To say there has been confusion, disillusions, and outright fabrications over Obamacare is about as redundant as saying water is wet.
One of the biggest arguments is that Obamacare dramatically increases premiums. Some people claim they're receiving letters saying their premiums are doubling.
But why ?
According to the provisions of the PPACA, 80% of your insurance premiums must be spent on your medical care.
This isn't in dispute. It's the law. If 80% of your premiums aren't spending on your care, you get a rebate.
And it's obvious that your health costs aren't going to double, so why is your insurance premiums doubling if the insurance company just going to have to rebate your excess premiums at the end of the year?
Let's be honest - insurance companies MAKE money by charging more in premiums than the spend in medical costs. That's their business model.
Well, it seems that if I were an insurance CEO and I doubled your premiums - I double my apparent profit for the account.
Your costs to me stay the same -
but for 11 months out of the year, I can post HUGE profit increases to my shareholders. Which means they're going to buy more shares, which increases the value of my holdings which makes me more money.
Now here's why I emphasize the word apparent. According to the PPACA - 80% of your premiums must be spent on your medical care - or I have to give you a refund.
That's the law. But I know when my company is going to take that huge hit - so I and the other primary shareholders short our shares for the month I cut all of those checks.
And then I buy them back at the reduced new share value. So for 11 months, my stock prices SOAR, and then I short them the 12th month.
And then - I report all of those losses to the IRS as a deductible business expense, which reduces my tax liability.
So my shareholders make huge amounts of money of the increased premiums, my portfolio is boosted by the increased profits on the book , I write your rebate checks which I use to reduce my tax liability is reduced courtesy of the US government which increases my profits which allows me to buy more shares.
So I charge you extra on premiums, and post higher earnings than the previous year.
My portfolio gets boosted by the higher P/E ratio and I rake in huge dividends for 11 months out of the year.
I short my stocks after I cut the checks for the rebate, which allows me to buy many more back at the same price.
I then report the rebates as a business related expense on my taxes, which I use to pay less in taxes.
I then post a 1st quarter profit above expectations, and my shareholders get paid. Including me.
Lather, Rinse, Repeat.
Just something to think about...