Wall Street Week Ahead: Holiday "on standby" as clock ticks on cliff

NEW YORK (Reuters) - The last two weeks of December are traditionally quiet for stocks, but traders accustomed to a bit of time off are staying close to their mobile devices, thanks to the "fiscal cliff."

Last-minute negotiations in Washington on the so-called fiscal cliff - nearly $600 billion of tax increases and spending cuts set to take effect in January that could cause a sharp slowdown in growth or even a recession - are keeping some traders and analysts from taking Christmas holidays because any deal could have a big impact on markets.

"A lot of firms are saying to their trading desks, 'You can take days off for Christmas, but you are on standby to come in if anything happens.' This is certainly different from previous years, especially around this time of the year when things are supposed to be slowing down," said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.

"Next week is going to be a Capitol Hill-driven market."

With talks between President Barack Obama and House Speaker John Boehner at an apparent standstill, it was increasingly likely that Washington will not come up with a deal before January 1.

Gordon Charlop, managing director at Rosenblatt Securities in New York, will also be on standby for the holiday season.

"It's a 'Look guys, let's just rotate and be sensible" type of situation going on," Charlop said.

"We are hopeful there is some resolution down there, but it seems to me they continue to walk that political tightrope... rather than coming up with something."

Despite concerns that the deadline will pass without a deal, the S&P 500 has held its ground with a 12.4 percent gain for the year. For this week, though, the S&P 500 fell 0.3 percent.

BEWARE OF THE WITCH

This coming Friday will mark the last so-called "quadruple witching" day of the year, when contracts for stock options, single stock futures, stock index options and stock index futures all expire. This could make trading more volatile.

"We could see some heavy selling as there is going to be a lot of re-establishing of positions, reallocation of assets before the year-end," Kinahan said.

RETHINKING APPLE

Higher tax rates on capital gains and dividends are part of the automatic tax increases that will go into effect next year, if Congress and the White House don't come up with a solution to avert the fiscal cliff. That possibility could give investors an incentive to unload certain stocks in some tax-related selling by December 31.

Some market participants said tax-related selling may be behind the weaker trend in the stock price of market leader Apple . Apple's stock has lost a quarter of its value since it hit a lifetime high of $705.07 on September 21.

On Friday, the stock fell 3.8 percent to $509.79 after the iPhone 5 got a chilly reception at its debut in China and two analysts cut shipment forecasts. But the stock is still up nearly 26 percent for the year.

"If you owned Apple for a long time, you should be thinking about reallocation as there will be changes in taxes and other regulations next year, although we don't really know which rules to play by yet," Kinahan said.

But one indicator of the market's reduced concern about the fiscal cliff compared with a few weeks ago, is the defense sector, which will be hit hard if the spending cuts take effect. The PHLX Defense Sector Index <.dfx> is up nearly 13 percent for the year, and sits just a few points from its 2012 high.

(Reporting by Angela Moon; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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Japan votes in election seen returning LDP to power

TOKYO (Reuters) - Japan voted on Sunday in an election expected to return the conservative Liberal Democratic Party (LDP) to power after a three-year hiatus, giving ex-Prime Minister Shinzo Abe a chance to push his hawkish security agenda and radical economic recipe.

Polls opened at 0700 a.m. (2200 GMT) and will close at 8 p.m. (1100 GMT), when major TV broadcasters will issue exit polls forecasting results.

An LDP win would usher in a government committed to a tough stance in a territorial row with China, a pro-nuclear power energy policy despite last year's Fukushima disaster and a potentially risky prescription for hyper-easy monetary policy and big fiscal spending to beat deflation and tame a strong yen.

Media surveys have forecast the LDP will win a big majority in parliament's powerful 480-seat lower house, just three years after a devastating defeat that ended more than 50 years of almost non-stop rule by the business-friendly party.

Together with a small ally, Abe's LDP could even gain the two-thirds majority needed to break through a policy deadlock that has plagued successive governments for half a decade.

Prime Minister Yoshihiko Noda's unpopular Democratic Party of Japan (DPJ), hit by a stream of defections, is likely to win fewer than 100 seats, less than a third of its tally in 2009. Voters feel the DPJ failed to deliver its 2009 election pledges.

"Whether it's relations with South Korea, problems with North Korea or trouble with China, on every front the Democratic Party's diplomacy has gone terribly," said Makoto Mizuno, a 58-year old company employee who was voting for Abe's party.

