How The Affordable Care act or Obamacare will create jobs

This is going to be long sorry but I promise if you read all the way through to the end you will learn something and you should learn something new everyday.

Telling insurance companies what to do is not going to cost jobs in fact it will be a net creator of jobs over time.

In fact there are three ways it will be a net creator of jobs.

The insurance companies love the Affordable care Act or Obamacare because it is going to give them millions of new paying customers and consequently billions of dollars in revenue. Many of these customers will be young and healthy so low risk customers as far as the health insurance companies are concerned. Some of these people do not have health insurance now because they figure they can risk it as they are young and healthy. Others do not have health insurance because they cannot afford it. That is where subsidies will come in to cover the short fall for low income individuals.

Just look at how the stocks of the big health insurance companies have performed since The Act was passed in 2010. The S&P 500 is up just over 28% from March, 12th 2010 to today’s date the 4th of October 2012. Humana(HUM) is up almost 57% from that date, Aetna(AET) is up almost 36% and United Health Care(UNH) is up over 71%!!! To outperform the over all market by over 250 percent is huge. If you had bought a S&P 500 index fund for $500 in March of 2010 it would be worth $642 before fees and commissions today. If you had bought UNH for the same $500 it would be worth $858. Picking an individual stock is risky though so even buying a Health Insurance ETF would have netted a gain over the S&P 500 just not as much of one. Four of the five big health related ETFs outperformed the S&P500 over the same time frame

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The individual and small group market is badly broken in the US. The people in these types of plans do not have the economies of scale to drive down premium costs. Everyone knows buying in bulk saves money over the long term and the same is true with health insurance. Big companies, big groups or big governments can get better rates because they are buying so much. The Health Insurance Exchanges that will be set up under the Affordable Care Act make this bulk buying possible.

All these millions of new paying customers that are relatively low risk make it possible for insurance companies to cover higher risk individuals. This includes older people, people with pre-existing conditions and/or chronic conditions that need long term care. Insurance is all about spreading the risk out over a larger group to minimize individual losses.

Think of it like a three legged stool. You need three points in a plane for a stable platform. Those three points will always create a stable stool because they are all in the same plane. I have already talked about the last two points as they are the incentives but there is a cost component as well. There has to be a cost component as at the end of the day the insurance has to be paid for.

The cost component is the individual mandate. Everyone has to have insurance so there is not a free-rider problem. Everyone needs to pay into the system in order for the insurance companies to cover older more expensive individuals and people with pre-existing and/or chronic problems. Without the mandate you cannot have the other two legs of the stool and it will fall over. There will not be a way for insurance companies to pay for the costs incurred by offering insurance to sick people at reasonable premiums. They will not be able to cover pre-existing conditions without the premiums from younger healthier people.

That is why Romney’s, “lets leave it up to the states plan,” will not work.

Not all states are going to set up plans that use all three legs. Most of the objections form the states that sued about the Affordable Care Act were in response to the Individual Mandate. The coverage for pre-existing conditions and older/sicker people only works if everyone buys in. No individual mandate then no coverage for these people. Romney cannot say that he will keep coverage for people with pre-existing conditions if there is not also near universal coverage. The universal coverage provided by the individual mandate also makes possible things like eliminating lifetime limits, eliminating rescission(when a health insurance company drops a customer because they are too sick and costing too much money) and offering better preventive care.

Now the individual mandate can be bypassed by the states if they can find a way to get to universal coverage without it. I think the individual mandate is the easiest and most logical way to do it but according to the law the states do not have to use it. Find a way to get to universal coverage without an individual mandate and the intent of the law is satisfied.

Romney knows all of this because remember Obamacare is modeled after Romneycare from Massachusetts. Before Romney got it passed in Massachusetts the idea of an individual mandate to promote universal coverage and get sick people onto the health insurance rolls was a Republican idea from the early 1990s. It was the Republicans market response to the Clinton’s health care overhaul.

Better preventive care is what is going to help us bend the cost curve down and actually reduce our health care costs over the long term. Everyone knows when it costs more to fix something after it is broken then it costs just to maintain it in the first place. All of these people on health insurance now are going to be getting preventive care that will hopefully catch minor problems before they end up as a more serious problem, an Emergency room visit or worst case a death. The Emergency room is the most expensive place to get health care. The more we can reduce Emergency room visits the more we can drive down health care costs. Diabetes, high blood pressure, high cholesterol, heart disease, obesity plus many more medical conditions are preventable diseases that more frequent care and wellness visits will reduce.

