"The goal was never to get all of them inured in the first year."
I don't believe waivers and changes by the president were part of the law.
The goal was for the ACA to be implemented. But the handwriting was on the wall with so many objections that it wasn't feasible to implement it completely, so waivers and changes were granted and the 7-8 million signing up was all they could count on.
Of course more will sign up in future years, it's mandatory, or pay a fine, which may be a choice for many. I assume, except for those self insured (10 million estimate?), that the uninsured don't have a high income so, the fine would be cheaper than getting it. That is until the government raises the fine.
Just want to add that the Asian countries have a very low number of kids raised in non-intact families. They also have the lowest rate of teenage pregnancies which is related to problem pregnancies and infant mortality (2-3 per 1000). The US on the other hand has the highest number of kids in non-intact families and the highest number of teenage births (it was as high as 60 per 1000, but has come down, but still the highest). One study when you risked adjusted so we had the same proportion of teenage pregnancies as Canada, we actually did much better when the medical community was engaged in dealing with problem births. We do very well comparatively, but it is expensive. We just have more self-imposed problems, but the medical community does their job very well compared to other countries. If it is more expensive for us because of our specific problems, how are we going to save?
"risk adjusting (i.e. ignoring) these things does nothing to help increase your achievement levels or graduation rates."
I agree. But as a side comment, risk adjusting healthcare outcomes and reimbursing differently if risk adjusted outcomes aren't equal is exactly where a substantial amount of the saving is suppose to come from in the ACA. When is all that going to start?
Back to the education point ... Boys, non-intact families and poverty you say. Poverty is directly related to non-intact families. I'll skip boys for now. We have a disproportionally high number of children in non-intact families relative to the rest of the developed countries (30-40% higher), and it is the "highest" correlation to underachievement in school ... and you're trying to not scratch your head and wonder?
I'm all for money for education (believe me), but the greatest marginal utility for the next dollar spent is not going to come from a dollar spent on our schools ... those dollars will just bounce off the kids from non-intact families. And this has been going on for decades, so there are tens of millions out there with lives less than they could be. They can't be ignored, so something has to be done, and I think there are some programs, but far less optimal than an intact family ... and more costly to society. At the same time we have to do something to reverse the trend in non-intact families (maybe that is where the next dollar spent ought to go) ... or we will just continue to fool ourselves.
The highest correlation to underachievement in school is whether you come from an intact family. The US has 30-40% more children in non-intact families as other developed countries. If we risked adjusted for that, we would probably be #1 in education as a nation. Poor education leads to worse healthcare decisions as well as the impact on jobs, poverty, etc. Mississippi has a considerably higher percentage of children in non-intact families than Wisconsin. If you risk adjust for that giving Mississippi the same proportion as Wisconsin, I think you'd be surprised. Parents are important, probably more so than teachers ... so how do you think hard working teachers feel in Mississippi. Anyway, the government won't go there, for obvious reasons ... parents are cheaper than teachers and administrators.
By the way, the same goes for healthcare ... if we risked adjusted ... we would be #1 (and it was expensive being number one).
Lesser outcomes were the wrong words ... should have been outcomes of lower quality the way you were using it.
And you don't know squat about what I know about health cost savings. I do have conversations with people close to me that are involved in that aspect of the data collection, and involved with using it to determine what is quality care.
Call me skeptical, but right now I don't see the government "risk adjusting" in any area properly. I could probably show that the Mississippi schools are better than Wisconsin schools and they do it for less money. Government doesn't want to go there, even though it would direct the discourse towards the proper area.
"If you got your legs blown off fighting..."
That's another thing. Think of all the war protests that took place when Bush was in office. Well the wars still continue. Where are all the protests from the "concerned" ... it just goes to show you it was all just political ... and only believed in the political benefit of the protests. What a bunch of intellectual shallow people.
"We're not out of the woods, the cost savings side must be given time to work."
Yes, the assumed savings from the ACA is supposed to come from improving quality of care by "risk adjusting" outcomes. Those healthcare providers that have "lesser" outcomes as determined by the government will be reimbursed less. This will require huge data centers that the government uses and proper studies done using the data. So, does everyone have confidence that the government can collect "all the necessary" data, massage the data properly, and withhold payment for work done will determine if there is a savings?
This may just be a case of the government picking winners and losers. Everyone has to be with them in order not to be a "loser". Sort of like all professors and scientists have to be "green and liberal", otherwise they don't get grants and are ostracized.
It's hard to say what's going to happen. Probably the most important point is that airlines have pricing power, so even if it stays in this range, they can tweak fares. Ever since 2008 there have been efforts by the CFTC to do something (about every 1.5 years), but they have been stymied for various reasons. We'll see.
Producing oil is energy intensive, the lower oil goes, the less it cost to produce.
"The rise in jet fuel could ultimately be passed along to consumers in the form of higher ticket prices."
That can realistically be done. And that should give you your price target, if not higher by 2015 (if they produce the earnings).
