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Obamacare: Where We Stand, March 31st Edition

Health Overhaul Uninsured

The March 31st deadline for enrolling in Obamacare has come and gone. How fast time flies.

It was only late last year that the March 31st hard deadline was created. Oh, you don’t recall? The March 31 deadline for signing up was created in the end of October. Initially, you needed to have active insurance by March 31st, not just successful ‘enrollment’.  Under the law, to successfully meet the rules of the individual mandate, you needed to enroll by March 1st, in order to have active insurance by the deadline of March 31st.  And furthermore, this new deadline had been held as the final date; until, of course, the Administration allowed another waiver for anyone ‘enrolled’ to complete the enrollment process well into the month of April.

In any case, this is now, technically, the day by which most have pointed to as the first real target date by which the government should be making solid progress in insuring the uninsured, and providing an adequate pool of payers into the insurance exchanges.

What we know, and maybe more importantly, what we don’t know, is critical to understanding the debate that will revolve around health care for the next few months.

So what do we know, for certain?

We know that around 7 million enrollments have gone through the exchanges by the end of March. That is admittedly a relative success in and of itself for the administration, which had such a disastrous start to the enrollment period. In my piece in the end of December, I did believe they would get the exchanges fixed, but I still thought they would be hard pressed to reach the 7 million mark.

The problem now becomes what the definition of enrollments are.  Enrollments are NOT people who have actually successfully been insured.  They ARE people who have successfully chosen an insurance policy on the exchange, and placed it in their ‘shopping cart’ on the website.

I am sure many can already see the problems with this.  First, the system has no way of telling if you are a repeat customer.  I for one have two accounts that have insurance policies in my cart, neither which I ever plan to purchase.  I was simply testing the exchange website.  Am I being counted?  I am unsure, but I do know I am receiving emails regularly to remind me to complete my purchase.

Second, until you complete the payment process, you are not insured.  HHS has clearly stated this on many occasions. Health experts such as Bob Laszweski have stated that in his discussions with insurers, he puts the ‘unpaid policy’ number at somewhere in the range of 15-20%.  My own personal discussions with insurers backs this up; and on March 30th, HHS Sec. Kathleen Sebelius stated the rate was around 10-20%.  So there is general agreement on this issue.

The rate of people insured really is the crux of the issue for the overall cause of health care reform.  The other metrics are far less important in the long run.  Several surveys, including the Gallup survey, have shown a short-term decreases in the rate of uninsured, but it is uncertain whether this is statistical noise or a true permanent trend. A new RAND corporation survey that was leaked to the LA Times has also shown a trend in decreasing the uninsured.

My own opinion is that the rate of uninsured must be dropping.  The real question is, by how much, and by what method?

Let us remember that initially, the CBO predicted that the vast majority of those purchasing health care insurance on the Obamacare exchanges would be uninsured persons, looking for access to the health insurance.  If this had been the case, then we should see a dramatic decrease in the number of uninsured.

However, it is difficult to believe this is the case. The same RAND study referred to above also shows that only about 1/3 of those on the exchanges were previously uninsured. Jonathan Cohn of the New Republic uses specific state numbers, like the enrollments in Kentucky and New York, to show that the number of uninsured is outpacing CBO predictions.  However, that doesn’t seem to be the case nationwide; I am willing to stipulate there are probably a few states that are doing well, but overall, it appears they will miss their target.   Philip Klein of the Washington Examiner points out the counter case, that is that it appears the exchanges are underperforming when it comes to insuring the previously uninsured.

Even using Cohn’s arguments, even he accepts it is highly unlikely that even a simple majority of those on the exchanges nationwide were uninsured previously.  Thus, the majority of those purchasing on the exchanges were persons who were buying insurance already, but simply were looking for government subsidies so they could get a better deal.

What does this mean in the grand scheme?  It means that the decrease in the rate of uninsured will be less than expected by many.  That doesn’t mean the rate will not decrease; Medicaid enrollments alone should decrease the rate of uninsured by a couple of millon, at least. It just means those actually purchasing insurance on the exchanges, by and large, were not the uninsured at all.

