Category Archives: Finance

State of the Union: Millennial Dilemma

Source: Stanford Center on Poverty and Inequality, May 2019

The annual Poverty and Inequality Report provides a unified analysis that brings together evidence across such issues as poverty, employment, income inequality, health inequality, economic mobility, and educational access to allow for a comprehensive assessment of where the country stands. In this year’s issue, the country’s leading experts provide the latest evidence on how millennials are faring.

Contents include:

Executive Summary
David B. Grusky, Marybeth Mattingly, Charles Varner, and Stephanie Garlow
With each new generation, there’s inevitably much angst and hand-wringing, but never have we worried as much as we worry about millennials. We review the evidence on whether all that worrying is warranted.

Racial and Gender Identities
Sasha Shen Johfre and Aliya Saperstein
The usual stereotypes have it that millennials are embracing a more diverse and unconventional set of racial and gender identities. Are those stereotypes on the mark?

Student Debt
Susan Dynarski
Often tagged the “student debt generation,” millennials took out more student loans, took out larger student loans, and defaulted more frequently. Here’s a step-by-step accounting of how we let this happen.

Employment
Harry J. Holzer
Labor force activity has declined especially rapidly among young workers. The good news: We know how to take on this problem.

Criminal Justice
Bruce Western and Jessica Simes
The imprisonment rate has fallen especially rapidly among black men. Does this much-vaunted trend conceal as much as it reveals?

Education
Florencia Torche and Amy L. Johnson
The payoff to a college degree is as high for millennials as it’s ever been. But it’s partly because millennials who don’t go to college are getting hammered in the labor market.

Income and Earnings
Christine Percheski
When millennials entered the labor market during the Great Recession and its aftermath, there were uniformly gloomy predictions about their fate. Does the evidence bear out such gloomy predictions?

Social Mobility
Michael Hout
Millennials have a mobility problem. And it’s partly because the economy is no longer delivering a steady increase in high-status jobs.

Occupational Segregation
Kim A. Weeden
Are millennial women and men working side by side in the new economy? Or are their occupations just as gender-segregated as ever?

Poverty and the Safety Net
Marybeth Mattingly, Christopher Wimer, Sophie Collyer and Luke Aylward
Millennial poverty rates at age 30 are no higher than those of Gen Xers at the same age. But this stability hides a problem: Millennials are replacing a falloff in earnings with large increases in government assistance programs.

Housing
Darrick Hamilton and Christopher Famighetti
Housing reforms during the civil rights era helped to narrow the white-black homeownership gap. But those gains have now been completely lost … and the racial gap in young-adult homeownership is larger for millennials than for any generation in the past century.

Social Networks
Mario L. Small and Maleah Fekete
Millennials are not replacing face-to-face networks with online ones. Rather, they’re a generation that’s found a way to do it all, forging new online ties while also maintaining the usual face-to-face ones.

Health
Mark Duggan and Jackie Li
It might be thought that, for all their labor market woes, at least millennials now have health care and better health. How does this story fall short?

Policy
Sheldon Danziger
A comprehensive policy agenda that could help millennials … and other generations too.

Do prices vary with purchase volumes in healthcare contracts?

Source: Robert B Handfield, Jaikishen Venkitaraman, Shweta Murthy, Journal of Strategic Contracting and Negotiation, OnlineFirst, April 4, 2019
(subscription required)

From the abstract:
Hospitals are facing severe increases in the cost of clinical supplies, and a common strategy is to drive economies of scale achieved by hospital consolidation. The supply strategy of “volume leveraging” involves sourcing through contracts with Group Purchasing Organizations (GPOs) for commercial distributors and manufacturers of medical products. This study seeks to document the empirical benefits associated with volume leveraging, through analysis of purchasing data from three large hospitals. The dependent variables include a number of factors that are used to justify volume leveraging approaches, yet the study finds no significant explanatory factors that determine price variation related to the volume purchased. Interviews with physicians and clinicians suggest that poor data quality leads to lack of transparency, and an inability to aggregate volumes across inventory SKUs may be preventing volume-based cost savings from materializing. The results also suggest that lack of transparency results in low levels of utilization, which increases costs.

Alexander’s Loan-Repayment Overhaul

Source: Andrew Kreighbaum, Inside Higher Ed, February 19, 2019

Proposal to automatically deduct loan payments as a share of borrowers’ paychecks promises big improvements but raises questions over some new complications, too.

Student advocates have for years complained about the complex set of options borrowers must navigate to repay their student loans. Student loan borrowers are faced with a dizzying nine repayment plans based on their income, in addition to a standard 10-year loan-repayment plan.

There’s a growing consensus that Congress should reduce those options to one income-based option on top of the standard plan.

Senator Lamar Alexander, the chairman of the Senate education committee, would go one step further, calling for loan payments to be automatically deducted from borrowers’ paychecks. ….

