The Democrats Have a Millennials Problem

millennialsRemember when
Barack Obama permanently won millennial voters to the side of
Democrats in 2008? As I wrote in my October 2014 magazine feature
story, “The
Millennial Scramble,”
experts predicted that Obama had secured
young people forever when he secured the presidency.

Well, that was short-lived. Millennials are as dissatisfied with
the president as everyone else, and are expected to sit this
election out—a major blow to a president who believed initiatives
like Obamacare would be widely appreciated by young people.
According to
The Hill
:

Jim Manley, a Democratic strategist and
former spokesman for Senate Majority Leader Harry Reid
(D-Nev.), said that the promise of “hope and change millennials
invested in has hit a brick wall.”

Manley said that this in turn has made young voters “very
cynical about the political process and less likely to vote than
they had in the past.” …

A poll released earlier this year showed a significant
decline in the number of Democratic-leaning millennials
who planned to vote in the midterm elections.

The survey, conducted by Harvard University’s Institute of
Politics, found that young voters are increasingly turned off by
the political environment.

That’s an important distinction, though: millennials aren’t
exactly flocking to the Republican banner. They are “turned off” by
the political environment entirely, and are skeptical that any
politicians have answers to their economic plight.

Does this mean millennials are experiencing some kind of
libertarian awakening? While there’s no definitive answer, Reason’s
Nick Gillespie and Emily Ekins have
argued
that the generation is still “unclaimed.” They are
socially tolerant, but their economic views are up in the
air—accordingly, they haven’t bought into a specific party or
ideology yet.

Even so, Democrats have some obvious advantages that make it
comparatively easier for them to recruit young voters. As The
Hill
notes, the student loan debt situation has become a cause
celebre of those who would recapture millennial support, including
Sen. Elizabeth Warren:

A DNC official said that they have been building upon their past
success, and that most young voters agree that the Democratic Party
has their best interests at heart, championing issues ranging from
college affordability to equal pay.

“It’s a reflection of what we’re running on more broadly,” said
one DNC official, adding that these issues appeal to voters across
the board and are not simply geared toward the younger set.

At the same time, the official added that millennials understand
that “Democrats have their backs.”

Anyone who doesn’t want to see millennials returning to the
Democratic fold in search of debt forgiveness and tuition subsidies
needs to articulate the case that increased federal involvement in
higher education has
made college more expensive
and wrecked it for everyone.

And it should be clear that a Republican Party more in tune with
the libertarian sensibilities of millennials would stand a
significantly better chance at winning some of their votes.

from Hit & Run http://reason.com/blog/2014/10/24/the-democrats-have-a-millennials-problem
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Steven Greenhut: Health Care So Convoluted, Obamacare Supporters Are Running

Earlier this week Covered California — the
new Obamacare-inspired insurance exchange — issued some
controversial contracts. “California’s health insurance
exchange has awarded $184 million in contracts without the
competitive bidding and oversight that is standard practice across
state government, including deals that sent millions of dollars to
a firm whose employees have long-standing ties to the agencies
executive director,” reports the Associated Press. This looks
bad, writes Steven Greenhut, especially as Obamacare
supporters fight back an initiative (Proposition 45) on the
November ballot that would give the state’s insurance commissioner
the power to approve or reject health-care rate hikes — the same
power he has with most other types of insurance.

View this article.

from Hit & Run http://reason.com/blog/2014/10/24/steven-greenhut-health-care-so-convolute
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This is the only -no risk- way I know about to guarantee a 20% return

Travel Opportunity This is the only  no risk  way I know about to guarantee a 20% return

October 24, 2014
Santiago, Chile

I’m going to make you a deal.

For the rest of your life, I’m going to be your silent partner. You’re going to pay me 20% of everything you ever make. Forever.

In return, I’m not going to do anything. I won’t add value to your life or your business. In fact, I’m actually going to be destructive.

For the rest of your life, I’m going to make you fill out a bunch of stupid forms. If you own a business, I’m going to make you hire employees that you don’t need and incur all sorts of costs just to handle all the excess paperwork.

