Latest News and Reviews

Health Insurance Reform Increases Competition In Insurance Industry?

There has been a major argument between the congressional sponsors of the health insurance reform and President Barrack Obama that the health insurance exchange will lead to an increase in the competition. As per the exchange, the consumers will be allowed to make a choice between private health insurance plans with the premiums artificially increased by the government mandates and the government program that will artificially lower down the premiums.

Michael Cannon reported in ‘Fannie Med? Why a Public Option is Hazardous to your health’, on Aug. 6 Cato Institute paper that the new program by the government will literally expel a huge number of American from their present health insurance plans as a result of which, their relationship with their doctors will be threatened. The employers will choose to leave their current health plans for their employees and the private health plans will be closing down.

An analysis made by the Lewin Group estimates that if the Congress uses price controls of Medicare and if the programs become available to everyone, it will be able to attract 120 million Americans out of their private insurance plans. This number means more than 50% of the private insurance market. Mr. Cannon reports that a large number of those Americans will involuntarily leave their current insurance plans.

It is amazing that all the fearful people showing up for expressing their worries at the town hall meetings of this summer dismissed by the leaders of the Congress as hate mongers, racists and worse, has been saying.

Mr. Cannon advises that if the Congress aims at increasing the competition and making the health care more efficient, then there are other options available. Medicare should be converted into a program which gives vouchers to the seniors and frees them from purchasing any health care plan from the market.

Thousands of dollars will be made available to the workers which are currently controlled by their employers in the lieu of large health savings accounts. Likewise, the workers will be able to purchase any health care plan of their choice from the market.

Last but not the least; the Congress should increase the competition by asking the states not to deny entry of health plans and health care providers licensed from other states into the market. This means that the health insurance and clinician licenses will become portable across the state borders.

Such reformations will reduce the costs, increase the innovation and decrease the number of people without any insurance. All this will be done without additional spending by the government or higher taxes.

You must be wondering that if the things seem to be too good, then why they have still not reached the tables of Washington?

New Credit Card Rules – Beware Of Bank Fees Raise

New credit card protection rules from the federal government kicked in recently. But keeping in view the stricter rules, the banks are raising interest rates and fees, with a hope to offset the potential losses of revenues from these reform measures. Experts of personal finance, Bill Hardekopf analyzing the reform legislation commented that the three changes that came into effect are:

1. Credit card issuers are now required to send a notice to the credit card users before 45 days of increasing their rates, and not 15 any more. This will give a chance to the card holder to either pay off the credit card or to do his shopping.

Hardekopf says that the 30 extra days of receiving the notice is advantageous for the consumers. But because the consumers are now given more time before the increase in the rate, they get more time to do their shopping with lower interest rate or transfer their balance to another card. Yet, it has to be noted that the offers for balance transfers are not as liberal as they were in the past and most of the cards now charge 3% fees for a single balance transfer.

Increases in the rates are widespread in the current period, so the consumers need to pay due attention to their entire bill inserts, plain white envelopes in the mail and any email notifications. These are the ways how most of the credit card issuers notify their consumers about their increase in the rates.

Hardekopf also comments that it is surprising that the CARD act needs the bank to send an advance notice to the consumers about increase in the interest rate, but it does not ask the bank to send notice to the consumers if it closes their account or decreases the card’s credit limit.

2. Under the new rule of CARD act, the banks will need to mail the monthly statements to the consumers at least 21 days prior to the date when it is due to be paid. Earlier, this period was 14 days before due date.

Hardekopf says that these 7 extra days should not be considered as a time when you can wait and then pay the bill on the last date. The payments should be made regularly as per your schedule so that the issuers get the payment on time, well in advance of the 7 days provided to you. If this extra time is used for delaying the paying of the bill, the consumers may forget and may incur an expensive late fee.

3. Under this rule, the consumers are given the right to opt out the fee increases and rate hikes. Currently, some issuers are allowing their consumers to opt out, but the new CARD act makes this mandatory.

If a consumer opts out of the rate increase, he will no longer be able to do shopping with the card and he will need to pay off all the remaining balance under existing rates within a period of 5 years. If a consumer chooses to opt out, he will need to inform the issuer timely by sending an opt out letter to the bank rejecting the rate hikes. The mail should be sent registered receipt and the consumer should also keep the letter’s copy for his own record. Then, the balance will need to be paid at original rate. The account that has been closed will also be shown on the credit record of the consumer.

Student Loan Repayment Program - More Agencies Paying Off Their Employee’s Student Loan Debt

The Office of Personnel Management released a report recently according to which the federal agencies have increased their expenditure on programs for student loan repayment for the employees by 22% from 2007 to the year 2008. John Berry, the director of OPM said that he is pleased with this increase. He said that there are several skills gaps within the federal government and all the possible ways should be adopted to bring best possible services to the public of America.

During the year 2008, 6,879 employees were provided with $51.6 million by 35 federal agencies in the student loan repayments. For the fiscal year 2007, 33 federal agencies took part in the repayment program by distributing $42.2 million of loan repayments to 6,619 employees. In the last cycle of reporting, OPM switched to collecting calendar year data from fiscal year data.

Since the fiscal 2002, the program has substantially grown. At that time, agencies were able to offer repayments of student loans as incentives for the employees for the first time to continue in the government. In 2002, only 16 federal agencies took part by spending $3.2 million loan repayments for 690 employees. The agencies are able to supply as much as $10,000 per year and a total of $60,000 for every employee, in return of which, the recipients are required to commit to 3 years in federal service.

According to the report, although there has been a recent growth within the program, only 39 out of 80 independent agencies and departments have either provided repayments of student loans or are planning to begin in near future. 17 agencies told the OPM that they are not able to spend money on the student loan repayments mainly because of the budget process.

