Father of Senator Ted Cruz (R-TX) certainly gives credibility to the premise that common sense, not to mention love for this Country, runs in the family. This article is from the The Blaze.com
Rafael Cruz, the father of Texas Sen. Ted Cruz, invigorated the crowd during a recent Tea Party event.
Describing his own personal journey escaping Cuba and working hard to build a life for himself in the U.S., the elder Cruz noted comparisons that he believes exist between Fidel Castro’s governance and President Barack Obama’s executive actions.
Upon rising to power, he said that Castro, like Obama, spoke about hope and change. While the message sounded good at the time, it didn’t take long for socialism to take root in his home country. And he paid the price.
For his part in the revolution — one that many originally assumed would yield a more vibrant country — Cruz was punished while in Cuba.
“I was in prison,” he said. “I was tortured, but by the grace of God I was able to leave Cuba on a student VISA and came to the greatest country on the face of the earth.”
Cruz described his efforts working as a dishwasher in America and paying his own way through the University of Texas. From there, he built a life for himself — one that was filled with experiences that caused him to greatly appreciate the country that had given him so much.
His plight in Cuba colored his American experience
“You can’t understand a loss of rights unless you’ve experienced it,” Cruz told TheBlaze following the speech.
His unique perspective leaves Cruz with the ability, he argues, to see the troubling signs surrounding socialism. Young people in America today, he told TheBlaze, take for granted the rights and privileges that the U.S. has afforded them.
“Socialist polities are very easily recognized because of my experience in Cuba,” he said during the speech, noting that he worked hard to help get Ronald Reagan elected after recognizing that the U.S. government in the 1970s was already taking troubling steps in the direction of socialism.
Cruz’s passion and love for America was apparent throughout the address. He called the nation “the bastion of freedom in the world” and told the audience of the importance of fighting for freedom.
Outside of the Bible, he praised the U.S. Constitution and the Declaration of Independence as “the greatest two documents that have ever been penned.”
“We have a responsibility to carry forth these ideals of freedom to our children and grandchildren,” he told the audience. “This country is exceptional and unique in the world.”
After the speech, TheBlaze also asked if he believes his son will run for president.
“I can’t answer that. It is up to God,” he responded.
Watch the speech, below:
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Wednesday, July 10, 2013
Tuesday, July 9, 2013
Most Dangerous Cities
Most Dangerous Cities from 24/7 Wall Street
10. Cleveland, Ohio
Violent crimes per 100,000: 1,383.8
Population: 393,781
2012 murders: 84
Poverty rate: 34.3%
Pct. of adults with high school degree: 77.0%
More than 825 robberies were reported in Cleveland for every 100,000 residents last year, the second highest robbery rate in the nation behind only Oakland. The total number of robberies in the city rose from 3,156 in 2011 to 3,252 in 2012. Cleveland also had the nation’s second highest burglary rate in 2012, with close to 2,500 burglaries per 100,000 residents. Unlike robbery, burglary does not involve force or coercion and is not considered a violent crime. Recently, the highly publicized discovery of three area women that had been missing for roughly a decade and held captive within the city led to extensive criticism of the Cleveland Police Department. Cleveland is one of the nation’s poorest large cities with a median household income of just $25,731 in 2011 — barely over half the national median.
9. Baltimore, Md.
Violent crimes per 100,000: 1,405.7
Population: 625,474
2012 murders: 219
Poverty rate: 25.1%
Pct. of adults with high school degree: 80.5%
There were 219 murders in Baltimore in 2012, more than all but five other major cities both in absolute terms and per capita. In addition, the city’s robbery rate of 576.4 cases per 100,000 people was the ninth highest in the country. Despite remaining one of the most violent cities, city officials noted that crime rates have been declining. While the total number of murders increased, total gun crime fell by 6% compared to 2011, according to the Baltimore Police Department. In addition, the city’s property crime rate of 4,660.3 cases per 100,000 residents was lower than any of the top cities for violent crime.
8. New Haven, Conn.
Violent crimes per 100,000: 1,439.2
Population: 129,934
2012 murders: 17
Poverty rate: 30.1%
Pct. of adults with high school degree: 78.4%
There were 766 robberies in New Haven in 2011, or 589.1 cases per 100,000 residents, the eighth highest rate among all cities considered that year. In 2012, the number of robberies in the city jumped to 844. At 649.6 robberies per 100,000 residents, this was one of the highest rates recorded in 2012. But while both robberies and aggravated assaults rose last year, the number of murders declined from 34 in 2011 to just 17 in 2012. Gun violence remains a concern for the community. Recently, police began reaching out to known gang members on probation or parole to offer help to members looking to earn a high school diploma or otherwise improve their lives. As of 2011, just 78.4% of New Haven residents over 25 had a high school diploma, much lower than the 85.9% rate nationwide.
