http://www.nytimes.com/2011/09/28/business/28insure.html?hp
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"There is no more noble occupation in the world than to assist another human being - to help someone succeed." (Alan Loy McGinnis)
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In a study released yesterday by the Kaiser Family Foundation, the data showed the average annual premium for health insurance through an employer reached $15,073 in 2011 - 9% higher than the previous year.
Not to belabor the obvious but higher premiums are inappropriate for a time when unemployment is high and the GDP growth rate is at stall speed. Businesses cite the cost of coverage as a factor in decisions not to hire. The cost of family coverage has doubled since 2001 - wages have increased 34%.
The charts supporting the data from the Kaiser study show annualized inflation at 2% and wages (for those who are still employed) up 3%. Matching this up with a 9% increase in health care premiums makes no sense. Worker premiums have gone up 131% over the last 10 years. Employer contributions have gone up 113% over that same period.
I like to separate guesses from facts so here goes: the facts are that health care and health care-related fields are a good place to land a job because it's hard to see anything but profit margins continuing to go up. I think I'm on pretty solid ground there (so Aetna, and other companies like them should be secure places to work). But, from a management point of view, where's the challenge to get better or to make the work environment better for your staff when raising premiums covers your profit margins (and any of your mistakes). My guess is that it's like running a casino - the management always wins.
My suggestion: correlate premiums to the prior year's inflation rate - then see how well the management does.
The Kaiser foundation estimates that one to two percentage points of the premiums this year are related to provisions of the new health care law already in effect: like coverage for children up to 26 years old and for prevention services like mammograms. Really? I'm sorry, what is health care insurance for?
What's interesting from an economic point of view is that the "insurers" (and I use that term advisedly) are raising rates at a time when many people are putting off going to the doctor in order to avoid co-payments and higher deductibles. And the defense from the "insurers" is: higher premiums need to be charged because their costs would rebound once the economy recovered. Do I need to comment on that?
Stay healthy.
Wednesday, September 28, 2011
Monday, September 26, 2011
Clean Air Standards 3
http://online.wsj.com/article/SB10001424053111904194604576582814196136594.html?mod=WSJ_Opinion_AboveLEFTTop
***************
"To do well at a few things, give up many things." (John C. Maxwell)
***************
According to today's wsj.com, the EPA claim that critics of its campaign to remake U.S. electricity are "partisans" is wrong. It turns out that the "critics" include other regulators and even some in the Obama Administration. According to a "trove" of documents uncovered by Congressional investigators these internal critics think the EPA is undermining the security and reliability of the U.S. electric power supply.
According to Alaska Republican Lisa Murkowski, there's a major question about what will happen when as much as 8% of U.S. electrical generating capacity is taken off the grid because of an unprecedented set of rules (from the EPA) that will cause coal-fired capacity to shut down.
That 8% number comes from the Federal Energy Regulatory Commission (FERC) which since 2005 has been charged with ensuring that lights stay on. One undated memo specifies multiple weaknesses in EPA reliability modeling.
I could go on but I'll leave us with this: yesterday's review by Fareed Zakaria of Daniel Yergin's new book (The Quest), mentioned that China and India combined are building 4 new coal-fired plants per week. So, wait for it, we're going to succumb to our "Don Quixote-like" regulators and risk black outs so that "we" can make absolutely no difference in the massive increase in coal-fired releases into the atmosphere from China and India.
Who are these people?
***************
"To do well at a few things, give up many things." (John C. Maxwell)
***************
According to today's wsj.com, the EPA claim that critics of its campaign to remake U.S. electricity are "partisans" is wrong. It turns out that the "critics" include other regulators and even some in the Obama Administration. According to a "trove" of documents uncovered by Congressional investigators these internal critics think the EPA is undermining the security and reliability of the U.S. electric power supply.
According to Alaska Republican Lisa Murkowski, there's a major question about what will happen when as much as 8% of U.S. electrical generating capacity is taken off the grid because of an unprecedented set of rules (from the EPA) that will cause coal-fired capacity to shut down.
That 8% number comes from the Federal Energy Regulatory Commission (FERC) which since 2005 has been charged with ensuring that lights stay on. One undated memo specifies multiple weaknesses in EPA reliability modeling.
I could go on but I'll leave us with this: yesterday's review by Fareed Zakaria of Daniel Yergin's new book (The Quest), mentioned that China and India combined are building 4 new coal-fired plants per week. So, wait for it, we're going to succumb to our "Don Quixote-like" regulators and risk black outs so that "we" can make absolutely no difference in the massive increase in coal-fired releases into the atmosphere from China and India.
Who are these people?
