# ObamaCare: The Worst That Can Happen vs. Shutdown & Debt Ceiling **URL:** \ **Category:** Great Debates\ **Created:** [October 8, 2013, 6:09pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702 "2013-10-08T18:09:24Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [October 16, 2013, 10:06am UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/121 "2013-10-16T10:06:18Z")
Disheartening, yes. But I don’t really have a problem dismissing specimens of that sort - especially politicians. I vaguely understand that people somewhere probably voted for them and might even _gag_ support them in some sense, but it just doesn’t have the same impact that something like [this](http://www.businessinsider.com/megyn-kelly-ratings-fox-news-msnbc-investigation-nielsen-2013-10) does. Last week Fox News ran their new primetime lineup and overall > [@](#): > > the network ranked **fourth in all of cable networks** during the 8-11 p.m. ET primetime period, outpacing competitors MSNBC (20th) and CNN (32nd). emphasis added. I had to read that a few times trying to figure out what I was missing before I realized to my horror that it was very possible I wasn’t missing anything. That’s where it gets really scary as far as I’m concerned. You can write off the wackos in Congress as a perfect storm of redistricting and Ambien induced zombie voting, but then you see something like this and you just want to see NASA back in action because you need a ride off this fucking planet. ---
**Author:** ![John\_Bredin](https://avatars.discourse-cdn.com/v4/letter/j/96bed5/32.png) [@John\_Bredin](https://boards.straightdope.com/u/John_Bredin)\ **Post date:** [October 16, 2013, 7:18pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/122 "2013-10-16T19:18:15Z")
> [@elucidator](#): > > It will not be good. I’ll stand firm on that prediction, without reservation. Roughly, somewhere between not good at all and zombie _ **calypso** _ Apocalypse. Our future is in limbo, no question about it. Limbo lower, now! How low can we go?! 😛 ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 18, 2013, 3:58pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/123 "2013-10-18T15:58:01Z")
> [@deltasigma](#): > > You’re just repeating the same fallacies that I’ve already disproven. You have only managed to prove that you are ignorant and pretentious. You have linked to cites without explaining how you think those cites support your claims because you don’t even know if it actually supports your claims. Your claim is that in some cases the treasury will not be able to raise enough money to roll their maturing debt because they never know how much they’re going to get. This is false. The Treasury can ALWAYS raise enough money at auction to roll over debt regardless of the interest rate environment, without exceeding the debt limit. Let me walk you through a few offerings. Here is a treasury offering announcement: > **[A\_20130501\_3.pdf](https://www.treasurydirect.gov/instit/annceresult/press/preanre/2013/A_20130501_3.pdf)** > > 43.01 KB See where the the yield, interest rate, premium/discount are determined at auction? At auction you bid the interest rate you want to lend money to the treasury. You are NOT bidding how much you are paying for those bonds. They accept bids lowest to highest until they have covered their offering, the highest winning rate is called the stop rate and that is the rate that everyone gets on the bonds. On new issuances, if the stop rate is 10% then the bonds will have a coupon of 10% and cost face value. If the stop rate is 3% then the bonds will have a coupon of 3% and STILL cost face value. If everyone bids 3.14159265359% then the bonds will have a a coupon of 3 1/8% (3.125%) and the bonds will have enough of a discount to achieve the stop rate. There is a rounding convention that is used to round the coupon to the next lowest 1/8% because noone wants pi for a coupon rate (there is no legal prohibition as far as I can tell its just convention). Here are the results from that offering. > **[R\_20130509\_1.pdf](https://www.treasurydirect.gov/instit/annceresult/press/preanre/2013/R_20130509_1.pdf)** > > 42.96 KB You see how they rounded it down to the next lowest 1/8th of a percent? There isn’t even a law saying they HAVE to round down, but you want to keep the price of the at or below pat so that people can predict how much (at most) they will have to lend if they have a winning bid. Treasuries ALWAYS mature on the same day as a new offering so this is the mechanism used to determining the terms (and price) of the debt that will be repaying the maturing debt. On off months Treasury will sell what are called re-openings. These are further issuances of an already issued series (usually the most recently issued series). This money is generally not used to repay maturing debt of the same type. Perhaps THIS is what has been confusing you. Here is an announcement for a reopening: > **[A\_20130606\_2.pdf](https://www.treasurydirect.gov/instit/annceresult/press/preanre/2013/A_20130606_2.pdf)** > > 