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Demand For Free Drugs Grows Significantly

April 6, 2010 By Chuck

The demand for medications from sources that attempt to locate free medicine is up significantly.

With millions of people out of work, many having exhausted their COBRA health insurance, and those who are financially struggling to keep up are finding it necessary to locate assistance programs that offer free medications.

Organizations helping people find free drugs have reported increases of up to 50 per cent in requests in recent months, while pharmaceutical companies say they have expanded donations through “patient assistance programs” by typically 15 to 25 per cent.

Rich Sagall, who created NeedyMeds.org, a phone and web-based clearing house near Boston helping patients find free medicines, says he is receiving 14,000 inquiries a day, up from 10,000 in late 2008. “We’re exceedingly busy. I’m upset that this many people need access. There’s definitely more need and more queries.” US pharmaceutical companies provide some medicines free to many poorer Americans through “patient assistance programs”. […] (FT)

Filed Under: Economic Impact, Health Care, Market Updates Tagged With: ,

Health Care Reform – More Impacts

March 31, 2010 By Chuck

Uh oh… More companies have said that the health care reform act will cost them additional hits to their revenues.

Didn’t President Obama say this would be good for everyone, including business? If this is how multi billion dollar corporations are responding then how is this going to impact the smaller sized (greater than 50 employees) businesses?

(sarcasm alert)

Reportedly President Obama has summoned the CEO’s of the large companies reporting that the health care reform will impact their revenues. I guess he wants to scold them for speaking without his permission first. Then he will give them each a check and then a week later the companies will correct their earlier statements and praise the new reform.

(sarcasm off)

Ingersoll-Rand Co Ltd forecasts $0.12/ per share charge related to health care legislation –
- As retiree healthcare liabilities and related tax impacts are already reflected in the companies financial statements, the Healthcare Reform Legislation will result in a non-cash charge to income tax expense in the first quarter of 2010 of approximately $41 million (approximately $0.12 per diluted share). This charge reflects the anticipated increase in income taxes that will occur as a result of the Healthcare Reform Legislation. The previously-communicated 2010 earnings outlook for the Company does not include the impact of this charge.

Lockheed Martin Corp Forecasting $0.25/ per share charge related to health care legislation – Since the tax benefit of the future deductions was reflected as an asset in Lockheed Martins 2009 financial statements, the elimination of the tax deduction is expected to result in a charge to Lockheed Martins net earnings in the first quarter of 2010 of approximately $96 million after tax, or approximately $0.25 per diluted share. Cash impacts of this charge will be realized over several years beginning in 2013. Previously disclosed 2010 outlook for earnings per share was based on the tax law in effect as of January 28, 2010 and did not include the effect of the Act, the Amendment Act, or any other subsequent event.

Filed Under: Health Care, Market Updates Tagged With: , , , ,

Q4 GDP, Jobs, Health Care Reform, Housing, and the Stock Market

March 27, 2010 By Chuck

What a week we have been through. The situation with Greece seems to change by the hour with battles between the European Union, the IMF, and Chancellor Merkel of Germany. Greece is rumored to try and go to the market this coming week with a bond sale.

Greece will issue Eurobonds next week in order to test the rescue plan – Greece plans to borrow about €5B before end of March – Source: news wire

Q4 GDP

The final Q4 GDP came in and it was a bit lower than expected (5.6) with the downward revision mostly coming from lower consumer spending growth (1.6% vs 2.8% prior) as well as more weakness in the real estate markets.

A significant reason why the Q4 GDP was a high as it is, even after the downward revision, is the buildup of inventories. As stockpiles of goods were allowed to dwindle in 2009 to save cash this has led to a surge of inventory buildup as companies begin to add goods to their inventories for the expected return of consumers in droves. When purchasing agents all hit the manufacturers at once to build up some stockpiles it creates a surge in virtually all manufacturing sectors. This is what created a GDP to go from below zero to a suddenly positive number of 5.6%.

The reason, which I have opined previously, that the GDP witnessed in Q4 will not be repeatable is simple, the surge of inventory buildup is a one off event. At best, manufacturing will curtail again as the inventory buildup is completed. Now comes the consumers, if the inventory buildup exceeds the consumer demand then purchasing agents will once again be scaling down future orders. If consumers have reached a new “comfort level” of buying frugally, then it’s very clear that inventory stockpiles will only be maintained at a status quo level, not growing stockpiles which would mean a stagnant manufacturing sector.

