Bam Bam’s HC Reform: WTF

Anyone who hasn’t been hiding under a rock during the past few weeks has heard of O’Bama’s healthcare reform bill. The basics of the bill are that healthcare be provided to at least 97% of the population. The tab for this overhaul is in the $600B range. The idea is that the bill will reduce the cost of treatments and medicine, which will reduce the premiums charged by healthcare providers. This means that folks with current health insurance will see a reduction in their premiums and folks that don’t have health insurance will have a choice of new and affordable plans. There are a myriad of other factors that go into this reform, such as making insurance companies accountable and increasing the competition. Also, the goal seems to be a McDonaldization of hospitals and other health care facilities. Basically, that means that no matter what hospital you go to, you’ll receive the same high quality care as any other place. One funny detail is the plan wants to require insurance companies to cover pre-existing conditions.

I, personally, have a few problems with this. One, the bill suggests that having health insurance is a “right”. The last time I checked the Constitution, it made no mention of health insurance being a right to every American citizen. There are people out there who take terrible jobs, simply because of the health coverage. It is not a right. Only about 60% of the jobs in this country offer health insurance as a benefit. The cost that this plan will have is going to be spread out amongst everyone in the form of increased taxes. The $600B price tag is simply the tip of the iceberg in terms of cost.

I am in favor of the tax on the “wealthy”, since there are so many loopholes in the tax code that the average percentage of taxes paid by the richest 1% in the country was about 17%, which is roughly the tax bracket shared by the average middle class person. Since the top 10% control 50% of the assets in the country, let them pay a few percentage points more. They can afford it and it will not affect their standard of living whatsoever.

To sum this up, O’Bama is 1/8th the way through his term and I did have high hopes for him. However, I give him an “A” for effort, but his ideas and performance are a lowly “D-“. Luckily, I’m and individual and my opinion means nothing in the grand scheme of things. Unfortunately for Bam Bam, if what he has put in motion does not yield any fruit in the next two years, we will have seen our first single term president since G.H. Bush (unless Palin gets the GOP nomination, then we’ll get him for another four years). Even if his plan does produce good results in the short-term, the full consequences of his actions will not be realized until well after he is gone from office. It will be a bit like the financial meltdown we are going through can be attributed to Clinton and not G.W. Bush, even though he is still an idiot.

So, what can we take away from all of this that can be used to our advantage? That’s as tough a question as there is at this point. You are kind of “damned if you do, damned if you don’t.” Staying totally in cash will subject you to inflation risk. Going all in the market can leave you open to market risk, especially since the jury is out on whether the economy is going to make a recovery sooner or later. Going all into bonds leave you open to interest rate risk. The yields are high, but the bigger issue is the reclassification of bond ratings that has taken place recently. You must understand the risk and weigh that against the interest rate. The spreads are still very large, so there is a lower risk than normal, but you still have to be vigilant in your research of the bonds you intend to purchase. As for myself, I’m still sitting on the side of the pool with my feet in the water; debating on whether I’m going to dive in or just wade in. It is times like this (and forgive me for sounding like a broken record) when flexibility is the key to being prepared for anything.

The market is approaching 9,000, but do not bet on it being at that level by the close of the year. Also, try not to look at the market overall, but rather the stocks you hold. Understand all the sectors and the industries within.