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A No-Growth Obamacare Christmas?

Obama's "signature achievement" may help bring growth to a halt even before it takes effect.

by
Tom Blumer

Bio

November 4, 2013 - 12:40 pm
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Middle-income and upper middle-income professionals and self-employed persons comprise much of the individual market. They are now being forced to choose between either purchasing far more expensive coverage through their state exchanges containing coverage they neither want nor need, or doing without health insurance entirely and paying a tax penalty. Additional millions of Americans who have chosen to be uninsured until now are facing the same choices. In California alone, according to the state’s Covered California exchange, this will affect about 2.7 million people who will receive no Obamacare subsidies to cushion the impact:

CalHealthInsIndivMarketImpact

A March outside study commissioned by Covered California estimated that average monthly Silver and Bronze plan premiums for affected individuals across all age groups would be $450 and $386, respectively. That’s supposedly a 20 percent average increase for those who are currently insured, and $386 to $450 the currently uninsured haven’t been spending at all.

People who know they will have to spend hundreds of dollars extra every month on health insurance starting next year won’t wait until next year to sharply curtail their spending. They’ll start the minute they learn the bad news, taking billions away from November and December retail sales. Meanwhile, those who will supposedly be saving money on health care thanks to subsidies won’t change their spending habits until the lower premiums take effect in 2014.

It would only take $4 billion in reduced monthly spending by affected individual plan households each month with a Keynesian multiplier of 1.75 to clip a half-point from the nation’s $1.4 trillion monthly gross domestic product — and most forecasts for fourth quarter GDP were at 2 percent or below even before the ADP report and a recent dive in consumer confidence were known. There is also an undetermined number of people in “small group employer plans” who are seeing their plans terminated, and whose impact will only compound the damage.

Suddenly, thanks to the accumulated effect of years of poor economic policy choices combined with the sticker shock of Obamacare, no GDP growth in the fourth quarter is within the realm of possibility.

Merry Obamacare Christmas.

(Artwork created using a modified Shutterstock.com image.)

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Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.

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Top Rated Comments   
Nothing grows until he goes.
1 year ago
1 year ago Link To Comment
/SARCASM ON

Obama has achieved what so many thought impossible: the end of the "boom and bust" economic cycles. It's going to be BUST FOREVER. Long live our wise and fearless Great Leader!

/SARCASM OFF
1 year ago
1 year ago Link To Comment
All Comments   (22)
All Comments   (22)
Sort: Newest Oldest Top Rated
...and don't forget, the BILLION $ just spent on the website went to 'connected' companies, one of which was turned down for a gubmint contract before, complained and got a contract for part of the programming. I suppose that if I contributed heftily to Obama's re-election, I'd want some payback as well. And speaking of payback, LOL, the gubmint just decided that health care providers were exempt from being prosecuted for 'pay backs'. Read all about it folks. The law is only for those who oppose the Obama administration. Obama's friends can do as they like and get away with it as does Obama. Long live the 'King'. sheesh.

Coeurmaeghan in Twentynine Palms, CA
1 year ago
1 year ago Link To Comment
OK, sorry, 'The IRS could have been given that 3 BILLION $ ', should of course have read 1 BILLION $. I should proofread my comments more closely. Thank you for your patience.

Coeurmaeghan in Twentynine Palms, CA
1 year ago
1 year ago Link To Comment
...and I STILL don't get it. Unless one is afraid that giving everyone free insurance or health care would be too socialistic, which the administration is constantly being forced to deny they are, it seems to me that the money spent on the web page(s) for just signing up would have done that admirably. Almost a BILLION $ spent just for the web site alone. With a population of approximately 330 MILLION, couldn't they have spent that money easier, since the IRS is already in charge of re-embursing overpayment of taxes (refunds). The IRS could have been given that 3 BILLION $ and either given everyone 3 million $ or bought healthcare for everyone. Please someone explain my faulty reasoning because I just don't get the waste inherent in having the gubmint in charge of making a website, much less our healthcare.

Coeurmaeghan in Twentynine Palms, CA
1 year ago
1 year ago Link To Comment
President Obama, fundamentally transforming America one (lost) job at a time.
1 year ago
1 year ago Link To Comment
my response to ACA aka Obamacare is this letter:

Dear economy,
I will not be stimulating you this coming Christmas season nor anytime soon. The government has MANAGED to tap me wallet dry and thus I'll be unable to participate in any purchases other than the most essential, which the Obama government has already MANAGED to skyrocket like food, gas and utilities...I guess this is what happens when you are MANAGED rather than FREE.
Yours down and broke,
Terry L. Newberry
1 year ago
1 year ago Link To Comment
I didn't miss your point but you appear to have missed mine (although I am guilty as charged on the strawman - for which I apologize). All that frivolous over-spending can be another man's basic income. If you call for a stop to it, someone suffers. Not much different than Obama dissing yacht owners and Vegas vacationers - until even he realized he was hurting a lot of non-rich people.
1 year ago
1 year ago Link To Comment
It is true that wasteful spending doesn't mean cash is literally burned, someone does end up with it. But it's a false premise which would mean no spending could ever be cut.

The economic fact is that by misdirecting those resources into less efficient use, government directly slows economic growth. The same holds true for the massive tax increase that is this health care law. People are being forced to spend money they wouldn't have spent, and on plans they wouldn't purchase voluntarily for very good reasons.
1 year ago
1 year ago Link To Comment
I agree completely with you. I was making a different point that forcing or coercing someone to stop spending does have repercussions. Everyone is and should be vulnerable to voluntary changes in spending that usually are gradual. But to campaign for or coerce people to suddenly stop spending on something is going to hurt someone.
1 year ago
1 year ago Link To Comment
This was supposed to be a reply to SineWaveII. Don't know how/why it ended up here
1 year ago
1 year ago Link To Comment
We have the lowest workforce participation rate in generations. Almost all of our job growth [which for 5+ years has not been enough to break even for population growth and generational change] is now part time because of Obamacare. The government claims that there is no inflation by removing food and energy from the calculations and adding housing prices which have not recovered from the initial financial collapse. Since we have to constantly buy food and energy, and only the *Nomenklatura* regularly buy real estate; we are a lot poorer than the government falsehoods [statistics] indicate.

Now, right before the holiday season, those poor souls who can get through to the Obamacare website are being told that they are going to be forced to pay exorbitant prices for government designed insurance that does not protect them in any way. Said charges enforced by the IRS. At the same time those who don't sign up are being threatened with penalties and fines. There are legal limits on those fines, but the Executive Branch has spent 5+ years convincing the country that they are not bound by the law.

Who in their right mind is going to spend any extra money that they have on anything but preparations for hard times? There is now no rational way to avoid those hard times any more. So, since the Christmas shopping season is make or break for a lot of retailers; Bah Humbug is going to be their watchword.

Subotai Bahadur
1 year ago
1 year ago Link To Comment
Maybe when the obamabots finally figure out their obamacare insurance isn't worth the paper it's written on, the little light bulb above their heads will glow, although it will most likely be quite dim. Elections have consequences and the consequences of the 2012 election are beginning to look very dangerous for our country's health, economy, and safety.
1 year ago
1 year ago Link To Comment
Nothing grows until he goes.
1 year ago
1 year ago Link To Comment
/SARCASM ON

Obama has achieved what so many thought impossible: the end of the "boom and bust" economic cycles. It's going to be BUST FOREVER. Long live our wise and fearless Great Leader!

/SARCASM OFF
1 year ago
1 year ago Link To Comment
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