Author / Hoosier Econ

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Posts by Hoosier Econ

Located out of Central Indiana. Blogger of economics, politics and societal trends.
by Hoosier Econ

Another Indiana School District Battling Obamacare Regulations

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More developments with Indiana school districts dealing with countless rules/regulations related to Obamacare. This story comes out of North Spencer County School Corporation. Superintendent Dan Scherry and the school board recently learned from a trade association that Obamacare would make him legally liable if fines are incurred. 

Scherry said the law states an individual could be held responsible for fines incurred for an employee working full-time that isn’t offered health insurance. To give individual employees relief from that provision of the law, the North Spencer school board on Monday discussed and approved a Patient Protection and Affordable Care Act Hold Harmless Resolution.

 

That resolution, which Scherry said was developed by the Indiana School Board Association, basically absolves administrators or other individuals from personal liability for those fines and makes the school corporation responsible.

 

 

And how much would have someone in like Mr. Scherry faced if the rule wasn’t found and dealt with? What is the process for something like this in order for a fine to happen?

“For us, it could be a $300,000 or $400,000 fine, so you’re talking about changing lives there,” said Mr. Scherry. If an employee is working more than 30 hours a week and not covered by health insurance, Scherry explained they could make a complaint with the insurance exchange through the government, then the government could impose a fine saying the business or school district didn’t follow the law. Without this resolution, Scherry said the fine could haunt individual people, but after it is passed by school boards the school corporation would be responsible.

With school districts already facing massive budget tightening as is, this new fine process will be the new normal for local taxpayers. Even though the school districts are protecting employees from not getting fined, now the taxpayer is on the hook. Go ahead and expect school corporation budgets to be cutting more from teaching areas so they can stash a “rainy day” fund for Obamacare fines.

Here is a link to the rest of the story.

I think I will just let Mr. Scherry sum up what this bill is doing to various aspects of our economy:

“It’s just a mess,”

by Hoosier Econ

Farm Bill & Indiana Schools Facing Obamacare “Uncertainty”

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Indiana Senator Joe Donnelly was recently on the floor of the Senate pleading for the passage of the new ten year farm bill currently up for debate. He did the basic verbal judo political speak in saying the bill would help “Hoosier Farmers”. Senator Donnelly is very much celebrated as a moderate thinker by the political writers at the Indianapolis Star. I personally have challenged a few of their writers in what direction he would choose once in the Senate and get the usual “Bipartisanship” line and that is about it. I am not seeing anything as of right now from the Indianapolis Star on this issue but if they write about his statements on the proposed farm bill, it will be very nuanced without much substance.

The current Farm Bill of 2013 will most likely pass the Senate and head to the House. The farm bill is anything but a farm bill. Here is small paragraph from RedState.com: 

Today, the Senate will invoke cloture on the 5-year farm bill, S. 954.  The 1150-page Senate bill costs $955 billion over 10 years and creates a new shallow loss program covering up to 90% of a farmer’s income – on the taxpayer dime.  Roughly 80% of the cost is related to food stamps.  For good measure, this bill contains sugar subsidies, biofuels subsidies, and conservation programs.  This mega-bill was rushed through the committee process and has only been subject to four amendments on the floor. 

Farm bills of this magnitude need to be stopped and absolutely broken down for separate votes. On top of that, when a Senator like Joe Donnelly steps to the microphone to express support for this bill, just be honest and say what the bill is.  Here is the link to his floor speech and it says nothing about what the bill really is intended to support.

One more piece to “Farm Bills”, they hardly ever help a bunch of farmers. Face the Facts USA has an excellent breakdown of the most previous data of the last farm bill. They added a nice slideshow for their data breakdown. Here is the link for their article but will post one small piece:

The most recent Farm Bill shows the bulk of its $96.2 billion cost went elsewhere. $77.6 billion in 2011 went to the food stamp program known as SNAP (Supplemental Nutrition Assistance Program). Just $13.44 billion went to programs for farmers.

Switching topics, more and more financial decisions are not only being made by businesses in how to adopt the coming Obamacare guidelines but local municipalities are as well. The new unspoken effects are hitting public schools. Just recently, my high school I attended released a statement saying part of the cuts they needed to make was from uncertainty with costs pertaining to the healthcare law. Now more news is coming out from other Indiana schools with what they have to do to be able to afford the law. This comes from Hancock County, Indiana:

Part-time employees could see their hours cut or changed under new federal regulations related to the Affordable Care Act. Though portions of the Affordable Care Act have been phasing in since its adoption in 2010, the new legislation grows teeth Jan. 1 and Hancock County governments, businesses and school districts are taking notice. Large employers who have part-time staff working between 30 and 40 hours a week, for example, will be required to provide health insurance. Failure to provide the coverage for 95 percent of the employer’s workforce could result in significant monetary penalties from the federal government.

