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Scott CohenOur Take On The Baucus $856 Billion Health Care Package

By Scott Golden, CFO and co-founder, Golden & Cohen

It would have been tough not to see the headlines this month in the Washington Post and New York Times announcing the big news from Senator Max Baucus, the Democrat from Montana who chairs the Finance Committee.

His slimmed-down price tag of $856 billion over 10 years for health-care reform is a cut from the $1 trillion once proposed. Baucus’ plan also has middle-class American families paying 13 percent of their family income in health-insurance premiums before co-payments, deductibles and other cost sharing.

What we think and why

Like any bill, there are some good things and some not so good things. Let’s start with the cost of health care. I see two major issues: Non-negotiation with pharmaceutical companies on Medicare RX costs and tort reform remain untouched. This is a shame, as these two areas are where some costs could be controlled.

In the Baucus plan, there is no public option, just cooperatives. It is unclear how these will work, so it is hard to comment. Currently, there is a system for shopping out competitive plans through the broker system. The cost to the government is $0. If the cooperatives use private companies, why would this be different from now? I do not know the answer to this question yet, as not enough information is available.

Making everyone take insurance adds to the insurance pool, and this should spread risk. However, there is the issue of hardship in terms of forcing people to buy something.

Taxes or fees aimed at the insurance companies and other related parties will only be passed on to the end user. This is Business 101. It will cause the groups that can least afford that expense to pay more. I see this as counterproductive to the goal. Taxing the insurance companies on the Cadillac plan will also cost the end user money and as a result, make things more expensive.

The bottom line

We are obviously early in the process, but this proposal seems to be the best attempt at bipartisanship. However, it does not have any Republican support at this time. And in the end, I do not see this as containing the real costs of care. When a plan effectively addresses this issue, I may change my tune.

Stephanie CohenHealth-Care Reform For The Uninsured

By Stephanie Cohen

Recently, I was asked this very interesting question: What happens when young people with serious and chronic health problems, who for most of their lives have received coverage through their parents, lose it when they turn 21?

In fact, in my 20-year experience as an insurance broker, I have seen children who have been terminated from their parents’ policy by the insurance carrier (as per contract) because they have reached the maximum dependent age.

The good news is that there is the option of COBRA, at least in most cases. This means that the dependent remains in the group plan for 36 months. If there is no COBRA (group is under 20 employees), many times there is state law that emulates COBRA. In both instances, coverage is available.

If no state law providing for COBRA is available, there are HIPAA plans (Health Insurance Portability and Accountability Act of 1996) that guarantee coverage, or perhaps a state-subsidized program to help people who have lost their coverage with no health questions asked and no pre-existing condition limitations. Generally, the people who are uninsured after getting dropped from their parents’ plans either decide on non-coverage intentionally, or cannot afford the COBRA coverage.

What will the impact of reform be on this area? That's a question that we're eager to understand. For now, the COBRA option seems like the best one for young adults no longer covered by the family plan.

Is The Economy Finally Out Of The Woods?

Bernie BarrettBy Bernard R. Wolfe, CFP® Bernard Wolfe & Associates

Are we out of the woods? My colleagues and I are hearing this question over and over. For those of you who have known me for a long time, you probably know that I usually have a very optimistic outlook. This time, though, I still have some concerns. Before I explain my worries, I am confident that the collapse of the financial markets, which had seemed very possible through February of this year, was indeed averted.

In fact, we even see some stabilization. The Treasury recently announced that the guarantees they had provided on money market funds would end on schedule next month. The guarantees did not cost the taxpayers a penny but instead, actually earned the Treasury a billion dollars from fees paid by the participating mutual fund companies. This was a very nice return and clearly, a step in the right direction.

The stock market rally has been very impressive. The S&P has rallied 54.62 percent, the Dow is up 45.28 percent, and the NASDAQ is up 61.07 percent since March 9th, 2009.My concern is that this could be a “head fake.” We feel this rally has more to do with people feeling thankful that the financial world will survive, and not necessarily because of great corporate earnings and/or expansion of our gross national product (GNP). In fact, our team here at Bernard R. Wolfe & Associates refers to this rally as the “No Armageddon Rally.” For those of you who have not seen the movie, we are simply saying that the financial world is not coming to an end.

With that said, a positive economic outcome is anything but a sure thing. For this reason, we have made changes in the allocations of certain portfolios in the event we have a possible “W-shaped” recession.