However, many voters remained undecided just days before the vote, the polls showed.

Voter distaste for both major parties has spawned a clutch of new parties including the right-leaning Japan Restoration Party founded by popular Osaka Mayor Toru Hashimoto.

Abe, 58, who quit abruptly as premier in 2007 after a troubled year in office, has been talking tough in a row with China over uninhabited isles in the East China Sea, although some experts say he may temper his hard line with pragmatism once in office.

The soft-spoken grandson of a prime minister, who would become Japan's seventh premier in six years, Abe also wants to loosen the limits of a 1947 pacifist constitution on the military, so Japan can play a bigger global security role.

The LDP, which promoted atomic energy during its decades-long reign, is expected to be friendly to nuclear utilities, although deep public safety concerns remain a barrier to business as usual for the industry.

A mother of two voting at a polling booth in Akasaka said she could not support the LDP because of their past stance on nuclear energy.

"I can't vote for a party that promoted nuclear power for decades. Politicians forget what happened last year (after the quake). I have children and I have to think about their future," said a 43-year old housewife who declined to give her name.

She said she was voting for the Tomorrow Party of Japan, which aims to shut down all nuclear reactors within 10 years, much earlier than the current government's goal to phase out the energy source by the 2030s.

ECONOMY IN DOLDRUMS

Abe has called for "unlimited" monetary easing and big spending on public works, to rescue the economy from its fourth recession since 2000. But such policies, a centrepiece of the LDP's platform for decades, have been criticized by many as wasteful pork barreling.

Many economists say that prescription for "Abenomics" could create temporary growth and enable the government to go ahead with a planned initial sales tax rise in 2014 to help curb a public debt now twice the size of gross domestic product.

But it looks unlikely to cure deeper ills or spark sustainable growth, and risks triggering a market backlash if investors decide Japan has lost control of its finances.

Japan's economy has been stuck in the doldrums for decades, its population ageing fast and big corporate brands faltering, making "Japan Inc" a synonym for decline.

Consumer electronics firms such as Sony Corp are struggling with competition from foreign rivals and burdened by a strong yen, which makes their products cost more overseas.

Noda's DPJ surged to power in a historic victory in 2009 promising to pay more heed to consumers than companies and put politicians, bureaucrats, in charge of policymaking.

Many voters now feel the DPJ failed to meet its election pledges as it struggled to govern and cope with last year's huge earthquake, tsunami and nuclear disaster, and then pushed through an unpopular sales tax increase with LDP help.

"Basically over the last three years the ruling Democratic Party has tried to do all sorts of things, but every policy they've tried has backfired," said Shunichi Asanagi, a 40-year old company executive voting for the LDP.

(Additional reporting by Mari Saito, Ruairidh Villar, Leika Kihara, Editing by Raju Gopalakrishnan and Michael Perry)

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RIM shows how BlackBerry 10 touch screen keys could rival even its traditional keyboards [video]

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Donald Faison Marries Cacee Cobb

By Lesley Messer

12/15/2012 at 08:25 PM EST

Cacee Cobb and Donald Faison

Dr. Billy Ingram/WireImage

It's official!

After six years together, Donald Faison and Cacee Cobb were married Saturday night at the Los Angeles home of his Scrubs costar Zach Braff.

Cobb's friend Jessica Simpson was a bridesmaid. Sister Ashlee Simpson also attended.

"What a happy day," Tweeted groomsman Joshua Radin, a singer, who posted a photo of himself with Faison and Braff in their tuxedos.

The couple got engaged in August 2011. At the time, Faison Tweeted, "If you like it then you better put a Ring on it," and Cobb replied, "If she likes it then she better say YES!!"

Since then, the couple had been hard at work planning their wedding. On Nov. 12, Faison, who currently stars on The Exes, Tweeted that they were tasting cocktails to be served on the big day.

"Alcohol tasting for the wedding!" he wrote, adding a photo of the drinks. "The [sic] Ain't Say It Was Going To Be Like This!!!"

This is the first marriage for Cobb. Faison was previously married to Lisa Askey, with whom he has three children. (He also has a son from a previous relationship.)

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Fewer health care options for illegal immigrants

ALAMO, Texas (AP) — For years, Sonia Limas would drag her daughters to the emergency room whenever they fell sick. As an illegal immigrant, she had no health insurance, and the only place she knew to seek treatment was the hospital — the most expensive setting for those covering the cost.

