Looks like China grabbed the Olympic torch this summer and is bringing it to Washington DC to claim its place at the head G-table. Though it is uncertain what, if anything, the G-20 summit will accomplish, one thing is clear: China is striking a claim to a major role in global economic and financial policy. Its aggressive stimulus program makes US policy actions look half-baked. What once looked like bold moves by Paulson and Bernanke are now looking increasingly tentative and malleable, just what a market looking for clarity and certainty does not want. It all goes to show that China ‘s experience at dealing with toxic products is paying off, and that China is much better at the Socialism thing than recently converted free market groupies.
Certainly, you would never see senior Chinese officials arguing publicly over who has the best mortgage relief plan. Treasury and the FDIC’s Sheila Bair had better sort this out in hurry: CreditSights cites an alarming increases in subprime mortgage delinquencies as unemployment rises and the stimulus rebate checks are long since spent.
Whatever flaws the TARP may have, they are magnified by a failure to communicate. Ever since the botched rollout of the “bank bailout” plan Paulson has been on the back foot, alternately pleading for support and protesting that people just don’t understand. Maybe he should send everybody a copy of Research Primer: Understanding the Credit Crisis.
President-elect Barack Obama, meanwhile, is keeping a safe distance from the perils of Paulson, but will eventually have to nail his colors to the mast, to thoroughly mix metaphors. His healthcare agenda came under scrutiny this week with several reports on Research Recap garnering attention. This includes Moody’s handicapping of the winners and losers under the plan. A PricewaterhouseCoopers analysis came to the shocking conclusion that the plan might turn out to be more expensive and deliver fewer savings than claimed. In addition, Standard & Poors noted that the weak economy is posing increased risks for health insurers.
And as if things weren’t bad enough already for real estate, the mounting problems of retailers such as Circuit City are adding to their woes, as noted in CMBS Outlook Uncertain as U.S. Retail Sector Nosedives.
Research Recap Quote of The Week:
The ongoing adjustment in housing markets still has a long way to go. - OECD
Technorati Tags: china, CMBS, credit-crisis, G-20, health insurers, Healthcare, housing, mortgage-backed-securities, retailers, TARP, zei
President-elect Barack Obama’s proposed healthcare policy would provide coverage to two-thirds of America’s uninsured at an estimated 2009 cost of $75 billion, and may not deliver meaningful savings for families for a decade or more, according to a PricewaterhouseCoopers Health Research Institute study.
President-elect Obama’s proposals could lead to lower margins for providers, pharmaceutical companies and health plans that increasingly depend on government payment.
In the free report,“Healthcare Policy in an Obama Administration,” PwC points out that 40 percent of the estimated 30 million Americans who would gain coverage under Obama’s plan, would do so through their employers – a development that would be welcomed.
PwC compares Obama’s plan to the healthcare system in Massachussets, where many of Obama’s plans are being tested and where 97 percent of residents have received expanded healthcare.
Other Findings:
- Approximately one-third of the cost of Obama’s plan could come from existing funding for the uninsured. The remaining amount will have to be raised through repealing tax cuts, raising taxes or other limitations in spending.
- Reforms are aimed at providing tax subsidies for the healthcare disenfranchised which includes the estimated 15% of uninsured Americans and those small businesses that cannot afford to offer coverage.
- Expanding coverage will exacerbate current deficiencies in the health system, such as labor shortages.
- Without successful cost containment strategies, growing healthcare costs would increase the costs of the Obama plan dramatically over time and reduce the effectiveness of mandates - making federal costs unsustainable.
- The health industry can improve care and lower costs through public-private efforts.
The study joins others released in the past week, and written about here, including a Moody’s Investors Service analysis of winners and losers under Obama’s plan.
Technorati Tags: Barack healthcare plan, health insurers, Healthcare, healthcare providers, Massachusetts, Massachusetts healthcare, medical spending, obama, Obama health plan, Pharmaceuticals, PricewaterhouseCoopers, PwC, transition2008, uninsured
The outlook for health insurance companies rated by Standard and Poor’s has turned negative for the coming year to 18 months, the ratings agency said, as healthcare feels the pinch of the slumping U.S. economy.
More competition and aggressive pricing are contributing to the negative outlook as well, S&P said.
We believe job loss, small business failures, sustained competitive pricing, and budgetary shortfalls (particularly at state and local governments) likely will affect many U.S. health insurers, reducing revenue growth and gross underwriting margin (partly through business mix changes) and pressuring operating expense levels.