We are concerned that this recovery may be more of a putt-putt recovery than a boom-boom recovery. We think the economy may slow further as the fiscal stimulus fades, and the tax cuts that were enacted in 2001 and 2003 are set to expire. Further, consumers have increased their savings rate from .01 percent in 2008 to nearly 7 percent so far this year.1 While this may sound like a positive, it is not good for the economy, which relies on the consumer for 70 to 75 percent of the GNP number. 2

Consumers are not spending as they were prior to the recession. In fact, many people have been de-leveraging in an effort to improve their personal balance sheet. The current pace of spending by the government cannot continue. It is inevitable that at some point, policy makers will make the painful decision to eliminate the budget imbalance, putting fiscal policy back on a more sustainable track. Our government’s spending for fiscal 2009 is projected to be 28 percent of GNP. Only 1944 and 1945 were higher in the last 150 years. 3

What happens to the growth rate of our economy when the government stops pumping in money and consumers still continue to not spend? We feel the recent changes we have made to our portfolios take these possibilities into account. While there are never any guarantees, we feel very comfortable with our current strategies regardless of what our economy has in store. Our objective is always to strive to match our clients’ goals and risk tolerance with the appropriate blended strategies.

As always, our entire team is here for you. We welcome any comments or questions:

  1. Google Finance – September 11, 2009
    S&P 500 – An unmanaged index of 500 stocks that is considered representative of the US stock market
    Dow – The Dow Jones Industrial average is an index of 30 industrial stocks which is considered representative of the US stock market
    NASDAQ – The NASDAQ is an index of all stocks traded on the NASDAQ stock exchange
  2. The Washington Post “Opening their Wallets, Emptying their Savings”, Blaine Harden, July 30, 2009
  3. Morningstar Perspectives “Now Comes the Hard Part”, Reed Conner & Birdwell, August 18, 2009

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by NFP Securities, Inc. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by NFP Securities, Inc. for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results. Asset allocation does not guarantee against loss of principal.

Securities and Investment Advisory Services offered through NFP Securities, Inc., a Registered Broker/Dealer. Member FINRA/SIPC and Federally Registered Investment Advisor.

Bernard R. Wolfe & Associates is an affiliate of NFP Securities Inc. and subsidiary of National Financial Partners Corp., the parent company of NFP Securities, Inc.

Stephanie Cohen featured in Disruptive Women in Health Care

TriathlonIn the Sept. 2 issue of the popular health care blog, Disruptive Women in Health Care, insurance broker Stephanie Cohen wrote a provocative article about the future of the brokerage business. Read the entire article here.

“As an insurance broker in the metro Washington DC area, I have been in the trenches of selling, and advocating for our customers for their small group health insurance, disability programs and life insurance plans for over 17 years,” she said. “Needless to say, it has been maddening in the last five years to watch rates rise and our customers get increasingly frustrated with the system. I spend my days arguing with insurance companies about what they will cover and what they won’t — and I’m consistently amazed that these large firms often don’t have a handle on the benefits they provide in their policies. To say the right hand doesn’t know what the left is doing is a dramatic understatement.”


Golden & Cohen Partners With Aflac


By Jack Cohen

We are pleased to announce that this month, Golden & Cohen has partnered with Aflac, the number one provider of guaranteed-renewable insurance in the United States. (

Aflac, founded 50 years ago by three brothers who started the company in six small rented rooms in Columbus, Georgia, now helps protect more than 40 million people worldwide.

We are happy to be able to now offer our clients Aflac’s VOLUNTARY benefits at no cost to the employer. For more information, contact Aflac representative Tara Pellet, who works in our Gaithersburg office and shares the same corporate culture as we do of giving customers top-notch service and care. We are confident our clients will enjoy working with her. Click here to Email Tara.

Life Lessons: Triathlon Racing As A Metaphor For Running Our Business


By Scott Golden

When Stephanie and I first thought of running a pair triathlon, it was very intimidating. The prospect of swimming a metric mile in open water (nothing like a swimming pool), then jumping on a bike for 40 kilometers, and then running 10 kilometers—well, we are the first to admit that voluntarily engaging in this activity borders on the ridiculous.

But when you break it down into manageable pieces, it’s an entirely different experience.

Just like we do in our health-care brokerage firm, Stephanie and I use a team approach to get through each piece of the triathalon. And, we rely on each other’s strengths—just like we do at work. Steph, for instance, is great at running and biking; I am not. I am a strong swimmer; Steph is not. Combined, we are very good as we use our strengths to our advantage but let the weaknesses be handled by the stronger partner.

And last but not least is this bit of insight: We train independently in order to perform better together. No company, marriage or triathlete can be effective without some alone time—time to work on yourself so that you can improve your performance. At least, it works for us.

Stephanie CohenSave the Date: October 22

Join Golden & Cohen for a provocative, intimate discussion with award-winning journalist and author Kati Marton when she is interviewed by Robin Strongin, publisher of the cutting-edge blog, Disruptive Women in Health Care on Oct. 22, from 6:30-8 p.m. A cocktail reception and networking event with some of DC's power elite will follow. Buy your tickets today, only $28.

Read more about the event here.

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