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The Reason Health Insurance Penalties Are Tempting

Posted: June 24, 2013 at 10:00 am   /   by

Spending Daily | June 24, 2013


The IRS’s $46 Million “Oversight”

The Huffington Post reports, “In what appears to be a significant oversight, the Internal Revenue Service sent a total of $46,378,040 in refunds to ‘unauthorized’ workers at one address in Atlanta, Ga., according to a report from the Treasury Inspector General for Tax Administration. Brought to light Friday by, the IRS’s $46 million in refunds included 23,994 tax payouts sent to the particular property in 2011. As the audit report discloses, the Atlanta address is one of several that received a high number of refunds for Individual Taxpayer Identification Number (ITIN) tax returns. ITINs are issued to those who are ineligible to obtain a Social Security number. However, it seems, the application for these identification numbers is flawed. In the July 2012 report, entitled “Substantial Changes Are Needed to the Individual Taxpayer Identification Number Program to Detect Fraudulent Applications,” the Treasury Inspector General recommends an overhaul of the ITIN application program so that suspicious applicants are identified from the get-go.”


76% Of Americans Are Living Paycheck-to-Paycheck

CNN reports, “Roughly three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings, according to a survey released by Monday. Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all. ‘It’s disappointing,’ said Greg McBride,’s senior financial analyst. ‘Nothing helps you sleep better at night than knowing you have money tucked away for unplanned expenses.’ Even more disappointing; The savings rates have barely changed over the past three years, even though a larger percentage of consumers report an increase in job security, a higher net worth and an overall better financial situation.”


Report: Economic Well-Being of U.S. Children Slips”

The Associated Press reports, “An annual survey released Monday by the Annie E. Casey Foundation shows the number of children living in poverty increased to 23 percent in 2011, after the recession. The Southwest has been hit particularly hard. New Mexico, for the first time, has slipped to worst in the nation when it comes to child well-being. More than 30 percent of children in the state were living in poverty in 2011 and nearly two-fifths had parents who lacked secure employment, according to this year’s Kids Count survey. Nevada is ranked No. 48, followed by Arizona. Mississippi, which has traditionally held last place, made slight improvements in early childhood education while reading and math proficiency for some students increased, putting the state at No. 49.”


“Young and Isolated”: Difficult Times for Working-Class Young People

Jennifer M. Silva writes in The New York Times, “In a working-class neighborhood in Lowell, Mass., in early 2009, I sat across the table from Diana, then 24, in the kitchen of her mother’s house. Diana had planned to graduate from college, marry, buy a home in the suburbs and have kids, a dog and a cat by the time she was 30. But she had recently dropped out of a nearby private university after two years of study and with nearly $80,000 in student loans. Now she worked at Dunkin’ Donuts. ‘With college,’ she explained, ‘I would have had to wait five years to get a degree, and once I get that, who knows if I will be working and if I would find something I wanted to do. … My manager says some people are born to make coffee, and I guess I was born to make coffee.’ … Young working-class men and women like Diana are trying to figure out what it means to be an adult in a world of disappearing jobs, soaring education costs and shrinking social support networks. Today, only 20 percent of men and women between 18 and 29 are married. They live at home longer, spend more years in college, change jobs more frequently and start families later.”


Economic Recovery Still Stuck In First Gear

The Wall Street Journal reports, “After four bumpy years, the U.S. recovery finally appears to be on a smoother road. Many economists now predict 2014 will be the best year for growth since 2005, while joblessness is expected to click below 7% next year for the first time since 2008. Houses are selling again, the energy sector is booming and jobs, while not plentiful, are being created at a steady pace. On Wednesday, the Federal Reserve upped its estimate for next year’s expansion as well. There have been earlier waves of optimism that the economy was poised for better growth, and the past week’s financial-market turmoil is a reminder that a lot still could go wrong. News that the Fed could start dialing back stimulus later this year sent the Dow Jones Industrial Average down 2.34% on Thursday. The average closed at 14799.40 Friday, down 1.80% for the week. A persistent decline in stock prices or faster-than-expected increases in mortgage and other long-term interest rates could slow the recovery. It has been a long haul. The recovery that began in June 2009 has been painfully slow. Jobs, median household income, industrial production and home prices still haven’t returned to the levels they were at before the recession.”