Catch the guy with high cholesterol and high blood pressure before he has a heart attack or a stroke that requires an emergency room visit. Get him the drugs he needs to help bring his blood pressure and cholesterol down before a cardiac surgeon has to crack open his chest and try and repair a damaged heart. The stock market agrees with this approach too. The market as a whole things it is a winning strategy and that it will make Pharmaceutical companies more money. How do I know that? Of the five big health care ETFs that I mentioned earlier the one that is up the most since March of 2010 is the pharmaceutical one ticker symbol PJP. It is up 79.73% as I am writing this versus the S&P 500’s 28.14%.

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So there you have it one way that the Affordable Care Act will create jobs in the health care sector by bringing in millions of paying customers for health insurance companies and drug companies.

The second way is the obvious way. All of these people are going to need more doctors and nurses. I think that goes without saying and does not require almost two pages of explanation.

The last way the Affordable Care act will be a net creator of jobs is a little more subtle.

Right now if you have a good paying job that provides good health insurance from a large company and you want to leave that company to start your own small business you have a hard choice to make.

Take the risk of starting a small business and follow the American Dream of being your own boss. Be an entrepreneur make your own way in the world then compound that risk with either not having health insurance or paying enormous premiums for individual coverage. Remember the individual and small group market is broken because there are no economies of scale. You have to buy in bulk to save money and as an individual or small group you simply cannot do that.

With the Affordable Care Act you would be able to get affordable individual coverage because of the economies of scale that will come aboutwith the Health Insurance Exchanges. Leave your big company with good health insurance to start that business and while there are still lots of risks the cost of health insurance will not be one of them.

I know this is the case because I work with people who in the past had their own small businesses. One of the reasons they cite for not going back into business for themselves is the enormous cost of individual health insurance plans. A small business is risky enough without the chance that your already expensive health insurances costs might go up by 30 plus percent the next year. In the past the premiums for small group and individual health insurance plans have increased by that much or more in a single year.

Someone who wants to go back to school to better themselves would be in a similar situation. If they have a pre-existing condition now and they leave their current job to go to graduate school that have two choices unless the university offers group insurance to their students. Some universities offer a group plan insurance to their students but not all universities do. Pay an enormous amount of money for individual insurance or go without health care coverage and risk a financial calamity. Take the risk going without health insurance and even if nothing catastrophic happens if you have a pre-existing condition getting that condition covered again when you have health insurance in the future might be impossible or much more expensive.

I am not the only person saying this.

None of that works without the three legs of the stool I mentioned before.

Everyone has to have coverage and in order for everyone to have coverage you have to set up these Health Insurance exchanges to offer affordable coverage to individuals plus enact subsidies to bring the cost down for those that cannot afford insurance.

The low risk individuals make it possible for health insurance to be offered to higher risk individuals and for pre-existing conditions to be covered.

Without those two things, low risk people in the pool and universal coverage you cannot cover higher risk people or coverage for pre-existing conditions.

There you have it. Three ways the Affordable care act will create jobs not cost jobs.

First, more customers for health insurance, pharmaceutical and other health related companies. The movement on the stocks shows that the marketplace thinks these companies will make more money with the law in place.

Second, more health care professionals at all levels will be needed. Not just doctors and nurses but support staff as well. Expensive ER visits will hopefully go down while less expensive primary care visits should go up.

Third, increased flexibility for workers to start their own business, go back to school or take another job with a smaller company that might not have the buying power of a large company.

I am sure not everyone will agree with all that but I hope you at least learned something because right now overall the general public is chronically misinformed on issues like this.

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More reasons a viable third party is needed in US

This election just offers up more proof of why a viable third party is needed in the US.

Just by looking at the exit polling data it is very clear.

ABC Exit Polling

Another result further underscores general public discontent and sounds a cautionary note for the Republicans in the midst of their victory. Just 43 percent of voters expressed a favorable opinion of the in-power Democratic Party, vs. 52 percent who saw it negatively. But on the Republican Party, it was essentially the same — 41 percent favorable, 53 percent unfavorable.

CNN Exit poll data

Link to Full Exit Poll Data

So as you can see from the exit polling data the voters do not approve of the Democrats but they don’t approve of the Republicans either. So in this tsunami of a historic election where the Republicans won in numbers that haven’t been since around 1930, when it was the Democrats who crushed the Republicans, the voters really don’t care for the Republicans either. The Republicans just aren’t the Democrats and that is just fine with the average voter right now.

If there was a viable third party in this country then people would have someone to vote for besides just the other guy that they hate just as much as the third guy.

http://www.cjr.org/campaign_desk/six_nuggets_from_the_2010_exit.php

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Party Realignment in the United States

I have always been a big fan of the Theory of Political Party Realignment. The American political system is set up to keep change from happening too quickly. The whole check and balance system is set up so that no one part of the federal gov’t can overpower the other and that slows down change.

That natural inertia in the political system has a tendency to build up tension in the system. Much like in plate tectonics when tension builds between two continental plates it much be eventually released in some type of seismic event.  The longer the tension builds up the more powerful the quake.

