Monthly Archives: March 2017

Obamacare ‘Explosion’ Could Come On May 22nd, Here’s Why

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After a stunning healthcare defeat last week, delivered at the hands of his own party no less, Trump took to twitter to predict the imminent ‘explosion’ of Obamacare.

Donald J. Trump

✔@realDonaldTrump

ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!

10:37 AM – 25 Mar 2017

Donald J. Trump

✔@realDonaldTrump

The Democrats will make a deal with me on healthcare as soon as ObamaCare folds – not long. Do not worry, we are in very good shape!

10:03 PM – 27 Mar 2017

 

As it turns out, that ‘explosion’ could come faster than anyone really expects as legislators and health insurers have to make several critical decisions about the 2018 plan year over the next 2 months which could seal Obamacare’s fate.

As the Atlanta Journal Constitution points out today, the Trump administration has until May 22nd to decide whether they will continue to pursue the Obama administration’s appeal to provide subsidies to insurers who participate in the federal exchanges.

Of course, any decision to remove those subsidies would likely result in yet another massive round of premium hikes and further withdrawals from the already crippled exchanges where an astounding number of counties across the country have already been cut to just 1 health insurance provider.  And, as we’ve pointed out before, higher rates = lower participation = deterioration of risk pool = higher rates….and the cycle just repeats until it eventually collapses.

As background, in 2014, House Republicans sued the Obama administration over the constitutionality of the cost-sharing reduction payments (a.k.a. “taxpayer funded healthcare subsidies”), which had not been appropriated by Congress.  Republicans won the initial lawsuit but the Obama administration subsequently appealed and now Trump’s administration can decide whether to pursue the appeal or not.

One key to insurers selling plans in the marketplace are reimbursements they receive called cost-sharing reductions. These aren’t the same as the tax credits that people receive to help pay their premiums; it is financial assistance to help low-income people pay their out-of-pocket costs, such as deductibles. The Congressional Budget Office projected those payments would add up to $7 billion this year and $10 billion in 2018.

But for insurers, there’s a question over how long that money will be delivered, due to an ongoing political and legal dispute about whether the cost-sharing money should be distributed at all.

In 2014, House Republicans sued the Obama administration over the constitutionality of the cost-sharing reduction payments, which had not been appropriated by Congress. The lawmakers won the lawsuit, and the Obama administration appealed it. Late last year, with a new administration on the other end of the suit, the House sought to pause the proceedings — with a deadline for a status update in late May.

The Trump administration and House lawmakers have to report to the judge this spring. If the Trump administration drops the appeal, it would mean the subsidies would stop being paid — a huge blow to the marketplaces and millions of people. If lawmakers wanted the payments to continue, they would have to find a way to fund them. One opportunity for that is coming up fast, the continuing resolution that must be passed by April 28. If the Trump administration continues the lawsuit, it will be in the odd position of fighting its own party.

The CBO estimates the payments would total roughly $10 billion in 2018.

As we’ve noted before, several large insurers, including UnitedHealth Group and Aetna, have already made the decision to exit Obamacare due to financial losses.  Now, Molina Healthcare is also pondering whether it would be able to continue to participate in the absence of federal subsidies.

Big insurers like UnitedHealth Group and Aetna have mostly left the individual market over the years, citing financial reasons. Several counties across the country only have one insurer offering ObamaCare plans.

Now Molina Healthcare is signaling it may downsize its presence in the market, or pull out altogether, if Congress or the administration doesn’t act to stabilize it. Molina has 1 million exchange enrollees in nine states this year.

“We need some clarity on what’s going to happen with cost-sharing reductions and understand how they’re going to apply the mandate,” said Molina CEO Dr. Mario Molina.

Asked if Molina would leave ObamaCare if the payments are stopped, the CEO said: “It would certainly play into our decision. We’ll look at this on a market-by-market basis. We could leave some. We could leave all.”

