1 00:00:02,960 --> 00:00:07,520 Speaker 1: Broadcasting live to New York Bloomberg eleventh to Washington, d C. 2 00:00:07,760 --> 00:00:13,040 Speaker 1: Bloomberg to Boston, Bloomberg well underd to San Francisco, Bloomberg 3 00:00:13,119 --> 00:00:17,640 Speaker 1: nine to the countries, Chaneral one nineteen and around the 4 00:00:17,680 --> 00:00:21,239 Speaker 1: globe the Bloomberg Radio plucks and Bloomberg got gone. This 5 00:00:21,800 --> 00:00:24,840 Speaker 1: is taking stock. Coming up on taking stock, will take 6 00:00:24,920 --> 00:00:27,800 Speaker 1: stock of Etna, the insurance giant says it's gonna stop 7 00:00:27,840 --> 00:00:30,680 Speaker 1: selling health insurance through most of the exchanges that were 8 00:00:30,680 --> 00:00:34,560 Speaker 1: created by the Affordable Care Act because they're losing money. 9 00:00:34,720 --> 00:00:37,239 Speaker 1: They say they lost four hundred and thirty million dollars 10 00:00:37,240 --> 00:00:39,960 Speaker 1: on the Obamacare plans in the first half of the year. 11 00:00:40,560 --> 00:00:43,440 Speaker 1: Will be speaking to less Fund letter from East Squared 12 00:00:43,520 --> 00:00:45,479 Speaker 1: Asset one of the best of the best on this 13 00:00:45,640 --> 00:00:48,000 Speaker 1: in the business. Another one one of the best invest 14 00:00:48,040 --> 00:00:50,239 Speaker 1: in the business as our own Charlie Palatis and Bloomberg 15 00:00:50,240 --> 00:00:52,159 Speaker 1: Newsroom with the Bloomberg Business Class, and I thank you 16 00:00:52,240 --> 00:00:54,760 Speaker 1: Kathleen Hayes, Thank you pim Fox Etner shares down now 17 00:00:54,800 --> 00:00:58,560 Speaker 1: by four tenths of one percent one eighteen seventy right 18 00:00:58,560 --> 00:01:02,120 Speaker 1: now on. As of that, the Home Depot posted second 19 00:01:02,200 --> 00:01:05,840 Speaker 1: quarter profit up nine point three percent. Also boosted its 20 00:01:05,840 --> 00:01:09,280 Speaker 1: earnings forecast for the eras Americans continue to spree of 21 00:01:09,400 --> 00:01:13,160 Speaker 1: spending on their houses. Michael Lasser is an analyst at 22 00:01:13,319 --> 00:01:17,280 Speaker 1: Home Depot. He was interviewed today on Bloomberg Radio. Characterized 23 00:01:17,319 --> 00:01:20,200 Speaker 1: this as an in line quarter, and yes they did 24 00:01:20,240 --> 00:01:23,839 Speaker 1: slow so quentially, but that was fully expected. The first 25 00:01:23,920 --> 00:01:27,440 Speaker 1: quarter was benefited from and some abnormally warm weather in 26 00:01:27,480 --> 00:01:30,479 Speaker 1: the spring, So this is more typical of what you're 27 00:01:30,480 --> 00:01:32,600 Speaker 1: gonna find at the state of the cycle. We do 28 00:01:32,720 --> 00:01:34,880 Speaker 1: think that we're still in the middle stages of the 29 00:01:34,880 --> 00:01:37,039 Speaker 1: home improvement cycle and this can last for a while. 30 00:01:37,520 --> 00:01:39,959 Speaker 1: So five point four percent growth, if they saw in 31 00:01:40,000 --> 00:01:42,639 Speaker 1: the US, is a good number. And Home Depot shares 32 00:01:42,680 --> 00:01:45,240 Speaker 1: there down now by six tenths of one percent. Rival 33 00:01:45,319 --> 00:01:49,279 Speaker 1: lows down three tenths of one percent. Centers Corp buying 34 00:01:49,480 --> 00:01:53,240 Speaker 1: gm K Services Inc. And a two point two billion 35 00:01:53,280 --> 00:01:57,520 Speaker 1: dollar tie up of providers of workplace uniforms and corporate apparel. 