 

Even the lawyers hired to help sort out the coming law are uncertain:

And while the law was designed to provide more Americans with affordable health care, there’s plenty of uncertainty surrounding the new regulations. “There’s mass uncertainty,” said Jim Matthews, attorney with Bose McKinney and Evans in Indianapolis who has been advising clients on the act. “There are so many surprises in this law, and they just keep coming and coming.”

The Eastern Hancock School Board had to cut non-contract employee hours from 30-40 to 29 hours. Not only is it the school district but the county itself:

The Hancock County Commissioners budgeted for a 20 percent increase in health insurance costs for 2014, still not knowing the full impact of the Affordable Care Act. Details of the 2014 budget will be worked out in the next few months, and one discussion point will be whether to cut the hours of some part-time employees or make them full-time. 

“Normally, you would benefit from two part-time positions rather than a full-time position,” Commissioner Brad Armstrong said. “But if your part-time position is going to get over 30 hours, then it incurs the cost in benefits, there’s really no savings in doing that.”

Many of the county’s part-time employees are in the community corrections department, said Mary Bowmer, payroll administrator. Adding health insurance for a single employee will come at a cost of more than $6,600 for the county.

The full article is in this link. This is just a microcosm of what is too come for the entire nation. Municipalities are struggling massively from tight budgets, this will only confuse the budget makers a few more years as this law plays out.

 

 

by Hoosier Econ

Indianapolis #1 For College Graduates

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Indianapolis, IN has been ranked #1 for college graduates and employment. Unemployment rate for college grads in the city is a staggering 1.9%.

Read the entire article at the Indianapolis Star

by Hoosier Econ

Early Indicator of “Obamacare”

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When Congress passed another healthcare plan designed to “help” the American people it had widespread implications. The bill has thousands of pages of not just law, but also regulations written after the bill was passed.

One of the programs within the bill for the HHS(Health & Human Services) agency to begin implementing right away was a “High Risk Pool” for people with already pre-existing conditions. I have been following this program for awhile now in the press. Here is the short version of what the program was created to do. Five Billion dollars was set aside to assist people with already pre-existing conditions until the full bill was implemented. Projections were to sign up anywhere from 350,000-500,000 people. Now the stats are out and should give many pause in seeing how costs of the total health care program will affect the United States government overall spending of this bill down the road.

Investors.com reported on April 10,2013:

ObamaCare funded the PCIP with $5 billion to cover patients with pre-existing conditions from 2010 to 2014. Less than a third of the people HHS projected would enroll in the plan actually signed up for the coverage. Yet despite the low enrollment, the plan is broke. In fact, it started running out of money at the beginning of this year, which means it busted its budget a full year ahead of projections. In a 2012 report, HHS conceded that it had miscalculated (though not until page 11 of its 15-page report): “On average, the PCIP program has experienced claims costs 2.5 times higher than anticipated.”

So what were the estimated numbers in 2010 for this one small program within the bigger healthcare plan? Here is a breakdown from the Heritage Foundation:

In 2010, the Obama Administration estimated that 375,000 people would enroll in the PCIP. But as of January 2013, over two-and-a-half years since the plan began, only 107,139 were enrolled—less than 29 percent of original projections.

Not only did costs skyrocket, but major changes to the program recipients as well:

In addition to suspending enrollment, CMS made major benefit adjustments in an effort to control program costs—mainly by increasing enrollee cost-sharing requirements. These changes included the consolidation of three plan options into one, increased co-insurance, and increased maximums for out-of-pocket costs (a 56 percent increase for in-network services and a 42 percent increase for out-of-network services).

This is not unexpected. History is filled with facts to teach us present day Americans about the fallacy of “Government Healthcare Programs” but we always choose the divine providence of “The Government” when it comes to social experiments. In the same article quoted above, they also had this historical data to show us the coming cost explosion from previous healthcare experiments:

In 1965, the Johnson administration figured Medicare would cost $12 billion by 1990. Its actual cost was $110 billion. Now it’s almost $600 billion and climbing.

Washingtontimes.com had these historical numbers on November 18,2009:

In 1965, the House Ways and Means Committee estimated that the hospital insurance program of Medicare – the federal health care program for the elderly and disabled – would cost $9 billion by 1990. The actual cost that year was $67 billion. In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion.

