WEBVTT - E Squared's Funtleyder on Aetna Exiting Obamacare Plans (Audio)

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<v Speaker 1>Broadcasting live to New York Bloomberg eleventh to Washington, d C.

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<v Speaker 1>Bloomberg to Boston, Bloomberg well underd to San Francisco, Bloomberg

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<v Speaker 1>nine to the countries, Chaneral one nineteen and around the

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<v Speaker 1>globe the Bloomberg Radio plucks and Bloomberg got gone. This

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<v Speaker 1>is taking stock. Coming up on taking stock, will take

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<v Speaker 1>stock of Etna, the insurance giant says it's gonna stop

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<v Speaker 1>selling health insurance through most of the exchanges that were

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<v Speaker 1>created by the Affordable Care Act because they're losing money.

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<v Speaker 1>They say they lost four hundred and thirty million dollars

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<v Speaker 1>on the Obamacare plans in the first half of the year.

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<v Speaker 1>Will be speaking to less Fund letter from East Squared

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<v Speaker 1>Asset one of the best of the best on this

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<v Speaker 1>in the business. Another one one of the best invest

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<v Speaker 1>in the business as our own Charlie Palatis and Bloomberg

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<v Speaker 1>Newsroom with the Bloomberg Business Class, and I thank you

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<v Speaker 1>Kathleen Hayes, Thank you pim Fox Etner shares down now

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<v Speaker 1>by four tenths of one percent one eighteen seventy right

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<v Speaker 1>now on. As of that, the Home Depot posted second

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<v Speaker 1>quarter profit up nine point three percent. Also boosted its

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<v Speaker 1>earnings forecast for the eras Americans continue to spree of

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<v Speaker 1>spending on their houses. Michael Lasser is an analyst at

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<v Speaker 1>Home Depot. He was interviewed today on Bloomberg Radio. Characterized

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<v Speaker 1>this as an in line quarter, and yes they did

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<v Speaker 1>slow so quentially, but that was fully expected. The first

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<v Speaker 1>quarter was benefited from and some abnormally warm weather in

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<v Speaker 1>the spring, So this is more typical of what you're

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<v Speaker 1>gonna find at the state of the cycle. We do

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<v Speaker 1>think that we're still in the middle stages of the

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<v Speaker 1>home improvement cycle and this can last for a while.

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<v Speaker 1>So five point four percent growth, if they saw in

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<v Speaker 1>the US, is a good number. And Home Depot shares

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<v Speaker 1>there down now by six tenths of one percent. Rival

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<v Speaker 1>lows down three tenths of one percent. Centers Corp buying

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<v Speaker 1>gm K Services Inc. And a two point two billion

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<v Speaker 1>dollar tie up of providers of workplace uniforms and corporate apparel.

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<v Speaker 1>Shares of both companies are advancing right now. We have

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<v Speaker 1>got G and K It is surging eighteen point one percent.

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<v Speaker 1>Syntas is up five point nine percent. Hayness Celestial Group,

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<v Speaker 1>a supplier of organic and natural products, the whole foods

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<v Speaker 1>market and other grocers plunging the most in more than

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<v Speaker 1>fifteen years after delaying financial results on accounting concern and

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<v Speaker 1>about abandoning its full year targets. Hayne is down now

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<v Speaker 1>by twenty six point eight percent. Again, SMP down nine dropped.

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<v Speaker 1>There are four tenths of one percent. The down down

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<v Speaker 1>sixty eight also would dropped the four tenths of one percent.

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<v Speaker 1>Gold up five tenths of one percent to thirteen forty

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<v Speaker 1>nine neons to thirty two on Wall Street. Now we'll

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<v Speaker 1>look at the other stories making news. Thank you, Charlie

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<v Speaker 1>from the Bloomberg news room. I'm Rami Inessentio. It's day

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<v Speaker 1>two of scheduled three day trial involving Donald Trump in

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<v Speaker 1>West Palm Beach, Florida. Bloomberg spot Moon reports golfers claimed

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<v Speaker 1>the billionaire real estate tycoon shafted them on membership dues,

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<v Speaker 1>but Trump, in a video deposition, can tended his words

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<v Speaker 1>shouldn't always be taken at face value, because sometimes, as

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<v Speaker 1>he put it, it's called negotiation. He conceded he told

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<v Speaker 1>some members that despite what their contracts said, they were

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<v Speaker 1>no longer welcome to use the facilities. While they awaited

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<v Speaker 1>refunds after we took over what's now Trump National Golf

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<v Speaker 1>Club Jupiter. And while he's boasted in the past, I

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<v Speaker 1>think I've been very good for golf. I've taken places

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<v Speaker 1>that were in trouble and I've turned him around. He

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<v Speaker 1>said in his deposition his son hadle negotiations with members

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<v Speaker 1>and he didn't exactly know what the letter he sent

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<v Speaker 1>out actually meant. Bob Moon Bloomberg Radio. Louisiana Governor John

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<v Speaker 1>Bell Edwards is describing the deadly flooding in the state

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<v Speaker 1>as historic and unprecedented. He reassured residents today that emergency

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<v Speaker 1>crews are working around the clock to help anyone in trouble.