With everything hanging on the consumer it becomes clear to me that irrespective of any pent up demand for goods, the longer term outlook remains weak. With unemployment still hanging near 10% (closer to 17% when counting those who are forced to work part time for lack of full time work), a housing market that is still in shambles, and foreclosures still rising which I don’t expect to see any major turn in the numbers until late 2011 or early 2012 at best, and consumer credit still in a contraction trend then how is it the consumers will be bouncing back to pre 2007 levels?

Housing Market – Government keeps blowing air into the balloon

Instead of letting the natural supply and demand system establishing market prices, the government keeps trying to blow air into the already deflating balloon. We learned just yesterday that the Obama administration is attempting to get banks to write down more mortgages to aid those who are underwater. Additionally, the administration is also considering payment assistance to those who are unemployed.

While all of this may be good in the short term for those who are underwater with their mortgages or unemployed, it continues to stall the natural process of price discovery in the markets. The governments attempts to salvage the housing market is keeping prices at artificial levels. In other words, the government is doing everything possible to keep the housing bubble from deflating any further – at taxpayer expense. And creating a false hope that prices will skyrocket upwards in the coming months and years.

The only way to correct the housing market problem for the long term is to allow the excess debt to be taken out of the equation. I understand this will be a painful process, but it is necessary to “reset” the entire market. All government efforts to keep the balloon from deflating any further only prolongs the pain. Those who believe the housing bubble of the past decade will return will be disappointed, and this will lead to further stresses in the housing market as speculation is once again rolling the dice that the bubble will come back.

Jobs

The weekly jobless claims data that was released on Thursday showed no let up in the number of people seeking unemployment insurance benefits. It is holding steady at approximately 450,000 each week. Next week the monthly unemployment report will be issued (on April 2nd). Expectations are that the report will show a positive job growth for the first time in nearly 2 years. But if it does show job growth, how much of it will be a direct result of the temporary hiring the government is doing now for the 2010 Census effort? Please consider my post on employment impact of the 2010 Census.

Health Care Reform

It passed, now we have to live with it. Already there are scattered reports of individual polices experiencing increasing premiums following the President’s signing the bill into law. Large and small companies have already reported that the changes to the health insurance laws will impact revenues for 2010 as they will be forced to spend more on health insurance for the employees. AT&T reported yesterday that it will cost upwards of $1 Billion in 2010 alone.

AT&T Corp Discloses forecasts $1B non cash charge in Q1 due to health care reform – filing

- Included among the major provisions of the law is a change in the tax treatment of the Medicare Part D subsidy. AT&T Inc. ("AT&T") intends to take a non-cash charge of approximately $1 billion in the first quarter of 2010 to reflect the impact of this change. As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health care benefits offered by the company.

Similar statements were issued by 3M, Caterpillar, and John Deere in the past two days. If large companies will be facing higher costs then it is likely to have an impact on employment levels and/or benefits for retirees. This could place even more stresses on the already broken Medicare system.

But it is not the large companies that I worry about, it is the small companies with at least 50 employees that will be facing a choice of providing health insurance at great costs or no insurance at all and simply pay the yearly penalty to the government, which for some companies will be cheaper than paying for health insurance.

While the debate on the merits and demerits of the new law continues, I see it as a disaster for the economy and the public at large. Because so much of the new law does not go into effect until months and years later it allows the health insurance companies to gouge their customers before they must adhere to the new regulations. Much like the credit card companies did over the past 8 months before that law went into effect.

The Market

The stock market remains jittery and on the edge. Following the health care reform bill becoming law two bond auctions were held, and both were bad. This sent yields higher as the bond market is having a hard time absorbing all of the notes being sold by the government and the increasing threat of the increasing deficit. Together these two factors gave the bond market a shock this week and should this continue we are likely to see interest rates rising significantly in the months to come.

But Ben Bernanke will either be forced to raise the Fed Funds rate or drain liquidity in order to control yields. Either situation would not be good for the equity market at this time.

The equity market continues to hover around resistance levels, remains extremely over bought, and sentiment indicators that show extremes are upon us. All of the ingredients for a significant turn in the markets.

Filed Under: Market Updates Tagged With: , , ,

Health Care Stocks Rise, But On What ?

March 22, 2010 By Chuck

Many health related stocks (insurance and pharma) moved up today on the heels of the Obama Care health reform bill.

