Associated Press: UnitedHealth warns of Medicare profit squeeze

UnitedHealth Group, the largest provider of Medicare Advantage plans, warned Thursday that funding cuts for the privately-run versions of the federal Medicare program will force it to reconsider its expectations for earnings growth next year.

CEO Stephen Hemsley told analysts that the government-subsidized coverage for elderly and disabled people faces a reimbursement cut of about 4 percent next year. That’s on top of other possible federal funding reductions and an expected 3 percent rise in medical costs.

“We did not expect the fastest-growing, most popular and most effective of the Medicare benefit options serving America’s seniors would be underfunded to this extent in 2014,” Hemsley said.

More than 13 million people were enrolled in Medicare Advantage plans last year, or about 27 percent of the Medicare population, according to the nonprofit Kaiser Family Foundation.

Insurers offer hundreds of different Medicare Advantage plans around the country. The coverage typically provides extras such as dental and vision care, or rates that are lower than standard Medicare.

UnitedHealth, which is the nation’s largest health insurer, has nearly 2.9 million people enrolled, and the plans brought in about 20 percent of the insurer’s revenue last year.

Shares of UnitedHealth and other insurers that provide Medicare Advantage coverage slid in February after the Centers for Medicare and Medicaid Services released data that pointed to payment cuts as steep as 8 percent next year. The government then softened the blow to a reduction of about 4 percent.

But UnitedHealth said that cut, combined with the other reductions, will be tough to stomach. UnitedHealth said it may have to trim benefits, change provider networks or leave some markets to preserve Medicare Advantage profitability.

Hemsley, UnitedHealth’s CEO, called the reimbursement cut “a significantly greater rate setback than anyone could have expected.”

The company also said widespread government spending cuts that started earlier this year and hit Medicare will make it hard for the insurer to reach the top end of its forecast for 2013 earnings of $5.25 to $5.50 per share. Analysts expect earnings of $5.51 per share, according to FactSet, a research firm.

Analysts had labeled UnitedHealth’s 2013 earnings forecast conservative after it came out last fall, and the insurer normally raises it several times through the year. But so far, the company has just backed the initial projection.

Thursday’s outlook warning came as UnitedHealth reported that its first-quarter earnings sank 14 percent, largely due to a lower gain the company recorded due to leftover insurance claims.

Click below for the full article.

http://finance.yahoo.com/news/unitedhealth-warns-medicare-profit-squeeze-175814694–finance.html

 

Motoramic: Why does the world’s largest automaker need $146.5 million from Kentucky?

On Friday, Toyota Chief Executive Akio Toyoda and Kentucky officials are expected to announce a $530 million expansion of Toyota’s sprawling Georgetown factory in the Bluegrass State so that it can build 50,000 Lexus ES sedans a year. In return for adding 570 permanent jobs, Kentucky will give Toyota a package of tax breaks and other incentives worth $146.5 million. Such deals are so common they rarely draw comment, but it’s worth asking: Why does the world’s largest automaker need a handout?

To get the incentives, Toyota promised to hire up to 570 new full-time workers at the Georgetown plant, along with 180 temporary workers. As the Louisville Courier-Journal reports, those permanent employees will be paid an average of $26 an hour in wages and benefits, a bit more than half of what long-time employees in Georgetown make.

It would be unfair to Toyota to single it out for taking a path trod so often by other automakers and corporations; in fact, it’s unheard of for an automaker from General Motors to Mitsubishi to expand a plant without some kind of government gift. Last December, The New York Times counted up 35 different grants to Ford from Kentucky alone between 2007 and 2010, totaling $307 million — which came even as the company cut jobs.

And those breaks pale to the deals automakers bargain for when they open new plants, with the current record held by Volkswagen, whose Tennessee factory came with incentives that total $577 million over several years. In return for those incentives, VW vowed to hire 2,000 full-time workers, for a cost of about $288,500 per job, a ratio that was the highest ever for a new auto assembly plant in the United States. When Kia opened its plant in Georgia in 2009, it did so only after driving a hard bargain for a $400 million incentive package, including everything from school property tax breaks to a free rail spur to ship cars from the factory.

State and local governments give automakers endless breaks for several reasons. A new auto plant often means additional jobs from parts suppliers on top of the add-on boost to the local economy. In tough times for American workers, automotive manufacturing jobs ofter stability and wages well above what’s available in most service industry careers. And many state officials fear being held to answer why a project was lost if the pot wasn’t sweet enough.