36 00:01:57,800 --> 00:02:00,600 Speaker 1: Shares of both companies are advancing right now. We have 37 00:02:00,760 --> 00:02:04,920 Speaker 1: got G and K It is surging eighteen point one percent. 38 00:02:05,280 --> 00:02:09,640 Speaker 1: Syntas is up five point nine percent. Hayness Celestial Group, 39 00:02:09,680 --> 00:02:12,680 Speaker 1: a supplier of organic and natural products, the whole foods 40 00:02:12,720 --> 00:02:15,720 Speaker 1: market and other grocers plunging the most in more than 41 00:02:15,760 --> 00:02:20,320 Speaker 1: fifteen years after delaying financial results on accounting concern and 42 00:02:20,520 --> 00:02:25,040 Speaker 1: about abandoning its full year targets. Hayne is down now 43 00:02:25,200 --> 00:02:30,840 Speaker 1: by twenty six point eight percent. Again, SMP down nine dropped. 44 00:02:30,840 --> 00:02:32,760 Speaker 1: There are four tenths of one percent. The down down 45 00:02:32,880 --> 00:02:35,480 Speaker 1: sixty eight also would dropped the four tenths of one percent. 46 00:02:35,800 --> 00:02:38,480 Speaker 1: Gold up five tenths of one percent to thirteen forty 47 00:02:38,560 --> 00:02:41,600 Speaker 1: nine neons to thirty two on Wall Street. Now we'll 48 00:02:41,600 --> 00:02:45,640 Speaker 1: look at the other stories making news. Thank you, Charlie 49 00:02:45,639 --> 00:02:48,760 Speaker 1: from the Bloomberg news room. I'm Rami Inessentio. It's day 50 00:02:48,760 --> 00:02:51,560 Speaker 1: two of scheduled three day trial involving Donald Trump in 51 00:02:51,560 --> 00:02:55,080 Speaker 1: West Palm Beach, Florida. Bloomberg spot Moon reports golfers claimed 52 00:02:55,120 --> 00:02:58,160 Speaker 1: the billionaire real estate tycoon shafted them on membership dues, 53 00:02:58,200 --> 00:03:00,680 Speaker 1: but Trump, in a video deposition, can tended his words 54 00:03:00,720 --> 00:03:03,760 Speaker 1: shouldn't always be taken at face value, because sometimes, as 55 00:03:03,800 --> 00:03:06,680 Speaker 1: he put it, it's called negotiation. He conceded he told 56 00:03:06,720 --> 00:03:09,080 Speaker 1: some members that despite what their contracts said, they were 57 00:03:09,080 --> 00:03:11,440 Speaker 1: no longer welcome to use the facilities. While they awaited 58 00:03:11,480 --> 00:03:14,240 Speaker 1: refunds after we took over what's now Trump National Golf 59 00:03:14,240 --> 00:03:16,720 Speaker 1: Club Jupiter. And while he's boasted in the past, I 60 00:03:16,720 --> 00:03:18,840 Speaker 1: think I've been very good for golf. I've taken places 61 00:03:18,880 --> 00:03:21,120 Speaker 1: that were in trouble and I've turned him around. He 62 00:03:21,200 --> 00:03:24,320 Speaker 1: said in his deposition his son hadle negotiations with members 63 00:03:24,320 --> 00:03:26,200 Speaker 1: and he didn't exactly know what the letter he sent 64 00:03:26,240 --> 00:03:30,040 Speaker 1: out actually meant. Bob Moon Bloomberg Radio. Louisiana Governor John 65 00:03:30,080 --> 00:03:32,919 Speaker 1: Bell Edwards is describing the deadly flooding in the state 66 00:03:32,960 --> 00:03:37,320 Speaker 1: as historic and unprecedented. He reassured residents today that emergency 67 00:03:37,320 --> 00:03:40,680 Speaker 1: crews are working around the clock to help anyone in trouble. 