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How much health care can $10 a week buy?

20 Mar

In the 1980s while negotiating a union contract I was trying to make the case for raising the deductible and coinsurance in the health benefits plan. As part of my pitch I made an analogy with other forms of insurance.  What I said was that if you look at auto insurance, it doesn’t pay for an oil change or new tires.  One union representative said his wife had just had surgery and did I expect him to pay for that. The point was that not everything is insurable and some cost sharing is fair and desirable.  What I got back from the other side of the table was, “Are you comparing my wife to a car?”

The Health Lottery

Actually, I was comparing spending $20 on an oil change and $20 on an office visit coinsurance, but that didn’t matter.  That “Are you comparing my wife to a car?” syndrome is not unusual because we cannot get past the attitude that paying for health care is not the top priority for spending our money.

Here is another way to look at this.

Georgia residents spent an average $470.73 on the lottery in 2010, or 1 percent of their personal income.  Only Massachusetts (STOMA1) had higher spending, $860.70 per adult, more than three times the U.S. average. Georgia had per capita income of $34,800 in 2010, below the national average of $39,945, while Massachusetts’s was higher at $51,302, according to data compiled by Bloomberg.

In fact, in Georgia the median household income 2006-2010 was $49,347 and 15.7% of the population is below the poverty level. Under the Affordable Care Act a family with an income of $50,000 will receive a premium subsidy a little over $12,000 per year plus cost-sharing subsidies up to an additional $3,600 per year.

Clearly spending several hundred dollars on the lottery is not equal to the cost of health insurance, but the lottery is not the only non-necessity people spend money on. In other words, what is unaffordable is a lot more than health care, but we tend to reset our priorities so that the $80 office visit is unaffordable, but the lottery ticket is not.  Go figure.

Logically our priorities would be more like this:

  1. Food
  2. Shelter
  3. Health care
  4. Clothing
  5. Saving
  6. Retirement
  7. Education
  8. Other stuff
  9. Vacations
  10. Gambling

Exactly where are our priorities?  What is affordable?

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Let the price of gas go to $8.00 a gallon … what a jolt for the Volt!

18 Mar

If you knew someone who really liked something they did, had done it all their lives and virtually had a cultural attachment to that something, how would you get them to change (assuming for their own good)?

You could entice them to try something new or you could break their affinity to that something so they wanted to change for the presumed better. If they were not only happy, but nearly addicted to the status quo (and no, we are not talking about drugs or smoking) enticing them would be difficult. However, gradually making the attractiveness to that something less attractive would eventually cause the person to seek better options even if it were initially unpleasant.

What the heck are we talking about? Gasoline and the good old internal combustion engine of course.

Electric Car

Load up the kids

The current Administration seeks to get us off the fuel of the last century by subsidizing cars nobody wants to buy (because those vehicles simply do not meet Americans needs or equally important perceived needs). You can waste all you want subsidizing an electric car, but if it goes only forty miles and holds one bag of groceries or a golf bag minus the clubs, it won’t get plugged into many garages in America unless it becomes the most desirable option.

At the same time, as gas prices rise many Democrats in Congress want to release oil from the Country’s strategic reserve to artificially hold down the price of gas.

Well duh!

Could anything be more at cross purposes? Here you have the political mind in action. Don’t do what’s right, do what won’t get you unelected. In Europe gasoline is $7.00 to $9.00 a gallon (equivalent). Guess what, your greatest risk in Holland is getting hit by a bicycle, in Rome by a motor scooter and in most other places by a car that might fit in the third row of an American SUV. In addition, their rail system is very convenient. Why, because it is too expensive to not use these means of transportation.

It is all about creating the environment for people to want to change. If we did that, there would be no need for electric car or any other efficient vehicle subsidies because people would be demanding cars that were cheaper to operate because they needed them and wanted them and someone would fill that need.

Perhaps I’m on to something, I think I’ll call it free enterprise and market demand.

Here is another way to view this motivation thing. North Korea just announced it was launching a new ballistic missile and space satellite shortly after the US pledged to send 240,000 tons of food so it can feed its people.