Once 2014 kicks in which is full implementation of the law itself, we unfortunately will be on the side of waiting to see costs explode. Not only that aspect, but HHS will probably start changing rules once people have signed contracts for health insurance. Constantly changing rules is part of having “Centrally Planned” programs by the government.

Like I said, we unfortunately will have to wait and see.

by Hoosier Econ

Government Sells Debt This Week….Here’s How It Went

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The United States Treasury sold quite a bit of debt this week and here is the round up of how it went. Quick note: 10 Year Treasuries have been spiking lately suggesting that investors are now demanding the government pay more on their interest on debt. July 2012 it was 1.38%. It now stands at 2.17%. 

– On Thursday, $29 Billion was sold in 7 year notes at a yield of 1.496%. This is the highest since March 2012. Almost 40% of the debt was bought up by indirect bidders which include foreign central banks. Another 20% was bought up by direct bidders which is money managers. 

– On Wednesday, the Treasury sold $35 Billion in five year notes. Indirect/Direct buyers accounted for 67% of the purchases because interest rate was higher. Bidders got 1.045% which is the highest since October 2011.

-On Tuesday, the government ran into some problems with their 2 year notes. They sold a total of $35 Billion in debt to mostly primary dealers. Indirect/Direct only accounted for 33% of the buying. This was the fewest bids for two year notes since February 2011.

Overall the government sold $99 Billion in debt. Obviously this has to be paid back in 2-7 years with either more tax revenue(which means tax increases) and/or new bond sales. Interest rates appear to be going up by investors wanting more comfort since government has so much debt and with other investments paying higher percentage of return. The government has to play just like everyone else seeking investors to buy their debt.

May “Interest on Debt” payments have not been released yet. But so far in the fiscal year 2013 (which began in October 2012), United States Treasury has paid around $228 Billion on interest on debt. You can track the interest on debt yourself at this site

by Hoosier Econ

Beef Prices and Future Outlook

Get ready to feel the pain of high beef prices. Not only is inflation rising naturally due to Federal Reserve printing of money, but beef farmers are leary of coming back into the market from last years drought.

I recently spoke to two farmers here in the central Indiana area about cattle herds. Straight up “No’s” were issued. The typical length of time for cattle to hit the market (birth to sale) is one and half years. Farmers are staying away this year because many sold off last year. Word they told me is “three years” in seeing any recovery.

Nationally the U.S. is under 90 million head of cattle for the first time since 1952.

by Hoosier Econ

Gold & “Detroit Is Back”……To Being Broke

Detroit, MI is broke but not a lot of people want to accept it publicly. People are leaving in droves and the city is deteriorating physically. Personally, it is amazing passing through the city then crossing over into Windsor, Canada and seeing the stark difference of economic situations. Two different worlds separated by one body of water. From a satire point of view, watching the Presidential 2012 Election, our current President touting “Detroit is Back” was a flat out lie but the masses accepted his message.

Less than three months after the elections, the city was taken over by the state itself. The city is bleeding money and has debt that probably will not be paid back. Now CBS Detroit is reporting the latest:

Detroit’s emergency manager says the city is bleeding much more red ink than originally thought. That’s what Kevyn Orr told WWJ City Beat Reporter Vickie Thomas in an exclusive one-on-one interview. “The situation is severe,” Orr said. “It’s worse that we originally thought. It ain’t good.” With just 39 days under his belt, Orr is already putting the final touches on a draft of his 40-plus page financial report, which must be submitted to the state on Monday.

They have accumulated about $15 Billion in long term debt. Operating debts are now pinging at $18-$20 Million/year.

Bottomline, Detroit is going to go bankrupt and the news will wave it off as “No big deal”. Cities are facing enormous pressure due to geographical population shifts and long term financial promises that are very generous.

GOLD
Some interesting data on gold has come out. Gold value has suffered some price drops in the last few months due to money moving out of it and into equities(stock market). Now some new data is showing massive purchases of it. Here is some data I received from my investor advisor:

Chinese gold imports in March exploded to an all time record high of 223.5 tons. This follows 97.1 tons in February, and brings the total imports for the first quarter of 2013, to 372 tons, on par with what China imported in the entire first half in 2012. It also means that since January 2012, China has imported an absolutely stunning 1,206 tons of gold. Putting this number in context, this is 20% more than the entire report of official gold holdings of 1054 tons of the PBOC, and represents roughly half of the total 2500 tons of gold mined every year.

