Category Archives: markets

An Illustration

Posted on by
1

…of why government is unsuited to run what are essentially business operations.

Not to keep picking on Obamacare, but this program really is a poster child for why government can’t do this sort of thing. All year long, the Federal government has been trying to revamp its failed ObamaMart, euphemistically known as Healthcare.gov. Here’s the status of that effort.

  • ObamaMart still is transitioning to new government contractors to manage basic functions. This transition has been going on since the first of the year. They’re not even stable yet on what companies have been hired to do the work.
  • Some back-end functions, including a system to automate payments to insurers, are running behind schedule—still. These functions were supposed to be fully operational last October 1, at the initial deployment of ObamaMart. The revamp can’t get this right, either.
  • [N]ew versions of some functions still will need to be tested with insurers before open enrollment begins 15 Nov. Actual testing is a new wrinkle. Welcome to be sure, but even though CDS has said that ObamaMart was never seriously tested the first time, apparently CDS still is only testing some parts—spot checking.
  • [The] exchange for small businesses, delayed by technical problems last year…will “launch” without some functions.
  • [T]he system to funnel subsidy payments to plan providers for the benefit of plan purchasers (remember that back end?), originally supposed to be ready for the launch in October, then later set for completion by mid-March, is now scheduled to be fully operational in 2015—well after the enrollment period for purchasing 2015 plans has closed.

These highlights demonstrate a terrible performance, by an entity that has no concept of the cost of money and that has none of the performance incentives that a competitive environment in a free market economy provides.

And This Tidbit Re Obamacare—Finding Out More of What Is In It

Posted on by
Reply

Even The New York Times is starting to figure it out.

Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day—or $36,500 a year—for each employee who goes into the individual marketplace.

The ruling…by the Internal Revenue Service…blocks any wholesale move by employers to dump employees into the exchanges.

Many employers—some that now offer coverage and some that do not—had concluded that it would be cheaper to provide each employee with a lump sum of money to buy insurance on an exchange, instead of providing coverage directly.

And

When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the Internal Revenue Service said employers could not meet their obligations under the health care law by simply reimbursing employees for some or all of their premium costs.

Of course, in a sane world, such reimbursement would be equivalent to providing coverage, just letting the individual

Never mind that such reimbursements are exactly that coverage—especially since the reimbursements are paid only when there’s been a health plan bought: sort of contained in the meaning of “reimbursement.” But then Big Government would have to accept that individuals are fully capable of exercising their own choice—their own judgment—in the matter, rather than needing Momma IRS’ judgment.

There’s more in the NYT‘s piece….

Obamacare—Finding Out More of What Is In It

Posted on by
Reply

Labor is discovering more about Obamacare that isn’t all that.

the law doesn’t take into account that health benefits have been negotiated by employers and unions over decades, and that rewriting plans to meet new requirements can affect wages and other labor terms.

And

Uncertainty about future costs is also hampering negotiations. One of the biggest looming unknowns is the so-called Cadillac tax on high-cost health plans scheduled to take effect in 2018. The provision imposes a 40% tax on the annual cost of health care above $10,200 for individual coverage and $27,500 for family coverage.

The regional transit system in Philadelphia, Septa, estimates the tax will boost its health-care costs by $15 million a year, or 12.5% of the $120 million it currently spends each year on health coverage.

And [emphasis added]

Another provision of the law that eliminates caps on annual and lifetime health-care costs has forced multi-employer plans to purchase their own insurance to prevent potential runaway costs from bankrupting plans.

Jim Ray, a lawyer who represents the Laborers International Union of North America in benefits negotiations, said these provisions have increased construction-industry health plans’ costs by 5% to 10%, and already resulted in lower wages for some laborers. He said employers are frequently seeking contract language to cap their own liability for future cost increases from the law.

“When we first supported the calls for health-care reform, we thought it was going to bring costs down,” he said.

Hmm….

The State of the Obama Recovery

Posted on by
Reply

…now that we’re in the fifth year of it.

Real gross domestic product—the output of goods and services produced by labor and property located in the United States—decreased at an annual rate of 1.0% in the first quarter according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.6%.

It might not get better soon:

Personal consumption—which captures spending on goods and services—fell a seasonally adjusted 0.1% from March[.]

The SEC’s Nanny State

Posted on by
Reply

The excuse here is the existence of so-called dark pools, or off-exchange stock trading in private venues like “banks or other firms.” It’s certainly true that the information exchange concerning companies whose stocks trade in the dark pools is less—often quite a bit less—than that available for exchange-traded stocks.

What the SEC wants to do, though, is push the dark pool trading onto the SEC-preferred stock market exchanges. In applying this pressure—it’s hard, even for this administration, simply to mandate the move—the SEC is proposing a rule that would, in a “pilot program,” force the dark pool to offer a better price for any stock (that the SEC chooses to have) included in the pilot program than is available on the exchange. Because participants in the dark pool mustn’t be allowed to exercise their own judgment outside of government oversight; participants in the dark pool mustn’t be allowed to arrive at their own agreements on suitable exchanges of value. They’re just not as smart as government bureaucrats. Or the participants in the government-preferred stock exchanges.

In March, 37% of all trading occurred away from stock exchanges, up from 33% two years ago, according to Tabb Group.

There’s a reason for this, and it has to do with excessive government regulation of those preferred exchanges. Oh, and the fees not paid in the dark pool on those completed trades. Here is a list of the fees charged by the NYSE, many of which are imposed by the government. On a per-share basis, they don’t look like much, but over the volume of trading that goes on, the fees add up to a handsome sum. The exchanges and the government want “their” money.

The real problem, though, is that the pressure against the dark pool is largely illegitimate.

Don’t understand the trade? Don’t have enough information? Don’t do the trade. Don’t know enough to know whether you have enough information to assess the risk? Don’t do the trade. It’s not that complicated.

Caveat emptor. Personal responsibility. Apparently the SEC thinks Americans are just too dumb to live under those precepts. Instead, they want caveat imperium [sic: most of you get my point. For the scholars who see the grammatically correct meaning, I suggest that’s on my point, also). Government responsibility.