Amsterdam Bicyles, parking

Amsterdam

Washington said a launch carrying a satellite could violate Pyongyang’s agreement last month to stop nuclear tests, uranium enrichment and long-range missile launches — and thereby scuttle U.S. plans to resume food aid.

Does North Korea have any motivation to divert money from space or its military to prevent starvation? Of course not, they have been subsidized by the same people subsidizing electric cars and windmills. Clearly once again this carrot didn’t work and neither did a $7,500 tax credit for buying the Volt.

Happy Saint Paddy’s Day

17 Mar

Truth be told it has been 150 years since my relatives came from Ireland to America and another truth is that along the way that Irish blood was thinned with a little English, German and Swedish. Nevertheless, my first steps in Ireland a few years ago gave me a unique sense of being home especially as we passed through the village where my great, great-grandfather and his six brothers were born in County Clare. Corny I know, but I can’t help reflecting on what the previous generations faced that made them leave their home for the unknown only to face conditions not much better. As I am fortunate to travel frequently, I never fail to be amazed at how blessed we in America are and how much we take for granted, every one of us.

May love and laughter light your days, and warm your heart and home. May good and faithful friends be yours, wherever you may roam. May peace and plenty bless your world with joy that long endures. May all life’s passing seasons bring the best to you and yours!

The picture at the top of this page is a famine cottage.

Medicare premium $247 in 2014 – false information won’t go away

13 Mar

I am beginning to become disillusioned about the ability of people to think and reason and not be blinded by prejudices  [i]. . . he said with tongue in cheek.  It seems that people will believe what they want to believe and not be deterred by the facts.

I have written frequently that the rumor about the Medicare Part B premium increasing to $247 in 2014 is not true and yet I still get comments to the contrary.  The latest is that Snopes.com says it is true. No, Snopes does not say that at all.  Here is what it says:

From Snopes:

As for future Medicare Part B premium rates, the information cited above is wrong on two counts: No provision of the health care legislation passed during the Obama administration sets Medicare premium rates, nor is a whopping jump of over 100% to a $247.00 monthly premium in 2014 a realistic figure.

Many people, it seems, just want to believe that so-called Obamacare is responsible for a tremendous jump in Medicare premiums (and no doubt the tornadoes in the mid-west as well).  That is not true; there is nothing in the Affordable Care Act that talks about the Medicare premium.

So far I have been accused of lying, of being a liberal, of being a supporter of President Obama and I forgot what else because of posting the truth about the Part B premium rumor.  Frankly, I am none of those, but I am one thing.  I am scared to death that some of these people are going to vote.

If you want to believe rumors and Internet nonsense that is your right, but for Pete’s sake, don’t spread false information or any information without checking out the facts.  You can go to Snopes, Fact Checker and other sources if you like.  In this case you can read the Medicare Trustees Report and you can easily get the full text of the Affordable Care Act.  You can do all kinds of productive things before you spread rumors, try it sometime.

Here is a tip. Just because it is on the Internet or you receive an e-mail along with another four million people, does not make it true.

[i] a preformed opinion, usually an unfavorable one, based on insufficient knowledge, irrational feelings, or inaccurate stereotypes

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Spare me the campaign ads, it’s a done deal

10 Mar

It’s just started and I’m already fed up with the 2012 presidential election. We all know how it’s going to turn out anyway. Romney will be the Republican candidate and Obama will be the next President. The Democrats will keep the Senate and the Republicans will just barely keep the House leading to four more years of the nonsense we have been going through for the last four.

Instead of spending all this PAC and Super PAC money interrupting my TV shows for the next six months, let’s do some good with it. The Democrats can buy Chevy Volts and birth control pills, or voluntarily pay more income taxes.

The Republicans can use their money to find health care “consumers,” drill for oil, take lessons in human nature and they can also give a little to Rush Limbaugh for civility lessons.

Or, both groups can simply make a donation to reduce the deficit.

Frankly, I don’t care what any of them do with their millions as long as they don’t insult my intelligence with their barrage of lies and misleading information.

Where did I put that “I Like Ike” button? “Stevenson, Stevenson he’s our man, if he can’t do it no one can!” “In your heart, you know he’s right.”