Mario Molina, chief executive of Molina Healthcare, predicted that if the cost-sharing reductions are not funded, it could result in premium increases on the order of 10 to 12 percent.

While all this uncertainty swirls, health insurers must decide — soon — whether to make rate filings to sell insurance in 2018. The deadline varies by state, but for those that have marketplaces run by the federal government, it is June 21. Filing doesn’t mean that insurers will participate; they’ll have months more to negotiate and could still drop out. But it’s the first step toward offering plans in 2018 and should provide a signal about what the marketplaces are likely to look like.

Meanwhile, it seems pretty likely that Obamacare couldn’t survive another collapse in coverage like we saw in 2017 (charts per the New York Times):

2016 healthcare insurance carriers by county:

Obamacare 2016

 

2017 healthcare insurance carriers by county:

Obamacare 2017

 

The first step is admitting you have a problem.

Trump Slams Freedom Caucus: “We Must Fight Them”

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It appears negotiations between the Trump/Ryan camps and the conservative Freedom Caucus over Obamacare repeal have not only gone nowhere but are back to square one, or perhaps zero, because moments ago Donald Trump, who had taken a modest sabbatical from his favorite social network, lashed out on Twitter against the conservative group that scuttled last Friday’s repeal vote, saying “The Freedom Caucus will hurt the entire Republican agenda if they don’t get on the team, & fast. We must fight them, & Dems, in 2018!”

Donald J. Trump

✔@realDonaldTrump

The Freedom Caucus will hurt the entire Republican agenda if they don’t get on the team, & fast. We must fight them, & Dems, in 2018!

9:07 AM – 30 Mar 2017

After this antagonistic tweet we doubt that relations between, already on edge between the two camps, will improve.

And with Paul Ryan speaking out against Trump negotiating with the Democrats, it appears that any renewed attempt to repeal Obamacare remains on indefinite hiatus.

Hispanic-Owned Businesses Dominate Bids For Trump’s ‘Xenophobic’ Border Wall

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Trump’s proposed border wall has been described by many of the left as everything from “xenophobic” to just plain “racist” and pretty much everything in between.  That said, perhaps “equal opportunity employer” would be more accurate in light of a new analysis from the Wall Street Journal that took a look at who has submitted bids to help construct the wall so far…in a little dose of irony for the left, hispanic-owned businesses currently lead the charge with 32 bids.

More than 200 companies have expressed interest in submitting plans to help design and build a wall along the U.S. border with Mexico, as the Trump administration seeks to fulfill a key campaign promise despite significant obstacles.

The companies, whose names were published on a federal contracting website, vary widely in size and capability—from construction giants like Kiewit Corp. to smaller, family-owned businesses.

Among those interested at this early stage are more than three dozen businesses owned by minorities, a Wall Street Journal analysis shows. Roughly 13% of the companies expected to submit proposals for the wall, for example, are owned by Hispanics.

Border Wall

 

One such immigrant-owned business bidding on the border wall is run by Mario Burgos whose father immigrated to the U.S. from Ecuador.

Mario Burgos,  the son of an immigrant, owns an Albuquerque, N.M., construction logistics company and plans to submit a proposal. He said he viewed the project as more geared toward border security than immigration, and a surefire way to boost employment in job-strapped New Mexico.

“I am not against immigrants by any stretch of the imagination,” said Mr. Burgos, whose father came to the U.S. from Ecuador. “There isn’t a country in the world that doesn’t have borders and doesn’t want to enforce them.”

Mr. Burgos noted that his company, Burgos Group LLC, which holds various defense contracts with federal agencies, has handled projects in southern New Mexico near the border and was familiar with operating in remote, rugged locations.

Meanwhile the owner of Helix Steel said he’s not worried about the potential political fallout, saying “if fighting for American jobs is wrong, I’ll take that risk.”

Other interested businesses have niche specialties, like Leesburg, Va.-based Helix Steel. Chief Executive Chris Doran said Helix’s products, which make concrete more resistant to blasts and other stresses, would suit what he called a “massive opportunity.”

