Health Reform Update

January 14th, 2014

Several ACA taxes which begin in 2014 are now being passed on to premiums, sixty-one thousand apply for health insurance in Illinois, but new enrollments have few young people, new guidance released for plan designs, and higher deductibles are leaving many underinsured by new plans.ACA Taxes Increase Starting in 2014, Obamacare begins taxing insurance companies — who contend a good chunk of these costs will be passed on to consumers in the form of higher premiums. The new levies include a multibillion-dollar assessment on insurance companies based on their market share, a fee that will be used to compensate insurers who take on the most costly policyholders and a penalty for individuals who decide to remain uninsured.

Sixty-One Thousand Apply for Health Insurance in Illinois in December The Illinois enrollments are up nearly ninefold from November, when little more than 7,000 selected policies, according to federal data released Monday. Nationwide, nearly 2.2 million selected a plan, with the vast majority coming in December.

Guidance on Cost-Sharing Limits, Wellness, and Mental Health Parity in New ACA FAQs On January 9, 2014 the Departments of Labor, Health and Human Services (HHS) and Treasury (collectively, the “Departments”) issued an 18th set of frequently asked questions about the Affordable Care Act, including issues raised by that law’s intersection with the Mental Health Parity and Addiction Equity Act (“MHPAEA”), as well as a grab-bag of other issues.

Older Pool of Health Care Enrollees Stirs Fears on Costs WASHINGTON — People signing up for health insurance through the Affordable Care Act’s federal and state marketplaces tend to be older and potentially less healthy, officials said Monday, a demographic mix that could threaten the law’s economic underpinnings and cause premiums to rise in the future if the pattern persists.

High Deductible Health Law Plans Leave Some ‘Underinsured’ For working people making modest wages and struggling with high medical bills from chronic disease, President Barack Obama’s health care plan sounds like long-awaited relief. But the promise could go unfulfilled.

Economy Entering New Year on a Roll

December 26th, 2013

Wall Street Journal (12/25/13) Sarah Portlock; Josh Mitchell
WASHINGTON—A pickup in business investment and robust new-home sales point to an economy on stronger footing heading into the new year.

“It’s a holly, jolly data Christmas for the economy as all signs point to an accelerating economy,” said Joel Naroff, chief economist at Naroff Economic Advisors.

Orders for U.S. durable goods—big-ticket items such as cars and aircraft designed to last more than three years—rose 3.5% last month, reversing a decline in October, the Commerce Department said Tuesday. Excluding the volatile transportation category, manufactured-goods orders rose 1.2%, the strongest gain since May.

Meanwhile, Americans continued to purchase new homes at a brisk pace in November, the Commerce Department said in a separate report this week, the latest sign the housing market is regaining traction after a rise in mortgage rates. New-home sales hit a seasonally adjusted annual rate of 464,000 last month, down only 2.1% from October’s upwardly revised annual rate of 474,000. October and November marked the two strongest months of new-home sales since mid-2008.

The pair of reports showed renewed optimism by businesses and prospective homeowners, two of the biggest drivers of the economy, and led Macroeconomic Advisers to raise its estimate for fourth-quarter growth. It now forecasts gross domestic product to expand at an annualized rate of 2.6% in the final three months of the year, up three-tenths of a percentage point from an earlier estimate.

The overall durable-goods increase was driven by business investment, particularly in civilian aircraft orders, which rose nearly 22%. But a broader measure of business spending on software and equipment rose at a solid pace in November after falling in recent months. Orders for nondefense capital goods, excluding aircraft, increased by 4.5%, its strongest pace since January. That could be a sign businesses stepped up spending after the partial government shutdown in October.

Weak business spending has weighed down the U.S. recovery, with many companies pointing to uncertainty from Washington as a reason for holding back. The two-year budget agreement reached in Congress earlier this month may quell some of those concerns.

“The tone of durable-goods orders improved substantially in November,” said TD Securities strategist Gennadiy Goldberg. “Stronger orders bode well for both the fourth quarter and 2014 economic growth prospects, suggesting that companies remain keen on increasing investment and expanding capacity as the economy and consumer sentiment improve.”

Another bright spot was stronger demand for motor vehicles last month. Orders in the category rose 3.3%, the strongest since February. That indicates consumers are once again buying cars after delaying the decision in recent years.

Still, underlying demand in the U.S. remains sluggish compared with past recoveries, with much of the third-quarter growth due to companies restocking inventories. Unemployment remains at an elevated 7% with nearly 11 million unemployed workers. Consumer and business spending, while showing healthy increases lately, are still at sluggish levels. And workers’ wages are growing only tepidly, raising concerns about how long consumers will be able to maintain the current level of spending.