And because I’m your partner, people all around the world won’t want to do business with you. You’ll definitely miss out on all sorts of opportunities because I’m your partner.

Of course, should you decide that you don’t want to pay me my fair share anymore, I’ll send a bunch of goons to drag you out of your home in the middle of night at gunpoint and throw your ass in jail.

And if you want to terminate this relationship altogether, you have to pay me a huge sum up front.

Sounds like a great deal, right?

Of course, no rational human being would ever willingly enter into such a one-sided, ruinous financial relationship.

But this is precisely what taxes are– a completely one-sided, ruinous financial relationship that we’re stuck with by accident of birth.

Everyone knows how draining taxes can be to their personal finances, and an entire industry exists to help people reduce their tax burdens.

Some of these tactics are completely irrational. In financial markets, people often deliberately sell stocks at a loss simply for the tax benefit. Or they’re forced to set up incredibly complex and expensive structures just to ensure the government doesn’t take half of their stuff when they die.

Tax mitigation strategies are important. In a zero interest rate environment where returns paid by most bank deposits, money market funds, and government bonds fail to keep up with inflation, cutting your tax bill can be one of your best returns on investment.

Think about it– if you can save 20% on your taxes, it puts as much money in your pocket as making a 20% investment return. (actually more like a 25% investment return… because you get taxed on your capital gains…)

Earlier this week I briefly mentioned one strategy known as the Foreign Earned Income Exclusion (often called the foreign income tax exclusion).

This is a way for you to earn up to $99,200, tax free. And if you include your spouse and housing benefits, the tax-free earnings can easily exceed $250,000.

Here’s how it works–

US citizens are taxed on their worldwide income no matter where they live. (This is almost entirely unique to the Land of the Free).

If you’re a US citizen living in Bangladesh and earning money in Pakistan, and you’ve never set foot on US soil, Uncle Sam still expects its fair share of your income.

The key exemption, however, is that non-resident US citizens (i.e. Americans living abroad) can earn up to a certain amount each year, tax free.

This amount varies from year to year. In 2013, for example, the exclusion was $97,600. For 2014, it increased to $99,200.

This means you can earn nearly $100,000 in income while living overseas and not have to pay a dime of income tax on those earnings.

To be clear, the IRS is very particular what qualifies as ‘earned income’. This includes things like salaries, commissions, bonus income, and professional fees, as well as certain allowances and reimbursements like cost of living allowances and moving expenses.

(It’s also possible to set up a business overseas and receive a salary which would be exempt from US individual income tax.)

One of the primary qualifiers to claim this benefit is that your ‘tax home’ must be in a foreign country. And the IRS has two ways for you to demonstrate this.

First is what’s called the Physical Presence Test. In order to qualify, you must have spent 330 full days outside of the United States in a 12-month period, i.e. you can only be in the US for 35 or 36 days in a year.

Note- “full day” means a consecutive 24-hour period from midnight to midnight. So if you depart New York today and arrive to London tomorrow morning October 25 at 10am, your first ‘full day’ won’t be until Sunday.

The other way to qualify for the exclusion is to be a ‘bona fide resident’ of a foreign country for an entire tax year.

This is a much more subjective approach than simply counting the days you spend outside of the US.

Through this test, the IRS looks at a number of circumstances. Are you really living overseas? Do you have a home, bank account, and local ties to a foreign country? Are you a legal resident, or at least going through the process? Is your family living with you?

Even more important– do you maintain a home in the US? Do you stay there when you’re in the US? Are your household goods and personal property still in the US?

Unlike the physical presence test, qualifying under this bona fide residency option means that you can spend more than 35 days in the US… so there’s a bit more flexibility to spend time with friends and family.

And again, both you AND your spouse can qualify, meaning EACH of you can exclude $99,200 of your foreign earned income. This can potentially save you $43,018 or more in federal tax.

Taxes are an enormous benefit of living overseas. Your life can be MUCH richer. In addition to having more freedom and greater lifestyle opportunities, you can save a boatload of money… and stop financing war.