See, cheap and memorable.

20120304-152419.jpg

What is the actual federal debt and who caused it?

6 Mar

I'm still not optimistic

We hear a lot these days about deficits, debt and even more about who is at fault, who added more and why.  What we don’t hear a lot about are the facts.

So let’s take a look;

On January 20, 2001 at the start of the Bush administration the federal debt was $5,727,776,738,304.64 (that’s trillion).  On January 20, 2009 at the end of the Bush administration the federal debt was $10,626,877,048,913.08 or an increase in eight years of $4,899,100,310.609 for an annual average increase of $612,387,538,826 (that’s billion).

On January 20, 2009 at the start of the Obama administration the federal debt was $10,626,877,048,913. As of January 20, 2012 the debt was $15,236,271,879,792.78 for an increase of $4,609,394,830,879 in three years or an annual increase of    $1,536,464,943,626 (that’s trillion).

So what caused all this debt; spending and tax reductions, but mostly not paid for spending.

In May 2001 Bush enacted tax cuts worth $1.3 trillion. On September 11, 2001 we began our war on terror followed by the Iraq war. In December 2003 Medicare Part D was approved (unfunded). In October 2008 we had the Emergency Economic Stabilization Act.

Remember, that from January 2007 forward both houses of Congress were controlled by Democrats.

Obama inherited a debt that had about doubled during an eight year period. During his first three years he increased the debt another 50%

During his administration we have had several major spending bills, including:

2009

February 17: American Recovery and Reinvestment Act

May 20: Helping Families Save Their Homes Act of 2009

August 6: Cash For Clunkers Extension Act

November 6: Worker, Homeownership, and Business Assistance Act of 2009

2010

March 18: Hiring Incentives to Restore Employment Act (HIRE Act)

March 23: Patient Protection and Affordable Care Act

March 30: Health Care and Education Reconciliation Act of 2010

July 22: Unemployment Compensation Extension Act of 2010

September 27: Small Business Jobs and Credit Act of 2010

December 17: Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

And of course, in February 2012 extension of unemployment benefits and the Social Security tax holiday.

So whose fault is our current debt? It’s every member of Congress since January 20, 2001.  Does it matter who inherited what or on whose watch September 11 occurred or the economy collapsed, not if you are a taxpayer or creditor of the U.S. it doesn’t.

You promised me...

Keep in mind that no matter how you slice it, no matter what shenanigans occurred by the financial community, the root cause of the economic crisis was federal policies trying to push more and more people into home ownership they could not afford and that goes back several administrations and Congresses controlled by both parties. Of course, careless individual borrowing and debt accumulation by individuals added fuel to the fire as well.

Raising taxes alone is not going to get us out of this mess and not just because you can’t raise enough in taxes to do so without killing the economy, but more importantly because Congress keeps spending without regard to the consequences.  You can argue all you want that short-term spending is necessary to stimulate the economy as many liberal-minded economists do, but the reality is that Congress doesn’t know when to stop because spending means votes from this generation and the people most affected can’t vote yet, so who cares.

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What you should know about executive pay

5 Mar
President Barack Obama delivering remarks on n...

I'll never be overpaid (unless I can ge that rap thing going).

During the liberal left enlightenment we have become obsessed with executive pay, the wealthy, millionaires and billionaires, all 400 or so of them.  During the health care debate you were told the pay of health insurance executives was a cause of high premiums (utter nonsense by the way). Notably absent from the target wealthy were the  entertainment and sports elite and their multimillion dollars pay days, lavish life styles, private planes along with a few college presidents and football coaches who earn over a million dollars a year. Don’t get me wrong, if you can make millions dunking a ball into a net or singing garbage mouth “music” that demeans women and any other rational person, more power to you.  It’s not them who are dumb.

Before we continue let me say some executives are overpaid, some are greedy and most receive extra compensation in the form of bonuses for work that should be part of their job in the first place. In addition, in many cases the assessment for meeting incentivized goals is questionable at best. But if you think about it, that is true for most of us only on a smaller scale. Building up OT, extra long breaks, calling in sick or just goofing off on the job are all forms of over compensation.