On the housing front, the new-home sales report suggests the market is picking back up after a rise in mortgage rates dented sales earlier this year. Mortgage rates climbed more than a percentage point starting in the spring after Federal Reserve officials signaled they were considering reining in the central bank’s $85 billion-a-month bond-buying program. The higher borrowing costs, coupled with a rise in home prices, likely scared off some prospective buyers. But households may be adjusting to the higher rates, which are still historically low but climbing.

Because new-home sales are tallied at the signing of a contract rather than at the closing, they can be an early indicator of housing-market trends.

From a year ago, new-home sales were up 16.6% in November.

The monthly pace of new-home sales caused inventory to decline, the Commerce Department said. At November’s pace, it would take 4.3 months to sell homes on the market, down from 4.5 months in October.

Extension of Benefits for Jobless Is Set to End

November 19th, 2013

New York Times (11/17/13) Annie Lowrey

During the last week of December around 1.3 million people will lose access to additional weeks of jobless benefits. Another 850,000 will be denied benefits in the first three months of 2014.

Congressional Democrats and the White House are pushing to extend the amount of time covered by the unemployment insurance program, but the chances of an extension are small. The extended program was created in 2008 to combat the recession. Congress has extended the program multiple times since.

Full Story Available

OSHA Urged to Launch Temporary Worker Emphasis Program Occupational Health & Safety (11/05/13)

November 6th, 2013

The U.S. Occupational Safety and Health Administration’s assistant secretary, Dr. David Michaels, has received 15 recommendations from a coalition of workplace safety groups that urge the agency to improve safety and health conditions for temporary workers. OSHA is preparing a proposal that would mandate that companies publicly post summary data from their log of work-related injuries. The top two recommendations regard delineating health and safety responsibilities in dual-employer settings.         |          Full Story Available

PwC: Manufacturing Hiring Plans Hit Five-Year High

October 21st, 2013

PwC’s Q3 2013 Manufacturing Barometer shows a gain in U.S. industrial manufacturers with an optimistic view of the global economy during the next 12 months to 40% in the third quarter from 31% in the second quarter and 29% a year ago. In addition, 60% are optimistic about the U.S. economy, and 78% think the U.S. economy grew in the third quarter, marking the highest level in seven years. “Despite the uptick in global economic sentiment, the U.S. remains the growth driver in the industrial manufacturing sector, with continued signs of healthy demand, pricing strength, new product investment, and hiring,” says Bobby Bono, U.S. industrial manufacturing leader at PwC.

The survey reveals that 58% of respondents plan to add employees during the next 12 months, up 16 points from the second quarter, with demand high for skilled labor (35%), professionals and technicians (35%), and production workers (30%). However, 77% said they need to fill skill gaps, the biggest of which are in middle management (70%) and skilled labor (67%). Another 50% of respondents said they had open positions that cannot be filled with skilled employees.

What the Concealed Carry Law Means for Staffing Companies

September 19th, 2013

Illinois House Bill 183 (found here) became law on July 9, 2013, making Illinois the last state to allow possession and concealed carry of a loaded firearm outside the home. The 2013 Illinois “Firearms Concealed Carry Act” lets a licensed gun owner carry concealed firearms in most workplaces unless the property owner prohibits concealed firearms on the property by posting a 4” by 6” sign.

If property owners and employers do not prohibit guns at the workplace, they could be liable for the resulting gun violence. Such liability may or may not be covered under the insurance policies of your staffing company and/or clients.

Considerations

  • Unlike the laws in neighboring states, the Illinois law does not limit the liability of property owners or employers who permit concealed carry on their properties.
  • Business owners who rent may be at the mercy of their landlords to bar firearms on property that is not owned by them.
  • The law does not affect the employer’s right to regulate their employee’s behavior while the employee is working within the scope of his or her employment.
  • Property owners and employers in all states that allow firearms in the workplace may be liable for workers’ compensation, negligence and other tort liability based on injuries due to gun violence.

Exceptions

The Illinois statute still prohibits concealed carry at schools, government buildings, local parks, athletic facilities, hospitals, nursing homes and other medical facilities, transportation facilities, colleges/universities, sports arenas, libraries, zoos, museums and amusement parks.

 

Key Obamacare rule for business delayed for year

July 3rd, 2013

By BRETT NORMAN and JENNIFER HABERKORN |

The Obama administration is postponing the federal health care law’s insurance mandate for employers next year, in a major concession to the business community and lawmakers who have become increasingly vocal about the law’s potential to damage a slowly recovering economy.

The announcement doesn’t affect the main coverage tools in the law — the individual mandate and the new subsidized insurance markets. But it could boost the cost of the law if more people end up seeking subsidies instead of getting covered on the job.

