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Made Some Money on Intrade

March 22, 2010, 9:17 am

A while back, Megan McArdle had what I thought was good advice - using betting as a way to hedge emotional risks.  For example, I was going to be really disappointed if the health care bill passed, so I bet that its passage would occur.  I am still unhappy, but I have some extra cash.

I have been buying on the dips for a while now.  I predicted way back last July that it was going to pass no matter what

It is totally clear to me that Obama and Pelosi will spend any amount of money to pass their key legislative initiatives.  In the case of Waxman-Markey, the marginal price per vote turned out to be about $3.5 billion.  But they didn't even blink at paying this.  That is why I fear that some horrible form of health care "reform" may actually pass.  If it does, the marginal cost per vote may be higher, but I don't think our leaders care.

Tags: , ,
Category: Health Care
  • http://southbend7.blogspot.com/ SB7

    I was planning on doing the same thing, but I got spooked off because I wasn't confident I understood the fees InTrade charges for withdrawing money from your account. I don't have a lot of money to put on the line with something like this, so I was worried a $10 fee would eat up a significant chunk of my winnings.

    Have you been satisfied with the fees they charge you to withdraw? Do you mind if I ask what you got charged?

  • Flatland

    What are the odds of a successful court challenge as being pursued by Virginia, Florida, et al.

  • Allen

    I was at my grandma's in North Dakota this weekend. I was amazed by the number of commercials being ran there. One of the unions was running one that claimed a vote for this bill was a vote against the big insurance companies.

    So it goes...

  • http://www.thorobase.com Robin Howlett

    Is it legal for US citizens to bet this way? How do you withdraw the winnings? Do you have to declare it?

  • morganovich

    i find it difficult to even imagine a system more prone to abuse than our current lobbying and political donation system.

    i pay my congressman X for his campaign. he then champions legislation requiring a bunch of other people to pay me 100X though some kind of mandate. repeat as needed.

    we will only be able to take the former kind of influence out of politics once we take the latter away from politicians.

  • http://www.devilish-details.blogspot.com Methinks

    We considered buying the contract, but realized that winning on it would have increased rather than decreased our emotional pain. I hope it actually minimized your emotional pain, Coyote.

    Great point, Morganovich.

  • Sean Wise

    If this bill was a big vote against the big insurance companies, why did their stock, big Pharma, medical device makers and hospitals all rise on passage of this bill?

    Any one taking bets on how soon the percentage of GDP devoted to health care will reach 20%? I believe we are currently between 17.5 and 18%. I'm betting between 2015 and 2016.

  • sch

    Stock rise is reflection of expected increased profits by
    pharma and medical suppliers and insurers over the next 8-10
    years. For them the fit won't hit the shan til after 2020
    or so when the unsustainability of Obamacare becomes apparent even to the dense. Pharma got an extension of patent length so new drugs will stay expensive longer, at
    least those that make it past the new CMS innovations and
    practices board. Getting the % GDP to 20% is a piece of
    cake by 2016-18, with the boomers loading up on medicare
    and adding in illegals and 20-30yr olds.

  • tomw

    Ha-Ha [cue Simpsons voice..]

    The insurance companies are toast. Short their stock or sell if you own any.

    The legislation as passed mandates that 85% of all premiums paid be paid out in claims.

    Do a little math, and you will quickly see that there isn't much room, if any, for profit when you are capped at a fixed expense ratio, and have no incentive to reduce it, and, are not allowed to reduce it. What's left after expenses is profit, the ever elusive carrot that energizes this economy.
    There ain't none, or room for almost none.
    IMO.
    tom

  • Sean Wise

    To TomW,
    Don't be too sure about the demise of the insurance industry. As its structured they will become a regulated utility. High regulated industries are usually guarenteed a profit by their regulator and that profit is based on the costs they have to pay out. That means they benefit if costs go up as they get to keep a fixed percentage of the volume. The real tragedy of this bill is you have another player that benefits from higher costs. The only way I see this falling apart is if the mandated enrollment is declared unconstitutional and then the dems will default to a single payer system. (I kink of think they hope their bill will be declared unconstitutional for this reason.)

  • DKH

    tomw,

    Note that insurance companies have revenue sources other than premiums, namely, investments. They make money on the time spread between collecting premiums and paying them out. Necessarily, these should be low-risk investments, but the new law (if it is summarized correctly above) doesn't quite cap their profits. I might be concerned about the drive to increase profits through more aggressive investing, as that may be a new motivation, but I don't know the law on the subject.