How do you feel about this government intervention?  Click below for the full article.

http://autos.yahoo.com/blogs/motoramic/why-does-world-largest-automaker-146-million-kentucky-164424807.html

New York Times: Mortgage Relief Checks Go Out, Only to Bounce

A $300 relief check that bounced. The name and other information was redacted by The New York Times for privacy reasons.

When the bank account is running dry and the mortgage payment is coming due, the phrase “insufficient funds” is the last thing you want to hear.

Now imagine hearing those two words when trying to cash a long-awaited check from the same bank that foreclosed on you.

Many struggling homeowners got exactly that this week when they lined up to take their cut of a $3.6 billion settlement with the nation’s largest banks — lenders accused of wrongful evictions and other abuses.

Ronnie Edward, whose home was sold in a foreclosure auction, waited three years for his $3,000 check. When it arrived on Tuesday, he raced to his local bank in Tennessee, only to learn that the funds “were not available.”

Mr. Edward, 38, was taken aback. “Is this for real?” he asked.

It is unclear how many of the 1.4 million homeowners who were mailed the first round of payments covered under the foreclosure settlement have had problems with their checks. But housing advocates from California to New York and even regulators say that in recent days frustrated homeowners have bombarded them with complaints and questions.

The mishap is just the latest setback to troubled homeowners. It took more than two years to resolve a federal investigation into the foreclosure abuses. Even after the settlement in January, the checks were delayed for weeks.

—-

The Too Big to Fail Banks certainly didn’t seem to have trouble getting their checks from Hank Paulson or Ben Bernanke but it looks like these folks weren’t so fortunate.  Click below for the full article.

http://dealbook.nytimes.com/2013/04/17/victims-of-foreclosure-abuses-face-another-woe-bounced-checks/

 

The News Tribune Reports…. Goldman CFO: Still ‘very close’ to crisis

Goldman Sachs reported what seemed like a good first quarter, but analysts were more concerned about the bank’s future than the past three months. They peppered the chief financial officer with questions about impending regulations, and investors sent Goldman’s stock down even as other banks rose.

By the numbers, it was a decent quarter. Profit rose 5 percent and revenue was up 1 percent. Both beat analysts’ expectations. Bond underwriting soared 69 percent as issuers rushed to take advantage of low interest rates and a hearty appetite for corporate debt among investors. CEO Lloyd Blankfein described the results as “generally solid.”

Goldman’s leaders sounded a cautious tone on a conference call with analysts, however. They said investors were still nervous about the economy and that the bank would continue to focus on controlling costs.

Click below for the full article.

Wall St. Cheat Sheet: Are Your Income Taxes Fair?

With the official tax deadline in the rear view mirror, many Americans can now reflect on how much they paid Uncle Sam. If you feel like you are paying more than your “fair share,” you are not alone.

Unsurprisingly, Americans are losing faith in the fairness of income taxes. According to the latest Gallup survey, only 55 percent of Americans regard the income tax they pay as fair, the lowest reading since 2001. The results are based on Gallup’s Economy and Personal Finance poll and includes adults from all 50 states. It was conducted in the early part of April.

Click below for the full article.

http://wallstcheatsheet.com/stocks/are-your-income-taxes-fair.html/?ref=YF

Schiff: 2/3 of America to Lose Everything Because of This Crisis

A record breaking stock market is distorting a frightening  reality:  The U.S. is being eaten alive  by a horrific cancer that will ultimately destroy the economy and impoverish  the vast majority of its citizens.

That’s according to Peter Schiff, the best-selling author  and CEO of Euro Pacific Capital, who delivered his harsh warning to investors in  a recent interview on Fox Business.

“I think we are heading for a worse economic crisis than we  had in 2007,” Schiff said.  “You’re going  to have a collapse in the dollar…a huge spike in interest rates… and our whole  economy, which is built on the foundation of cheap money, is going to topple  when you pull the rug out from under it.”

Schiff says that, despite “phony” signs of an economic  recovery, the cancer destroying America stems from a lethal concoction of our  $16 trillion federal debt and the Fed’s never ending money printing.

Currently, Bernanke and company is buying $1 trillion of  Treasury and mortgage bonds a year. That’s about $85 billion per month against  a budget deficit that is about the same level.

According to Schiff, these numbers are unsustainable. And  the Fed has no credible “exit strategy.”