We have had a realignment of the political parties in the US in a long time.

Depending on which theory you buy into the last realignment happened during the civil rights era and continued into 70s with Nixon’s Southern Strategy.  At that point the south, for the most part, started voting for Republicans at least in federal offices. This makes sense as the GOP really represented the values and principles of the south and the Democrats did not. The only reason the South voted democratic was because the GOP was the Party of Lincoln. There were still a handful of Dixiecrats or very conservative Democrats, Zell Miller comes to mind as an example, but for the most part the South switched to Republicans by the end of the 70s.

The other date for the last Realignment in American Political parties is 1994 and the Republican’s rout of the Democrats to gain control of Congress for the first time in decades. In response to this Clinton tacked the Democrats more to the right, a good thing in my opinion, got welfare reform done as one example of that. The Republicans completed their takeover of the South and fully consolidated their base with the Evangelicals.
That evangelical base allowed the GOP to come back from spending too much time trying to stick it to Clinton and win back the executive branch while also holding onto Congress. The Democrats being pussies and not using Clinton’s popularity to help campaign helped. The Democrats being pussies help the Republicans win elections a lot.

So either of those you pick it has been a while since a realignment when you consider we have had one about once ever generation or so.  You could even consider those two periods of time the start of the realignment and the end of it. It started with the Civil rights act of 1964 and finished with Welfare Reform act of 1996. That is if you want to put more specific dates on it. I don’t know if I would use those exact dates but in that general time period works.

Now we are entering what I think is the start of the next Part Realignment in the US. It started with Obama’s election which was truly historic. That was the epicenter of this upcoming political earthquake that will be the next realignment. That event spawned the Tea Party crowing about deficits and wasteful spending. Keep in mind these were things that they didn’t to seem to be that concerned about as long as it was a Republican in the White House.  A Republican Administration that ran up a larger deficit through tax cuts, unfunded prescription drug mandates, two wars and a huge expansion of private contractors for all parts of the federal gov’t.

Lets just ignore that for now.

The Tea Party is at least partially in control of the GOP now.  They have won a lot of primaries, though I think they will lose many of those general elections on Tuesday, and they have defeated establishment backed candidates in some of those primaries.

Jim DeMint will head some type of Tea Party Caucus in the Senate and Michelle Bachmann is already heading up a Tea Party Caucus in the House. Those freshman and senators and congresspeople who won with Tea Party support will have real power and will have at least a portion of the more senior GOP people backing them with even more power. They wont’ have control over the entire GOP though.

There is still that Evangelical base with real power in the GOP. The Tea Party has so far stayed away from the social issues that drove the Evangelicals’ power and fervor.  I think that social issue conservatism is just right under the surface at the Tea Party however, and will come out eventually. At that point what happens?

Do the more libertarian members of the tea party break up the coalition?  Or do they hold their noses like the social conservatives did in the past? I don’t know but I think we will find out in the next two to three election cycles.

My thought is that the Tea Party will eventually implode the Republican Party from the inside. The drive for ideological purity, which seems to stem from the Tea Party based on how they challenged so many incumbents in primaries, will finally drive out the final few GOP moderates.

Those GOP moderates will see the Blue Dog Democrats as close cousins. There won’t be many of Blue Dogs left in Congress most likely as I think the majority of them are going to be replaced by Republicans in the next two election cycles. That is going to create a Democratic party that is more liberal and a Republican party that is much, much more conservative.  Nothing will get done as a result and there will be gridlock in congress that will make the gov’t shut down of 1994 look like a long snow weekend in DC.

Out of the ashes comes the exiled moderates form the two parties.  The Republicans implode first as they started losing their moderates earlier and most of their moderates were driven out by the party internally not voted out in a general election.

The Democrats don’t last much longer though and also collapse though not as quickly as they still have the big tent party philosophy that the Republicans lost.

Third parties can’t survive long in the US system though so I don’t really see a third-party developing completely. It would be nice if it did I just don’t think it is likely. More likely I think is a situation where the moderates cool down the tempers of the far right and left and let some things get done for a few years. Maybe two election cycles but probably not more than that.

If the moderates can hold out long enough they should spin-off some of the extremists from both parties and hopefully two more reasonable major parties from the ashes. The parties are realigned and we can get some stuff done.

As I said I would love a strong viable third-party to be born out of this I just don’t see it happening for more than a brief amount of time.

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Why am I making another post about Christine O’Donnell

My first response would be, “I don’t know,” but I have actually come up with a reason.

I was just watching the video of her exchange with Coons at Law School debate broadcast on the AM station WDEL 1150.  David Weigel has the video up on his blog here. I have read several quick blogs and stories about this but so far I think all have missed a key point.