68 00:03:40,960 --> 00:03:45,200 Speaker 1: Nobody has been forgotten, Uh it is. This is a 69 00:03:45,320 --> 00:03:49,440 Speaker 1: very difficult situation to get response out as as quickly 70 00:03:49,480 --> 00:03:51,920 Speaker 1: as we would like to. The flooding has killed eight 71 00:03:52,000 --> 00:03:56,880 Speaker 1: people and affected at least forty thousand homes. Pennsylvania's Attorney General, 72 00:03:56,920 --> 00:04:00,840 Speaker 1: Democrat Kathleen Kane, has resigned one day after her perjury 73 00:04:00,880 --> 00:04:04,320 Speaker 1: conviction in a grand jury leak case. Kane was accused 74 00:04:04,320 --> 00:04:07,520 Speaker 1: of leaking grand jury secrets to embarrass a rival prosecutor 75 00:04:07,680 --> 00:04:10,920 Speaker 1: who she blamed for a critical news article and a 76 00:04:10,920 --> 00:04:13,160 Speaker 1: man suspected of gunning down an imam and his friend 77 00:04:13,160 --> 00:04:14,760 Speaker 1: as they left in New York City mosqu will be 78 00:04:14,760 --> 00:04:17,840 Speaker 1: in court today. Police have charged Oscar Morrell with second 79 00:04:17,880 --> 00:04:21,719 Speaker 1: degree murder and criminal possession of a weapon. Global News 80 00:04:21,720 --> 00:04:23,560 Speaker 1: twenty four hours a day, powered by more than twenty 81 00:04:24,160 --> 00:04:27,200 Speaker 1: journalists and analysts in more than one twenty countries. I'm 82 00:04:27,279 --> 00:04:31,560 Speaker 1: Rainy in Essencio. This is Bloomberg, Charlie, and we thank 83 00:04:31,600 --> 00:04:35,279 Speaker 1: you and again recapping the tal the SMPNAZDAC all Moving 84 00:04:35,360 --> 00:04:39,520 Speaker 1: Law SMP five index down nine, a drop there of 85 00:04:39,640 --> 00:04:43,039 Speaker 1: five tenths of one percent. I'm Charlie Palatin. That's a 86 00:04:43,040 --> 00:04:47,320 Speaker 1: bloom Bird business splash. During listening to taking Stock with 87 00:04:47,480 --> 00:04:52,560 Speaker 1: pin Box at Gatlee Hayes on Bloomberg Radio, Healthcare and 88 00:04:52,800 --> 00:04:56,040 Speaker 1: the Affordable Care Act at, which covers about nine hundred 89 00:04:56,040 --> 00:04:59,479 Speaker 1: thousand people through the Affordable Care Act exchanges, is the 90 00:04:59,520 --> 00:05:02,840 Speaker 1: third may you're ensure to pull back from these marketplaces. 91 00:05:02,960 --> 00:05:05,280 Speaker 1: United Health Groups set in April it plans to pull 92 00:05:05,320 --> 00:05:08,320 Speaker 1: out in most states, and just last month, Humana said 93 00:05:08,360 --> 00:05:10,200 Speaker 1: it's going to cut back its offerings to just a 94 00:05:10,240 --> 00:05:12,880 Speaker 1: handful of counties. Here to tell us more about this 95 00:05:12,920 --> 00:05:15,240 Speaker 1: development is Less fund Lighter. He is the health care 96 00:05:15,279 --> 00:05:18,560 Speaker 1: portfolio manager for E squared Asset, and he joins us 97 00:05:18,600 --> 00:05:21,000 Speaker 1: now less thanks very much for being with us, Thank 98 00:05:21,000 --> 00:05:22,839 Speaker 1: you for having me all right now. When you wrote 99 00:05:22,839 --> 00:05:26,280 Speaker 1: your book in two thousand nine, Healthcare Investing Profiting from 100 00:05:26,279 --> 00:05:29,960 Speaker 1: the New World of Pharma, biotech and healthcare services, did 101 00:05:30,000 --> 00:05:33,120 Speaker 1: you foresee a time when the major insurance companies would 102 00:05:33,120 --> 00:05:37,280 