"This Law is so good...."

"...That I'm delaying even more parts, that I'm sure you'll love, until after the election."

Now that the fourth 'Recovery Summer' is drawing to an end. The White House was supposed to take time to reintroduce the public to the Affordable Care Act, commonly called Obamacare, and to teach the public how to sign up for benefits this fall, which is critical to the success of the law. If the young and healthy don't sign up, well, it is the difference between rates falling and rates rising for the elderly and sick, the persons Obamacare is suppose to help. In a nutshell, Obama needs the youth vote to save his legacy yet again.

The White House has had little time to focus on the fight to get young people signed up. Instead, this month kicked off with the Obama administration deciding to offer personal tours of the White House as a cheap alternative to the sequester cuts. Just kidding, yeah, he used the frequented God provision in Obamacare to delay a key piece of the law. The requirement imposed on larger employers of 50 or more people to provide coverage or risk fines. This is making many pundits cry foul because this leaves the individual mandate, and it's newly Supreme Court minted taxes, in place. The same individual mandate that is supposed to help force the young and healthy to go out and buy insurance. Take away the mandate, and premiums for Obamacare will, in most places, skyrocket.

Seeing a structural weakness in the law and a logical argument to hammer it with, the Republican-led House this week voted to delay the individual mandate for a year to match with the other decree. It was the 39th such vote trying to defund, delay, or outright dismiss the law. This has forced the White House to change their marketing from a sales pitch to sign up back to promoting the law itself. One can't help to chuckle a little at the idea that one man can declare a delay for one part of the law, but largest single body of elected officials in Washington is rendered mute when they try and do the same.

That one man, President Obama surrounded himself with smiling beneficiaries of the parts of the Affordable Care Act already in effect yesterday. Among those singled out: those who have been on the receiving end of a somewhat obscure provision requiring insurance companies to pay rebates to policyholders if the companies spend too much on administrative costs rather than medical expenses.

"Dan Hart, who's here, from Chicago, had read these rebates were happening, but he didn't think anything of it until he got a check in the mail for 136 bucks." -President Obama 7/16/13

Of course if Mr. Hart is a healthy 25 year old non-smoker who had individual insurance, then the 136 bucks for last year would cover only about 10% of his rate increase for this year, but I digress.

This year an estimated 8.5 million checks mailed out thanks to the law's "medical loss ratio" rules. That's actually down from the 13 million from last year and is expected to keep falling as companies adjust their business models to fit the new law. Also, since corporations aren't people and the majority of those checks are going to businesses, the number here is greatly inflated. And, while the President is talking about a few million people getting refunds of $100 or $200, Republicans have been talking in much more expansive terms.

Despite recent CBO projections that keep estimating a reduced number of people enrolling in the exchanges, based on numbers that are well under predictions, and fewer tax credits being handed out as a result in these lower enrollments, the net cost projections over ten years has been increasing every year and now sits in the net range of $1.3 to $1.4 Trillion dollars, net. I give a window since these estimates are constantly changing, usually for the worst. The February to May estimates resulted in a net cost increase of $40 billion.

Not enough people signing up mixed with ever increasing costs. I'd say that this is a disaster, but once again, I mention that this is what the bill is supposed to do. Maybe not tomorrow, maybe not next year, but several years down the road, there will be only one fiscally responsible route to take, that is to force everyone into the healthcare exchanges. Once that is completed the rules of the exchanges will become so tightened as force most of the healthcare providers out of the game. Once selection drops to a point, the only morally responsible thing left for the government to do is take control of all the insurance plans, standardize them, and convert our country into a single payer system.

Support it or fight it, I just wish for everyone to know where this battle is ultimately heading.

You Can't Spend Your Way Out of This

This past Tuesday, the Congressional Budget Office (CBO) released a report that says that the budget deficit will grow through 2023 and it states that it will eventually require the government to raise taxes, reduce benefits and services, or undertake some sort of combination of the two. Here is the kicker, these steps will be needed just to cover the interest payments.

You know that point when you have a mortgage or student loans, you've been making your payments, painful as they may be from month to month, then look at your end of the year statement and realize the principal isn't going down. That all the money you've put into these payments are just for the interest. The country is starting to get that way.

The CBO projects that interest rates on the Ten-Year Treasury Note will rise from 2.1 percent currently, to 5.2 percent in 2017. A mix of every bond ratings declining and the fed continuing to eat most of the free market action on bonds has helped keep this rate artificially low for some time, but the CBO is projecting that these rates will not stand over the next 5 years. Since the government usually pays no more then the interest in it's debt anyway, and is still borrowing at ridiculous levels, our payments to service the debt, a topic getting not nearly enough explanation during the fiscal cliff crisis, will go up... by a lot.

In December, the Treasury Department reported that total interest bearing debt owed by the government carried an interest rate of 2.5 percent. FY2012’s interest payments on our debt was in the neighborhood of $360 billion. If interest rates overall reflect the CBO’s forecast for the benchmark, these interest payments alone will clear the $1 Trillion mark by 2017. At which point we will be spending more on debt then on education, or welfare, or even national defense. It would also equal about the amount of money we have to borrow now to just make it though a fiscal year.

What an odd coincidence that Obama will be out of office at the end of 2016. But, like a first divorcee of a gold digger, we get stuck paying off the bill for this multi-year shopping spree. Leaving us with the choice of paying our obligations to our debt, or spending money on frivolous things like Social Security or Medicare. 

Couple this very predictable crisis with the possibility of dipping into another recession if the can-kicked sequester on defense spending proceeds and the economy doesn't see a turn around in the next, oh, lets say, three to five hours. Another recession and more spending could also push us into more bond rating trouble, which could push the 5.2 percent guesstimation of the CBO even higher, causing even higher payments, well, you can see how this can go from horrible to downright cataclysmic if everything doesn't go according to plan.

Or, the more likely route, the fed will continue to buy up bonds with this magical invisible stockpile of money they have. Shoring up Social Security and Medicare as they start to pay out more then they take in in the trillions. All the while this is used as an excuse to raise tax rates and come up with new things to pay tax on, (Internet Tax?) while never addressing the real problem, that this government (note that I'm not singling out the president) has a significant spending problem.