The audience, mostly law students I imagine, laugh at what O’Donnell says.


The thing is this isn’t a joke. This is one of the things that extreme strict constructionist and/or literal interpretation i.e. the Constitution is a dead document types believe. It is an extreme example of it but it is what they do. ‘Separation of church and state’ are not in the Constitution exactly word for word but the phrase, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech,” is generally interpreted as such. Jefferson sort of coined the phrase in his letter to Danbury Baptists, yes shocking before the rise of the evangelical religious right Baptists were for a separation of church and state.

If it isn’t in the Constitution word for word then it doesn’t count. Reminds me of an argument I got in at another forum when someone started a thread asking when the US became a Socialist country. Her claim was the United States form of gov’t is Capitalism and Obama was making the US a Socialist country destroying it so he should be removed from office.

After myself and several others pointed out that the neither socialism or capitalism are even forms of gov’t at all but really economic systems I asked her what form of gov’t does the US actually use. She dodged the question or ignored it for days. Then when I pressed her on it said she wasn’t going to answer because whatever she said I would just turn it around and use it against her and because I was attacking her and calling her stupid.

Then I explained what form of gov’t the US actually uses, federal constitutional representative democratic republic in long form, and where the various parts come from.

This got another angry post from one of the wing nut members on the forum who was a good bit smarter than the OP.

The US isn’t a constitutional republic full stop because the word ‘federal’ and “democratic’ are not used anywhere in the Constitution. That got a laugh line out of me too but he was dead serious. The Constitution never uses those two terms but it does describe mechanisms in the function of gov’t that are exactly what a federal democratic system would be.

Didn’t matter to him though he knows his Constitution, has been reading it and carrying it with him for over 50 years, and if the exact words aren’t in the Constitution then it isn’t in the Constitution.

O’Donnell seems to be another one of these types of truly literal strict constructionists and that is a scary thought for most anyone in this country.

The gaffe isn’t that she doesn’t know what is in the Constitution, though from the exchange on the 14th, 16th and 17th amendments she doesn’t have a very good idea of what is in the Constitution. In fact she gets the 17th amendment wrong saying at around 3:40 that “it gives the power for the state gov’t to determine who represents you in Washington,” but then she does sort of get it at least partially right by mentioning free elections.

Just for reference the 17th amendment is generally called the direct election of senators amendment.

Also she seems honestly surprised that the 14th amendment is the amendment that establishes the modern definition for citizenship and gives you the equal protection clause.

Lastly I agree with the moderator as anyone who is campaigning at least somewhat on tax reform should know what the 16th amendment is.

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No, you are not me or us.

 

No, Ms. O’donnell you are not me. You are not even representative of your age group and gender. According to the just released National Survey of Sexual Health and Behavior as seen here

According to the graph right here 65% of women in Ms. O’Donnell’s age group engaged in masturbation while alone. Not exactly in the majority there with her views. In fact so far outside the mainstream she is nearly an outlier.

 

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I like the word musings

Introduction:

So what is this blog about?

Cars? Sure sometimes

Politics? Anyone from Finalgear would know that I will get into that sometimes.

Food? Sure I like talking about food and recipes I come up with.

In short I guess it is about whatever I want it to be which is good. It is my blog, my thoughts my musings I can say what I want.

My wife has been bugging encouraging me to write a blog for months now. “You are smart,” she says, “and you write so much already why not put it all in one place instead of having it all the web?”

“Because where I write I at least know people will read it and I get feedback be it positive or negative. If I put it at my own particular part of the web I don’t think anyone will really read it.”

Well lets see if anyone reads it over here away from my usual audience.  I finally got enough encouragement to try this out. From my wife talking about it all the time to certain posters at finalgear.

Comments like, “The voice of knowing stuff,” and “It’s like an information bitch-slap,” prodded me along.

That being said some standard disclaimers that I have seen other people post. I sell cars so I will put up pics and short little reviews of cars I get in sometime. Maybe I will even do videos if I get around to it. My posts are my own and unrelated to my employer. I don’t think politics and business mix well so I will do my best to separate them.

I hinted that I was going to do this first when talking about Party realignment in the American Political system. I am going to get to that but I need to do some more research first. I do love my research all neatly organized out ahead of time so I can just plow into it later on. It is about the only thing besides my tools that I ever organize.

We do have some new cars in at work so I will put up pics of those eventually. There are 2010 Saab 9-5s in and 2011 Volvo S60s too. Plus there are some interesting used cars in like a BMW 550i with a six speed manual. There are always cool cars floating around somewhere. Though the cars I find cool as someone in ‘the business’ are probably a little different then the cars the average person finds cool.

There you have it first blog post just a general introductory little blurb. I tend to be wordy when I really get going on a subject I have done a ton of research on so you have a fair warning for the future.

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