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U.S. Plans to Unveil New Insurance Options

September 29, 2013 by Leave a Comment

The options are part of a multistate insurance program that Congress authorized in 2010 to increase options for consumers shopping in the online insurance markets scheduled to open on Tuesday.

Congress conceived multistate plans as an alternative to a pure government-run insurance program — the “public option” championed by liberal Democrats and opposed by Republicans in 2009-10.

“The multistate program will help deliver choice and high-value health plans in the new marketplace, expanding quality, affordable options for uninsured Americans,” an administration official said.

The administration plans to unveil the program on Monday, the official said, even as Congress fights over the future of President Obama’s health care law, intended to provide coverage to more than 25 million people within three years.

Federal officials said they had signed a contract with the Blue Cross and Blue Shield Association to offer health insurance next year in the marketplaces, or exchanges, of 30 states and the District of Columbia. In later years, the officials said, they hoped to see at least two multistate plans in every state, as Congress envisioned.

Under its federal contract, Blue Cross and Blue Shield will offer different products in different states — a total of more than 150 products, including health maintenance organizations and preferred provider organizations, which give discounts for using selected health care providers. In many of the products, consumers will have access to a nationwide network of doctors and hospitals.

The federal government negotiated the benefits and premiums for the Blue Cross and Blue Shield products, so this plan carries a federal seal of approval.

In negotiating with insurers, the Office of Personnel Management leveraged more than 50 years of experience in the Federal Employees Health Benefits Program, the nation’s largest employer-sponsored health insurance program, covering more than eight million federal employees, retirees and dependents. Blue Cross and Blue Shield plans are, by far, the most popular among federal employees, with more than 60 percent of the enrollment.

Under the 2010 health care law, the federal government was supposed to sign contracts with at least two multistate plans. But the application from Blue Cross and Blue Shield was the only one approved. Five other companies expressed interest and may file applications in the future, federal officials said. By 2017, at least two multistate plans are supposed to be available in each state.

When Congress was debating the health care legislation in 2009, many Democrats wanted the federal government to offer an insurance plan like Medicare, to compete directly with private insurers in the exchanges. In a letter to Congress in June 2009, Mr. Obama said: “I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive and keep insurance companies honest.”

Republicans resisted the idea, as did the American Medical Association and many drug companies, which feared that a government-run insurance program could set prices and drive private insurers from the market.

Supporters of the multistate plans authorized by Congress say the plans will increase competition in local health insurance markets, many of which are dominated by one or two carriers. The multistate plan will, for example, be available next year in New Hampshire and West Virginia, which would otherwise have just one carrier in their exchanges.

Federal officials said the multistate plan would also be in operation next year in Alaska, Arkansas, California, Colorado, Delaware, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, New Mexico, New York, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin.

Local Blue Cross and Blue Shield plans have been selling insurance for decades, but federal officials said the national plan would offer consumers different products and additional choices.

The multistate plan was also supposed to offer insurance to small businesses, but federal officials said it would provide such coverage next year only in Alaska, Maryland, Virginia and the District of Columbia.

Article source: http://www.nytimes.com/2013/09/30/us/politics/us-plans-to-unveil-new-insurance-options.html?partner=rss&emc=rss

Filed Under: Your Money

Health Insurance Exchanges Scramble to Be Ready as Opening Day Nears

September 29, 2013 by

He rejected the idea of a flashy downtown news conference that morning. He postponed a series of ads meant to drive customers to its Web site, coveroregon.com. In fact, Mr. King is not even allowing people to sign up for health coverage online without assistance at first; they will have to go through an insurance agent or a community group until at least mid-October.

Tuesday is the long-awaited kickoff of President Obama’s signature health care law, when millions of Americans can start signing up for new insurance options. Yet across the country, officials are issuing warnings that despite fevered efforts, their new insurance exchanges — online markets where people can shop for health plans and see if they qualify for federal subsidies — will not be fully operational for weeks or even months.

Last week, the District of Columbia’s exchange announced that it would not immediately be able to determine online whether people qualify for Medicaid, which about half the states are expanding under the law, or for a federal subsidy to help cover the cost of private coverage. In Colorado, for the first month, people who want to know if they are eligible for a subsidy will have to call a customer service line.

In Nevada, home to a large Hispanic population, a Spanish-language version of the exchange Web site will not be ready until mid-November. And in Maryland, small businesses will not be able to buy insurance for their employees through the state exchange until January. Federally run exchanges are having similar problems.

Many of the 16 directors of state-run exchanges are describing October as a “soft launch” period, when Americans can start exploring their coverage options — but on Web sites that may be incomplete, vulnerable to glitches and perhaps not ready for an onslaught of customers.

“I have no idea what this thing’s going to look like on Oct. 1,” Mr. King said one afternoon last week as dozens of tense-looking programmers, scattered through the exchange offices outside Portland, rushed to finish testing and fix problems. “We could crash and burn and have to close it down.”

The outcome could hardly be more important for Mr. Obama. With Republicans threatening to shut down the government unless Democrats agree to delay the law for a year, even small problems with the exchanges could be powerful fodder for the law’s opponents.

