The Obamacare Follies: Ed’s Daily Notes for October 15th   Leave a comment

New York Times: From the Start, Signs of Trouble at Health Portal

You know Obamacare is in trouble when the New York Times runs articles like the one above. What struck me was the fact the government contracted 55 companies to design various parts of the healthcare exchange website, but they didn’t finish writing the regulations until this past spring. So they expected 55 companies to design and build a functioning website in 6 months? If they were building a blog, I could believe it, but not a website that is supposed to serve as a portal between insurance consumers and multiple insurance companies. Even better: The Department of Health and Human Services was responsible for testing the software. How much experience does this government agency have in testing websites? Clearly not enough, based on the results.

Also, I recommend Megan McArdle’s review of the NYT article at Bloomberg. As always, her writing and analysis is top-notch.

McArdle brings up a valid and rather scary point:

If the exchanges don’t get fixed soon, they could destroy Obamacare — and possibly, the rest of the private insurance market. The reason that the exchanges were so important was that they were needed to attract young, healthy people into the insurance system. The worry was that if insurance is hard to buy — if you have to do your own comparison shopping and then call the insurance company, and fax in some paperwork and two years of tax returns — that the young and the healthy simply won’t do it. Sick people and old people who were getting huge subsidies — and maybe the ability to buy insurance on the private market for the first time in a long while — would overcome any obstacles, because if you’re spending $15,000 a year on health care, it’s worth a lot of your time to make sure that you have insurance. But if your biggest annual health-care expense is contact lens solution, you may just decide to skip it and pay the fine.

The administration estimates that it needs 2.7 million young healthy people on the exchange, out of the 7 million total expected to apply in the first year. If the pool is too skewed — if it’s mostly old and sick people on the exchanges — then insurers will lose money, and next year, they’ll sharply increase premiums. The healthiest people will drop out, because insurance is no longer such a good deal for them. Rinse and repeat and you have effectively destroyed the market for individual insurance policies. It’s called the “death spiral,” and the exchanges, like the mandate, were designed to keep it from happening.

Without the exchanges, the death spiral seems almost assured. The amount of work required to find a policy, figure out your subsidy, buy coverage and file the paperwork will be very high. And it’s unlikely that folks who can’t even be bothered to go to ehealthinsurance.com right now will do it. The Affordable Care Act made the task of signing up young healthy people on the exchanges even harder with its much-loved requirement that companies allow kids to stay on their parents’ policies until they’re 26, which took millions of potential buyers out of the pool. The ones who are left are going to be disproportionately poorer and less well educated than the middle-class offspring who can get cheap insurance through mom and dad. There’s a reason that virtually every person you’ve seen written up in an article as they tried to get insurance at a community center or clinic is some combination of over 55, retired or afflicted with a serious chronic condition.

Without a functioning website, this government program could destroy the health insurance market. Knowing this, I would avoid investing in health insurance companies. Even with government subsidies, they may not be able to stay ahead of the “death spiral”.

Bloomberg: How Mongolia Brought Nomads TV and Mobile Phones

Above is a link to a great story about my favorite frontier market. Recommended reading.

Washington Post: NSA collects millions of e-mail address books globally

Every now and then, I will veer from the investing/money theme of this blog, especially when I a story irritates me:

The National Security Agency is harvesting hundreds of millions of contact lists from personal e-mail and instant messaging accounts around the world, many of them belonging to Americans, according to senior intelligence officials and top-secret documents provided by former NSA contractor Edward Snowden.

The collection program, which has not been disclosed before, intercepts e-mail address books and “buddy lists” from instant messaging services as they move across global data links. Online services often transmit those contacts when a user logs on, composes a message, or synchronizes a computer or mobile device with information stored on remote servers.

Rather than targeting individual users, the NSA is gathering contact lists in large numbers that amount to a sizable fraction of the world’s e-mail and instant messaging accounts. Analysis of that data enables the agency to search for hidden connections and to map relationships within a much smaller universe of foreign intelligence targets.

During a single day last year, the NSA’s Special Source Operations branch collected 444,743 e-mail address books from Yahoo, 105,068 from Hotmail, 82,857 from Facebook, 33,697 from Gmail and 22,881 from unspecified other providers, according to an internal NSA PowerPoint presentation. Those figures, described as a typical daily intake in the document, correspond to a rate of more than 250 million a year.

Each day, the presentation said, the NSA collects contacts from an estimated 500,000 buddy lists on live-chat services as well as from the inbox displays of Web-based e-mail accounts.

Think about this: How many people do you know only through the internet? Perhaps you have a shared interest with them, but you really don’t know anything else about them. Maybe you add them to one of your friends lists.

Now, what if THEY know a terrorist? All of a sudden, the FBI is hitting up the FISA court to collect the rest of your online records. Of course, they start surveillance on you, and maybe find out you’re not guilty of anything, but maybe they discover some things you’d rather not have revealed publicly. Who knows where that information goes? Forget having a political career, because it is entirely possible that someone in power could get that information and use it against you in a campaign (hello Herman Cain!).

What does it take to get you to look at your own government with suspicion? It is already obvious they look at YOU that way.

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Posted October 15, 2013 by edmcgon in Editorial/opinion, Market Analysis, News, Politics

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