Obamacare Rollout Mess Continues

The Chicago Tribune editorializes, “The rollout of Obamacare later this year is likely to bring a rate shock for many Americans who will buy health insurance from state marketplaces known as exchanges. How much will premiums jump? Officials at the U.S. Department of Health and Human Services won’t say. Yes, HHS has received rate filings from insurers. But the agency won’t release rates until September, when the final contracts are signed. That’s only a month before these new exchanges are supposed to open for business nationwide. HHS officials say they’re still negotiating with insurers and want to drive down prices. They say divulging all this information could confuse consumers or spook insurers. It could be that HHS is keeping a lid on rates because it wants to avoid a California-like debacle. …Bottom line: The cost of health insurance in California and the rest of the country will spike for many people, especially the young. At the same time, millions of Americans will be pushed into fledgling, sure-to-be-glitchy exchanges to buy that insurance. With roughly 100 days before the Oct. 1 opening of exchanges nationwide, federal and state officials have blown deadlines and remain tangled in regulatory confusion, according to twin reports last week from the Government Accountability Office.”


The Reason Health Insurance Penalties Are Tempting

The New York Times reports, “Often, when the government wants you to do something, it makes you pay if you don’t. That would seem to be the case with Obamacare, which penalizes companies for not providing health care. But in that penalty, there could be a paradoxical result: dropping health coverage could save companies a lot of money. Once new health insurance exchanges are up and running in October, companies with 50 or more full-time employees will face a choice: Provide affordable care to all full-time employees, or pay a penalty. But that penalty is only $2,000 a person, excluding the first 30 employees. With an employer’s contribution to family health coverage now averaging $11,429 a year, taking that penalty would seem to yield big savings. Yet there may be costs in employee satisfaction, especially if companies don’t raise pay enough to keep workers whole when they buy insurance on the exchanges. …Whatever the reason, the government is about to conduct a huge experiment in corporate decision-making.”


“The IRS’s Best Friend In Congress”

Eliana Johnson editorializes in The Wall Street Journal, “The House Oversight Committee’s investigation into the Internal Revenue Service’s discrimination against conservative groups continues—but at least one unenthusiastic member seems to think the committee’s work is done. Over the objections of Chairman Darrell Issa (R., Calif.), Rep. Elijah Cummings (D., Md.) last week released online the full, 205-page transcript of an interview that committee investigators conducted with an IRS employee in Cincinnati named John Shafer. Mr. Cummings explained that he was compelled to release the Shafer transcript because it explodes Mr. Issa’s ‘conspiracy theories’—chiefly, that the White House played a role in the targeting of conservative groups, and that it was orchestrated out of IRS headquarters in Washington, D.C. In fact, Mr. Issa has never said the former, and much that is known so far about the IRS scandal suggests that the Washington connection is substantial. Mr. Cummings’s enthusiasm for defending the IRS may make him a lonely figure among the 22 Republicans and 16 Democrats on the House Oversight Committee, but he is likely to find an ally in his chief counsel on the committee. She is Susanne Sachsman Grooms, who worked for the IRS between 2008 and 2011 as an adviser to the deputy commissioner for services and enforcement and then as a senior counselor to the chief of criminal investigations. At the time, the deputy commissioner for services and enforcement—her boss—was none other than Steven Miller, who held the post of IRS commissioner from November 2012 until his resignation in May after the scandal broke. Mr. Cummings also has a strong tie to the Obama administration: His staff director on the Oversight Committee, David Rapallo, is a former White House lawyer.”


“Promise of Price Cut on Hospital Bills is in Limbo”

The Associated Press, “Huge list prices charged by hospitals are drawing increased attention, but a federal law meant to limit what the most financially vulnerable patients can be billed doesn’t seem to be making much difference. A provision in President Barack Obama’s health care overhaul says most hospitals must charge uninsured patients no more than what people with health insurance are billed. The goal is to protect patients from medical bankruptcy, a problem that will not go away next year when Obama’s law expands coverage for millions. Because the Affordable Care Act doesn’t cover everyone, many people will remain uninsured. Also, some who could sign up are expected to procrastinate even though the law requires virtually everyone to have health insurance.”