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<v Speaker 1>Nobody has been forgotten, Uh it is. This is a

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<v Speaker 1>very difficult situation to get response out as as quickly

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<v Speaker 1>as we would like to. The flooding has killed eight

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<v Speaker 1>people and affected at least forty thousand homes. Pennsylvania's Attorney General,

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<v Speaker 1>Democrat Kathleen Kane, has resigned one day after her perjury

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<v Speaker 1>conviction in a grand jury leak case. Kane was accused

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<v Speaker 1>of leaking grand jury secrets to embarrass a rival prosecutor

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<v Speaker 1>who she blamed for a critical news article and a

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<v Speaker 1>man suspected of gunning down an imam and his friend

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<v Speaker 1>as they left in New York City mosqu will be

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<v Speaker 1>in court today. Police have charged Oscar Morrell with second

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<v Speaker 1>degree murder and criminal possession of a weapon. Global News

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<v Speaker 1>twenty four hours a day, powered by more than twenty

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<v Speaker 1>journalists and analysts in more than one twenty countries. I'm

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<v Speaker 1>Rainy in Essencio. This is Bloomberg, Charlie, and we thank

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<v Speaker 1>you and again recapping the tal the SMPNAZDAC all Moving

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<v Speaker 1>Law SMP five index down nine, a drop there of

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<v Speaker 1>five tenths of one percent. I'm Charlie Palatin. That's a

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<v Speaker 1>bloom Bird business splash. During listening to taking Stock with

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<v Speaker 1>pin Box at Gatlee Hayes on Bloomberg Radio, Healthcare and

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<v Speaker 1>the Affordable Care Act at, which covers about nine hundred

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<v Speaker 1>thousand people through the Affordable Care Act exchanges, is the

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<v Speaker 1>third may you're ensure to pull back from these marketplaces.

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<v Speaker 1>United Health Groups set in April it plans to pull

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<v Speaker 1>out in most states, and just last month, Humana said

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<v Speaker 1>it's going to cut back its offerings to just a

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<v Speaker 1>handful of counties. Here to tell us more about this

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<v Speaker 1>development is Less fund Lighter. He is the health care

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<v Speaker 1>portfolio manager for E squared Asset, and he joins us

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<v Speaker 1>now less thanks very much for being with us, Thank

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<v Speaker 1>you for having me all right now. When you wrote

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<v Speaker 1>your book in two thousand nine, Healthcare Investing Profiting from

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<v Speaker 1>the New World of Pharma, biotech and healthcare services, did

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<v Speaker 1>you foresee a time when the major insurance companies would

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<v Speaker 1>pull out of these government exchanges? Well? When I wrote

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<v Speaker 1>the book, we were just entering into the Obamacare negotiations,

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<v Speaker 1>and I had I had hoped that the government wouldn't

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<v Speaker 1>have gone the exchange route because I didn't think that

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<v Speaker 1>that was a viable strategy. But when they did it,

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<v Speaker 1>then I thought maybe there was a chance, as long

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<v Speaker 1>as the intentives to keep people in the exchanges were

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<v Speaker 1>strong enough. But what's up and subsequently is the the

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<v Speaker 1>penalties aren't high enough um to push the healthy into

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<v Speaker 1>the exchanges, and we've gotten a bad case of adverse selection,

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<v Speaker 1>which has caused the major insurers to lose a lot

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<v Speaker 1>of money, and now they're all pulling out. So is

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<v Speaker 1>this mean Does this mean though, that penalties have to

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<v Speaker 1>be hired? It seems to me that another problem less

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<v Speaker 1>quite frankly, talking to people who have to find healthcare

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<v Speaker 1>and the exchanges, Uh, it isn't just the penalties must

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<v Speaker 1>them to want to pay them. If they look at

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<v Speaker 1>it and say, wow, it's gonna cost me like four

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<v Speaker 1>or five a month, maybe three, I'm going to have

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<v Speaker 1>to have like a five thousand dollars six thousand dollar

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<v Speaker 1>out of pocket, they just say this is still very expensive. Right. Well,

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<v Speaker 1>that that's the key problem, and that was that was

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<v Speaker 1>the where the penalties were designed to overcome. That is

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<v Speaker 1>that it's worth paying the penalty because it's less expensive

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<v Speaker 1>than buying health insurance if you had deductibles and insurance

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<v Speaker 1>and the premiums themselves. And so quite frankly, the insurance

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<v Speaker 1>on the exchange, even at the very lowest level, even

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<v Speaker 1>with subsidies, is out of reach for a lot of

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<v Speaker 1>people other than the people who for whom insurance is