The family's options improved somewhat a decade ago with the expansion of community health clinics, which offered free or low-cost care with help from the federal government. But President Barack Obama's health care overhaul threatens to roll back some of those services if clinics and hospitals are overwhelmed with newly insured patients and can't afford to care for as many poor families.

To be clear, Obama's law was never intended to help Limas and an estimated 11 million illegal immigrants like her. Instead, it envisions that 32 million uninsured Americans will get access to coverage by 2019. Because that should mean fewer uninsured patients showing up at hospitals, the Obama program slashed the federal reimbursement for uncompensated care.

But in states with large illegal immigrant populations, the math may not work, especially if lawmakers don't expand Medicaid, the joint state-federal health program for the poor and disabled.

When the reform has been fully implemented, illegal immigrants will make up the nation's second-largest population of uninsured, or about 25 percent. The only larger group will be people who qualify for insurance but fail to enroll, according to a 2012 study by the Washington-based Urban Institute.

And since about two-thirds of illegal immigrants live in just eight states, those areas will have a disproportionate share of the uninsured to care for.

In communities "where the number of undocumented immigrants is greatest, the strain has reached the breaking point," Rich Umbdenstock, president of the American Hospital Association, wrote last year in a letter to Obama, asking him to keep in mind the uncompensated care hospitals gave to that group. "In response, many hospitals have had to curtail services, delay implementing services, or close beds."

The federal government has offered to expand Medicaid, but states must decide whether to take the deal. And in some of those eight states — including Texas, Florida and New Jersey — hospitals are scrambling to determine whether they will still have enough money to treat the remaining uninsured.

Without a Medicaid expansion, the influx of new patients and the looming cuts in federal funding could inflict "a double whammy" in Texas, said David Lopez, CEO of the Harris Health System in Houston, which spends 10 to 15 percent of its $1.2 billion annual budget to care for illegal immigrants.

Realistically, taxpayers are already paying for some of the treatment provided to illegal immigrants because hospitals are required by law to stabilize and treat any patients that arrive in an emergency room, regardless of their ability to pay. The money to cover the costs typically comes from federal, state and local taxes.

A solid accounting of money spent treating illegal immigrants is elusive because most hospitals do not ask for immigration status. But some states have tried.

California, which is home to the nation's largest population of illegal immigrants, spent an estimated $1.2 billion last year through Medicaid to care for 822,500 illegal immigrants.

The New Jersey Hospital Association in 2010 estimated that it cost between $600 million and $650 million annually to treat 550,000 illegal immigrants.

And in Texas, a 2010 analysis by the Health and Human Services Commission found that the agency had provided $96 million in benefits to illegal immigrants, up from $81 million two years earlier. The state's public hospital districts spent an additional $717 million in uncompensated care to treat that population.

If large states such as Florida and Texas make good on their intention to forgo federal money to expand Medicaid, the decision "basically eviscerates" the effects of the health care overhaul in those areas because of "who lives there and what they're eligible for," said Lisa Clemans-Cope, a senior researcher at the Urban Institute.

Seeking to curb expenses, hospitals might change what qualifies as an emergency or cap the number of uninsured patients they treat. And although it's believed states with the most illegal immigrants will face a smaller cut, they will still lose money.

The potential impacts of reform are a hot topic at MD Anderson Cancer Center in Houston. In addition to offering its own charity care, some MD Anderson oncologists volunteer at a county-funded clinic at Lyndon B. Johnson General Hospital that largely treats the uninsured.

"In a sense we've been in the worst-case scenario in Texas for a long time," said Lewis Foxhall, MD Anderson's vice president of health policy in Houston. "The large number of uninsured and the large low-income population creates a very difficult problem for us."

Community clinics are a key part of the reform plan and were supposed to take up some of the slack for hospitals. Clinics received $11 billion in new funding over five years so they could expand to help care for a swell of newly insured who might otherwise overwhelm doctors' offices. But in the first year, $600 million was cut from the centers' usual allocation, leaving many to use the money to fill gaps rather than expand.

There is concern that clinics could themselves be inundated with newly insured patients, forcing many illegal immigrants back to emergency rooms.

Limas, 44, moved to the border town of Alamo 13 years ago with her husband and three daughters. Now single, she supports the family by teaching a citizenship class in Spanish at the local community center and selling cookies and cakes she whips up in her trailer. Soon, she hopes to seek a work permit of her own.

