Open Enrollment for the Nation

I was able to see some recent figures for health insurance costs for the year 2013, and I have to say I hope companies are doing their open enrollments now - before the election.

If not, many people may be in for a surprise after the election.  Of course, I know a lot of people who support Obamacare who say they don't mind paying more for health care if it means everyone is covered, among other things.  Fine and good, but let's let the People decide if they agree with that as a majority.

Based on the surprise to the increases and changes I've already seen, there may be quite a few Americans that are unprepared for just how much getting everyone covered is going to cost them, especially in light of the promises that came with Obamacare to reduce health care costs.

Health Savings Accounts are taking some of the biggest hits, and it looks like employer support of them could be dropping significantly.  That isn't good news for many who saw it as a good option between being covered and being frugal by cutting overall health care costs yourself and saving money for future health needs.  Costs for the minimum premiums are going up for both individuals and employers, and how contributions to the HSA accounts are accounted for is also causing controversy over whether it really makes sense to contribute much money to them at all.

And if you liked the idea of using Flexible Spending Accounts, the $2,500 contribution limit may really  hamper your plans if you have kids that need braces, or have needs that exceed $2,500 per year.  Unless someone can show me otherwise, this new limit is an "invisible" tax on every dollar above $2,500 that the normal FSA account holders was used to contributing to their accounts in years past.

But it isn't just those costs that have gone up.  Even traditional plan premiums are going up for employers and individuals.

I'd start asking your employer and/or health care provider to get you information about what next year's costs are going to be, before you vote this year.  Once you determine how it will affect you, then cast your vote.

The next few weeks left in the election are America's open enrollment period.  We'd better be ready for what the majority decides it wants.  Because it will be many years before we again have a chance to change our plan as a nation.

Below is some information from the HSA Council on changes being made through Obamacare.

The primary issues of concern for high-deductible plans are that:

• The medical loss ratio formula doesn’t take into account contributions to HSAs.  Many high deductible health plans are accompanied by an HSA, which covers much of the first-dollar costs before the plan’s deductible is reached.  HSA contributions are currently not reflected in the medical loss ratio calculations.
• High deductible health plans may not be able to raise rates fast enough to keep up with rising costs.  High deductible health plans will require larger annual rate increases than typical medical plans because medical inflation will have a greater impact on claim levels than plans with lower deductibles. 
• High deductible health plans have fewer premium dollars to cover their fixed expenses.  Every plan has fixed expenses that it covers with premiums. Since high deductible health plans have lower premiums than other plans, a greater percentage of the premium must be used to pay these fixed expenses.  For example, $400 of fixed expenses represents 40 percent of a $1,000 premium, but only 20 percent of a $2,000 premium and just 8 percent of a $5,000 premium.  Therefore, it is harder for a lower premium plan to keep its non-claim expenses below 20 percent of its adjusted premiums as the medical loss ratio rule requires.
• High deductible health plans have less predictable claims experience that could increase the risk of paying rebates.  High deductible insurance plans pay fewer claims than plans with low deductibles.  But when high deductible health plans pay claims, the claim dollar amounts tend to be larger. This lower-frequency/high-payment creates less actuarial predictability which can result in high claims in one year and low claims in another. If the plan has low claims, it may not meet the 80 percent medical loss ratio and be required to pay rebates.  If the plan has high claims, it may lose money that it cannot “make up” in other years.

The information below was provided by HSA Bank:

 • Qualified Medical Expenses: Starting January 1, 2011 you will no longer be able to pay for over-thecounter medications from your HSA as a qualified medical expense. The new law removes over-the-counter 

drugs not prescribed by a physician from being paid from an HSA, FSA, or HRA on a tax-free basis.

 • Non-qualified expense penalty: Under the new law, if you use your HSA funds for non-qualified expenses, 

you will face a higher penalty. The tax penalty for non-qualified HSA distributions will increase, effective 

January 1, 2011, from 10% to 20%.

 • Mandated insurance coverage: Effective January 1, 2014, the legislation will require most U.S. Citizens 

and legal residents to have health insurance. It also outlines the minimum coverage and essential health 

benefits that need to be provided for a plan to qualify for the mandated coverage. This could potentially limit 

the types of health plans that will be available to consumers. Below are a few of the areas which require 

clarification by the Secretary of Health and Human Services: 

   • Preventive care services:  All insurance policies will be required to provide first dollar coverage for 

preventive care services. While HSA-compatible health plans are currently allowed to provide first-dollar 

coverage of preventive care services, in the future, all plans will be required to do so. These provisions 

will go into effect in 2014. Additionally, further clarification must be provided regarding what constitutes 

“preventive care” under the new regulations and whether or not that definition conflicts with current IRS 

guidance on what constitutes “preventive care” for HSA purposes.

   • Minimum actuarial value: All insurance policies will be required to provide a minimum actuarial value 

of at least 60 percent for the benefits covered. Clarity must be provided regarding how “actuarial value” 

is defined. It is also not clear whether a plan’s actuarial value would include employer or individual 

contributions made to the individual’s HSA. Including the contributions in the calculation of a plan’s 

actuarial value would make it easier for more HSA-compatible health plans to meet the minimum 

actuarial value requirement. If contributions are not included, many plans could no longer be sold. 

