Healthcare Inflation Set to Rise

An improving economy is a good thing, but it can lead to inflation. This seems to be the case with healthcare, which had seen modest employer spending growth in recent years.

Professional services firm PwC’s Health Research Institute reports that medical inflation is projected to rise to 6.8% in 2015 – as consumers act on their “pent up demand” for healthcare, and use more on it.

According to the HRI, this growth in spending comes not only from consumers feeling freer with their spending, but by an increase of new consumers in the healthcare market, as millions of newly-insured patients seek out healthcare.

New drugs and therapies are also pushing up the cost of healthcare. One example of this would be expensive new Hepatitis C therapies, which HRI said are alone expected to be responsible for a 0.2% increase in spending growth.

Healthcare providers are also spending big on IT integration due to a spate of mergers and acquisitions in the sector. Some of these deals are also resulting in higher payments paid to physician practices, especially ones that are being acquired by hospitals and health systems.

However, some of this inflation will result in lower health care costs down the line. For instance, patients who utilize healthcare more stand a better chance of managing their health better. Also, patients who receive expensive new cures today can be healthier later on.

IT investments being made along with mergers can result in more modern, efficient systems being deployed. This can cut down on such healthcare spending wastes as antiquated and redundant record-keeping.

HRI also points out that, while 6.8% medical inflation is up from recent years, it is still way below the double-digit increases seen in the years before this recent round of recession and healthcare reform took off.

So, there’s no need to panic yet that healthcare costs will soar as they did in the nineties and 2000s, the firm said. Some forces are driving them up, and some are working to moderate these costs in the longer term.


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Small Businesses Turn to Non-Bank Lenders

One quarter of small businesses and middle-market companies recently surveyed had obtained their recent credit from non-bank lenders, according to business advisory firm Greenwich Associates. Such is the difficulty – five years after the financial crisis — still being had by some SBEs in obtaining credit. But that’s not all of the story.

Greenwich Associates surveyed approximately 125 companies, and found that, of the companies that obtained credit over the past 18 months, one-quarter reported securing funds from non-bank providers.

Of those, 90% said they would use non-bank providers again, and 60% told Greenwich that non-bank providers made the process of obtaining credit easier than banks did.

These results tell us that banks now risk losing business in this important customer segment. It also tells us that some small businesses really are having a difficult time obtaining credit on good terms – even as large corporations report having an easier time of it than before the crisis.

Greenwich said that about a third of its SBE/middle market responders said they turned to non-bank lenders at least in part because their traditional banks refused to lend.

However, the rest of them said they chose non-banks based on these lenders offering favorable terms, conditions, rates and pricing versus traditional banks.

It’s clear that the non-bank lenders stepped into a void created when traditional banks shut off the lending taps to small businesses following the financial crisis. Since then, many of these lenders have improved their offerings, and are now beating out the banks on rates and terms.

Hopefully, there will be more competition for small business lending as the economy improves. After all, small business’ access to credit is a key component of growing the economy.


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The Boss Needs a Vacation

Your boss really regrets not taking enough time off during his/her last vacation, if the results of a recent survey are any indication. Given how grumpy people get when they’re not well-rested, you may be regretting it, too.

Staffing firm OfficeTeam said it surveyed senior managers to find out how they approached their vacation time. According to the firm, one in three (34%) of the respondents said that taking too little time off was the biggest mistake they made with their last vacation.

One quarter of the senior managers interviewed said they couldn’t relax, or get their minds off of work. This isn’t surprising, since 22% said they made the mistake of checking in with the office too many times while on vacation.

OfficeTeam advises managers to time their vacations to avoid scheduling them during “crunch time” at work. Also they should have their workplace sorted out for their absence, by having people designated who can handle tasks, and make decisions.

Managers should also remember to notify all key people of their impending vacation, and to get important work cleared before departure. Most of all, managers should plan to disconnect from the office as much as possible, and set firm “ground rules” about how much contact to have with work.

If your boss does all of these things — and takes a good, long, relaxing vacation this year — you and your co-workers may all be thankful.


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Most Financial Advisors Underestimate the Fees They Charge

A new report finds that nearly two-thirds of financial advisors underestimate the fees they charge to their clients.

In a survey, Peak Advisor Alliance and Cerulli Associates found that nearly 63% of advisors surveyed thought they were charging total fees of less than 1.5%. This estimate was low by 30 basis points, the firms said.

