Reader Explains Why Her Family of Four (with existing coverage) Opts Out of Obamacare

In the email below, reader Stacie explains why she and her family of four, all healthy, opt out of Obamacare. Instead she is willing to pay the penalty and use cash-only healthcare services.

Stacie's family had affordable coverage before. Now they don't have any coverage.

Yes, this is yet another case of Obamashock!

Stacie writes ...

Hello Mish!

I find all your articles very insightful and educational. I especially appreciate your ability to bring "light" to Obamacare and what it means for our country going forward.

My husband and I are both 28. (Healthy, non-smokers and no preexisting conditions) We also have two young daughters who are healthy.

Our plan was to sign up for another year of coverage through my husband's employer. Due to increase costs, they are only offering one plan with an HSA. However, these HSA deductibles are higher than I have ever seen. For our family it is $12,000 (in-network). The premiums are $720 per month. $720 a month for the privilege of getting worse coverage.

The exchange is offering similar coverage and premiums. Thus, we are making a tough decision. We are opting out of coverage. It is cheaper for us to use cash only clinics,  eat organic food and continue to pay for our gym membership.

I believe the Obama administration thought no one with existing coverage would opt out. But when new "affordable" premiums are roughly 25-30% of a healthy, young family's total income, what do they expect?

Healthcare premiums should not be the same percentage as a mortgage payment.

Thanks for all you do,

Stacie

Obamacare Severely Penalizes Healthy Lifestyles

It was well understood, in advance, at least by Mish readers, that young, healthy individuals and families, would subsidize overweight, older, citizens with poor lifestyles.

This is a prime "Obamashock!" case in point.

Obamashock! Ongoing Recap

• Obamashock! Hits Employees of Sodexo, "World's Largest Quality of Life" Service Company
• Expect Another Leap in Healthcare Costs; New Obamashock! Rules: Obamacare Expanded to Cover Mental Health and Addiction
• More Obamashock! Glitches Hit Paper, Phone Applications; Obamacare Glitch Great Quotes
• My Personal Experience - Obamashock!

Anecdotes do not constitute "data". Unfortunately, I do not have hard counts of those like Stacie.

Like you, I can only wonder how many readers are in Stacie's shoes. The only answer I can come up with is "too many".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Retirement for Chicago Park District Employees, With Full Benefits: Age 58; Reflections on Chicago's Second Triple-Notch Bond Downgrade in Six Months

Want to retire at age 58? With Full benefits? When Private sector workers do not qualify for full Social Security benefits until age 67?

Who doesn't?

Hey, no problem. Just work for the Chicago park district (or countless city police and fire departments).

Retirement for Chicago Park District Employees, With Full Benefits: Age 58

Please consider the November 7th article Parks and Wrecks by the Illinois Policy Institute.

The Illinois General Assembly today approved a pension bill that requires taxpayers to pay an additional $75 million into the Chicago Park District pension fund in addition to tripling the taxpayer contribution to the troubled pension fund.

Make no mistake: This bill is bad for workers and taxpayers. It will most likely result in higher taxes and fees for city residents, but no greater level of retirement security for park district workers.

The Chicago Park District has more than $1.4 billion in official debt. This includes $40 million in debt related to retiree health care, $426 million in pension debt and $944 million in other long-term debt.

Private sector workers do not qualify for full Social Security benefits until age 67; the retirement age for the majority of Chicago Park District workers, under this bill, would be 58. Any pension reform bill must match the government retirement age to the private sector retirement age to fix the system.

The bottom line is that with today’s actions, lawmakers in Springfield cemented tax and fee increases on Chicago residents. They are continuing to paper over the city’s pension problem and refusing to tackle it head on.

Reflections on Chicago's Second Triple-Notch Bond Downgrade in Six Months

Also consider Chicago’s triple-notch credit downgrade

Pension costs are already unraveling the state’s finances. Now it’s the city of Chicago’s turn.

The city’s out-of-control pension liabilities and “accelerating budget pressures associated with those liabilities” has resulted in another credit downgrade by Moody’s Investors Service.

The national credit rating agency downgraded the city’s nearly $8 billion in general obligation bonds to A3 from Aa3. This is a triple-notch downgrade.

Chicago is now just four notches above junk-bond status – any further downgrades mean the city is likely to face problems borrowing money.

The agency made good on its April 2013 promise to evaluate state and local pension plans on more realistic assumptions. At that time, Moody’s placed 29 local governments under review – including Chicago.

The rating agency has long critiqued pension funds’ use of overly ambitious investment return targets that allow funds to understate their true pension shortfalls.

