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Sunday, November 3, 2013

Digressions On The Keystone, ObamaCare, And The Red Queen

It took me a long, long time to work through the various phases of my thoughts on the Keystone XL issue.

Regular readers have put up with my constantly changing themes on that debacle. My very first posting on the Keystone XL was a note-in-passing; I had no interest in pipelines, and certainly not in pipelines that were not part of the Bakken. I noted the story, moved on, and never planned to return to the Keystone XL. I noted that I did not have a "dog in that fight" and could not care less about the a pipeline.

Then, over time, the Keystone XL took on a story of its own, becoming a regular issue of interest for the blog.

My thoughts about the Keystone XL have gone through these stages:
  • could not care less (see above)
  • seriously? thousands of miles of pipeline in this country and folks are up in arms against one more? certainly "you" have got to be kidding
  • comical (readers, I'm sure remember my soap series: As The Keystone XL Turns)
  • incredulity: I couldn't believe this story had lasted four years (we're easily into our fifth year, now)
  • back to comical
And that's where it will probably end for me, just a comical story. There are serious ramifications but the serious ramifications are overshadowed by the comedic theme running through the entire story.

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Which brings me to ObamaCare. It did not take me as long to go though the various stages of thought regarding ObamaCare. Unlike the Keystone XL debacle, ObamaCare has very, very serious ramifications and it was never comical. My initial reaction was emotional, visceral, political, but the story has now become, simply, a fascinating, serious, historical issue unfolding before our very eyes. The nice thing about blogging (or keeping a journal), at least for me, is to help me sort out what is going on, or trying to figure out something. Someone once told me: if you can't write it down (put it into words), you don't understand it.

[That's the reason I started blogging on the Bakken; I had been through several booms and busts in the Williston Basin oil patch, and never understood the phenomenon. I was in the Bakken from the beginning and I didn't want to miss another opportunity to learn. Through blogging about the Bakken, I feel I have a very, very good understanding of what is going on. I make factual errors while blogging about the Bakken but in the big scheme of things these errors are unimportant; readers point them out; I correct them and move on. It's the big story that fascinates me; it's the big story that is important.]

I will continue to blog about ObamaCare. My comments will seem partisan, emotional, visceral. That may be the impression but it won't be reality. Forget the politics. The turning point was the article I posted last Thursday. I finally figured it out. The whole thing.

There are a gazillion things to consider when thinking about ObamaCare. But this is the one "thing" that ObamaCare keeps coming back to: there are no lifetime caps on medical expenses. Think about that.

I am unaware of any other example in which any sector in the US economy has just been hit with an unlimited liability (with the exception of the unfunded government mandates). The program simply won't work. Think about it. There are no medical caps. No one has any idea how much this is going to cost; there has been no precedent for this anywhere, in the history of the universe. In the past, once medical care got past a million dollars or so for an individual who could no longer pay, the providing medical system (Mayo Clinic, for example) simply wrote it off as "goodwill" and took the financial hit and the tax benefit. But now, the insurance company is going to be forced to continue paying Mayo Clinic, and the insurance company is "us." The only way for the insurance company (and companies) to pay these millions in claims is by raising the premiums.

The rise in premiums folks are talking about now are for calendar year 2014. After April, 2014, the deadline for signing up for ObamaCare (the individual mandate has been extended six weeks, I believe), the insurance companies will be calculating the premiums for 2015, which will be announced in late 2015. By mid-2014, insurance companies will have a very good idea a) how much this will cost them; and, b) holy cow -- the Affordable Care Act really does mean the end of lifetime medical caps.

I will continue to blog / link stories about ObamaCare, but now it will be simply for archival purposes; it's not longer personal, visceral, emotional. It will be simply fascinating to watch this unfold in real time as folks realize what ObamaCare means.

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So, what does ObamaCare have to do with "all Bakken, all the time"?  For most of my readers, probably nothing. For me, blogging about ObamaCare does at least three things. It puts the Bakken into perspective. Twenty years from now when I'm going through the blog, it will be important to know what else was going on in the US during the Bakken boom. Second, it adds a bit of spice to the blog. I've read other one-subject blogs and after a while they become tedious, boring. Adding something like ObamaCare to the blog breaks up the monotony of the Bakken.

Finally, it allows me think about big issues and finding ways to make them easier to understand. After months of blogging about ObamaCare, I finally had my "aha" moment last Thursday and the entire thing became clear. I do not know what Senator Baucus, an originator of ObamaCare, saw that made him remark that ObamaCare was going to be a trainwreck. This newsmax article suggests he was only worried about the website, the rollout. Note the date of that article. He probably wishes he had stayed with his original thought.

By the way, there is a very, very famous precedent for this. Sometime after Professor Einstein became famous for his specific and general theories of relativity, he was forced to insert a "fudge factor" to make his theory on the fate of the universe to work. Some years later, he realized his "fudge factor" was the most stupid thing he had ever done and said he wished he had never "invented a fudge factor." In Mr Baucus' case, the situation is reversed. When he called ObamaCare a "trainwreck" he was right on target. Five years from now he will wish he had not changed his tune.