The next issue that will arise is how all of these factors affect premiums for the coming year.  I have talked about the demographics affecting the exchanges; primarily that young people have not signed up at a rate as great as expected initially.  The CBO and HHS had initially predicted that about 39% of those in the exchanges would be composed of those ages 18-35.  The average, across the nation, appears to currently be less than 30%, a number that Kathleen Sebelius now has basically accepted publicly.

This is important because, to subsidize those that are older or in poor health, the insurance pools require more healthy (and generally younger) payors into the system. Without those payors, the general cost of premiums will increase.  Liberals argue that age is a poor metric to calculate whether people are healthy or not.  This is true.  However, do they really believe that the people rushing to buy health insurance are the healthy among us, and not the ill?  There is a selection bias obviously involved here, and it is far more likely that those with poor health are the first to arrive in line for health insurance under Obamacare.

Almost everyone now stipulates that insurance premiums will rise more than the baseline expectations for 2015.  In fact, overall costs are already increasing. USA Today reported that health costs are increasing at the fastest rate in a decade…and that is before these cost pressures arise to affect premiums.

The biggest question left this year regarding Obamacare really is, how much will premiums increase?  If they increase at the same rate as the past 5 years (less than 4% a year on average) that will be a major success for the administration.  However, if they increase at a rate above 6% a year (and there are rumors the rates could increase by double digits), that could be catastrophic for the popularity of the program.

These are the core issues, though many other issues do remain.  Will people continue to be resentful to President Obama and Democrats for lying to them about being able to keep their insurance plans, and being able to keep seeing their same doctor?  Will the changes in their insurance policies make them more or less content?  Will increases in deductibles raise the ire of many Americans, who may or may not have understood those costs when they purchased their health policies?  These and many more questions remain, all of which ultimately will be more significant than the enrollment numbers of March 31st, 2014.

The only advice I can give is, be patient; only time will tell.

 

 

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My Google Hangout With Bret Baier of Fox News

This is video of the Google Hangout I participated in with Bret Baier, host of Fox News Special Report. We focused on the status of Obamacare, as we approach the March 31st signup deadline.

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Primary Race 2014: Kansas

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Much like Kentucky, which I wrote about yesterday, Kansas is not a primary race I thought of nor wanted to be talking about.

Incumbent Senator Pat Roberts is seeking his fourth term.  He has been a steadfast conservative by all accounts, though a fixture among the Republican establishment.  His re-election should have been a cakewalk.

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However, Roberts has stumbled into a controversy of his own making.  It was recently discovered he lists as his voting address the home of two longtime political supporters who rent out a room to the senator.

Roberts’ campaign has handled the entire story badly.  The Senator himself told the New York Times that he stays with the couple when in the area. “I have full access to the recliner.”

His campaign then promised to release, in detail, the evidence behind Roberts current living status.  After several days, they changed their mind, and stated they would not comment any further on the story.

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Into this mess enters Milton Wolf, M.D.  What is Dr. Wolf’s primary claim to fame?  He is the second cousin of our current President, Barack Obama.  Wolf has been a vocal opponent of the Affordable Care Act from the very beginning, and has been a Tea Party activist for years.

Nobody had seriously given Wolf a chance at upsetting the steadfast Roberts, but the new controversy could tip the tables enough to make the race interesting.  Most conservative groups had stayed out of the race until now, and the few that had voiced any opinion had come out in support of the incumbent.

Wolf is hitting Roberts hard on the residency status, basically accusing Roberts of being a Virginian in fact. Several early radio ads show that Wolf will try to discredit Roberts as quickly as possible.

Is this contest seriously in question?  I remain skeptical, but clearly Roberts has provided Wolf with an opening.  I have a soft spot for Wolf, who is a radiologist like myself.  He will have to make the most of Roberts’ stumble to make this a race worth watching.