7. Birmingham, Ala. Violent crimes per 100,000: 1,517.8
Population: 213,266
2012 murders: 67
Poverty rate: 32.0%
Pct. of adults with high school degree: 81.3%
Birmingham had among the 10 highest murder and aggravated assault rates at 31.4 cases per 100,000 people and 954.2 cases per 100,000 residents, respectively, in 2012. The city also had 6,934.1 property crimes per 100,000 people in 2012, higher than all but four other cities. This included 2,205.7 burglaries per 100,000, the sixth highest of all cities. City residents are in a far worse economic position than the nation as a whole. The median household income in Birmingham was just $28,646 in 2011, far lower than the $50,502 across the United States. Also, 32% of the population lived below the poverty line that year, compared with just under 16% nationwide.
6. Stockton, Calif.
Violent crimes per 100,000: 1,548.0
Population: 299,105
2012 murders: 71
Poverty rate: 25.8%
Pct. of adults with high school degree: 75.1%
The number of violent crimes reported in Stockton rose from 4,155 in 2011 to 4,630 in 2012. This was partly due to the increase in the number of robberies, from 1,323 in 2011 to 1,556 last year, and the increase in the number of aggravated assaults, from 2,684 in 2011 to 2,913 in 2012. As a result of this uptick in crime, Stockton had some of the highest incidences of murder, robbery and aggravated assault in the nation. Stockton also holds the dubious distinction of being the largest city in U.S. history, by population, to enter bankruptcy. In the city proper, the unemployment rate was 18.3% in 2012, more than 10 percentage points above the national rate last year.
5. Memphis, Tenn.
Violent crimes per 100,000: 1,750.0
Population: 657,436
2012 murders: 133
Poverty rate: 27.2%
Pct. of adults with high school degree: 83.4%
Memphis had the third highest rate of aggravated assault in 2012, with 1,151.9 cases per 100,000 residents. This was up from the 1,032.3 cases per 100,000 in 2011. The city’s murder rate of 20.2 per 100,000 people and robbery rate of 514.4 per 100,000 people were also up from 2011. The high levels of crime has people in the Memphis area feeling uneasy. According to a recent Gallup survey, roughly 43% of Memphis area residents reported feeling unsafe walking at night, the highest percentage of all the 50 largest metropolitan areas in the country and significantly higher than the 28% across the United States.
4. St. Louis, Mo.
Violent crimes per 100,000: 1,776.5
Population: 318,667
2012 murders: 113
Poverty rate: 27.0%
Pct. of adults with high school degree: 83.9%
There were 1,120.6 aggravated assaults per 100,000 people in St. Louis in 2012, higher than all but three other cities. Moreover, the murder rate of 35.5 cases per 100,000 was the fifth highest of all cities. Although St. Louis’s violent crime was still among the highest in the country, it has improved. There were 80 less violent crimes per 100,000 people in 2012 compared to 2011 — the best improvement of any city on this list, with the drop mostly attributable to 106 less robberies per 100,000 people in 2012 compared to the previous year. Law enforcement officials attributed some of the drop to an increased police presence in high-crime neighborhoods.
3. Oakland, Calif.
Violent crimes per 100,000: 1,993.1
Population: 399,487
2012 murders: 126
Poverty rate: 21.0%
Pct. of adults with high school degree: 79.9%
There were 1,085.9 robberies per 100,000 residents in Oakland in 2012, higher than any other city. This was also significantly higher than the 851.2 robberies per 100,000 just a year earlier. The rates of murder and aggravated assaults also increased in 2012 compared to 2011. Violent crime was not the only issue in Oakland, either — there were 6,594 property crimes per 100,000 residents in 2012, more than all but eight other cities, and up from 5,287.9 in 2011. Crime in the city has increased ever since the city’s police department went through a round of layoffs in 2010 due to $30.5 million deficit.
2. Detroit, Mich.
Violent crimes per 100,000: 2,122.6
Population: 707,096 2012 murders: 386
Poverty rate: 40.9%
Pct. of adults with high school degree: 77.4%
Detroit’s murder rate of 54.2 per 100,000 residents was the second highest in the country last year. The homicide rate in Detroit, which included 386 criminal murders and an additional 25 justifiable homicides, reached the highest level in nearly 40 years. In addition, the city’s aggravated assault rate of 1,320.8 cases per 100,000 people was also the second highest in the United States, although this was an improvement from the 1,333.6 cases per 100,000 residents in 2011. Detroit has struggled economically in recent years. The city’s 2012 unemployment rate was a whopping 18.6%, much higher than the 8.1% across the nation last year. The median household income of $25,193 was less than half the national median for 2011.