However, whether or not an executive is overpaid is a problem for the organization’s board of directors and its shareholders. They must determine if they are getting value for their money, if performance is reflected in their investments and what it takes to attract and retain the executives they want to run the company. Relatively few executives receive the headline grabbing $100 million payouts and most of the reported compensation packages are misleading because they include far more than what most of us think of as pay, in other words all those big bucks are not in the paycheck. Regardless of an executive’s pay, it has an insignificant effect on the cost of products and services or health insurance premiums.

I know all this because I was a VP of Compensation and Benefits for a Fortune 500 company where I drafted and negotiated employment contracts and designed compensation plans for executives and below.

Where did it come from?

If you are going to be envious of or just disgusted with executive pay you should know what it is. Aside from the few hedge fund managers who make the occasional billion, most corporate compensation packages are made up of several components which may include all or several of the following: base pay, deferred compensation, stock options, restricted shares, supplemental pensions, bonuses, performance shares and the like.

When you look at all this stuff you see that the majority of compensation is not cash in the paycheck and most is deferred to a future payout which may or may not occur. In theory at least and if administered correctly the big payout will come with the growing success of the company which benefits shareholders and ultimately all employees.

Stock options give the executive the ability to convert options into stock in the future at a fixed price and benefit from the gain. Let’s say I give you 1,000 options to buy XYZ stock at $50 a share any time after three years have lapsed, but after ten years they expire and are worthless. How much did I give you? For you to receive any value the price of the stock must be above $50 when you exercise the shares during the period between three years after you receive the options and when they expire. For you to benefit you must help create value for all shareholders. So, what may appear to be $50,000 in compensation will only be that amount if the price of the stock doubles (benefiting all shareholders).

Other forms of stock compensation (restricted shares, performance shares) do provide immediate value, but the number of shares actually given to the executive depend on meeting both short and long-term performance goals typically tied to the company’s results such as earnings per share, return on investment, total shareholder return or something like that; often comparing results with other companies in an industry. In addition, there are vesting periods of several years before the executive has a right to the shares of stock.

Deferred compensation is often reported as part of the compensation package too, generally when an executive leaves a company, but deferred compensation is just what it says, it is money earned, but not taken by the employee. Instead it is deferred to some future date. Let’s say you earn $50,000 a year but tell your employer to defer $5,000 each year. Since the employer is using the money he would otherwise pay you, he is going to pay you interest.  At some point when you leave the employer, you will receive your money plus the interest.  During the period you are still employed, there is no guarantee you will ever be paid as the money now held by the employer is subject to creditor demands and if the employer gets into financial trouble all your deferred compensation is lost.  Sound like a good deal?  Most of the time it is and it defers paying income taxes, but given the likely trend in tax rates, money paid at some point in the future may pay a higher tax.

There is one other major element in executive pay and that is pensions.  Because of federal limits on the amount that can be paid from a qualified pension plan, most large corporations provide a supplemental reinstatement pension plan to allow an executive to receive a pension using the same formula used for other employees, some of which may be above IRS limits because of their pay.  Compensation above $250,000 per year cannot be counted when funding a qualified pension plan and no pension from a qualified plan can be above $200,000 a year.  When you hear about huge payouts upon an executive retiring that amount will include the present value of the pension earned by the executive even though it will most likely be paid over his or her lifetime. For example, let’s say you have a pension of $3,000 a month and you retire at age 62.  The lump sum value of that pension based on current annuity rates is about $546,000.  Of course if you were earning a million dollars a year and your pension was a million dollars a year the lump sum value would be about $15,000,000.  That is the amount you will hear about as part of their total compensation.  Keep in mind that if the retired executive dies within a short time of leaving the employer, he may never receive the total amount promised. Oh, about that fair share thing, in addition to normal income taxes on their pension, the person receiving one of these special pensions must pay Social Security and Medicare taxes in advance on the lump sum value of the pension even if they don’t live to receive the full value. In our example, that amount is $217,500.

That is a simple explanation of executive compensation.  The reality is the subject is immensely complicated and subject to rules and regulations from a variety of federal departments. Legions of consultants, tax advisors, and lawyers make a living from advising corporations about executive compensation matters.