For now, the clinic helps with basic health care needs. If necessary, Limas will return to the emergency room, where the attendants help her fill out paperwork to ensure the government covers the bills she cannot afford.

"They always attended to me," she said, "even though it's slow."

___

Sherman can be followed on Twitter at https://twitter.com/chrisshermanAP .

Plushnick-Masti can be followed on Twitter at https://twitter.com/RamitMastiAP .

Read More..

Wall St Week Ahead: Holiday "on standby" as clock ticks on cliff

NEW YORK (Reuters) - The last two weeks of December are traditionally quiet for stocks, but traders accustomed to a bit of time off are staying close to their mobile devices, thanks to the "fiscal cliff."

Last-minute negotiations in Washington on the so-called fiscal cliff - nearly $600 billion of tax increases and spending cuts set to take effect in January that could cause a sharp slowdown in growth or even a recession - are keeping some traders and analysts from taking Christmas holidays because any deal could have a big impact on markets.

"A lot of firms are saying to their trading desks, 'You can take days off for Christmas, but you are on standby to come in if anything happens.' This is certainly different from previous years, especially around this time of the year when things are supposed to be slowing down," said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.

"Next week is going to be a Capitol Hill-driven market."

With talks between President Barack Obama and House Speaker John Boehner at an apparent standstill, it was increasingly likely that Washington will not come up with a deal before January 1.

Gordon Charlop, managing director at Rosenblatt Securities in New York, will also be on standby for the holiday season.

"It's a 'Look guys, let's just rotate and be sensible" type of situation going on," Charlop said.

"We are hopeful there is some resolution down there, but it seems to me they continue to walk that political tightrope... rather than coming up with something."

Despite concerns that the deadline will pass without a deal, the S&P 500 has held its ground with a 12.4 percent gain for the year. For this week, though, the S&P 500 fell 0.3 percent.

BEWARE OF THE WITCH

This coming Friday will mark the last so-called "quadruple witching" day of the year, when contracts for stock options, single stock futures, stock index options and stock index futures all expire. This could make trading more volatile.

"We could see some heavy selling as there is going to be a lot of re-establishing of positions, reallocation of assets before the year-end," Kinahan said.

RETHINKING APPLE

Higher tax rates on capital gains and dividends are part of the automatic tax increases that will go into effect next year, if Congress and the White House don't come up with a solution to avert the fiscal cliff. That possibility could give investors an incentive to unload certain stocks in some tax-related selling by December 31.

Some market participants said tax-related selling may be behind the weaker trend in the stock price of market leader Apple . Apple's stock has lost a quarter of its value since it hit a lifetime high of $705.07 on September 21.

On Friday, the stock fell 3.8 percent to $509.79 after the iPhone 5 got a chilly reception at its debut in China and two analysts cut shipment forecasts. But the stock is still up nearly 26 percent for the year.

"If you owned Apple for a long time, you should be thinking about reallocation as there will be changes in taxes and other regulations next year, although we don't really know which rules to play by yet," Kinahan said.

But one indicator of the market's reduced concern about the fiscal cliff compared with a few weeks ago, is the defense sector, which will be hit hard if the spending cuts take effect. The PHLX Defense Sector Index <.dfx> is up nearly 13 percent for the year, and sits just a few points from its 2012 high.

(Reporting by Angela Moon; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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NATO says Syrian Scuds hit "near" Turkey

BEIRUT (Reuters) - NATO accused Syrian President Bashar al-Assad's forces of firing Scud missiles that landed near to the Turkish border, in explaining why it was sending anti-missile batteries and troops to the bloc's frontier.

The Syrian government, which finds itself under attack from rebels in the capital Damascus and by a diplomatic alliance of Arab and Western powers, denies firing such long-range, Soviet-built rockets and had no immediate comment on the latest charge.

Admiral James Stavridis, the American who is NATO's military commander, wrote in a blog on Friday: "Over the past few days, a handful of Scud missiles were launched inside Syria, directed by the regime against opposition targets. Several landed fairly close to the Turkish border, which is very worrisome."

It was not clear how close they came. NATO member Turkey, once friendly toward Assad but now among the main allies of the rebels, has complained of occasional bullets and artillery fire, some of which has been fatal, for many months. It sought the installation of missile defenses on its border some weeks ago.