Health insurers have largely dodged the liquidity problems plaguing other financial institutions, and those with strong balance sheets will weather 2009 well, S&P said. Still, the ratings agency expects more downgrades than upgrades in 2009 and additional pressures from healthcare reform movements in 2010.
For details, Outlook On U.S. Health Insurance Sector Revised To Negative From Stable.
Technorati Tags: economy, financial-industry, health-insurance, Healthcare, insurance industry, insurers, liquidity, negative outlook
Even if the democratic party wins the White House and expands its majorities in Congress in next week’s elections, a major shift to the left on domestic policy is unlikely to materialize, according to Oxford Analytica.
The most likely election outcomes have strong echoes of the 1992 contest, OxAn says in a new report. “On that occasion, Bill Clinton defeated the elder President George Bush by just under 5% of the popular vote, the Democrats held some 257 seats in the House of Representatives, and commanded 57 seats in the Senate. However, this outcome did not result in Democratic hegemony over either domestic or foreign policy; indeed, the Republicans rebounded with a crushing victory in mid-term congressional elections two years later.”
This suggests that predictions of a third-wave of ‘liberalism’ — on the scale of the New Deal or Great Society-eras — is very premature.
“History suggests that the passage of major legislation does not necessarily correspond to periods of single party control, or come via congressional votes along partisan lines. Obama’s ambitious legislative agenda, including major healthcare reform, is unlikely to pass without some Republican support. Democratic dominance in Washington would not, of itself, lead to a significant transformation of domestic policy. Implementing the most ambitious elements of the party’s agenda, particularly healthcare reform, will still be very challenging. However, solid Democratic control on Capitol Hill would allow a president of the same party considerable leeway abroad.”
Technorati Tags: domestic policy, foreign policy, Healthcare, politics, presidential-election, public-policy
Mergers and acquisitions activity and US initial public offerings of venture-backed companies are on pace this year to hit their lowest point this decade , according to new data from Dow Jones VentureSource. During the third quarter, venture-backed companies produced just $4.57 billion through IPOs and M&A, down 66% from the $13.4 billion generated in the year-ago period.
The IPO market continues to be shut off for venture-backed companies, as only Rackspace Hosting Inc. (NYSE: RAX) went public in the third quarter, compared with 11 such offerings a year ago. Meanwhile, 66 M&A deals involving venture-backed companies generated $4.4 billion, compared with 116 deals and $12.7 billion a year earlier.
Only seven venture-backed companies have gone public so far this year, compared with 48 in the first three quarters of 2007.
The lack of IPOs is more pronounced now than during the dot-com bust earlier this decade, when 13 venture-backed companies went public in the first three quarters of 2001 and 14 venture-backed firms went public in the first three quarters of 2002.
What’s more, just 247 venture-backed companies were bought by acquirers during the first three quarters of this year, generating $22.3 billion, down from 327 and $34.1 billion in the same period last year, according to Dow Jones VentureSource.
That means 2008 is on pace to see the lowest amount of M&A deals this decade.
The number of information technology exits, which includes software, communications and semiconductors, took a dive in the third quarter to 48 deals from 74 deals in the year-ago period. More telling, the total exit dollars in IT was $2.9 billion, down 60.3% from $7.3 billion in the third quarter last year, suggesting acquirers are cutting back on spending. Year-to-date, 170 IT companies were acquired for $12.8 billion, versus 207 companies and $17.9 billion a year ago.
Health care fared poorly as well. Eleven companies were acquired for a total value of $798 million, compared with $2.5 billion from 15 deals in the third quarter of 2007. Year-to-date, 38 companies were acquired for $2.9 billion, compared with 43 companies for $6.5 billion.
The business and financial services category, which had been gaining steam the past couple of years, showed little signs of life in the third quarter. Just three companies produced $160.8 million, compared with 22 companies and $2.4 billion a year ago. Deals for the year-to-date period fell to 28 from 49, while the total value actually rose to $5.6 billion from $5.2 billion due to a strong showing in the first quarter this year.
The Wall Street Journal reports that a total of 119 companies worldwide braved the rocky stock markets during the latest three-month period, raising $7.8 billion in all, according to Dealogic. The number of deals is less than half the 241 offerings that raised $33.3 billion in the second quarter and one-third the 364 IPOs that raised $49.3 billion in the third quarter of 2007, and the decline in the amount of cash raised is even more dramatic.
