Despite a landmark settlement that was expected to increase coverage for out-of-network care, the nation’s largest health insurers have been switching to a new payment method that in most cases significantly increases the cost to the patient.
The settlement, reached in 2009, followed New York State’s accusation that the companies manipulated data they used to price such care, shortchanging the nation’s patients by hundreds of millions of dollars.
The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on. Gov. Andrew M. Cuomo, then the attorney general, said it would increase reimbursements by as much as 28 percent.
It has not turned out that way. Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially.
“It’s deplorable,” said Chad Glaser, a sales manager for a seafood company near Buffalo, who learned that he was facing hundreds of dollars more in out-of-pocket costs for his son’s checkups with a specialist who had performed a lifesaving liver transplant. “I could get balance-billed hundreds of thousands of dollars, and I have no protection.”
Insurance companies defend the shift toward Medicare-based rates under the settlement, which allowed any clear, objective method of calculating reimbursement. They say that premiums would be even costlier if reimbursements were more generous, and that exorbitant doctors’ fees are largely to blame.
But few dispute that as the nation debates an overhaul aimed at insuring everybody, the new realpolitik of reimbursement is leaving millions of insured families more vulnerable to catastrophic medical bills, even though they are paying higher premiums, co-payments and deductibles.
“They’re not getting what they think they’re paying for,” said Benjamin M. Lawsky, the superintendent of the Department of Financial Services, whose investigators recently found that under the switch, 4.7 million New York State residents — 76 percent of those with out-of-network coverage — are facing reimbursement reductions of 50 percent or more.
The switch “certainly creates the appearance that insurers are trying to end-run the settlement and keep out-of-network payments low,” Mr. Lawsky said….”Comments »
‘WASHINGTON (CNNMoney) — On July 1, the interest rates on student loans subsidized by Uncle Sam will double to 6.8%.
The upshot? Students taking out loans for the next school year will have to dig deeper in their pockets to pay them off. Unless Congress steps in to stop the increase from going forward.
The issue has become a political talking point. President Obama, who called for congressional action in his State of the Union speech in January, is using the issue to stump for votes.
His Republican rival Mitt Romney says he, too, believes Congress should step in.
On Tuesday, Senate leaders said they will take up a bill within days to extend the lowered interest rates. The Senate minority leader, Mitch McConnell, said Republicans are willing to consider the measure as long as there is a way to pay for the extension….”
The Treasury sold 2.5 billion euros ($3.3 billion) of the zero-coupon 2014 debt to yield 3.355 percent, up from 2.352 percent at the previous auction on March 27. Investors bid for 1.80 times the amount offered, down from 1.86 times last month. The Rome-based Treasury also sold 943 million euros of inflation-linked bonds due in 2017 and 2019 to yield 3.88 percent and 4.32 percent, respectively. The auction’s maximum target was 3.5 billion euros.
Investor confidence in the debt of Europe’s so-called peripheral countries has eroded since Spain’s announcement on March 2 it won’t meet its deficit target this year, leading to six weeks of declines of Italian bonds. Monti last week delayed its goal to erase the deficit by one year to 2014, joining Spain in missing fiscal targets amid a worsening recession…”Comments »
By Caroline Liinanki
A growing understanding of the composition of hedge fund returns is letting investors capture the return streams of hedge funds through systematic exposure to persistent risk premia (returns above the expected risk-free rate of return). This provides investors with diversification away from equity market risk in a low-cost, liquid and transparent manner, but without the downsides of investing in a hedge fund.
For a long time, hedge fund returns were believed to derive purely from manager skill and clever investment decisions based on active management. However, the academic literature has identified that it is not so much skill as exposure to certain return sources that can explain the majority of returns in certain hedge fund styles.
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Earlier this month, President Obama signed into law the Jobs Act, short for Jumpstart Our Business Startups. This Act won bipartisan support because it purports to create jobs by making it easier for small businesses to raise capital. However, the Jobs Act will also significantly loosen the regulatory requirements on hedge funds – whether or not this was the intent of Congress.
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TOKYO (AP) — Japan said Saturday it will take steps to forgive about 300 billion yen ($3.7 billion) of Myanmar’s debt and resume full-fledged development aid as a way to support the country’s democratic and economic reforms.
The government made the announcement after a meeting between Prime Minister Yoshihiko Noda and Myanmar President Thein Sein following a summit with leaders from the five nations of the Mekong River region.
Myanmar’s military junta last year handed power to a nominally civilian government that has surprised the world with a series of sweeping political and economic reforms, including releasing prominent political prisoners and allowing democracy icon Aung San Suu Kyi to contest recent parliamentary by-elections.