Out of all the agencies that participated, most of the assistance is provided by the Justice Department which spent $23,420,746 on relief of loans for 2,610 employees. Some other major participants are Defense and the State departments, Securities and Exchange Commission and Government Accountability Office.

Officials of the state department told the OPM that according to an employees’ survey who received repayments of the loan, the program has a major impact on the retention. Since the beginning of the program in the year 2002, 2,300 employees of the state have received loan payments and out of these employees, only 127 have resigned before completing their 3 years of required federal service.

Max Stier, the president of non-profit Partnership for Public Service, appreciated the efforts of the agency to take part in this repayment program, especially during these tough economic times. He said that this is a very significant incentive towards recruitment. By all the means of research, this is one of the most momentous ways for encouraging talent from the university campuses to serve to the government.

Cash For Clunkers Program Still Hot With Sales

Car purchasers showed signs of easing after the lunatic rush a week ago but sales were not far from being on the top over the last weekend given the popularity of “Cash for Clunkers” program.

Last week, the senate voted to push in an extra 2 billion dollars into the very notable auto discount program. This shall be good enough to stretch the program till Labor Day. As anticipated, this brought the traffic to a relative halt in terms of arrival at the dealer’s desk. This has been a departure from the trend last week when the buyers rushed to dealers gripped with fear that the program would run short of money.

Yes, the sale of cars hasn’t doubled akin to the weekend prior yet it is 25 to 50 percent in excess of the general fare at many dealers in Los Angeles County. This is a peaking seemingly associated with the clunkers discount. Don Rohde, sales manager at Galpin Ford in North Hills suggested that his group was still quite busy and he is falling short of salesmen to tackle the demand. The dealership had sold as many as 70 new cars over the last weekend. It is lesser than 115 cars a week prior but half as much in excess of sales in past few months. According to Rohde, about 80 to 90 percent of this fresh car sale is owing to the clunker show.

According to Sammy Kobeissi, sales manager at Power Ford in Valencia, the program has been nothing short of amazing and he felt that though not at last week’s position, the clunkers show was still a true winner.  The clunkers program that took off on July 24 provided the car purchasers with a mammoth discount of $ 3500 to $ 4500. This is when they buy gas guzzlers for better and more fuel-friendly vehicles. Till date, 220,000 and more vehicles have already found their way out of dealer’s house via this program providing a much required emancipation to the auto industry. If sales tracker Autodata Corp is to be believed, then the industry has already shoved some 11.2 million units of light trucks and cars to the customers in July. This incidentally is the highest level of sales in last 10 months.

Kobeissi stated that by early parts of Sunday morning, the Ford dealership had sold 18 fresh cars in comparison to 30 over the just culminated weekend. Having said this, the clunkers trade-in was responsible for as much as half of the weekend’s fresh car sales.

At frontier Toyota, Teresa Webber of Stevenson Ranch got close to trading in her 2000 Ford Explorer for a just generated Toyota RAV4. Webber felt that the timely rebate has allowed them to pre-pone their car buying wish that they had slated for 6 months hence. The cumbersome paper formalities and government’s failure in having paid out the rebate money notwithstanding, the program is doing well, according to David O’Brien, general sales manager at Frontier Toyota. He suggested that the program has worked every bit that was asked of it giving people a chance to grab their clunker trade-in and amassing response form public in unprecedented style. The sweet anxiety for the dealers is that they have to really gear up for keeping up with the demand schedule. Nationwide, dealerships have suggested that they have fallen short on some of the more popular vehicles like Toyota Prius, Ford Focus and Dodge Caliber. Rohde summed it up brilliantly saying that “It’s kind of a good problem to have”.

Credit Card Industry Ushers In New Times

Fresh set of rules with the objective of treating some very bad credit issuing abuses come into effect between now and the month of February. Having said this, banks would certainly chase newer ways to bring down cardholders for cash.

Consumers are all set to receive a welcome bounty through credit card reforms as banks will be liable to inform 45 days in advance about any alterations made in their credit card offerings. This is only a commencement of a well chalked out plan. The entire layout will be inclined towards equaling the status of consumers and card issuing companies. It is a relief for customers who have often found themselves at the receiving end of lending malpractices.

Sally Greenberg, executive director of the National Consumers League, suggested the reform to be bearing the greatest importance among all the card reforms last decade. Also, he believes that the reform would tighten screws on abusers of lending practices.

Only A Few Though

For instance, the law remains rather mute on binding arbitration clauses that govern a major part of credit card contracts. Such contracts rob a cardholder the right to court via class action lawsuits and jury trials. Having said this, there are still various parameters through which a normal cardholder is shielded from the heinous practices of issuing companies. Some of them are:
•    Disallowing card issuers from enhancing rate of interest during the first year of opening an account; this, of course, unless the cards command a variable rate of interest or there is a payment default within first 60 days of due date.
•    Disallowing issuers from enhancing interest rates on presently running balances.
•    Asking issuers to bring down interest rates to earlier levels when cardholders make perfect payment for a span of 6 months after a default.
•    Disallowing fee on making payments

Cardholders have been constantly complaining about regularly altered deadlines that create a lot of confusion and subsequent failure in timely payments. At such times, it hurts when a late fee is levied. The new law would require issuers to keep a constant due date each month and also allow payment to be made till 5 pm. For ensuring that a person below 21 is not caught in a vicious debt cycle, the law has made mandatory for an adult to co-sign for an under 21.

Also, fresh plastic offerings can’t be made to under-21 group unless they have deliberately asked for it. Credit card issuers will be required to post their entire contracts via internet so that a consumer can choose among many other equals.

It goes without saying that the banking industry fought tooth and nail against the reform.