ObamaCare: Forensic Analysis, by Al Martin

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by Al Martin

ObamaCare: Forensic Analysis

(11-1-13) What’s eventually going to happen with ObamaCare is what always happens in a situation like this and this happens only when Democrats are in power. It gets sub-contracted out to the cheapest bidder and they’ll always go to a socialist welfare nation-state. That’s why they went to Canada to express solidarity. They fuck it up and sub it out to somebody in India who fucks it up even more, and then after having spent $500 million already, it will come back to the United States. Then they’ll hire competent nerds at five times the money they spent already, who will actually get the thing straightened out. When all is said and done of course, they would have spent a billion dollars.

The problem is that they’ve already spent $500 million to get it set up and fucked up. If they had budgeted a billion dollars to do it from the get-go and left it in the hands of competent American nerds, it would have gotten done right the first time. After all it happened this way – funneling the work to Michele Obama’s Princeton classmate at CGI -- because it’s the only way that Democrats have to pay political patronage. They just can’t write a big check like the Republicans can since they don’t have that infrastructure to do that. The way they do it then is to make it some government expenditure for some program to get something done which ultimately winds up costing twice as much as it should. It’s the only way they have to pay back political patronage.

So are death panels coming to your location? This ObamaCare does not affect anyone who’s on Medicare and seniors are the least affected. This affects the young.

ObamaCare was always a variation on a garden variety Ponzi scheme. The idea that younger people would sign up and then pay for the people with more serious medical conditions wasn’t part of it at all. The idea was that those who are “healthy” were going to pay two or three times more than what they’re paying now for essentially the same coverage in order to provide a pool of money they could then subsidize those with so-called pre-existing conditions.

Anyone who is aged 65 or more is not affected by ObamaCare because they’re already on Medicare. Also it does not affect any supplementary policies that are sold to Medicare beneficiaries.

So was ObamaCare a shakedown due to lobbying efforts by insurance companies? Not all insurance companies benefit from ObamaCare. The big ones like United Health Care and Cigna have stayed away from it because of the choice provision where you don’t get high-end billing anymore by sending people to the Mayo Clinic. The compensation rates in this deal are very similar to Medicare compensation rates. That’s why the big insurance companies stayed away from it and why so many of the doctors have stayed away from it because the compensation is similar to that which exists in the Medicare program.

Now anybody on the so-called high end of medicine, whether you’re an insurance company that specializes in “Cadillac” policies or you’re a clinic that specializes in high-end patients or you’re a doctor whose patient list is mostly high end, then you lose money on this deal. That’s why they haven’t signed up for it.

ObamaCare is a backdoor to socialization of medicine – and Obama knows it. You see how careful the Democrats are to stay away from that verbiage. In other words, it’s a backdoor to what other countries have done which is to get the “better-heeled” as it were to create a pool of money through higher premiums in order to finance those with pre-existing conditions and to provide subsidies for those who vote for Democrats.

The problem now is that the Big Money doesn’t go for it and therein lies one of the problems in this deal. If you’re going to make this thing workable, then you have to make it truly universal. This is something that hasn’t been done since it’s full of loopholes and exit doors that won’t make it workable.

They’re trying to sell something that the American people don’t want – it’s not the coverage – and what they’re against is this idea of socialization of medicine. That’s the label that the Democrats can’t get around. Why? Because anything with the word socialization or social welfare-ism is anathema in this country. People have always been told that social welfare-ism is a false and fiscally corrosive model – which in fact it is.

The first thing they have to do is get the “glitches” regarding getting the website straightened out. Nothing else can happen until that happens. Secondly as thing goes along, popular support for it is going to erode. That’s already happening because the numbskulls in the surveys that won’t support ObamaCare -- but support the Affordable Health Care Act because they’re too stupid to know it’s the same thing – when they get sticker shock or one of the 19 million that get cancellation notices of their existing private insurance policies, they’re going to squawk about it.