 

 

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Primary Races 2014: Kentucky

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This, honestly, is not a discussion we should be having.

Minority Leader Mitch McConnell is an icon in Kentucky. He will raise more money than virtually any other Republican in this cycle.  He has every major Kentucky GOP member behind him.

And yet…this is still an open question.

The problem for McConnnell is his likely Democrat challenger, Alison Lundergan Grimes, Secretary of State of Kentucky.  She has family lineage, Democrat support, and a cash reserve all of her own.

Even worse…she is running even with McConnell in early polling.

Into this dynamic enters Matt Bevin.  A businessman, he believes McConnell has betrayed the conservative wing of the party.  As such, he has the support of virtually every Tea Party and Conservative action group, including the Madison Project, the Senate Conservative Fund, and radio personalities Mark Levin and Glenn Beck.

Questions of Bevin’s conservative credentials came to light this week, as evidence showed that Bevin supported the TARP rescue program in late 2008.  That said, this is likely a small bump in the road for Bevin, and likely doesn’t change his prospects at all.

I am not a big fan of challenging GOP stalwarts that are relatively conservative.  McConnell is flawed, but unlike many of the RINOs of the past, his departures from conservatism largely are because of his leadership position more than his true beliefs.

That said, McConnell is a relatively weak candidate in a state the GOP should and must hold to have a reasonable chance of taking the Senate.  If McConnell’s poll numbers stagnate or drop further, conservatives in the state have to take a serious look at the alternatives.

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Primary Races 2014: Nebraska

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Next in our series of primary races: Nebraska, a seat being vacated by the retirement of Mike Johanns.

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Ben Sasse is considered the leading candidate to win the nomination.  Sasse is the President of Midland University.  He has a series of prominent endorsements, including the Senate Conservatives Fund, Club for Growth and prominent GOP leaders such as Tom Coburn and Paul Ryan.

 

He has been steadfastly conservative, opposing Obamacare among other things, though was criticized for his support of Medicare Part D.

The other major candidate is former State Treasurer Shane Osborn.  Osborn actually has a significant history:  he was the pilot at the Hainan Island incident.  On April 1, 2001, Osborn was piloting an EP-3E airplane with a 23 member crew about 70 miles (110 km) away from the Chinese border when it collided with a Chinese fighter jet.

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As Treasurer, Osborn focused on increased transparency for the state administration.  He also put extensive effort into returning private property from the hands of government.

Freedomworks has endorsed Osborn, which sets the major conservative groups against each other in this race.

The other candidates, who are considered longshots, include Sid Dinsdale, President of Pinnacle Bank, Clifton Johnson, and attorney Bart McLeay.

 

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Primary Races 2014: Oklahoma

Oklahoma

Special Note:  I am starting a new series trying to give a run down and evaluation of the key primary races across the nation. The goal ultimately is to use the grassroots organizations at the Conservative Union and our sister organizations to pick the best conservative candidate possible.  This is the first in that series. 

Oklahoma was a race nobody even considered several weeks ago.  Sen. Tom Coburn was ready and able to serve out the rest of his term, and then retire happily to greener pastures.

However, Sen. Coburn decided enough was enough.  Whether it was his ailing health, or the worsening political climate in D.C., it started a tough race to see who would take his coveted Senate seat.

Here are the current list of candidates:

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Rep. James Lankford (R-Okla.) is a current member of the House of Representatives, representing Oklahoma’s 5th district, which encompasses the central portion of the state, including the capital, Oklahoma City. Lankford succeeded current governor, Mary Fallin, in that district.

Lankford is very likely to get the core of the Oklahoma GOP delegation behind his candidacy, including Sen. Coburn and Gov. Fallin.

However, numerous conservative groups are opposed to him.  Lankford has traditionally been relatively conservative, but has supported the GOP leadership on many occasions against the hard-line austerity hawks and others.  Club for Growth, who adores Coburn, opposes Lankford’s candidacy.  As an example, Club for Growth gives Coburn a 96% score for conservatism, while they only give a 78% score to Lankford.