“Reforms in Myanmar are steadily moving forward. As Myanmar approaches a crucial stage in its democratization, Japan will all the more encourage Myanmar’s efforts to reform,” Noda said at a news conference with Thein Sein. “We hereby pledge to strengthen our assistance to the country so that the Burmese people will be able to enjoy the fruit of its reforms.”
Myanmar, also known as Burma, owes Japan about 500 billion yen from past development loans.
Of that amount, the Japanese government said in a statement that it will cancel 127.4 billion yen in loans due after April 2003. It will also forgive 176.1 billion yen in overdue charges accumulated over the past two decades after one year’s time as the two countries jointly monitor reforms.
Japan does not have sanctions on Myanmar, although it cut most government aid in 2003 after Suu Kyi was put under house arrest, which ended last November. Japan was Myanmar’s largest aid donor until 2003 and has continued small amounts of humanitarian grass-roots aid in health and education.
“On behalf of the Myanmar government and its people, I would like to express my gratitude to Japanese government officials and the people of Japan,” Thein Sein said. “The resolution of Myanmar’s debt issues as well as our cooperation and aid will be effective and helpful for the people’s efforts for the development and reform of Myanmar.”
Japanese companies had held back from investing in resource-rich Myanmar because they didn’t want to upset relations with the United States and the European Union, which have imposed sanctions on the country, and due to the lack of transparency in business laws.
HANOVER, Germany (Reuters) – The global financial crisis is not over and technical innovation and investment will be key to sustaining what remains a “tortuous” recovery, Chinese Premier Wen Jiabao said on Sunday during a visit to Germany.
Wen also said China, the world’s biggest exporter and second largest economy, would press on with reforms aimed at creating better legal protection for foreign investors — a major concern for the growing number of German firms active in the country.
“Currently, the international financial crisis is not over and the global economic recovery is difficult and tortuous,” Wen said at the Hanover trade fair that was also attended by German Chancellor Angela Merkel.
More investment in the real economy and technical innovation will be the most powerful drivers of global recovery, he said.
China’s annual economic growth slowed to 8.1 percent in the first quarter of 2012 from 8.9 percent in the previous three months – the fifth consecutive quarter of slowdown.
“The reason why the global economy cannot walk out of the shadow of the (financial) crisis is also related to the lack of new growth points in the real economy,” Wen said, adding that China and Germany had fared better than most during the crisis due to their strong manufacturing bases.
“(The two countries) will surely have an ever more important role to play in innovation and development of worldwide industry,” he said.
Merkel, whose country has faced criticism over its insistence on reducing debts even during a time of poor growth in much of the developed world, said Germany wanted to strike a good balance between fiscal discipline and fostering growth.
“We must succeed with both because responsibility rests with Germany too for a sensible global economic development,” she said.
Merkel praised China’s huge stimulus package launched during the financial crisis, saying it contributed to Germany’s own export-led recovery.
Germany has also welcomed China’s pledge last week to contribute towards new funding for the International Monetary Fund that is meant to protect the global economy from the euro zone debt crisis.
The economies of China and Germany – the world’s second biggest exporter – are increasingly intertwined, with bilateral trade jumping to 130 billion euros in 2010 from 94 billion in 2009.
Morgan Stanley’s net exposure to the five countries — Greece, Ireland, Italy, Portugal and Spain — was $4.01 billion before hedges, according to figures posted yesterday on the New York-based bank’s website. Net exposure to France rose to $4.14 billion from $1.71 billion as of Dec. 31.
Concern that Europe’s debt crisis would spark bank losses contributed to a 41 percent tumble for Morgan Stanley’s shares in the third quarter of last year. The firm said in October that its net exposure to the five was $3 billion, helping halt the decline of the shares….”Comments »
By BRETT ARENDS
Is it true that stocks are cheap “when compared with bonds”? That’s the line on Wall Street. If you haven’t heard it from your broker yet, you will. Indeed, in a recent report, some investment strategists from big brokerages, in their enthusiasm for stocks, argued that they were at record lows compared with bonds.
The comparison doesn’t come out of the blue. It has a long tradition in finance, where it is known as “the Fed model,” because the ratio once appeared in a Federal Reserve report.
The argument is pretty appealing to many — especially now, when bond yields are so low. The stock market today sells for about 14 times forecast earnings — or, to put it another way, if you buy $100 worth of stocks, they should generate, or yield, about $7 in after-tax earnings. That’s on par with historical averages. But that 7 percent “earnings yield” looks enormous when compared with the pitiful 2 percent you’ll earn from 10-year Treasury bonds. Wall Street will offer data going back to the 1960s that shows the two yields moving in tandem.
