health insurance

CBO: Updated 2014-2024 Budget Projections Show Substantially Rising Budget Shorfalls, Federal Debt

That idea that the U.S. could someday resemble a “banana republic” might not be too far off the mark. From the non-partisan Congressional Budget Office website today:

As it usually does each spring, CBO has updated the baseline budget projections that it released earlier in the year…

Between 2015 and 2024, annual budget shortfalls are projected to rise substantially—from a low of $469 billion in 2015 to about $1 trillion from 2022 through 2024—mainly because of the aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. CBO expects that cumulative deficits during that decade will equal $7.6 trillion if current laws remain unchanged. As a share of GDP, deficits are projected to rise from 2.6 percent in 2015 to about 4 percent near the end of the 10-year period. By comparison, the deficit averaged 3.1 percent of GDP over the past 40 years and 2.3 percent in the 40 years before fiscal year 2008, when the most recent recession began. From 2015 through 2024, both revenues and outlays are projected to be greater than their 40-year averages as a percentage of GDP (see the figure below)…

In CBO’s baseline projections, federal debt held by the public reaches 78 percent of GDP by 2024, up from 72 percent at the end of 2013 and twice the 39 percent average of the past four decades (see the figure below). As recently as the end of 2007, federal debt equaled just 35 percent of GDP

Such high and rising debt would have serious negative consequences. Federal spending on interest payments would increase considerably when interest rates rose to more typical levels. Moreover, because federal borrowing would eventually raise the cost of investment by businesses and other entities, the capital stock would be smaller, and productivity and wages lower, than if federal borrowing was more limited. In addition, high debt means that lawmakers would have less flexibility than they otherwise would to use tax and spending policies to respond to unexpected challenges. Finally, high debt increases the risk of a fiscal crisis in which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates…

(Editor’s note: Bold added for emphasis)

You can read the entire assessment and view the complete document on the CBO website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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ObamaCare Killed My Health Insurance Plan

From a letter I received in the mail this afternoon from my health insurance provider:

Changes are coming to the health insurance marketplace… The Affordable Care Act (ACA) is changing health insurance… You’ll need to enroll in a plan that includes all ACA requirements. We’ll give you information to help you choose a new plan.

Translation: ObamaCare killed your health insurance plan, Mr. Hill. Now go find another plan.

Which sucks, because it was a good plan that I worked really hard to find, and it was incredibly-reasonable in terms of cost. Dirt-cheap actually.

I’ve seen the projected costs of a new health insurance plan for me, and I think it’s pretty safe to say having to enroll “in a plan that includes all ACA requirements” is going to cost me a lot more than what I’m currently paying for such insurance.

“Hope and Change.” Change will be all that’s left in these pockets pretty soon.


“36 Times Obama Said You Could Keep Your Health Care Plan”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Friday, November 8th, 2013 Government, Health, Insurance, Political Parties 2 Comments

CBO: ObamaCare’s Gross Costs Over 10 Years May Be Nearly Twice White House’s Original Projections

Universal healthcare. A noble idea- if a nation can afford it.

As for “ObamaCare,” the more time that passes since the Affordable Care Act was enacted on March 23, 2010, the more expensive the projected numbers are getting.

Howard Sheppard reported on the website of Central Pennsylvania FOX affiliate WPMT FOX 43 yesterday:

The gross costs of the national healthcare law rammed through Congress by President Barack Obama will reach an estimated $1.76 trillion over 10 years – nearly twice the amount originally projected. The figure, which the Congressional Budget Office (CBO) revealed on Wednesday, is bound to cause embarrassment to the administration as it comes just as debate on “Obamacare” is starting to heat up again, two weeks before the Supreme Court is set to hear arguments on whether the Affordable Care Act is unconstitutional…

Original White House estimates said the gross cost of the healthcare act would be $940 billion over a decade, but the CBO’s new figures raise that figure to a shade under $1.5 trillion. For the 10 years from 2013-2022 that increases even further to $1.76 trillion.

(Editor’s note: Italics added for emphasis)

Back on March 1, I noted that according to a Government Accountability Office (GAO) report released February 26, ObamaCare will increase the long-term federal deficit by $6.2 trillion.

$6.2 trillion.

