11/07/2013 04:26 pm ET Updated Nov 07, 2013

Unconventional Wisdom On Obamacare

The "deathwatch" is on for the firing of Health and Human Services Secretary Kathleen Sebelius, so says the Washington Post. She's an obvious example of someone just waiting at the stop to be thrown under the next bus to take the fall for and the heat off, the White House. Right?

But think again: why on earth would President Obama -- regardless of how upset he may be about what he did or didn't know concerning the embarrassing incompetence surrounding the launch of the Insurance Exchange Website -- invite yet another, open-ended round of Congressional hearing into that mess in connection with the confirmation of whoever he puts up to succeed Ms. Sebelius? Ted Cruz would probably put a "hold" on the nomination just for the fun of it. No, next to the Supreme Court Justices, Sebelius has the safest job in town.

Heads will roll, too, over the "revelations" that the U.S. NSA has been spying on the leaders of our European allies for a decade as well as more recently trolling the phone calls of 70 million French and 60 million Spaniards per month. Again, highly unlikely. In the first place, it turns out that the so-called "revelations" are about as untrue as the promise that you can keep your insurance if you like it (regardless of whether you're too dumb to realize you're getting screwed by the policy and don't have much insurance at all; more on that subject later).

The initial European newspaper accounts alleged that the US was spying on 70 million and 60 million phone calls per month in France and Spain, respectively. It was, among other, Senator Rand Paul on CNN who neatly turned millions of calls into millions of citizens of those countries. This is a classic example of how rumor mongers produce mongrelized versions of reality much of the time. But wait, there's more: it wasn't even the US NSA that did it: the metadata (numbers called only, sans ID's) was done by foreign -- probably home country -- intelligence services, which they shared with the US -- and virtually all of it involved phone calls of non-citizens of either country. "Reliable sources," indeed. CNN should wash its mouth out for allowing such overseas garbage on air without even an attempt at "keeping them honest," the network byword that seems lately to apply only to the White House as the folks at CNN perform their on-air auditions for Fox News.

Not to be outdone in spreading false conventional wisdom, CNBC has offered up a parade of ObamaCare victims -- including some highly articulate, well-groomed real estate ladies from California and Florida who just happened to show up in studios to reveal how "they" told them that their existing insurance policies were being pulled with only until Nov. 1 to chose a policy at a higher rate for insurance they don't need. None of the Tea Party affiliates passing as reporters on the financial "news" network (now a fully functioning subsidiary of the Tea Party) bother to clarify that the "they" these women referred to was not the ObamaCare exchanges but rather the women's own private insurers. Nor did they say that the reason these women couldn't "keep" their insurance was that the insurance companies could no longer make money on them as written given the new requirements of the Affordable Care Act as to minimum acceptable insurance coverage and new limits on administrative (i.e., non-health-care) charges against their premium income).

None of this, of course, was ever a secret. The Affordable Care Act and the "grandfathering" rules as to existing individual insurance policies at the time the law was enacted were certainly matters of public record. Everybody who knew as much about the law as the Republicans trying to repeal it were aware that hundreds of thousands of policies would wither turn-over, charge terms or otherwise fail these rules.

Moreover, at the times in 2009 and 2010 when the President referred to folks keeping their policies if they liked them, his statements were quite literally precisely true, because the policies then in effect were grandfathered so long as they remained unchanged -- a choice made by the insurer and the insured, not by some Washington bureaucrat. CNBC must have seen The Man Who Shot Liberty Valance too many times - "When the (urban) legend becomes the fact, print the legend" seems to be the new CNBC code.

How about you guys at CNBC try "Winning Us Back" Maria? Perhaps if you would have done half the homework on your guest's actual situation that the Los Angeles Times did, you would have found that Anthem Blue Cross, not the ObamaCare Exchange, had mislead her about her options. She could today buy with subsidy a substantially better policy with unlimited doctor visits and a lower deductible ($2000 versus $5000) for only $40 per month more. In short, your purported story on the failings of ObamaCare was pure and simply false at its core. You allowed yourself to be spoon-fed by your favored politicians at the expense of your reputation.

While we're in the financial journalism sector, let's look at all the totally wrong hype the cable networks laid on about how certain they were that the Fed would cut back its stimulus bond purchases back in September. The same commentators are now trying to spread the word that the latest Fed post-meeting announcement means the Fed will indeed taper beginning as early as December. But they forget that the next Fed meeting comes just a day or so before the Congressional deadline for a new budget deal to replace the Halloween trick known as Sequester. Why on earth would the Fed take the risk of easing up on its "sole support" of the economy 48 hours before the Congress could choose to put us back on shutdown watch!

Not that shutdown is going to happen 10 days before Christmas, although the "smart money" says that DC will again put on the fright masks again just in time for Santa. Not so fast. This time both sides have an interest in cutting some kind of deal, however limited, just to show they can. Notice that neither political side has taken an absolutist position: Republican Paul Ryan says this can't be "all about raising taxes." Of course it won't be. Democrat Patty Murray says it can't be all about cutting entitlements. Of course it can't. Sounds like each is leaving some wiggle room. So should we, when we hear the next prediction of certain doom.

Terry Connelly is an economic expert and dean emeritus of the Ageno School of Business at Golden Gate University in San Francisco. Terry holds a law degree from NYU School of Law and his professional history includes positions with Ernst & Young Australia, the Queensland University of Technology Graduate School of Business, New York law firm Cravath, Swaine & Moore, global chief of staff at Salomon Brothers investment banking firm and global head of investment banking at Cowen & Company. In conjunction with Golden Gate University President Dan Angel, Terry co-authored Riptide: The New Normal In Higher Education.