In an indication of the difficulty of the job, some of the states with delays, like Oregon and Maryland, have been preparing for many months and have political leaders who strongly support the law.

“It makes you wonder about the exchanges that actually have been at this a shorter period of time,” said Jon Kingsdale, a managing director at Wakely Consulting Group, who is advising several state-run exchanges. “Do they even know what their problems are?”

The federal government, which will operate all or part of the exchanges in more than 30 states that declined to create their own, mostly because of political opposition to the law, is having readiness problems of its own. In one example, the Obama administration said on Thursday that small businesses would not be able to buy coverage online through federally run exchanges until November.

Although the exchanges have been able to tap billions of federal start-up dollars and hire companies like Accenture, Oracle and Xerox to help with the work, their task has been highly complex and their time frame tight.

The Web portals for the exchanges have to be able to share information in real time with insurance companies, state agencies and the federal government, which has built a “data hub” through which it can verify the income and citizenship of people applying for subsidies or Medicaid. Each portal has to undergo rigorous testing to ensure, for example, that data will flow properly, that the portal is secure and that it can handle heavy volume. Much of the testing is still going on.

Article source: http://www.nytimes.com/2013/09/30/us/as-opening-day-nears-insurance-exchanges-scramble-to-prepare.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

U.S. Shutdown Nears as House Votes to Delay Health Law

September 29, 2013 by

The votes, just past midnight, followed an often-angry debate, with members shouting one another down on the House floor. Democrats insisted that Republicans refused to accept their losses in 2012, were putting contempt for the president over the good of the country and would bear responsibility for a shutdown. Republicans said they had the public on their side and were acting to protect Americans from a harmful and unpopular law that had already proved a failure.

The House first voted 248-174 to repeal a tax on medical devices, then voted 231-192 to delay the law’s implementation by a year — just days before the uninsured begin enrolling in the law’s insurance exchanges. The delay included a provision favored by social conservatives that would allow employers and health care providers to opt out of mandatory contraception coverage.

But before the House had even voted, Senator Harry Reid of Nevada, the majority leader, declared the House bill dead. Senate Democrats are planning to table the Republican measures when they convene on Monday, leaving the House just hours to pass a stand-alone spending bill free of any measures that undermine the health care law.

The House’s votes early Sunday all but assured that large parts of the government would be shuttered as of 12:01 a.m. on Tuesday. More than 800,000 federal workers deemed nonessential faced furloughs; millions more could be working without paychecks.

“The American people don’t want a government shutdown, and they don’t want Obamacare,” House Republican leaders said in a statement. “We will do our job and send this bill over, and then it’s up to the Senate to pass it and stop a government shutdown.”

A separate House Republican bill passed unanimously Sunday morning to ensure that military personnel continued to be paid in the event of a government shutdown, an acknowledgment that a shutdown is likely. En route to South Korea, Defense Secretary Chuck Hagel was unimpressed, excoriating his former Republican colleagues in Congress.

“This is an astoundingly irresponsible way to govern,” Mr. Hagel said, adding that a fully functioning military went beyond its uniformed forces to its civilian personnel. “If this continues, we will have a country that is ungovernable.”

Representative Darrell Issa, a powerful Republican committee chairman who is close to the leadership but has sided with those who want to gut the health care law, flashed anger when asked what would happen when the Senate rejected the House’s offer.

“How dare you presume a failure?” he snapped. “We continue to believe there’s an opportunity for sensible compromise, and I will not accept from anybody the assumption of failure.”

But Mr. Reid made it clear that failure was inevitable. “After weeks of futile political games from Republicans, we are still at Square 1,” he said. “We continue to be willing to debate these issues in a calm and rational atmosphere. But the American people will not be extorted by Tea Party anarchists.”

The White House was just as blunt. “Any member of the Republican Party who votes for this bill is voting for a shutdown,” the press secretary, Jay Carney, said in a written statement. The White House also said that the president would veto the House bill if approved by the Senate.

In fact, many House Republicans acknowledged that they expected the Senate to reject the House’s provisions, making a shutdown all but assured. House Republicans were warned repeatedly that Senate Democrats would not accept any changes to the health care law.

Jennifer Steinhauer contributed reporting.

Article source: http://www.nytimes.com/2013/09/29/us/politics/budget-talks-government-shutdown.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Federal Agencies Lay Out Contingency Plans for Possible Shutdown

September 28, 2013 by

Each cabinet-level department and federal agency was required to identify essential personnel and determine which operations would continue if no deal were reached by Tuesday, the first day of the new fiscal year.

Although huge parts of the federal bureaucracy could be forced to close, many government functions would continue.

Senior Pentagon officials said on Friday that the more than 1.3 million active military personnel would remain on duty during a shutdown but would probably not receive their paychecks until a spending agreement was reached. The service members and civilians who stay on the job would be categorized as essential to the protection of life and property and to national security.

About half of the Defense Department’s approximately 800,000 civilian employees would be furloughed without pay.

There is little question that troops deployed to Afghanistan would continue their missions, as would warships now off the coast of Syria to pressure President Bashar al-Assad’s government to adhere to a plan to surrender its chemical weapons stockpile.