The delay, revealed just as the administration was stepping up efforts to educate the public about enrollment this fall, is at least partial proof of what Republicans have been predicting for months: that the health law is way too complex to be ready to go live in 2014. And that’s a message that may well resonate all through next year – including the 2014 midterm elections.

Those GOP critiques picked up immediately.

“Obamacare costs too much and it isn’t working the way the administration promised,” Senate Republican Leader Mitch McConnell (R-Ky.) said after Treasury announced the one-year delay. “And while the White House seems to slowly be admitting what Americans already know, and what I hear consistently in my travels around Kentucky regarding the regulatory burden on employers, the fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans.”

Speaker John Boehner’s press secretary Brendan Buck tweeted simply: “Obamacare. Such a train wreck.”

“Absolutely thrilled by #ObamaCare delay,” Republican operative Brad Dayspring tweeted. “Will help #GOP candidates across the board in 2014. Debate will be a repeat of 2010.”

The Treasury Department, which is in charge of the employer mandate, said it recognized that the steps businesses have to take to show they were complying with the rules were complex and a burden. Treasury said it would try to streamline them over the next year.

There will be no penalties in 2014 for businesses that don’t cover workers. Most large businesses do cover their workers. Small businesses, with fewer than 50 workers, were already exempt from the rule.

The delay was announced as Washington was already emptying for the July 4 holiday. It comes in the shadow of a mounting pile of criticisms of the employer mandate. There’s been a push by some business groups and lawmakers so that only people workig 40 or more hours a week would be covered. The health law currently says 30 hours is full time, and some businesses and more recently, school districts, have complained that they would have to cut their employees hours to escape the mandate penalties.

The move is also likely to raise the prices tag of Obamacare by making more people eligible for subsidies, namely those whom employers would have covered under the threat of penalties under the law. Employers with 50 or more “full-time equivalent” employees were required under law to provide affordable insurance or else pay $2,000 per year penalty per employee.

The employer mandate’s penalties were expected to reduce the deficit by $5 billion in 2014, according to a Congressional Budget Office estimate published in February.

Labor Department Confronts ‘Epidemic’ of Wage-and-Hour Violations

June 10th, 2013

Thomson Reuters News & Insight (06/07/2013) Carlyn Kolker

At a recent conference at New York University Law School, Patricia Smith, the U.S. Department of Labor’s solicitor, said the agency faces an “epidemic” of wage-and-hour law violations, with workers across the nation being denied minimum wage and overtime. Smith said the department has shifted from complaint-based investigations to directed investigations, in which the department reviews entire industries or geographical areas. Violations were found 79% of the time in complaint-based investigations and 71% of the time in directed investigations, which Smith said “really shows there are serious problems out there.” She added that the department is increasing its enterprise-wide enforcement efforts, which involve investigating systemic violations at multiple facilities, and is working with individual states on worker misclassification and other issues.

U.S. employers add 175K jobs, rate ticks up to 7.6 percent

June 7th, 2013

June 07, 2013

(AP) — The U.S. economy added 175,000 jobs in May, a gain that shows employers are hiring at a still-modest but steady pace despite government spending cuts and higher taxes.

The unemployment rate rose to 7.6 percent from 7.5 percent in April, the Labor Department said Friday. The rate rose because more people began looking for work, a healthy sign. About three-quarters found jobs.

The government revised the job figures for the previous two months. April’s gain was lowered to 149,000 from 165,000. March’s was increased slightly to 142,000 from 138,000. The net loss was 12,000 jobs.

Stocks rose when the market opened at 8:30 a.m. Central time, an hour after the report was released. The Dow Jones industrial average surged 150 points in the first hour of trading.

“Today’s report has to be encouraging for growth in the second half of the year,” said Dan Greenhaus, an analyst at New York-based BTIG LLC.

Employers have added an average of 155,000 jobs in the past three months. But the May gain almost exactly matched the average increase of the past 12 months: 172,000.

Analysts said the less-than-robust job growth would likely lead the Federal Reserve to maintain the pace of its monthly bond purchases. The Fed has said it will keep buying bonds at the same rate until the job market improves substantially. The bond purchases have helped drive down interest rates and boost stock prices.

Stock markets have gyrated in the past two weeks on speculation that the Fed will start to taper its $85 billion a month in bond buying — a step that could raise rates and cause stock prices to fall.

“I think the Fed will stay on hold,” said Nariman Behravesh, chief economist at IHS Global Insight. “They want to see numbers above 200,000 on payroll jobs on a consistent basis before they start to taper off.”

Behravesh said he thinks the Fed will maintain its pace of bond buying through this year before scaling it back in 2014.

