- Posted October 23, 2013 by
New York, New York
The Household Economics Facing Americans Purchasing Health Insurance
With all the talk about the dysfunctional issues and implementation rollout of ObamaCare, there is one critical element people seem to be missing: Enjoy the problems because sooner or later the system will be fixed and your out-of-pocket costs are virtually guaranteed.
There is a clear picture of ObamaCare opponents piling on to the problems with Healthcare.gov, and most of the arguments about delaying individual mandates seem to be warranted. After all, it’s difficult to penalize someone if the product or service is not available for purchase. Regardless, though, Americans should be happy the rollout has been challenged because the real headaches in the form of extra expenses have yet to be realized.
I’ve always said Americans will never fully grasp the issue of long-term debt in the USA because it doesn’t impact them out-of-pocket. True, the nation’s fiscal burdens hurt all of us; but it’s different because the outlying costs are indirect, meaning the Average Joe isn’t forced to reach into his wallet and spend his own dollars just for waking up in the United States. This is why Joe will put up a fight over a 25 cent increase in his commuting cost more than he ever will when it comes to a $17 trillion debt facing his homeland.
But the revolt is most certain to begin. Once Americans are literally seeing their hard-earned dollars going towards something they don’t really believe they need, the anger is certain to reach a boiling point.
A key metric mentioned in yesterday’s Jobs Report was wage growth, or lack thereof. In September, American workers enjoyed a 3 cent raise in their average hourly earnings. For the year, you and your colleagues have seen the average hourly rate increase by 49 cents. Of course, this figure is before taxes are paid. But, a raise is a raise.
Sadly, however, this extra cash is about to evaporate…quickly. Knowing Americans have to buy health insurance—after all, it is the law—people will be reaching into their wallets for something that isn’t tangible, which is going to lead to even more economic hardships for the Average Joe.
Pundits like to talk about the expected increase in healthcare premiums (+29% for family plans; +25% for individuals), but until the real invoices start arriving, Americans will not quite accept the fiscal burden coming their way. Think about all the extra costs people have to pay just to survive and you can accept the economic risk this country is willfully putting on itself.
To add to our fiscal misery, the U.S. Energy Information Administration released its short-term expense outlook for the USA. Those who heat with natural gas can expect to spend 13 percent more this winter; propane about 9 percent more; electric heat about 2 percent more. If you want real dollars, your approximate bill expense will be $679 for natural gas; propane users will spend $1,666; and electricity will be $909.
The good news is heating oil prices are forecasted to decrease by an all-awesome 2 percent, thus costing the average consumer $2,046 for the upcoming winter.
There’s no need for me to get into the costs of food and shelter. You get the point. But all of these out-of-pocket costs are quickly becoming too much to overcome, which leads many economists to wonder what the long-lasting effects will be to the domestic economy. Either way, though, it’s a negative impact and will trickle down to businesses and corporations.
The good news, though, is you’ll have healthcare. Grant it, you may be as poor as a boxcar hobo, but you will always be covered for that annual flu shot.
ABOUT LANDCOLT CAPITAL LP & TODD M. SCHOENBERGER
LandColt Capital LP is a private investment firm catering to institutional and accredited investors. The LandColt Onshore and Offshore Fund is based on quantitative and qualitative analysis, and utilizes proprietary investment models and methods developed over decades with a discretionary macro approach, to trade market sentiment. For more information, you are invited to review the firm’s website at www.LandColtCapital.com. For more frequent updates, follow on Twitter @LandColtCapital.
Todd M. Schoenberger is the founder and Managing Partner of LandColt Capital LP, and serves as Portfolio Manager of the LandColt Onshore and Offshore Funds. He is a frequent financial commentator for several national television and radio stations, including CNN, CNBC, BNN, Bloomberg News and Radio, FOX Business and News Channels, and has been a keynote speaker at West Point, the United States Naval Academy, with additional engagements scheduled at a number of top-level financial summit conferences throughout the country and Europe. For more frequent updates, follow on Twitter @TMSchoenberger.