Obamacare - What's Up With That

So I read this recent article on how Obamacare is costing boat loads of money and premiums are up across the board:

http://www.zerohedge.com/news/2016-03-25/thanks-obamacare-what-americans-spent-most-money-2015

Now I agree that health care is undoubtedly a big driver of what little inflation the government has reported.  But the question that I do not think can be answered yet is why and will this continue.  The reason I say this is largely due to anecdotal evidence but I think it is enough to raise the question.

I primarily raise the question based on a comment from a doctor.  He told me that doctors and hospitals are incredibly busy following implementation of Obamacare as there is this massive population of patients who simply did not seek medical attention before because they did not have insurance and could not afford it.  They only went to get help when they had no choice and then it was commonly to the emergency room on Medicare or Medicaid's dime.  Now that many of them have the coverage they are getting physicals and checkups and, guess what, problems are being discovered that need to be dealt with.  And these problems are leading to more payouts by insurers than perhaps they anticipated because I suspect the insurers did not factor this into their initial premiums,  either because they did not anticipate the increase or intentionally ignored it to keep initial premiums low to get things started.  Either way, they are having to increase premiums to pay for all these people who have old, festering, unattended to problems that are now being addressed.

So again the question I pose is whether this initial significant increase will continue or level off in time, and I suspect only time will tell.

Meanwhile the good news might be that the 4th Quarter GDP estimate was just increased to 1.4% with the "bulk" of the increase coming from "services," which is in no small part healthcare. 

http://www.shopfloor.org/2016/03/fourth-quarter-2015-real-gdp-revised-higher-at-1-4-percent-growth/

So Obamacare may be achieving what the Fed so desperately has tried to do.  QE and ZIRP may not get folks to spend but require them to get health insurance and by God they will use it!

http://www.zerohedge.com/news/2016-03-26/healthcare-about-surpass-housing-biggest-source-american-growth

Then again things are not going so honky dory lately over at the Atlanta Fed with its GDPNow forecast.  Its forecast for the 1st quarter 2016 went from a sweet 2.3% two weeks ago on March 11 to a somewhat more sour 1.4% March 24.  Hopefully that direction will not continue.  We shall see.

We Used to Invest

Long ago you could look at data, either on macro level or on a micro level, and hopefully make some informed decisions on where to put your money.  You could do silly things like look at the employment numbers to gauge the health of the economy or at the financial statements of a company to determine its value and risk.  You could roughly ballpark timing of economic cycles and when a reversion to mean was in the cards.  You could do your homework and truly find a good value place to "invest" your money.  Those days sadly are gone.

Moves by the governments and Central Banks of the world, along with games played by many corporations with no fear of punishment, have ended those days.  It used to be if a corporation cooked its books it failed and went bankrupt but now it can rely on the government to bail it out.  Economic cycles are now totally distorted by Fed action so recessions are delayed in their onset but more severe when they occur.  Data from the government includes countless adjustments, seasonal and otherwise, until it is virtually meaningless.  Financial information from companies cannot be taken at face value with more and more companies cooking their numbers with non-GAAP numbers, stock buybacks and the like.  The market is also based on computers and algorithms where its direction can simply be due to a quirk or fat finger.  It is truly a world for speculators, not investors.  Yet folks looking to retire some day are increasingly either needing to save enough to retire without and expected return or to take risks they should not take because conservative investments provide next to no return.

So even the most savvy of investors are stumped.  If you watched The Big Short you saw some very smart fellows who figured out the housing bust in advance who nearly went broke because the true impact of what was happening was hidden for an extended period through fraud that went unpunished.  As pointed out in this link by Lance Roberts, economic cycles are increasingly distorted and hard to anticipate, especially now that major economies around the world are all following suit in kicking the can.

http://seekingalpha.com/article/3959755-yellen-just-cage-bears?ifp=0&app=1

Yet as he explains this simply delays the inevitable and makes it worse when it arrives.  This is why I have been wanting Yellen to increase rates.  Not because it will aid the economy in the short term but because it will allow the long overdue recession to wash out the crap.  The longer we kick the can on this the worse it will be and more people will suffer needlessly.  Yet now the Central Banks of the whole world seem to be coordinating a final stand against the onset of a natural correction cycle.  They will fail in avoiding it and only succeed in making it worse.  And in the process they will make any assessment of when this economic cycle should come virtually impossible to determine, despite how many charts and stats you study.

So be careful out there.