Documents released on Friday by the Pentagon listed essential duties that would be carried out during a government shutdown, including recruitment, intelligence and surveillance, fire protection, counseling and other services for sexual assault victims, operations of mortuary facilities for fallen service members, and a broad range of medical care.

The military is one of several departments whose employees are considered essential for national security purposes. The Department of Homeland Security, which comprises organizations like the Secret Service, Customs and Border Protection and the Federal Emergency Management Agency, would have to furlough roughly 14 percent of its employees, far lower than many other cabinet-level agencies.

Nearly all of the F.B.I.’s roughly 16,000 agents and analysts at its headquarters and its 56 field offices across the country would continue to work because they are considered essential to protecting the country. “Nonessential” employees like carpenters and dock employees who unload shipments would be told to stay home.

Most employees of the State Department would continue to report to work, domestically and abroad. Most overseas employees, and many of the people working in Washington to support them, would be considered essential because of their diplomatic and national security functions.

Much of the State Department operates outside the normal Congressional appropriations process, meaning many bureaus and offices would remain open. Most passport offices, for example, would continue to process applications normally because the department’s consular function is financed largely through fees.

Although more than half of the Department of Health and Human Services would be furloughed, Medicare and Medicaid beneficiaries would continue to receive services. Retirees would continue to get checks from the Social Security Administration.

The rollout of President Obama’s health care law, with the first insurance marketplaces to go online starting on Tuesday, would continue because most of the money for that program was provided by the Affordable Care Act and other laws.

The Food and Drug Administration would continue some vital activities, like product recalls and the inspection of imports, but would curtail many other food safety activities.

National parks and their visitor centers would be closed, but other Interior Department operations would carry on. Approximately 500 Fish and Wildlife Service employees, whose salaries are paid by a permanent appropriation, would continue caring for animals at parks and hatcheries. At the United States Geological Survey, employees would continue to monitor equipment to forecast floods or detect earthquakes and volcano activity. Native Americans would continue to receive benefits payments, and the Bureau of Indian Education would operate its schools.

The District of Columbia, whose budget is approved by Congress, would normally be required to send home all but its most essential employees, shuttering services like public libraries and the Department of Motor Vehicles.

But in protest of Congress’s inability to agree on a spending measure, Mayor Vincent C. Gray informed the Office of Management and Budget that he had deemed all district employees to be essential.

While Mr. Gray’s gambit seemed legally tenuous, the chairman of the City Council, Phil Mendelson, was expected to hold a vote on Tuesday on legislation that would allow the city, during a federal shutdown, to pay its employees from a contingency reserve fund.

Robert Pear contributed reporting.

Article source: http://www.nytimes.com/2013/09/29/us/politics/federal-agencies-lay-out-contingency-plans-for-possible-shutdown.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Breaking Up With ‘Breaking Bad’ Is Hard for Albuquerque

September 28, 2013 by

At a different fast-food restaurant, the manager might have been alarmed. But this particular one had doubled as Los Pollos Hermanos, the chicken joint owned by a ruthless leader of a methamphetamine cartel in “Breaking Bad,” the AMC television series.

Such fan fervor — in this case, impersonating the show’s main character, a chemistry-teacher-turned-meth-cook named Walter White — had become routine. In fact, during one week this month, 117 fans from places as disparate as northern France, the Cayman Islands, Baton Rouge, La., and Kalispell, Mont., signed the hefty “Breaking Bad” guest book perched on the Twisters counter near the soda machine.

The show, which won three Emmy Awards this year, including its first for best drama series, began filming in 2007 in Albuquerque, a city long overshadowed in tourism by Santa Fe, its smaller neighbor to the north. Over the next six years, however, as the series showcased Albuquerque’s grit and high-desert beauty, the city became a star in its own right and an entire “Breaking Bad” economy sprang up.

But now, with the series finale to be broadcast Sunday night — filming concluded in April — the future is uncertain for the many businesses that have come to rely on the show for sales.

During the show’s run, the production directly employed an average of 200 people, said Wayne Rauschenberger, chief operating officer at Albuquerque Studios, the 28-acre facility where much of the show was filmed. Beyond that, there were lumber yards, antique stores, limousine companies, hotels, caterers and others performing ancillary functions. Residents were hired as extras, and homeowners and businesses were paid for filming privileges.

The set decorator Michael Flowers says he patronized antique stores when designing sets, recalling that he spent $20,000 on scrap metal at a local salvage yard while building the show’s meth-lab set. Mr. Flowers described his philosophy as: “Don’t shop at chains. Go to ma-and-pa stores; keep the money in Albuquerque.”

The series’ creator, Vince Gilligan, routinely incorporated local spots into filming. He has been widely quoted as saying Albuquerque became a central character in the show. As the show’s popularity surged — about 6.6 million viewers tuned in last Sunday — so did Albuquerque’s.

“ ‘Breaking Bad’ became such a phenomenon that it helped in other areas such as tourism,” says Nick Maniatis, director of the New Mexico State Film Office. “You wouldn’t think that would be the case for a show about meth. But it was shot so beautifully. They did such a great job showing different areas of our state.”