"Syria is clearly a chaotic and dangerous situation; but we have an absolute obligation to defend the borders of the alliance from any threat emanating from that troubled state," Stavridis wrote.

Batteries of U.S.-made Patriot missiles, designed to shoot down the likes of the Scuds popularly associated with Iraq's wars under Saddam Hussein in the 1990s, are about to be deployed by the U.S., German and Dutch armies, each of which is sending up to 400 troops to operate and protect the rocket systems.

The Syrian government has accused Western powers of backing what it portrays as a Sunni Islamist "terrorist" attack on it and says Washington and Europe have publicly voiced concerns of late that Assad's forces might resort to chemical weapons solely as a pretext for preparing a possible military intervention.

In contrast to NATO's air campaign in support of Libya's successful revolt last year against Muammar Gaddafi, Western powers have fought shy of intervention in Syria. They have cited the greater size and ethnic and religious complexity of a major Arab state at the heart of the Middle East - but have also lacked U.N. approval due to Russia's support for Assad.

Moscow reacted angrily on Friday to the way U.S. officials seized on comments by a top Kremlin envoy for the Middle East as evidence that Russia was giving up on Assad. Comments by Mikhail Bogdanov on Thursday in which he conceded Assad might be ousted did not reflect a change in policy, the Foreign Ministry said.

Assad's diplomatic isolation remains acute, however, as Arab and Western powers this week recognized a new, united coalition of opposition groups as Syria's legitimate leadership. Large parts of the country are no longer under the government's control and fighting has been raging around Damascus itself.

European Union leaders who met in Brussels on Friday said all options were on the table to support the Syrian opposition, raising the possibility that non-lethal military equipment or even arms could eventually be supplied.

In their strongest statement of support for the Syrian opposition since the uprising began 20 months ago, EU leaders instructed their foreign ministers to assess all possibilities to increase the pressure on Assad.

With rebels edging into the capital, a senior NATO official said that Assad is likely to fall and the Western military alliance should make plans to protect against the threat of his chemical arsenal falling into the wrong hands.

HUNGER SPREADS

Desperation for food is growing in parts of Syria and residents of the northern city of Aleppo say fist fights and dashes across the civil war front lines have become part of the daily struggle to secure a loaf of bread.

"I went out yesterday and could not get any bread. If only the problem was just lack of food - there is also a huge shortage of fuel, which the bakeries need to run," said Ahmed, a resident of the battle-scarred Salaheddine district.

He said people get into fist fights over flour and rebels regularly have to break up fights by firing into the air.

The World Food Programme (WFP) says as many as a million people may go hungry this winter, as worsening security conditions make it harder to reach conflict zones.

Forty thousand people have now been killed in the most enduring and destructive of the Arab revolts. The government severely limits press and humanitarian access to the country.

U.N. humanitarian chief Valerie Amos said on Friday the United Nations is committed to maintaining aid operations in Syria.

"NOTHING OFF THE TABLE"

At the EU summit, Britain's David Cameron pushed for an early review of the arms embargo against Syria to possibly open the way to supply equipment to rebels in the coming months. Germany and others were more reluctant and blocked any quick move. But there was widespread agreement that whatever action can be taken under current legislation should be pursued, and the arms embargo would still be reviewed at a later stage.

"I want a very clear message to go to President Assad that nothing is off the table," Cameron told reporters at the end of a two-day summit. "I want us to work with the opposition ... so that we can see the speediest possible transition in Syria.

"There is no single simple answer, but inaction and indifference are not options."

Among factors holding Western powers back from arming the rebels is the presence in their ranks of anti-Western Islamist radicals. Following a U.S. decision this week to blacklist one such group, Jabhat al-Nusra, a "terrorist" group, thousands of Syrians demonstrated on Friday against ostracizing the movement.

The latest, weekly Friday protests in rebel-held areas were held under the slogan: "The only terrorism in Syria is Assad's".

Inspired by Arab uprisings across the region, Syrian protesters were met with gunfire by Assad's security forces in March 2011. Armed revolt overtook the movement, which has become increasingly sectarian - waged by majority Sunni Muslims against forces loyal to Assad, who is from the minority Alawite sect, an offshoot of the Shi'ite Islam practiced in Assad's ally Iran.

A video posted on the Internet showed dozens of Sunni rebels dressed in camouflage gear congratulating and kissing each other outside a burning Shi'ite shrine.

