a-reversal-from

Obama to Endorse New Rules to Limit Health-Insurance Premium Increases

by on February 22, 2010

By Nicholas Johnston and Kristin Jensen Feb. 22 (Bloomberg) — President Barack Obama will endorse new rules giving the government power to stop insurance-rate increases it deems unreasonable, as part of a plan to revamp the health-care system, an administration official said. Obama’s proposal, which would give the U.S. Department of Health and Human Services the new authority over insurers, is to be unveiled today. The move is a reversal from months of the White House leaving details of the largest U.S. medical overhaul in more than four decades largely up to congressional Democrats. The president has invited Republican leaders and top congressional committee members to a Feb. 25 meeting at Blair House, across from the White House, calling on them to release a “comprehensive bill” of their own that would cover millions of uninsured Americans and reduce rising medical-care costs . Obama on Feb. 20 urged lawmakers to attend the meeting in “good faith” as he decried “jaw-dropping” insurance-rate increases that he said underscore the need for remedies. On Feb. 9, he singled out for criticism proposed insurance premium increases by a California subsidiary of Indianapolis- based WellPoint Inc . that the company later delayed. In his weekly radio address Feb. 20, he said customers of Anthem Blue Cross of California recently “opened up their mailboxes to find a letter” containing news that the company wanted to raise premiums “by an average of 25 percent, with about a quarter of folks likely to see their rates go up anywhere from 35 to 39 percent.” Widening Concern Obama also expressed concern about similar rate increases that either have been put into effect or are proposed in Michigan, Kansas and Maine. “The bottom line is that the status quo is good for the insurance industry and bad for America,” he said. Obama’s legislative proposal will include the creation of a government panel to set rules for reasonable rate increases, the official said on condition of anonymity ahead of today’s announcement. The proposal, first advanced in legislation introduced by Democratic Senator Dianne Feinstein of California, would create a seven-member Health Insurance Rate Authority to make recommendations on rate reviews and approvals. The members would include consumer representatives, an insurance industry representative, a physician, and experts in health economics, actuarial science, and related fields. It would publish an annual report on insurance-market behavior, the official said. Delegating to States Under the proposal, the health secretary could also delegate enforcement to a state insurance regulator to block the premium hike or order its modification, the official said. Obama is disclosing his legislative proposal on health care after legislation that would require all Americans to have insurance stalled in Congress amid Republican opposition. Republicans have criticized the Democratic legislation, saying it’s too expensive at about $1 trillion over 10 years, that it unfairly forces people to obtain insurance, and will lead to a government takeover of health care. Senate Republican leader Mitch McConnell of Kentucky said yesterday the American people “really want to us to shelve this bill and start over.” “It strikes me as rather arrogant to say, ‘Well, we’re going to give it to you anyway, and we’ll use whatever device is available to achieve that end,’” McConnell said on the “Fox News Sunday” television program. To sidestep Republican opposition, the Democrats may use a procedure called reconciliation, which would require just 51 Senate votes to pass. That may pose a problem because Senate rules require reconciliation measures to only deal with revenue and spending issues, which would mean the bill might have to be stripped down. House and Senate lawmakers were days away from overcoming differences and melding their bills when the Jan. 19 special Senate election in Massachusetts deprived Democrats of the 60th vote they needed to get the new compromise through that chamber. Now, lawmakers are looking to Obama to finish the job. To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net Kristin Jensen in Washington at kjensen@bloomberg.net .

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Obama to Endorse New Rules to Limit Health-Insurance Premium Increases

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Obama Will Endorse New Rules to Limit Health-Insurance Premium Increases

by on February 22, 2010

By Nicholas Johnston and Kristin Jensen Feb. 22 (Bloomberg) — President Barack Obama will endorse new rules giving the government power to stop insurance-rate increases it deems unreasonable, as part of a plan to revamp the health-care system, an administration official said. Obama’s proposal, which would give the U.S. Department of Health and Human Services the new authority over insurers, is to be unveiled today. The move is a reversal from months of the White House leaving details of the largest U.S. medical overhaul in more than four decades largely up to congressional Democrats. The president has invited Republican leaders and top congressional committee members to a Feb. 25 meeting at Blair House, across from the White House, calling on them to release a “comprehensive bill” of their own that would cover millions of uninsured Americans and reduce rising medical-care costs . Obama on Feb. 20 urged lawmakers to attend the meeting in “good faith” as he decried “jaw-dropping” insurance-rate increases that he said underscore the need for remedies. On Feb. 9, he singled out for criticism proposed insurance premium increases by a California subsidiary of Indianapolis- based WellPoint Inc . that the company later delayed. In his weekly radio address Feb. 20, he said customers of Anthem Blue Cross of California recently “opened up their mailboxes to find a letter” containing news that the company wanted to raise premiums “by an average of 25 percent, with about a quarter of folks likely to see their rates go up anywhere from 35 to 39 percent.” Widening Concern Obama also expressed concern about similar rate increases that either have been put into effect or are proposed in Michigan, Kansas and Maine. “The bottom line is that the status quo is good for the insurance industry and bad for America,” he said. Obama’s legislative proposal will include the creation of a government panel to set rules for reasonable rate increases, the official said on condition of anonymity ahead of today’s announcement. The proposal, first advanced in legislation introduced by Democratic Senator Dianne Feinstein of California, would create a seven-member Health Insurance Rate Authority to make recommendations on rate reviews and approvals. The members would include consumer representatives, an insurance industry representative, a physician, and experts in health economics, actuarial science, and related fields. It would publish an annual report on insurance-market behavior, the official said. Delegating to States Under the proposal, the health secretary could also delegate enforcement to a state insurance regulator to block the premium hike or order its modification, the official said. Obama is disclosing his legislative proposal on health care after legislation that would require all Americans to have insurance stalled in Congress amid Republican opposition. Republicans have criticized the Democratic legislation, saying it’s too expensive at about $1 trillion over 10 years, that it unfairly forces people to obtain insurance, and will lead to a government takeover of health care. Senate Republican leader Mitch McConnell of Kentucky said yesterday the American people “really want to us to shelve this bill and start over.” “It strikes me as rather arrogant to say, ‘Well, we’re going to give it to you anyway, and we’ll use whatever device is available to achieve that end,’” McConnell said on the “Fox News Sunday” television program. To sidestep Republican opposition, the Democrats may use a procedure called reconciliation, which would require just 51 Senate votes to pass. That may pose a problem because Senate rules require reconciliation measures to only deal with revenue and spending issues, which would mean the bill might have to be stripped down. House and Senate lawmakers were days away from overcoming differences and melding their bills when the Jan. 19 special Senate election in Massachusetts deprived Democrats of the 60th vote they needed to get the new compromise through that chamber. Now, lawmakers are looking to Obama to finish the job. To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net Kristin Jensen in Washington at kjensen@bloomberg.net .