Obama Expected to Unveil Climate Plan Tuesday

The Associated Press reports, “President Barack Obama is preparing to unveil his long-awaited national plan to combat climate change in a major speech, he announced on Saturday.” There’s no single step that can reverse the effects of climate change,” Obama said in an online video released by the White House. ‘But when it comes to the world we leave our children, we owe it to them to do what we can.’ People consulting with White House officials on Obama’s plan, to be unveiled Tuesday at Georgetown University, say they expect him to put forth regulations on heat-trapping gases emitted by existing coal-fired power plans. They were not authorized to disclose details about the plan ahead of the announcement and requested anonymity. …The White House wouldn’t disclose any details Saturday about what steps Obama may call for. But his senior energy and climate adviser, Heather Zichal, said last week that controls on greenhouse gas emissions from power plants would be a major focus. She also said the plan would boost energy efficiency of appliances and buildings, plus expand renewable energy.”


“Farm Bill Smack Down”

The Chicago Tribune editorializes, “House Republicans revolted against their leaders last week, rejecting a farm bill that would have cost $940 billion over the coming decade. So for the second time in less than a year, Congress has failed to pass a renewal of the massive legislation that funds farm subsidies and food stamps. While all the focus was on the Republican revolt, this was in fact a bipartisan tubing. Only 24 Democrats voted in favor of the House bill, which was defeated on a 195-234vote. Republicans had counted on their rank-and-file to pass this, but 62 Republicans voted ‘no.’ Democrats and Republicans rejected the bill for different reasons. Many Democrats thought the cuts in food stamp spending were too severe. Many Republicans thought there should be deeper cuts in food stamps, others objected to the preservation of unjustified farm subsidies. There’s value in this defeat. The Senate, which passed a $955 billion farm bill two weeks ago, is on notice that the House isn’t interested in business as usual. … Here’s an opportunity for Congress to do something revolutionary: Break up the farm bill. Debate and vote on food stamp policy and farm policy as entirely separate matters. …Since 1996, farmers have been getting hefty government checks, called direct payments, for doing nothing but being farmers. Even their keenest supporters have given up trying to justify that transfer of wealth from taxpayers to some of the wealthiest people in the countryside. …The House and Senate bills would eliminate direct payments, but crop insurance would be expanded. That can’t be justified.”


A Strong Economy Can’t Be Bought with Cheap Money

Robert Samuelson writes in The Washington Post, “We are now discovering the limits of cheap money. For more than four years, central banks around the world — led by the Federal Reserve — have aggressively pumped money into their economies to stimulate faster revival. These infusions are huge. From 2007 to today, the assets of major central banks nearly doubled from $10.4 trillion to $20.5 trillion, reports the Bank for International Settlements (BIS) in its just-released annual report. When these assets (bonds, mortgages and other financial instruments) are purchased, the sellers receive cash. The outpouring of cash aims to lower interest rates, push up stock prices and real estate values, and restore confidence and stronger economic growth. …That’s one downside: Cheap money is hard to reverse gracefully. The larger problem is that central banks are trying to do things beyond their powers. Says Stephen Cecchetti, the chief BIS economist: ‘Monetary stimulus alone cannot put economies on a path to robust, self-sustaining growth, because the roots of the problem preventing such growth are not monetary.’ In the annual report, he argues that low interest rates might even be counterproductive. They make it easier to finance large budget deficits and may delay needed, though unpopular, cuts. (Created in 1930 to help settle World War I debts, the BIS now serves mainly as a forum for international financial cooperations.)” is an educational project of Public Notice, an independent, nonpartisan, non-profit, 501(c)(4) organization dedicated to providing facts and insight on the effects public policy has on Americans’ financial well-being.

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The Reason Health Insurance Penalties Are Tempting