43.07 KB This announcement differs from the previous announcement in several respects. One of the difference is that these bonds have a coupon rate that was determined when the series was first issued. So the yield and the premium/discount are determined at auction. In new issuances, the discount is usually a rounding mechanism. This is not the case in re-openings, in this case, interest rates had shot up almost 3/8ths of a point in the previous month so there is a significant discount because the coupon rate had already been set. This does not happen when the coupon rate is determined after the auction as is the case with all new issuances. > [@](#): > > First, you can’t have a redemption and auction the same day. I’m pretty sure the logistics of that would be not be doable, but who knows. You’re sitting in front of a computer so you MUST know they exist. Look at the previous announcements. You see the issue date is May 15th 2013 and the maturity date is May 15th 2043? So yes, bonds come due on the same day that bonds are issued. > [@](#): > > Second, even if that were possible, I’ve already shown that the amount of the auction is not and CANNOT be determined in advance - to which your witty retort is simply, ‘Oh yes it can.’ What seems to be a logical argument, to wit, the last sentence above is, as I’ve already stated, nothing more than your regurgitating your previously deprecated argument. You are wrong and you haven’t shown anything, I hope the above explanation finally clears things up for you. The face amount can always be raised at auction (subject to rounding) because you are not bidding on the price you pay, you are bidding on the rate you will receive. Somebody once said “a little bit of knowledge can be a dangerous thing” I think they had you in mind when they said it. At this point I don’t know if you really don’t understand what I’m saying or just pretending not to so that you can avoid admitting you are full of shit. > [@John\_Stamos\_Left\_Ear](#): > > It was nice of a sitting Congressman to [weigh in on this thread](http://talkingpointsmemo.com/livewire/wolf-blitzer-presses-goper-to-explain-why-obamacare-will-destroy-america-video): > Of course, not much evidence to back up those claims (despite Wolf Blitzer giving him time to provide some.) And I’m pretty sure that he would just write off any evidence which shows that not coming up with a debt ceiling deal would be a ton worse than ObamaCare could ever be as “[lies from the pit of hell](http://www.huffingtonpost.com/2012/10/06/paul-broun-evolution-big-bang_n_1944808.html),” which is what he said about evolution, the Big Bang and other things he doesn’t like or understand. > > This is what Team Republican looks like. This isn’t some fringe guy, he’s a sitting Congressman. And this is what he believes and will influence his vote. It is clear that the conservative concern over Obamacare is largely driven by the fear that it will be popular not that it will be a disaster. It is likely to become permanent unless and until we get true comprehensive health care reform. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [October 18, 2013, 5:04pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/124 "2013-10-18T17:04:58Z")
It’s one thing to simply not understand something and just not want to admit it for whatever reason, but I’m gettin the sense that you know perfectly well that you’re wrong and even if maybe you don’t grasp all of the nuances of why that is, I think by now you probably have the gist of it. So at this point what you’re doing seems to be an attempt at misdirection. I say that because the links to the treasury documents you provide are to announcements, both of which say things like > [@](#): > > Yield-----------------------------------Determined at Auction > Interest Rate--------------------------Determined at Auction > [FONT=serif] **Premium or Discount** ----------------Determined at Auction[/FONT] [FONT=serif]Or IOW, what I’ve said all along. If you had wanted to show what had actually HAPPENED at those auctions, that would have been a simple enough thing to do as the information was at the [link](http://www.treasurydirect.gov/RI/OFNtebnd)I’ve given you twice before in the S&P thread I keep referring to here. In fact, it nicely summarizes each of them in a single line so gather round boys and girls and let me tell you the story of Joe US Bond and how he felt so great going into the auction - 100% in fact, but so sub par walking out. It’s a tragedy for the ages I tellz ya. > [@](#): > > Security\_\_Term\_\_\_Type\_Issue\_Date\_\_Maturity\_Date\_\_\_Rate%\_ **Yield%Price\_\_\_\_\_\_\_CUSIP** > > * * * > > 30-YEAR\_\_\_\_\_\_\_\_\_\_BOND\_05-15-2013\_\_\_05-15-2043\_\_\_\_2.875\_\_\_\_2.980\_\_\_97.927211\_\_\_912810RB6 > 29-YEAR\_\_8-MONTH\_TIPS\_06-28-2013\_\_\_02-15-2043\_\_\_\_0.625\_\_\_\_1.420\_\_\_81.754227\_\_\_912810RA8 [/FONT] ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 18, 2013, 9:08pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/125 "2013-10-18T21:08:28Z")