Mr. Doran, whose company has about 50 employees, said he wasn’t concerned with fallout from participating in the project. “All I can say is I’m fighting for American jobs, and if fighting for American jobs is wrong, I’ll take that risk,” he said.

Of course, as we noted last week, just as Trump sent out RFP’s for his impenetrable, yet “aesthetically pleasing”, 30-foot border wall, Mexico’s government warned Mexican companies that it would not be in their best “interests” to participate in the project even though there will be no explicit legal restrictions or sanctions to stop them if they tried.  Per Reuters:

“We’re not going to have laws to restrict (companies), but I believe considering your reputation it would undoubtedly be in your interest to not participate in the construction of the wall,” said Mexican Economy Minister Ildefonso Guajardo.

“There won’t be a law with sanctions, but Mexicans and Mexican consumers will know how to value those companies that are loyal to our national identity and those that are not,” Guajardo added.

His comments echo those of Mexico’s foreign minister Luis Videgaray, who said on Friday that Mexican companies that see a business opportunity in the wall should “check their conscience” first.

Seems like the list of ‘racist’ companies in this country is growing very quickly.

Trump To Sign Executive Orders Seeking To “Halt Trade Abuses”, Boost Collection Of Duties

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In a reminder that Donald Trump’s trade policies – at least as he represented in the past, before surrounding himself with ex-Goldman globalists – are largely protectionist, on Friday, the US President will sign executive orders aimed at “identifying abuses” that are causing “massive U.S. trade deficits” and clamp down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said quoted by Reuters.

The latest executive orders come at a sensitive time, one week before Trump is set for his first face-to-face meeting with Chinese President Xi next week in Florida, where trade issues promise to be a major source of tension. China was the biggest contributor to the $734 billion U.S. goods trade deficit last year, and the meeting “will be a very difficult one” Trump said in a tweet on Thursday night.

The directives, if actually implemented, should allow Trump to focus on meeting his campaign promises to combat the flow of unfairly traded imports into the United States just a week after his pledge to repeal and replace Obamacare imploded in Congress. Commerce Secretary Wilbur Ross told reporters that one of the orders directs his department and the U.S. Trade Representative to conduct a major review of the causes of U.S. trade deficits.

These include trade abuses such as dumping of goods below costs and unfair subsidies, “non-reciprocal” trade practices by other countries and currencies that are “misaligned.”

Ross was careful to differentiate that currency misalignment was not the same as manipulation, and only the U.S. Treasury could define currency manipulation. But he said in some cases, currencies can become misaligned from their traditional valuations unintentionally, citing the Mexican peso’s sharp decline late last year after Trump’s election.

As Reuters adds, Chinese Vice Foreign Minister Zheng Zeguang on Friday acknowledged there was a trade imbalance, but said it was mostly due to differences in the two countries’ economic structures and noted that China had a trade deficit in services. “China does not deliberately seek a trade surplus. We also have no intention of carrying out competitive currency devaluation to stimulate exports. This is not our policy,” Zheng told a briefing about the Xi-Trump meeting.

The study also will examine World Trade Organization rules that Ross said do not treat countries equally, such as on taxation. The United States has long complained that WTO rules allow exports to be exempt from value-added taxes, but do not allow export exemptions from the U.S. corporate income tax.

* * *

The ordered study also will examine the effects of trade deals that have failed to produced forecast benefits, Ross said. The aim was to complete the study and report the findings to Trump in 90 days – a time frame that coincides with the expected start of negotiations to revamp the U.S.-Canada-Mexico North American Free Trade Agreement.

The study’s findings will underpin the Trump administration’s future trade policy decisions, Ross said, and will be the first “systematic analysis” of the trade deficit’s causes, “country-by-country, product-by-product.”

“It will demonstrate the administration’s intention not to hipshoot, not to do anything casual, not to do anything abruptly,” Ross told a White House briefing.