When tourists began streaming in, they sought out the aesthetically ordinary places they had seen on screen, like the Twisters restaurant and the house that serves as Walter White’s home. In 2012, ABQ Trolley Co. began highlighting such locations in a weekly tour that now runs from April to October; it routinely sells out. Earlier this year, two other companies began leading competing bicycle and limousine tours.

Many more fans make their way to the landmarks on their own. Fran Padilla, owner of the house whose exterior and swimming pool were used as the White family home, counted more than 2,000 gawkers outside her window in August and September. She keeps tabs on visitors by using a pair of binoculars to scour their license plates, and occasionally emerges to introduce herself.

Originally from Brooklyn, Mrs. Padilla has lived in the house with her husband for 40 years. When the show’s location scout knocked on their door before the pilot was filmed, “it was like winning a lottery,” she says. “With all the homes in Albuquerque, they picked ours?”

She declined to divulge how much the production paid out, except to say: “It didn’t make us rich, but it was nice. Extra money is always nice.”

The fact that four and a half of the show’s five seasons are available on Netflix allows it to continue drawing new viewers, beyond its huge TV following. That gives Mrs. Padilla and others faith that its drawing power for Albuquerque won’t be just a fad.

Others have doubts. Debbie Ball, who owns the Candy Lady, believes that the boom will fade in a year’s time. She has been churning out blue rock candy meant to resemble the special blue meth manufactured by Walter White in the show. The candy was used as a prop in the first two seasons of “Breaking Bad,” and she now sells it to tourists in what she calls “dollar dime bags.” She estimates she has sold 35,000 bags since August 2012.

Article source: http://www.nytimes.com/2013/09/29/business/breaking-up-with-breaking-bad-is-hard-for-albuquerque.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

Last Shutdown a Lesson Lost on Capitol Hill

September 28, 2013 by

“I’ll buy you a Coke Zero if you can tell me what the government shutdown was about in ’95,” said Senator Lindsey Graham, a South Carolina Republican who was among the raucous House freshmen then. “What was the issue? Nobody remembers!”

Previous Congresses and administrations managed to find a way out of their own conflagrations. In fact, the last major shutdowns, in late 1995 and early 1996, paved the way for sweeping bipartisan compromises, including tax and budget changes that both Congressional Republicans and President Bill Clinton were pleased to call their own.

The entire exercise solidified a pattern of high-pressure, low-skill budget showdowns for the next generation, but a sinewy economy made it all seem O.K.

“It’s easy to look back and say it was all planned that way,” said Leon E. Panetta, Mr. Obama’s former defense secretary and Mr. Clinton’s chief of staff during the shutdowns. “But I have to tell you, it was a day-to-day crisis, and you never quite knew what the hell was going to happen.”

Whether those stuck in some Congressional fiscal jam in 2033 will study 2013 for lessons on how a divided Washington finally pulled back from the brink with a last-minute compromise or engaged in a meltdown that harmed the economy and ended careers is yet to be determined. But in many ways, Washington of today feels a lot like 1995-96, when the government shut down twice over the course of a month.

Then, as now, partisan rancor over federal spending burned hotly. Congressional Republicans complained bitterly about the Democratic president, jabbing at him for playing too much golf and opposing military action in a factionalized foreign land.

Representative John A. Boehner of Ohio, then on a lower rung of leadership, was tormented by House freshmen who were trying to use spending agreements to undo social policy, lamenting that “you can’t bring about this much change without a lot of listening and hand-holding.”

Partisan divides over the role and scope of government are even deeper now, with the procedures of government thrown into such chaos that Republican senators took to the floor last week to offer something close to a comedy roast of one of their own, Ted Cruz of Texas. The lessons of the Clinton-era deadlock, which damaged the Republican Party while restoring a weakened president, may be elusive.

Unlike this Congress, both chambers then were ruled by one party, which worked in concert, at least in the beginning, to undermine a president who, unlike Mr. Obama, was up for re-election. Mr. Clinton engaged in daily castigations of Congress while keeping alive negotiations with his adversaries, two things Mr. Obama eschews.

Further, Mr. Clinton’s incipient opponent back then, Senator Bob Dole of Kansas, was the majority leader with a centrist agenda that is hard to find among current Senate Republicans. “It’s mind boggling,” Mr. Dole said of the current budget impasse. “The difference between then and now is the Senate said enough is enough.” (Also, no senator performed a fake filibuster as Mr. Cruz did last week. They were old-fashioned that way.)

An important structural difference exists as well: before the shutdowns of 1995-96, Congress had already passed numerous appropriations bills to finance main areas of government. Congress today has passed zero, the net result of an earmark ban (money to fix a bridge tends to be the best fixer for hurt feelings) and a divided opinion in the House and Senate over how much money the government is actually allowed to spend.

“This would be as complete a government shutdown as you can get,” said Stan Collender, a veteran federal budget expert.

Stalemates between Congress and the White House over spending have existed since the government began, but they became more severe during the 1970s, leading to an increased number of stopgap spending agreements. From that ensued increasingly protracted fights over how to fix those spending gaps, and the spending bills became proxies for other policy battles.

In 1984, President Ronald Reagan, sparring with Democrats over spending, military aid to Nicaragua and other issues, initiated a shutdown of various cabinet-level agencies for a short period. President George Bush had his own fight with Congress over discretionary spending, which led to a shutdown in 1990.