It’s definitely something to consider.

from SOVEREIGN MAN http://www.sovereignman.com/trends/this-is-the-only-no-risk-way-i-know-about-to-guarantee-a-20-return-15381/
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What Unilever just Said About Consumers Around the World: “It’s Really Tough out There”

Wolf Richter   www.wolfstreet.com   http://ift.tt/Wz5XCn

What is it with these consumer-products companies that need to sell a lot of cheap stuff to a lot of consumers around the world? Over the last few days, one after the other reported what are more or less unvarnished quarterly revenue and earnings debacles.

At McDonald’s, global revenues fell 5% and net income plunged 30%. At Coca-Cola, international volume was up a measly 1%, but in the US, volume declined 1%. Revenues were down fractionally for the quarter and 2% year-to-date. Net income in the quarter dropped 14%. Revenues at third largest beer-giant Heineken, which brews its stuff in 70 countries, dropped 1.7%. People are scratching their heads: are consumers actually cutting back on beer? Other companies too have reported disappointing results.

On Thursday it was Unilever, the Anglo-Dutch giant maker of shampoos, deodorants, laundry detergents, ice cream… that warned in its quarterly report about what it looks like “out there,” not in the stock market, but in the real economy around the world.

“It is really tough out there,” said CFO Jean-Marc Huët. “We have been at pains to say that for a long period of time.” Consumers are in trouble and are cutting back across key markets, leaving the company with price pressures and crummy sales.

Revenues fell 2%. “Underlying sales,” which are adjusted for a variety of things, rose 2.1%, but it was the worst growth since Q4 of crisis-year 2009, and down from 3.8% in the prior quarter.

Unilever warned of a slowdown in all the right places, in the emerging markets, in Europe, and of stagnation in the US. Like other consumer-products companies, it complained about currency issues, political unrest, bleak economies, the wrong kind of weather, and other uncertainties that perplex consumers to no end and cause them to get stingy.

“We expect markets to remain tough…,” CEO Paul Polman said.

In the emerging markets overall, where nearly 60% of its revenues come from, underlying sales managed to increase 5.6%, down from 6.6% in the prior quarter, with Turkey, Indonesia, and the Philippines being particular bright spots. But Brazil is sliding into recession, Russia is slowing down as well, and China, oh my!

As China is entering its worst slowdown in many years, consumers are reacting by closing their wallets. Retailers and wholesalers are reacting to the newly prudent consumers by “de-stocking,” the company reported. The result was a “sharp slowdown.” Underlying sales plunged 20%!

Then there’s the problem in the developed markets: sales dropped 2.5%, while they were still growing fractionally in the prior quarter. In North America, sales inched up a barely visible 0.6%. And Europe – which had been fixed not long ago, based on the hype being propagated ceaselessly – has become unfixed again. Unilever bravely blamed “poor summer weather” across Europe for the lousy performance of its ice cream category. Whatever the reasons, sales dropped 4.3%.

“Europe is not around the corner by any means,” Huët admitted.

And after complaining about price pressures and outright “price deflation” in Europe – though overall prices went up, just not fast enough to doll up Unilever’s revenues – it then ironically reported the following about its entanglements in, well yes, price fixing allegations:

Unilever is involved in a number of ongoing investigations by national competition authorities. These proceedings and investigations are at various stages and concern a variety of product markets. Where appropriate, provisions are made and contingent liabilities disclosed in relation to such matters.

So how is Unilever grappling with these economic and weather-related issues? It’s introducing cheaper products, on the basis of shrinkflation. For example, it developed smaller ice cream cones that sell for €1 ($1.27) in Spain so that even newly impoverished, jobless, or underpaid Spaniards can buy one every now and then. CFO Huet explained it this way:

We’ve learned from the previous economic crises the importance of having such value brands in the portfolio that can capture some of the down-trading that inevitably happens when disposable income levels fall.

And that sums up the economic problems facing Unilever, Coca-Cola, McDonald’s, Heineken, and all the others: it’s an economic crisis for consumers who’re struggling with falling disposable incomes.

And then there’s the corporate response to all this: the requisite “savings program,” as Huët called it, “to apply all the levers to translate top line growth … into earnings per share.” Because that’s the only thing that matters.