A fighter holding a rifle said the group was destroying the "dens of the Shi'ites". Reuters could not independently verify the video, which was posted on YouTube on Wednesday and purports to be filmed in the northern town of Jisr al-Shughur.

(Writing by Oliver Holmes and Alastair Macdonald; Editing by Michael Roddy)

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Microsoft, Motorola file to keep patent case details private

SEATTLE (Reuters) – Microsoft Corp and Google Inc‘s Motorola Mobility unit have requested a federal judge in Seattle to keep secret from the public various details from their recent trial concerning the value of technology patents and the two companies’ attempts at a settlement.

Microsoft and Motorola, acquired by Google earlier this year, are preparing post-trial briefs to present to a judge as he decides the outcome of a week-long trial last month to establish what rates Microsoft should pay Motorola for use of standard, essential wireless technology used in its Xbox game console and other products.

The case is just one strand of litigation in an industry-wide dispute over ownership of the underlying technology and the design of smartphones, which has drawn in Apple Inc, Samsung Electronics Co Ltd, Nokia and others.

In a filing with the Western District of Washington federal court in Seattle on Friday, Microsoft and Motorola asked the judge to allow them to file certain parts of their post-trial submissions under seal and redact those details in the public record.

The details concern terms of Motorola‘s licenses with third parties and Microsoft‘s business and marketing plans for future products. During the trial, which ran from November 13-20, U.S. District Judge James Robart cleared the court when such sensitive or trade secret details were discussed.

“For the same compelling reasons that the court sealed this evidence for purposes of trial, it would be consistent and appropriate to take the same approach in connection with the parties’ post-trial submissions,” the two companies argued in the court filing.

The judge has so far been understanding of the companies’ desire to keep private details of their patent royalties and future plans, although that has perplexed some spectators who believe trials in public courts should be fully open to the public.

In addition, Motorola asked the judge to seal some documents relating to settlement negotiations between the two companies, arguing that keeping those details secret would encourage openness in future talks and make a settlement more likely.

Judge Robart is not expected to rule on the case until the new year.

The case in U.S. District Court, Western District of Washington is Microsoft Corp. vs. Motorola Inc., 10-cv-1823.

(Reporting by Bill Rigby; Editing by Richard Chang)

Tech News Headlines – Yahoo! News

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Gunman's Father and Brother Are 'in Shock,' Says a Source

By Diane Herbst

12/14/2012 at 08:50 PM EST

State police personnel lead children to safety away from the Sandy Hook Elementary School

Shannon Hicks/Newtown Bee/Reuters/Landov

The father and older brother of the gunman who was blamed for the Connecticut school shooting are being questioned by authorities but are not suspects, a law enforcement source tells PEOPLE.

The Associated Press reports that the gunman has been identified as 20-year-old Adam Lanza.

His unidentified father, who lives in New York City, and his older brother, Ryan, 24, of Hoboken, N.J., are "in shock," the law enforcement source tells PEOPLE.

They were being questioned by the FBI in the Hoboken police station but "are not suspects, they have no involvement," the source says.

"Imagine the 24 year old – he's lost his mother. Imagine the father, his son killed 20 kids," the source says."   

As for Adam, "It looks like there's mental history there," the law enforcement source says.

Adam Lanza died at the scene of the shooting that killed 20 children and six adults at the Sandy Hook Elementary School in Newtown, Conn.

His mother, Nancy Lanza, was found dead at her home, according to CNN.

The source describes the weapons used by Lanza as "legitimate." According to CNN, Lanza used two hand guns that were registered to his mother and a rifle.

Adam's parents were no longer together, the source says.   

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Fewer health care options for illegal immigrants

ALAMO, Texas (AP) — For years, Sonia Limas would drag her daughters to the emergency room whenever they fell sick. As an illegal immigrant, she had no health insurance, and the only place she knew to seek treatment was the hospital — the most expensive setting for those covering the cost.

The family's options improved somewhat a decade ago with the expansion of community health clinics, which offered free or low-cost care with help from the federal government. But President Barack Obama's health care overhaul threatens to roll back some of those services if clinics and hospitals are overwhelmed with newly insured patients and can't afford to care for as many poor families.

To be clear, Obama's law was never intended to help Limas and an estimated 11 million illegal immigrants like her. Instead, it envisions that 32 million uninsured Americans will get access to coverage by 2019. Because that should mean fewer uninsured patients showing up at hospitals, the Obama program slashed the federal reimbursement for uncompensated care.

