“Cindy Vinson and Tom Waschura are big believers in the Affordable Care Act. They vote independent and are proud to say they helped elect and re-elect President Barack Obama,” the Mercury news said. “Yet, like many other Bay Area residents who pay for their own medical insurance, they were floored last week when they opened their bills: Their policies were being replaced with pricier plans that conform to all the requirements of the new health care law.”

Vinson, a 60-year old retired teacher will pay $1,800 more a year for her individual policy. Waschura, 52, self-employed engineer, will have to pay $10,000 more for insurance for his family of four.

This isn't funny, although the irony is. We at CalWatchdog, along with many in the new media, have been warning about the impending fallout of Obamacare. Our critics accused us of everything from being doom-and-bloomers, to wanting poor people to die.

CalWatchdog stories provided data, numbers, facts, studies, and quoted health care experts. But as is the case with so many, people apparently need to experience things first hand in order to learn.

Surprisingly, even with the painful reality of the significant health care cost increases, the San Jose Mercury News called media stories warning about Obamacare-induced cost increases, “political rhetoric.”

“For years, the nation has been embroiled in the political rhetoric of 'Obamacare,' but this past week the reality of the new law sank in as millions of Americans had their first good look at how the 3 1/2-year-old legislation will affect their pocketbooks,” the Mercury News said.

Obamacare facts page says, “In exchange for the new rights and protections most Americans must obtain health coverage by 2014, get an exemption, or pay a fee.”

Covered California spokesman Dana Howard defended the “winners and losers” under Obamacare. “Some people will see an increase who are already on the individual market purchasing insurance,” he said, “but most people will not,” Howard said.

Covered California, the state's health insurance exchange, claims on its website, “Your destination for affordable health care.”

I guess that depends on who you ask.

The list of who won't have to pay for health care under the Affordable Care Act is long. “The shared responsibility payment (IRS penalty) should not apply to any taxpayer for whom coverage is unaffordable, who has other good cause for going without coverage, or who goes without coverage for only a short time,” according to the U.S. Department of Health and Human Services.

The list of exemptions to the payment of Obamacare exempts just about everyone except the middle class and those who pay income tax.

“I really don't like the Republican tactics, but at least now I can understand why they are so pissed about this,” Waschura said. “When you take $10,000 out of my family's pocket each year, that's otherwise disposable income or retirement savings that will not be going into our local economy.”

“I was laughing at Boehner — until the mail came today,” Waschura said, referring to House Speaker John Boehner, and the Republicans' charge to defund Obamacare.

But it was okay that the $10,000 health care cost was going to come out of someone else's pocket.

The latest scandalous executive order from President Obama exempts one particularly powerful entity: Congress. Obama did so via  executive order because he could not let it be debated by the U.S. Senate or House of Representatives. The complaints with Obamacare are many; a public debate would have been disastrous, even if the mainstream media continued to ignore it.

Last week, I wrote about the IRS announcing it didn’t want the government health care plan. Friday, Congress announced it didn’t want it either.

Is anyone in California listening? I surmise the next exemption from the Obamacare health plan will be the California Legislature.

Avoiding what they created

The Wall Street Journal reported today that Obamcare, officially known as the Affordable Care Act, actually specifically required members of Congress and their staffs to participate in its insurance exchanges. The idea was to make sure they have first-hand experience with the government health plan they’re about to impose on their constituents.

But members of Congress and their staffs know too much. Not only do they know what’s in Obamacare, many of them helped write it. And they don’t want it. It was written for the unwashed masses, not for the elite of the government.

With his magic executive order pen, Obama suspended the requirement for Congress. Instead of paying for the substandard health care as they are imposing on the rest of the great unwashed, “Congress will receive extra payments based on the Federal Employee Health Benefits Program defined-contribution formula.” According to the WSJ, this “covers about 75 percent of the cost of the average insurance plan. For 2013, that’s about $4,900 for individuals and $10,000 for families.”

“It is important to note that the Congressional Budget Office projects only 2 percent of Americans will actually pay the ‘mandatory’ fine for non-participation,” I wrote in June.

Not only can you not keep the health plan you like, the new government plan foisted on you will cost you more — especially with all of the exemptions allowed by the White House. The base of those who should be in the plan, and paying for it, is shrinking. So the cost is already going up.

The Wall Street Journal said this is illegal. “Office of Personnel Management has no authority to pay for insurance plans that lack FEHBP contracts, nor does the Affordable Care Act permit either exchange contributions or a unilateral bump in congressional pay in return for less overall compensation,” the WSJ said. “Those things require appropriations bills passed by Congress and signed by the President.”

IRS allowable exemptions

This is from my June story about Obamacare exemptions:

The proposed regulations also catalog the statute’s nine categories of individuals who are exempt from the shared responsibility payment:

* Individuals who cannot afford coverage;

* Taxpayers with income below the federal filing threshold;

* Hardship;

* Individuals who experience short coverage gaps;

* Religious conscience;

* Members of a health-care sharing ministry;

* Incarcerated individuals; and

* Individuals who are not lawfully present.

and now…

* Native American Indians.

These exemptions leave only the working middle class and those who pay income tax to pick up the tab.

Who doesn’t pay?

The half of Americans who do not pay federal income taxes will not be required to pay the “mandatory” IRS fine if they do not buy government health insurance.

Illegal aliens will not be fined.