> [@deltasigma](#): > > It’s one thing to simply not understand something and just not want to admit it for whatever reason, but I’m gettin the sense that you know perfectly well that you’re wrong and even if maybe you don’t grasp all of the nuances of why that is, I think by now you probably have the gist of it. So at this point what you’re doing seems to be an attempt at misdirection. OMFG, my head’s about to explode. Are you fucking kidding me?:smack: You must have this site confused with some other site where you can pull a stunt like this. Are you used to hanging out with really stupid people that let you get away with shit like this? > [@](#): > > I say that because the links to the treasury documents you provide are to announcements, both of which say things like [FONT=serif]Or IOW, what I’ve said all along. > > If you had wanted to show what had actually HAPPENED at those auctions, that would have been a simple enough thing to do as the information was at the [link](http://www.treasurydirect.gov/RI/OFNtebnd)I’ve given you twice before in the S&P thread I keep referring to here. > > In fact, it nicely summarizes each of them in a single line so gather round boys and girls and let me tell you the story of Joe US Bond and how he felt so great going into the auction - 100% in fact, but so sub par walking out. It’s a tragedy for the ages I tellz ya. > [/FONT] And what do you think those things tell you? Do you have ANY clue? The discount on new issues is PURELY to adjust for rounding it is not a result of the inverse relationship between yield and price. It is a rounding mechanism, I explained this above. There is no relationship inverse or otherwise between the winning yield and the bond price. Let me do it again here: > [@](#): > > If everyone bids 3.14159265359% then the bonds will have a a coupon of 3 1/8% (3.125%) and the bonds will have enough of a discount to achieve the stop rate. There is a rounding convention that is used to round the coupon to the next lowest 1/8% because noone wants pi for a coupon rate (there is no legal prohibition as far as I can tell its just convention). Things work a bit differently for re-openings but re-openings have nothing to do with rolling the debt. You see the first quote you linked maturing 5-15-2043? Thats a new issue, it comes with a brand spanking new CUSIP number and everything. You see the second one for a TIPS that has a 29 year 8 month maturity maturing on 2-15-2043? Thats a reopening, it is a further issue of a bond that is already outstanding. That is why the announcements for those will have a line for how much of that particular bond is already outstanding and they will have a coupon rate that is already set so when you bid on THOSE you get an inverse relationship between yield and price. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [October 18, 2013, 11:20pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/126 "2013-10-18T23:20:41Z")
Let me ask you a very simple question. Something you should be able to punch into your HP12C in 10 seconds flat (only an amateur would do this on spreadsheet). For the May [15th 30yr bond auction](http://www.treasurydirect.gov/instit/annceresult/press/preanre/2013/R_20130509_1.pdf), tell me what the total proceeds of the auction were and if you’re not going to say something virtually equivalent to $16B, explain in detail how you got your number. So I’m very clear here - I don’t care how much was bid on, accepted, etc. I want to know how much actual cash the Treasury received. And if it’s not virtually equal to $16B, explain why that’s not a problem if the actual amount that the auction will take in can’t be known in advance when you have the limitation of a debt ceiling and redemptions. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 20, 2013, 1:37am UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/127 "2013-10-20T01:37:11Z")
> [@deltasigma](#): > > Let me ask you a very simple question. Something you should be able to punch into your HP12C in 10 seconds flat (only an amateur would do this on spreadsheet). > > For the May [15th 30yr bond auction](http://www.treasurydirect.gov/instit/annceresult/press/preanre/2013/R_20130509_1.pdf), tell me what the total proceeds of the auction were and if you’re not going to say something virtually equivalent to $16B, explain in detail how you got your number. > > So I’m very clear here - I don’t care how much was bid on, accepted, etc. I want to know how much actual cash the Treasury received. > > And if it’s not virtually equal to $16B, explain why that’s not a problem if the actual amount that the auction will take in can’t be known in advance when you have the limitation of a debt ceiling and redemptions. Why would I need an HP12C for this kind of math? Or did you just want to let everyone know you knew reverse polish notation? The price is 97.927211 so they got 97.927211% of face value (the amount due at maturity). But they don’t HAVE to sell at a discount. They could have issued treasuries with a 2.98% (the stop rate) coupon and received par. They rounded to 2.875% because they like to issue treasuries with coupons in 1/8% increments. They didn’t set the coupon at 3% because that would have led to a premium and they don’t issue bonds at a premium. When you bid, you obligate yourself to pay up to the face amount at the interest rate you bid (or better). This is why they don’t generally issue these things at a premium because it would complicate the bidding process. Cocky and arrogant just doesn’t work very well on this board unless you are a fucking expert in your field and my experience has been that the real experts aren’t cocky about their superior knowledge. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [October 20, 2013, 1:45am UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/128 "2013-10-20T01:45:12Z")
So let me be clear then. You’re refusing to answer the question I asked you. Personally I’d call THAT arrogant. edit: a[s to mentioning the HP12C](http://en.wikipedia.org/wiki/HP-12C): > [@](#): > > The HP-12C is HP’s longest and best-selling product, in continual production since its introduction in 1981. Due to its simple operation for key financial calculations, the calculator long ago became the _[de facto](http://en.wikipedia.org/wiki/De_facto_standard)_ standard among financial professionals.[[1]](http://en.wikipedia.org/wiki/HP-12C#cite_note-1) ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 20, 2013, 2:03am UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/129 "2013-10-20T02:03:41Z")
> [@deltasigma](#): > > So let me be clear then. You’re refusing to answer the question I asked you. Personally I’d call THAT arrogant. > > edit: a[s to mentioning the HP12C](http://en.wikipedia.org/wiki/HP-12C): Read the post, I answered your question. They got ~97% of the face value. Do you need me to multiply 97% by 16 billion? Are you freaking serious? And yes its still pretentious to refer to an HP12C when you are asking someone to multiply 16 billion by 97% even if its the most popular calculator among financial professionals. Unless you are trying to calculate IRR (internal rate of return), NPV (net present value) or something like that, you don’t need to use an HP12C and referring to the HP12C like you did seems like an attempt at trying to make yourself seem more legitimate. And frankly, the financial calculators in the APP store are every bit as good as the HP12C (which has remained virtually unchanged since I was studying finance in college). ---
**Author:** ![cornopean](https://avatars.discourse-cdn.com/v4/letter/c/8c91f0/32.png) [@cornopean](https://boards.straightdope.com/u/cornopean)\ **Post date:** [October 20, 2013, 2:06am UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/130 "2013-10-20T02:06:29Z")
> [@elucidator](#): > > It would be the first addiction in human history that actually made the people healthier. Perhaps a nationwide mania for brushing and flossing will follow, God forbid! > > (I assume you considered the word “dependency”, but chose the weightier “addiction” because it spatters better when flung.) I think that what will happen is people will care even less about how expensive their healthcare is b/c they don’t have to pay for it using their own money. Second, since doctors are no longer paid well for their services, they will care less about customer service. Along the same lines, gone is the incentive to develop new procedures and new drugs. ---
**Author:** ![cornopean](https://avatars.discourse-cdn.com/v4/letter/c/8c91f0/32.png) [@cornopean](https://boards.straightdope.com/u/cornopean)\ **Post date:** [October 20, 2013, 2:08am UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/131 "2013-10-20T02:08:52Z")
> [@John\_Stamos\_Left\_Ear](#): > > It was nice of a sitting Congressman to [weigh in on this thread](http://talkingpointsmemo.com/livewire/wolf-blitzer-presses-goper-to-explain-why-obamacare-will-destroy-america-video): > Of course, not much evidence to back up those claims (despite Wolf Blitzer giving him time to provide some.) And I’m pretty sure that he would just write off any evidence which shows that not coming up with a debt ceiling deal would be a ton worse than ObamaCare could ever be as “[lies from the pit of hell](http://www.huffingtonpost.com/2012/10/06/paul-broun-evolution-big-bang_n_1944808.html),” which is what he said about evolution, the Big Bang and other things he doesn’t like or understand. > > This is what Team Republican looks like. This isn’t some fringe guy, he’s a sitting Congressman. And this is what he believes and will influence his vote. does the chart on this page concern you at all? [http://www.qando.net/?p=15798](http://www.qando.net/?p=15798) ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [October 20, 2013, 2:09am UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/132 "2013-10-20T02:09:10Z")