Between base pay, cash bonuses, stock award and retirement benefits some executives receive a great deal of compensation, a great deal. One could argue that they are overpaid and in many cases they are, but does that mean their pay should be the business of the federal government beyond compliance with the scores of applicable laws?  Should executive pay be used by politicians to foster their own agendas and mislead Americans as to the implications of this compensation?

If a person in business earning a total of $10,000,000 a year is a problem, then we should also have a problem with movie stars, sports stars and anyone else who earns an amount that makes them stand out among us mortals.  It’s not easy to accept that any one person can be worth $10 million a year in compensation when the average family income is around $50,000.  These folks are an easy target, they make for good rhetoric and needless to say most of us would like to earn a tenth of what they do.

However, don’t be fooled by the class baiting we are seeing in politics today. It’s not what someone else has earned that matters, it is what opportunities you have to do the same that matters.  Most of the wealthy in this Country earned their wealth whether we agree with their value added or not. And most of the highest net worth Americans got that way through increasing stock value, and they brought along millions of average people with them.

Seven billion dollars more for Perkins college loans, aiming at the wrong target again. Why are college costs escalating at the rates they do?

4 Mar

Here we go again, dealing with a problem by ignoring the problem. College costs are out of control, we all know that just as we know health care costs are out of control. The President wants to deal with the escalating cost of a college education by increasing the support for Perkins loans by $7 billion dollars. In other words, give more money to more people to pay for ever-increasing costs. No doubt many people will see this as a good thing, spending more always results in something good happening.

Just like with health care, throwing more money at the problem, insulating people from the problem and not addressing the real problem will get us nothing in return.

What is the real problem; well let’s ask the right question. Why are college tuitions escalating at the rates they are? Why does a college education cost what it does?

As with health care there are a number of reasons including; bloated professor salaries and related compensation costs, low teaching productivity from many professors, the perception that high cost adds high value, spending too much money on buildings, stadiums, administration, etc. than is unnecessary for the primary mission of education, lack of focus on a curriculum that accomplishes a specific goal resulting in thinking, qualified, skilled graduates.

We have made it a status symbol to send our kids to a prestigious college, a badge of honor to discuss how much we spent on a college education. Those stickers on the rear windows of our cars are not there to support the school, but to tell our friends and neighbors, hey we have arrived, and hey, we kept up with the Jones’s.

In doing so we are duped. We don’t ask about the efficient use of a college’s money (our money), we don’t look at budgets or building plans. We go to colleges with our hands out and on our best behavior begging for admission and what aid we can receive. We don’t hold the college accountable for the education it provides or for much else.

Just like with health care we are incapable of acting as consumers demanding efficiency, quality and value.

There is no reason for college costs to escalate beyond general inflation, to pay professors who write books and run consulting business $100,000 or more to teach a few hours a week. There is no reason to pay a $1 million a year to a college football coach or a college president for that matter (in the absence of solid performance measures).

Aren’t we stupid, we put limits on local community school spending to keep our taxes low, and meet budgets yet we deal with college costs by adding $7 billion more to the federal deficit?

What is most scary about all this is not that we are ignoring the problem, but that so many people buy into the idea that simply throwing government money are something, money we don’t have, accomplishes anything. Hey, it’s an election year, we all know that, but if we continue to be so gullible with this type of proposal, we have no right to complain. More money to pay for exorbitant charges is very likely to encourage increasing those charges, not the reverse. This is no different from when we changed health insurance from paying physicians with a fee schedule to paying on a reasonable and customary fee basis – escalating fees simply raised the fees allowed for payment…surprise, surprise!

Managing the deficit is not on anyone’s agenda

20 Feb
 Hundreds of millions in savings from winding down the Iraq and Afghanistan wars and we immediately find new ways to spend the money, not reduce the deficit or balance the budget.
President Barack Obama signs legislation in th...

And it's not even my money, cool huh?

A 2% payroll tax cut is about to expire (one that should not have occurred in the first place), the President appeals to the public to tell Congress what the loss of the $40 will mean to them and unthinking Americans respond in droves not caring where the money will come from, the inevitable consequences of our financial chicanery or the long-term impact on Social Security funding … Hey just get it from the “wealthy 1%.”

