It’s early November, but today’s article may well be one of the most important of the year. In my view, barely less so than January 2nd’s “direst prediction of all,” when I discussed my rational for collapsing commodity prices for years to come. Which, I might add, was written when WTI crude oil was $53/bbl vs. $45/bbl today; and the CRB Commodity Index, at 230 vs. 195 today, having briefly touched a 40-year low of 185 in late August.
In yesterday’s “how’s Economic Mother Nature doing?,” I quantitatively demonstrated that despite relentless manipulation of “last to go” markets like the “Dow Jones Propaganda Average” and paper PMs (per last night’s 120th “Sunday Night Sentiment” raid of the past 124 weeks, and 540th “2:15 AM” attack of the past 617 trading days); and unprecedented money printing from the ECB, BOJ, PBOC, and dozens of other “final currency war” participants; the “unstoppable tsunami of reality” is wreaking havoc on global commodities, currencies, economies; and yes, many financial markets as well.
Moreover, since October 2014’s “end of QE – LOL” and “countdown to the Yellen Reversal,” I’ve vehemently discussed why raising rates was not only impossible – for the Fed, or any Central bank – but that such a move would be financially and economically cataclysmic. To the contrary, negative rates and “QE to Infinity” appear to be far more likely scenarios; which in Europe, Japan, China, and countless other nations, has already proven to be the case. In fact, the below chart demonstrates just how comical the Fed’s current pretense of “leaving the door open” for a potential December rate hike is – given that U.S. manufacturing activity has plunged to its lowest level since the 2009 financial crisis. Not to mention, Whirlybird Janet continues to insist “employment” and “inflation” are the two most important inputs to the Fed’s monetary policy decisions – whilst the Labor Participation plunges to a 37-year low; and the BLS’ own “inflation gauges,” like the CPI, flash negative results.
Since the Fed supposedly “ended” QE a year ago, all global economies have plunged; and nearly all financial markets as well – particularly, commodities and currencies. Meanwhile, debt of all kinds have started to go parabolic; and the aforementioned, unprecedented overcapacity of everything from commodities, to infrastructure, to government itself suggests the bleakest economic outlook in decades. As I put it last week, the “worst global economy of our lifetimes.” And now that the U.S. has been armed with a spanking new, $19.6 trillion “debt ceiling” – which will immediately be deployed to send troops to Syria, amongst other atrocities – the outlook for monetary inflation has never been higher; and with it, economic stagnation.
However, amongst these horrific economic headwinds – and countless others – the true “bullet to the head of the 2016 economy” may well be Obamacare; as its ever-expanding Communist reach promises to bankrupt countless thousands of lower and middle-class households; accelerate the Federal government’s financial collapse – and with it, the Fed’s money printing; and create a staggering fascist miasma of corruption, inefficiency, and wealth disparity.
To that end, let’s go back to my June 29th, 2012 article, “S.C.O.T.U.S. changes the U.S.A. to R.U.S.S.I.A” – in the aftermath of the Supreme Court’s unfathomable decision to uphold Obamacare, in a 5-4 vote in which the only justice to vote against party lines was Chief Justice Roberts, a Republican appointed by George W. Bush. In other words, the reason Obamacare exists is because, incredibly, a Republican voted in favor of it – no less, the most influential Republican judge on the planet. To wit, here’s what I wrote at the time.
“The U.S. Supreme Court just registered its worst decision in America’s 230 year history. In a nation already generating $1.5 trillion in annual deficits – on the verge of yet again breaching its debt ceiling; amidst an environment of economic freefall and unending war; accumulating tens of trillions of new debt to pay for universal healthcare is financial suicide. Moreover, the government destroys everything it touches – so giving it the authority to manage healthcare will surely yield dramatic productivity declines and cost increases.”
And here’s the gist of the MUST READ article I wrote a year later, in June 2013’s “Obamacare Catastrophe.”
“I have long written of Obamacare being the singularly most destructive piece of legislation Congress has ever passed.”
Well, in the 2½ years since the latter article was written, so much else has gone economically FUBAR, the “pink elephant” Obamacare was, in effect, temporarily forgotten – particularly when the “employer mandate” – to insure all employees in companies with more than 50 employees – was deferred in early 2014 until…drum roll please…the end of 2015. I.e., next month. To that end, it’s no “coincidence” that labor participation has plunged since said deferral – and with it, real wages. Not to mention, “weekly jobless claims” – as more and more people are forced to become part-time workers, ineligible for unemployment insurance, by companies reducing full-time, Obamacare-eligible payrolls ahead of the December 2015 deadline. Which is probably why retail sales have plunged to 2009 levels; as consumer debt – particularly, of the subprime pursuasion – has exploded.