Wednesday, September 14, 2011
The Lost Decade
http://www.nytimes.com/2011/09/14/us/14census.html?_r=1&nl=todaysheadlines&emc=tha2
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"If you can't write your idea on the back of my business card, you don't have a clear idea." (David Belasco)
***************
Today's Times produced an article based on data released by the Census Bureau yesterday on the number of Americans living below the poverty line: 46.2 million people. This is the highest number in the 52 years the bureau has been publishing figures on it.
Thus, it should not surprise that median household incomes fell last year to levels last seen in 1997. According to Lawrence Katz at Harvard, this is the first time since the Great Depression that median household income, adjusted for inflation, had not risen over such a long period: "This is truly a lost decade. We think of America as a place where every generation is doing better, but we're looking at a period when the median family is in worse shape than it was in the late 1990s."
The two tables which are part of the article are an excellent depiction of the downward spiral. The median household income chart shows the current level (adjusted to 2010 dollars) at $49,445 versus 1999 at $53,252 (with recessions shaded). The percentage of people living below poverty chart shows 15.1% today which is identical to the 15.1% in 1993.
While it is sometimes difficult to set aside politics in circumstances such as these, there are those politicians and economists whose positions are beginning to change in favor of short term spending at the federal level. For them, the concept of "infrastructure spending" is beginning to have an appeal.
Last year, about 48 million people ages 18 to 64 did not work even one week out of the year.
According to Timothy Smeeding (Directorof the Institute for Research On Poverty @ the U of Wisconsin, Madison), "We're risking a new underclass of young, less educated adults, mainly men, who can't support their children and form families because they are jobless."
Last year, about 16.4 million children lived in poverty (22% of the U.S. population).
Is there a higher priority than doing something about this?
***************
"If you can't write your idea on the back of my business card, you don't have a clear idea." (David Belasco)
***************
Today's Times produced an article based on data released by the Census Bureau yesterday on the number of Americans living below the poverty line: 46.2 million people. This is the highest number in the 52 years the bureau has been publishing figures on it.
Thus, it should not surprise that median household incomes fell last year to levels last seen in 1997. According to Lawrence Katz at Harvard, this is the first time since the Great Depression that median household income, adjusted for inflation, had not risen over such a long period: "This is truly a lost decade. We think of America as a place where every generation is doing better, but we're looking at a period when the median family is in worse shape than it was in the late 1990s."
The two tables which are part of the article are an excellent depiction of the downward spiral. The median household income chart shows the current level (adjusted to 2010 dollars) at $49,445 versus 1999 at $53,252 (with recessions shaded). The percentage of people living below poverty chart shows 15.1% today which is identical to the 15.1% in 1993.
While it is sometimes difficult to set aside politics in circumstances such as these, there are those politicians and economists whose positions are beginning to change in favor of short term spending at the federal level. For them, the concept of "infrastructure spending" is beginning to have an appeal.
Last year, about 48 million people ages 18 to 64 did not work even one week out of the year.
According to Timothy Smeeding (Directorof the Institute for Research On Poverty @ the U of Wisconsin, Madison), "We're risking a new underclass of young, less educated adults, mainly men, who can't support their children and form families because they are jobless."
Last year, about 16.4 million children lived in poverty (22% of the U.S. population).
Is there a higher priority than doing something about this?
Sunday, September 11, 2011
The President's Jobs Proposal
http://online.wsj.com/article_email/SB10001424053111904103404576560940420785126-lMyQjAxMTAxMDEwMDExNDAyWj.html?mod=wsj_share_email
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"Steve Jobs' legacy, like Henry Ford's, is very much a new, wider, richer, more opportunity-filled world for the common man." (John Steele Gordon)
***************
I've attached a current article from the Wall Street Journal on the new proposals aimed at helping with the job situation. It includes a chart ("Weighing Prospects") that summarizes some of the reactions from economists.
Mark Zandi, at Moody's Analytics, wrote a brilliant book that was literally contemporary to the worldwide financial crisis as it was occuring: one of my students, at the time, asked to use it as part of her thesis. He is, as well, one of the few contemporary economists that have advised both parties in Congress (this, of course, does not mean that they take his advice).
Moody's suggests that full enactment of the proposals will boost GDP growth by 2 percentage points next year. This would add 1.9 million jobs and shave a percentage point off the unemployment rate (currently at 9.1%, with the BLS U6 rate - which includes those who would like to work, but have given up, or are working part time - at 16%/17%). One of Zandi's more relavent perspectives that, again, both major political parties quote, is what I call the flow thru ratio: what does a dollar spent into the economy do for employment? According to Zandi, a dollar spent on an "employee" tax holiday generates $1.25 toward GDP. That same dollar toward an "employer" tax cut generates $1.04 for every dollar spent.
