Don’t bet big on health law changes just yet

The Denver Post - - BUSINESS - By Tom Mur­phy Will my cov­er­age still work af­ter In­au­gu­ra­tion Day? Can Trump ease the huge premium hike that I face? Will I still pay a fine for skip­ping cov­er­age?

Why worry about buy­ing health in­sur­ance when Pres­i­dent-elect Don­ald Trump plans to dump the re­quire­ment that most Amer­i­cans get cov­er­age?

For the same rea­son you should al­ways worry about health in­sur­ance: Lit­tle health prob­lems eas­ily can turn into big bills with­out it.

“The real risk is some­thing will hap­pen to you, and you won’t be able to get care or (you) go broke try­ing to pay for it,” said Karen Pol­litz, a se­nior fel­low at the non­profit Kaiser Fam­ily Foun­da­tion. Pol­litz re­calls the time she saw the bill for surgery her son needed af­ter break­ing his wrist skate­board­ing: It would have cost $21,000 if in­sur­ance hadn’t cov­ered most of it.

The threat of fi­nan­cial dis­as­ter, not the Af­ford­able Care Act’s hazy fu­ture, should shape any de­ci­sion to buy cov­er­age for next year, health ex­perts say.

Here’s what we know about the ACA’s fu­ture as the an­nual open en­roll­ment win­dow for in­di­vid­ual in­sur­ance winds down. Shop­pers have un­til Dec. 15 to buy cov­er­age that starts Jan. 1. Any­one who misses that dead­line can still en­roll by Jan. 31 to have cov­er­age for the rest of the year and avoid a penalty for re­main­ing unin­sured.

No changes are ex­pected next year for the more than 10 mil­lion peo­ple cov­ered through Health­Care.gov and state mar­kets that of­fer sub­si­dized pri­vate in­sur­ance. A sim­i­lar num­ber of low-in­come peo­ple cov­ered by Med­i­caid in states that ex­panded the pro­gram also are safe, for now.

Trump has said he’d like to sign leg­is­la­tion re­peal­ing the law soon af­ter his Jan. 20 in­au­gu­ra­tion, but that’s un­likely. It prob­a­bly will take months for Congress to act. Repub­li­cans, who will con­trol Congress, also have dis­cussed giv­ing the law’s ben­e­fi­cia­ries a tran­si­tion pe­riod of a year or more as they phase out the law and in­tro­duce what they say will be a re­place­ment.

No. The 2017 prices were set months ago, they have been ap­proved by reg­u­la­tors, and they are be­ing used in the mar­ket.

Cus­tomers can hunt for cheaper cov­er­age on or off the ACA’s pub­lic ex­changes be­fore the end of open en­roll­ment.

There are other cheaper al­ter­na­tives, but they come with a catch. Raleigh, N.C., bro­ker Liz Gal­lops has been talk­ing to some clients about short-term cov­er­age that gen­er­ally costs less — and cov­ers less — than plans sold on the ACA’s ex­changes. Th­ese plans leave cus­tomers ex­posed to a fine for re­main­ing unin­sured, but they of­fer some pro­tec­tion from the hit of a big med­i­cal ex­pense, which is the big worry.

Peo­ple who re­main unin­sured next year could face a penalty of $695 per adult or more, depend­ing on house­hold in­come. But they wouldn’t have to pay that fine un­til af­ter fil­ing in­come taxes in early 2018. Trump has said he wants to dump this un­pop­u­lar el­e­ment of the law, so it may not ex­ist by then. Still, there’s no guar­an­tee. Gal­lops doesn’t bother with spec­u­la­tion. She thinks the safest bet for cus­tomers is to sim­ply “play by the rules that we have to­day.”

At the dawn of 2016, the dwin­dling of China’s mas­sive hoard of for­eign re­serves sparked tur­moil on global fi­nan­cial mar­kets. Now, signs of ac­cel­er­at­ing cap­i­tal out­flows in­spire lit­tle more than a yawn.

Fig­ures pub­lished Wed­nes­day showed the value of the Peo­ple’s Bank of China’s for­eign ex­change re­serves fell by $69.1 bil­lion to $3.05 tril­lion in Novem­ber, the largest drop since Jan­uary. S&P 500 fu­tures, how­ever, showed no im­me­di­ate re­ac­tion and bench­mark U.S. in­dexes then ral­lied to all­time highs, a stark con­trast to 10 months prior, when a sim­i­lar draw­down was cited as the prox­i­mate cause of car­nage in global eq­ui­ties.

One dif­fer­ence now is that China’s cap­i­tal ac­count hadn’t been as leaky ahead of Novem­ber’s large de­cline; mar­ket par­tic­i­pants had seen far rainier days from mid 2015 un­til early this year. Out­flows av­er­aged about $60 bil­lion from Fe­bru­ary through Oc­to­ber, roughly half of the amount from the prior six months, ob­served Ge­orge Pear­kes, Be­spoke In­vest­ment Group’s macro strate­gist.

“Tweleve months for­ward prices have in­cluded lots of risk premium to make up for spot de­clines, soft­en­ing the blow for the mar­ket,” he writes. “Im­plied volatil­ity also trades at a huge premium to re­al­ized volatil­ity for CNH, and when (vol­ume) ramps up, op­tion sellers are al­ready com­pen­sated against more vi­o­lent price ac­tion.”

In other words, as traders have priced in a more volatile and weaker yuan rel­a­tive to the U.S. dol­lar via the for­ward and de­riv­a­tives mar­kets, this also raises the bar for roil­ing the mar­ket through any sur­prise uptick in out­flows.

David Woo, global head of rates and cur­ren­cies re­search at Bank of Amer­ica Mer­rill Lynch, said that the big­gest dif­fer­ence is that China has shown its will­ing­ness to use tools to con­trol any fall­out.

Pol­i­cy­mak­ers now are more will­ing to use levers at their dis­posal in an at­tempt to crack down on cap­i­tal out­flows, such as mak­ing it more dif­fi­cult for residents to buy in­sur­ance poli­cies in Hong Kong. There’s some proof they’ve been suc­cess­ful: the sale of ac­tress Cate Blanchett’s Sydney home fell through when the Chi­nese buyer was un­able to get enough money out of the coun­try to set­tle the deal.

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