 • Small employer benefit requirements: The legislation also includes a provision that would prevent small 

employers from offering plans with deductibles greater than $2,000 for singles and $4,000 for families 

(indexed annually). Employers may offer plans with deductibles higher than $2,000 / $4,000 if the employer 

offers a flexible spending arrangement (FSA) that reimburses the difference between the higher deductible 

and $2,000 / $4,000. This provision will affect the health plans that can be offered to small employers and 

still qualify for HSA contributions. This provision goes into effect in 2014.

 • Excise tax on ‘Cadillac’ plans: The new law will impose an excise tax of 40 percent on employersponsored coverage that has a benefit value in excess of $10,200 for single coverage and $27,500 for 

family coverage (indexed annually). The benefit value of employer-sponsored coverage would include the 

value of the group health plan and contributions to employees’ FSAs, HRAs, and HSAs. This tax would be 

imposed on insurance companies, including self-insured plans and plans sold in the group market, and plan 

administrators. However, this provision does not go into effect until 2018.

• Medical loss ratio requirement:  The new law imposes a “medical loss ratio” requirement. It would require 

a set percentage of premiums to be paid directly to medical claims. Since HSA-compatible plans have lower 

premiums, this may make it challenging for plans to meet the established ratios and still qualify for HSA 

coverage.

Think Progress Image

I just saw an image from Think Progress that states:

"These five people just saved millions of Americans by protecting Health Care" - Think Progress

Here is the image below. I took the image, photoshopped it, and posted it as saying "These five people just raised your taxes. And you didn't even get to vote for them." - Think About It.

Supreme Court Ruling Infers Obama Was Wrong

The Supreme Court ruled that Obamacare is a tax, so it can be imposed by Congress.

To be clear, I have no qualms with individual mandates at the State level. They are instituted and upheld all the time.

But at the Federal level, they can only be instituted as a tax. However, I thought Obama said Obamacare wasn't a tax? (see video)

Looks like the Supreme Court disagrees.

So, Obama has increased our tax burden by $1.76 Trillion, by latest CBO numbers. According to the IRS, there were 142,856,282 Individual Tax Returns for the 2010 Tax Year (most recent available statistical year), meaning Obama's new tax liability on average will be 12,320.07 over the next 10 years by those figures.

Anyone out there know of a president or congress that has levied such a large tax before?

Is Health Care A Right?

Two levels on which I don't agree that health care is a right. The first level is that, if it is a right, it is definitely not a protected right under the constitution.  If we as a nation define it as a right by adding it as an amendment or addition to the Bill of Rights, then it would become protected.  When the Bill of Rights was written as a compromise for those who questioned the Federalist notion of a constitution and a central government, hospitals and doctors existed.  If the non-Federalists had felt that healthcare was an inalienable right they would have asked for its inclusion into the Bill of Rights, because they basically asked for everything else they could think of. Good thing they did; Imagine being without the Bill of Rights, which is what the Federalists wanted until it was obvious they needed a compromise.

The second level is on what constitutes a right.  What are rights, and where do they come from?  I have always questioned that, and recently questioned it again in regards to whether I should think health care is a right or not.  If it is, I want to be behind it as a defender of rights.  If it is not, I want to explain why not.

Fundamentally:

• A right is rooted in, and constituted of, principles defining the ability to act.

• Rights come from the obligation of others to keep themselves from violating your ability to act.  In other words, rights are negative obligations - weighty responsibilities.   

What we know:

• The need for health care in a time of sickness is not an act.

• Society has only defined certain obligations of doctors in times of emergency, sickness, or need - and complete health care is not one of them.  

So, health care is not a right, but a privilege given to us unvoluntarily (i.e., at a price) by others who possess (which is a right) and have obtained (which is a right) the skills necessary to do so.

True rights do not infringe on another person's rights.  My right in the pursuit of happiness, freedom of speech, freedom of religion, right to an attorney, right to a fair trial, or any other, should not and do not take away from another's same rights.

If health care was, or could be, a right, how could it be so without taking away the rights of others?

As stated above, I currently have the right to an attorney, but I have to pay for it out of pocket or request one (the act), and the right is given to me to defend me from accusation of my peers (The People, who are under that obligation).  If the People of my State decide to accuse me, I should (and do) have the right to defend myself against them.

However, in the case of a medical need, it usually occurs by natural cause.  The People did not inflict the medical need upon me, so I have no right for a doctor to be provided (there is no act and no obligation).  But I do have the right to hire (a right) one and receive treatment if I have obtained the ability (a right) to do so.