Ross has promised tougher enforcement of U.S. trade laws and more anti-dumping and anti-subsidy cases initiated by the Commerce Department, rather than relying on companies to claim injuries from imports.

He said the study would focus on those countries that have chronic goods trade surpluses with the United States. China tops the list, with a $347 billion surplus last year, followed by Japan, with a $69 billion surplus, Germany at $65 billion, Mexico at $63 billion, Ireland at $36 billion and Vietnam at $32 billion.

A second trade order to be signed by Trump aims to halt the non-payment and under-collection of anti-dumping and anti-subsidy duties the United States slaps on many foreign goods. White House National Trade Council Director Peter Navarro said $2.8 billion in such duties went uncollected between 2001 and the end of 2016 from companies in some 40 countries.

Navarro said the order directs the Commerce and Homeland Security departments to close these gaps by imposing tougher bonding requirements to ensure duty collections and new legal requirements for assessing risks associated with importers. Navarro, a harsh critic of China’s trade practices, insisted that the orders were not aimed at sending a message ahead of Xi’s visit.

Nothing we are saying tonight is about China,” he said. “This is a story about trade abuses, this is a story about under-collection of duties, this is a story about 40 countries that basically subsidize their products unfairly and send them into our country or dump their products.”

While Navarro has been a staunch supporter of anti-globalist trade practices, his voice has been muted in recent weeks by Trump’s “Goldman circle” of advisors, who share a very much opposing view on trade than Navarro and Bannon.

Trump Defends Flynn: “He Should Ask For Immunity In This Media Witch Hunt”

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When commenting on the statement issued by Mike Flynn’s lawyer Robert Kellner on Thursday night after the blockbuster WSJ report that Flynn was willing to testify “in exchange for immunity”, an allegation that was not explicitly confirmed in the lawyer letter, we said “judging by Kelner’s language, Flynn’s offer is not so much to “turn” on Trump, as to set the record straight, while putting an end to the ongoing “media witch hunt.”

Fast forward to Friday morning, when President Trump appeared to agree with this interpretation and defended his former National Security Adviser Michael Flynn’s offer to be interviewed by the House and Senate intelligence committees.

“Mike Flynn should ask for immunity in that this is a witch hunt (excuse for big election loss), by media & Dems, of historic proportion!” Trump tweeted.

Donald J. Trump

✔@realDonaldTrump

Mike Flynn should ask for immunity in that this is a witch hunt (excuse for big election loss), by media & Dems, of historic proportion!

7:04 AM – 31 Mar 2017

What is most notable from Trump’s tweet is that by not attacking Flynn, it would suggest anything the former Nat Sec advisor has to reveal would likely not be destructive to Trump, who at least initially appears to be on Flynn’s side.

Following the WSJ story, Flynn’s lawyer said Thursday that the retired lieutenant general is willing to talk to the intelligence panels as part of their probes into Russian election meddling and Trump and his aides’ alleged ties to Moscow. The full statement is reposted below:

General Flynn certainly has a story to tell, and he very much wants to tell it, should the circumstances permit.

Out of respect for the Committees, we will not comment right now on the details of discussions between counsel for General Flynn and the House and Senate Intelligence Committees, other than to confirm that those discussions have taken place. But it is important to acknowledge the circumstances in which those discussions are occurring.

General Flynn is a highly decorated 33-year veteran of the U.S. Army. He devoted most of his life to serving his country, spending many years away from his family fighting this nation’s battles around the world. He was awarded four Bronze Stars for actions in Iraq, Afghanistan and elsewhere in the war on terror. He received the Legion of Merit twice, and the Defense Superior Service Medal four times. He is a recipient of the Defense Department’s Distinguished Service Award and the Intelligence Community Gold Seal Medallion for Distinguished Service, as well as numerous other decorations.

