Presidential Thoughts

I have been many things in my career, in fact, probably called many things, but never a ‘Blogger’. With the publishing of this, I guess I now am one! I don’t promise perfect prose, grammar, and spelling will be as good as spell-check permits. My goal will be to provide information and commentary and news and events that may prove useful, or at least of interest, to your business and/or personal situation. I invite, and even ask for feedback and dialogue, (I only ask that if it is negative, be gentle).

It is hard to get through a day without some discussion regarding Health Care reform. By Health Care reform, I am referring to the Patient Protection and Affordable Care Act which was passed into law on March 23, 2010. It is usually referred to PPACA, I think because it is hard to call it by its real name and keep a straight face. For simplicity, and to save space, that is how we will refer to it from this point forward. Of course the law is over 2,700 pages long, and 7 days later, needed the Health Care Education Reconciliation Act of 2010 to amend it. Many have questioned my sanity since I normally read these things, but even I could not get through most of it. My concern are the thousands of pages of regulations to be written by the bureaucrats to now tell us what was really in the bill, what we actually meant by it, and how to implement it. To date there have been almost 5,000 pages of regulations written and passed.

This bill initiates major changes to the health care system which will affect every American. Some of those changes went into effect immediately, with the rest scheduled to become effective at varying stages over the next several years. In the event you have not become informed and up to date, (the vast majority of Americans), I hope to highlight some of those changes over the course of time.  Of course, many of them, (see 2014) have substantial costs involved, which, of course, will add to the costs of health care.

By the end of 2010, there are many reforms to become effective. I can write a page on each item, (some would require 2 or 3). If you would like any additional information or have specific questions, please contact me. Otherwise, here is just a list:

  • Grandfathering (“keep the plan you are on”)
  • Temporary high risk pool or Pre-existing Condition Insurance Plan
  • Mini exchange
  • Early Retiree reinsurance
  • Network Access
  • Revised Appeals process
  • Elimination of pre-existing condition exclusions for children
  • Prevention services
  • Rescissions
  • Lifetime limits
  • Annual limits
  • Administrative cost caps or medical loss ratio
  • Rate review
  • Small business tax credits

Beginning 2011, additional Reforms are to be in effect:

  • Health savings accounts and flexible spending account changes
  • Employer wellness discounts
  • Disclosure of value of benefits  on W-2 form

In 2012, even more requirements for insurers:

  • Uniform coverage documents
  • Quality of Care reports

With 2013 we see even more:

  • Flexible spending account limits
  • Medicare tax increase
  • Medical expense deductibility restrictions
  • Medicaid expansion to 133% of the federal poverty level
  • Comparative effectiveness research fee, because we don’t call them taxes anymore)

And then we get to 2014 when the BIG stuff kicks in:

  • Guarantee Issue
  • Community rating
  • Federal and State Exchanges
  • Individual Mandate
  • Subsidies up to 400% of federal poverty level
  • Employer mandates to provide ‘minimum essential coverage‘, (primarily for employers with 50 + Full-Time Employees).
  • Auto enroll for Employers with more than 200 Full-Time Employees
  • Employers to provide Free Choice Vouchers to qualifying employees on the Exchange
  • Waiting period restrictions
  • Federally mandated benefit requirements, (Silver, Gold and Platinum)
  • Insurer Tax (by 2018 expected to cost approximately $14.3 Billion)
  • Prescription Drug tax (approximately $2.8 Billion)
  • Medical Device Tax (2.3% tax)

As can be seen, just Healthcare reform could take up pages and pages.  However, even I would not want to read that much. So, to conclude my first blog, some fun and interesting facts:

GOLF MONEY – Golfer Jim Furyk made $11.35 million on 9/26/10 (a week ago yesterday), $1.35 million for finishing 1st in the Tour Championship held in Atlanta and $10 million for winning the season long FedEx Cup.  In their entire professional golfing careers, Arnold Palmer and Jack Nicklaus made a combined $7.6 million in tournament winnings (source: PGA).

WOW SEPTEMBER – The S&P 500 gained +8.9% (total return) in September 2010, its best September result since 1939 (i.e., 71 years ago) and its 4th best performance for any month in the last 20 years.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).

ONGOING BULL – From its bear market low close on 3/09/09, the S&P 500 has gained +74.3% (total return) through the close of trading on Thursday 9/30/10 (source: BTN Research).

BUFFETT SPEAKS – On 9/30/05 (i.e., 5 years ago), famous stock investor Warren Buffett predicted that over the upcoming 7 years (i.e., 10/01/05 to 9/30/12), the S&P 500 would return less than 10% per year.  As of 9/30/10, the S&P 500 has gained +0.6% per year on a total return basis over the last 5 years (source: Fortune, BTN Research).

DIDN’T HELP MUCH – Mortgage servicers modified 1,008,420 loans nationwide in 2008 and 2009.  As of 6/30/10, only 38% of the more than 1 million modified loans were current with their monthly principal and interest payments (source: Office of the Comptroller of the Currency).

PLEASE VOTE – Only 37.1% of the US voting-age population voted in the 2006 mid-term elections.  The 2010 mid-term elections will take place in less than 1 month on 11/02/10 (source: Federal Election Commission).

Quote of the Day: In a bid to stem taxpayer losses for bad loans guaranteed by federal housing agencies Fanny Mae and Freddy Mac, Senator Bob Corker (R-Tenn) proposed that borrowers be required to make a minimum 5% down payment in order to qualify. His proposal was rejected 57-42 on a party-line vote because, as Senator Chris Dodd (D-Conn) explained, “passage of such a requirement would restrict home ownership to only those who can afford it.”

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