Of course, the “employer mandate” is just a small part of the unmitigated carnage Obamacare will wreak – as tens of millions of people are, today, in the market for health insurance renewals – or new plans entirely – in which the average premium increase is likely to be well above 30%; often, for far inferior coverage. But don’t worry, the Fed claims there’s no inflation. And thus, whilst the “99%’s” borrowing rates will continue to soar – based on the aforementioned student and auto loan figures above, for example; it’s savings rate will likely be held at zero (or lower) “to Infinity.”
“Based on data from the Washington Examiner, 231 insurers requested double-digit percentage premium price hikes for 2016, as opposed to just 121 in 2015. Furthermore, the magnitude of the hikes will be much greater in the upcoming year. A whopping 126 plans aimed for a minimum 20% premium hike, 61 plans attempted to justify a 30% premium boost, 26 policies are targeting a 40% price jump, and a dozen plans actually requested a 50%-plus premium jump for 2016.”
Why do I bring this up today, you ask? Because when my current plan, from Golden Rule/United Healthcare, didn’t demand its usual 15% or so annual increase when my current term ended in August, I started to get suspicious – particularly when last month, my neighbor told me his premiums were, for no particular reason, being raised by 50%. When two weeks ago, I received a letter from Golden Rule claiming that, due to a lack of Obamacare compliance, my current plan is “no longer being offered in Colorado” – and that a new plan alternative would be sent to me shortly – I became deathly afraid, even after my Golden Rule rep assured me the new plan would be similar to my current plan. Well, on Friday afternoon I received my new plan proposal – which not only demanded a 28% premium increase, but a 60% increase in both my deductible and maximum out-of-pocket payments. And the scariest thing of all is that when my wife started researching alternative plans a few months back, she was told we are literally not allowed – per Obamacare – to switch plans midstream. In other words, Communism at its worst, which is exactly what is inferred in the aforementioned “S.C.O.T.U.S….” article.
Which unfortunately, is only the half of it – as care of the aforementioned, unfathomable inefficiencies, corruption, and mathematical incongruity, ten state “healthcare exchanges” have been closed down – or are in the process of – following roughly $1 billion dollars of losses since opening less than two years ago; much of which will never will be properly accounted for. Including, I might add, the one in my home state of Colorado; and ex-home state of New York.
Amongst the painfully logical causes of Obamacare’s ongoing economic collapse – excluding fraud, of course – are the following, according to this informative article. And a word to the wise before reading them. Don’t eat a large meal, as you are apt to get nauseous.
- 1. Medical loss ratios are simply too high – In 2010, before Obamacare was the law of the land, just 21 states had an MLR of 80% or higher. That is, the percentage of of client premiums spent on patient care and plan improvements. However, under Obamacare, insurers are required to spend a minimum of 80%, severely reducing health insurers’ profitability. Not surprisingly, by 2014 all 50 states had an MLR of at least 80% – as mandated by Obamacare – with an average of a barely profitable 92%. Moreover, ten states, and Washington D.C., had average MLR’s above 100%.
- Not enough young adults are enrolling – In 2014, the penalty for non-enrollment was akin to a slap on the wrist, at the greater of $95 or 1% of modified adjusted gross income (MAGI). In 2016, this figure is jumping to the greater of $695 or 2.5% of MAGI; but even with these inflated penalties, which could result in tax penalties of $1,000 or more for some consumers, the cost of purchasing healthcare is much higher, even when tax benefits are included. According to Bloomberg, the average nationwide silver premium in 2015 was $307 per month, or nearly $3,700 per year. As individual mandate penalties cost nowhere near a full-year Obamacare plan, most young adults prefer to take their chances with the penalty, and save their money.
- The Congressional Budget Office estimates were way off from the start – The CBO’s original Obamacare enrollment estimates have proven to be widely inaccurate. The latest estimate from the CBO is that 10 million people will be enrolled by the end of 2016. However, in its original estimates – prior to the launch of the Obamacare exchanges in October 2013 – the CBO predicted 21 million people would be enrolled by the end of 2016.
In other words, Obamacare hasn’t even close to been fully deployed – and already, it has degenerated into a cesspool of corruption, inefficiency, and failure. Healthcare companies are going bankrupt; individuals are experiencing massive premium increases and lesser coverage; and all the while, the ever-expanding, “too big to fail” healthcare sector” – which by the way, represented the largest component of third quarter GDP growth (the weakest print in two years, I might add). Which, in and of itself, shouldn’t be considered “GDP” in the first place, given that nearly all healthcare spending is non-profit generating.
Again, “renewal season” for 2016 premiums – for myself, and millions of others – started this weekend. And thus, the cumulative collapse in U.S. household budgets due to this unfathomable health insurance horror starts now. And thus, if you think today is the “worst global economy of our lifetimes” – or that Central bank monetary lunacy has plateaued, you “ain’t seen nothing yet!”