Well, last night an interesting battle for the best double speak and smoke-blowing became intense after Cisco (CSCO) posted its earnings results. Already, with a substantial lead, was Kathleen Sebelius and her belated update on how many people have actually enrolled in the new healthcare exchanges. Here's a hint...not many.
The first paragraph from the press release (all about millions):
Based on available data, 846,184 completed applications were submitted to Marketplaces during the first month of the initial open enrollment period (10-1-13 to 11-2-13), including applications that were submitted to the SBMs and FFM. These completed applications correspond to a total of 1,509,883 million individuals (persons) who have applied for coverage through the Marketplaces during this time period. This represents 22 percent of the Congressional Budget Office (CBO) estimated 7 million Marketplace enrollment in 2014.
A quick glance at the above paragraph hints at a rousing success. Just think, 22% of the seven million needed to make this program a success completed applications. This really is a signature achievement if this was only a one paragraph press release.
The second paragraph from the press release (all about qualified health plans...the good ones):
The Marketplaces have helped a total of 1,477,853 persons by determining or assessing that they are either eligible to enroll in a Marketplace plan (used throughout this report-also known as Qualified Health Plans or QHPs) with or without financial assistance, or in Medicaid or the Children's Health Insurance Program (CHIP). To date, 106,185 persons have selected a Marketplace plan-this includes 79,391 in SBMs and 26,794 in FFM. An additional 975,407 persons who have been determined eligible have not yet selected a plan through the Marketplace.
Whoa...now, we're getting to the nitty-gritty. We've gone from huge numbers in the hundreds of thousands and millions to what is commonly referred to as reality.
• 79,391 people took the bait and actually enrolled in plans via state-run websites
• 26,794 people took the bait and actually enrolled in plans on the national website
I do find it interesting how fast the federal government combed through people's income statements, bank accounts, and employment information. The suggestion that because 975,407 are eligible they'll eventually sign on the dotted line is yet another part of this flimsy sales approach that has all the subtlety of an old school pitch from the hucksters on the Atlantic City boardwalk.
This is just horrific stuff. By this time, we were told 500,000 people would have enrolled and would be telling all their friends and family members. This isn't a signature achievement by any stretch of the imagination. It's an unmitigated disaster. The law was based on a pipedream and detached from honesty and common sense from the very beginning, so the website's problems serve as a perfect proxy. But, this is no game. Now, many experts are crunching numbers and figuring more people will lose their health insurance than gain people that will have coverage for the first time.
To try to fix that dilemma, a plan is being cobbled together, probably in a cauldron, which is going to cost a lot of money.
Here's one of the reasons the fix is going to hurt...as you read further into the press release, we are reminded that this wasn't only about people without insurance but the creation of another entitlement via tax payer subsides.
The third paragraph from the press release (It's so easy...just a click of a button):
To date, the Marketplaces have processed eligibility determinations and assessments for 98 percent (1,477,853) of the 1,509,883 persons who have applied for coverage - including: 1,081,592 persons (73 percent of the total number of persons with processed eligibility determinations / assessments) have been determined eligible to enroll in a Marketplace plan, (including 326,130 persons who have been determined eligible to enroll in a Marketplace plan with financial assistance)106,185 (10 percent) of the 1,081,592 total Marketplace plan eligible persons have already selected a plan by clicking a button on the website page.
The news is embarrassing, but at the same time it is a gift for a nation that didn't want this law and reluctantly went along with hints of free medical care, doctors for babies and the promise of keeping your plan and doctor.
Show Chambers the Door
Last night Cisco (CSCO) posted a big miss and offered lowered guidance. The stock took a hit, and market bears didn't hesitate to email and tweet me this was the beginning of the end. I hope it is, as this is yet another Silicon Valley CEO that just hasn't done a good job...for more than a decade. Still, I'm not sure a company that sold $12,000,000,000 worth of stuff over a 90-day period is the right sign of the Apocalypse. There is no doubt the news hurts tech, but this is old lumbering giant tech is not the hot star rocking the cloud with fancy gadgets.
Chambers blamed a lot of things for the miss, but his comments that American spying did the company in around the world is a cop out...even if it's true. Cisco (CSCO) has been an underperformer for a long time in my mind even if Wall Street could never stop loving this old favorite darling. Maybe, Cisco could fix the Obamacare website; that might help both. Nah, there's no hope for either.
"Far short of their potential"
Those words in a prepared statement from Janet only confirm what we all knew from the very beginning...the new Fed chairman will be very accommodative, and the economy and labor markets are running far short of its potential. The problem at this point is that the Fed is realizing all its money printing isn't working, unless the goal is to enable the federal government to spend money it doesn't have and banks to clean up their nuclear waste. If the idea is to help Main Street it's not going to happen without a ceasefire from the White House.
It should also be clear to the Fed the risk-reward equation makes further money printing too dangerous.
Fed news is countering the disaster at Cisco this morning and the tug of war continues as bears continue to become more emboldened; they have to be right sooner or later, right? We'll continue to look at fundamentals but also manage the model portfolio in a way that doesn't expose huge wins to big losses but occasionally the ride gets bumpy.
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