Down goes the Dow

Most health care cost increases on the consumer are the result of employers passing on more of the share to their employees. The overall costs aren't increasing that fast.

Hans wrote:

I read that link and the scandal is the fraudulent fudging of numbers. Surely it happens everywhere, everybody in my early chem labs fudged all their data to get somewhere plausibly near the expected result!

I like your posts, but sorry, my personal health care premiums will be increasing 42% next year, and the deductible and max out of pocket are increasing from $2k to $10k, and that's the same story with everybody in the tech park where I work, across about 25 different medium-sized businesses. I think that working people's health care costs are skyrocketing.

sorry to hear your costs are going up but that is not the story nationwide. Cost increases are pretty much at the general inflation rate, far, far less than the 5-7% growth rates of the past. Although I may be conflating overall costs with premiums.

Clearly, big,big things are happening in health care that is reducing the long term costs of health care. Between the lower cost of energy and the lower cost of health care increases....pretty much everything that we have thought inevitable....isn't anymore.

But here:

"We’re in the midst of a rare slowdown in the growth of health spending. That slowdown just hit the employer health insurance market.

On Wednesday, the Kaiser Family Foundation published its annual survey on the health plans that employers are offering their workers. It’s large and comprehensive and generally regarded as the most reliable measure of what’s happening in the employer market.

The big finding is that the growth in health insurance premiums was only 3 percent between 2013 and 2014. That’s tied for the lowest rate of increase since Kaiser started measuring (this is the 16th year of the survey).

For the past few years, health spending as measured in all kinds of ways has been encouraging. Spending growth in Medicare and Medicaid are down. National health spending is down. But employer health premiums were a little slower to catch on."

and here:

Since 2010, according to a new report by the White House Council of Economic Advisers, inflation-adjusted per-capita health-care spending has been rising at an annual rate of just 1.3 per cent. Depending on which index of prices you look at, that’s the lowest rate of increase in forty or fifty years. The slowdown in spending growth has extended across all the big categories (hospital care, physician and clinical services, prescription drugs, home health/nursing care) and across all types of health plans (private insurance, Medicare, and Medicaid). It’s a big deal.

this sums up the long term benefits of lower increases in health care costs:

If the slowdown in spending growth were to be sustained, it would transform the policy debate about spending and budget deficits. For decades now, the big worry in Washington has been that rising health-care costs will gradually swallow up household and government budgets, squeezing out other forms of spending, and sending the budget deficit soaring. The numbers seemed to show that this was inevitable. Between 1965 and 2010, per-capita outlays on health care increased at an annual rate of 4.5 per cent. At that rate of growth, over-all spending doubles every sixteen years, and the ramifications for purchasers of health care—individuals, firms, and the government—are huge. We’ve all seen the Congressional Budget Office projections that show Medicare and Medicaid accounting for an ever-increasing proportion of the federal budget.

If the rate of growth of health-care spending were to remain at 1.5 per cent a year, or thereabouts, rather than 4.5 per cent, the long-term trends would look very different. Instead of doubling every sixteen years, healthcare spending would take almost fifty years to double. And as long as the economy and tax revenues expanded at a reasonable rate—say 2.25 per cent or more per annum, after adjusting for inflation—the proportion of G.D.P. and the federal budget devoted to health-care spending would level off rather than continuing to climb. Even a more modest but permanent fall in the rate at which spending rises—to two or three per cent a year—would have a big financial and political impact over the long term. As long as health-care outlays rise more or less in line with G.D.P., they can be financed pretty readily, and the threat of a fiscal crisis is greatly diminished.

dude, it's unaffordable not because of the rate of increases, but because of the absolute burden. a 3% increase on a part of my budget that is way too big already just makes the problem worse. A lowered rate of increase affects only the symptom, not the problem--a good metaphor for US health care in general.

2 points:

a) maser was right about the change in the calculation of the GDP, so referencing things relative to recent GDP rates doesn't compute

b) looks like maser was right about a flight to quality, meaning a flight to the US, at least according to bloomberg--http://www.bloomberg.com/news/2014-11-19/yellen-inherits-greenspan-s-conundrum-as-long-rates-sink.html

hmmm, thanks for that bloomberg link

Kurt Vonnegut's Editor wrote:

2 points:

a) maser was right about the change in the calculation of the GDP, so referencing things relative to recent GDP rates doesn't compute

b) looks like maser was right about a flight to quality, meaning a flight to the US, at least according to bloomberg--http://www.bloomberg.com/news/2014-11-19/yellen-inherits-greenspan-s-conundrum-as-long-rates-sink.html

1 point:

a) Yes it does, because nobody references anything to the GDP itself but rather to the change in GDP. As such, any reasonable change in the calculation of GDP is essentially irrelevant.