Considering the growing instability of the U.S. financial house of cards, one might wonder if the costs associated with universal health coverage won’t be the straw that eventually breaks the camel’s back.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Sheppard, Howard. “CBO: Obamacare estimated cost nearly double to $1.7 trillion.” FOX Central Pennsylvania. 16 May 2013. (http://fox43.com/2013/05/16/cbo-obamacare-estimated-cost-nearly-double-to-1-7-trillion/#axzz2TYdCQnzp). 16 May 2013.

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Illinois Could Have Nearly $22 Billion In Unpaid Bills By FY 2018

It’s been a while since I last blogged about the Civic Federation, an independent, non-partisan government research organization that provides analysis and recommendations on government finance issues for the Chicago region and State of Illinois. In late September 2011, the Chicago-based organization had just released its analysis of the enacted FY 2012 State of Illinois budget, and noted the financially-challenged state was expected to end the year with over $8 billion in unpaid bills from vendors, local governments, and others (related to business tax refunds, employee and retiree health care and Medicaid).

Over $8 billion in unpaid bills.

Fast forward to today. From a Civic Federation press release Monday:

Illinois’ Unpaid Bill Backlog Projected to Reach $22 Billion by FY2018

State urgently needs long-term plan to address rising pension and Medicaid costs, loss of income tax revenues

(CHICAGO) – An analysis released today by the Civic Federation’s Institute for Illinois’ Fiscal Sustainability shows the State of Illinois is on track to accumulate nearly $22 billion in unpaid bills by FY2018 unless action is taken to curb rising pension costs and plan for increases in the Medicaid program…

“Nearly $22 billion in unpaid bills.”

Illinois residents, get ready to bust out your wallets.

You can read the entire Civic Federation press release here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Illinois’ Total Unfunded Liabilities: $275 Billion

The following bit about Illinois’ total unfunded liabilities from a January 28 Investor’s Business Daily editorial was so depressing to read that I originally planned to blog about it much earlier this morning- but needed to step away. From the IBD website:

A recent release by the Illinois Policy Institute shows this [$96.8 billion unfunded debt to five state pension systems] is only the tip of the iceberg and when you add in other liabilities such as $54 billion in unfunded liabilities for retiree health insurance and $15 billion in pension bonds that Gov. Pat Quinn and his immediate predecessor, former Gov. Rod Blagojevich, issued to avoid pension reform, Illinois’ total unfunded liabilities amount to $275 billion, or $58,000 in debt for each and every household in the state.

(Editor’s note: Italics added for emphasis)

So what’s it going to be, Illinois? Since a booming economy seems unlikely to return anytime soon, will the Democrat-dominated Illinois General Assembly finally enact significant spending cuts? Raise fees and taxes through the roof? Throw public sector retirees “under the bus?”

They’re going to have to do something real quick.

Or watch the whole thing unravel.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Source:

“Obama’s Illinois Downgrade Makes It America’s Greece.” Investor’s Business Daily. 28 Jan. 2013. (http://news.investors.com/ibd-editorials/012813-642237-credit-downgrade-illinois-standard-poors-worst.htm). 31 Jan. 2013.

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Paul Volcker-Led Group: Illinois Could Have Trouble Meeting ‘Its Population’s Basic Needs’

Any remaining doubts I may have had about my home state of Illinois being in bad shape are gone after reading a new report from the non-partisan, Paul Volcker-led State Budget Crisis Task Force. In June 2011, former New York Lieutenant Governor Richard Ravitch and former Federal Reserve Chairman Paul Volcker assembled the task force to examine threats to near- and long-term fiscal sustainability in six U.S. states: California, Illinois, New Jersey, New York, Texas, and Virginia. From the “Summary” portion of the Report of the State Budget Crisis Task Force: Illinois Report that was released Wednesday:

Illinois’ budget is not fiscally sustainable. Despite recent progress and difficult choices, it is still in a deep hole. It cannot simultaneously continue current services, keep taxes at current levels, provide all promised benefits, and make needed investments in education and infrastructure. All of the major threats identified by the Task Force in its July 2012 report have contributed to Illinois’ current problems and will contribute to future budget-balancing struggles.

Illinois has the worst unfunded pension liability of any state, an estimated $85 billion. It has underfunded its pension systems since the early 1980s. Contributions now must escalate rapidly if Illinois is to honor promised benefits; by fiscal year 2015, pension costs (and related debt service) could take up one-fourth of the state’s resources. Illinois will not be able to fund other priorities unless it adopts serious pension reform.

