landing and sent the Shanghai Composite tumbling 1.82%, the biggest drop in six months. In addition to China, there was the German ZEW Survey, which while beating expectations of a 5.0 print, dropped from 8.6 to 6.9 in August, the lowest since 2012. In fact, the gauge has decreased every month since December when it reached a seven-year high. And while there is not much other news today ahead of the blitz assault of data later in the week, including the Fed tomorrow, the TLTRO announcement on Thursday and the Scottish referendum results and the BABA IPO on Friday, we are stunned futures aren't as usual, soaring.

Just when one thought the embarrassment for Obamacare, and its epically flawed website Healthcare.gov, which according to some accounts had over 100 million lines of code, the vast majority of which did not work as it is after all a government project, could not get any worse it just did following a report in the WSJ that the website which is reasonably expected to be the safest in the world (and at a price of over $500 million it should be the safest in the world) considering it holds not only the financial but personal and healthcare data of millions of Americans, has been hacked. According to the WSJ, a hacker broke into part of the HealthCare.gov insurance enrollment website in July and uploaded malicious software. And the punchline: neither the government, nor the security contractor, Blue Canopy Group, found out it had been hacked until two months later.

Since the inception of Obamacare, Humana up more than 440% because just as cereal manufacturers decrease their costs by putting less cereal in the same box, health insurers have raised the deductibles and co-insurance.

Although I never thought it was possible, it makes me angry to write this book review. I'm not angry because I don't like the book. On the contrary, this is the best economics book I've ever read. Indeed, it may be the best and most influential book I've ever read in my life. I only wish I had read it the moment it was published in April 2013. 

Remember all those allegations that Obamacare would be an unmitigated disaster for businesses, especially smaller companies? Well, now we have some facts. A week ago we noted that the Philly Fed found that Obamacare was a disaster for business, and now no lessor entity than the Congressional Budget Office (CBO) is out with its latest forecasts, concluding "certain aspects of the Affordable Care Act will tend to reduce labor force participation." While we already noted that 'work is punished' in America, it appears now that with Obamacare, non-work is actually incentivized.

According to government's own projections, the 'universal coverage' provided by the Affordable Care Act will still yield almost 4 million Americans who will prefer to pay an average tax of more than $1,000 to the government for 2016, rather than buying health insurance that year... and the total number of nonelderly uninsured Americans projected for calendar 2016 is some 30 million.

The Status Quo is dysfunctional because its model of how the world works is broken. It won't matter if gridlock remains in place or one of the parties gets to impose its "brand" of policy-tweaks; since no one on the political spectrum has any concept that the current model described in these 12 points is broken, fixing the political dysfunction won't fix the systemic dysfunction.

Remember all those allegations that Obamacare would be an unmitigated disaster for businesses, especially smaller companies? Well, now we have proof.

It appears Sen. Orin Hatch's comment that "everything from this ill-conceived tax's structure to its implementation has been a disaster," are coming true. As AP reports, an "Obamacare" tax on medical devices is falling short of its revenue target because thousands of companies aren't paying it, according to a government audit released Tuesday. An audit found the IRS received only 5,107 returns (against expectations of over 9,000) with a 24% shortfall in revenues. The tax is projected to generate $29 billion over the coming decade, so a 24 percent shortfall - if it were sustained - would be significant.