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<v Speaker 1>completely subsidized. Well, Less, the Department of Health and Human

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<v Speaker 1>Services argues that the companies should really just blame themselves

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<v Speaker 1>because they set premiums too low. Does that make any sense? Well,

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<v Speaker 1>the the government put together what's called the three RS,

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<v Speaker 1>which are basically risk adjustments to help encourage insurance companies

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<v Speaker 1>because they didn't have experience on the exchanges before to

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<v Speaker 1>enter the markets, so they didn't have any experience. And

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<v Speaker 1>I would add also that the exchanges, and this I

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<v Speaker 1>think is the government's fault. There's based on something of

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<v Speaker 1>a faulty premise that there are a lot of healthy

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<v Speaker 1>young people that wanted to buy insurance and that turned

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<v Speaker 1>out not to be the case. So it is true

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<v Speaker 1>that they set them low, but they were encourage to

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<v Speaker 1>set them low. And now in order to make a

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<v Speaker 1>profit they have to orally break even. They have to

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<v Speaker 1>uh raise insurance to the point where premiums are unaffordable,

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<v Speaker 1>and you're seeing that with that today. But as you noted,

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<v Speaker 1>U Yamana and United have also pulled out of the exchanges,

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<v Speaker 1>and it would seem to me that there will be

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<v Speaker 1>more to come. Interesting. I know, I saw a study

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<v Speaker 1>a couple of years into um the Affordable Care Act

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<v Speaker 1>noting that actually younger people are much more likely to

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<v Speaker 1>avail themselves and mental health services, and that was actually

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<v Speaker 1>erasing any savings that might have come by enrolling more

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<v Speaker 1>more younger people. What about if the if the exchanges

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<v Speaker 1>weren't state by state. But it helps if it was

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<v Speaker 1>just one national exchange, there's an excuse, Oh well, why

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<v Speaker 1>would you pay the same for our Hart transplant in

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<v Speaker 1>Georgia as New York City? But you know you do

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<v Speaker 1>that with car insurance. Why isn't that way with healthcare? Well,

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<v Speaker 1>it's it's because there are each each state has its

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<v Speaker 1>own insurance UH commissioner, and they're in charge with making

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<v Speaker 1>sure that the plans are viable. Although I would have

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<v Speaker 1>advocated something like a federal reserve system with regional insurers

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<v Speaker 1>as opposed to a state by state, but of course

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<v Speaker 1>I'm not. It's not funt lender care at Obamacare and

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<v Speaker 1>so um, I think that what you have and you

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<v Speaker 1>certainly have it with some there are some start up

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<v Speaker 1>healthcare acts trying to make a go of it too.

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<v Speaker 1>Is that younger patients, to your point, do our utilizers

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<v Speaker 1>more than they had thought, but a lot of them,

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<v Speaker 1>A lot of the young ones are actually staying on

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<v Speaker 1>their parents insurance until the twenty six so you're sort

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<v Speaker 1>of and then hopefully they're employed in their unemployee employee insurance,

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<v Speaker 1>so they're really losing out on a lot of the

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<v Speaker 1>healthy people to offset the sick people who now that

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<v Speaker 1>insurance is available, are joining onto the plans. And I'd

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<v Speaker 1>also add that it appears that a lot of people

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<v Speaker 1>get sick, get insurance, and then once they're well, they

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<v Speaker 1>hop off the exchange. And we've seen a lot of

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<v Speaker 1>that happening, and they do and seemed to be a

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<v Speaker 1>remedy for that. Uh, let's just just a quick thought

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<v Speaker 1>from you, because remember the merger that was supposed to

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<v Speaker 1>happen with Humana, and that's been nixed by the Justice Department.

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<v Speaker 1>Massachusetts Senator Elizabeth Warren coming out, what's she say today

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<v Speaker 1>about this? Well, she said something to the effect of,

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<v Speaker 1>you know, it looked like a quid pro quel on

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<v Speaker 1>the part of it. We'll stay in the exchanges if

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<v Speaker 1>you let our deal go through. And now that the

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<v Speaker 1>FDC has said um no to the deal, or at

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<v Speaker 1>least no not at this moment, uh, that is pulling

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<v Speaker 1>out of the exchanges. And Warren essentially said, well, you know,

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<v Speaker 1>you can argue about this deal, but you should stay

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<v Speaker 1>in and not you know, put people's lives at risk.

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<v Speaker 1>But EDNA is losing a lot of money, and I'm

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<v Speaker 1>not sure that there altruistically obligated to stay on exchanges.

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<v Speaker 1>All right, we're gonna leave it there. Less Fund Ladder,

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<v Speaker 1>thank you so very much for joining us. Talking about

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<v Speaker 1>ETNA leading some leading some more of the big insurance exchanges.

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<v Speaker 1>This is Bloomberg. Bloomberg taking stock is brought to by

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