Congress extends the tax cut without funding it, adding more to the deficit.

Not a week goes by that another piece of legislation is not introduced adding more to federal spending.  There is more for everybody, just don’t pay for it or instead soak the top 5 percent of Americans.

There are several clear messages here. Americans want more, they know little and care less about Federal spending .  Obama is going to be re-elected because he is more than willing to buy the votes of the middle class.

It’s not all that complicated and Americans are going to get exactly what they deserve.

Wealthy in America-Inequality in America; where is the ROI? Higher taxes on the “wealthy” is a losing strategy

18 Feb

A favorite theme of today’s politicians is income inequality; not paying ones fair share, etc. However, inequality has been with all societies since time began. Inequality is not necessarily bad and can result simply from the high achievements of a relatively few in a society. This is not unfair as long as the successful have not intentionally prevented the mass of people from achieving success. For example, through unfair taxation or poor educational opportunity.

In a society such as in the U.S. opportunity abounds regardless of how difficult ones situation may be as the result of circumstances of birth. Some people rise above their circumstances to amazing heights, some rise modestly, some plod along and some do nothing positive, what’s new?

Economically - Challenged & illiterate .. CIA ...

Today we focus on the taxes paid by the rich; billionaires such as Warren Buffett claim they pay too little because most, if not all, of their income is taxed at capital gains or dividend rates. While true that those rates result in a low effective tax rate for the super wealthy, that argument seems to ignore the many government transfers and credits applicable to the majority of Americans. Various tax credits and deductions are unavailable or are limited for higher income (starting in some cases around $80,000 in annual income) Americans. If circumstances such as the number of children one decides to have can result in no income tax payable, how is it unfair that income invested (already taxed once) and at risk is taxed at a lower rate than ordinary income?

Higher income (far below millionaires and billionaires) Americans are limited in their tax advantages in many ways such as the taxation of Social Security benefits, higher Medicare premiums, limited IRA contributions, the alternative minimum tax, the estate tax (which the new Obama budget wants to raise to 45%), limited retirement benefits and 401(k) contributions, several new taxes under the Affordable Care Act including a new 3.8% tax on unearned income such as taxable profit from selling a home and more.

Virtually every tax advantaged program passed by Congress contains limitations or exclusions applicable to higher income individuals. In other words our tax system goes out of its way to benefit the non wealthy which is one of the reasons nearly 50% of Americans pay no income tax. Despite this, we are besieged with criticism of the 1% and far lower who, according to our President, don’t pay their fair share.

We struggle even defining wealthy. Is it income or is it assets and net worth? Is the senior citizen living on Social Security and a modest pension wealthy? What if he has accumulated $500,000 in savings and investments and has a fully paid home worth $400,000? Many government transfer programs ignore such assets when defining eligibility. One could easily have a half million dollars in net worth and still avoid taxation of Social Security and higher Medicare premiums. Is that fair?

Is it fair a man can be married three times, be divorced twice and each of those ex and current wives receive his Social Security benefit based on his earnings alone? Not only do higher income people (again, far from millionaires) pay Medicare payroll taxes on all of their wage income, they pay higher Medicare Premiums, while the taxes they pay on their Social Security benefits also pay for a portion of Medicare.

Should higher income people pay more to their government and get less, ok that’s a fair argument. But what is not fair is claiming the successful in America are not now paying their fair share.

If you are poor or low-income and have lived your life accordingly, you have received a disproportional amount of wealth transfer (not to mention access to hundreds of government programs designed to improve your education and lift you out of poverty) and will continue to do so in old age. If you are middle-income, you should remain middle-income in retirement and if you are higher income the same holds true. You lived your life, made your choices, reaped the rewards or suffered the consequences.