So Unilever would cut expenses here and there, axe 1,400 people, and whittle down its exposure to pension costs, all of which will do wonders for the disposable incomes of those folks…. And that’s the vicious cycle of corporate cost cutting in response to strung-out consumers who’re cutting back because they’ve been hit with the consequences of corporate cost cutting.

An epidemic of store closings, restructurings, and even bankruptcies has hit US retailers as consumers run out of options. Read… What NCR just Said about the American Retail Quagmire




via Zero Hedge http://ift.tt/1tR0TMX testosteronepit

Market Jumps On Today’s Central Bank Verbal Plunge Protection, Courtesy Of Mario Draghi

One has to laugh: if stocks are selling off, then trot out the daily central banker headline urging to BTFD.

Sure enough, just as the market was about to roll over moments after today’s abysmal housing data revisions were released, what happens? The usual central banker “verbal plunge protection”, this time courtesy of ECB’s Mario Draghi and the following Bloomberg headlines:

  • DRAGHI CALLS FOR STIMULUS: CNBC
  • DRAGHI SAYS JOINT EFFORT NEEDED TO AVOID RECESSION: CNBC
  • DRAGHI SAYS INFLATION TO REMAIN LOW IN THE NEAR TERM

Next: algos headline scan “Draghi” and “Stimulus” and the rest is levitation history.




via Zero Hedge http://ift.tt/1tR0WbQ Tyler Durden

Banker Suicides Return: DSK’s Hedge Fund Partner Jumps From 23rd Floor Apartment

The summer, thankfully, has been largely bereft of the dismal trend of bankers committing suicide, but as Bloomberg reports, Thierry Leyne, a French-Israeli banker and partner of Dominique Strauss-Kahn, the disgraced former chief of the IMF, was found dead Thursday after apparently taking his own life by jumping off the 23rd floor of one of the Yoo towers, a prestigious residential complex in Tel Aviv. This is the 16th financial services executive death this year.

 

 

Bloomberg reports that Thierry Leyne, the French-Israeli entrepreneur who last year started an investment firm with former International Monetary Fund Managing Director Dominique Strauss-Kahn, has died. He was 48.

Leyne died yesterday in Tel Aviv, according to his assistant at the firm, who asked not to be identified. Le Figaro newspaper reported that he committed suicide.

 

Last year, Leyne joined Strauss-Kahn in establishing the Paris-traded firm Leyne, Strauss-Kahn & Partners after the former IMF head bought a 20 percent stake to help develop the investment-banking franchise of Leyne’s company, Luxembourg-based Anatevka SA. Leyne had taken Anatevka public in March 2013 before joining forces with Strauss-Kahn, commonly referred to in France as DSK.

 

The new partnership — usually called LSK & Partners by using both men’s initials — was part of Strauss-Kahn’s efforts to rebuild his post-IMF life after he was charged in 2011 of criminal sex, attempted rape, sexual abuse, unlawful imprisonment and the forcible touching of a chambermaid at the Sofitel hotel in Manhattan. Strauss-Kahn denied the charges, which were later dropped. He settled the maid’s lawsuit in 2012.

And NYTimes adds,

Mr. Leyne, 48, jumped off the 23rd floor of one of the Yoo towers, a prestigious residential complex, according to Israeli officials.

Leyne's Background:

Leyne, who resided in Tel Aviv, built his career as a financier in France, Israel and Luxembourg. He founded the investment firm Assya Capital in 1994 and listed it on Euronext in Paris in 2001. Leyne merged the business with Global Equities Capital Markets in 2010 to provide financial advice and private banking to clients in eastern Europe, Le Figaro reported.

 

Anatevka, which had a market value of 50 million euros ($63 million) when Strauss-Kahn purchased his stake, controlled the merged entity, known as Assya Compagnie Financiere, offering asset management, brokerage, corporate finance and capital investment. Anatevka had a staff of about 100 people in six countries — Luxembourg, Belgium, Monaco, Israel, Switzerland and Romania — in September 2013.