1. Flint, Mich.
Violent crimes per 100,000: 2,729.5
Population: 101,632
2012 murders: 63
Poverty rate: 40.6%
Pct. of adults with high school degree: 82.9%
With a staggering 2,729.5 violent crimes per 100,000 residents, no city had a higher violent crime rate than Flint. The city of just 101,632 people had 63 total murders and 1,930 aggravated assaults, both the highest relative to the city’s population. Flint also had nationwide highs in burglary rates and arson per 100,000 people. The sheriff of Genesee County, where Flint is located, proposed a plan to create a violent crime mobile response unit that would cost $3 million. However, Governor Rick Snyder rejected the plan because he believed resources would be better “integrated into the ongoing efforts to make Flint safer.” Like Detroit, Flint has suffered economically in recent years. The median household income was just $23,380 in 2011, the second-lowest of all 555 cities measured by the U.S. Census Bureau.
10. Cleveland, Ohio
Violent crimes per 100,000: 1,383.8
Population: 393,781
2012 murders: 84
Poverty rate: 34.3%
Pct. of adults with high school degree: 77.0%
More than 825 robberies were reported in Cleveland for every 100,000 residents last year, the second highest robbery rate in the nation behind only Oakland. The total number of robberies in the city rose from 3,156 in 2011 to 3,252 in 2012. Cleveland also had the nation’s second highest burglary rate in 2012, with close to 2,500 burglaries per 100,000 residents. Unlike robbery, burglary does not involve force or coercion and is not considered a violent crime. Recently, the highly publicized discovery of three area women that had been missing for roughly a decade and held captive within the city led to extensive criticism of the Cleveland Police Department. Cleveland is one of the nation’s poorest large cities with a median household income of just $25,731 in 2011 — barely over half the national median.
9. Baltimore, Md.
Violent crimes per 100,000: 1,405.7
Population: 625,474
2012 murders: 219
Poverty rate: 25.1%
Pct. of adults with high school degree: 80.5%
There were 219 murders in Baltimore in 2012, more than all but five other major cities both in absolute terms and per capita. In addition, the city’s robbery rate of 576.4 cases per 100,000 people was the ninth highest in the country. Despite remaining one of the most violent cities, city officials noted that crime rates have been declining. While the total number of murders increased, total gun crime fell by 6% compared to 2011, according to the Baltimore Police Department. In addition, the city’s property crime rate of 4,660.3 cases per 100,000 residents was lower than any of the top cities for violent crime.
8. New Haven, Conn.
Violent crimes per 100,000: 1,439.2
Population: 129,934
2012 murders: 17
Poverty rate: 30.1%
Pct. of adults with high school degree: 78.4%
There were 766 robberies in New Haven in 2011, or 589.1 cases per 100,000 residents, the eighth highest rate among all cities considered that year. In 2012, the number of robberies in the city jumped to 844. At 649.6 robberies per 100,000 residents, this was one of the highest rates recorded in 2012. But while both robberies and aggravated assaults rose last year, the number of murders declined from 34 in 2011 to just 17 in 2012. Gun violence remains a concern for the community. Recently, police began reaching out to known gang members on probation or parole to offer help to members looking to earn a high school diploma or otherwise improve their lives. As of 2011, just 78.4% of New Haven residents over 25 had a high school diploma, much lower than the 85.9% rate nationwide.
7. Birmingham, Ala. Violent crimes per 100,000: 1,517.8
Population: 213,266
2012 murders: 67
Poverty rate: 32.0%
Pct. of adults with high school degree: 81.3%
Birmingham had among the 10 highest murder and aggravated assault rates at 31.4 cases per 100,000 people and 954.2 cases per 100,000 residents, respectively, in 2012. The city also had 6,934.1 property crimes per 100,000 people in 2012, higher than all but four other cities. This included 2,205.7 burglaries per 100,000, the sixth highest of all cities. City residents are in a far worse economic position than the nation as a whole. The median household income in Birmingham was just $28,646 in 2011, far lower than the $50,502 across the United States. Also, 32% of the population lived below the poverty line that year, compared with just under 16% nationwide.
