The 2014 senate races. Has obamacare put every democrat everywhere in danger . All those stories and much more coming up on the kudlow report beginning right now. Good evening, everyone. Im larry kudlow. This is the kudlow report. We are live at 7 00 p. M. Eastern and 4 00 p. M. Pacific. Lets get to the storm currently pounding the east coast. Steve handelsman from nbc news is out in the snow for us tonight. It doesnt get any better than that. Good evening, steve. Reporter hi, larry. Good evening. I dont think the snow is the big story. Here in washington its snowy. Its snowy all up and down the east coast. There will be a big amount of accumulation. On the back side is the cold. Heres some investment advice. Go long on parkas. Buy down futures. Its freezing out here. Here on capitol hill, the government workers were told, most of them anyway, stay home and try to work from home. That may be the case tomorrow. No decisions made. A lot of schools closed, mostly because of the snow, and also because of the cold. And tremendous transportation disruption all up and down the east coast. And then airports that serve all the big east coast airports, at least 3,000 flights canceled. And so, larry, theyre worried here in washington because of the bitter cold. 10 to mine nus 10 to minus 15 forecast. Pretty much the same through baltimore, philly, new york, up into maine. Its a real chiller. On top of that, all of the snow has disupt ared the states capitol. Steve handlesman, youve never looked better. Many thanks to nbcs steve handlesman. Now bad news for obamacare tonight. Even with a modest increase in overall enrollment in the obamacare exchanges, early estimates suggest that at least 2 3 of those people already had some form of Health Insurance before the law even went into effect. Plus, the chances of getting 7 million uninsured people on the rolls in the next year and 20 million in the next three years to make it solvent look mighty slim. Let me get this straight, president obamas signature achievement which was supposed to bring down Health Care Costs and reduce the number of uninsured, americans arent very effective at doing either right now. Surprise, surprise, its not working. Here now we have two Health Policy experts, dan mendle son and paul howard is director of the manhattan Institutes Center for medical progress. Gentlemen, thank you on a snowy and cold night. Paul, let me go to you first. What do you make of the lousy numbers reported over the weekend . I have another one for you, mckenzie has done a very substantial study and they say it may be as low as 11 , only 11 are newly insured people. Right. You have obviously the bosh rollout of the healthcare. Gov website, you have insurance priced above what they were last year. You have a lot of young and Healthy People sitting on the sidelines not buying Health Insurance. Only 24 of newly enrolled are in the 18 to 35 category. Then you have some small employers dumping people into the exchanges. Target announced that today. Overall ee noerm mounormous chu. I think that has to worry the administration and insurers. Dan mendleson, if i were the administration i would be worried for a lot of reasons. Not just more broken prompts but this program gets more and more expensive, the costs go higher and the premiums go higher as they continue to undershoot their targets. Whats your view of this story . I think its way too early to call this program dead. The fact is that the people enrolling in this program are the ones who need it. Theyre the ones who are chronically ill, theyre the ones who were canceled by their insurance. Its the ones that are finding less expensive insurance in the exchanges. What you have in this program is a private Market Exchange that is making individual insurance available to every american for the first time in history. So its not surprising that you see a lot of different kinds of people enrolling in this insurance. It wasnt dead. I am all for taking care of the elderly and the sick. I understand why theyre enrolling. I get that. You know what, im all for that. I mean, i think the gop should come out because i think thats a key feature of this that a lot of people like, but, but, but, but, but the problem is the young arent coming in and so the mix is so bad that youre going to go bankrupt sooner than anyone thought. Let me come back to this mckenzie study to get your take. Very important. Mckenzie study, only 11 newly insured. Heres what they said, affordability is the biggest problem, i. E. , premiums, right. 50 cited affordability and 30 cited technical challenges, meaning the website. The website may be improving over time, but affordability is going to get worse, if youre right, and that elderly demographic is the key. Larry, i think whats important here is that we give the private market an turch opportunity to work. On the affordability issue, i dont think you want us to be subsidizing people more. The fact of the matter is that the subsidies are pretty high already. So, look, its early in this program still. Theres another two months left before the deadline. The ones who have signed up really need it. They either had insurance before, theyre used to the market or they need it because theyre sick. I think whats going to happen towards the end of the elrollment period is you will see the younger, healthier people enroll in this program. The other thing is, theres time. This is the first year. Look, ive heard the promise and i havent seen the results. You may be right, but so far youve got to say that