“Today’s report is perhaps the perfect number for nervous investors,” said James Marple, senior economist at TD Economics. “It is strong enough to point to continued economic recovery but not so strong as to bring forward expectations of Fed tapering.”

Some signs in the report suggested that the spending cuts and weaker global growth are weighing on the job market. Manufacturers cut 8,000 jobs, and the federal government shed 14,000. Both were the third straight month of cuts for those industries.

Average hourly wages ticked up just a penny in May, to $23.89. That was because much of the job growth was in lower-paying industries.

But mild inflation is boosting American’s purchasing power. Over the past 12 months, hourly wages have risen 2 percent. Inflation has increased just 1.1 percent in that time.

The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years. But economists worry that the steep government spending cuts and higher Social Security taxes might be slowing growth in the April-June quarter to an annual rate of 2 percent or less.

Consumers appeared earlier this year to shrug off the tax increase. But in April, their income failed to grow, and they cut back on spending for the first time in nearly a year. A Social Security tax increase is costing a typical household that earns $50,000 about $1,000 this year. For a household with two high-earners, it’s costing up to $4,500.

Cuts in defense spending might have slowed factory output in some areas, according to a Fed report released this week. Factory activity shrank in May for the first time since November, and manufacturers barely added jobs, according to a survey by the Institute for Supply Management.

A separate ISM survey found that service companies grew at a faster pace last month but added few jobs. Service firms have been the main source of job growth in recent months.

Some positive signs of the economy’s resilience have emerged. Service companies reported an increase in new orders, the ISM found. That suggests that businesses could expand further in coming months.

And steady gains in home sales and construction are providing support for the economy even as manufacturing weakens.

Each Chicago manufacturing job leads to 2 more: study

May 21st, 2013
By  Meribah Knight  May 21, 2013

It’s called a multiplier effect: when one job generates another job that is  dependent on that job, and so on. In the Chicago area, each new manufacturing  job creates another 2.2 jobs in the region, on average, according to a new study  by the University of Illinois at Chicago.

the most robust areas for job multiplicity are in the manufacturing of  petroleum and coal products and in pharmaceuticals, each generating 8.3 and 5.7  jobs, respectively, in the region, according to the report from UIC’s Center for  Urban Economic Development.

The study found that chemical manufacturing generates 3.8 jobs, and beverage  and tobacco products create 3.6 jobs. Textile manufacturing jobs came in last,  generating only 0.5 additional jobs, the study found.

“Most of these industries are powerful job creators,” said study co-author  Howard Wial, executive director at the Center for Urban Economic Development and  a Brookings Institution fellow. He worked on the report with Elizabeth Scott, an  economic development planner in the Center for Urban Economic Development.

To find the overall multiplier, the study added each new manufacturing  factory job with jobs in supply industries, and then jobs in service industries  that each manufacturing employee patronizes. The study, which begin measuring  the impact with only factory jobs — it does not include research and development  or administrative positions at manufacturing companies — analyzed seven counties  in Illinois: Cook, DuPage, Kane, Kendall, Lake, McHenry and Will.

The Chicago region’s overall average of a 2.2 job multiplier for the  manufacturing industry is on par with other metropolitan regions, Mr. Wial said.  On a national scale, the multiplier for a manufacturing job is 4.6, higher  because of a larger geographic scope for supply chains and induced spending.

Manufacturing tends to have a higher multiplier than other industries because  of its sturdy wages and long supply chains, Mr. Wial said.

The finding that petroleum and coal — realized mainly as the region’s oil  refining industry — generated the most impact in the Chicago area was  unexpected, Mr. Wial said. He said it was surprising to find that the region’s  oil and coal industry had such a lengthy supply chain, making even more of an  impact than automotive or machinery sectors.

The report found that Chicago’s two largest manufacturing industries, food  and fabricated metal, create 2.6 and 2 additional jobs, respectively.

“When a new job in an industry leads to the creation of even one other job in  the region, that’s a very good return,” Mr. Wial said. “That’s why policymakers  still prize manufacturing for its potential to create jobs, despite growing  automation.”

In other words: Even while manufacturing jobs dwindle as human capital is  replaced with robots and automated machinery, a higher output will still result  in more jobs, Mr. Wial said.

“Industries with higher productivity typically pay higher wages, leading to  more induced jobs,” he said.

And the region’s recent  growth in the manufacturing sector can only mean good things for  putting the multiplier into action.

“Until recently, offshoring, consumer spending on imported goods and the  growing use of out-of-region suppliers reduced manufacturing’s impact on job  growth in the Chicago area,” Mr. Wial said. “The recent rebound of manufacturing  employment may change the situation.”