Based on the new Moody’s methodology, which uses more conservative assumptions, Chicago’s 2012 pension shortfall jumps nearly 90 percent, to $36 billion from $19 billion.


However, Chicago’s burgeoning liability is not the city’s only problem. The yearly bill to pay for those pensions is set to spike 2.5 times to $1.2 billion in 2015 from $467 million in 2014.



The increase is due largely to a law that will require significantly higher pension contributions by the city beginning in 2015. These contributions will create a “tremendous strain” on the city’s operating budget, hurting the Chicagoans that most depend on core government services such as education, health care and public safety.

Chicago’s crisis is no different from what the state is experiencing. Under new Moody’s methodology, the underfunding for the state’s five state-run funds is set to approach $200 billion.

Pensions are threatening to bring down both Chicago and the state as a whole.

Reflections on Pension Plans in General

Pensions are the #1 problem for cities and states. The Fed artificially suppressing  interest rates makes matters worse.

Pension plans heading into the crisis were underweight equities. Now, because bond yields in general have collapsed, pension plans are likely overweight stocks, hoping to catch up at the worst possible time.

Even if the above assumption is false, and pension plans are now weighted normally, how the hell can plans meet 7.5% to 8.0% return assumptions with 10-year bonds yielding 2.75%?

The answer is simple: It won't happen. Pension plans attempting to meet unreasonable expectations by leveraging into equities now will be hammered in due time.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Small Business Optimism Sinks On "Precipitous Decline in Hiring Plans"; Is Lack of Credit an Issue?

The National Federation of Independent Business (NFIB) reports Small Businesses Optimism Takes a Tumble largely due to a precipitous decline in hiring plans.

Fall arrived literally this month, as small business optimism dropped from 93.9 to 91.6, largely due to a precipitous decline in hiring plans and expectations for future small-business conditions. Of the ten Index components, seven turned negative, falling a total of 27 percentage points. The stalemate in early October over funding the government as well as the failed “launch” of the Obamacare website left 68% of owners feeling that the current period is a bad time to expand; 37% of those owners identified the political climate in Washington as the culprit—a record high level.

NFIB chief economist Bill Dunkelberg: “Small employers are not fooled by headlines announcing record high stock market indices; everyday they live the economic realities of overregulation, increased taxes, weak sales and a government without any direction or plan for the future. The average value of the Index since the recovery started is 91—8 points below the thirty-five year average through 2007 and well below readings typically experienced in a recovery. The new budget deadline of January 15, 2014 is approaching quickly and Congress continues to wrangle over the disastrous healthcare law and little else. We shouldn’t expect skies to turn blue anytime soon.”

Is Lack of Credit an Issue?

The short answer, as I have commented numerous times before, is "no".



Credit Markets

Six percent of the owners reported that all their credit needs were not met, unchanged from September. Twenty-eight percent reported all credit needs met, and 53% explicitly said they did not want a loan. Only 2% reported that financing was their top business problem. Twenty-eight percent of all owners reported borrowing on a regular basis, down 2 points and a record low.  A net 6% reported loans “harder to get” compared to their last attempt (asked of regular borrowers only), up 1 point from September. The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative 8 percent, 1 point worse than September. A surprising result in an economy with the most aggressive monetary policy in history.

Commentary by Chief Economist Bill Dunkelberg

Typical of the reporting by the “mainstream media” on the economy, CNN (Your Money, Nov 2) asserted that stingy credit was dragging down the small business sector; no mention of the impact of Washington antics.  Banks are once again being blamed for the slow recovery, not the Administration’s policies (or lack thereof). However, only 2% of NFIB members cite credit and interest rates as their top business problem, and a record 66% expressed no interest in a loan, obviously due to their dismal view of the future of the economy. It’s not a problem of credit supply; it’s a lack of credit demand due primarily to poor economic prospects.  Consumer sentiment is sympathetic to that notion as optimism posted declines in October, signaling that customers are less optimistic as well.

The healthcare law is revealing itself to be everything opponents feared. But what else could be expected when a few hundred people (in one party) decide to restructure 15% of the economy. Nobody read the bill, nobody understood the whole thing, the big picture. Now, as it dissembles, a panicked Administration is throwing even more tax dollars at the project in an effort to stem the hemorrhaging. No surprise in Washington, apparently firms that supported the Obama campaign were awarded contracts for most of the work.  Kind of like giving Ms. Pelosi’s husband the exclusive right to dispose of our unneeded post office real estate - what a deal.

For numerous charts and other analysis, please see the 23-page NFIB November Report.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com