youre not right. Go ahead, paul, what are you going to say . The challenge here, dan made some good points, is the challenge for Median Health costs, 900 a year, looking at what theyre spending on premiums and deduct iblts even for silver plans are 2,000, 2500. Theyre spending that money if they go uninsured. The penalty, 1 of income, very small. So they can easily do the math and say im going to be paying more in premiums and expected health costs even if i go uninsured. The subsidies are targeted at those sickest and oldest leaving out the most profitable enroll lees sitting on the sidelines. In two ways ironically, the fact is that target and other employers putting people into these exchanges will help the risk pool. You know, long before obama was elected employers were spending less and less on Employee Health care and so it is its understandable that you see people now coming into the exchange, some people are just, you know, voluntarily going in even if their employers are actually offering coverage. The trouble with that story though, to be honest with you paul or dan mendleson, as bob la chef ski has said, this was designed by academics and egg heads. They didnt go to the consumers to come up with numbers and provisions. You wont get these youngsters, i think, to spend 5,000 a year, okay, with whatever, a 3,000 deductib deductible. Not happening that way. I want to go to another point because, dan, you raised this. I want you both to weigh n. Paul howard, the issue of subsidies. You really have two subsidies here. You have the initial subsidy on purchase and enrollment. You have a second subsidy which some people call a bailout and thats the socalled risk corridors or the socalled reinsurance. Now that second subsidy becomes necessary because there is no actuarial market risk oriented allowances. All these mandates are coming in adding to the costs and be now the lousy demographics are going to make the costs more expensive, paul howard. Theres a rebellion going on about the subsidies which some people regard as a bail out. Whats your take on this rebellion . Look, basically the insurers are being told you cant underwrite for risk. There will be Community Rating and guaranteed issue. There will be guaranteed subsidies. Thats not a market that works. So, look, democrats had to put these risk corridors and reinsurance in to make money on the table to get insurers to participate. Look, theyre not going to be made completely whole even at the top end of the risk corridors. Theyre only making 80 cents back on every dollar they lose. With Profit Margins 4 or less on the exchanges, thats not a great market to be in. Id caution part d and Medicare Advantage have some risk adjustments. I think the problem is weve handcuffed the Insurance Industry and not let them manage risk appropriately around benefits and other design features. I think even more, dan mendleson, theres no marketbased risk analysis here, thats whats driving the actuaries crazy. Thats not in Part D Drug Program they were basing the drugs off actual market prices and then the generic equivalent. So they had a sense of where the market was and where the initial costs were going to be for the first couple of years. In this case you have no Market Pricing of risk, therefore, the actuaries cant do their job, therefore, the cost overruns may drive the subsidies, aka, the bailouts even higher. Ill give you the last word, dan mendleson. Im going to disagree with you on that is i think whats happening is the Insurance Companies are taking a lot of risk. Theyre trying to estimate what the cost of the program is going to be based on what they know the underlying program is. These subsidies are to help the program get up and running. They are highly similar to the subsidies that were put in place in the republican Medicare Part d program. No, but that was its really whats necessary to get the program up and running. Its becoming a talking point. I want to disagree. Dr. Scott talked about this. Bob talked about this. That drug program was basically you could chart the market prices of the drugs and the generics, this program here, you cannot chart the actual risk available because theres no market. The benefit mandates have created something that has nothing to do with the marketplace and thats why we cant , no, thats why this is completely different and likely, likely to be vastly more expensive, dan mendleson, whether we call it a bailout or another subsidy. It will be vastly more expensive. If the Insurance Companies, if they couldnt have underwritten it, they would not have fielded product in these markets. They can underwrite it and thats what theyre doing, and i think whats going to happen is this will stabilize. It might take a couple of years to stabilize, but itll happen and at that time there will be a strong individual Health Care Insurance option for every american in this country. All right. Thats one point of view. Appreciate it very much. Dan mendleson, appreciate t. Lets switch gears. We did know oil surged more than even the most optimistic predictions. To get even better and create more highpaying jobs, we need free market deregulation for more refineries and we need free trade forex ports. Later in the show, republicans are widening the Playing Field as theyre looking to garon some places, long shots, just a few months ago. Now it may be in play. Can the gop pull it off . Right now as always, dont forget, free market capitalism is the best path to prosperity. We have a gang buster discussion of energy coming