And just in case anyone else was missed in the exemption list, the last paragraph was added to cover any other vulnerable group:

“The HHS regulations also provide that the hardship exemption will be available on a case-by-case basis for individuals who face other unexpected personal or financial circumstances that prevent them from obtaining coverage.”

by Wayne Lusvardi

A few hundred years ago there was the famous Dutch Tulip Mania of 1637. It was followed by the South Sea Bubble of 1711 and the Mississippi Company Bubble of 1719.

In modern times, there was the California Energy Crisis of 2000-01, with its energy bubble caused by government price caps. Then there was the U.S. sub-prime Mortgage Bubble of 2003 to 2006, centered in California.

Now there is the mania of the San Bernardino County Joint Powers Authority to seize “underwater mortgages” on homes through the use of eminent domain.

The county’s proposal calls for a joint public-private partnership to be formed with a private mortgage company to reduce the amount owed on “underwater mortgages.”  Underwater mortgages are where the amount owed on a home loan is way more than the current market value of the home.

All the loan reductions would be rolled into a municipal bond to spread the cost of over-mortgaged properties to all property owners in the county on their property tax bill.  It is assumed that losses could be socialized; but gains in property value would still be allowed to private property owners.

Hope and mass delusion spring eternal when people are economically desperate. And San Bernardino homeowners with “underwater mortgages” are understandably desperate and prone to being misled by loan sharks. Only in this case the government is inviting the loan sharks into San Bernardino County, just as they did with the sub-prime Mortgage Bubble.

A Homeowner ‘Steering’ Committee

Homeowners are apparently being misled by the news that the county plans to use eminent domain to reduce the loans on their over-mortgaged properties. They have now formed the San Bernardino Homeownership Protection Program to steer San Bernardino County to rescue their over-mortgaged properties and not to have those mortgages picked by some other process.

David John of the Heritage Foundation reports that, at most, only about 20,000 to 30,000, of the 150,000 underwater mortgages would be considered for the proposed loan write down program. For the higher figure, that’s about 20 percent.  As we can already see the selection of who gets such loan reductions would be prone to being politicized.  Will loan reductions be “blue-lined,” just as mortgages were purportedly once denied to minority neighborhoods by “redlining?” 

How Homeowners Are Misled

Here is how Kathleen Pender, the personal finance and investing columnist for the San Francisco Chronicle, understands such a loan-reduction program would work:

“Suppose a homeowner owes $300,000 on a home now worth $200,000. The city seizes the loan and pays the current mortgage holders $170,000. This price assumes a large number of severely underwater homeowners will ultimately default. The city, which now owns the loan, writes down the balance to $190,000. Now instead of being underwater, the borrower has $10,000 in equity. He gets a new loan for $190,000, which pays off the $170,000, with $20,000 left over for the city to share with its investors and pay expenses.” 

Pender’s above example is mistaken, however.  Homeowners would not be allowed $20,000 in “equity” or price appreciation upon re-sale of their home. Government can socialize losses, but they cannot privatize gains.  A knowledgeable person like Pender is even misinformed as to how this program would work.  When even the experts are misled, it is no surprise that homeowners are deluded that there is some magic wand that government could wave to get rid of the excess mortgages on their properties and allow them to reap a small profit.

Profit on Loan Reductions Forbidden

I previously worked for a public housing authority and did many loan write-downs for low-income and affordable housing programs.  The standard practice was to require homeowners to agree in writing to give up any future value appreciation in their home as a condition for receiving a loan subsidy. This is also how the popular semi-private homeownership program called Habitat for Humanity works. Kurt Eggert, professor of law at Chapman University, has additionally said that homeowners would be forbidden from making a profit on any loan reductions for properties in foreclosure or with underwater mortgages.

The U.S. Subprime Home Loan Bubble of 2003 to 2007

We’re still suffering from the collapse of the mid-2000s subprime home loan bubble and resulting bank panic. The bubble was created by government to compensate for a huge loss of jobs resulting from a relative demographic decline of intact families to take out enough home and small business loans to support pensions and Medicare for the elderly.

Government policy “mandated” that renters take out sub-prime loans and become homeowners to prop up pensions and government medical care.  Obamacare is just another form of such a “mandate” to prop up pension and medical subsidies, only now it is called a “tax” because of the July 28 U.S. Supreme Court Ruling. This demographic imbalance is the same problem that has caused the economies of Greece, Spain and other European countries to collapse.

Bubbles, manias and Benito

San Bernardino has falsely promised homeowners with underwater mortgages that they can have their cake and eat it too; that they can reduce the over-mortgaged loans on their now deflated home values and can have some small amount of equity and future home price appreciation at the same time.

Even if implemented, such a loan reduction program would lead to yet another false bubble economy and crash.  Government cannot load the over-mortgaged portion of everyone’s home loan in California into a hidden premium in energy or water rates, as it has with Green Power to pay for smog reduction.

California has ended up with a man-made permanent water drought as an unintended consequence of cleaning up smog from urban air basins by loading the cost in inflated water rates.  San Bernardino County will unintentionally end up with permanent economic drought and stagnation if it should be able to figure out a way to legally justify the socializing of over-mortgaged properties by eminent domain.

Lenders would avoid making home loans in San Bernardino. And the bond market would be afraid to invest in San Bernardino for fear that bonds would be confiscated by government via eminent domain.  A system of gambling in home loan derivatives would be introduced to the San Bernardino real estate market, just as California allowed casinos on Indian Tribe lands in the Inland Empire.

California would more resemble Mussolini’s fascist Italy, in which business and government colluded, than it would a free market economy.  The home loan market in San Bernardino would be stigmatized as the first in the U.S. with socialized mortgages.