Senate Conservatives Fund has also that it won’t support his Senate bid “because of his past votes to increase the debt limit, raise taxes, and fund Obamacare. “We have reviewed his record and it’s clear that conservatives cannot count on him to fight for their principles,” added Matt Hoskins, the group’s executive director.

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Oklahoma House Speaker T.W. Shannon is a new name to national conservatives, but quickly got the attention of some of the larger conservative groups.

Former Sen. J.C. Watts was considering a run, but it appears he will take a pass, and many observers believe he will support Shannon’s candidacy.  That will provide him with a great amount of legitimacy going forward.

Shannon has advocated the sale of unused state properties. He has focused on spending tax dollars on much-needed infrastructure repairs, such as deficient bridges and roads. Shannon also has advocated a measure to require Oklahoma recipients of the Supplemental Nutrition Assistance Program (food stamps) to perform at least 35 hours of work activities or be denied aid. The program was ultimately scaled back significantly.

Currently, a survey from GOP firm Harper Polling gives Lankford 54 percent support among GOP primary voters, while Shannon takes 18 percent support and paramedic James Weger takes just 1 percent. Twenty-seven percent are undecided.  Most of the margin however is because of Shannon’s low name recognition.

Right now, it appears the other potential big names in the race, including the aforementioned Watts, Rep. Tom Cole, Rep. Jim Bridenstine, and former Gov. Frank Keating, among others, will take a pass.  It is very like this will be a Lankford vs. Shannon race, with the prime political players in the state aligning behind one or another.

Although the traditional conservative groups have lined up against Lankford, that by no means makes him a moderate. He is pro-gun, pro-austerity, and anti-Obamacare.  The real debate will be whether going forward Shannon or Lankford will be a more effective voice for core conservative principles.

 

 

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Election 2014: Senate

Courtesy of University of Virginia Center for Politics.

Courtesy of University of Virginia Center for Politics.

The 2014 midterm provides many possibilities, and many conundrums for conservatives. After squandering several ideal potential Senate race victories in 2012, most notably in Missouri and Indiana, Republicans face a relatively favorable landscape in this cycle.  However, that by no means implies that taking the Senate majority will be an easy task.

States that are foregone conclusions:

Safe Republican Seats:  Alabama, Idaho, Kansas, Maine, Mississippi, Nebraska*, Oklahoma, South Carolina (both Senators), Tennessee, Texas, Wyoming.

Safe Democrat Seats: Iowa*, Massachusetts, New Jersey, New Mexico, Oregon, Rhode Island

* denotes seats where the incumbent is retiring. 

Races Up For Grabs:

Alaska:   Mark Begich was lucky to win his seat 6 years ago.  If not for a late prosecutorial action against former Senator Ted Stevens, Begich would never have won the seat in the first place. The best thing going for Begich is the competitive Republican primary, where Lieutenant Governor  Mead Treadwell, 2010 nominee Joe Miller (a Tea Party candidate), and State Natural Resources Commissioner Dan Sullivan will all challenge each other in a heated primary.  Miller ran a very poor race last time, and his strength this time is dubious.  Treadwell is the candidate that is most likely to unite the GOP.  The key point in this race will be Begich’s defense of his Obamacare vote, which will be a recurring meme in this piece.

Prediction:  Slight Democrat lean, because of the GOP primary fight.

Arkansas:  Mark Pryor is among the weakest incumbents, and has consistently trailed Republican Rep. Tom Cotton for months.  Pryor is actively running away from Obamacare now, although advertisement money is pounding him on the issue.

Prediction:  Republican lean.