In the 1996 fiscal year, which featured the two most infamous shutdowns in American history, the battle between Congress and Mr. Clinton centered principally around how to balance the budget, with a side fight over Medicare premiums that ultimately provoked the shutdown. Republicans wore lapel pins calling for a balanced budget.

The current fight over a doomed Republican plan to deprive Mr. Obama’s health care law of money, Mr. Graham said, “is about taking a legislative proposal, the signature issue of the president, and asking him to walk away from it. I just don’t see that as being the best tactic.”

In stark contrast to the current fight, the Republican game plan in the mid-1990s came from the top. The speaker at the time, Newt Gingrich, fresh off a popular campaign to take over the House, led the shutdown strategy, and his members largely rallied around it. Senate Republicans, while dubious about the politics, went along for the ride.

Today, Senator Mitch McConnell, the Republican leader, is plagued by both his minority status and a primary challenge from the right. He has done little to bridge the gap between Republicans willing to fight to the end and those who want to move on. But the latest crop of Republican senators often seems impervious to pressure from their leaders.

It was Mr. Dole, with his presidential ambitions affirmed and his control of his conference secure, who pulled the plug on Mr. Gingrich and his revolutionaries.

Mr. Dole said his biggest regret was not moving sooner. “I think we could have ended it a day or two earlier,” he said, “because Clinton was eating our lunch.”

Jonathan Weisman contributed reporting.

Article source: http://www.nytimes.com/2013/09/29/us/politics/last-shutdown-a-lesson-lost-on-capitol-hill.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Economic View: Housing Market Is Heating Up, if Not Yet Bubbling

September 28, 2013 by

In fact, according to the S. P./Case-Shiller Composite-10 Home Price Index, which Karl Case of Wellesley College and I developed, home prices in the United States were up 18.4 percent in real, inflation-corrected terms in the 16 months that ended in July. During the housing bubble that preceded the 2008 financial crisis, the largest 16-month increase wasn’t much bigger: 22.7 percent, for the period ended in July 2004.

Is it possible that we are lapsing into what I call a bubble mentality — a self-reinforcing cycle of popular belief that prices can only go higher?

Some answers arise from a study that Professor Case and I have been conducting since 2003. Under the auspices of the Yale School of Management, we’ve been sending out annual questionnaires to random samples of recent home buyers in four United States cities: Boston, Milwaukee, Los Angeles and San Francisco. Last year, we reported on our project at the Brookings Institution in a paper we wrote with Anne Thompson of McGraw-Hill Construction.

We updated the survey in May and June. The results suggest that though we are not in a bubble now, there are troubling signs that we may be heading toward one.

Out of 2,000 questionnaires sent to home buyers, we received 368 responses. We asked the respondents how much they thought home prices would rise both in the next year and in the longer term — each of the next 10 years.

The short-term expectations were somewhat high, with respondents saying they anticipated a 5.7 percent increase, on average, in the next year. (That’s close to the implied home price appreciation of 5.6 percent in the home price futures market at the Chicago Mercantile Exchange.)

These projections were much higher than those in 2011, when respondents anticipated only a 1.6 percent increase, and somewhat above those of 2012, when the expectation was 4.0 percent. Still, in 2004, just before the peak in home prices, short-term expectations were far loftier, at 8.7 percent.

What’s more, long-term expectations in the current survey remained relatively modest, at 4.2 percent a year for the next 10 years. At that rate, if consumer inflation is modest, at, say, 2 percent a year, real prices would rise only about 2.2 percent annually, and we wouldn’t return to the December 2005 peak in real home prices until 2031.

We also posed this question in the survey: “Do you agree with the following statement: Real estate is the best investment for long-term holders, who can just buy and hold through the ups and downs of the market.” In 2004, some 84.2 percent of respondents agreed. But the percentage has been generally declining ever since, bottoming last year at 66.5 percent. While that level may still seem high, we should remember that these are people who have just bought a home. (The level was up a little in 2013, to 70.4 percent.)

Here’s another indication that we are not now in bubble territory: Some 10.6 percent of respondents said they bought a home “only to rent out to others.” That proportion has been rising irregularly since 2004, when it was just 2.7 percent. The change likely reflects the recent tilt in demand toward rental housing, which isn’t likely to sustain high prices in scattered suburban housing.

The questionnaire invited readers to respond in their own words to questions like these:

• “Was there any event or events in the last two years that you think changed the trend in home prices?”

• “What do you think explains recent changes in housing prices in [name of respondent’s city]? What ultimately is behind what is going on?”

When we asked these questions near the height of the bubble in 2004, especially in the booming markets like Los Angeles and San Francisco, home buyers tended to use terms that suggested bubble thinking — phrases like “limited land,” “high demand for housing,” “population growth,” “everyone wants to be here” and “buyers willing to pay any asking price.” There was also much talk about low interest rates, and how they might soon rise, even though the 30-year mortgage rate, then at just over 6 percent, was much higher than the current level of about 4.5 percent.