Click below for the full article.

http://moneymorning.com/ob-article/schiff-us-will-win-currency-war.php?code=3243#.UW4XY1_D_HZ

Reuters: Stock Markets Rally, lifted by gold, earnings, and data

Traders work on the floor at the New York Stock Exchange, April 11, 2013. REUTERS-Brendan McDermid

Stocks jumped more than 1 percent on Tuesday, a day after their worst decline since November, as gold prices rebounded and earnings from Coca-Cola and Johnson & Johnson improved the outlook for first-quarter results.

Inflation data, which reinforced expectations that the Federal Reserve will keep its stimulus plan in place, added to bullish sentiment.

The price of gold jumped 1 percent after its record daily drop in dollar terms on Monday. The SPDR Gold Shares ETF (GLD.P), which fell 8.8 percent on record volume Monday, rose 1.1 percent to $132.80. The S&P 500 materials index .SPLRCMA climbed 1.9 percent, leading the benchmark S&P 500 higher.

The market’s advance followed the S&P 500’s drop of more than 2 percent drop on Monday, giving the index its worst one-day percentage loss since November 7. The S&P 500 is up 10.4 percent since the start of the year after enjoying a strong first-quarter run, partly as a result of the Fed’s continued stimulus efforts.

“Yesterday I think was a bit out of line … But I think the trend is that the market is consolidating, that we’re going to see a little bit of a pullback here over the next month and a half or so, and then we’ll get on to greener pastures,” said Brian Amidei, managing director at HighTower Advisors in Palm Desert, California.

Click below for the full article.

http://www.reuters.com/article/2013/04/16/us-markets-stocks-idUSBRE93006T20130416

Daily Finance: Dow Has Worst Day This Year as Commodities Plunge

NEW YORK (AP) – A steep fall in commodity prices led the stock market to its worst day this year on Monday, as worries about the global economy resurfaced.

The Dow Jones industrial average dropped 265 points, its biggest loss in five months.

The first trigger came from China. News that the world’s second-largest economy slowed unexpectedly pummeled oil, copper and other commodities. In the stock market, companies that produce oil and mine for metals fared the worst. A slowdown in China, a huge importer of basic materials like copper, would stymie profits at those companies.

Click the link below for the full aritcle.

http://www.dailyfinance.com/2013/04/15/dow-jones-stock-market-drop-commodities/

More on the Gold Price Drop

Earlier we posted Peter Schiff’s thoughts on the gold price drop.  What do you think, is this a market correction?  Will the price of gold rise as the economy and the dollar weaken or has the economy stablized?

Below are a series of articles on the topic with information and varying opinions on the subject.

Gold plunges to lowest in more than 2 years
http://news.yahoo.com/gold-plunges-lowest-more-2-181027539.html

Zero-Hedge: What happened the last time we saw gold drop like this?
http://www.zerohedge.com/news/2013-04-15/what-happened-last-time-we-saw-gold-drop

Daily Paul: Gold and Silver Doom and Gloom or Crack Up Boom?
http://www.dailypaul.com/281931/gold-and-silver-doom-and-gloom-or-crack-up-boom

Ben Bernanke Swamps the Gold Bugs
http://news.yahoo.com/ben-bernanke-swamps-gold-bugs-173938980.html

Business Insider: The Gold Collapse Is Personally Costing Ron Paul A Fortune
http://www.businessinsider.com/ron-paul-investment-gold-2013-4

CNN Money: Gold plunges to two-year low
http://money.cnn.com/2013/04/15/investing/gold-prices-china/index.html

Reuters: Gold investors run for the exits, prices suffer biggest-ever drop
http://in.reuters.com/article/2013/04/15/markets-gold-idINDEE93E0CK20130415

CNBC Guide to Obamacare for Small Businesses

Even as you finish with this year’s taxes, if you’re a small-business owner experts say it’s time to look ahead to 2014, when the tax implications of the Affordable Care Act (ACA) begin to kick in.

“Just now, things are really sinking in that there is this employer responsibility,” said Amanda Austin, of the National Federation of Independent Business.

Under ACA, often called Obamacare, employers with 50 or more full-time workers face a mandate to provide insurance. It’s known formally as shared responsibility.

“You’re going to need somebody to do a thorough review of the impact on your business,” Austin said, because the new rules are complex.

For the complete article including more on the 50/30 rule, click the link below.

http://www.cnbc.com/id/100641995