The Healthcare Horse Trade

by James DiGeorgia,

… one event could send all of those major indexes precipitous down 10% to 15% in a few weeks …

I think it makes sense to get ready for the best of times in the markets. But it’s also possible that we won’t get there without first experiencing some scary 500-point-down days.

That’s because neither the Dems nor the GOP are stopping to think what REALLY happens next with the “Affordable Care Act”!

The “Affordable Care Act” may have been developed with good intentions. But it’s a terribly written law that could end up hurting more people than it helps.

I’ve been following the newest Obamacare lawsuit to reach the Supreme Court, King v. Burwell. The central issue is whether people who participate in state-run health exchanges are entitled to receive federal subsidies.

BloombergView explains it well …

“The law authorized federal subsidies to help people buy health insurance on state exchanges. Some states didn’t set up exchanges, and let the federal government do so for their residents instead. Conservatives argue that those states are now being illegally subsidized, because the wording of the law is specific to state exchanges. Liberals argue that this amounts to a typo and the subsidies should continue.”

If the plaintiff is successful in suing the government, as many as 7 million people could see their healthcare premiums jump 322%.

Such an event could cost those Americans $3,164 a year … and many will be forced to drop their coverage.

Having as many as 7 million people immediately thrown off their current insurance plans would create a major economic, political and social nightmare.

On top of that, 95 million people with healthcare could also be at risk of seeing their benefits reduced.

This kind of economic dislocation could nudge U.S. growth below 2%.

This could be devastating for many individuals, and the ripple effect will be palpable to the companies that provide services, equipment, pharmaceuticals and other therapies.

I’m talking about hospitals … health insurers … pharmacies … pharmaceuticals … medical-device makers … biotechs … and small medical-support businesses like laboratories, X-Ray providers, medical software companies and research-and-development outfits.

The list goes on.

The multiplier effect of this kind of economic dislocation could result in a sharp climb in the U.S. unemployment rate.

Democrats and Republicans have proven President George Washington’s worst fears true about the danger of political parties to our democracy.

He was absolutely on-the-money about their “baneful effect.” (Washington’s farewell address is a worthwhile read.)

Imagine what he would have to say about what’s happening today …

What’s Wrong in Washington

This form of government was built and modeled on compromise. In it, most people settle for less than what they want, but get enough to willingly give something else up in exchange.

Washington’s current dysfunction is embedded in the inability to “horse-trade.” This is putting this country’s economic and national security at risk.

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