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“Brazil signaled it may cut its benchmark interest rate to a record low as a still “fragile” global economy eases inflationary pressures in the world’s sixth-biggest economy.
The bank, in a statement accompanying its decision last night to lower the Selic rate by 75 basis points to 9 percent, said risks of missing its 4.5 percent inflation target are “limited” as the global outlook remains “disinflationary.” In the minutes to their meeting last month, the bank said borrowing costs would probably stabilize “slightly above” the record low 8.75 percent…”Comments »
“China’s central bank pledged to ensure adequate availability of cash in the financial system by using tools including reductions in the reserve-requirement ratio, state media reported.
Authorities will “appropriately take targeted liquidity management actions” based on circumstances including foreign- capital inflows and funding demand, the official Xinhua News Agency said in a report late yesterday on an interview with an unidentified person at the People’s Bank of China. Options include adding cash through reverse-repurchase operations and cutting required reserves, Xinhua said….”Comments »
Being an investor is tough. Nothing moves in a straight line, except maybe a fake Bernie Madoff-type account. Everything proceeds in sawtooth fashion, and each up and down seems cleverly calculated to play on your emotions just enough to tempt you to take action at the wrong time. In fact, we could be headed into a correction right now. Carl Richards of Behavior Gap has an awesome illustration of the basic problem:
Source: Carl Richards/Behavior Gap (click to enlarge)
According to DALBAR data, the dips are pretty good at causing investors to bail out. DALBAR’s most recent study released in March 2012 showed that the average stock fund investor made annual returns of only 3.49% over the last 20 years versus an annual return of 7.81% for the S&P 500. The average investor “generally abandons investments at inopportune times,” according to their research. That’s a polite way of saying that investors panic when the market goes down and they sell out, often near the lows.
And there is plenty of temptation. According to uber-reliable Ned Davis Research, as summarized in this Wells Fargo market update, there have been 294 dips of 5% or more since 1928. In other words, you usually have three or four chances a year to screw up. Considering that most investors have a 20-30 year life cycle, that’s a lot of dips to deal with.
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“Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors.
Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros ($289 billion) at the end of January, data from Spain’s treasuryshow. Italian banks increased ownership of their nation’s sovereign bonds by 31 percent to 267 billion euros in the three months ended in February, according to Bank of Italy data.
German and French banks, meanwhile, have cut holdings of those countries’ bonds, as well as Irish and Greek debt, by as much as 50 percent since 2010 in some cases. That leaves domestic firms on the hook for a restructuring such asGreece’s last month and their main financier, the European Central Bank, facing losses. Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union.
“The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.”
ECB Lending…”Comments »
Non-performing loans as a proportion of total lending jumped to 8.16 percent in February, the highest level since 1994, from less than 1 percent in 2007, according to Bank of Spain data published today. The ratio rose from 7.91 percent in January as 3.8 billion euros of loans soured in February, a 110 percent increase from the same month a year ago. That takes the total credit in the economy that the regulator lists as “doubtful” to 143.8 billion euros.
Defaults are rising and credit is shrinking at a record pace as 24 percent unemployment corrodes the quality of loans built up in the country’s credit boom and saps the appetite of banks to make new ones. Doubts about the extent of Spain’s non- performing loans problem is hurting bank stocks and driving up the government’s borrowing costs on investor concern that the expense of propping up ailing lenders may add to the debt burden.
“One of our concerns in Spain is to what extent contingent liabilities could pass to the central government,” said Andrew Bosomworth, Pacific Investment Management Co.’s Munich-based head of portfolio management. Non-performing loans “will have to rise when you take into account the unemployment rate and what’s happening with the economy,” he said….”Comments »
“Adam Posen ended his push for further Bank of England stimulus this month and David Milesdescribed his view on the need for more as “finely balanced” as officials said inflation may turn out faster than forecast.
The pound rose after minutes of the central bank’s April 4- 5 meeting showed that Posen joined the majority of the nine- member Monetary Policy Committee in seeking no change to the 325 billion-pound ($517 billion) asset-purchase target. U.K. jobless claims rose less than economists forecast and the official unemployment rate fell, a separate report showed.
While Bank of England officials noted that the U.K. may face a recession in the first half of this year, they said inflation may turn out faster than forecast. They endorsed a final month of bond purchases to aid growth while setting the stage for a possible pause in May, when they will consider new quarterly forecasts and debate whether to halt the so-called quantitative-easing program.
“The probability of QE in May — which already looked relatively low — has diminished significantly,” said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. “It is too soon to rule out further QE in the second half of 2012, but the probability of this is diminishing in response to short-term inflation ‘stickiness’ and firmer underlying activity data.”Comments »