Speaker 1: pull out of these government exchanges? Well? When I wrote 103 00:05:37,320 --> 00:05:41,120 Speaker 1: the book, we were just entering into the Obamacare negotiations, 104 00:05:41,360 --> 00:05:45,480 Speaker 1: and I had I had hoped that the government wouldn't 105 00:05:45,520 --> 00:05:48,240 Speaker 1: have gone the exchange route because I didn't think that 106 00:05:48,240 --> 00:05:52,400 Speaker 1: that was a viable strategy. But when they did it, 107 00:05:52,520 --> 00:05:54,719 Speaker 1: then I thought maybe there was a chance, as long 108 00:05:54,760 --> 00:05:58,040 Speaker 1: as the intentives to keep people in the exchanges were 109 00:05:58,040 --> 00:06:02,479 Speaker 1: strong enough. But what's up and subsequently is the the 110 00:06:02,640 --> 00:06:07,400 Speaker 1: penalties aren't high enough um to push the healthy into 111 00:06:07,440 --> 00:06:12,120 Speaker 1: the exchanges, and we've gotten a bad case of adverse selection, 112 00:06:12,400 --> 00:06:14,720 Speaker 1: which has caused the major insurers to lose a lot 113 00:06:14,760 --> 00:06:19,520 Speaker 1: of money, and now they're all pulling out. So is 114 00:06:19,560 --> 00:06:22,840 Speaker 1: this mean Does this mean though, that penalties have to 115 00:06:22,880 --> 00:06:25,839 Speaker 1: be hired? It seems to me that another problem less 116 00:06:25,880 --> 00:06:28,279 Speaker 1: quite frankly, talking to people who have to find healthcare 117 00:06:28,320 --> 00:06:31,000 Speaker 1: and the exchanges, Uh, it isn't just the penalties must 118 00:06:31,040 --> 00:06:32,480 Speaker 1: them to want to pay them. If they look at 119 00:06:32,480 --> 00:06:34,680 Speaker 1: it and say, wow, it's gonna cost me like four 120 00:06:34,760 --> 00:06:37,400 Speaker 1: or five a month, maybe three, I'm going to have 121 00:06:37,560 --> 00:06:40,520 Speaker 1: to have like a five thousand dollars six thousand dollar 122 00:06:40,640 --> 00:06:45,640 Speaker 1: out of pocket, they just say this is still very expensive. Right. Well, 123 00:06:45,640 --> 00:06:48,680 Speaker 1: that that's the key problem, and that was that was 124 00:06:48,760 --> 00:06:52,880 Speaker 1: the where the penalties were designed to overcome. That is 125 00:06:52,920 --> 00:06:56,480 Speaker 1: that it's worth paying the penalty because it's less expensive 126 00:06:56,520 --> 00:07:00,560 Speaker 1: than buying health insurance if you had deductibles and insurance 127 00:07:00,560 --> 00:07:04,480 Speaker 1: and the premiums themselves. And so quite frankly, the insurance 128 00:07:04,520 --> 00:07:08,040 Speaker 1: on the exchange, even at the very lowest level, even 129 00:07:08,120 --> 00:07:11,760 Speaker 1: with subsidies, is out of reach for a lot of 130 00:07:11,800 --> 00:07:14,440 Speaker 1: people other than the people who for whom insurance is 131 00:07:14,480 --> 00:07:17,880 Speaker 1: completely subsidized. Well, Less, the Department of Health and Human 132 00:07:17,960 --> 00:07:21,480 Speaker 1: Services argues that the companies should really just blame themselves 133 00:07:21,520 --> 00:07:26,920 Speaker 1: because they set premiums too low. Does that make any sense? Well, 134 00:07:26,960 --> 00:07:30,920 Speaker 1: the the government put together what's called the three RS, 135 00:07:31,040 --> 00:07:35,560 Speaker 1: which are basically risk adjustments to help encourage