Category / debt

by Hoosier Econ

How Much Do Consumers Pay to Healthcare Providers?

Just Facts Daily posed a question to readers regarding healthcare payments. Here is the question and answer:

What portion of all healthcare spending in the U.S. is directly paid by consumers to healthcare providers (i.e., not indirectly paid through middlemen like insurance companies or governments)?

Less than 25%

In 2009, consumers directly paid for 12% of all healthcare spending in the U.S., as compared to 48% in 1960. This trend has been driven by government policies and is a major factor in the rise of healthcare spending, because it reduces consumers’ incentive to shop for the best value.

by Hoosier Econ

California Pension System Imploding

With Detroit bankruptcy being approved just a few weeks ago look for many other municipalities and possibly states to use similar methods to fend off economically impossible to meet financial demands.
The next bankruptcy is best captured in the LA Times article entitled “California pension funds are running dry” :

The state’s pension goliath, the California Public Employees’ Retirement System, had $281 billion to cover the benefits promised to 1.3 million workers and retirees in 2013. Yet it needed an additional $57 billion to meet future obligations.

The bill at the state teachers’ pension fund is even higher: It has an estimated shortfall of $70 billion.

Bankruptcy has already happened in some California towns.

Meanwhile, cash-strapped cities are facing escalating bills. Rising pension costs contributed to bankruptcies in Stockton, San Bernardino and Vallejo.

The man behind the transparency movement in California is state Controller John Chiang. He started a website tracking a towns finances for the public to see and it grew from there.

by Hoosier Econ

College Student Loan Debt Exploding

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When talking about economic “bubbles” one that is hardly ever mentioned is student loan debt. CreditCards.com had this about the amount of debt:

Debt affects people of all ages, but an explosion of student debt is weighing down this generation of young adults like no other before. According to data from the Federal Reserve, U.S. student loan debt soared from $550 billion in 2007 to nearly $1 trillion by 2013.

An April 2014 Wells Fargo survey reported that 29 percent of millennials (people between 22 and 33 years old) are worried about paying off their student loans, and data from FICO show that the burden of student-loan debts is contributing to a downturn in the number of millennials carrying credit cards.

You can read the rest of the article here.

by Hoosier Econ

Obamacare & 7 Eleven

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Via thehill.com

ObamaCare ads will now appear on 7-Eleven receipts at more than 7,000 stores nationwide as government health officials expand their outreach in the second year of healthcare sign-ups.

Information about ObamaCare sign-ups will appear on the bottom of receipts for anyone using a mobile payment company called PayNearMe, which allows bank-less customers to pay in stores like 7-Eleven and Family Dollar.

Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced the new partnership with the tech start-up PayNearMe on Thursday at a store in Washington, D.C.

“Putting these reminders at the bottom of PayNearMe receipts will help get health coverage information into the hands of traditionally hard-to-reach consumers,” HHS wrote in a statement.
The partnership will help HHS “reach financially underserved and other cash-preferring consumers,” the statement reads.

by Hoosier Econ

Federal Government Deficit for 2015 Fiscal Year

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CNSNews.com is reporting the federal governments 2015 first two fiscal months of tax revenue collected and how much it spent.

The U.S. Treasury continued to rake in tax dollars at a record rate in November as the federal government closed out the first two months of fiscal 2015 with $404,155,000,000 in total receipts, according to the Monthly Treasury Statement released today.
Even with these record revenues, the Treasury ran a deficit of $178.531 billion deficit in October and November as it spent $582.686 billion.

What were the sources of revenue?

The biggest source for the record federal revenue during the two-month period was the individual income tax. It brought in $192,619,000,000 in October and November. The second biggest source was “Social Insurance and Retirement Receipts,” the taxes Americans pay for Social Security and Medicare. These brought in $146,263,000,000.

by Hoosier Econ

How the Wealthy Write Off Taxes

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Whenever I see someone famous on TV talking about the need for higher taxes or claiming they enjoy paying taxes I always say, “Their accountant is laughing”.
Senator Tom Coburn issued a report showing exactly what I mean.

The tax code is so peppered with special giveaways that companies such as Facebook end up getting refunds, and high-profile athletes and artists use their tax-free foundations to give friends jobs while avoiding taxes — all leading to higher income tax rates for the rest of us, Sen. Tom Coburn charges in a new report being released Tuesday.

Here is a snapshot of what was found by his staff:

-Baseball owners are able to claim their players “depreciate” over time, the same way farms are able to claim their tractors depreciate
– Athletes and Hollywood stars who form tax-exempt organizations that they then use as tax shelters, throwing parties or paying employees’ salaries from the tax-exempt accounts while dedicating almost no money to charitable works.
-Kanye West’s foundation spent more than $1 million in 2009 and 2010 but “gave virtually nothing” to charity. Fellow performer Lady Gaga’s Born This Way Foundation raised $2.6 million but only gave away $5,000 in grants

You can read more via Washington Times

by Hoosier Econ

Lawyers Getting Rich Off Social Security Disability

ZeroHedge.com is out today with a piece about the explosion of social security disability and what lawyers are getting in fees.
Here is a snippet and you can read the rest here.

