President Obama's Fatal Weakness May Be Obamacare; Obama Admin In Danger

This was originally published on October 26, 10:12 AM. I'm bumping it to the top due to the huge news flow. Scroll down for the latest additions.

When I wrote Will Obama Be Impeached? Watch The Stock Market, I focused on the issues that seemed likely to generate impeachable offenses: Benghazi, the IRS scandal, DOJ cover ups. In the case of Benghazi, the latest rumor is that the CIA was buying Libyan arms and sending them to Syria via Turkey. If this is true (the Daily Caller is working on the story), then it could be a scandal equivalent at least to Iran-Contra. However, more surprising is how Obamacare is damaging the President's standing with the country.

Henninger: Obama's Credibility Is Melting
All of a sudden, from Washington to Riyadh, Barack Obama's credibility is melting.

Amid the predictable collapse the past week of HealthCare.gov's too-complex technology, not enough notice was given to Sen. Marco Rubio's statement that the chances for success on immigration reform are about dead. Why? Because, said Sen. Rubio, there is "a lack of trust" in the president's commitments.

"This notion that they're going to get in a room and negotiate a deal with the president on immigration," Sen. Rubio said Sunday on Fox News, "is much more difficult to do" after the shutdown negotiations of the past three weeks.
This is big for domestic politics.

When belief in the average politician's word diminishes, the political world marks him down and moves away. With the president of the United States, especially one in his second term, the costs of the credibility markdown become immeasurably greater. Ask the Saudis.

Last weekend the diplomatic world was agog at the refusal of Saudi Arabia's King Abdullah to accept a seat on the U.N. Security Council. Global disbelief gave way fast to clear understanding: The Saudis have decided that the United States is no longer a reliable partner in Middle Eastern affairs.
That is even bigger, for international politics.

Bluntly, Mr. Obama's partners are concluding that they cannot do business with him. They don't trust him. Whether it's the Saudis, the Syrian rebels, the French, the Iraqis, the unpivoted Asians or the congressional Republicans, they've all had their fill of coming up on the short end with so mercurial a U.S. president. And when that happens, the world's important business doesn't get done. It sits in a dangerous and volatile vacuum.

The next major political event in Washington is the negotiation over spending, entitlements and taxes between House budget chairman Paul Ryan and his Senate partner, Patty Murray. The bad air over this effort is the same as that Marco Rubio says is choking immigration reform: the fear that Mr. Obama will urge the process forward in public and then blow up any Ryan-Murray agreement at the 11th hour with deal-killing demands for greater tax revenue.
Social mood hasn't even sunk yet; the stock market hits new highs every few weeks in 2013. Granted, the overall level of social mood is negative, but what's going to happen when it goes through another downswing from current negative levels? Obama's approval/disapproval rating is back in negative territory, but the picture is even worse. He's benefiting from personal likability because when asked about his job on the economy or foreign policy, his approval numbers sink much lower.

His big problem may end up being Obamacare. The disaster of the website is generating all the news, but the next story is that young people don't want to sign up. Karl Denninger has been covering Obamacare extensively. Basically, Obamacare is a plan to force young healthy people into buying insurance. However, it's not just that they should buy insurance, they need to pay in enough money to make the current system solvent. Due to an insane system (the U.S. does not have health insurance in most places; it is better to describe it as prepaid medical services) that drives up costs and bad demographics, young people will see their premiums surge 200% to 300%, and even more. And that's for the cheapest plans, which will only cover 70% of expenses after the high deductible. In other words, for young people Obamacare is a massive tax that offers no benefits.

How Badly Will ObamaCare Screw You? Answers Here!
First, if you're "27", the average premium is $266.20/month or $3,194.40 per year. How many 27 year olds have an extra $3,200 to spend on this? Remember, this is the price that virtually every uninsured 27 year old must be willing -- and able -- to cough up in order to prevent the model this system is predicated on from collapsing.

If those 27 year olds don't show up, and they won't, then the system collapses instantly. If they do show up because the government threatens them with fines the economy collapses as $3,200 a year exceeds the average 27 year old's disposable personal income after mandatory expenses (e.g. food, shelter, etc.) Remember, there are always exceptions but these premiums are averages and over large pools of people the statistical averages are what matters -- not the ends of the barbell.

It gets better. The "average" 50 year old premium, again, for single coverage, is $452.87, or $5,434.44/year. How many 50 year olds will find that attractive compared against what they're paying now? Probably more of them, especially if they're already sick. But how about the healthy ones?

Note two things as well on this account -- these premiums are for non-smokers (smoker premiums are grossly surcharged with reports being 1.5x the above) and they do not account for anyone other than one person. If you are a single parent with kids (rather common) the premium on average is $610.23/month or about $7,300, and if you're a couple it's $647.86 (again, $7,774 annually.)

Now let's look at the government's own claims. First, the CPI index claims that health insurance is 0.656% of the family budget. What percentage of couples make $1.185 million a year? Why do I ask? Because that's the alleged median income for a couple if you believe the government's CPI numbers.

Yeah, right.