Back to the "Weighing Prospects" chart, I can't resist commenting on the inclusion of the BOA Merrill opinion. This, as BOA is trying to figure out whether they are going to lay off 40,000 employees in the near term. This from an organization that bought Merrill Lynch (was there any value there, were they forced into that purchase?). This from an organization so incompetent that they couldn't wait to buy Countrywide days before Countrywide was going over a cliff.
Last point: both Paul Krugman and Warren Buffet said that the U.S. efforts at "stimulus" in reaction to the worldwide financial crisis would not be enough. They were right. They usually are.
***************
"Steve Jobs' legacy, like Henry Ford's, is very much a new, wider, richer, more opportunity-filled world for the common man." (John Steele Gordon)
***************
I've attached a current article from the Wall Street Journal on the new proposals aimed at helping with the job situation. It includes a chart ("Weighing Prospects") that summarizes some of the reactions from economists.
Mark Zandi, at Moody's Analytics, wrote a brilliant book that was literally contemporary to the worldwide financial crisis as it was occuring: one of my students, at the time, asked to use it as part of her thesis. He is, as well, one of the few contemporary economists that have advised both parties in Congress (this, of course, does not mean that they take his advice).
Moody's suggests that full enactment of the proposals will boost GDP growth by 2 percentage points next year. This would add 1.9 million jobs and shave a percentage point off the unemployment rate (currently at 9.1%, with the BLS U6 rate - which includes those who would like to work, but have given up, or are working part time - at 16%/17%). One of Zandi's more relavent perspectives that, again, both major political parties quote, is what I call the flow thru ratio: what does a dollar spent into the economy do for employment? According to Zandi, a dollar spent on an "employee" tax holiday generates $1.25 toward GDP. That same dollar toward an "employer" tax cut generates $1.04 for every dollar spent.
Back to the "Weighing Prospects" chart, I can't resist commenting on the inclusion of the BOA Merrill opinion. This, as BOA is trying to figure out whether they are going to lay off 40,000 employees in the near term. This from an organization that bought Merrill Lynch (was there any value there, were they forced into that purchase?). This from an organization so incompetent that they couldn't wait to buy Countrywide days before Countrywide was going over a cliff.
Last point: both Paul Krugman and Warren Buffet said that the U.S. efforts at "stimulus" in reaction to the worldwide financial crisis would not be enough. They were right. They usually are.
Saturday, September 3, 2011
Zero Job Growth
http://www.nytimes.com/2011/09/03/business/economy/united-states-showed-no-job-growth-in-august.html?_r=1&nl=todaysheadlines&emc=tha2
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"The hero is the one with ideas." (Jack Welch)
***************
So August has presented us with zero job growth. There was an estimate this morning that roughly 400,000 state and local government jobs had been lost over the past year.
The White House said yesterday that it expected the 9.1% unemployment rate to stay that high thru at least 2012.
President Obama is expected to propose tax incentives to promote hiring and infrastructure spending. He's also expected to renew the payroll tax cut and extend unemployment benefits.
According to one economist, we have the same number of jobs in the U.S. that we had in January, 2000. Or, to use Fareed Zakaria's analogy, the U.S. GDP is at the same level as it was in 2007 and there are 6 million less jobs.
An economic statistic that is very closely watched by many economists is the percentage of working-age adults who are employed. As of August, that number is 58.2% which is the lowest number since 1983.
Yesterday, in Cernobbio, Italy, Nouriel Roubini (aka "Dr. Doom" because he forecast the worldwide financial crisis well before it happened) indicated that the advanced economies had reached a stall speed of around 1% annual growth. Roubini went on to say that governments and central banks, which have already made multitrillion dollar stimulus moves had no more "bullets."
There are some other facts here. Zakaria has pointed out on more than one occasion that Top 500 CEOs have all time record levels of "cash" on their books and have indicated to him that they will not spend it on capital projects in the U.S. until the tax and regulatory environment is clear. Is this rocket science?
I could go on.
***************
"The hero is the one with ideas." (Jack Welch)
***************
So August has presented us with zero job growth. There was an estimate this morning that roughly 400,000 state and local government jobs had been lost over the past year.
The White House said yesterday that it expected the 9.1% unemployment rate to stay that high thru at least 2012.
President Obama is expected to propose tax incentives to promote hiring and infrastructure spending. He's also expected to renew the payroll tax cut and extend unemployment benefits.
According to one economist, we have the same number of jobs in the U.S. that we had in January, 2000. Or, to use Fareed Zakaria's analogy, the U.S. GDP is at the same level as it was in 2007 and there are 6 million less jobs.