Of course, there are always a few exceptions and further explanations and arguments to these types of philosophies which would take much more time to write than I have.  Such as what happens when The People do inflict harm on someone - then does that person have a right to receive care?  Most judges or juries would rule yes and I agree with that.  Notice, however, that the right is usually alienable, meaning it can be transferred, or it is only for the duration of the treatment of the harm caused.  It normally would not include any and all medical care, as the alienable right was given because The People infringed on that person's right to be left alone.  (See Francis Hutcheson)

One last example, my right to legal representation can still be exercised (therefore it is inalienable) even if all of the lawyers were to leave the world, and none were available to represent me.  In that case, I become my own advocate and represent myself.  The right has not been reduced or transferred from me based on the lawyers' decisions to leave.  On the other hand, if all of the doctors were to leave the world, how would I exercise my right to health care, beyond the rights I already have to take care of and make decisions for myself?

The fact that health care is not a right does not mean we should not be charitable and help where we are able.  It means we should be careful about what types of weighty responsibilities we add to the burdens we share as Americans.  Balance is a notion that we tend to forget about but is symbolically everywhere in the foundations and inner workings of our country.  I believe there is good wisdom in that.

All,

Take a look at this article published today by Jim Cramer.  Although he's a democrat and was a supporter of Obama in the beginning, he has reversed course over the last year after viewing the destructive attitudes of the democrats (and some republicans who have gone along with them) in power.  Then read my comments after the article:

Cramer: Obamacare Will Topple the Market

Either the market doesn't care that the health care bill will pass -- and it will -- or it doesn't think that the proposal will cost that much -- something I think is nuts. Which brings us to a very tenuous crossroad: We have to wonder if this is one of those occasions, like in 2008, where the market doesn't see the coming catastrophe. Or perhaps the market sees any resolution as positive.

>>Here's Your Portfolio If Obama's Agenda Wins

I don't. I think when the health care bill passes -- and it will pass, I believe, because Nancy Pelosi has worked diligently behind the scenes to bend the anti-abortion foes, the key votes, to her will -- the president will get a second wind. That means the whole agenda -- cap-and-trade, Card Check for easier organizing (something that Wal-Mart's (WMT) inability to move even on its dividend boost tells you is coming) and amnesty for immigrants who are currently not citizens -- will quickly come to pass, perhaps even before the election. To pay for these items I see a dramatic increase in ordinary tax rates and perhaps capital gains and dividend tax rates in 2011 either reaching or exceeding those ordinary income rates as this current version of the Democratic Party believes that only rich people own stocks. (That's been a hallmark from Day 1 with this administration.)

Given those hurdles, which include a suicide pact with financial health for small businesses that obviously can't afford health care without risking the capital formation necessary, I think you have to put the double-dip recession back on the table.

Those who have read me here and watch "Mad Money" know that I was out there early thinking that 2010 would not produce a double-dip, despite ample commentary that it would. But if health care reform passes, I am going to revise my thinking -- and you know I think it will -- especially because immigrant amnesty will cause the health care system to be overloaded and our taxes to soar.

The stakes seem so high while the market appears so complacent, perhaps because none of the levies will pass until 2011. To me that's around the corner. It's been slightly more than a year that I have been bullish. That's hanging by a thread this week.

Obamacare cuts that thread. Even if the market doesn't seem to know it.

At the time of publication, Cramer had no positions in the stocks mentioned.

I have had this sentiment for a while, and back in January began scaling down positions, moving to cash.  I will continue to do so ahead of this vote, especially with the Dow now sitting at 10,700.  This seems like a good level to take some money of the table and wait to see what congress decides to do.

My dad recently asked me what direction the market might be going, and to be honest, I don't know any big professionals that I read who have much to say on it right now either.  That being said, while it is hard to get any direction in most sectors of the economy as we await the decision in DC, I think one sector that will do well regardless of what happens is the energy sector.  So if you still want to have some money in play, I would think investing in mutual funds, ETFs, or stocks in the energy sector might be a good idea.  In my view, if Obama wins and gets health care, he'll probably get Cap and Trade, which will make energy stocks go up.  If he loses, energy should still go up because the economy should improve. 

And anyway, Energy stocks, especially those with direct holdings in the commodity, gain value the longer the Fed keeps the interest rate depressed.  As well, OPEC is not backing down on supply restraints, so oil should hold up and increase in price as demand continues to increase, and production continues to fall.  One big player in the price right now is the drilling failure rate which is up dramatically over the last year.  That makes oil more expensive to produce, making the future price go up, meaning if you hold a share in the actual fields producing oil the value of that oil in the field increases.

My favorite energy stocks right now are Royalty Trusts and Master Limited Partnerships, or basically anything with either direct holdings in oil or gas reserves or companies that own the pipelines for distributing it.  Royalty Trusts and MLPs also pay very nice returns that have tax benefits, so their values hold up better even if the market moves against you.  Right now some RTs are distributing about 1% per month (12% annually) which is a great return.

Mutual funds and ETFs in this sector are also a good idea, just be sure they have exposure to natural gas and good oil companies like Devon Energy, Enbridge, and MLPs and RTs as part of their overall holdings.

Good luck out there.  And don't wait for Obama to mess things up market wise.  Right now the markets are showing no true direction and that is always a good time for some profit taking regardless of your overall market sentiment.  But as I said, a lot of the pros are becoming worried there might be a pullback, or worse, a double dip recession.  And cash is always nice to have to buy the dip when it happens.

Tijs Limburg


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