August 13, 2013$99 more every month, thanks to the “Affordable” Care Act… and the reader who sent us his tale is lucky The latest nasty surprise from Obamacare… and a road map to lead you out of the thickets The “great rotation” from bonds into stocks… and why Dan Amoss isn’t buying it The biggest concern for America’s small-business owners… aside from taxes and regulation Your replies to our “what’s your number” retirement survey, in which we encouraged you to dream big
“I just got the ‘joyous’ news from my insurance company,” a reader writes, “as to how much Obamacare, er, the Affordable Care Act, is going to cost me.”
He even sent along the table from Humana for proof.
[Click image to enlarge]
“Please note,” he adds, “that I am a 54-year-old male who doesn’t smoke, has no pre-existing conditions, takes no medication, has low blood pressure and low cholesterol. Yep, a $99 per month premium increase sure feels affordable to me. Humana was nice enough to let me know I could keep my current policy at my current premium if I wasn’t interested in an ACA-compliant one.
“Also take a look,” he adds, “at the change in out-of-pocket costs for an individual, not just the premium increase.” We have… and have helpfully circled it.
As it turns out, our dear reader should count himself lucky.
Obamacare’s limit on out-of-pocket costs — which was supposed to kick in next year — has now been delayed till 2015.
The cap, including deductibles and copays, was supposed to be $6,350 for an individual, and $12,700 for a family. “But under a little-noticed ruling,” reports today’s New York Times, “federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014.
“The grace period,” the paper adds, “has been outlined on the Labor Department’s website since February, but was obscured in a maze of legal and bureaucratic language that went largely unnoticed.”
This is your government in action in anno Domini 2013: Contra Nancy Pelosi three years ago, even passing the bill doesn’t guarantee “that you can find out what’s in it.”
In any event, the rule change means a consumer might end up paying $6,350 for doctor and hospital bills… and another $6,350 for prescription drugs.
The excuse offered up by the White House is that insurers need more time to get “separate computer systems” in alignment.
Said an anonymous official to the Gray Lady: “We had to balance the interests of consumers with the concerns of health plan sponsors and carriers.”
“Exactly how,” counters the Manhattan Institute’s Avik Roy at Forbes this morning, “is it in consumers’ interests to pay far more for health insurance than they do already?”
“It’s not,” Roy proceeds to answer his own question. “Unless you have a serious, chronic condition, in which case you may benefit from the fact that law forces healthy people to subsidize your care.
“To progressives, this is the holy grail. But for economically rational individuals, it’s yet another reason to drop out of the insurance market altogether. For economically rational businesses, it’s a reason to self-insure, in order to get out from under these costly mandates.”
For all the mandates that come with Obamacare, there are ways to “opt out” of the system — ways we detail in our special report, The Obamacare Antidote: 6 Ways to Get the Best Health Care of Your Life and Save up to $2,000 per Year.
These aren’t pie-in-the-sky theoretical solutions. We’re already getting notes of thanks from readers like you who’ve put our advice to work. “I was putting off a lipid panel since I had lost my insurance last year,” one writes, “and a walk-in clinic wanted $75 for an office visit plus another $75 for the test.”
After reading our report, he sought out an online provider we recommend. “Bought the full panel on Monday. Drew blood at a lab five minutes from my house on Tuesday. Got the results this morning (Wednesday) at 10 a.m. Total cost: $43.19!
“An excellent report with all working links (I clicked and saved them all).”
The report is free to all members of the Laissez Faire Club. You can join their ranks right here.
Another red day for the major U.S. stock indexes. The Dow has slipped below 15,400. Small caps are slipping, too; the Russell 2000 has surrendered the 1,050 level.
Record highs? Those are so 10 days ago…
“Investors have simply chosen to bid up stocks because they don’t want to hold cash,” says a skeptical Dan Amoss, “and they aren’t aware that there’s no historical proof the Fed can keep stocks levitated.
“For many smaller companies, second-quarter earnings reports are still arriving. And despite the impression that this earnings season has been ‘better than expected,’ I’m just not seeing it.
“Despite having taken advantage of the lowest borrowing rates in history, many companies are reporting disappointing revenues and margins and offering weak guidance.”
Dan doesn’t buy the “great rotation” thesis that investors are fleeing bond funds and as a result will bid up stocks even higher. “All year,” he says, “investors have been eager to own stocks. But with U.S. Treasury yields hanging around their recent highs, that eagerness should fade. Higher yields will not only make bonds more attractive relative to stocks; higher bond yields will also boost interest expense at many companies when it comes time to refinance debt.”
Indeed, if the 32-year trend in lower interest rates has reversed, “then all asset prices — especially stocks and real estate — will encounter head winds.”
Gold has given up much of the ground it gained yesterday, currently $1,321. But silver is holding on tight — down only a nickel, to $21.37.
Crude is steady — a shade above $106.
Small-business owners are feeling marginally more sunny as the summer wears on.
The monthly optimism index put out by the National Federation of Independent Business bumped up from 93.5 in June to 94.1 in July. That puts it back on the high end of its mediocre post-recession range…
Once again, when the survey respondents were asked what’s their “single most important problem,” taxes and regulations tied for first place at 21% each. A year ago, poor sales made for a three-way tie, but now that number has retreated to 16%.
