Obamacare Disaster Scares Labor Force

Conservatives told you so!! An article on Motley Fool by Sean Williams


There isn't much that the stock market dislikes more than uncertainty; and there are few pieces of legislation to have worked their way through Congress with more question marks than the Patient Protection and Affordable Care Act, known also as Obamacare.

This health reform bill, which will greatly expand the number of insured individuals in the U.S. while also capping insurers' profits, is set to go into full effect in just under six months... or so we thought.

A crushing blow to the U.S. labor force

Having just this weekend examined the merits of whether the federal government was ready to handle the technological, staffing, and educational aspects of setting up the complex health insurance data center and leading 34 separate state health exchanges, we received what I consider to be devastating news last night from the White House. According to the Obama administration, it will be announcing later this week a postponement to the health care law requirements (known as the employer mandate) for medium-to-large business for one additional year, until Jan. 1, 2015.

If you recall, as part of Obamacare, businesses with 50 or more employees are required to offer health care options to their full-time employees (defined under the PPACA as working 30 or more hours). Although these businesses aren't obligated to pay a cent of their employees' health care premiums, if the costs of their employees' premiums tops 9.5% of their income, the business is penalized between $2,000 and $3,000 on a per-employee basis.

The prospect of this penalty sent shockwaves throughout the large business sector and prompted job and hour cuts across a number of industries. Regal Entertainment (NYSE: RGC ) , the nation's largest movie theater operator, slashed weekly hours for thousands of its employees and squarely blamed Obamacare for the cuts. Medical device maker Stryker (NYSE: SYK ) took a slightly different approach but delivered similar end results. Because of the 2.3% medical device excise tax, which will be used to help fund the Medicaid expansion, Stryker shed 5% of its workforce in order to save more than $100 million annually.

The decision to give medium-to-large businesses an extra year to prepare was summed up by the Associated Press, which had been in discussion with White House advisor Valerie Jarrett, as: "She [Jarrett] said since enforcing the coverage mandate is dependent on businesses reporting about their workers' access to insurance, the administration decided to postpone the reporting requirement, and with it, the mandate to provide coverage."

While the explanation by Jarrett makes sense, the only reward here is for U.S. businesses, which will get another year of potentially full-time employment from their workforce. In return, the U.S. labor force gets another 18 months of uncertainty as to how their employer is going to handle the implementation of Obamacare. Although I noted a study a few months ago that showed only 11% of employers had altered their hiring habits, or planned to cut hours or jobs in anticipation of Obamacare, if any of these employers are big corporations, then we could have a very large problem on our hands.

Not so fast, individual health insurance buyers...

If you've been jubilantly cheering the delay up until now and are an individual health insurance purchaser, you may not be nearly as excited to find out that the individual mandate will still go into full effect on Jan. 1, 2014.

A big component to yesterday's delay announcement has to do with seeing how quickly workers adapt to the new law and sign up for insurance. Admittedly, the penalty for failing to sign up for health insurance for the average worker is going to be pretty low in 2014 (a flat fee of $95 or a percentage of income), but will escalate each year through 2016. There has been talk that individuals may choose to take the penalty since it would be, in some cases, considerably cheaper than purchasing even the least costly health insurance plan on the health exchanges. If a lot of individuals choose to go this route, delaying the employer mandate isn't going to make much difference to the success of Obamacare.

The other piece of the puzzle I examined over the weekend and relates to whether the government is ready to implement the insurance exchanges in just 90 days. If history serves as any indicator, it's going to be a glitch-filled and shaky start. It took the Bush administration three full years to prep for the implementation of the Medicaid Modernization Act, with work on that project continuing up to, and after, its launch. Nowadays, with even more riding on the line with regard to cloud-computing technology and needing to simultaneously access numerous branches of the government to determine everything from eligibility to health-plan conformity, the pressure is many times greater.

Is Obamacare's credibility gone?

Regardless of your personal opinion on the merits of Obamacare, the fact of the matter has been that many of the initial promises of the bill haven't been adhered to thus far.

In February, the Centers for Medicare and Medicaid Services, or CMS, proposed a 2.2% reimbursement rate decrease to Medicare Advantage health-benefit providers. Though a bit steeper than many had expected, the reduction proposal followed the basic expectation that the government was going to reduce its cash disbursements to for-profit health-care business. However, following two months of some 160 lawmakers and insurers lobbying the CMS, it decided in April to reverse its decision and propose a 3.3% increase to Medicare Advantage reimbursement rates! At the time, it was great news for Humana (NYSE: HUM ) and Universal American, which derive about two-thirds and three-quarters of their revenue from Medicare Advantage plans. But, it set an even greater precedence in the sector that health insurers weren't going to cede their pricing power to the government.

History practically repeated itself just a few weeks later when the CMS reversed its decision yet again on reimbursement rates, this time for acute-care hospital providers like HCA Holdings (NYSE: HCA ) and Tenet Healthcare. Unlike with Medicare Advantage providers, there wasn't any lobbying involved, just a mere reversal of opinion to raise reimbursement rates for acute-care providers by 0.8% and 1.1% for outpatient acute-care providers. The initial assessment by the CMS had called for a drop of around 1% in reimbursement rates.