 

In 1996, Leyne founded the company Axfin, one of the first independent investment firms in France, according to the website of Assya Capital. Axfin listed on the Paris stock exchange in 1999 before it was bought by Nuremberg, Germany-based Consors Discount Broker AG. Leyne was the supervisory board chairman of Consors France until the end of 2002.

 

Leyne was born in September 1965, according to French public records. He held French and Israeli citizenship, Figaro said. He had an engineering degree from the Israel Institute of Technology in Haifa, his LinkedIn profile shows.

*  *  *

This is the 16th financial services executive death this year…

1 – William Broeksmit, 58-year-old former senior executive at Deutsche Bank AG, was found dead in his home after an apparent suicide in South Kensington in central London, on January 26th.

2 – Karl Slym, 51 year old Tata Motors managing director Karl Slym, was found dead on the fourth floor of the Shangri-La hotel in Bangkok on January 27th.

3 – Gabriel Magee, a 39-year-old JP Morgan employee, died after falling from the roof of the JP Morgan European headquarters in London on January 27th.

4 – Mike Dueker, 50-year-old chief economist of a US investment bank was found dead close to the Tacoma Narrows Bridge in Washington State.

5 – Richard Talley, the 57 year old founder of American Title Services in Centennial, Colorado, was found dead earlier this month after apparently shooting himself with a nail gun.

6 – Tim Dickenson, a U.K.-based communications director at Swiss Re AG, also died last month, however the circumstances surrounding his death are still unknown.

7 – Ryan Henry Crane, a 37 year old executive at JP Morgan died in an alleged suicide just a few weeks ago.  No details have been released about his death aside from this small obituary announcement at the Stamford Daily Voice.

8 – Li Junjie, 33-year-old banker in Hong Kong jumped from the JP Morgan HQ in Hong Kong this week.

9 – James Stuart Jr, Former National Bank of Commerce CEO, found dead in Scottsdale, Ariz., the morning of Feb. 19. A family spokesman did not say whatcaused the death

10 – Edmund (Eddie) Reilly, 47, a trader at Midtown’s Vertical Group, commited suicide by jumping in front of LIRR train

11 – Kenneth Bellando, 28, a trader at Levy Capital, formerly investment banking analyst at JPMorgan, jumped to his death from his 6th floor East Side apartment.

12 – Jan Peter Schmittmann, 57, the former CEO of Dutch bank ABN Amro found dead at home near Amsterdam with wife and daughter.

13 – Li Jianhua, 49, the director of China's Banking Regulatory Commission died of a sudden heart attack

14 – Lydia _____, 52 – jumped to her suicide from the 14th floor of Bred-Banque Populaire in Paris

15 – Julian Knott, 45 – killed wife and self with a shotgun in Jefferson Township, New Jersey

16 – Thierry Leyne, 48 – jumped from 23rd floor apartment in Tel Aviv.




via Zero Hedge http://ift.tt/1D76TjP Tyler Durden

Pennsylvania So Mad at Mumia Abu-Jamal It Just Outlawed Offenders’ Free Speech

The government doesn't get to decide who gets to be famous or why.Let us not wade into an
argument as to whether Mumia Abu-Jamal is a cop-killer or a victim
of a corrupt justice system. Actually, go ahead and wade into the
argument if you like. Whether Abu-Jamal is innocent is not actually
relevant to this blog post, but the argument surrounding it
certainly is.

Pennsylvannia, the state in which Abu-Jamal was born and where
his crime took place, passed a law this week that essentially
declared that those convicted of crimes
no longer have free speech
. That is not the stated intent of
the law (it never is), but it’s absurdly clear it is what has
happened. This week Gov. Tom Corbett signed into law a bill that
allows victims of crime to go to a judge and stop a convicted
criminal from engaging in any “conduct which perpetuates the
continuing effect of crime on the victim.”

What could that possibly mean? It has to do with Abu-Jamal
giving a pre-recorded commencement speech to graduates at Goddard
College in Vermont. This apparently shocked the conscience of
Pennsylvania’s legislature and Maureen Faulkner, the widow of slain
officer Daniel Faulkner. So they’ve introduced a
victim’s veto
. If you’ve been convicted of a crime in
Pennsylvania, you can’t say or do anything that makes the victim or
victims feel “a temporary or permanent state of mental
anguish.”

