Health Care Link Dump

Posted on June 7, 2012 by novahockey

Just wanted to post some of the recent health care news.  There’s also been an uptick in the number of SCOTUS ruling previews, but none of them are really all that insightful.  Just parlor game speculation.

Also, the White House has issued a veto threat on the medical device tax repeal bill.  [Edit:  Link to Statement of Administration Policy]

AHIP released a survey that found the number of people enrolled in health savings accounts and high deductible health plans has tripled over the last five years.  Survey is available here.  The Washington Post and Kaiser Health News recently profiled employers’ increasing use of high deductible health plans.  Most of these plans already covered a lot of the essential benefits stuff for free, even before the ACA, which I probably should have known.  The article is available here.

Medical costs are expected to rise by 7.5 percent in 2013, the fourth consecutive year of modest increases, according to a study released by PricewaterhouseCoopers LLP’s Health Research Institute.   Four factors that will continue to slow the rise in medical costs in 2013: medical supply and equipment costs are moderating under market pressure; growth in physician services is expected to be one of the slowest areas of cost growth as consumers choose alternatives to traditional office visits; accessibility to information on prices is exerting downward pressure as consumers in high-deductible plans seek cost information and pricing information becomes more readily available; and pharmaceutical patents are expiring.  The study is available here.

The Washington Post and GAO on a ACA tax credit in that small businesses aren’t using due to the complexity of taking it.  article is available here.  The GAO report, “Small Employer Health Tax Credit – Factors Contributing to Low Use and Complexity” (GAO-12-549) is available here.

Video:  Former CMS Administrator says that premium support (aka vouchers) is going to happen.

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Morning Report 6/7/12

Posted on June 7, 2012 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1325.5 10.0 0.76%
Eurostoxx Index 2161.6 23.9 1.12%
Oil (WTI) 86.19 1.2 1.38%
LIBOR 0.468 0.000 0.00%
US Dollar Index (DXY) 82.02 -0.306 -0.37%
10 Year Govt Bond Yield 1.66% 0.00%  
RPX Composite Real Estate Index 178.3 0.2  

Markets are higher this morning after China cut interest rates to boost their economy. The benchmark lending rate will drop from 6.56% to 6.31%, effective tomorrow (such precision!). The allowed discount from the benchmark was widened from 10% to 20%.  Initial Jobless Claims in the US came in at 377k, more or less in line with expectations. Bonds and MBS are flat.

Given last Friday’s dismal jobs report, the market was definitely concerned about the Fed’s Beige Book survey which was released yesterday afternoon. Overall, the tone of the report did not confirm fears of an imminent slowdown. The Fed reported that “overall economic activity expanded at a moderate pace” and that “Economic outlooks remain positive, but contacts were slightly more guarded in their optimism.”

In another positive datapoint for the real estate industry, homebuilder Hovnanian reported better than expected earnings yesterday, with a 50% increase in backlog and a 52% increase in contracts. Perhaps this portends the rise in housing starts and construction we have been waiting for since 2008.

To get an idea how cheap stocks are compared to bonds right now, consider the fact that the 10 year yields about 1.65%, while the dividend yield on the S&P 500 is 2.2%. A dividend yield (let alone earnings yield) higher than the 10-year is a rare event. If you look at the ratio of the 10 year to the dividend yield, it reached  just over 60% last week, and the last couple times it reached that level (2008 and fall of 2011), it portended a huge stock market rally. At any rate, it seems to trigger asset allocation decisions and may account for some of the velocity of the moves in the S&P futures and the bond futures. It also means buy stocks and sell bonds.  Or borrow money long term.

Chart:  Ratio of the 10-year bond yield to the S&P 500 dividend yield:

 

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