That’s the magic number that everyone keeps talking about – 19 million. The Obama Regime knew that under this plan 19 million people would have their health care insurances policies cancelled and those notices are already going out. The Obama Regime is now trying to say that these were “sub-standard” policies anyway.

The Obama Regime incorrectly assumes that what they classify as “sub-standard” policies are purchased only by people that can’t afford to buy anything else, when in fact the majority of the 19 million people want these policies because they didn’t need all the ancillary coverage that went along with the more expensive policies. For example the 25-year olds don’t need to buy geriatric care coverage. The Obama Regime misinterprets that and it’s already coming back to haunt them because the majority of these 19 million people can afford to pay more.

The 47% of the people that vote for the Obama Regime couldn’t afford health care no matter what it costs. It’s not a matter of price for those who vote for the Obama Regime. It’s a matter of choice and this is how it’s opened a wedge that the Republicans will be able to march through because they know how sensitive the question of government interference into private choice combined with the specter of social welfare-ism is. That’s why this ObamaCare is going to be a dead duck. Unless the Obama Regime starts getting more realistic about this thing and understands that it can’t simply triple the rates in order for people who already have Cadillac policies – an insurance company term – to maintain those policies. It’s one thing if you’re just hitting just those with Cadillac policies but that doesn’t raise enough money. It’s like trying to tax all the billionaires. If you tax them 100% the amount of money it raises isn’t really enough to make any difference. It becomes the same thing in ObamaCare. If you simply raise the rate on all the Cadillac policies it doesn’t raise enough revenue for those with pre-existing conditions or to create a subsidy pool. Therefore you have to increase rates on much more average kind of people.

What the Obama regime and the progressive left minions thought is that they could pull the wool over the eyes of the Unwashed by selling it. It’s all about how you sell it. It doesn’t matter if it’s true or a lie, but they haven’t done a good job of selling it.

They had to scale back their socialized ambitions to provide coverage for those who otherwise couldn’t afford it because you can’t bring rates that low where those who can’t afford it could afford it anyway. So what difference does it make anyway? They’re trying to use this as a lever to transfer money from the 53% to the 47% and that’s not going to happen.

Bushonomics and the concentration of wealth effect that has created makes that wealth transfer mechanism from the 53% to the 47% impossible because so much of the wealth that 53% has is concentrated within the top 5% of that 53%.

Then there’s RomneyCare in Massachusetts, which is similar to ObamaCare. The state of Massachusetts, however, was smart about it. There was only so much money the state could kick into it, so the state, in order to allow people the continuation of choice and the continuation of high end, they gave high end doctors, clinics and hospitals tax breaks. That’s how it got financed.

On the other hand the federal government has never been good at doing that and financing things through tax breaks or tax incentives. They haven’t been successful at financing a portion of a spending program because there are too many competing interests. In an individual state where you do not have national competing interests, it becomes easier to do.

If the Obama Regime left it under the control of the individual states, they could have made this thing workable, but the minute you put in a federal mandate and federal regulations into it, it becomes unworkable. Why? Because you’re taking out one of the props that would have to pay for it – an organized tax subsidy or tax reduction or tax incentive – whatever you want to call it.

What’s going to happen ultimately is that this ObamaCare is going to fall apart because it was never workable to begin with, and then the Democratically controlled states Massachusetts, Illinois, California, etc. will probably pick up the pieces of it and try to do something similar on a state by state basis. You’ll only find that in states where there are more Democratic voters than there are Republican voters. And the Republican states? Forget about it

* AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.

His memoir, "The Conspirators: Secrets of an Iran Contra Insider," (http://www.almartinraw.com) provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published weekly on Al Martin Raw.com, which also publishes a bimonthly newsletter called "Whistleblower Gazette."

Al Martin's new website "Insider Intelligence" (http://www.insiderintelligence.com) will provide a long term macro-view of world markets and how they are affected by backroom realpolitik.

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