Colorado:  Mark Udall seems like he was on course for a smooth re-election campaign a year ago; that is no longer the case.  A mix of Obamacare, along with resurgent gun rights movement in the state, have moved his seat into a tossup.  2010 Sen nominee Ken Buck, Ex-state House Majority Leader Amy Stephens, State Sen. Owen Hill, State Sen. Randy Baumgardner, Businessman Mark Aspiri, and Businessman Jaime McMillan all are considering primary challenges.  Buck is the most well-known name, but he ran a poor campaign in his Senatorial loss last time.  This is a primary that will be hotly contested by the GOP and the Tea Party.

Prediction:  Democrat lean.

Georgia:  With the retirement of Saxby Chambliss, and without a clear obvious successor, Democrats hope to steal this seat with Michelle Nunn, the daughter of long-time Democrat Senator Sam Nunn.  Even with money and name recognition, that will be a hard slog.   Ex-Sec. of State Karen Handel, Rep. Jack Kingston, Rep. Phil Gingrey, Rep. Paul Broun, Businessman David Perdue are just a few of the Republicans challenging for the seat.

Prediction:  Republican lean.

Iowa:  Iowa should be a much competitive race for Republicans this cycle, with the retirement of Tom Harkin.  However, a primary race with no clear big name limits the GOP chances against Democrat Rep. Bruce Bailey.

Prediction:  Democrat lean.

Kentucky: Mitch McConnell is the Wiley E. Coyote of Republican politics.  Tea party hates him, he has been challenged multiple times, but he somehow always pulls through.  That is the most likely result here against well-financed Democrat Sec. of State Allison Lundergran Grimes.

Prediction:  Republican lean.

Louisiana:  Mary Landrieu is in trouble.  But we hear this during every re-election cycle and she still manages to pull through.  Is Obamacare the albatross that finally weighs her down too much?  A strong GOP field is led by Rep. Bill Cassidy, Ret. Air Force Col. Rob Maness, and State Rep. Paul Hollis.

Prediction:  Tossup.

Michigan:  This is a race that should be an easy lay-up for Democrats.   Carl Levin has held this seat for decades, and Republicans have not been a significant factor in Senate or Presidential races here for decades.  But former Secretary of State Terri Lynn Land has won statewide races here before, and is well-financed, and Rep. Gary Peters, her Democrat opponent, is not exactly a household name.

Prediction:  Tossup.

Montana:  With Sen. Baucus’s retirement, this should be an easy pickup for Republicans.  But considering 2012 where Republicans lost three seats that they should easily have picked up, nothing should be considered easy.  This is a wide open primary race on both sides of the aisle.

Prediction:  Republican lean.

North Carolina:  Kay Hagan is in big trouble.  She trails all of her GOP challengers, and these are not well-known Republicans running. She is running away from Obama and Obamacare as fast as her feet will take her, but it is not likely enough.

Prediction:  Republican lean.

New Hampshire:  Jeanne Shaheen should be a cakewalk for re-election, but Obamacare is dragging down her favorables.  With former Massachusetts Senator Scott Brown ready to jump in the race, he will make it at least somewhat interesting.

Prediction:  Democrat lean.

Virginia:  Similar to New Hampshire above.  Mark Warner should be walking easily to re-election, but well-known insider Ed Gillespie will be able to raise money and is high-profile enough to make the race interesting.

Prediction:  Democrat lean.

This is just the earliest look at the Senate races.  In the short run, what will be most important is the primary races, choosing the most competent conservative to challenge in the general election.

Early next week, I will have a primer on which primary races we should watch, and candidates to keep an eye on.

 

 

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Mitt: Movie Review

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So, last night Netflix finally released Mitt, the documentary by Romney family friend Greg Whiteley, who started filming as far back as 2006. It is a fascinating and unique view of a man (and in reality, an entire family) who twice ran for the Presidency, failed, and still in many ways may have been better off for it.

What is stunningly obvious, from 2006 onward, is how reticent his family is to making a Presidential run.  Mitt Romney himself seems torn.  From his personal statements, you start to believe that he truly believes he can help the nation, but you wonder if he thinks that personally this will be damaging, and his life ‘as-is’ is preferable to taking on this Herculean task.