Medicaid enrollment and expenditures in Illinois doubled between 2000 and 2011, growing far more rapidly than tax revenue. In June 2012 the state made major changes that reduce spending, but rising health care costs and the aging population will continue to drive costs upward. Without further reform, unsustainable Medicaid growth will crowd out other essential areas of the budget.

Illinois’ debt is also crowding out the budget. In 2003 Illinois sold a record-breaking $10 billion in pension obligation bonds, and again in fiscal years 2010 and 2011, the state sold bonds to cover its required contributions. The result of pension borrowing is that Illinois’ debt per capita is one of the highest of any state. Over 60 percent of Illinois’ total outstanding debt is due to pension bonds.

Illinois has compounded its challenges with poor fiscal management and opaque budgeting. At the onset of the 2008 financial crisis, Illinois was essentially insolvent. In the years leading up to the crisis, Illinois borrowed and shifted money across years and funds to “balance” the budget, without providing sustainable resources to pay for ongoing commitments. Budget gimmicks became a standard practice. The state has perennially pushed its bills off to the future; at the start of fiscal year 2013, unpaid obligations from prior years were approximately $8 billion. Illinois did all this without any sort of long-term financial plan to restore balance, and without reserves. Illinois has been doing backflips on a high wire, without a net.

Narrow, eroding tax bases have contributed to Illinois’ fiscal difficulties. State tax revenues were stagnant for at least a decade before the recent recession. Illinois enacted a major, temporary, income tax increase in 2011, but the additional revenues are being offset by reductions in federal American Recovery and Reinvestment Act of 2009 (ARRA) monies. Income tax revenues will not keep up with growth in the aging population because Illinois exempts retirement income. Other tax bases — on corporate income, cigarettes, and motor fuel — have been eroding and failing to keep up with economic growth. Illinois’ sales tax rates are high, but its base is narrow and the state taxes relatively few services. Illinois tax revenues are not likely to grow enough to meet future needs.

Federal deficit reduction threatens Illinois, as other states. Federal dollars account for approximately a quarter of the state’s all-funds budget and, after the expiration of federal stimulus spending, currently are $14.8 billion. Federal aid matches about 50 percent of Illinois’ Medicaid spending, and constitutes about 35 percent of the budget of the Department of Human Services, 30 percent of transportation, 20 percent of K-12 education, and 20 percent of spending for environment and natural resources. Federal spending cuts will put these programs at risk.

Illinois’ aging and deteriorating infrastructure is in urgent need of immediate repairs to meet basic standards of public safety. Beyond that, it needs expansion and modernization to accommodate future growth. Over the next several decades, Illinois’ infrastructure needs will likely exceed $300 billion, yet the state does not have a comprehensive plan to address this critical need. There are real costs associated with underfunding of infrastructure: shipping and travel delays, congestion, pollution, and diminished economic growth.

The state’s fiscal problems affect local governments in Illinois by shrinking revenue transfers at a time when these monies are most needed. The state has also proposed shifting funding responsibility for teachers’ pensions from the state to local school districts. This would eliminate some incentives that can drive pension costs upward, but would put considerable pressure on local finances. Local governments struggle with their own revenue problems, unfunded pension liabilities, and bond rating downgrades. The state does minimal monitoring of local government finances, and budget cuts could further reduce this oversight.

Illinois’ past fiscal choices and future threats challenge the state’s ability to meet its population’s basic needs, let alone accommodate future growth. Infrastructure is deteriorating. Education is threatened. Public safety, public health, and care for the needy all are at risk. Taxpayers and the state’s competitiveness are also at risk.

Illinois needs to make tough choices — now…

“Illinois’ past fiscal choices and future threats challenge the state’s ability to meet its population’s basic needs.”

Basic needs? That’s pretty bad.

This report comes on the heels of an analysis by the Tax Foundation, a non-partisan tax research group, in which Illinois residents were found to pay the 11th highest state-local tax burden in the United States in fiscal year 2010.

Early in 2011, Illinois Governor Pat Quinn hiked personal income taxes 67 percent.

It will be interesting (scary?) to see where the “Land of Lincoln” stands in next year’s Annual State-Local Tax Burden Rankings, when FY 2011 is factored in.

You can read the entire State Budget Crisis Task Force report on their website here (.pdf file).

You can view the latest Tax Foundation tax-burden rankings on their website here.

