Buysexyhalloweencostumes: Making Money With Options

The big news out of a majority of state capitols is that Obamacare’s Medicaid mandates will exacerbate state budget problems and drive many states to the brink of insolvency.

Thirty-three Republican governors and governors-elect have signed a letter to the White House and Congress making an emphatic appeal that Obamacare’s Medicaid provisions be repealed.

Medicaid pays health care and long-term care expenses for certain categories of individuals. Medicaid has many problems, but the central one is that it costs taxpayers nearly $400 billion annually without providing recipients a high quality of care.

National spending on Medicaid has more than quintupled over the past two decades, and about 16 percent of the population is currently enrolled. A recent study from the University of Virginia found that Medicaid patients have worse surgical outcomes than individuals without insurance. Despite these problems, Obamacare relies heavily on the Medicaid program to reduce the number of individuals without health insurance.

Obamacare’s Medicaid mandates include a requirement that states maintain current program eligibility along with a required Medicaid expansion that is expected to increase national enrollment by around 20 million. If a state reduces eligibility for Medicaid, it will lose all its federal support for the program, which is at least half of every state’s Medicaid spending. This means a state would lose the federal tax contributions its taxpayers send to Washington that eventually return to the state in the form of Medicaid reimbursement.

“States are unable to afford the current Medicaid program, yet our hands are tied by the maintenance of effort (MOE) requirements,” the governors wrote. “The effect of the federal requirements is unconscionable; the federal requirements force governors to cut other critical state programs, such as education, in order to fund a ‘one-size-fits-all’ approach to Medicaid. Again, we ask you to lift the MOE requirements so that states may make difficult budget decisions in ways that reflect the needs of their residents.”

Although the letter was signed by only Republicans, Medicaid is at least as much of a concern in blue states. For example, the new governor of New York, Andrew Cuomo, has proposed cutting $4 billion of projected spending on Medicaid (this savings will be split between the state and the federal government) to help close a $10 billion budget gap.

How will states reduce Medicaid spending, given that they are prevented from reducing program eligibility? There are two primary options: (1) reduce provider payment rates, and (2) cut program benefits. Almost all states have undertaken these actions over the past several years. Reducing payment rates decreases the number of providers who accept Medicaid recipients. Cuts to Medicaid benefits, which are often more generous than those offered by private insurance, have also occurred. The combination of these cuts will likely reduce quality of care and increase the number of recipients who head to emergency rooms for basic care.

Of course, states could keep their Medicaid programs in tact and take the scalpel to other budget items, such as education, transportation, or law enforcement, which are also being cut in many states. Or they could dramatically increase state taxes. How do these options sound?

The one option that should be off the table is a continuance of the federal Medicaid bailout, which was enacted as part of the February 2009 stimulus bill. This provision greatly increased the federal contribution toward state Medicaid spending and disproportionately benefited states with the most bloated programs. The country cannot afford to further increase the national deficit to fund the broken Medicaid entitlement. Instead of throwing more money at Medicaid, policymakers at the federal and state level should grapple with its structural problems.

Medicaid is desperately in need of reform at the federal and state levels, not expansion. States have different characteristics and priorities and need greater flexibility to tailor the Medicaid program to their own specifications. This is true of states with Republican and Democratic governors. This Congress should seriously consider the immediate budgetary concerns of the states as well as structural reforms that would improve care for beneficiaries and reduce taxpayer burden in the longer term. In fact, states should also demand greater flexibility from the federal government in terms of eligibility, benefits, cost sharing, and overall administration and management.

Jeff Gross/Getty Images

The Los Angeles Dodgers are planning to start Jay Gibbons and Marcus Thames in left field to open the 2011 season.

No, that’s not a typo.

It is the same Jay Gibbons who was out of the league in 2008 and 2009 only to resurface in Los Angeles in 2010 and hit .280 with five HR in 75 AB. It is the same Marcus Thames who has never had more than 348 AB in a season and is a career .248 hitter.