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Speaking of the Red Queen, which we weren't. Regular readers know the argument about the Bakken and the Red Queen. LOL. See the tag. Why limit the Red Queen discussion to the Bakken. The Red Queen effect is sine qua non of the oil and gas industry. Look at the headlines/ledes for XOM over the years:

Exxon Mobil reported its greatest decline in production in a decade, July 31, 2008.

Exxon Mobil Corp. reported lower- than-estimated second-quarter profit as production growth lagged analysts’ forecasts and refining earnings outside the U.S. declined.

Exxon Mobil slid Friday after the company reported inline earnings on higher prices and asset sales, but also a 9% decline in production, January 31, 2012.

Exxon Mobil is spending more on capital investments and exploration but output in Q1 declined anyway, sending earnings down below forecasts, April 26, 2012.

Exxon Mobil Corp.'s first-quarter profit rose slightly compared to last year but its production of oil and natural gas fell, as the energy giant continued to struggle in a world where large oil-and-gas fields are harder to find, April 25, 2013.

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The other day I posted a YouTube video of Velvet Underground's self-titled album of 1969. I enjoyed it (the music, not the process of posting) so much I decided to post another Velvet Underground YouTube video. In 2003, Loaded was #109 on Rolling Stone's reissue of their 500 greatest albums of all time.



Unloaded, Velvet Underground

My wife does not know this yet, but I am thinking of getting our 7-y/o granddaughter a set of drums; she loves to drum; I think she could become a great drummer. Mo Tucker.

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Back to ObamaCare. A reader sent me this article which I had already seen, as reported by Bloomberg: ObamaCare documents show 248 enrollees in first two days. This was my reply:
And I can guarantee you that the 248 that signed up have huge medical bills pending: cancer, AIDs; folks don't fight that hard to get insurance if they are healthy and the mandate deadline is several months from now. A lot of insurance company CEO's are sweating bullets right now.

By the way, I don't know if you saw the headline that the insurers were against the six week extension. Because of the website problems, the administration agreed to a six-week extension. Whatever the insurers factored in for premiums for 2014, they assumed premiums would start coming in as early as January 1, 2014, and NO LATER THAN April 1, 2014 (the original deadline was March 15, 2014), but now with a six week extension, that takes the deadline to May 1, 2014, meaning the first premiums would be due in June -- so insurers will start paying claims for the full year for those who sign up by the beginning of the year, but will only be getting premiums for the last half of the year for the later enrollees.

There is talk that insurers will be allowed a mid-year readjustment of premiums, but that has never happened before. I doubt Americans will tolerate a mid-year readjustment (up) and going into the election, the politicians won't allow it.  My hunch is that the politicians will vote to "cover" the insurers (bailout). There's no way the Tea Party can afford to stop this bailout. National Health Service is on the horizon, and it will be a talking point in the 2014 election.
Meanwhile, a reader sent me this article, sending it to me without comment. Based on the headline it seems to be a reporter (or reporters) promoting ObamaCare. There are only two groups still promoting ObamaCare: a) Obama hacks; and, b) those who qualify for ObamaPhones. The latter group appears to be increasing in size under this administration by the government's own statistics. But I digress. The NY Times article suggests that "millions of Floridians" will qualify for "fully subsidized" ObamaCare. If true, that tells one just how many very, very poor working people live in Florida (one has to have an income to quality for ObamaCare). What the writer(s) / reader do not understand is that folks who qualify for "fully subsidized" will not be able to afford the co-pays and/or deductibles.

But it will be an interesting state to follow: ObamaCare needs 7 million enrollees to make the program work. Seven million is the estimated sign-up goal for the first year; that has become the leading metric for the Obama administration. Without California, Texas and Florida, those numbers will be difficult, if not impossible to achieve.

3 comments:

  1. Love the blog, keep it up - yes, including the ObamaCare stuff. On that note, your countdown on the sidebar seems to be a year off. 807 days from now is 1/20/16. POTUS won't turn over until 1/20/17, so we're still over 1100 days off.

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    Replies
    1. Thank you for your kind note. It wouldn't surprise me that I'm wrong on the countdown on the sidebar. But you are correct. It's obvious I screwed up there....all of 2014, all of 2015 is ... etc., etc. If I can figure out how to re-do the countdown, I will fix it, but don't hold your breath. Smile.

      I really think the ObamaCare story is fascinating from a purely business/financial point of view. I don't think the numbers add up; if the numbers don't add up, the health care industry is in deep trouble, and one of two things will happen: the government will be forced to provide top cover for lifetime expenses/individual over "X" amount, or we will see complete restructuring of the program. The insurers are staring at the headlights of an on-coming train: unlimited lifetime expenses for all medical conditions, including psychiatric care.

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    2. Whether or not I got it exactly right this time, the countdown is now closer to reality. Bummer. This is worse than going to daylight savings time when you lose an hour of sleep in the spring. I just added another summer of Michelle's White House garden.

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