It is the fewest deals in a quarter since Dealogic began tracking IPOs in 1995, and the least money raised through IPOs since the second quarter of 2003.
Technorati Tags: (RAX), Add new tag, financial-services, Healthcare, information-technology, IPO, mergers and acquisitions, Rackspace, venture-capital
The health care plans proposed by John McCain and Barack Obama come under scrutiny by the Tax Policy Center and Health Affairs. The Wall Street Journal offers a summary of the two critiques:
“Republican presidential candidate John McCain’s health-care plan would make only a small dent in the ranks of the uninsured, at best covering about five million more people, two new reports conclude. Democratic nominee Barack Obama would cover more people — eventually adding about 34 million, according to one of those reports, by the nonpartisan Tax Policy Center.”
Sen. Obama’s plan would be costly, the center concluded: $1.6 trillion over 10 years. Sen. McCain’s would cost nearly as much: $1.3 trillion over the same span. The center doesn’t give either campaign credit for initiatives to reduce the cost of health care.
Writing in Health Affairs Joseph Antos, Gail Wilensky and Hanns Kuttner say the Obama plan amounts to a significant amount of new regulation, driving up the cost of insurance. In another Health Affairs article, Thomas Buchmiller, Sherry A. Glied 2, Anne Royalty and Katherine Swartz argue that higher administrative costs in the open market will make coverage more expensive and less generous under the McCain plan.
Also in Health Affairs, Mark V. Pauly combines elements of both plans to create a compromise proposal:
“Useful combinations include the presence of both public and private options and a system of credits that are more generous for lower-income households (Obama) and creation of a system of public subsidies that is incentive-neutral across individual and group insurance, curtailment of the current tax subsidy to high levels of coverage for high-income households, and the use of targeted high-risk pools and guaranteed renewability rather than community rating (McCain).”
Technorati Tags: health-insurance, Healthcare, mcc, obama, presidential-election
Forrester Research expects “serious gaming” - the use of games and gaming dynamics for non-entertainment purposes - to take off in the next seven years.
In a new report It’s Time to take Games Seriously, Forrester cites the rise of “Technology Populism,” the greening of IT, and the emergence of “millennials” born between 1980 and 2000 as factors driving the trend.
Michigan State University offers a master’s in serious game design and Coventry University in the UK houses the Serious Games Institute.
However, to achieve widespread adoption, the industry must deal with five issues: 1) what games should be called; 2) how slick the presentation should be; 3) how users should interface with the games; 4) how to determine ROI; and 5) determining if the technology has any limitations.
In Forrester’s view:
- Military and defense will provide developers with a place to innovate.
- Healthcare and emergency response will embrace large-scale games.
- Universities will become competition to game developers.
- Enterprises will seek to make games a part of work.
Forrester categorizes vendors vying for serious games business into four types:
1. Traditional video game companies such as Zombie and Blitz Game Studios.
2. Serious games vendors such as Virtual Heroes and PIXELearning.
3. Stalwart software giants, led by IBM (NYSE: IBM) and Microsoft (NASDAQ: MSFT).
4. Multimedia companies such as C2 Creative and Red Knight Learning.
Technorati Tags: Defense, gaming, Healthcare, military, universities
The Tax Policy Center has updated its analysis of the fiscal impact of the tax proposals of Presidential candidates Senators John McCain and Barack Obama. In both cases, the impact on the national debt would be greater than under the Center’s previous model.
Senator Obama’s plan as described by his economic advisers would increase the debt by about $3.4 trillion by 2018; Senator McCain’s plan would increase it by $5.0 trillion.
And the health proposals and campaign promises not in the official descriptions could increase the costs still further. This compares with increases of $3.3 trillion and $4.5 trillion respectively in the Center’s previous analysis.
Both candidates claim, however, that they will reduce spending below the Congressional Budget Office’s baseline projection used by the Center, which would shrink the deficits.
Although both candidates have at times stressed fiscal responsibility, their specific non-health tax proposals would reduce tax revenues by an estimated $4.2 trillion (McCain) and $2.8 trillion (Obama) over the next 10 years.
These numbers are down slightly from $4.5 trillion and $3.3 trillion estimated earlier. Both candidates argue that their proposals should be scored against a “current policy” baseline instead of current law. Against current policy, Senator Obama’s proposals would raise $800 billion ($700 billion earlier) and Senator McCain’s proposals lose $600 billion, unchanged from earlier.