But in states with large illegal immigrant populations, the math may not work, especially if lawmakers don't expand Medicaid, the joint state-federal health program for the poor and disabled.

When the reform has been fully implemented, illegal immigrants will make up the nation's second-largest population of uninsured, or about 25 percent. The only larger group will be people who qualify for insurance but fail to enroll, according to a 2012 study by the Washington-based Urban Institute.

And since about two-thirds of illegal immigrants live in just eight states, those areas will have a disproportionate share of the uninsured to care for.

In communities "where the number of undocumented immigrants is greatest, the strain has reached the breaking point," Rich Umbdenstock, president of the American Hospital Association, wrote last year in a letter to Obama, asking him to keep in mind the uncompensated care hospitals gave to that group. "In response, many hospitals have had to curtail services, delay implementing services, or close beds."

The federal government has offered to expand Medicaid, but states must decide whether to take the deal. And in some of those eight states — including Texas, Florida and New Jersey — hospitals are scrambling to determine whether they will still have enough money to treat the remaining uninsured.

Without a Medicaid expansion, the influx of new patients and the looming cuts in federal funding could inflict "a double whammy" in Texas, said David Lopez, CEO of the Harris Health System in Houston, which spends 10 to 15 percent of its $1.2 billion annual budget to care for illegal immigrants.

Realistically, taxpayers are already paying for some of the treatment provided to illegal immigrants because hospitals are required by law to stabilize and treat any patients that arrive in an emergency room, regardless of their ability to pay. The money to cover the costs typically comes from federal, state and local taxes.

A solid accounting of money spent treating illegal immigrants is elusive because most hospitals do not ask for immigration status. But some states have tried.

California, which is home to the nation's largest population of illegal immigrants, spent an estimated $1.2 billion last year through Medicaid to care for 822,500 illegal immigrants.

The New Jersey Hospital Association in 2010 estimated that it cost between $600 million and $650 million annually to treat 550,000 illegal immigrants.

And in Texas, a 2010 analysis by the Health and Human Services Commission found that the agency had provided $96 million in benefits to illegal immigrants, up from $81 million two years earlier. The state's public hospital districts spent an additional $717 million in uncompensated care to treat that population.

If large states such as Florida and Texas make good on their intention to forgo federal money to expand Medicaid, the decision "basically eviscerates" the effects of the health care overhaul in those areas because of "who lives there and what they're eligible for," said Lisa Clemans-Cope, a senior researcher at the Urban Institute.

Seeking to curb expenses, hospitals might change what qualifies as an emergency or cap the number of uninsured patients they treat. And although it's believed states with the most illegal immigrants will face a smaller cut, they will still lose money.

The potential impacts of reform are a hot topic at MD Anderson Cancer Center in Houston. In addition to offering its own charity care, some MD Anderson oncologists volunteer at a county-funded clinic at Lyndon B. Johnson General Hospital that largely treats the uninsured.

"In a sense we've been in the worst-case scenario in Texas for a long time," said Lewis Foxhall, MD Anderson's vice president of health policy in Houston. "The large number of uninsured and the large low-income population creates a very difficult problem for us."

Community clinics are a key part of the reform plan and were supposed to take up some of the slack for hospitals. Clinics received $11 billion in new funding over five years so they could expand to help care for a swell of newly insured who might otherwise overwhelm doctors' offices. But in the first year, $600 million was cut from the centers' usual allocation, leaving many to use the money to fill gaps rather than expand.

There is concern that clinics could themselves be inundated with newly insured patients, forcing many illegal immigrants back to emergency rooms.

Limas, 44, moved to the border town of Alamo 13 years ago with her husband and three daughters. Now single, she supports the family by teaching a citizenship class in Spanish at the local community center and selling cookies and cakes she whips up in her trailer. Soon, she hopes to seek a work permit of her own.

For now, the clinic helps with basic health care needs. If necessary, Limas will return to the emergency room, where the attendants help her fill out paperwork to ensure the government covers the bills she cannot afford.

"They always attended to me," she said, "even though it's slow."

___

Sherman can be followed on Twitter at https://twitter.com/chrisshermanAP .

Plushnick-Masti can be followed on Twitter at https://twitter.com/RamitMastiAP .

Read More..