And who are these wealthy Americans? We all know about the Wall Street crowd, hedge fund managers, and CEOs, but what about the small business owners, the cop and teacher whose combined income puts them over the limit for many government transfers? Do we think of the prudent middle-income couple who have paid off their mortgage and accumulated a nice nest egg or the government worker with a generous pension and health benefits, plus 403b plan? Probably not.
Frankly it doesn’t bother me that Warren Buffet pays a lower tax rate than I do or that I pay a higher effective tax rate than the majority of Americans. What bothers me is that the politicians have framed the discussion so Americans believe that being fair means taxing the “wealthy” more so that mismanaged government programs and unrealistic promises made by politicians can be partially paid for. That is a losing strategy for all of us.  What we should be asking is what have we gotten for our investment in government programs since the War on Poverty in the 1960s. Why haven’t all the programs in the last fifty years closed the income gap from the bottom up?

Foreclosure “settlement” is another distraction from the real problem.

10 Feb
English: Bustour touring foreclosures in San Diego

Wow!  There is a settlement with some banks and because the banks screwed up their paper work on valid  foreclosures (as opposed to any wide-spread illegal foreclosures); thousands of homeowners will be helped.

According to an article in the Wall Street Journal:

The   agreement is expected to call on the banks to provide $20 billion in other aid—by cutting loan balances for tens of thousands of homeowners and by refinancing thousands of borrowers who are current on their loans but owe more than their homes are worth.

Gee I wish someone had helped me in 1987 when I bought I house using 10% down with a mortgage at 9.45% that was underwater for nearly tens years after that.  What’s different today? Well, today politicians are seeking to gain favor, create positive headlines and make you think all this money squeezed from the banks will somehow stimulate the housing market. That’s hard to see happening given these folks are unlikely to do more than stay where they are. And why not, they have a good deal.

If you did not take thousands in home equity from your home, if you have been in your house for several years, if you bought it with a reasonable down payment  and you are still having a tough time with mortgage payments, you should be mad.

Illegal or unjustified foreclosures should be remedied, including reasonable compensation to those harmed. A massive screwup in paperwork that did not change the end result of a valid foreclosure is quite another matter.  The process needs to be fixed. However, this settlement is nothing more than getting the private sector to fund an attempt to correct another government screwup. And yes, the root cause of all this is government policy going back to the 1990s. I heard a discussion on the radio yesterday about the housing crisis and when one person mentioned this fact another participant claimed it was all the fault of the financial industry because they lobbied for the changes. Think about that for a minute, banks had to lobby members of Congress to lower their own lending standards?

However, the real point is that even if that were absolutely true, Congress took the action, passed the laws and pressured for subprime loans. Where is the integrity in that?  If someone encouraged your child to throw a rock through a window, whose fault is the broken window?

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The integral relationship between tithing, tattoos, and health care reform … Hey, we are all human!

9 Feb
tattoo # 4 - finished!

Hey, it's essential!

If you think I’m really stretching this analogy, let me state my case.

I was in church recently and the pastor was explaining the church’s finances. The church had 2,000 families as parishioners. Its fixed costs were $140,000 per year or about $70 per family. That seems doable yet the church came up $50,000 short last year as only 300 families of the 2,000 made any donation. It seems there are higher financial priorities for many families.

One of those priorities may be tattoos as a considerable number of church attendees sported body art.  How much does a tattoo cost I wondered. My research shows the minimum is about $100 with many in the $200 to $250 range and you can figure on $160 per hour for application.  That’s a hefty sum given it is not exactly the wealthy segment of society adorned like aborigines.

Two hundred fifty dollars will buy one other thing, it will pay for a whole year of a generic oral contraceptives or the typical co-pay for a brand version. But we all know that is an unaffordable personal expense requiring federal intervention so now it is free.

At the risk of being called, well, something I can’t help but wonder how many women with tattoos can’t afford their birth control pills.  Many people set their priorities based on their perception of personal responsibility. You see, a church can run its operation without money and the lowest cost, most routine health care is unaffordable if it detracts from our really important priorities like a snake on ones thigh or a pin of steel through the tongue.

Lest you think I am over generalizing or simply off my rocker look around for yourself and talk to people. Have you ever heard a person complain about the cost of some luxury they simply have to have, the price of a hot dog at Disney, their tattoo or the latest smart phone?

On the other hand, “What do you mean I have to pay $30 for those pills? I can’t afford that! I have lousy insurance!”