The Center notes that details on many parts of the plans are lacking so estimates are based on assumptions.
The new analysis adds a ”very preliminary” estimate of the economic impact of the candidates’ health plan proposals. Under the Center’s assumptions, if the plans took effect in 2009, the McCain plan would cost about $1.3 trillion over ten years and the Obama plan would cost about $1.6 trillion.
Technorati Tags: Healthcare, presidential-election
Switzerland’s move in the 1990s to a consumer-driven universal health care system could serve as a model for the US as it contemplates reform in the next Presidency. However, the Swiss system can be improved upon with less regulation and more consumer choice, Oxford Analytica says in a new report Swiss health system offers key lessons.
Key elements of the Swiss system:
Insurance coverage is mandatory – compliance is enforced by heavy fines and forced enrolment. This ‘compulsory insurance’ provides a safety net for the poor and protects people from health-related financial risks.
Health insurance is supplied privately - Insurers must offer a basic coverage model that is compulsory for all residents, are not allowed to make a profit on compulsory insurance and cannot refuse any applicant.
Insurers cross-subsidise the compulsory plans with ‘complementary insurance’ – offered as a top-up to the compulsory coverage for things like dental care and private hospital rooms — for which premiums can be risk-adjusted for age, gender and history.
Insurers compete on deductibles, complementary plans and managed care schemes.
Switzerland has generally avoided quality, access and provider compensation concerns associated with a single-payer system (such as the UK National Health Service), while providing universal coverage at a much lower cost compared to the US.
Although Switzerland spends a considerable amount on healthcare, this is still far less than the US figure (11.3% of GDP versus 15.3% in 2006). Swiss spending per capita, approximately 4,300 dollars in 2006, was comparable to what Norwegians and Luxembourgers spend, but was far lower than the approximately 6,700 dollar US outlay.
In addition, because insurance is bought by individuals and not through an employer, Swiss firms are unaffected by rising healthcare costs. This offers a distinct advantage over the current US model in which companies, which shoulder much of the cost of health insurance, are struggling to cope with rising health insurance premiums.
However, the Swiss system has had some problems, including ineffective cost containment and overregulation.
Technorati Tags: health-insurance, Healthcare
The application of web 2.0 technologies is now driving far-reaching changes in healthcare systems in the UK, USA and Europe, a new research report says. Web 2.0 in the Health Sector: Industry Review with a UK perspective concludes that new applications based on social health networks and content generated by health service users themselves - such as reviews of doctors and hospitals - will rapidly evolve to challenge existing healthcare systems and create new ways of delivering healthcare.
The research report, produced by e-Health Insider, details how participatory networked web 2.0 technologies - exemplified by Facebook, YouTube and Wikipedia - are being applied to healthcare.
The report argues that “e-health 2.0” will first and foremost be consumer-led. “Health is consistently one of the most searched for subjects online. The application of web 2.0 technologies into health is already challenging traditional doctor-patient relationships and beginning to place far greater power in the hands of consumers. These changes are likely to be rapid and may prove highly disruptive.”
The 108-page research report states that a wide range of applications have already been developed and are in use in health, with early signs of a groundswell of participation in the traditionally conservative healthcare sector.
Though important, this is not just about user-generated content through social networking tools, Wikis, blogs, video clips, or mash-ups. Web 2.0 technologies are now being used for new interactions between patients and providers.
Twenty e-Health 2.0 companies and organisations leading this fast emerging sector are profiled through questionnaire and follow-up interviews. The profiles provide a broad cross section of the wide range of e-health 2.0 applications already available. Organisations profiled are drawn from the US, UK, India and Germany, and include BioWizard, DailyStrength, Dooox, Ehealthopinion, HealthSpace, HealthVault, Healthwise, Jooly’s Joint (MS Webpals), MEDgle, MedHelp ,MedTrackAlert, NHS Choices, Patient Opinion, PatientsLikeMe, Patients Talking, RateMDs, RateMyHospital, RightHealth by Kosmix, SugarStats and Who Is Sick.
It concludes that although at an early stage an e-health 2.0 revolution is now underway, and makes a series of recommendations for healthcare providers and policy makers. The report can be purchased here.
Technorati Tags: Healthcare, Web-2.0