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Auto Leasing Returns as Production Cuts Spur Record Values for Used Cars

November 13, 2009

By Keith Naughton Nov. 13 (Bloomberg) — Auto leasing, once a cheap way to drive an expensive car, is making a comeback. General Motors Co. and Chrysler Group LLC resumed offering leases to buyers in August and September through their shared financing arm, GMAC Financial Services, after halting the practice as car demand fell in 2008. Ford Motor Co. plans more leasing promotions this year, while Toyota Motor Corp. makes it part of a $1 billion fourth-quarter marketing push. Automakers and finance companies are returning to leasing as it becomes profitable. U.S. used-car prices surged to a record this year as fewer vehicles were traded in at dealerships, letting automakers get better prices for models turned in when leases end. The return of leasing may boost new- car sales after demand fell to an almost three-decade low. “Leasing is coming back,” Jeremy Anwyl , chief executive officer of researcher Edmunds.com of Santa Monica, California, said in an interview yesterday. He predicts the practice will soon account for 20 percent of U.S. auto sales, more than doubling from the first half of 2009. Increased used-car values are “making leasing more attractive,” he said. Higher resale values let automakers offer lower monthly lease payments without taking a loss when they have to sell the car. Ford, which has whittled its lease business to about 5 percent of sales this year from 17 percent in 2007, considers more used-car demand a harbinger of returning sales. Ford, Cadillac Benefit “Leasing is really a critical piece of the business because people who lease have much higher loyalty to your brand,” Jim Farley , Ford’s group vice president of marketing, said in an interview. “This is something the dealers have been asking for for a long time.” The biggest beneficiaries may include luxury brands such as GM’s Cadillac, which generated as much as half its sales from leases before stopping the practice for a year in August 2008. Cadillac sales have fallen 39 percent this year, outpacing a 25 percent slide for the industry, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey. GM resumed leasing for all brands in August and Cadillac had its best month this year in September, with sales down 8.8 percent as the industry slid 23 percent. Cadillac sales fell 22 percent in October, mostly from a 30 percent drop in sales in its CTS sedan model, said Susan Docherty , GM’s U.S. sales chief. “As we get our feet and toes back into leasing, we’ll see the CTS number improve,” Docherty said on a Nov. 3 conference call discussing sales. Luring Buyers Leasing made the difference for insurance salesman Richard Birns. He chose a dark gray, 2010 Cadillac SRX Sept. 26 with a pop-up navigation screen, because of the $673 monthly payment. GM’s offer included a $1,000 rebate on the car with a sticker price of $42,000. “I can get a more expensive car for less money,” said Birns, of Jericho, New York, who previously leased an Audi T7. “I don’t have to worry about getting killed on the trade-in in three years.” Bayerische Motoren Werke AG’s BMW is offering a $349 lease payment for 36 months on the 328i sedan, plus a $1,500 cash rebate. The car’s starting price is $32,850. “One thing that tends to draw showroom traffic is a low lease payment because we can all relate to that,” said Jack Pitney , vice president of marketing for North America at Munich- based BMW. The higher used-car values let finance companies offer lower monthly payments, attracting more buyers, said James Clark, general manager of Automotive Lease Guide, which sets used-car values that serve as an industry benchmark. Record Resale Value Used-car values soared this year as the supply of those vehicles fell because owners held onto cars longer. The Manheim Used Vehicle Value Index rose to its highest level in September since it began tracking that data in 1995. While the index slipped last month, it’s still 13 percent higher than October 2008. The used-car supply will fall 34 percent by 2013 from 2008, Automotive Lease Guide projects. That’s a reversal from December, when used-car values plunged after years of loose leasing practices created a glut, Clark said. As higher gasoline prices reduced demand for SUVs in 2007 and 2008, automakers discounted leases to stoke sales instead of cutting production. Automakers had to sell vehicles returned when leases ended at a loss in used-car auctions. The practices contributed to record losses at Ford in 2008 and GM in 2007, leaving automakers cautious. Leasing will fall to about 15 percent of U.S. auto sales in the fourth quarter, down from 22 percent in 2008’s first quarter, said auto analyst Jeff Schuster , a Detroit-based researcher for J.D. Power & Associates. “This is not the time to jump into the deep end,” said George Pipas , Dearborn, Michigan-based Ford’s sales analyst. “I describe it as jumping into the shallow end.” To contact the reporter on this story: Keith Naughton in Southfield, Michigan at Knaughton3@bloomberg.net

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