In this year’s survey, the answers didn’t suggest a bubble mentality, though the theme of temporarily low interest rates remained. In summary, Americans are still relatively sober about housing. They aren’t showing “irrational exuberance” about home investing to the degree they did in the past, at least not yet.

But neither are they being completely realistic. In reading the most recent answers, I see no signs that home buyers have learned the lesson I tried to convey in the second edition of my book “Irrational Exuberance” in 2005. That message was that existing-home prices have shown virtually no tendency to trend upward in real, inflation-corrected terms over the last century. While land is limited, it’s only a small component of home value in most places. New construction often brings down the value of older homes, which wear out and go out of fashion, dragging down prices.

IT’S as if people are applying to housing an idea described by Frederick Lewis Allen in his 1931 book, “Only Yesterday.” Before the stock market collapsed in 1929, he said, people thought that “every crash of the past few years had been followed by a recovery, and that every recovery had ultimately brought prices to a new high point. Two steps up, one step down, two steps up again — that was how the market went.”

Well, people have certainly been right that there will always be steps up and down. Unfortunately, there is no certainty that the ups will outnumber the downs.

People who are now inclined to buy a home are most often just thinking that we are gradually recovering from a recession and that this is a good time to buy. The mental framing still seems to be about economic recovery and the likelihood that interest rates will rise. People mostly don’t seem to be prompted by the anticipation of another housing boom.

That’s the thinking at the moment. But whether these attitudes mutate into a national epidemic of bubble thinking — one big enough to outweigh higher mortgage rates, fiscal austerity in Congress and other factors — remains to be seen.

Robert J. Shiller is Sterling Professor of Economics at Yale.

Article source: http://www.nytimes.com/2013/09/29/business/housing-market-is-heating-up-if-not-yet-bubbling.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Corner Office: Jonathan Klein of Getty Images, on Useful Critiques

September 28, 2013 by

Q. Any early leadership lessons for you?

A. My father was C.E.O. of a manufacturing company in South Africa. He wasn’t entrepreneurial, though. He worked for the same company his whole career. He just made his way up from an engineer to running the company. We sort of grew up with business around the dinner table. I have two older brothers. One had his first C.E.O. gig when he was 24, and the other has always had his own companies. I went into law, then spent 10 years in investment banking before deciding that I wanted to do my own thing.

Q. Tell me more about those dinner-table conversations.

A. More often than not, the conversation had to do with both the challenges and the joy in managing people. And he had challenges that I have not had to face because he had thousands of workers in apartheid South Africa. We were brought up in a very liberal household, so he felt very strongly about what his obligations were toward his people.

Q. Were there certain expressions he would often use with you?

A. The main ones were around your word and reputation. He would always say you could spend a lifetime creating a good reputation, and you could lose it with just one bad judgment. Always focus on the long term, because the short term is, by definition, short. And he would say: “Jonathan, you talk too much. There’s a reason you have two ears and one mouth. If you’d shut your mouth, you might learn something.”

Q. And what were your school years like?

A. I was a rebel. I was challenging authority all the time. It’s partially my personality and partially my upbringing. Because of growing up in South Africa, I associated authority with bad stuff. So whenever somebody told me to do something or not to do something, I would challenge it.

Q. And after college?

A. I went to study law in London. I had decided when I was 7 that I was going to be a lawyer because everybody told me that I was so articulate and argumentative and kind of difficult, so I should be a lawyer. But I didn’t like it. It felt almost like an extension of the private school and Oxford-Cambridge system in England.

So I began working at an investment bank, and I stayed for 10 years, working with entrepreneurial and smaller companies until I decided to build a business myself.

Q. What are other leadership lessons you’ve learned from running Getty Images?

A. I’ve learned a lot from my executive coach. Anytime someone came to me to show me their work, I would critique it. I would almost behave like a schoolteacher — my mother was a teacher — and bring out the metaphorical red pen. And what I didn’t appreciate at the time is that before you mess around the edges, you’ve got to say to yourself, “Am I going to make this significantly better, or am I going to make it only 5 or 10 percent better?” Because in fiddling over the small stuff, you take away all the empowerment. Basically it no longer becomes that person’s work. And after a while, those people get into the habit of giving you incomplete work, and then you have to do it for them.

I also used to always debate and argue whatever point was under discussion. And my coach said: “You’ve got to stop. You’ve got to pause, and think, ‘Are you debating the point to get a better outcome or because you just like getting the last word and you like winning?’ If you’re debating to get a better outcome, absolutely do it. If you’re debating because of the latter, cut it out.”

Q. You’ve taken the company from a start-up to about 2,000 employees. What are your thoughts about fostering culture?

A. I learned very quickly that titles, especially mine, do not matter, and that you have to find ways to get people to do things because they think it’s the right thing to do, and so you need to explain the reasons behind your decisions.

We also went through a period when we acquired a lot of companies, and everybody was still feeling like they belonged to their original team rather than being part of Getty Images. So I wrote seven leadership principles, and they are still the bedrock of the company.

Q. What are they?

A. The first is “trustworthiness, transparency and openness;” followed by “the obligation to care;” “lead by example;” and “raise the bar.” Then “one voice, collective responsibility,” which is about creating a culture of us and we, not me and I. Next is “bring me solutions,” because in a lot of organizations the person who points out a problem gets credit. Here, you’ve got to also come up with a solution. And, finally, “no silos.” Every year, everybody is rated on how well they live up to those principles.