Do you want to dream? The CFTC feels that 28-36% of the price of many physical commodities is due to speculation which their new rules will address. That study was done when oil was $70/bbl. $70 was a while ago, but those percentages probably still hold. But imagine if only 10% of the price of oil was impacted by factors that will be addressed by these new CFTC rules. That's an additional $1.60/share in cost savings (for every 10%). It's still a dream, but with a possibility.
" It was surprising to me that Delta and American came down so hard with clearly overvalued tech stocks. "
I understand what you're saying, but besides the airlines needing a pause, the market took down a lot of stocks that went up a lot, but it seems the ones that have earnings are definitely coming back. It's good to get that correction out of the way ... I'd really like to see us get above $37, then $38 fairly soon and break the downtrend.
" At an 8x it is almost $50"
I'll make it so it's at least $50 with $6/share. Hunter Keay a while back said he was modeling an 8.5 multiple on pre-tax eps.
I can't predict things short term. MU talked about the converts in their conference call, so it was known. Short term the market has been digesting it. As the company moves to get out of the convertibles, or moves to limit their impact, it would certainly be better that the stock didn't takeoff right away.
This is just my opinion, but even with the stock at $24 the impact should only be a 5% dilution (assuming they get out of the 2043s ok), or if they pay cash, they lose the cash. If they pay cash which they say they intend to do, and they keep performing then in the long run it shouldn't have a great impact. Worst case is take a 5% dilution ... knock off 5% of your longer term target. If the stock goes higher while they are getting out of the convertibles it will be more than 5%, or it will take more cash. Anyway the story for MU is still intact. Whatever the hit, it theoretically should come off the longer term target ... even if the adjustment in price is done now.
Do I wish they wouldn't have the converts ... obviously, yes, but it doesn't destroy MU's longer term story.
I didn't say I was in disagreement with the author, the convertibles are a material subject. I was just saying that management realizes it, and I think the author realizes it, and then he said they need to get going ... ok, fine.
Your outlook depends on your horizon. But who knows what a stock will do over the next few months anyway.
I'll be happy with 51 cents, as I think it could be lower. Regardless, the hit from the storms (and a certain amount for it just being cold) are the main reason for the lower earnings, and hopefully people will look right past Q1. I initially didn't like that they had a capacity build internationally without filling the seats, but then again Easter is in April. Anyway, they have the capacity going into Q2 and they are ready to use it. I still feel the "very good" story is still intact.
Electric argued that MU management should make every effort to rid itself of the convertibles. Well, the way they retired the first bunch indicates to me that they already realize that. And I think the 2043's have some time before they are too painful.
The article lays out the dilutive impact, but if 60% of that (principal and capped calls) is covered, the remainder is 40% at these recent high stock prices. Let's hope they continue to rid themselves of the converts. Still a cost involve, but if they continue to perform it just delays the improvement of their balance sheet by half a year (in this stock price range) ... they could do part cash and stock ... maybe accept a 5% dilution. That would just take 5% off the top end of the stock price. Whatever that ends up being.
I tried to read as many posts as I could to see if someone else said anything about this, so excuse me if I'm bringing up something already talked about ... but has anyone discussed the capped calls that MU has to protect itself regards the convertibles?
" ASK JUSTICE DEPARTMENT TO SEEK CRIMINAL PROSECUTION"
Congress can only "ask" ... can't do anything different and that was always the understanding and the way it works.
Holder gets the right to decide. But he has to be careful that any decision doesn't dig a deep hole.
Summers offered some good advice. It is too bad it was ignored.
The rollout for sign up was one thing, but can you imagine how complex establishing a national data bank used to "risk adjust" care to determine who is doing "quality" care, and then adjust reimbursements? We do very little risk adjusting now for comparative studies. It might be simple in a few areas of healthcare, but not all. And there will be consequences for all areas ... if the assumed savings to lower premiums is to be had. I hope HPQ gets some those tech dollars.
It's easy to think big ideas, and its something else to come up with the details to make that big idea work in order to solve a problem that we may or may not have. As I mentioned, we have higher healthcare costs, but we have more health problems that are behavior/culturally caused than other countries have. It might be cheaper to solve some of those cultural problems. And, as I said, in the few studies I've seen, if you give our country proportionally the same amount of a particular healthcare problem as the other countries, our healthcare system does a better job than the other countries even though we are currently ranked lower in that area.
Since we export oil products (distillates), those products are priced off of world prices. Brent is the proxy for world prices, and Brent has been $107 +/- $3-5 for the last year and half. Watch Brent, not WTI. Now, WTI may be going up, and I would be guessing as to the reason. There has been talk about exporting oil. Would WTI then take on world prices closer to Brent?. But, I'm guessing. Anyway, watch Brent, jet fuel prices come off of it.
I question price discovery in commodities, as you do. It started back in 2000 when they deregulated derivatives, and attempts to make changes since 2008 have been painfully slow. There are more rules coming this year, but there is a lot of push back and attempts to water them down. There could be winners and losers, so it is a sensitive issue. There is no shortage of opinions as to whether or not those changes will have a price impact.