Then came yesterday's decision to back down from the employer mandate deadline and push it back one year, which multiple news outlets have referred to as more politically motivated than anything else with elections coming up in mid-2014.

One big benefit and a potentially huge problem

There is a chance this move could have benefits to the insurance sector and health-benefit providers like WellPoint (NYSE: WLP ) in that it gives businesses an extra year to figure out how to operate with a part-time labor force and exempt themselves from the penalties that could be associated with needing to offer health insurance and subsidizing their employees. If medium-to-large businesses choose to reduce hours, it could cause employees in increasing number to seek out insurance plans on the state-run exchanges, ultimately validating the effectiveness of Obamacare and making WellPoint -- which purchased AMERIGROUP last year to expand its individual market Medicaid based member group -- look like a genius.

Conversely, separating the effective dates of the individual and employer mandates makes a difficult bill to understand even more complex. More so than that, it could potentially reduce confidence in a bill that registered its second-lowest favorable rating since it was passed, according to the Kaiser Family Foundation's latest tracking poll. If approval ratings for Obamacare continue to wane, individuals may simply opt to take the penalty rather than sign up for health care, adversely impacting insurers like WellPoint.

Nine Most Arrogant Quotes from the Obama's

Nine Most Arrogant Quotes from the Obama's, from the Independent Journal Review

1. Really Nice Prison First Lady Michelle Obama recently likened living in the White House to being in a “really nice prison.” While she may suffer from a lack of privacy, her comment was made in Tanzania, where being imprisoned is nothing like taking $100 million jaunts around the globe.

2. Behave Yourselves! “Americans, behave yourselves,” President Obama said during a joint press conference with South African President Jacob Zuma on Saturday. Obama complained – as he has in the past – that “my press” tries to squeeze “three or four or five questions in there,” while complimenting Zuma on his more obedient media.

3. Free Flow of Information “I can tell you that in the United States, the fact that we have free Internet — or unrestricted Internet access is a source of strength, and I think should be encouraged. Now, I should tell you, I should be honest, as President of the United States, there are times where I wish information didn't flow so freely because then I wouldn't have to listen to people criticizing me all the time.” The comments to the Chinese delegation take on new light due to the AP & Fox scandals.

4. Bitter Clingers "You got into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton Administration, and the Bush Administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not. And it's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations." – President Obama speaks to wealthy San Francisco fundraisers in April of 2008.

5. Proud of My Country "For the first time in my adult life, I am proud of my country,” Michelle Obama said on February 18, 2008, “because it feels like hope is making a comeback.” Michelle Obama is a Harvard-trained lawyer and was making a deliberate statement to a large Milwaukee crowd.

6. Better Than Everyone "I think that I'm a better speechwriter than my speechwriters. I know more about policies on any particular issue than my policy directors. And I'll tell you right now that I'm gonna think I'm a better political director than my political director." Maybe so, but you aren't that hot at speaking off teleprompter.

7. Sunday Segregation “At times… anger is exploited by politicians, to gin up votes along racial lines, or to make up for a politician's own failing. And occasionally it finds voice in the church on Sunday morning, in the pulpit and in the pews. The fact that so many people are surprised to hear that anger in some of Reverend Wright's sermons simply reminds us of the old truism that the most segregated hour of American life occurs on Sunday morning.” President Obama speech on race relations, March 2008

8. Messy Democracy "When I said 'change we can believe in' I didn't say 'change we can believe in tomorrow.' Not change we can believe in next week. We knew this was going to take time because we've got this big, messy, tough democracy." President Obama's 50th birthday fundraiser, August 4, 2011.

9. The Great Uniter? "I love that for Barack, there is no such thing as 'us' and 'them' - he doesn't care whether you're a Democrat, a Republican, or none of the above... he knows that we all love our country... and he's always ready to listen to good ideas... he's always looking for the very best in everyone he meets." President Obama is above partisan politics? The guy who told his constituents 'voting is the best revenge,' 'take a gun to a knife fight,' 'get in their faces,' and 'punish your enemies'?

Obama and the Muslim Brotherhood - 7 July 2013 version

News Headline: "Violent protests in Cairo and elsewhere over the military’s ouster of President Mohamed Morsi raised doubts about prospects for an eventual accommodation that would allow the Brotherhood that supports him to compete in new elections. "
What they are not telling you is the extnet of some of largest demonstrations in history are largely against the Muslim brotherhood.

Some media sources are also reporting that Obama did not support the Egypt Muslim Brotherhood regime of Morsi which was removed by the Egyptian Army a couple days ago.

Really? That's not what the Egyptian people think, and it's like picking the winner of a horse race after the results are in.

How the hell did Obama NOT support these scum bags? Obama legitimized these terrorists by inviting a group of them to the White House before the national elections in Egypt which of course acted for the Morsi campaign. The Obama's aid packages helped prop up the Morsi government. Well, what can we exepct for the left leaning, go for broke Obama supporting media?

Then a day later the Obama administration’s call for an “inclusive” political process in Egypt with a role for the Muslim Brotherhood. Oh I get it,..this is another element of non-support for the terrorists Muslim Brotherhod.