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New Demographic Data For Chicago Released

New demographic data for Chicago has been released by the U.S. Census Bureau- and it’s enlightening. From the Census Bureau’s “Newsroom” yesterday:

Chicago’s Household Income at $43,628 in 2011, American Community Survey Shows

The median household income in Chicago was $43,628 in 2011, compared with the national figure of $50,502, according to statistics released today from the 2011 American Community Survey by the U.S. Census Bureau. In addition, 20.4 percent of people in Chicago did not have health insurance coverage, compared with 15.1 percent nationally. A selected profile of Chicago appears below, including statistics on education, housing and the foreign-born population.

“The American Community Survey provides a wide range of important statistics about our nation’s people, housing and economy for all communities in the country – including Chicago,” said Thomas Mesenbourg, the Census Bureau’s acting director. “The results are used by everyone from retailers, homebuilders and police departments, to town and city planners.”

The survey is the only source of local estimates for most of the 40 topics it covers, such as educational attainment, housing, employment, commuting, language spoken at home, nativity, ancestry and selected monthly homeowner costs down to the smallest communities.

Other selected highlights for Chicago:

Education

• In 2011, 50.1 percent of the preschool age population was enrolled in school, which was not significantly
different from 47.4 percent in the nation as a whole.
• Among Chicago’s 25-and-older population, 80.7 percent completed high school or more, compared with 85.9 percent in the nation as a whole.
• Meanwhile, 33.5 percent of the 25-and-older population had a bachelor’s degree or higher, compared with 28.5 percent nationally.

Housing

In 2011, the median value for an owner-occupied home was $228,300. In the nation as a whole, the value was $173,600.
• In 2011, the median gross rent (rent plus utilities) was $905, compared with $871 in the nation as a whole.

Foreign-Born Population

• About 21.4 percent of people in Chicago were foreign-born, compared with 13.0 percent in the nation as a whole.

(Editor’s note: Italics added for emphasis)

Median household income several thousand dollars below the national average.

Yet median value for owner-occupied homes more than $50,000 above the national average.

And today it’s being reported that unemployment across Illinois rose to 9.1 percent in August, the third straight month of increases in the state.

I wonder if more storm clouds aren’t on the horizon for residential real estate in the “Windy City?”

You can find out more information about the American Community Survey on the Census Bureau’s website here.

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Report: Health Care Expenses To Rise 8.5 Percent In 2012

Sounds like health care costs could be heading significantly higher next year. From MarketWatch’s Russ Britt on Wednesday:

Employers can expect to see an acceleration in health-care cost increases in 2012, with expenses rising 8.5% next year, according to a study released Wednesday by PricewaterhouseCoopers.

The 30-page study says that the recession put a lid on health-care costs, which should keep the inflation rate to 8% for 2011, but those price hikes are getting steeper as the recovery gains momentum.

“Now, a few months into 2011, employers and health plans say utilization remains somewhat deflated, but they’re already worried about a rebound in 2012,” the study says. “Add to this recessionary effect the changes brought on by health reform, and the variables affecting cost trends in 2012 become an interesting blend of reactions.”

(Editor’s note: Italics added for emphasis)

The study follows a report from March that predicted a number of U.S. companies would be altering their healthcare plans next year. CNN Money senior writer Parija Kavilanz wrote back on March 10:

Come 2012, millions of Americans who get health care coverage through their employer should brace for some big changes.

Charging higher contributions for dependent coverage and dropping retiree accounts, are among the steps companies are considering as they fight rising medical costs and new expenses tied to health reform, according to a new report Thursday from human resources consulting firm Towers Watson.

In addition to the aforementioned changes, Kavilanz noted other steps being looked at include “spouse penalties,” when an employee’s husband or wife has access to health insurance through their own employer but refuses it to be added to his or her spouse’s plan, and cracking down on unhealthy lifestyles.

Sources:

Britt, Russ. “Health-care expenses to rise 8.5% in 2012: study.” MarketWatch. 18 May 2011. (http://www.marketwatch.com/story/health-expenses-to-rise-85-in-2012-study-2011-05-18). 20 May 2011.

Kavilanz, Parija. “Health care: Employers making big insurance changes in 2012.” CNN Money. 10 Mar. 2011. (http://finance.yahoo.com/news/Health-care-Employers-making-cnnm-917752777.html?x=0). 20 May 2011.

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Friday, May 20th, 2011 Health, Insurance, Main Street, Retirement 2 Comments


Christopher E. Hill, Editor
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