Yearly Archives: 2015

How bad has Obama been for business?

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That sound you hear is corporations (especially in the healthcare industry) laughing all the way to the bank. Craig Israelsen had a fascinating article in a recent issue of Financial Planning Magazine, and the results are quite startling. As Israelsen correctly points out, presidents are happy to deny responsibility when the news is bad, and take unearned credit when news is good, but I’d like to suggest that any POTUS who has eight years (two terms) has to accept some blame and credit, especially after several years in office. Israelsen graphicBased on numbers, I’d say Clinton and Obama have been the most investor-friendly in recent memory, and investors (and business), should be lining up to thank them. And when did facts and numbers count in politics? (If you’re interested in the full article, drop me a line and I’ll send it along.

Let’s look at another common theme from a certain blowhard American political party—that the Affordable Care Act has been a disaster for the healthcare industry. Notice I said industry; whether it has improved the lives of individual consumers is another story. According to Morningstar’s charts, $10,000 invested on March 23rd, 2010 (the day President Obama signed the Affordable Care Act into law) would be worth $27,377.99 today. A 173% increase in less than 6 years doesn’t exactly seem unprofitable to me. Had you been smart enough to focus on biotechnology—you know, not be dragged down by all those terrible companies that make up any index—your $10,000 would be worth nearer $40,000 today. ($40,645 using FBIOX as an example—no investment recommendation intended, example only). Biotech is one of the most risky areas of the healthcare scene, but apparently Obamacare hasn’t put all that much of a damper on risky, venturesome research and innovation, if a better than 300% return is any indicator.

Wouldn’t it be nice if political opinions had some basis in facts? I hope I’ve just given you some.

Long term care: pay and pay and pay again

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Think you’ve been prudent and taken care of any long term care needs by buying long term care insurance? Okay, good, but now you can start worrying again. As usual, American capitalism has found new ways to extract more bucks out of us hapless suckers, oops I mean frugal, hard working citizens.

The Wall Street Journal last week had an article describing how Medicare tracks and audits hospitals for frequent re-admissions. The idea is supposed to be that if you give correct and adequate care followed up by adequate home care, you shouldn’t be readmitting people for the same thing. Ha-ha.  The reality is that home follow up is just about non-existent except for being handed an information sheet as they wheel you out (don’t want the discharged folks to trip on their way out). Hospitals will do everything they can to get you out in two days because after three days of warming a bed you might actually be eligible for some nursing home/rehab care. Their rate of referring to that is tracked, also—and penalized for MORE referrals, rather than being rewarded, as you might reasonably expect.

But now, some hospitals have found a way to obliterate records of readmits by classifying these stays as “observation” stays, which are technically outpatient visits. Which means  some patients will foot a far higher percentage of the bill, depending on insurance. And Medicare won’t count it as a readmission, even if you are “observed” for three days, so you won’t be eligible for any nursing home care provided by Medicare. Getting Medicare to pay for nursing home care was tough already, but this makes it impossible.

You could theoretically have several “outpatient observations”, then be referred to nursing care, and end up paying over and over again for multiple short stays, and your LTCI wouldn’t cover any of it, since the deductible period is usually either three months or six months. Many people select this because theoretically Medicare can cover up to 100 days, although getting that full term is harder than juggling watermelons.

This hasn’t become prevalent enough to raise a hew and cry yet, but if you or a loved one are being admitted to a hospital, be sure you know under what label the stay is being characterized for your insurance or Medicare coverage. And hope you find a pile of cash under that mattress.

Social Security “Reform”—They Pulled a Fast One

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They really put one over on us. With all the horrible news events lately, the pressure in Washington to produce an approved budget, and the joy that the government won’t be shut down once again, lawmakers slipped in major changes to Social Security without soliciting any comment or feedback (so far as the planning industry can determine).

It’s probably not going to surprise you that these changes are not to your benefit. Many of the Social Security claiming strategies that could be used to maximize your benefit have been eliminated. If you were born after 1954, you will not be able to use the “file and suspend” strategy, where the usually higher earning spouse, upon reaching full retirement age, was able to file for benefits, then suspend them. The spouse could then claim spousal benefits, while letting benefits on your own work record continue to grow until you claim them at the higher level reached by 70. Now, if you apply you will get whatever is the higher benefit to which you’re entitled, but you won’t have the option to restrict that application to “spousal only”, so you won’t get the bump up at 70. Also, if one person files and suspends, benefits for both spouses are suspended. It is unclear yet how this will affect divorced spouses, since it’s possible that a vindictive ex-spouse could refuse to collect benefits to postpone the ability to claim spousal benefits. Hopefully, this will be clarified by regulations or rectified by an amendment.

If you will be 62 by 2016, you can still take advantage of restricting your claim to spousal benefits, then switching at 70. Widows and widowers benefits are not affected, and anyone who is currently claiming should be grandfathered in.

This is being justified by saying it closes “loopholes”, as if people were doing something wrong by trying to get a decent level of retirement. I have to ask again, why do we not have a national commitment to guaranteeing a decent retirement to all citizens, as does EVERY OTHER Western Democracy? Instead of trying to prevent people from getting the pittance that is Social Security, and trying to cut the pensions of government workers who have them, we should be moving toward a solvent system that provides a decent retirement for all workers.

Confusing? Yup. If you do have questions, I’d be happy to analyze your situation and discuss alternatives and possibilities with you.