Talk Back

This is a column by James Moore and Scott Mather of PIMCO.

In the Fed’s zeal to try to stimulate the market through a retread of the so-called Operation Twist, this nation’s central bankers seem to have stepped into a realm where No Good Deed Goes Unpunished. In addition to the long bond dropping in yield 40 basis points in the wake of the announcement that the central bank will buy long-term Treasurys, broad equity markets have dropped some 6%. Some sectors, notably financials, have fallen even further.

That the patient has responded violently to the medicine of Dr. Bernanke and team reflects the realization that the cure may be worse than the disease. As we near the zero bound for interest rates, the usual rules do not apply–the second order side effects now dominate and cause more harm to the patient than good.

In its attempt to stimulate borrowing by making long-term money cheap, the Fed has harmed large swaths of savers. A look at three groups in particular proves instructive: pension plans, life insurance companies, and households saving both inside and out of 401(k)s. Continue reading…

By Daisy Maxey 
A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–The retirement guarantees provided by annuities are more important to investors than ever, advisers say, even as many advisers still avoid using them in clients’ portfolios.

As a solution, some advisers say the insurance companies that offer annuities need to simplify their products, help educate investors and advisers and battle the perception that they are too costly.

In the wake of the recent downturn, which decimated some portfolios, investors understand the importance of annuities in a way they hadn’t before, said Doug Lockwood, an independent adviser, certified financial planner and president of Harbor Lights Financial Group in Manasquan, N.J. The products “play a more important role in people’s lives; they can touch it and feel it now, while they couldn’t before.”

Nevertheless, Lockwood says annuities aren’t a major part of his business. He places clients in annuities on a case-by-case basis, using them as a diversification tool. Advisers would be more comfortable using annuities if they were more streamlined and transparent, and the companies need to do a better job of explaining them, he says.

Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Government is broken. Nothing demonstrates this better than health care.

Federal, state and local governments are broke because spending on Medicare, Medicaid and other health programs is rising faster than the economy is growing and than politicians can raise taxes.

Health care is too expensive.

In the U.S., health care swallows 18% of the $15 trillion GDP, and the government foots nearly half the bill. In nations with comparable per-capita incomes–France, Germany and Canada–health care eats 12%.

The U.S. system, emphasizing a regulated private market, does some things better–quicker access to specialists, for instance–but other systems, with more state participation, have strengths, including better access to general practitioners and citizens that don’t fear losing their homes to illness.

The even bigger, hidden costs are the high-quality jobs businesses can’t create.

Continue reading…

Thirty-two physicians and company owners and executives have been indicted for schemes to submit more than $16 million in false Medicare claims, the federal government said, in the latest step to root out fraud in the government-run health-care program.

A month ago, 61 people were indicted for allegedly submitting more than $150 million in false claims.

Medicare fraud has long been a criticism of the program, with its size in part a factor in the ability to “game the system.” More than $800 billion is spent annually on Medicare and Medicaid, the joint federal-state program for the poor, and by some estimates more than $60 billion each year is lost to fraud.

Continue reading…

By VICTORIA E. KNIGHT
A DOW JONES NEWSWIRES COLUMN

NEW YORK — Waiting for sweeping health-care reforms may not be the best strategy for small businesses combating the rising costs of insurance.

While President Barack Obama is pursuing changes designed to provide broader access to coverage, battle lines in Congress already are being drawn and the changes could be some way off.

There are options worth considering now, including signing up with professional employer organizations that offer large group health coverage. These PEOs use a co-employer arrangement to provide services in human resources, such as paying wages, and in benefits, such as 401ks and various types of insurance.

Employees of a small business with, say, 20 workers can join with co-employees in the PEO to enroll in a health plan, using their larger numbers as leverage to negotiate lower premiums and more benefits.

Continue reading…