6. Stockton, Calif.
Violent crimes per 100,000: 1,548.0
Population: 299,105
2012 murders: 71
Poverty rate: 25.8%
Pct. of adults with high school degree: 75.1%
The number of violent crimes reported in Stockton rose from 4,155 in 2011 to 4,630 in 2012. This was partly due to the increase in the number of robberies, from 1,323 in 2011 to 1,556 last year, and the increase in the number of aggravated assaults, from 2,684 in 2011 to 2,913 in 2012. As a result of this uptick in crime, Stockton had some of the highest incidences of murder, robbery and aggravated assault in the nation. Stockton also holds the dubious distinction of being the largest city in U.S. history, by population, to enter bankruptcy. In the city proper, the unemployment rate was 18.3% in 2012, more than 10 percentage points above the national rate last year.
5. Memphis, Tenn.
Violent crimes per 100,000: 1,750.0
Population: 657,436
2012 murders: 133
Poverty rate: 27.2%
Pct. of adults with high school degree: 83.4%
Memphis had the third highest rate of aggravated assault in 2012, with 1,151.9 cases per 100,000 residents. This was up from the 1,032.3 cases per 100,000 in 2011. The city’s murder rate of 20.2 per 100,000 people and robbery rate of 514.4 per 100,000 people were also up from 2011. The high levels of crime has people in the Memphis area feeling uneasy. According to a recent Gallup survey, roughly 43% of Memphis area residents reported feeling unsafe walking at night, the highest percentage of all the 50 largest metropolitan areas in the country and significantly higher than the 28% across the United States.
4. St. Louis, Mo.
Violent crimes per 100,000: 1,776.5
Population: 318,667
2012 murders: 113
Poverty rate: 27.0%
Pct. of adults with high school degree: 83.9%
There were 1,120.6 aggravated assaults per 100,000 people in St. Louis in 2012, higher than all but three other cities. Moreover, the murder rate of 35.5 cases per 100,000 was the fifth highest of all cities. Although St. Louis’s violent crime was still among the highest in the country, it has improved. There were 80 less violent crimes per 100,000 people in 2012 compared to 2011 — the best improvement of any city on this list, with the drop mostly attributable to 106 less robberies per 100,000 people in 2012 compared to the previous year. Law enforcement officials attributed some of the drop to an increased police presence in high-crime neighborhoods.
3. Oakland, Calif.
Violent crimes per 100,000: 1,993.1
Population: 399,487
2012 murders: 126
Poverty rate: 21.0%
Pct. of adults with high school degree: 79.9%
There were 1,085.9 robberies per 100,000 residents in Oakland in 2012, higher than any other city. This was also significantly higher than the 851.2 robberies per 100,000 just a year earlier. The rates of murder and aggravated assaults also increased in 2012 compared to 2011. Violent crime was not the only issue in Oakland, either — there were 6,594 property crimes per 100,000 residents in 2012, more than all but eight other cities, and up from 5,287.9 in 2011. Crime in the city has increased ever since the city’s police department went through a round of layoffs in 2010 due to $30.5 million deficit.
2. Detroit, Mich.
Violent crimes per 100,000: 2,122.6
Population: 707,096 2012 murders: 386
Poverty rate: 40.9%
Pct. of adults with high school degree: 77.4%
Detroit’s murder rate of 54.2 per 100,000 residents was the second highest in the country last year. The homicide rate in Detroit, which included 386 criminal murders and an additional 25 justifiable homicides, reached the highest level in nearly 40 years. In addition, the city’s aggravated assault rate of 1,320.8 cases per 100,000 people was also the second highest in the United States, although this was an improvement from the 1,333.6 cases per 100,000 residents in 2011. Detroit has struggled economically in recent years. The city’s 2012 unemployment rate was a whopping 18.6%, much higher than the 8.1% across the nation last year. The median household income of $25,193 was less than half the national median for 2011.
1. Flint, Mich.
Violent crimes per 100,000: 2,729.5
Population: 101,632
2012 murders: 63
Poverty rate: 40.6%
Pct. of adults with high school degree: 82.9%
With a staggering 2,729.5 violent crimes per 100,000 residents, no city had a higher violent crime rate than Flint. The city of just 101,632 people had 63 total murders and 1,930 aggravated assaults, both the highest relative to the city’s population. Flint also had nationwide highs in burglary rates and arson per 100,000 people. The sheriff of Genesee County, where Flint is located, proposed a plan to create a violent crime mobile response unit that would cost $3 million. However, Governor Rick Snyder rejected the plan because he believed resources would be better “integrated into the ongoing efforts to make Flint safer.” Like Detroit, Flint has suffered economically in recent years. The median household income was just $23,380 in 2011, the second-lowest of all 555 cities measured by the U.S. Census Bureau.
Monday, July 8, 2013
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.
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.
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