The question to ask here is why. Why would health care related stocks move up if the new reform bill is supposed to rein in costs and essentially put the insurance industry ‘on notice’. Perhaps it is because as I and many others have opined in recent weeks that the health reform bill is a joke, and it will benefit the insurers and other health sector companies, leaving the consumer out in the cold, at least in the near term.

Please consider the following from Karl Denninger:

[…] Here’s the bottom line:

  • If you refuse to buy health insurance, you will be fined on a sliding scale that amounts to 2% of your AGI.  So if you make $100,000 a year, you could be fined $2,000 for "refusing" to buy insurance.
  • You cannot buy a catastrophic policy any more.  The "cheapest" acceptable policy will cost somewhere around $15,000 for a single person, and over $20,000 for a family.  This is, for most people, more than five times the maximum possible fine – each and every year.  The law makes it effectively impossible to maintain an existing catastrophic policy as they "renew" every year, and should any change be made you are then forced to buy something "acceptable" in the law (or pay the fine.)
  • When the "pre-existing condition" bar comes down you cannot be charged more or denied coverage due to pre-existing conditions.
  • I fully expect 20-50% premium increases immediately, and for the next three years sequentially, in all existing policies.  This is precisely what the banks did in front of the CARD act becoming effective, and it will happen here as well.  That is the cause of the short-term rocket shot in the health-related stocks this morning.
  • In addition the capital gains tax changes will do severe damage to capital formation immediately, and these changes will become especially severe starting in 2014.  The market will anticipate these changes and react accordingly, although you certainly wouldn’t know it today. […] (link: Health Care: Arbitrage Obama And The Dems)

Irrespective of how good or bad the health reform will be when it fully kicks into effect years down the road, the near term may be absolutely horrible for those already insured. As Karl states, to which I also agree, give any company a delayed schedule to follow new rules and they will take advantage of the situation here and now to get as much as they can before laws become effective. Just look back at how the credit card companies raised interest rates upwards to 30% in the span of just a few short months before the new rules went into effect. This effectively locked in their suckers customers into a situation they had little choice of getting out of. If the customer argued against the interest rate hikes then he or she would be allowed to keep the previous rate however their credit card would be cancelled immediately, rendering the consumer without any credit card. They held you hostage and got away with it.

How will the new health reform bill play out? I expect to see similar tactics employed by the major carriers, however this time the implications will be even more dangerous.

As far as the stock go we only need to look at the IYH which tracks the health industry. While the health care stocks enjoyed a nice ride today, how long will it be able to last? Yet one more chart pushing right up into a wall of resistance.

IYH Health Sector Chart

Filed Under: Health Care, Market Updates Tagged With: ,

Health Care Reform Bill HR 3590 passes 219 / 212

March 21, 2010 By Chuck

It is now on its way to the US Senate for any last minute considerations or changes. If the Senate approves, then this is expected to become law within a matter of just days.

Health care reform is needed, this we all agree. But, only reform that would really work, and I fear this bill will not work.

The markets have weighed in on the health care bill also tonight and they don’t like it either. Currently the futures market is trading in the red, with the S&P e-mini’s down 7 points at the time of this writing.

Filed Under: Health Care, Market Updates Tagged With:

Health Care Reform Bill – What a Mess

March 20, 2010 By Chuck

Sunday, a day that will live in infamy. The House is set to vote on the health care reform bill on Sunday afternoon/evening.

During the Hank Paulson bailout spending bill that was pushed through under the disguise of a troubled asset relief program, but later ended up being nothing more than a handout to the largest Wall street firms. I wrote, faxed, and sent emails to Congress urging them to stop the bailout bill. Washington was overrun by a massive load of opposition to the bill with some reports placing the opposition at 300 to 1. Yes, 300 opposed for every single individual who was in favor of it. Phone systems were overrun, email servers crashed under the load, and fax machines were even turned off in some cases because they were being inundated with messages from their constituents.

And here we are yet again. The communications director for the House of Representatives reports that the telephone systems have been overwhelmed, email systems bogged down, and in some reports the staff at some offices won’t even take calls anymore from their constituents. The Obama health care reform bill is setting up to be a historic event. But will it work? Unfortunately this answer won’t be known until many months or even years down the road.

But there are sure good reasons why the opposition is screaming that the bill is a disaster.