One more interesting financial aspect of gold….

US bullion dealers have characterized the demand for the physical form of gold as the strongest since the immediate aftermath of the Lehman Brothers collapse in 2008 and, in some cases, the strongest on record. The spike in demand caused a shortage among American Eagle gold bullion coins at the U.S. Mint in April. The U.S. Mint told authorized purchasers on April 22 that it was temporarily suspending sales of the one-tenth-ounce gold bullion coins “while inventories can be replenished,” as year-to-date demand for those coins was up 118% from the same time last year.

Gold could be very spectacular in price movement in the next six months. It maybe wise to accumulate some now to enjoy the plus side in the long run.

by Hoosier Econ

Is The Indianapolis Mayor Worried About The Airport Finances?

Indianapolis Airport Authority(IAA) and a private company wanting to build an off-site parking facility for traveling passengers of the airport are at odds legally according to The Indianapolis Star.

Legal fees have reached at least $45,000 as the city-owned airport continues its effort to stop Cincinnati-based Chavez Properties and Parking. The company seeks to develop a 3,700-space parking lot south of I-70, near the main freeway entrance to the airport. The legal dispute involves what a 1990s-era land-use plan allowed in the Ameriplex park. The airport, which sold the land nearly two decades ago, argues that a private parking lot there would violate the intent behind the plan. Instead, airport officials contend, the space should be reserved for large warehouses and office buildings.

The airport authority has already loss this case once in Marion County Court and will probably lose again through the Indiana Appeals Court. The contract would have to be very clear in terms of the sale. The airport is getting beat on competition in where passengers choose to park and what experience they receive. This worries the airport immensely because parking fees make up 25% of their revenue they bring each year. The Star also reports on the rates of the current private companies already existing:

Its base drive-up rate, $8.50 per day, is cheaper than the airport’s surface lots, though a fuel surcharge and airport access fee can push up the total cost to between the airport’s $9-a-day economy lot and $12-a-day long-term lot. However, there are discounts for parking a full week and other promotions.

Here is an account from one passenger on parking away from the airport:

Duncan Giles, a federal union leader who travels occasionally for work, opts for the valet service at the off-site lot. Lot workers usually are chipper as they unload his car, he said, and he said the place feels secure. Upon his return, the car is warmed up and cleared of any snow. While the airport’s garage valet service is $20 a day, “I usually can get it for under $12 a day (off site), everything included,” said Giles, 51, who lives on the Southeastside. “You really can’t beat it.”

I have been watching the IAA and their numbers the past six months. This airport was heralded as a major economic stimulus to the area with a lot of promises attached to it when completed in 2008. Total cost ran about $1 Billion while being backed by bonds. Passenger numbers are dwindling which affect landing fees the airport takes in. Last year alone the airport only had two months of passenger counts beating expectations (February/March). The rest of the months they fell short of projected goals. First three months of this year the airport is down 1% in passenger traffic.

On top of the passenger decline, costly repairs are mounting up from inadequate construction. One example is the $100 Million dollar parking garage that is only 5 years old is facing up to almost $2 Million in repairs in fixing major leaks from faulty drainage.

On Sunday in The Indianapolis Star, it was reported the IAA is relying on parking, retail and landings fees to repay the bonds that financed the new airport terminal. Mayor Greg Ballard weighed in:

“We’ve got a whole lot of bonds (to repay) at the airport. We’ve got to repay them”

Obviously, the Mayor has taken the side of IAA in this legal battle because he knows what damage this could do to revenue generated long term. For all intensive purposes if IAA starts losing more money the city would have to step in to shore up losses. In my experience following politics, someone like a Mayor making comments like this shows he is seeing the same numbers I do. He probably hasn’t had the best of meetings in long term financials numbers the accountants are presenting to him.

by Hoosier Econ

Indiana Farmers “Make It Rain” on Crop Losses 2012

Indiana went through a major drought last year.  While many suffered through the horrendous heat, none got hit harder than Indiana farmers. In the past few months making my economic rounds, I went and talked with a few farmers about crop insurance payments and many said they faced no income level drops compared to a regular crop season. This has been backed up by Gary Truitt of Hoosier Ag Today:  

Indiana farmers so far have received more than $1 billion in crop insurance payments from losses last year when drought ravaged crops throughout the state. The payouts are double the previous record. The previous record amount of insurance indemnity payments to Indiana farmers for the three crops was $522 million in 2008.

You can read the rest here