up to show you how free markets will help to produce more energy. Im kudlow. Well be right back. Please stay with us. Passenger road trip buddy. Lets put some music on. Woman welcome to learning spanish in the car. Passenger youve got to be kidding me. Driver this is good. Woman vamanos. Driver passenger vamanos. Woman gracias. Driver passenger gracias. Passenger trece horas en el carro sin parar y no traes musica. Driver mira entra y comprame unas papitas. Vo get up to 795 miles per tank in the tdi clean diesel. The volkswagen passat. Recipient of the j. D. Power appeal award, two years in a row. Good bullish indicator. U. S. Crude Oil Production jumped 15 last year. Thats the fastest growth of any oil country in the last two decades. Natural gas production, also spiking. All of this in the private sector entrepreneurial boon thats shell fracking and horizontal drilling. You know what, really nobody saw it coming except a handful of visionaries like harold hamm in north dakota. But to keep this boom going were going to need some free market deregulation. Cnbc contributor, addison armstrong. Director of Market Research at tradition energy. Good evening. Let me begin with the success part of the story. By lots of calculations ive come up with 10 of u. S. Economic growth in this modest recovery. 10 has come from the oil sector. They dont count natural gas. Just oil alone. Whats your take on that . Whats sustainable . I think it absolutely is, larry. In the big picture theres four areas where the boom is really providing some great tail winds for the economy. First you have to look at what its doing to manufacturing here in the u. Sms. , then jobs and consumer trade. Lets go to trade. The slump now, the almost collapse of oil imports because we just dont need it has reduced our trade deficit by nearly 100 billion a year. Thats a huge amount. Thats a huge amount. And consequently its strengthening the dollar and improving the gdp growth rate. Now heres my issue, one of two issues, the u. S. Government from a long law from the 1970s prevents the export of energy, of oil. Oil, not natural gas, but oil. I think thats got to be listed, otherwise were going to blunt this Oil Revolution because well have more oil here than we know what to do with. Well, the good thing is our exports of refined products, distill late fuel, gasoline, theyre at a record high. Thats really one of the main underpinnings to the whole trade story. Youre right. Were going to come up and weve heard talk of this, the production wall. Were producing so much oil, were swimming on gasoline. Were short on distillates but we have a market for it. This might be the year for the breakdown of the ban on oil exports. There doesnt seem to be much appetite in congress to prevent such measure from being pushed through. After all, it was only instituted in an emergency situation when the Oil Embargoes started in the 70s. Right. Were in a different place. There is no argument for keeping this oil here in the u. S. I think thats exactly right. I want to add this. Most of the oil from shale is sweet and right. The old stuff is the heavier, darker stuff. Heres the point im making. We dont have enough Refining Capacity for all this new shale oil, we dont have it. So at least in the short term if we cant export it, theyre not going to drill for it, theyre not going to frac for it. Thats why we need to open up the laws. We need to create new refineries to get this tremendous amount of white, Sweet Crude Oil from the shale. Theres a bagillion regulations for building a new refinery. The issue is the not in my backyard issue. Nobody wants to have a refinery built. First of all, theyre vastly expensive and take many, many years but youre right. Weve been short finding capacity nor a long time and its remarkable what this countrys refiners have been able to do in terms of retooling and expanding facilities that we have this big boom in exports now. Again, goes back to the cost advantage that we have here in the u. S. Refineries in europe are shutting down because they cant compete with the cost basis we have. The bent spread and the wti has really disadvantaged european refiners and put us in the cat birds seat forex ports n fors europe. Easy question to you. Whats your outlook for the price of oil. Its about 95 in the open market now. What are you thinking, buddy . You know, our forecasts is coming out here at 95. We dont think there will be a big up side. We think the bias is to the down side. It will be off 5 year on year. Addison armstrong, thank you ever so much. Now new jersey governor, Chris Christie, he took the oath of office for his second term today. We have a live report from Nbcs Jay Gray on what christie had to say. You want to see some real growth for the economy, larry kolikoff makes his argument for abolishing the Corporate Income tax completely. Now that is my kind of guy. That is more like it. Stay with us for all of that and much more. Abolish the Corporate Tax. I need proof of insurance. Thats my geico Digital Insurance id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. But with less energy, moodiness, and a low sex drive, i had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about axiron. Chris christie inaugurated for his second term as governor while a snowstorm hits the state. Jay gray live in trenton. Good evening, jay. Reporter hey there, larry. The snow is blowing. The wind has picked up significantly. There has been a storm, political storms swirling around Chris Christie and his administration for several