What this means is that advisors are actually charging clients more than they think they are. It’s not that they’re being dishonest per se, since the study didn’t find that the advisors had lied to clients. It’s just that they thought they were giving their clients better value than they actually were.

This study points out a key “must do” of any investment strategy you may consider: know how much you are paying in fees. And verify the information yourself, (since, apparently, many financial advisors aren’t too clear on the subject).

According to a May, 2013 in Forbes, people who hire an investment advisor to manage a mutual fund portfolio or exchange-traded fund (ETF) portfolio can lose as much as 40% per year to fees.

The author of the Forbes Personal Finance piece, Rick Ferri, broke down this 40% as: the fees from the mutual funds added to the advisor fees, divided by the expected portfolio return before fees.

Sound complicated? Well, it is complicated – so if your advisor isn’t even clear on what he or she is charging you, you really need to do your own homework on fees. In the end, it is your money that gets lost to these fees, turning an otherwise good investment into a lousy one.

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Last Winter Still Taking a Bite Out of New Jersey’s Roads

The after-effects of last winter’s harsh weather are still being felt, at least in New Jersey.

Plymouth Rock Assurance said it is seeing a sharp increase in pothole-related claims in New Jersey over the past year.

The insurance company said that ratio of pothole-related claims relative to all collision claims increased by 62% from the winter of 2012-2013 to the winter of 2013-2014.

If you’re seeing (and feeling) more potholes in the roads you drive this year, Plymouth Rock has some advice to offer:

Keep enough space between you and the vehicle in front of you. This allows you time to see and avoid potholes.

Also, keep your tires properly inflated, since tires that are under-inflated are more prone to allowing the tire to bottom out quickly onto the rim during collision with a pothole. This can greatly increase the chance of damage from hitting a pothole.

Take it slow at night, since potholes are more difficult to see during nigh-time driving. Also, by reducing speed you are both increasing your options for avoiding potholes, and lessening the damage they do when you can’t avoid them.

If a pothole appears in your path, try to go around it. But first check that there isn’t another vehicle in the space you would be moving into. When breaking to avoid a pothole, go easy:  slamming on the brakes can increase downforce and the possibility of damage.

Hopefully, road crews will soon have the potholes created by last winter’s brutal weather filled. In the meantime, keep your eyes peeled.


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Someone May Be Selling Your Credit Cards, on YouTube

Digital thieves are now selling their ill-gotten gains right on YouTube, according to a new investigation by the Digital Citizens Alliance.

The group found that crooks are using YouTube to sell stolen credit cards, bank logins, and social security numbers – perhaps even those of someone you know.

In a new report, entitled, “Breach of Trust: How the Online Market for Stolen and Bogus Credit Cards is Eroding Confidence in the Internet,” Digital Citizens chronicles how they searched online for stolen personal records, and found a whole lot of marketing going on, right in the open.

Digital Citizens said that some of the thieves were hawking credit cards for as little as $7 per card, and claiming they were “guaranteed to work.”

In the report, Digital Citizen listed which search criteria they used, and how many hits each one got:

“how to get credit card numbers that work 2014″

 15,900 Results

“CC info with CVV”

 8,820 Results

“Buy cc numbers”

 4,850 Results

“CC number with CVV”

 4,160 Results

“CC Fullz”

 2,030 Results

“CC Fullz and bank login”

 1,790 Results

“CC with CVV and SSN”

 785 Results

In an ironic twist, Digital Citizens said they even found a YouTube video offering credit cards for sale accompanied by an ad for retailer Target. That would be the same Target that got hacked debit card data on millions of customers last year.

“The sad take away from the report is that YouTube continues to be used by rogue operators to conduct criminal acts, and not only does Google allow it to continue, but they profit from it by selling ads,” said Tom Galvin, Executive Director of Digital Citizens, in a statement.  ”We’d expect this on Silk Road or other dark corners of the Internet, but not by Google.”

Yes, indeed, this is both weird and appalling; it needs to stop. How can credit unions, banks, payment systems and retailers ever hope to stem the rising tide of card fraud if some of the biggest names on the Internet are participating in it? However unwittingly that may be happening, there’s no excuse for it.