Kurt = wrong.

Debt:GDP ratio, for one, and there are millions of others.

another round of all time highs for US big caps.

everything else still down 1-10% from highs

really striking how well big cap US has done vs. the rest of the world - the Sp500 is up 14% year to date! 14% after 32% last year! That's 50% in less than 2 years. Holy carp.

Globally, stocks are up just 6.1% ytd

and europe + Japan is DOWN 2.3% ytd

wacky stuff

so the question is:

are markets telling us that the US economic model is the right one going forward...or should contrarians go to the opposite side of the boat and buy Europe?

The U.S. recovery may be slow, but it looks impressive compared to the economic shithole that is the rest of the world.

agip wrote:

another round of all time highs for US big caps.

everything else still down 1-10% from highs

really striking how well big cap US has done vs. the rest of the world - the Sp500 is up 14% year to date! 14% after 32% last year! That's 50% in less than 2 years. Holy carp.

Globally, stocks are up just 6.1% ytd

and europe + Japan is DOWN 2.3% ytd

wacky stuff

so the question is:

are markets telling us that the US economic model is the right one going forward...or should contrarians go to the opposite side of the boat and buy Europe?

I am actually right on what the Dow is doing this year, so not as good as the S&P 500 and not as good as I usually do. It's ok though. I'll still take the gain. My mid-cap and small-cap funds are the big stinkers this year along with my international stuff. Saved by the large cap stuff and dividend growth funds. But, that's why you diversify. If I look at the chart for any of my funds over the last 5 years, the trend is WAY up...amazing.

Face the fax wrote:

The U.S. recovery may be slow, but it looks impressive compared to the economic shithole that is the rest of the world.

this is the difficulty of stock market investing - everyone knows what you said about the US economy - that is in the past. The 32% return in 2013 probably predicted the outperformance of the US economy in 2014.

So the question now - are markets predicting a continuation of the same trend?

Or is it a good time to be a contrarian and buy the stocks no one wants. You buy them, put them away and wait for more people to come on to your side of the boat.

I dunno.

but keep in mind while Europe and Japan are a mess economically, the emerging market economies are generally doing pretty well. the stocks are up around 7% - mediocre, but pretty good considering the massive drag of the rapidly rising US dollar.

the dow is up 9.4% with dividends, so that is not too shabby. But still around 30% less than the SP500.

I'm having the worst relative year of my life - probably only up 6% or so. I just didn't have enough in big cap US.

But that matches the performance of global stocks, so it's not too bad considerign I am only 70% stocks.

agip wrote:

Flagpole wrote:

I am actually right on what the Dow is doing this year, so not as good as the S&P 500 and not as good as I usually do. It's ok though. I'll still take the gain. My mid-cap and small-cap funds are the big stinkers this year along with my international stuff. Saved by the large cap stuff and dividend growth funds. But, that's why you diversify. If I look at the chart for any of my funds over the last 5 years, the trend is WAY up...amazing.

the dow is up 9.4% with dividends, so that is not too shabby. But still around 30% less than the SP500.

Yeah, I'll take it.

Who wouldn't take it? I mean, besides K5 and Maserati.

Pointing Out the Obvious wrote:

Who wouldn't take it? I mean, besides K5 and Maserati.

Well, you wouldn't for one.

sp500 is up an amazing 13.3% since October 15

so many people sold out there - under the 200 day moving average, plunging every day.

and then whammers - 13.3% in little over a month.

...for example, here is our erstwhile friend, Maserati, on oct 24, near the bottom, recommending a sell:

"Up about 100 in late trading Friday, nice gain heading into the weekend.

If I had bought in the last week, I would be selling right now, depending of course on what I bought. I have no confidence in these index levels, going forward.

Just listened to a quick vid on M* from Bob Johnson, where he describes why he thinks that "consumer spending" will rise between now and 2015, and where he gives a few possible confounding factors.

Adjusting for the holiday season, I disagree that "consumer spending" will rise.

Read more:

http://www.letsrun.com/forum/flat_read.php?thread=5369837&page=194#ixzz3JjxLyg00

__

yes, he did reverse that call, but cripes.

agip wrote:

...for example, here is our erstwhile friend, Maserati, on oct 24, near the bottom, recommending a sell:

"Up about 100 in late trading Friday, nice gain heading into the weekend.

If I had bought in the last week, I would be selling right now, depending of course on what I bought. I have no confidence in these index levels, going forward.

..

__

yes, he did reverse that call, but cripes.

We need another hot air balloon for this thread. Preferably someone who is borderline psycho.

Any takers?