The wording of the law is vague—but makes sure to note that
redress involves collecting “reasonable attorney fees and other
costs associated with the litigation.” Does it mean that a
convicted person who continues to protest his innocence in media
interviews is breaking the law? The law criminalizes conduct, not
just speech. Would asking the Innocence Project for help
with your case violate the law? Would doing anything outside of the
standard appeals process “perpetuate the continuing effect of the
crime”?

The Pennsylvania chapter of the American Civil Liberties Union
is
not impressed
:

“This bill is written so broadly that it is unclear what
behavior is prohibited,” said Reggie Shuford, executive director of
the ACLU of Pennsylvania. “Essentially, any action by an inmate or
former offender that could cause ‘mental anguish’ could be banned
by a judge.

“That can’t pass constitutional muster under the First
Amendment.”

They note that that the bill could also put the kibosh on
efforts by imprisoned criminals to engage in political advocacy and
criminal justice reform, which I suspect is a feature, not a bug.
The state’s victim advocate, Jennifer Storm, nevertheless insists,
“We’re not limiting one’s free speech. That is not what this bill
is about.” That is literally what you are doing. This law was
passed for the expressed purpose of censoring criminals.

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Ebola: The Upshot of Liberia’s Western Aid Curse

When an Ebola-afflicted man collapsed in Nigeria’s Lagos
airport, Nigerian authorities didn’t call the Western aid Ebolahotline demanding mulah and
manpower. They hunkered down and took aggressive steps to prevent
the contagion from spreading.

By contrast, Liberia started holding press conferences and
calling Western aid organizations when it belatedly detected the
disease. The outcome? Ebola is raging through this sad, sad
country, attacking over 300 people last week alone.

What’s the difference between Liberia and Nigeria? Liberia is
among the most indebted nations in Africa, I note in my column at
The Week, and Nigeria is the least. It’s capital Monrovia
is crawling with NGOs and the U.N. is already spending $500 million
to maintain a peacekeeping force. As one African put it: “The virus
has managed to escape from a country that has one of the largest
concentration of ‘helpers’ in the world.”

 With Western aid like this, developing countries don’t
need drones and bombs.

Go
here
to read the whole thing.

from Hit & Run http://reason.com/blog/2014/10/24/ebola-the-upshot-of-liberias-western-aid
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Jury Nullification Law Gutted by New Hampshire Supreme Court

JuryInsisting “It is well established that jury
nullification is neither a right of the defendant nor a defense
recognized by law,” the New Hampshire Supreme Court this morning
eviscerated a law
that was openly intended and
widely interpreted
as a
shot in the arm
for the right of jurors to consider the law as
well as the facts in criminal cases. It did nothing of the sort,
the court sniffed. It just codified existing law allowing the jury
to give some thought to the way in which laws are applied.

Yeah. That’s why legislators battled and prosecutors fretted
over the law’s passage.

In the case at hand,
The State of New Hampshire v. Richard Paul
. Richard
Paul was convicted of selling marijuana and LSD. During closing
arguments, his attorney urged nullification. By the court’s
description, the prosecutor acknowledged the jury’s nullification
role, but argued that the jurors should convict based the law—an
understandable back and forth between prosecution and defense.

Then, the judge issued “jury instructions that effectively
contravened his ‘jury nullification defense.'” Paul appealed his
subsequent conviction.

Honestly, the law had been watered down in the course of its
passage through the New Hampshire legislature, from a version that,
the court concedes, instructed the jury to “judge the law” and
“nullify any and all actions [the jurors] find to be unjust.” The
enacted
version
reads, instead, “In all criminal proceedings the court
shall permit the defense to inform the jury of its right to judge
the facts and the application of the law in relation to the facts
in controversy.”

At the time of passage in 2012, Tim Lynch of the Cato Institute
said it was “definitely a step forward,” but he was
worried about the dilution the measure had suffered
.