“For many small-business owners, the golden years aren’t looking so shiny,” reports the Associated Press. “Many have devoted so much time and money to their businesses that they have failed to plan for retirement.”
“I was sick to my stomach,” recalled Bismarck, N.D., businesswoman Kari Warberg Block of the day she realized she had nothing saved up. That was 10 years ago, at age 40. She’s since worked to remedy matters.
Not everyone is as fortunate: American Express recently surveyed independent business people about their retirement plans. Three out of five say they’re not on track to save what they think they’ll need. Nearly three out of four worry about their ability to save for the lifestyle they want.
“Catch-up plans for these owners,” says the AP, “usually consist of aggressively putting money aside or taking another big risk: Planning to sell their companies one day to fund their retirement.”
Meanwhile, we’ve compiled the results of our own informal survey — asking you how much of a nest egg you’d need to live your dream retirement. We heard from 2,952 people over the last 24 hours.
The average? $4.512 million.
A handful of people felt compelled to elaborate: “$100 million,” said one, “includes giving away half as well as buying a house with ocean views, traveling first-class, driving sporty high-priced cars and other rich toys. But when I put the toys down, I would like to see a good portions of my millions curing diabetes, battling a cooler planet, etc.”
Well, we did ask you to dream big.
But what do you do if there’s a gap between where you are now… and where you need to be if you’re going to live that dream?
That’s the question we’ve been working on urgently for the last several weeks. We’re a couple of days away from revealing a solution — an aggressive, but absolutely achievable, catch-up plan.
“Are your left hands and right hands connected and aware?” a reader emails us on the what’s-your-number topic. “I begin to wonder.
“The organization that created the I.O.U.S.A. documentary wants to know what ‘magic number’ (in retirement savings) will be necessary for an individual to enjoy their ‘dream retirement’? Really?
“If the dollar becomes worthless (due to Bernanke’s endless money-printing), then it will take an INFINITE number of dollars to buy anything, let alone retire!
“I’ll play along, though: Let’s say a TRILLION TRILLION DOLLARS is my ‘magic number.’
“That would probably be about 50 ounces of gold, for a more comprehensible number. And no, I’m nowhere near that number — but I’ve made a start. And I plan on buying more…”
The 5: So you’re the guy whose reply crashed our Excel spreadsheet when we tried to calculate the average…
Seriously, we love the Midas metal when it comes to preserving purchasing power. But even under the Jim Rickards scenario — a collapse of the international monetary system and gold revalued to $7,000 an ounce — will that get you where you want to be?
Something to think about anyway. More as the week goes on…
“Your Canadian reader has drunk a little too much Kool-Aid,” writes a reader replying to yesterday’s health care mailbag.
“My health insurance premiums have gone up 40% since Obamacare passed. Reduction in premiums, my ass.
“As an employer, that provides coverage for my employees, it is almost unaffordable. And as a health care provider, I’ve seen reductions in coverage and the conversion of even long-time full-time employees to part-time to save on coverage costs.
“With the oncoming tax on benefits, it is going to slow our economy down even more. And one thing our Canadian friend may have to get used to is a lot more U.S. immigrants. If the government rejects your request for treatment and you go to Canada and pay for it yourself, it is a felony.”
“I am constantly amazed at the capacity some people have for outright stupidity,” chimes in another. “Health care costs are exploding precisely because of government involvement. Take medicine and education, two areas of intensive government meddling. What do we see? SKYROCKETING costs.
“Let’s take a look at consumer electronics for a comparison. About 10 years ago, I was in Las Vegas for the Consumer Electronics Show. They had large-screen TVs that were hi-def (although still fairly heavy and with burn-in problems) and a 45-inch TV set was in the neighborhood of $12,000. Two weeks ago, I had to replace the 50-inch TV I’d had for eight-plus years that cost less than $4,000. I replaced this one with a 60-inch set for less than $1,700. It’s better technology in every respect, and A LOT CHEAPER, too.
“This is what comes of free (and fair, of course) markets. The consumer gets better products and services at lower prices. Education and health care are what come from massive government interference in free markets, which are then NO LONGER FREE. Ask our Canadian friend to stay north of the border. I’m sure he would lower the IQ of both countries were he to emigrate to the U.S.
“P.S. The only party line I’ve ever been able to see coming from Agora is the freedom party line. A pox on both parties and virtually all politicians.”
The 5: Thank you.
Dave Gonigam The 5 Min. Forecast
P.S. To elaborate on that “pox” a bit… We are emphatically not among the partisans who claimed the United States had “the finest health care system in the world” until Obama came along. Many of the worst scams predate him, by decades.
But he is taking a bad thing and making it worse, come Jan. 1 next year. “Young and old. The sick and healthy. Everyone pays more,” says our friend Jud Anglin, who’s performed yeoman’s research to help you work around the system and live a long, healthy life no matter what. Really, if you haven’t checked out the work he’s done for us, it’s high time you get started. You owe it to yourself.