Early in the movie, the family sits around in their Family Room, discussing the pros and cons of running for the 2008 nomination.  Almost nobody gives a positive to running.  But what is fascinating to me is how normal this discussion was.  I have had many family conversations just like this one, on far more mundate issues, like where we would take a vacation, a family financial decision, etc.

Only Tagg Romney makes a powerful argument to make a Presidential run:  “If you don’t win, we’ll still love you,” he says. “The country may think of you as a laughingstock, and we’ll know the truth, and that’s OK. But I think you have a duty to your country and to God to see what comes of it.” As the 2008 nomination proceeds, we see the hesitancy of the family as a common thread in their electoral race.

The family’s faith is prominent in the movie, something we didn’t see as much on the campaign trail.  Their moment of prayer almost seems intrusive, but at the same time, gives insight to how central Mormonism is to who this man is.

I think Mitt’s honesty about his own vulnerabilities is quite interesting as well.  He once calls himself a ‘flawed candidate’ because he can not rid himself of the flip-flopper label.  He, from the beginning, understands that he is far from perfect.  And he was quite self-reflective at times.  The scene during the night of election day 2012 was quite fitting.  At one point, he asks (so he can start getting ready for his concession speech, “Does anyone have the President’s number?  I hadn’t thought of that,”, chuckling a little while saying it.

One wonders, to this day, if Barack Obama is as self-reflective.  We simply don’t know, because we have not been given a window into that person as we do here.

Many liberals complain that this documentary didn’t dig into Romney’s policy decisions, or the inner strategy of the 2012 campaign which in retrospect was clearly flawed.  Some have argued that we needed to see more infighting, and the underbelly of the campaign.  But they are missing the point, as usual.  This was about Mitt Romney the man, far more than Mitt Romney the politician. There are obvious positives and negatives to taking this strategy with this documentary, but it is what it is.  It was artistic license, nothing more.

I don’t think this film changes the political dynamic in the least, however.  Barack Obama was going to win, regardless of what we saw of Mitt Romney behind closed doors.  It was strategic mistakes that doomed his campaign, not dislike of the man himself.  But I think this insight is quite useful.  After 5 years in office, and 9 years since he came to political prominence, we have still yet to see this kind of insight into who our current President is…which is quite informative about the entire Barack Obama Presidency.  Such transparency is not in our President’s nature.

But what this film does do, for me at least, is convince me that my original trust in this man was right.  I have doubted many of my choices when it comes to people I have supported for public office (none more than John McCain, a vote now that I regret).  But I have not once regretted supporting, campaigning for, and voting for Mitt Romney. This film likely guarantees that feeling will never change.

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Why The Media Is Doing Chris Christie , And The Entire Conservative Movement, A Favor With Bridgegate

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Bridgegate, as ludicrous as the term is, has now become the popular metaphor for the political shenanigans played by underlings of the Chris Christie administration in their Keystone Cops manuever to punish political enemies by closing down lanes of the George Washington Bridge for reasons that I still fail to fathom.  But as ludicrous as the term is, or the scandal as a whole is, the entire escapade should be thought of as a boon.

Why, might you ask?

For conservatives, it gives the entire GOP establishment time to take a deep, relaxing breath. Many of my ‘establishment’ contacts within the Republican Party were on the verge of jumping on to the Christie train, because they felt it was leaving the station, and nobody wanted to be left behind.  Romney confidants were lining up to join the Christie campaign, as were major Bush donors.  All the ducks were lining up in a neat little row.

Forget whether or not Christie was the best Republican candidate, or if he is even a conservative at all.  The entire concept of anointing anyone at this early stage, barely a year after our last losing campaign, is stupid. We have barely come to terms with the real reasons we lost with Mitt Romney, and we are ready to jump ship with another Northeastern quasi-Republican because he talks tough and get RINOs to fund him?

These are the moments that I accept the GOP is the stupid party.