Q. How do you hire?

A. I always ask, “Of all the jobs you’ve done, what was your favorite?” Then I’ll ask, “Why?” And I always ask: “What do you enjoy most about working and what do you enjoy least? And what do you do when you’re not working?” I’m really trying to put together the person’s narrative.

Q. And when a new hire hasn’t worked out, what’s typically been the problem?

A. One problem is when people don’t ask enough questions, and have too many opinions. They don’t spend enough time trying to understand the business, the people and the culture, and they reach conclusions too quickly. And then the company turns against them because they were disrespectful to what we’ve achieved, or think we’ve achieved.

Q. What advice would you give to college seniors?

A. Be open to anything. And I don’t say “follow your passion,” because you usually don’t know what your passion is when you’re that age. You can’t. So I’ve always told people you’ve just got to be open to stuff. Expect the unexpected, and then prepare for it.

Article source: http://www.nytimes.com/2013/09/29/business/jonathan-klein-of-getty-images-on-useful-critiques.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

Fair Game: Why Judges Are Scowling at Banks

September 28, 2013 by

LAST week, for the first time since the financial crisis, the government faced off in court against a major bank over lending practices during the mortgage mania. Lawyers for the Justice Department contend that Countrywide Financial, a unit of Bank of America, misrepresented the quality of mortgages it sold to Fannie Mae and Freddie Mac, the taxpayer-owned mortgage finance giants, starting in 2007. Fannie and Freddie incurred gross losses of $850 million on the defective loans and net losses of $131 million, the government said.

Bank of America disagrees. Its lawyers say that Countrywide did not defraud Fannie or Freddie.

This case is undoubtedly big, but it is only one of many mortgage-related matters inching through the judicial system. And what is notable about some of the lower-profile matters is the tone and tack that federal judges are taking in their rulings. District court judges are not generally known as flamethrowers, but some seem to be losing patience with the banks.

For decades leading up to the foreclosure debacle, plaintiffs’ lawyers say, judges generally took the side of lenders when borrowers came to court complaining of problematic lending or predatory loan servicing. Many judges still do. But some are getting tough, perhaps having seen too many examples of dubious bank behavior.

“Maybe the judges are tired of the diet of baloney sandwiches the banks have been feeding them,” said April Charney, a foreclosure defense lawyer who for years represented troubled borrowers at Jacksonville Area Legal Aid in Florida. She is now in private practice.

Two recent rulings — one in New York involving Bank of America and one in Massachusetts involving Wells Fargo — serve as examples. In the Wells Fargo case, a ruling on Sept. 17 by Judge William G. Young of Federal District Court was especially stinging. In it, he required Wells Fargo to provide him with a corporate resolution signed by its president and a majority of its board stating that they stand behind the conduct of the bank’s lawyers in the case.

The case involved a borrower named Joseph Henning who fell behind on his mortgage, which he received from Wachovia, an entity later absorbed by Wells Fargo. In a suit filed against Wells Fargo in May 2009, Mr. Henning contended that the loan was predatory.

Judge Young agreed with the bank’s argument that federal laws pre-empted the state-law remedies Mr. Henning was seeking. But he did so reluctantly, calling it a win based “on a technicality.”

Then he chastised the bank. “The disconnect between Wells Fargo’s publicly advertised face and its actual litigation conduct here could not be more extreme,” the judge wrote. “A quick visit to Wells Fargo’s Web site confirms that it vigorously promotes itself as consumer-friendly,” he continued, “a far cry from the hard-nosed win-at-any-cost stance it has adopted here.”

If Wells Fargo does not supply the corporate resolution within 30 days of the ruling, the case will go to a jury trial, the judge said.

Mary Eshet, a spokeswoman for Wells Fargo, called the judge’s remarks in the ruling “inflammatory and unsubstantiated,” and added: “We believe Judge Young should follow the law which he recognizes and finalize his own judgment in this case.” The bank is asking an appellate court to require the judge to enter his dismissal order without the corporate resolution.

Valeriano Diviacchi, the lawyer for the borrower, said he had never seen a ruling requiring a corporate resolution as Judge Young’s did. Mr. Diviacchi said that he didn’t know why the judge made the ruling but that the judge appeared to want the case to be heard by a jury of Mr. Henning’s peers, people who may have had their own experiences with questionable bank practices.

“Judge Young is one of the few judges who will refer matters to juries — even when a cause of action does not entitle a party to a jury right — because he believes in it as a foundation of the justice system and a democratic society,” Mr. Diviacchi said.

The second case arose after Edwin Ramos and Michelle Ava Stouber-Ramos filed for bankruptcy and had the first and second mortgage on their Tampa, Fla., condominium discharged by the court. That kind of discharge protects a borrower from any attempts to collect the debts as a personal liability.

Bank of America received notice of the discharge in September 2010. But in spring 2012, the bank began sending letters to the Ramoses, saying their $26,991 second mortgage was “seriously delinquent” and demanding that they pay the amount owed immediately. Otherwise, the bank said, it would proceed with “collection action.”