From biggovernment.com

  • Rations and denies access to healthcare. Denying access to healthcare is the most inhumane and unethical means of cutting costs;
  • Costs $1 TRILLION ( $100 Billion more than The Senate Bill) ;
  • Creates over 110 Federal Agencies, commissions and boards;
  • Creates The Health Insurance Rate Authority….a direct violation of States’ Rights;
  • Establishes a “ Comprehensive Database” on Americans;
  • Establishes Individual and Employer Mandates (Mr. Obama’s own Chair of Council of Economic Advisors has stated that this alone would cost 5.5 Million jobs….more unemployment.);
  • Institutes $748 Billion in new taxes;
  • Cuts Medicare by $500 Billion, over a period when 30% MORE Americans will be added to Medicare rolls, (You do the math…);
  • Imposes $136 Billion in tax hikes on working families making LESS THAN $250,000 (Americans for Tax Reform Analysis);
  • Ends Medicare Advantage Program for Seniors and forces them to a more expensive plan with less benefits;
  • Applies Medicare Tax to unearned income;
  • Increases Medicare Payroll Tax from 2.95 to 3.8%; and
  • Increases unfunded mandates on every State.
  • Increases Capital Gains tax rate as of 2014 to 23.8%
  • Creates 16,000 jobs for the IRS to implement penalties for those not buying insurance

Those who approve of the health care reform bill generally come from the mind set that “something needs to be done”, and they will take anything that sounds like ‘reform’ in the title. I to believe the entire insurance and health system in the United States is broken. But, I do not believe the current bill does anything at all to fix the underlying problems, and it will likely create even more problems as time passes.

If I were to reform the health care industry I would mandate that all insurance companies, hospitals, and pharmaceutical companies have a profit cap, they would not be publically traded companies, and they would have to report to a national health cost regulator. You say, but Chuck that is not a capitalist system. I am a strong capitalist, but there are ‘some’ things that should just not fall under a normal ‘for profit’ capitalist system, and health care is the one.

When hospitals and insurance companies trade on the stock market and must report quarterly earnings to their shareholders they have to show year over year growth. How can a system that provides basic life sustaining health services get a yearly increase in profits? By cutting internal costs, raising insurance rates, and raising the costs of procedures. That’s how. The very need to appease the shareholders by showing increased profit year over year is one of the biggest drivers of our broken health care system today.

Wall Street is great for widget makers, aircraft engine makers, cell phone equipment, car companies, and on and on. But the very companies that Americans have to turn to for basic life sustaining care should not be on Wall Street. If we have anyone to blame for the mess the health care industry is in we only have to look at those companies themselves and their need to grow profits consistently.

For me, I would rather go to a University teaching hospital any day over a “for profit hospital system”. Quality health care should come from the very people who desire to enter into the profession because of their desire is to help people. Good doctors become bad doctors when the hospitals put them into quota systems, all in the name of profits for the hospital and the shareholders.

Same goes with insurance companies. The “for profit” insurance industry is a scam at best. As with the hospital systems, insurance companies must keep finding more ways to squeeze health care in order to increase profits year over year. And it does not take a rocket scientist to figure out how they increase profits.

The Obama administration’s health care reform sounds great on the surface. Why shouldn’t it, it has the word “reform” in the title. But does it actually do anything at all to provide better health care and control costs? In my opinion it does not, it only serves to further complicate the already complicated and bureaucratic mess. And in the end it will be the tax payers on the hook for even more while receiving even less for it.

Innovation, research, and new discoveries should come from universities and other research facilities that receive grant money. As a taxpayer I would be more receptive to having some of it go to research through a Federal research grant program. This keeps the incentives alive to develop new medications, new cancer treatments, and so on. Lets get research out of the hands of the “for profit” companies whose motives are to go to market as quickly as possible with a new drug because it will make the shareholders happy. The bigger the profit incentive the bigger the risks associated with the product is how I see it.

Federal grant money for medical research would cost far less than any reform bill, and would place quality back into the health system.

Just my two cents on the issue.

Filed Under: Health Care, Market Updates Tagged With:

Public Pension Plans – Uh Oh

February 19, 2010 By Chuck

State pension plans are in financial trouble, facing a $1 Trillion deficit. The Pew Center on the States just released a survey of state run pension plans for retirees in the public sector. The finding of the report is strikingly bad.

With $2.4 trillion on hand to meet a $3.4 trillion in promised pensions and retiree health care benefits the system is in trouble.

State Retirement Systems Under Funded

Filed Under: Market Updates Tagged With: ,

Sunday Musings – The Economy Is Fine

November 15, 2009 By Chuck

The clip shown below from last nights opening for Saturday Night Live pretty much sums up how it is we are led to believe all is well.