It gets better. My own expectation was that Obamacare would send healthcare costs soaring because people would either become insured or go on Medicaid, driving up demand for healthcare. I wrote about it or linked to others several times, in posts such as Obamacare Will Increase Healthcare Spending and Increase the Deficit; The Obamacare Bomb; and in Updated: ZeroHedge has a more pessimistic debt model, in which I wrote:
Obamacare taxes really hit in 2014 with the penalties and that's when the economy will slow considerably, likely sinking into recession later in 2013. Medicaid costs will surge as people forego insurance, pay the penalty and sign up for Medicaid.

Denninger says the latter is already happening in a major way in Here It Comes (ObamaCare ALREADY Detonating)
This is (thus far) anecdotal, but if it plays out anywhere near what I'm hearing reports of this law is done and so is the Federal and State budget process.

Specifically, I am hearing that of the (few) people who have managed to actually (1) create an account on the federal health care system exchanges and (2) go through the process nearly all of them are winding up referred to Medicaid. What's nearly all? There are reports that it is in the 90% range in many if not most area!

Got that? Almost none of the so-called "enrollees" are actually paying customers.
If you're at all interested in Obamacare, it's well worth reading that whole post. Denninger goes on to explain more reasons why young/healthy people aren't signing up (besides costs). This could become a major story, major in such a way that it dwarfs everything else by an order of magnitude because it marks the absolute total failure of the President and Congressional Democrats on healthcare. This is too big of a failure to reform, it can only be repealed with something entirely new in its place, but the public will have lost faith that the government can do anything.

This is shaping up into a Battle Royale because the Tea Party will be armed with the total failure of Obama on his signature legislative achievement when the debt ceiling comes up again in February. If Obama can't do this right, why would he be right on anything? It will also embolden Democrats because they will rightly sense that the Tea Party could turn around from October's loss and stage a major political win. They will blame the laws failures on Republicans and any economic weakness on the October shutdown. Social mood is already moving lower and trade numbers are sinking in China. A social mood storm is brewing for early 2014.

Update: More from ZeroHedge, see Obamacare's Website Debacles Migrate To Paper, Pen And Phone
Raucous laughter aside, there really are no words to describe the gross incompetence that has been revealed, even if many knew long ago that when the government really sets its mind to it, it can screw something up better than the entire private sector possibly ever could.

And since there are no words, back to the raucous laughter
Most of the post links to this Politico story: ‘Glitches’ hit Obamacare paper, phone applications too. Mish also linked to Health Care Law Fails to Lower Prices for Rural Areas and Millions of Americans Are Losing Their Health Plans Because of Obamacare.

Pretty much every main selling point about Obamacare was a lie. You can't keep your old plan, which means you may also be unable to keep your doctor. It costs more, not less, for many people, especially younger and healthier people. It will increase costs to the government and raise overall healthcare costs. It is almost the perfectly designed anti-healthcare reform bill.

Update: I linked above to a previous post The Obamacare Bomb.
Obamacare sets the percentages that insurance companies must pay for medical costs BY GROUP.
This is finally getting out into the discussion, with Karl Denninger writing about it in Two Other GIGANTIC "Screw You" Parts Of Obamacare
Actuarial Value. This is a complicated way of saying "what percentage of total health care expense" is the policy expected to cover? For a bronze plan (the least-expensive, but still expensive policy) the answer is 60%.

You may have heard the "actuarial value" but you probably didn't understand what it meant. Let's put some numbers on this. Assuming you will pay $300 a month for your "bronze" plan under Obamacare, or $3,600 a year.

The policy can of course, at most, pay $3,600 per year, per person who has it on average or the company will go out of business because it will lose money. Eventually all firms that lose money continually go bankrupt. Therefore, on average it must pay out less than this much per person, assuming zero overhead (which is of course impossible.)

This means that on average you are expected to fork up about another $2,400 in cash for your medical care on top of the $3,600 in premiums, or $6,000 annually.

Don't have $6,000 in disposable income?

Tough crap.

Now note that these are averages, and further disregard inefficiencies. In other words, the total you are expected to spend will be somewhat less, because the inefficiency goes not to provide care but to run the insurance company. Nonetheless this illustrates the problem -- you think it's $3,600 a year but it's really $6,000 you're signing up for!
Click through to read the second part.

Update: More comedy.

Update: The news that Obama lied about people being able to keep their plans is not shocking. It was obvious from the way the regulations were written that plans would be cancelled. The media is suddenly acting like this is news though, which is bad news for Obama. There's a lot more bad news that we've know since the law was written, but if the media acts as if every revelation is major news, there could be bad news coming out for months on end, well into 2014.

Obama's big lie
Obama admin. knew millions could not keep their health insurance

And it also matters because the media is starting to follow the meme and dredge up more lies: 60 MINUTES: YES, AMERICA, THE OBAMA ADMINISTRATION LIED TO YOU ABOUT BENGHAZI

Most people focus on the stories themselves, but the wider picture is more important. President Obama has no credibility left and that extends to financial markets. He may be unable to stop a crisis from spiraling out of control, should one emerge.

Update: Obama Admin puts pressure on insurance companies, telling them not to speak about Obamacare problems.

Update: I thought it was interesting that mainstream political analysts are now talking about how the jump in out of pocket costs for insurance, and the fear of it, will cause people to stop buying things.

Update: Child support systems will be impacted by Obamacare. Obamacare and child support

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