Notwithstanding his life of national service, the media are awash with unfounded allegations, outrageous claims of treason, and vicious innuendo directed against him. He is now the target of unsubstantiated public demands by Members of Congress and other political critics that he be criminally investigated. No reasonable person, who has the benefit of advice from counsel, would submit to questioning in such a highly politicized, witch hunt environment without assurances against unfair prosecution.

Mike Flynn Tells FBI He Will Testify In Exchange For Immunity

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Update: there appears to be a discrepancy between the WSJ story, and the letter submitted by Mike Flynn’s lawyer, Robert Kelner, according to which the former National Security Advisor spoke only to  the House and Senate Intel Committees, not the FBI and furthermore, nowhere in the letter does it explicitly state that Flynn requested immunity form prosecution.

Counsel to Lt. General Mike Flynn (Retired)

General Flynn certainly has a story to tell, and he very much wants to tell it, should the circumstances permit.

Out of respect for the Committees, we will not comment right now on the details of discussions between counsel for General Flynn and the House and Senate Intelligence Committees, other than to confirm that those discussions have taken place. But it is important to acknowledge the circumstances in which those discussions are occurring.

General Flynn is a highly decorated 33-year veteran of the U.S. Army. He devoted most of his life to serving his country, spending many years away from his family fighting this nation’s battles around the world. He was awarded four Bronze Stars for actions in Iraq, Afghanistan and elsewhere in the war on terror. He received the Legion of Merit twice, and the Defense Superior Service Medal four times. He is a recipient of the Defense Department’s Distinguished Service Award and the Intelligence Community Gold Seal Medallion for Distinguished Service, as well as numerous other decorations.

Notwithstanding his life of national service, the media are awash with unfounded allegations, outrageous claims of treason, and vicious innuendo directed against him. He is now the target of unsubstantiated public demands by Members of Congress and other political critics that he be criminally investigated. No reasonable person, who has the benefit of advice from counsel, would submit to questioning in such a highly politicized, witch hunt environment without assurances against unfair prosecution.

* * *

In a dramatic development involving Mike Flynn, President Trump’s former national security adviser who resigned just a few weeks into his tenure over allegations surrounding his Russian connections, the WSJ reports that he has told the FBI and congressional officials investigating the Trump campaign’s potential ties to Russia that he is willing to testify and be interviewed in exchange for immunity from prosecution, “according to officials with knowledge of the matter.”

As the WSJ adds, “as an adviser to Mr. Trump’s presidential campaign, and later one of Mr. Trump’s top aides in the White House, Mr. Flynn was privy to some of the most sensitive foreign-policy deliberations of the new administration and was directly involved in discussions about the possible lifting of sanctions on Russia imposed by the Obama administration.”

He has made the offer to the FBI and the House and Senate intelligence committees though his lawyer but so far officials have not accepted his deal.

It was not immediately clear why Flynn would need immunity from prosecution, or whether the offer was made after coordination with the Trump administration.

As the WSJ adds, “it wasn’t clear if Mr. Flynn had offered to talk about specific aspects of his time working for Mr. Trump, but the fact that he was seeking immunity suggested Mr. Flynn feels he may be in legal jeopardy following his brief stint as the national security adviser, one official said.

As a reminder, Flynn was forced to resign after acknowledging that he misled White House officials about the nature of his phone conversations with the Russian ambassador to the U.S. during the presidential transition.

Flynn’s communications with the Russian ambassador, Sergei Kislyak, have been scrutinized by the FBI, which is examining whether Trump campaign personnel colluded with Russian officials who are alleged to have interfered with the presidential election, according to current and former U.S. officials. Russia has denied the allegations. Flynn also was paid tens of thousands of dollars by three Russian companies, including the state-sponsored media network RT, for speeches he made shortly before he became a formal adviser to Mr. Trump’s campaign, according to documents obtained by a congressional oversight committee.

As the WSJ adds, Democratic lawmakers have requested a copy of the security-clearance form that Mr. Flynn was required to file before joining Mr. Trump in the White House, to see if he disclosed sources of foreign income.