An economic statistic that is very closely watched by many economists is the percentage of working-age adults who are employed. As of August, that number is 58.2% which is the lowest number since 1983.
Yesterday, in Cernobbio, Italy, Nouriel Roubini (aka "Dr. Doom" because he forecast the worldwide financial crisis well before it happened) indicated that the advanced economies had reached a stall speed of around 1% annual growth. Roubini went on to say that governments and central banks, which have already made multitrillion dollar stimulus moves had no more "bullets."
There are some other facts here. Zakaria has pointed out on more than one occasion that Top 500 CEOs have all time record levels of "cash" on their books and have indicated to him that they will not spend it on capital projects in the U.S. until the tax and regulatory environment is clear. Is this rocket science?
I could go on.
Clean Air Standards 2
http://www.nytimes.com/2011/09/03/science/earth/03air.html?_r=1&nl=todaysheadlines&emc=tha2
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"Before it can be solved, a problem must be clearly defined." (William Feather)
***************
I've attached today's adventure with the gang that couldn't shoot straight. President Obama has asked Lisa Jackson to back off (because jobs are more important) an EPA ozone standard rule process. Lisa Jackson said something unintelligible about "her legacy." I guess whether people have jobs or not is secondary to her legacy. I guess it's all about "her."
In the meantime, here in Texas, the head of Texas' electric grid operator said new federal regulations on coal plant pollution could boost electricity prices by around 10%. Texas coal plants have 6 months to comply with new regulations on pollution.
The 10% number was surfaced at a news conference organized by the National Association of Manufacturers and held @ the Texas Instruments campus here in Richardson. Since the coal plants would have difficulty meeting the EPA standards in time, current estimates indicate that between 2% and 8% of coal plant capacity will have to shut down. Basically, the rule requires Texas coal plants to reduce sulfur dioxide and nitrogen dioxide emissions by January.
Senator John Cornyn, who was at the news conference, said he'd prefer that President Obama nuke the rule, as he did an EPA ozone standard rule process on Friday. He challenged President Obama to "place a moratorium on new rules and regulations until unemployment comes down."
While the head of the Texas Commission on Environmental Quality hasn't yet filed a formal request with the EPA for a delay (or a supplemental process), that will be considered. He said suing the EPA is also an option.
Frankly, after what the President did yesterday, probably a phone call from Senator Cornyn to President Obama would cover it. Let's see, jobs in Texas versus Lisa Jackson's legacy - I'm guessing JOBS would be more important.
***************
"Before it can be solved, a problem must be clearly defined." (William Feather)
***************
I've attached today's adventure with the gang that couldn't shoot straight. President Obama has asked Lisa Jackson to back off (because jobs are more important) an EPA ozone standard rule process. Lisa Jackson said something unintelligible about "her legacy." I guess whether people have jobs or not is secondary to her legacy. I guess it's all about "her."
In the meantime, here in Texas, the head of Texas' electric grid operator said new federal regulations on coal plant pollution could boost electricity prices by around 10%. Texas coal plants have 6 months to comply with new regulations on pollution.
The 10% number was surfaced at a news conference organized by the National Association of Manufacturers and held @ the Texas Instruments campus here in Richardson. Since the coal plants would have difficulty meeting the EPA standards in time, current estimates indicate that between 2% and 8% of coal plant capacity will have to shut down. Basically, the rule requires Texas coal plants to reduce sulfur dioxide and nitrogen dioxide emissions by January.
Senator John Cornyn, who was at the news conference, said he'd prefer that President Obama nuke the rule, as he did an EPA ozone standard rule process on Friday. He challenged President Obama to "place a moratorium on new rules and regulations until unemployment comes down."
While the head of the Texas Commission on Environmental Quality hasn't yet filed a formal request with the EPA for a delay (or a supplemental process), that will be considered. He said suing the EPA is also an option.
Frankly, after what the President did yesterday, probably a phone call from Senator Cornyn to President Obama would cover it. Let's see, jobs in Texas versus Lisa Jackson's legacy - I'm guessing JOBS would be more important.
Friday, September 2, 2011
Clean Air Standards
http://money.cnn.com/2011/09/02/news/economy/regulations/index.h
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"Men occasionally stumble over the truth but most pick themselves up and hurry off as if nothing had happened." (Winston Churchill)
***************
I've attached an article out today on the President backing off "tough" clean air regulation. Obviously, we all want clean air but the jobs situation has pressured the President to stop a planned increase in clean air standards.