In regards to Gibbons, obviously it’s a tiny sample size and impossible to draw any conclusions from. The fact of the matter is that Gibbons hasn’t posted a usable season since 2005 (.277, 26 HR) and, at 34 years old, it's nearly impossible to expect any significant production in 2011. In fact, it would appear much more likely that he falls flat on his face.

Thames has power, but strikes out a ton (28.1 percent over his 1,946 AB career) making it nearly impossible to hit for a usable option. He’s never had the opportunity to play full time and is much better suited as part of a platoon.

But is a Gibbons/Thames pairing better than what they may have elsewhere?

The Dodgers have a pair of in-house options who could emerge by year’s end and give their current platoon a run for their money. Let’s take a look:

Trayvon Robinson
He spent the year at Double-A in 2010, hitting .300 with nine HR, 57 RBI, 80 R and 38 SB. The 10th-round draft pick in 2005 has slowly made his way through the Dodgers system and now, at 23, appears primed to take the next step.

He has the potential to be a dynamic top-of-the-order hitter, with 85 stolen bases over the past two seasons. However, he needs to improve his contact rate if he has any intention of making an impact. In 2010, he struck out 125 times versus 73 walks. It was his fourth straight season of at least 104 Ks and the first time he has walked more than 60 times in a year.

To get an idea, just look at his strikeout rates over the past four years:

2007: 30.05%

2008: 23.69%

2009: 27.13%

2010: 28.80%

It's impossible to be a usable leadoff type option with that type of strikeout rate. Robinson needs to be able to get on base regularly and if he isn’t making contact, it is just not going to happen. With the fear of his strikeout rate further increasing as he moves up against tougher competition (he hasn’t played above Double-A), he appears to be a longshot at this point. He has the speed, but needs to develop the rest of his game early in 2011.

Jerry Sands
He split time between Single and Double-A in 2010 hitting .301 with 35 HR, 93 RBI, 102 R and 18 SB. The SB total is probably a bit deceiving and I wouldn’t put any stock in it. His ticket to the major leagues is his power, and he showed it off in a big way.

He was consistently good at each level he stopped at in 2010, helping to give hope that he can maintain the power as he climbs the ladder:

Single-A: .333, 18 HR, 46 RBI in 243 AB

Double-A: .270, 17 HR, 47 RBI in 259 AB

Like Robinson, he also could have a problem with strikeouts as he moves to the upper-levels, though his rate was actually better in 2010.

At Double-A he posted a 23.94 percent rate, and while that is concerning, his power certainly helps to offset it. Yes, there is a concern that he may hit for a lower average than fantasy owners would prefer, but if he hits a ton of home runs it is something that we can easily overlook. Plus, you have to think that his walk rate (12.7 percent) gives hope that he can keep the strikeouts under control.

Power hitters are no longer a certainty in baseball, so someone that can bring 30-plus HR power to the table is always going to have value. The 28th-round draft pick in 2008 easily could overtake Gibbons/Thames for the LF job, or maybe the Dodgers will get tired of the light-hitting James Loney filling 1B (Sands has seen significant time both at 1B and in the outfield in the minors).

Sands should start the year at Triple-A and if he makes a statement early, it wouldn’t be surprising to see him in the outfield before long.

What are your thoughts on these two players? Who do you think has the better chance of reaching the major leagues in 2011? Would you target either in fantasy formats?

**** Make sure to order your copy of the Rotoprofessor 2011 Fantasy Baseball Draft Guide, selling for just $5, by clicking here. ****

Make sure to check out our other Prospect Reports as we wrap up 2010 and head towards 2011:

Ackley, Dustin

Archer, Chris

Britton, Zach

Cousins, Scott

Iglesias, Jose

Kipnis, Jason

Lawrie, Brett

Mesoraco, Devin

Pineda, Michael

Ramos, Wilson

Revere, Ben

Taylor, Michael

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Monday, January 24, 2011

Making Money With Options

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