In the clip the actor portraying VP Joe Biden waves his hand and says “The stimulus is working“. Unless you are a fan of Star Wars you would probably have missed the meaning of his waving of the hand as he spoke.

The tale of the Jedi Knights from Star Wars is that they can induce a thought by employing a mind control technique which was always highlighted by a wave of the hand in front of those with weaker minds.

The point I am emphasizing here is that we have always known that the Government will tell us one thing while reality is in many cases something completely different. But the level of putting on a happy face and hand waving by the Government has ramped up to what must be an all time high of ‘inducing  good karma”.

There are so  many examples of this technique from Washington that I would not even know where to begin. During this current economic crisis that the nation still finds itself embroiled in we only have to look back to the past few years with then Treasury Secretary Hank Paulson.  Mr. Paulson  spoke many times before the economy slid down the mountain that the fundamentals of the economy were sound. That sentiment was echoed by many others, Democrat and Republican were guilty of spreading good cheer when everyone else in the private media (bloggers) were saying the opposite. In the end we found out which was telling the truth.

On Friday we received the University of Michigan consumer confidence data and it dropped lower yet again. Consumer confidence is a ‘forward’ looking indicator as it conveys the attitude of the people who will be spending the money.  And just where will that money come from to fuel organic growth with real unemployment nearing 18% (U-6 measurement), credit card companies jacking up interest rates to 30% and even cutting off millions of card holders by reducing their spending limit or outright canceling their accounts. Heck, you don’t even to have to have bad credit yourself anymore, but if you even shop at stores that is known to have a higher average of shoppers with bad credit then guess what… you are labeled one of them as well even if you have good credit history.

I hope one day more and more people will wake up and realize they keep getting sold a bag of lies and crap by those who supposedly represent us. Unfortunately when people do speak up the mainstream media (and Government) paints those individuals as radicals. The last time I checked the 1st amendment to the Constitution still allowed free speech. Even though the 1st amendment is still there the people are slowly giving up that freedom by allowing themselves to be taunted in the media and being spoken down to by the Government.

It was said centuries ago that when the people fear the Government, there is tyranny; when the Government fears the people there is liberty (Thomas Jefferson).

Today the situation goes one step further by adding into the mix the thousands of lobbyists who speak for the corporations and not the people. If you are rich and powerful you have a direct line to the White House. If you are a lobbyist you have elected officials on speed dial, if you are blue collar middle class you have no one that will listen to you, and if you are the poor you have no voice whatsoever.

Today I learned that some talking points echoed by Congress during the health care reform bill debate were actually provided by lobbyists that were hired by Genentech (ref NY Times).

The men and woman in Washington are supposed to represent YOU. But just try to call your local Representative and schedule an appointment to meet with him or her. The majority of the time their staff will just tell you they don’t have the time and request that you send a letter instead (I know this, I have tried it many times). If you are a representative of a major corporation and you contact the Representative you move to the head of the line.

So the next time your elected official waves his hand in front of your face telling you that ‘all is well’ surprise him by saying “your Jedi mind tricks won’t work with me any more”. And tell them to represent you for a change.

Lookup information on how to reach your representative —>  CLICK HERE

Lookup information on how to reach your State Senator  —->  CLICK HERE

Want to learn who is paying who in Washington  —–> Open Secrets.org

11-15-2009 3-58-16 PMJust for example, let us take Senator Chris Dodd (D- CT). Last week he released a draft bill that would provide regulation to the financial industry. But will his draft bill have any meat to it? Of course not, his biggest contributors are the financial firms themselves.

Chris Dodd top contributors 2003-2008 shown here.

The only way our elected officials will ever listen to us is if we outnumber the power of their pimps; the lobbyists.

How sad it is that people in this Country will take the time to send a message to American Idol to cast a vote, but won’t take the time to send a message to those who represent them in Washington.

Is this the United States of America or is it the United Corporations of America?

More on this topic (What's this?)
Guest Post: Biden Says “It’s a Depression For Millions of Americans” (naked capitalism, 10/20/09)
Charlie Rose sits down with Kenneth Rogoff (Investment Postcards from Cape Town, 11/11/09)
Charlie Rose in conversation with Barton Biggs (Investment Postcards from Cape Town, 11/25/09)
Read more on Clip, Election 2008 at Wikinvest
Filed Under: Market Updates Tagged With: , ,
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