I am concerned, however,  that this language does not go
far enough.   We don’t know how much pressure trial
judges will exert on defense counsel.  As noted above, if the
attorney’s argument is “too strenuous,” the judge may reprimand the
attorney in some way or deliver his own strenuous instruction about
how the jurors must ultimately accept the law as described by
the court
, not the defense.  I’m also
afraid what the jurors hear will too often depend on the
particular judge and, then, what that judge wants to do in a
particular case.

That’s pretty much exactly what happened here. Insisting “Were
[the law] interpreted to grant juries the right to judge or nullify
the law, there would be a significant question as to its
constitutionality,” the New Hampshire Supreme Court said Paul got
more than he was entitled to when the judge in his case allowed his
attorney to mention nullification before issuing contrary
instructions.

So Paul is out of luck. And defendants in the state can no
longer rely on the state’s jury nullification law, because the
state’s highest court says that law doesn’t mean what everybody
knew it meant.

Below, Reason TV on a happier outcome from a jury.

HT: Kirsten Tynan

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Health Insurers Worried That Obamacare Might Have to Be Implemented as Written

Imagine you’re a health insurer
participating in Obamacare’s exchanges. There are some things you
don’t like: The back end of the federal exchange, which is supposed
to handle payments to insurers, still isn’t finished. There are
some things you’d like to see changed: Insurers currently aren’t
allowed to offer plans below a certain actuarial value—the average
amount of medical expenses covered for people in the plan—although
there are currently proposals to change this.

But even still, it’s not a bad arrangement: Americans are
generally required to buy the product you sell, they are heavily
subsidized by the federal government, and if your expenses for
exchange-based plans come in more than a bit higher than expected,
the federal government will cover a significant percentage of your
overage.

All in all, you’ve got a fairly generous setup. But you probably
have some worries. For instance, what about those
lawsuits contending that, because the text of Obamacare only allows
subsidies in state-established exchanges, only state-established
exchanges should be allowed to disburse subsidies? Imagine what
would happen if those crazy legal challenges were actually
successful. That might be a problem for insurers, given that the
majority of exchanges were established by the federal government,
not states. 

Now, many of the health law’s supporters have argued that the
challenge is an extended legal joke—an error in wording, not a
serious legal challenge. Only an anti-Obamacare cynic, a
text-obsessed nihilist, could think that when Congress wrote and
passed legislation specifying that subsidies would be available in
state-established exchanges that Congress actually meant this
literally. Or, well,
Jonathan Gruber
, who helped draft the federal health law and
the Massachusetts health reform it was based on. But that’s neither
here nor there.

If you’re an insurer, however, you might not be so sure. You see
this Gruber fellow
saying
, all the way back in 2012, that “if you’re a state and
you don’t set up an exchange, that means your citizens don’t get
their tax credits.” (He’s since changed his mind, and says he
previously misspoke on multiple occasions.) And you see a
couple
of court decisions that seem to buy into the odd notion
that the plain, unambiguous text of the law is the clearest
expression of congressional intent. You notice that, even when a
court disagrees with the challengers, it agrees that they kind of
have a point,
as the Fourth Circuit did
when it admitted that “a literal
reading of the statute undoubtedly accords more closely with their
position.”

Sure, one of the decisions in favor of the challengers has now
gone to a full court review, which is
expected
to be more favorable to the administration. But
overall, the whole situation looks kind of dicey.

And so, since you’re an insurer, you’d probably want, well,
insurance against the prospect that these oddball legal
literalists, who think the law should be implemented in the
explicit way that the text of the law states, and not some
impressionistic way that better fits the administration’s purposes,
might actually win.

As CNBC notes,
that’s just what insurers sought and eventually got from the Obama
administration in the latest round of health exchange
contracts:

These insurers will sell you some Obamacare—at least as long as
the government is footing the bill for most of their customers.

Insurers doing business on HealthCare.gov will be
allowed to terminate their health plans if there’s a halt on
federal tax credits that help most Obamacare customers buy the
coverage, according to new language for 2015
contracts.…The language in the contracts, without saying so
overtly, recognizes that there is a chance that those challenges
could succeed.

In other words, if you’re an insurer, you might be worried. And
you might have good reason to be. 

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