Tuesday, July 21, 2015

ObamaCare Costs Exploding For Insurers, States; Closer To A Single-Party Payer

Panic Time?

One reason for mergers: one of the two parties, sometimes both, are failing, or see "failure" in their future. Zacks reports:
Earlier this month, Humana agreed to be acquired by Aetna Inc. AET. Humana has been incurring increased operating and capital expenses, huge heath insurer fees, dependence on Medicare Advantage (MA) plans and an expected cut in MA funding. However, many of these issues will be mitigated by its association with Aetna.

The combination of the two majors from the insurance industry space is likely to create the second-largest managed health care company in the U.S. Post acquisition, Aetna will have a 74% stake in the combined entity, while the remaining 26% will be held by Humana.
Humana has been experiencing higher benefit ratios across most operating segments owing to increased benefits. The company’s escalating expenses have also been weighing on margin expansion.

The majority of Humana’s revenue generation is supported by the sale of its Medicare Advantage plans, which are the privately administered versions of the federal health program for seniors. However, the health care reform has resulted in lower sale of Humana’s Medicare Advantage products, which might affect the insurer’s top line.

Moreover, as mandated by the Health Care Reform Law, Humana paid $562 million as health insurance industry fee in 2014. This fee is expected to increase by 41% in 2015, which is definitely a headwind to the company’s bottom-line growth.

Humana’s agreement to be a part of Aetna, therefore, is the company’s best bet to survive in the fast changing health insurance industry. Furthermore, Humana’s Accountable Care agreements, partnerships, efficient capital deployment, focus on expansion through acquisitions and diversifications as well as strong ratings position it for long-term gains.

North Dakota Revises Estimate of Medicaid Costs
From Under $3 Billion To More Than $8 Billion For FY2017

KXNews is reporting:
North Dakota's costs for expanding Medicaid under the Affordable Care Act are higher than had been projected.
The Department of Human Services has revised its cost estimates from $2.9 million to $8.2 million for the 2017 fiscal year. The agency says actual health care costs are higher than forecast when the state opted to expand the health program for the poor in 2013.
I don't understand the numbers. I will let others sort it out for now.

Hillary's Plan To Save Medicare -- Raise Capital Gains

The AP is reporting:
Hillary Rodham Clinton plans later this week to propose raising capital gains taxes for some investors, pivoting from a 2008 pledge not to increase the rate beyond 20 percent.
The policy is part of a larger effort by her campaign to encourage greater focus on longer-term economic growth rather than more immediate gains for investors_a priority for the liberal Democrats she'll need in 2016.

The new rates would be pegged to the duration of the investment, with short-term holdings taxed at a higher percentage.
The reporter (or Hillary) sounds like he/she is unaware that that is currently the practice: the rates are pegged to the duration of the investment, with short-term holdings taxed at a higher percentage.
Earlier this year, Obama proposed increasing the rate to 28 percent for the highest earners. While Clinton's proposal is still being finalized, her rate would likely be higher than Obama's plan for the shortest-held investments, according to a campaign official who spoke anonymously to discuss plans still being developed. Currently, gains on securities held for more than a year are taxed at the same rate as those held for decades.
In fact, if she wants money to move more quickly, she needs to upset the wheelbarrow. The shorter the holding duration, the lower the capital gains taxes. Securities held for years should be taxed at a higher rate if she wants money to move more quickly.

Some of us hold securities for multiple generations. 

History of capital gains taxes:
Clinton's tax proposal marks a shift from her 2008 campaign, when she promised not to raise capital gains rates higher than the 20 percent bracket established during her husband's administration. At the time, the rate was 15 percent — a result of the tax cuts championed by then-President George W. Bush.
"I wouldn't raise it above the 20 percent, if I raised it at all," Clinton said in an April 2008 debate.
Now, Clinton says a surge in companies focusing on shorter-term goals, like stock buybacks, rather than longer-range investments in employees and communities prompted her change in position.
"The increase in short-termism has grown in urgency since 2008, and the urgency of our solutions has to match it," she said on Monday, in a question and answer session that Facebook hosted.
Over his time in the White House, President Barack Obama has raised the capital gains rate for top earners to 23.8 percent — fulfilling a campaign promise to raise the tax.

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