Social Security Disability Insurance (SSDI) is no small program, costing taxpayers more than the combined cost of federal welfare payments, housing subsidies, food stamps and school lunches. Attorneys receive taxpayer-funded fees each time they successfully place a client in the program, which incentivizes them to encourage clients to file disability claims. The fees are capped at 25 percent of the successful client’s SSDI award, or $6,000, whichever is less.

Attorneys took in $1.2 billion in such fees in 2013, up from just $425 million in 2011.

Here is a graph showing the explosion of SSDI recepients.

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by Hoosier Econ

Economics & “Coolidge”

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Halfway through reading Amity Shlaes book “Coolidge”. Very detailed and good reference for what the country was politically/economically facing at the time. Here are some economic factors from Calvin Coolidge time period:

Debt after WWI was $27 Billion. Nine times higher than 2 years before.

College professor salaries in 1890 were $2,500. This was 20 times more then tuition. Average American wage earner made $425/year.

1905, home in Massachusetts cost between $2,000-$5,000. Banks did not do mortgages. Building associations did.

1915 IRS employed 4700 people

1920 federal budget was $6.3 Billion and Calvin Coolidge Vice Presidential salary was $12,000.

From 1920 – 1921 Ford Motor Company sold 1.25 million cars.

by Hoosier Econ

Cost of Caring for Illegal Immigrant Child: $86,846.34

While back I posted a piece about the cost associated with the taxpayer caring for illegal immigrant children. Now new dollar amounts have been discovered by Judicial Watch. Sad thing about the bloviating transparency talk from immigrant supporters is this information had to be obtained by an FOIA because the government was unwilling to produce the numbers.

Federal officials paid Baptist Children and Family Services nearly $183 million to help care for 2,400 unaccompanied illegal immigrant children for four months earlier this year at military facilities in Oklahoma and Texas, according to documents made public Wednesday by Judicial Watch.

“The cost to the American taxpayer was $86,846.34 per illegal alien child at Ft. Sill [in Oklahoma], for a total to $104,215,608 for 1,200 UACs from June 12 to October 18,” Judicial Watch said. “The bill also included $2,648,800 in compensation for 30 members of the BCFS ‘Incident Management Team,’ for a total to $88,293 per IMT member for the four-month period.”

The contract was awarded to Baptist Children and Family Services. Here are other items bought by this contract:

“Recreational items will include board games, soccer balls, basket balls, jump ropes, bracelet making kits, yarn, puzzles, arts and crafts, decks of cards, and eye-hand coordination game sets. Reimbursement is requested for $180,000.”

“Educational items will include … tempera paint, paint markers, paint brushes, easel brushes, art paper … Crayons, multicultural crayons … for $180,000.”

“Laptop Kits … 100 Kits … 5 Laptops per kit – $500 per kit … $200,000.”

°“VOIP Phone Kits … 80 kits … 10 cell phones per kit with International call capabilities and radio … $160,000”

H/T Washington Times

by Hoosier Econ

Are Your Local Indiana Officials Financially Literate

Few years back I was approached by an acquitance to support their run for local office. Coincidentally I had just reviewed some economic news on their budget situation in the town he was running in. The person gave me a beautiful speech about “giving back” and helping the poor. I asked him a direct financial question pertaining to the financial issue he would have to deal with once in office. His look was all I needed to know he had no clue in what I was asking about.

Liz Farmer addresses this question in an article from February 2014 about the impact of municipalities not having people elected with economic knowledge.

In the fall of 2012, the Minneapolis suburb of Vadnais Heights found itself with a credit rating downgraded to junk status. Local leaders in the town of 12,000 were not only insulted, but shocked. Vadnais Heights owed its disgrace to one action it didn’t think was that crucial: It had stopped making bond payments on a $25 million sports complex. The town had expected the complex to meet its borrowing costs through added revenue, but it had fallen short of estimates. So town officials had ceased paying bondholders rather than choosing to bill taxpayers for the unexpected costs.

What is particular events led to misunderstandings of laws?

Failure to understand financial outcomes, even when combined with good faith, is more dangerous to states and localities than it has ever been. Tougher ratings standards are part of the picture, but the problem goes far beyond those. Municipal and state leaders face an entirely new regulatory climate with the passage of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act. That law, which is still being implemented, is bringing increased scrutiny of government financial performance on all levels.

Overall the above situations are not isolated cases. Smaller jurisdictions have issues getting economic competent people into office and usually make decisions on the fly.
I found this quote in the article to be very telling:

“When you think about it, I’m a retired cop and now I’m chairman of a finance committee of a $3 billion organization and the 10th largest city in the nation,” says San Jose, Calif., Councilman Pete Constant. “Can you imagine a corporation taking someone like that and putting them in charge of it with so little experience?”