> [@Damuri\_Ajashi](#): > > Read the post, I answered your question. They got ~97% of the face value. Do you need me to multiply 97% by 16 billion? Are you freaking serious? I’m quite serious, in contrast to what appears to be your demeanor. So let’s summarize shall we? You claimed that the auction would get the full face amount of the offering. Now you admit they would only get 97% of the offering. Care to pick one? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 21, 2013, 2:59pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/133 "2013-10-21T14:59:53Z")
> [@deltasigma](#): > > I’m quite serious, in contrast to what appears to be your demeanor. > > So let’s summarize shall we? You claimed that the auction would get the full face amount of the offering. Now you admit they would only get 97% of the offering. Care to pick one? /boggle. You’re simply wrong, have bad reading comprehension and don’t seem to understand finance anywhere near as well as you think you do. Is my explanation this opaque to everyone else or is deltasigma a special case? Do you understand the concept of rounding? I said that they could get full face value but unless the stop rate is an increment of 1/8% they round down the coupon (which means they discount to achieve the stop rate). In the example you are referring to, the stop rate (winning bid) was 2.98%. The Treasury didn’t want to issue a 30 year bond with a 2.98% coupon so they rounded down to 2.875% (2 7/8% because they like to do things in 1/8 increments for historical reasons). This means they have to discount the purchase price to achieve a yield equal to the stop rate of 2.98%. At this point, I don’t know how many different ways I can explain rounding. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [October 21, 2013, 4:03pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/134 "2013-10-21T16:03:43Z")
And I guess you’re unable to comprehend the notion of a dilemma since you are on the horns of one and after repeated attempts to apprise you of this fact you seem to be oblivious. Either that or you think we’re stupid enough to be distracted from the original point. You objected to the idea that a rollover couldn’t take place by saying that all the Treasury had to do was have an auction on the same day as old debt was redeemed and make the amount of the auction for the same amount. Actually, it was my argument that this would not be possible and you said that was bullshit. My reasoning was that the amount raised by an auction cannot be determined in advance and is always less than the nominal amount of the bonds being issued - which I have shown to be true - regardless of why it happens to be true. You seem to have no response of any kind to that except to continue to ignore the original issue of the rollover not working the way you said it would work but in fact it would inevitably raise less cash than what was redeemed and what the Treasury was seeking to replace. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [October 21, 2013, 5:33pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/135 "2013-10-21T17:33:04Z")
How about this scenario for “The worst that can happen”: Hundreds of thousands or millions of people get cancellation notices for their current insurance policies, because they do not meet the regulations required by Obamacare. For example, Blue Cross/Blue Shield California just sent out 115,000 cancellation notices. Then, because of the massive snafu with the federal exchanges and web sites, people are unable to sign up for new health care plans by the Dec 15 deadline. Now what? What happens to the hundreds of thousands of people who lost their insurance and can’t buy a new policy by the deadline? What happens to the people who get sick or injured during the period between losing their old insurance and being able to purchase new insurance? I’m not saying that this is definitely going to happen, but it looks like a real possibility to me. The problems with the online enrollment system are not trivial, and I wouldn’t make any bets as to how long it will be before the masses can successfully use it. Another possible problem: Young people don’t enroll in nearly enough numbers, either because the administration misjudged their willingness to buy insurance or underestimated the costs, or because they tried to sign up, got very frustrated by the screwed up process, and quit. Obamacare absolutely depends on millions of young people signing up for insurance. If they don’t, the costs are going to skyrocket. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 21, 2013, 6:04pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/136 "2013-10-21T18:04:41Z")
