Mish's Global Economic Trend Analysis

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Obamacare Premiums 47% Higher But Deductibles 27% Lower Than Grandfathered Health Plans; Obamacare Lies Posted: 20 May 2013 11:34 AM PDT Here's the question of the day: If you have a choice (and you many not for long because companies are abandoning grandfathered plans) Should you skip Obamacare and keep your old plan? Any policy in place on March 23, 2010, the day health reform was enacted, falls under the grandfather exemption. As the Obama administration put it, if you like your plan, your doctor or both, you can keep them. Last year some 60 percent of employers, large and small, offered at least one grandfathered plan during open enrollment, according to the Kaiser survey. New employees can also join a grandfathered plan so long as the company has maintained consecutive enrollment in it. For old plans as well as new ones, premiums are likely to rise next year - though the old plans still could be considerably more affordable than the newer ones. Technically, a plan can stay grandfathered indefinitely, but few, if any, will. Most grandfathered plans have gone away already, according to the human-resources consultancy Mercer, which estimates only about a third of employers are expected to offer one in 2013. Across the board, it is costs that will lead to the disappearance of most grandfathered plans. If employers or individual plans want to keep grandfathered status, they will have little leeway to pass higher costs along to policyholders. Any policy that increases co-payments, deductibles or co-insurance forfeits its grandfathered status. Comparison Points Grandfathered plans don't have to provide full, co-payment-free coverage of preventive services, such as flu shots, mammograms and cholesterol screenings. Grandfathered plans don't have to cover a government-designated "essential benefits package" of procedures and treatments. Grandfathered plans may require prior authorization for out-of-network emergency care, unlike with new plans. Grandfathered policies bought by individuals carry their own exclusions, like a $750,000 annual cap on reimbursement for the aforementioned essential benefits, including hospitalization, emergency services or pediatric care. The online insurance broker eHealthInsurance found that premiums were 47 percent higher and deductibles were 27 percent lower than for individual plans that will incorporate all of PPACA's new rules. Average monthly premiums for individuals in plans without the newly required benefits — the closest equivalent to grandfathered plans — were $190 versus $279. Average deductibles for individuals were $2,257 versus $3,079. Obamacare Lie:  "You Can Keep Your Existing Plan" That difference in monthly premiums of $190 vs. $279 will entice many to keep their existing plan, assuming it is still offered. However, that setup won't last very long because companies cannot raise premiums on grandfathered plans. Simply put, Obama lied when he said "you can keep your existing plan", knowing full well the law was purposely written to make sure that would not happen over time. Eventually you will be stuck with a new Obamacare plan and higher premiums whether you like your existing plan or not. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Wild Swings in Gold and Silver; Time to Give Up Hope? Posted: 20 May 2013 10:03 AM PDT Overnight action in gold and silver was interesting to say the least. Silver plunged 10% and was halted four times in a flash crash, of sorts, yet is now in the green. Silver 10-Minute Chart click on chart for sharper image Silver hit as low as $20.25 and as high as $23.24. The maximum rally from the low was 14.8% Gold 10-Minute Chart click on chart for sharper image Action in gold was also pronounced, but not quite as wild as silver. Gold fell $25 from the open but is now up $22 and and in the second-to-last 1--minute candle (about 10 minutes ago from this posting) was up another $10. Time to Give Up Hope? Louise Yamada says it's Time for Gold Bulls to Abandon Hope. Is it? I think most already have. There is amazing pessimism in the sector already, and abandonment of hope is what it takes to set a bottom. Are We There Yet? I don't know if we have reached the point of extreme pessimism yet, but nor does anyone else. Are we close? I believe so. Large Specs Trim Gold, Silver Net Longs Please consider Large Specs Trim Gold, Silver Net Longs. Large speculators continued to pare their net bullish positioning for gold and silver futures and options but increased it for platinum and palladium during the most recent reporting period for data compiled by the Commodity Futures Trading Commission. Money managers in the CFTC's "disaggregated" report were net long by 39,216 contracts for futures and options combined, but this is down from 49,260 the prior week and is the lowest tally since this reporting format began in 2009. In the longer-running "legacy" report, the non-commercials – commonly referred to as the funds – cut their net long to 68,942 lots from 78,871 the prior week. This now stands at the lowest level since late 2008. Bank of America Merrill Lynch pointed out that large speculators continued to unwind long positions. The number of total longs in the disaggregated report fell by 2,986, while the number in the legacy report fell by 5,284. Further, speculators continue to add short positions, pointed out UBS and TD Securities. TDS said this is occurring amid concerns the Federal Reserve may taper its monetary stimulus, thereby weighing on sentiment. Money managers added 7,057 fresh shorts, while non-commercials added 4,645. UBS reported that total speculative gross short positions in gold are at a record high and double the level from the start of the year. Meanwhile, net speculative length rose for the platinum group metals. Standard Bank described these metals as "experiencing supply-side distress" that means more potential for increased investor demand. Money managers bumped up their platinum net length to 23,703 lots from 21,819 the previous week, while non-commercials increased this to 32,734 from 30,641. In both cases, this was largely due to fresh buying. Money managers added 1,421 new long positions, while non-commercials added 1,247. In percentage terms, the decline from just over 1900 to the $1325 area is just a normal looking correction. Yet, fund speculation is at the lowest level since 2008. While not a timing mechanism, pessimism seems rather extreme for such a normal looking correction. Nothing has changed fundamentally as irrational exuberance abounds in nearly all the equity and bond markets, all running on nothing but momentum and unwarranted faith in the Fed to keep the bubbles expanding. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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