What I'd like to see stopped is stupid government. Since I started posting, my perspective has been that this "blog" is about business, economics and/or demographics. But, the actual administration of clean air standards could be a little more sophisticated than it is: why does everything have to be an "either/or"? I have no idea whether the President telling Lisa Jackson to withdraw the draft "Ozone National Ambient Air Quality Standards" has a direct relationship to the fact that Texas coal fired power plants could be shut down over some sort of air quality issue that Lisa Jackson has, but here's the deal: we could have cooperatively set standards nationally and locally to phase out coal fired plants over time while retraining employees and phasing in gas-fired or other alternative power plants so that "we" here in Texas are not faced with potential brown outs or black outs from possible plant shut downs.
Interestingly, within the article, there is an excellent video interview with Harvard economist Ken Rogoff who sides with those of us who said there never was a "recovery" from the recession. If you follow "jobs," nothing's changed. Rogoff prefers to call the worldwide recession that started in December, 2007, as the beginning of a second "Great Contraction" (the first being the Great Depression). In that sense, his position is very similar to Paul Krugman who refers to this current economic situation as a "Lesser Depression." As defined by jobs, the current economic situation has a real unemployment rate of 17% (standard BLS rate of 9.1% plus those who've given up - the BLS pros call that the "U6" unemployment rate), where the Great Depression had a 25% unemployment rate.
Both Rogoff and Krugman advocate infrastructure spending where it is needed NOW (bridges and roads, etc.). Top 500 CEOs and Private Equity gurus have both said that clearer regulatory and tax policy could bring pent up capital and other investment spending back the the U.S. economy.
At least there are ideas out there about what to do. Government needs to proactively participate in that and prime the pump where possible and necessary.
Forgive me if I don't get all teary-eyed over the appointment of Jeff Immelt (GE CEO) as the new "jobs czar" to lead the charge on creating jobs in the U.S. He recently moved one of his operating divisions from the upper Midwest to China. Speaking of China, while they are building a new coal fired power plant every week (at least, that was their pace), they have also been referred to as the world's largest investor in clean energy. Short term, they need power. Long term, they want clean air. What a concept! They're pragmatic.
Short term, we want clean air. Long term, we're unemployed (with brown outs and black outs).
Really?
***************
"Men occasionally stumble over the truth but most pick themselves up and hurry off as if nothing had happened." (Winston Churchill)
***************
I've attached an article out today on the President backing off "tough" clean air regulation. Obviously, we all want clean air but the jobs situation has pressured the President to stop a planned increase in clean air standards.
What I'd like to see stopped is stupid government. Since I started posting, my perspective has been that this "blog" is about business, economics and/or demographics. But, the actual administration of clean air standards could be a little more sophisticated than it is: why does everything have to be an "either/or"? I have no idea whether the President telling Lisa Jackson to withdraw the draft "Ozone National Ambient Air Quality Standards" has a direct relationship to the fact that Texas coal fired power plants could be shut down over some sort of air quality issue that Lisa Jackson has, but here's the deal: we could have cooperatively set standards nationally and locally to phase out coal fired plants over time while retraining employees and phasing in gas-fired or other alternative power plants so that "we" here in Texas are not faced with potential brown outs or black outs from possible plant shut downs.
Interestingly, within the article, there is an excellent video interview with Harvard economist Ken Rogoff who sides with those of us who said there never was a "recovery" from the recession. If you follow "jobs," nothing's changed. Rogoff prefers to call the worldwide recession that started in December, 2007, as the beginning of a second "Great Contraction" (the first being the Great Depression). In that sense, his position is very similar to Paul Krugman who refers to this current economic situation as a "Lesser Depression." As defined by jobs, the current economic situation has a real unemployment rate of 17% (standard BLS rate of 9.1% plus those who've given up - the BLS pros call that the "U6" unemployment rate), where the Great Depression had a 25% unemployment rate.
Both Rogoff and Krugman advocate infrastructure spending where it is needed NOW (bridges and roads, etc.). Top 500 CEOs and Private Equity gurus have both said that clearer regulatory and tax policy could bring pent up capital and other investment spending back the the U.S. economy.
At least there are ideas out there about what to do. Government needs to proactively participate in that and prime the pump where possible and necessary.
Forgive me if I don't get all teary-eyed over the appointment of Jeff Immelt (GE CEO) as the new "jobs czar" to lead the charge on creating jobs in the U.S. He recently moved one of his operating divisions from the upper Midwest to China. Speaking of China, while they are building a new coal fired power plant every week (at least, that was their pace), they have also been referred to as the world's largest investor in clean energy. Short term, they need power. Long term, they want clean air. What a concept! They're pragmatic.
Short term, we want clean air. Long term, we're unemployed (with brown outs and black outs).
Really?
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