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Home Equity Equals an Oxymoron

I wish this started with the Bush Adminstration, but it didn’t. This started in earnest during the Clinton Administration. Not only was everyone supposed to be able to own a home, those Americans who own homes were sitting on a “gold mine.” Almost instantly your home transformed from a long-term investment into your own private piggy bank which you can raid at any time for any reason. You remember the commercials. Home equity loans were as easy as signing your name. You could use them for anything, including vacations, buying a new boat or a new car, etc…

While there should be no surprise to anyone that home equity loans are defaulting an alarming rate. Americans simply don’t have the money. With home values continuing to decline, the equity behind these home equity loans are also falling. Billions of dollars are evaporating.

Our homes were never designed to be our own ATM machine.

From NYT:

During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and the collateral in the homes backing the loans has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up. (more…)

By |2010-08-12T06:38:38-04:00August 12th, 2010|Bush Administration, Economy|Comments Off on Home Equity Equals an Oxymoron

Conservative solutions for healthcare reform

I know this sounds like an oxymoron, but stay with me. Joe writes, “…common sense health insurance reform will cost the government little to nothing.” I always liked these common sense solutions. They make me smile. The reason I smile it is that if they were so simple and easy we would’ve tried them already. Congress has been desperately looking for something simple and easy to try for the last 25 years. During this time both Republicans and Democrats have controlled the House and the Senate and could’ve passed “common sense” solutions. Especially, especially if those common sense solutions didn’t require insurance companies or pharmaceutical companies to lose money. Congress would have been all over it.

1. Allow people to band together to buy group health insurance without being an employee-based group.

This sounds nice. You have to find a way to get millions of people to band together, not just a few. As far as I know, Americans have not banded together to buy gas or to buy groceries. Small bands of Americans (a couple thousand) would be almost the same as a small business and its employees. The reason any given small business has stopped covering employees, as a rule, is cost. There’s no way a small band of Americans is going to be able to figure out how to decrease the cost. Now, the exception would be small bands of young healthy Americans. They could easily band together and cover themselves for little or nothing. Basically, this is Kent Conrad’s idea, which has been thoroughly vetted. This is about co-ops. Co-ops will not be competitive because they don’t have the numbers to negotiate drug prices and fees for service.

2. End exemptions for a self-insured plans.

If we are going to end exemptions, why isn’t that the case in the healthcare exemption? The benefit of health insurance is not taxed. Our treasury loses $110 billion every year because of this. This seems to be a much fairer solution, don’t you think?

3. Standardized insurance forms and information systems.

This will cost millions. It will cost insurance companies and doctors’ offices and hospitals millions of dollars to change from what they have to something else. Who’s gonna decide what the standard is? Clearly, we’re not gonna trust the government to do that, so we are going to wait for business to come up with a committee to do this? Expect a decision in three to four years… and a voluntary implementation of this will never happen. There’s no incentive for business to do this. Unless you want to pass regulations — no way. Conservatives hate regulations.

4. End cost shifting.

Cost shifting doesn’t end. Just because you tell them to stop it, doesn’t mean it will end. Hospitals and doctors have incentives to continue cost shifting. They get paid. Personally, as a physician, I’ve been down this road, where we “aggressively” go after those without money and those who don’t pay. The bills simply never get paid off. They end up spending a lot of money trying to track down people who have moved out of state. They end up spending a lot of money on people who are paying $25 and $50 a month on bills that are $50,000 and $100,000 or more. Neither hospitals nor physicians will willingly take this hit.

Remember, we are obligated to provide medical care for those people who are dying. This isn’t like a car dealership. No matter how badly you want a car, if you don’t have cash or financing you don’t get that car. If you come in to the emergency room because of a heart attack or a bleeding ulcer, we take care of you. This is the way it should be. It also should be that we get paid for the services that we render. How we get paid by those who don’t have money to pay is a question that society needs to answer.

So far, none of the suggestions that have been made by some conservatives that I’ve reviewed here amount to any significant cost savings. None of the suggestions will control costs. With healthcare costing $2.2 trillion in 2007, I’m sorry to say that these solutions are weak at best.

By |2009-12-13T02:21:33-04:00December 13th, 2009|Healthcare|Comments Off on Conservative solutions for healthcare reform
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