But Bridgegate?  It is a gift from the heavens.  Truly and deeply, thank you for this gift.

What this scandal does is forces the establishment to look at the field of competitors. And the field, despite the media narrative, is quite strong.  For all the joking you hear from mainstream journalists, there are a multitude of qualified Governors, Executives, and Legislators that could all make fine Presidential material. I am more than happy to allow the nomination process run its due course before jumping on anyone’s bandwagon this early in the cycle.

Additionally, this keeps the bulk of political money off the table for the time being.  Once donors start giving to a candidate, it is very difficult from them to stop…even when they know their candidate has lost, or will eventually lose.

As for Chris Christie, he may not see it now because he is in the eye of the storm, but this was a boon to him as well. He has been the media darling; the GOP example of someone who could ‘work with both sides’, who would go on MSNBC and be praised by liberals as a ‘good Republican’.

How long did that love affair last after Bridgegate broke?

All moderate Republicans who are in love with the mainstream media come to this reality sooner or later.  John McCain didn’t realize it until he was well into the 2008 campaign.  Jon Huntsman remains a media darling to this day for a simple reason: he lost…badly.  Better Christie wakes up now, and realizes a simple, innate reality of the media today:

The mainstream media is no friend of yours, if you are a Republican.

If Christie survives this, first it teaches us that he has the strength of will and the character to fight the Democrat smear machine.  If he goes down in flames, it teaches us that he was never fit to be Presidential material anyway.

All in all, I find the entire episode as a net positive.

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Obamacare Turning Into Cash For Clunkers

WRECK OBAMACARE, OBAMA CARTOONS

The most recent news that should worry us regarding the rollout of Obamacare is the news that only a small percentage of of those purchasing plans on the exchanges were without insurance last year.

According to Aetna CEO Mark Bertolini, “Right now we only see that 11 percent of the population is people that were formerly uninsured are now insured, so we didn’t really eat into the uninsured population.”

The argument among progressives was Obamacare would be very attractive to those that had gone without insurance, and would decrease the number of uninsured.  So far, that is not the reality.

Instead, what we are seeing is, in many ways, similar to the miscalculation of Cash for Clunkers.  Most economists now accept that Cash for Clunkers was a failure all around.  A study from the Brookings Institution that using the most optimistic view, it created 1 job for ever $1.4 million spent.  Not exactly bang for your buck.

What is relevant to our discussion of the ACA rollout, however, is why this was the case.

Simply put, what Cash for Clunkers did was subsidize car purchases.  So what happened?  People that were planning on buying a car 1 year or 2 years in the future moved their purchases forward. The government gave them an incentive to spend in the short-term, because they received a huge financial benefit to do so.  The problem? That ultimately did little to stimulate anything, because those same people did not buy cars later.

What is occurring in Obamacare right now is that people who were already purchasing insurance have looked at the exchanges, and now see that they could financially benefit from the subsidies.  Those people thus made a market oriented choice; why turn away free money?

However, here is the rub: if people are making a market oriented choice…what is the incentive for those who didn’t purchase insurance prior to Obamacare to change their mind now?  In many ways, low-cost insurance was cheaper last year than it is this year; so the uninsured, in many cases, have less incentive to purchase insurance today.

Many of these people actually made a market decision prior to Obamacare: they felt the cost was worth the risk.  What we are seeing in the Obamacare marketplace is the same thing.  People that didn’t have insurance are, for the most part, making the same market decision.  On the other hand, those that had insurance before are simply looking for the best deal available…and if the government hands you free money, who is going to say no?  Again…the market always wins.

We are making the same mistake on a macroeconomic level on Obamacare as we did with Cash for Clunkers.  You really want to motivate people to make choices, you must use the marketplace in your favor.  But the government, in both of these cases, was and is fighting the market.  They are giving subsidies, but they are not truly making it financially more attractive for people to buy insurance today than before.  If the uninsured don’t see a huge financial incentive to purchase insurance, no amount of subsidy will change that dynamic.

 

 

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