Healthcare.gov is very easy to hack, credit card payments in jeopardy
It turns out that the personal and possibly health history information of those who signed up online at healthcare.gov, is retrievable by hackers in less than 5 minutes of hacking. This video plays a government IT security expert's testimony to congress on this point. This is terrible news for the planned credit card online payment rollout next month.
On the heels of the Target disaster, people who were going to pay for their insurance with a debit or credit card will be afraid to be exposed. Target affected something around 70 million card users, which is at least a third of all people with a debit or credit card, considering the total US population is around 350 million.
It's likely in the next few days the Executive branch (OBAMA) will realize this and delay online payments. Included in the statistics of currently enrolled people are people who enrolled but haven't paid their premium and were planning to do so by debit/credit card. When those people fail to pay, the plan cancels, removing them from the overall statistic. Enrollment numbers therefore are inflated in a way that the mass media and analysts of publicly traded insurance companies don't yet take into account. This is bad news for the beneficiaries of ACA, the large health insurers.
Another reason portending decline of health insurance companies is their dependance on a 75% stoploss bailout provision of the Affordable Care Act. It states that the federal government will reimburse 75% of losses after the first 8% loss when payouts to doctors and hospitals exceeds revenue from premiums. At this point, the health insurers are guiding earnings and internally speaking about the bailout provision as a very lucky and necessary thing, because they know the ACA is failing. The executives at UNH and AET for instance, know that payouts will exceed revenue based on enrollment numbers and demographics being at least the WORST CASE SCENARIO that they originally would have projected. With a bailout, we cross into the realm of politics rather than law!
Congressional law can be chagned by new congressional law, and the American taxpayer will soon realize that they are bailing out politically unpopular Obamacare by bailing out the health insurance companies.
"Health insurers are evil large corporations that need to be controlled" was one of the main battle cries to get Obamacare passed. Of course, it was supported by evil health insurers too because assured guaranteed profit to them. Now we have the political sentiment of "large corporations are evil" which will never go away, as a foundation of the democratic voting bloc. And we have an unpopular healthcare law that is alienating many middle class democrat voters who are losing their insurance personally, or can see the flawed economic model finally. And the result is there is not enough political will to undertake a health insurance bailout. The 24 hour news cycle will be all over this issue, and when the bailout provision is rejected, expect public health insurance stocks head down very sharply.
I will be giving you, the subscriber "peer around the corner" news on trends that haven't yet been taken into consideration by the markets. I regularly interact online with dozens of "guru" blogs to try to connect the dots of likely black swan events for stocks and commodities. I speak with people in different metropolitan economic zones of the United States and travel the country in person to bring my perspective to view market trends invisible to provincial New York and Chicago traders.
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-Andrew James
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