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-- Posted Monday, 6 April 2009 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Monday, April 6, 2009

“Phenomenally accurate forecasts” 

A recent story in the Wall Street Journal explained how the newly jobless may be eligible for employer-sponsored health insurance coverage at drastically reduced rates. Sounds like good news, right? Not if you’re an insurance agent. In fact, it’s a kind of reverse stimulus for those who make their living selling health coverage. Until now, a substantial portion of their business came from workers who had recently lost their jobs, since many newly unemployed workers are under pressure to replace workplace coverage with more affordable plans. Although the employees are legally entitled under federal law to “Cobra” their old coverage for up to 18 months, the costs can be quite high, especially if the original plan contained generous prescription benefits, low co-payments and other perks. Often, by bumping up co-pay amounts and reducing benefits somewhat, an insurance agent can coverage comparable to Cobra for significantly less.

Now, though, with the government subsidizing 65% of the cost of a Cobra plan, the insured has no incentive to shop around. With the subsidy, a plan that would cost a worker $450/month can be had for just $150. One agent we know said the subsidy would have a devastating impact on insurance agents who specialize in health care.  “This is the law of unintended consequences,” he said. “The government thinks it’s applying a stimulus, but it’s just going to throw taxpayer money at higher-cost plans,” while reducing the incentive of laid-off workers to look for a better deal.

Retroactive, Too!

The plan will be retroactive, allowing workers who did not initially opt for Cobra coverage to do so now.  They will also be able to apply for a refund on premiums paid after the subsidy law was enacted on February 17.  The number of workers who extend coverage through Cobra has been relatively small up till now because of the high cost of such plans. Employers are allowed to charge former workers up to 102% of the cost of premiums. This is surely a plan that every Keynesian can get behind.

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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Monday, 6 April 2009 | Digg This Article | Source: GoldSeek.com

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