Article source: http://www.nytimes.com/2013/09/29/business/why-judges-are-scowling-at-banks.html?partner=rss&emc=rss

Filed Under: Economy News

Your Money: A Guide to the New Exchanges for Health Insurance

September 27, 2013 by

But after much anticipation, the curtain will finally rise on the exchanges next week, providing millions of consumers with an online marketplace to compare health insurance plans and then buy the coverage on the spot.

The exchanges are likely to be most attractive to people who qualify for subsidized coverage. Individuals with low and moderate incomes may be eligible for a tax credit, which can be used right away, like a gift card, to reduce their monthly premiums. People with pre-existing conditions will no longer be denied coverage or charged more (this applies to most plans outside the exchanges, too). And all of the plans on the exchanges will be required to cover a list of essential services, from maternity care to mental health care.

“In today’s individual market, it’s like Swiss cheese coverage,” said Sarah Dash, a research fellow at the Health Policy Institute at Georgetown University. “Consumers should have an easier time figuring out what they are getting for their money.”

But it’s still going to take some time to analyze the plans and their costs, which are expected to vary widely across the states. And the coverage may still pinch many families’ budgets. Fortunately, there’s a six-month window, from now to March 31, for people to figure it all out.

Here’s some information to get you started:

Q. Where can I apply or get more information on the exchanges?

A. To avoid fraud artists, enter through the front door: Healthcare.gov. From there, you can find links to the exchange offered in your state. There may be technical glitches as the program gets started, so alternatively, you can call 1-800-318-2596.

Q
. When does coverage go into effect?

A. You can apply as early as Oct. 1, but coverage won’t begin until Jan. 1. The enrollment period for coverage in 2014 closes on March 31, 2014. After that, you can enroll only if you have a major life event like a job loss, birth, marriage or divorce.

Q. What sort of coverage will be offered?

A. All plans will have to provide the same set of essential benefits, including prescriptions, preventive care, doctor visits, emergency services and hospitalization (this also applies to most individual and small-employer group plans sold outside of the exchanges). But plans can offer additional benefits, or different numbers of services like physical therapy, so you’ll need to do a side-by-side comparison to see what fits your needs — or at least the needs you can anticipate.

Q. Are the plans sold on the exchange more comprehensive than plans outside?

A. There are four plan levels, each named for a precious metal. They all generally offer the same essential benefits, but their cost structures vary. The lower the premium, the higher the out-of-pocket costs.

The bronze level plan, for instance, has the lowest premiums, but will require consumers to shoulder more costs out of pocket. They generally cover 60 percent of a typical population’s out-of-pocket costs, and include deductibles, co-payments and coinsurance. The silver plans cover 70 percent; gold, 80 percent; while platinum covers 90 percent (and therefore carries the highest premiums).

If you buy a plan on an exchange, your annual out-of-pocket costs cannot exceed $6,350 for individuals and $12,700 for a family of two or more in 2014. Catastrophic plans are also available to people under age 30 or those suffering a financial hardship. These carry high deductibles (equivalent to the out-of-pocket maximum, or $6,350 for a single person, in 2014). You cannot apply tax credits to these plans, either.

Premiums will vary across the states because of a variety of factors, like market competition, the underlying cost of care and the negotiating power of the exchanges, according to Kaiser research.

Q. If the costs with plan levels are similar, how will plans differ within the metal levels?

A. Networks of doctors and hospitals will differ, and cost-sharing structures may also vary. One plan might have lower deductibles and higher co-pays, whereas another plan might have a separate deductible for prescriptions. Various medications may also be covered differently. “If you are someone who is taking medicines, make sure you know what your drugs will cost in the various plans being offered,” said Cheryl Fish-Parcham, deputy director of health policy at Families USA, a Washington consumer advocacy group.

Q. Will I be eligible for a premium tax credit (subsidized coverage)?

A. People with income between 100 percent of the poverty line (or about $23,550 for a family of four) and 400 percent of poverty ($94,200 for a family of four) are eligible for a tax credit to defray premium costs. (All income eligibility is based on your modified adjusted gross income; the online version of this column links to a guide explaining how that is calculated).

The tax credits are set up so that consumers will not have to pay more than a certain percentage of their income, ranging from 2 percent for those with incomes of up to 133 percent of the poverty level ($15,282 for a single and $31,322 for a family of four) to 9.5 percent for those with income of 300 to 400 percent of the poverty level, according to the Center on Budget and Policy Priorities. The dollar amounts of the credits are calculated based on the costs of the second-to-lowest-cost silver plan available to you.

Kaiser has a calculator that can give you an idea of your eligibility.

Q. Can I get help with my out-of-pocket expenses, like deductibles?

A. People with incomes between 100 percent of the federal poverty line ($23,550 for a family of four) and 250 percent ($58,875 for a family of four) are also eligible for cost-sharing reductions, which means you’ll pay less for items including deductibles and co-payments, and you’ll have lower out-of-pocket maximums.

Article source: http://www.nytimes.com/2013/09/28/your-money/health-insurance/a-guide-to-the-new-health-insurance-exchanges.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: , ,
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