I wonder if removal of a tattoo is an essential health benefit … Oops, better not give HHS any ideas.

A quote we may have forgotten

5 Feb

Life grants nothing to us mortals without hard work.

Barack Obama.    

Horace

Split a pill; when does the buffet open?

28 Jan

As I am preparing to board a cruise ship, I look around and it is hard to see a fellow traveler under age 65 or perhaps even age 70 or to put it another way there are a large number of Medicare cards on this boat. Then I equate the cost of a cruise with the following.  Yeah I know there are a lot of poor elderly, I know that  because government stats tell me so.  However, those averages miss a lot of people with a lot of money to spend. Hey, why not split a pill if you can do it on a cruise?

1 in 5 Older Americans Cutting Back on Health Care to Save Money

WASHINGTON—More than 20 percent of Americans age 50 or over report saving on health costs by switching to cheaper generic drugs, getting free samples, stopping pills or reducing dosages, and nearly as many skip or postpone doctor appointments for the same reason, according a new report by the nonpartisan Employee Benefit Research Institute (EBRI).

The data suggest that spending by those near or in retirement declines to match income, even when it means giving up real needs.

“We know that consumption tends to fall with age, but it’s difficult to measure whether falling consumption is voluntary,” said Sudipto Banerjee of EBRI, author of the study. “However, we found evidence that a significant segment of the older population may be making spending adjustments to their health care in order to save money.”

Specifically, the analysis found that more than 1 in 5 (21.5 percent) households reported that they have made some changes in their prescription drugs to save money, and nearly as many (19.4 percent) said they have either skipped or postponed doctor appointments to do so. More than a quarter of households (27.5 percent) reported difficulty in paying their monthly bills.

The report found that these reductions were almost equally prevalent among households, whether they reported increasing or decreasing their annual spending. Even for those who reported that their spending was unchanged, 16.5 percent reported making prescription drug changes, while 11.7 percent reported skipping or postponing doctor visits to save money.

The study also found that about 1 in 10 of those in excellent health reported skipping or postponing doctor appointments to save money, while more than three times as many (36.5 percent) of those in poor health reported doing so. Similarly, nearly 1 in 3 (29.9 percent) of those in poor health reported making prescription drug changes to save money, which is nearly twice the number of those in excellent health.

Further, the study found that single women and blacks had the highest involuntary spending adjustments: 22.8 per- cent and 24.8 percent of single women made prescription drug changes and skipped or postponed doctor appointments to save money. Comparable numbers for blacks were 25.9 percent and 27.3 percent, respectively.

The study is based on data from the 2009 Internet Survey of the Health and Retirement Study (HRS). The full report is published in the January 2012 EBRI Notes, “Spending Adjustments Made By Older Americans to Save Money,” online at www.ebri.org 

Related articles

“Foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government.” Warren Buffett

20 Jan
Tax

From an Arthur Laffer commentary in the January 11, 2012 Wall Street Journal:

Incidentally, I’m not the first to question Mr. Buffett’s commitment to “shared sacrifice” in balancing the federal budget. In a 2007 CNBC interview, when asked why he shelters his money through tax-free strategies rather than writing big checks to Uncle Sam, Mr. Buffett responded: “I think that on balance the Gates Foundation, my daughter’s foundation, my two sons’ foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government.”

Amen, Mr. Buffet, I agree. I think my (and many others) modest monthly contributions to the Link Community School in Newark, NJ does a better job helping inner city minority children get a good education and better chance at the American dream than any government program. Such a program is a combination of the efforts of families who care, children who are motivated, dedicated educators and private contributors who care about effective use of their money .

That’s a lot different from government grants thrown at bureaucrats down the line who are largely unaccountable except perhaps to the politicians who want to be seen as caring for the downtrodden.

Mr. Buffet and the super wealthy like him on the left of our society must find it easy to promote higher taxes when no amount of taxation will impact them. However, it is mind-boggling that these really smart, savvy people think filtering more and more of American’s income through a massive, politically motivated, inefficient government bureaucracy is the most efficient or fairest way to raise the quality of life for us all. “War on poverty you say.”

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