insurance companies 136 00:07:35,600 --> 00:07:38,560 Speaker 1: because they didn't have experience on the exchanges before to 137 00:07:38,760 --> 00:07:43,480 Speaker 1: enter the markets, so they didn't have any experience. And 138 00:07:43,600 --> 00:07:45,880 Speaker 1: I would add also that the exchanges, and this I 139 00:07:45,880 --> 00:07:48,640 Speaker 1: think is the government's fault. There's based on something of 140 00:07:48,640 --> 00:07:51,600 Speaker 1: a faulty premise that there are a lot of healthy 141 00:07:51,640 --> 00:07:55,640 Speaker 1: young people that wanted to buy insurance and that turned 142 00:07:55,640 --> 00:07:58,320 Speaker 1: out not to be the case. So it is true 143 00:07:58,360 --> 00:08:00,400 Speaker 1: that they set them low, but they were encourage to 144 00:08:00,400 --> 00:08:02,480 Speaker 1: set them low. And now in order to make a 145 00:08:02,560 --> 00:08:06,040 Speaker 1: profit they have to orally break even. They have to 146 00:08:06,440 --> 00:08:10,080 Speaker 1: uh raise insurance to the point where premiums are unaffordable, 147 00:08:10,320 --> 00:08:14,080 Speaker 1: and you're seeing that with that today. But as you noted, 148 00:08:14,600 --> 00:08:17,600 Speaker 1: U Yamana and United have also pulled out of the exchanges, 149 00:08:17,680 --> 00:08:20,800 Speaker 1: and it would seem to me that there will be 150 00:08:20,840 --> 00:08:23,840 Speaker 1: more to come. Interesting. I know, I saw a study 151 00:08:24,080 --> 00:08:26,800 Speaker 1: a couple of years into um the Affordable Care Act 152 00:08:27,080 --> 00:08:29,160 Speaker 1: noting that actually younger people are much more likely to 153 00:08:29,160 --> 00:08:31,960 Speaker 1: avail themselves and mental health services, and that was actually 154 00:08:31,960 --> 00:08:35,760 Speaker 1: erasing any savings that might have come by enrolling more 155 00:08:35,800 --> 00:08:38,720 Speaker 1: more younger people. What about if the if the exchanges 156 00:08:38,720 --> 00:08:40,600 Speaker 1: weren't state by state. But it helps if it was 157 00:08:40,640 --> 00:08:43,040 Speaker 1: just one national exchange, there's an excuse, Oh well, why 158 00:08:43,040 --> 00:08:44,800 Speaker 1: would you pay the same for our Hart transplant in 159 00:08:44,960 --> 00:08:47,400 Speaker 1: Georgia as New York City? But you know you do 160 00:08:47,480 --> 00:08:51,199 Speaker 1: that with car insurance. Why isn't that way with healthcare? Well, 161 00:08:52,320 --> 00:08:55,080 Speaker 1: it's it's because there are each each state has its 162 00:08:55,080 --> 00:08:59,199 Speaker 1: own insurance UH commissioner, and they're in charge with making 163 00:08:59,240 --> 00:09:03,000 Speaker 1: sure that the plans are viable. Although I would have 164 00:09:03,040 --> 00:09:07,640 Speaker 1: advocated something like a federal reserve system with regional insurers 165 00:09:07,679 --> 00:09:10,880 Speaker 1: as opposed to a state by state, but of course 166 00:09:11,440 --> 00:09:13,960 Speaker 1: I'm not. It's not funt lender care at Obamacare and 167 00:09:14,080 --> 00:09:18,080 Speaker 1: so um, I think that what you have and you 168 00:09:18,160 --> 00:09:20,400 Speaker 1: certainly have it with some there are some start up 169 00:09:20,640 --> 00:09:23,080 Speaker 1: healthcare acts trying to make a go of it too. 170 00:09:24,040 --> 00:09:28,239 Speaker 1: Is that