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GE Capital Ordered to Pay Consumers $225 Million

US consumer watchdog The Consumer Financial Protection Bureau has ordered GE Capital Retail Bank to pay a total of $225 million in relief to consumers harmed by GE credit card practices that were deemed to be illegal, deceptive and/or discriminatory.

GE Capital Retail Bank is General Electric’s retail credit card business.

According to the feds, this is the largest credit card discrimination settlement in U.S. history.

Under the order, GE Capital Retail Bank — which changed its name to Synchrony Bank in early June — must refund $56 million to 638,000 consumers whom CFPB said were mislead about add-on products, such as debt cancellation services.

Card-holders were encouraged to add these products to their credit card accounts without first being fully informed that they would cost money, according to CFPB.

GE Capital telemarketers were found by the Bureau to have misrepresented these products to consumers in several ways, such as failing to disclose to consumers that they were making a purchase when taking advantage of certain offers.

In a related – and much larger – fine, GE Capital was ordered to pay another $169 million for denying debt relief to around 108,000 consumers on a discriminatory basis. According to CFPB, these customers were denied these services because they asked to receive communications in Spanish.

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Road Ahead Looks Good for U.S. Economy

A new forward-looking report on the U.S. economy predicts that growth and hiring should increase in the months ahead.

The Conference Board’s Leading Economic Index (LEI) for the U.S. was up o.5% in May, after rising 0.3% in April and 1.0% in March. After a slow start to the year, the U.S. economy has showed increased strength for the last three months.

According to Board economist Ataman Ozyildirim, the May increase in the LEI was very broad-based. “Housing permits held the index back slightly but the LEI still points to an expanding economy and its pace may even pick up in the second half of the year,” he said, in a statement.

The LEI looks at such things as initial unemployment claims, manufacturing hours worked, building permits issued, manufacturing orders, stock prices and interest rates.

These are measures that add up to the economic conditions we can expect in the near future. It’s not a perfect “crystal ball” but it’s been pretty reliable over the years. Right now, what the LEI is saying is that the U.S. economy is poised to accelerate into the second half of the year.


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In a Happy Place…with Auto Insurance

Satisfaction with auto insurance has increased despite increases in premium prices, says J.D. Power.

In its just-released 2014 U.S. Auto Insurance Study, J.D. Power reported that overall satisfaction with auto insurance companies increased by 16 points (on a 1,000-point scale), to 810 in 2014. This is the highest level seen since 2000, when the study began.

According to J.D. Power, the study measures customer satisfaction in areas including interaction, price, policy offerings, billing and payment, and claims.

Around 19% of customers surveyed experienced an insurer-initiated premium this year, compared with 20% last year. However, the increases for 2014 have been much lower on average, (at $86 in 2014 vs. $153 in 2013).

J.D. Power also found a growing percentage of customers who experienced no price increase from over the past 12 months (55% this year vs. 52%, last year). Not surprisingly, it is among these customers that the increase in price satisfaction was greatest.

The study also revealed that auto insurance providers are doing a better job of communicating with customers these days – particularly when there is a change in premium.

But, as the study found, those changes in premium are becoming a bit less frequent, and have been a bit easier on the wallet. It therefore makes sense that people are a bit happier with their auto insurance these days.


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Fed, European Central Bank Keep Mortgage Rates in Check

It looks like mortgage rates will stay reasonable for the time being, as Fed caution and European stimulus help to keep a lid on big moves.

Bankrate, in its weekly survey, found that average mortgage rates largely unchanged last week, versus the week before. The benchmark 30-year fixed mortgage rate dropped from 4.34% to 4.33%, while the 15 year fixed inched up to 3.44%, from 3.43%.

Most experts were looking for higher rates this year, as the Fed continued its “tapering” of bond purchases. Bankrate points out, however, that the slow economy of early 2014 helped put the brakes on mortgage rate rises, despite the taper.

And while the Fed is tapering, the European Central Bank has moved into stimulus mode. Bankrate said that ECB policy has kept interest rates down in Europe, which has helped to make U.S. Treasuries more attractive to overseas investors.

With mortgage rates tied closely to government bonds, the overall effect of these moves is to keep mortgages affordable for U.S. customers.

So, between the Fed’s cautious approach to raising rates, and the effects of the ECB’s stimulus, we have some powerful forces working to keep mortgage rates pretty much where they are.

This doesn’t mean that rates will never rise above 5%, (as experts were predicting they would during 2014), it just means that things are calm for now.

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