> [@Sam\_Stone](#): > > How about this scenario for “The worst that can happen”: > > Hundreds of thousands or millions of people get cancellation notices for their current insurance policies, because they do not meet the regulations required by Obamacare. For example, Blue Cross/Blue Shield California just sent out 115,000 cancellation notices. Could you send a link to this story? It was not in the Murky News this morning, and I searched for California Blue Cross cancellations, and got just a bunch of requests for help in cancelling policies, all from years ago. > [@](#): > > Then, because of the massive snafu with the federal exchanges and web sites, people are unable to sign up for new health care plans by the Dec 15 deadline. > > Now what? What happens to the hundreds of thousands of people who lost their insurance and can’t buy a new policy by the deadline? What happens to the people who get sick or injured during the period between losing their old insurance and being able to purchase new insurance? > > I’m not saying that this is definitely going to happen, but it looks like a real possibility to me. The problems with the online enrollment system are not trivial, and I wouldn’t make any bets as to how long it will be before the masses can successfully use it. > > Another possible problem: Young people don’t enroll in nearly enough numbers, either because the administration misjudged their willingness to buy insurance or underestimated the costs, or because they tried to sign up, got very frustrated by the screwed up process, and quit. > > Obamacare absolutely depends on millions of young people signing up for insurance. If they don’t, the costs are going to skyrocket. Well, the California exchange seems to be working fine based on the fact that the callers to the radio show about it seemed to have no problem getting to it. The New York exchange is okay also. If by some chance the system still doesn’t work under conditions of reduced volume (unlikely) the deadline date can be extended. Not like this is the first overloaded website in history. It is true that the penalty for next year isn’t very high - but it is increasing. Given the screams if they started with a very high penalty, it is arguably a good strategy. It is an interesting experiment which should tell us the perceived value of insurance for the young. Certainly above zero, and certainly below that for someone my age. If the penalty plus the value is \> the cost, they will sign up. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [October 21, 2013, 6:46pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/137 "2013-10-21T18:46:23Z")
Here’s a link: [NBC News - Thousands Get Health Insurance Cancellation Notices](http://www.nbcnews.com/health/thousands-get-health-insurance-cancellation-notices-8C11417913) > [@](#): > > Health plans are sending hundreds of thousands of cancellation letters to people who buy their own coverage, frustrating some consumers who want to keep what they have and forcing others to buy more costly policies. > > The main reason insurers offer is that the policies fall short of what the Affordable Care Act requires starting Jan. 1. Most are ending policies sold after the law passed in March 2010. At least a few are canceling plans sold to people with pre-existing medical conditions. What happened to, “If you like your current insurance, you can keep it”? > [@](#): > > But the cancellation notices, which began arriving in August, have shocked many consumers in light of President Barack Obama’s promise that people could keep their plans if they liked them. > > “I don’t feel like I need to change, but I have to,” said Jeff Learned, a television editor in Los Angeles, who must find a new plan for his teenage daughter, who has a health condition that has required multiple surgeries. > > An estimated 14 million people purchase their own coverage because they don’t get it through their jobs. Calls to insurers in several states showed that many have sent notices. > > Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual policies in the state. Kaiser Permanente in California has sent notices to 160,000 people – about half of its individual business in the state. Insurer Highmark in Pittsburgh is dropping about 20 percent of its individual market customers, while Independence Blue Cross, the major insurer in Philadelphia, is dropping about 45 percent. So, people with pre-existing conditions have been dropped by their insurance carriers. This will force them onto the exchanges since they won’t be able to get private insurance. And the exchanges aren’t ready in many states. The Obamacare web site is a mess, and I’d be willing to wager that it will not be operating 100% reliably before the new year. Maybe they’ll get all this sorted out, but when you’re talking about possible worst-case scenarios, this seems to be one. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [October 21, 2013, 6:51pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/138 "2013-10-21T18:51:45Z")
> [@Sam\_Stone](#): > > The Obamacare web site is a mess, and I’d be willing to wager that it will not be operating 100% reliably before the new year. I’d take that bet if I didn’t suspect you would insist on being the authority on what constitutes 100% reliability. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 21, 2013, 8:37pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/139 "2013-10-21T20:37:31Z")