younger patients, to your point, do our utilizers 171 00:09:28,480 --> 00:09:30,480 Speaker 1: more than they had thought, but a lot of them, 172 00:09:30,600 --> 00:09:32,360 Speaker 1: A lot of the young ones are actually staying on 173 00:09:32,400 --> 00:09:35,640 Speaker 1: their parents insurance until the twenty six so you're sort 174 00:09:35,679 --> 00:09:39,160 Speaker 1: of and then hopefully they're employed in their unemployee employee insurance, 175 00:09:39,240 --> 00:09:42,120 Speaker 1: so they're really losing out on a lot of the 176 00:09:42,200 --> 00:09:45,439 Speaker 1: healthy people to offset the sick people who now that 177 00:09:45,640 --> 00:09:48,600 Speaker 1: insurance is available, are joining onto the plans. And I'd 178 00:09:48,600 --> 00:09:51,319 Speaker 1: also add that it appears that a lot of people 179 00:09:51,920 --> 00:09:55,600 Speaker 1: get sick, get insurance, and then once they're well, they 180 00:09:55,720 --> 00:09:58,199 Speaker 1: hop off the exchange. And we've seen a lot of 181 00:09:58,280 --> 00:10:00,599 Speaker 1: that happening, and they do and seemed to be a 182 00:10:00,679 --> 00:10:04,440 Speaker 1: remedy for that. Uh, let's just just a quick thought 183 00:10:04,559 --> 00:10:07,040 Speaker 1: from you, because remember the merger that was supposed to 184 00:10:07,080 --> 00:10:11,200 Speaker 1: happen with Humana, and that's been nixed by the Justice Department. 185 00:10:11,559 --> 00:10:14,680 Speaker 1: Massachusetts Senator Elizabeth Warren coming out, what's she say today 186 00:10:14,720 --> 00:10:17,719 Speaker 1: about this? Well, she said something to the effect of, 187 00:10:18,480 --> 00:10:20,599 Speaker 1: you know, it looked like a quid pro quel on 188 00:10:20,679 --> 00:10:23,120 Speaker 1: the part of it. We'll stay in the exchanges if 189 00:10:23,160 --> 00:10:25,240 Speaker 1: you let our deal go through. And now that the 190 00:10:25,320 --> 00:10:28,600 Speaker 1: FDC has said um no to the deal, or at 191 00:10:28,640 --> 00:10:32,600 Speaker 1: least no not at this moment, uh, that is pulling 192 00:10:32,640 --> 00:10:36,240 Speaker 1: out of the exchanges. And Warren essentially said, well, you know, 193 00:10:36,440 --> 00:10:39,160 Speaker 1: you can argue about this deal, but you should stay 194 00:10:39,200 --> 00:10:42,280 Speaker 1: in and not you know, put people's lives at risk. 195 00:10:42,400 --> 00:10:45,320 Speaker 1: But EDNA is losing a lot of money, and I'm 196 00:10:45,360 --> 00:10:49,760 Speaker 1: not sure that there altruistically obligated to stay on exchanges. 197 00:10:49,880 --> 00:10:51,720 Speaker 1: All right, we're gonna leave it there. Less Fund Ladder, 198 00:10:51,720 --> 00:10:54,040 Speaker 1: thank you so very much for joining us. Talking about 199 00:10:54,120 --> 00:10:57,600 Speaker 1: ETNA leading some leading some more of the big insurance exchanges. 200 00:10:57,800 --> 00:11:02,480 Speaker 1: This is Bloomberg. Bloomberg taking stock is brought to by 201 00:11:02,559 --> 00:11:05,800 Speaker 1: Celebrity Motor Car Company, the luxury of BMW, the performance 202 00:11:05,840 --> 00:11:08,760 Speaker 1: of Maserati, the innovation of Lexus, walked the red carpet 203 00:11:08,800 --> 00:11:10,760 Speaker 1: and get the status you deserve at the Celebrity Motor 204 00:11:10,800 --> 00:11:13,160 Speaker 1: Car Company visits Celebrity Motorcar dot Com