Health Insurance Freedom

Posted on August 28, 2014 by Fairlington Blade

I posed a question up on Plum Line today and got some interesting responses. I think NoVA and jnc were active on the thread. We’ll make it a two parter. I thought Brent, Kevin or Mark might be interested.

1. Your employer pays for your family’s health insurance at a cost of $12,000 per year. Said employer offers to drop the coverage and increase your salary by the same amount. Under current law, you lose the tax benefit of deductibility, but gain the liberty to purchase whatever insurance you like. Is it worth the price?

2. Same as scenario #1, but assume that current law is changed to make health insurance deductible on Schedule A. That or make employer provided health insurance taxable.

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I was effectively asked the first question when negotiating terms for a possible new position. I responded that I would have to purchase health insurance of some kind as my better half is a freelancer. The offer included health insurance. I’d take it that way as I don’t care for the tax hit.

I’d say yes to Question #2 as I dislike the link between health insurance and employment. It’s a relic of wage and price controls from the 40s. The U.S. spends as many public dollars as most developed countries do and then kicks in a few more precent of GDP.

BB

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Morning Report – Second Quarter GDP revised upward

Posted on August 28, 2014 by Brent Nyitray

Markets are lower this morning on tensions in Ukraine. Bonds and rallying as well. 

 

Some strong economic data this morning, with the second revision to 2Q GDP coming in at 4.2%. Consumption rose to 2.5% and the PCE price index (the Fed’s preferred inflation indicator) came in at 2.1%, with the core at the Fed’s target rate of 2%. 

 

Initial jobless Claims came in at 298,000, another strong number. The Bloomberg Consumer Comfort Index rose to a 5 week high. 

 

Pending Home Sales rose 3.3% in July, but are down 2.7% year-over-year.

 

The Ellie Mae Origination Insight Report is out. Refis dropped to 32% of all loans in July. FHA accounted for 20%, Conventional 64%, VA 11% and other 5%. The average FICO dropped to 727.

 

Fannie Mae has taken down their estimate for housing in 2015. They dropped their estimates for housing starts and new home sales by 17%. People hoping that 2015 is the breakout year in housing are going to be disappointed.

 

New rules on PMI could raise rates on average 15 basis points. 

 

The elderly are finding the amount they owe on their mortgages increasing. Not sure how much of this is due to reverse mortgages. The mortgage-burning party seems to be a thing of the past.

 

Consumers have confidence, but not the cash to do anything about it. This is why the consumer confidence numbers look good, but spending numbers are not. Asset prices can only do so much – the chief driver of spending is wages, not asset prices. In fact, home equity extraction during the bubble years masked the overall weakness in wage growth. 

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