> [@deltasigma](#): > > And I guess you’re unable to comprehend the notion of a dilemma since you are on the horns of one and after repeated attempts to apprise you of this fact you seem to be oblivious. Either that or you think we’re stupid enough to be distracted from the original point. I don’t think you understand what you are talking about. I tried to be nice and assume we were misunderstanding each other but its clear that you’re incredibly cocky, arrogant and wrong about things. The original point was that you were acting pretty cocky and arrogant about your financial acumen and calling out all of SDMB as financially illiterate and then you proceed to display a stunning amount of ignorance on one of the most fundamantal financial transaction in our financial system, treasury auctions. > [@](#): > > You objected to the idea that a rollover couldn’t take place by saying that all the Treasury had to do was have an auction on the same day as old debt was redeemed and make the amount of the auction for the same amount. Actually, it was my argument that this would not be possible and you said that was bullshit. The Treasury issues new debt on the same day that outstanding debt matures all the time (they hold the auction a few days before the old debt matures and issues them on the date the old debt matures). So yeah, your arguments that you can’t roll debt because you couldn’t time it correctly are bullshit. > [@](#): > > My reasoning was that the amount raised by an auction cannot be determined in advance and is always less than the nominal amount of the bonds being issued - which I have shown to be true - regardless of why it happens to be true. You have never shown what you said to be true, you couldn’t have, because you are wrong. And it DOES matter why there are discounts because you had no fucking clue about rounding (the only reason we have discounts) before I explained it to you, in fact you had very little idea about anything. You thought that auction bidding was on the price of the bonds, then I showed you that the bidding was on the yield. Then you said that bidding on the yield was how they determined price, then I showed you that the coupon was not set before the auction so bidding on the yield would not determine the price (you do understand why bidding on the yield would not detemine price when the coupon is not set, right?). Now you claim that because the treasury uses a rounding convention, they can’t raise par value at auction!!! Its a convention, not a law or mathematical rule its a self imposed convention that they use for the convenience of the marketplace. Hell they could change the convention and auction rules to allow for rounding premiums at auction if they wanted to, then they would always get more at auction than the corresponding maturing debt. They could require all bids to be in 1/8% increments if they wanted to. They could issue debt with coupons that are not in 1/8% incrementys. These sort of changes would be cumbersome but they can do it if the alternative is default or breaking the debt ceiling. > [@](#): > > You seem to have no response of any kind to that except to continue to ignore the original issue of the rollover not working the way you said it would work but in fact it would inevitably raise less cash than what was redeemed and what the Treasury was seeking to replace. First of all even in your distorted version of reality, if the stop rate was a round number like 2.875% the bonds would be sold at par with a coupon or 2.875% so nothing is inevitable even in your world. The rounding conventions are self imposed rules that are in place for the convenience of the marketplace. Seeing as how the [Treasury.gov](http://Treasury.gov) site is too confusing for you, perhaps this site will make things clearer. [http://www.riskglossary.com/link/treasury\_securities.htm](http://www.riskglossary.com/link/treasury_securities.htm) At this point you are embarrassing yourself in an attempt not to admit your ignorance. You no longer have any credibility in a broad cross section of subjects on this board but, hopefully, you will at least realize that you are wrong about this and not make stupid statements about treasury auctions IRL. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [October 21, 2013, 10:35pm UTC](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702/140 "2013-10-21T22:35:01Z")
> [@Damuri\_Ajashi](#): > > The auction process doesn’t involve bidding on the principal amount, it involves bidding on the interest rate. > > **So you ALWAYS know how much the auction will bring** , you just don’t know the interest rate it will bring. That’s what you said in post 81. You were wrong. Backpedal and make all the excuses you want. edit: I’m sure you’ll need to get in the last word, so be my guest. [Previous page](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702.md?page=6) [Next page](https://boards.straightdope.com/t/obamacare-the-worst-that-can-happen-vs-shutdown-debt-ceiling/670702.md?page=8)