…. While the proposal to reduce the myriad repayment options for borrowers already has broad support among higher ed interest groups, getting buy-in for making student loan payments work more like payroll taxes is more uncertain.

Jessica Thompson, director of policy and planning at the Institute for College Access and Success, said streamlining the repayment plans available to borrowers is “an overdue change.” But she said paycheck withholding for loan payments is “in reality a lot more complicated than it sounds.” ….

Emerging Iterations on State Free College Policy in the 2019 Legislative Sessions

Source: Sarah Pingel, Education Commission of the States, January 31, 2019

State legislatures are officially in full swing, with 44 states plus the District of Columbia in session. At Education Commission of the States, we’re cleaning our glasses and diving into the thousands of pieces of education-related legislation spilling into our inboxes. Not surprisingly, free college maintains its position on state legislators’ minds. We are already tracking 45 pieces of legislation in 19 states plus the District of Columbia…..

Not-for-profit healthcare and higher education – US – New accounting standard for operating leases is credit neutral

Source: Rita Sverdlik, Lisa Martin, Lisa Goldstein, Diane F. Viacava, Susan I Fitzgerald, Kendra M. Smith, Moody’s, Sector Comment, January 23, 2019
(subscription required)

New guidance from the Financial Accounting Standards Board (FASB) related to operating leases took effect January 1. Under the new standard, issuers will include the net present value (NPV) of operating leases on the balance sheet. This change does not affect issuers’ credit quality because our assessments already consider operating leases in a manner similar to the new FASB standard. However, in a few limited circumstances, the accounting change will affect issuers’ compliance with financial covenants in bond and bank agreements and temporarily elevate credit risk.

Health Care Providers’ Credit Quality To Suffer If ACA Lawsuit Ruling Is Not Overturned

Source: S&P Global Ratings, December 17, 2018
(subscription required)

Last week a federal judge in Texas struck down the Affordable Care Act as unconstitutional in a lawsuit brought by 20 state attorneys general. In S&P Global Ratings’ view, if this ruling is not overturned the credit quality of many health care providers, insurers, and states could be hurt….

When Political Mega-Donors Join Forces: How the Koch Network and the Democracy Alliance Influence Organized U.S. Politics on the Right and Left

Source: Alexander Hertel-Fernandez, Theda Skocpol and Jason Sclar, Studies in American Political Development, Advance Access, Published online: October 22, 2018
(subscription required)

From the abstract:
As economic inequalities have skyrocketed in the United States, scholars have started paying more attention to the individual political activities of billionaires and multimillionaires. Useful as such work may be, it misses an important aspect of plutocratic influence: the sustained efforts of organized groups and networks of political mega-donors, who work together over many years between as well as during elections to reshape politics. Our work contributes to this new direction by focusing on two formally organized consortia of wealthy donors that have recently evolved into highly consequential forces in U.S. politics. We develop this concept and illustrate the importance of organized donor consortia by presenting original data and analyses of the right-wing Koch seminars (from 2003 to the present) and the progressive left-leaning Democracy Alliance (from 2005 to the present). We describe the evolution, memberships, and organizational routines of these two wealthy donor collectives, and explore the ways in which each has sought to reconfigure and bolster kindred arrays of think tanks, advocacy groups, and constituency efforts operating at the edges of America’s two major political parties in a period of intensifying ideological polarization and growing conflict over the role of government in addressing rising economic inequality. Our analysis argues that the rules and organizational characteristics of donor consortia shape their resource allocations and impact, above and beyond the individual characteristics of their wealthy members.

Tracking Trump’s Conflicts of Interest – Details and news coverage of the Trump Family’s business and financial dealings

Source: Sunlight Foundation, 2018

This database is part of the Sunlight Foundation’s ongoing “Tracking Trump’s Conflicts of Interest” project, funded by the Lodestar Foundation. As we continue to learn about the First Family’s business holdings, this database will be updated. Learn more about the project or our methodology and download the data. Get involved and help with the updates by contacting us here.

CMS’s proposed changes to outpatient services, if finalized, would hurt hospital margins

Source: Diana Lee, Daniel Steingart, Jessica Gladstone, Jonathan Kanarek, Kendra M. Smith, Peter H. Abdill, Moody’s, Sector Comment, August 8, 2018
(subscription required)

On July 25, The Centers for Medicare and Medicaid Services (CMS) proposed several changes to the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System, which, if finalized, would generally be credit negative for both not-for-profit and for-profit hospitals. Changes include: (1) site neutral clinic visits, (2) expansion of 340B policy changes to off-campus departments of hospitals, and (3) adding certain nonsurgical procedures as covered procedures at ambulatory surgical centers. While on their own, these proposed changes would not be material to overall sector credit quality, the effects would vary by hospital. In general, the proposal to move certain cardiac procedures to ASCs, if finalized and if adopted by clinicians, would likely have the broadest and most significant effect on the hospital sector. Additionally, to the extent that commercial payors follow suit, each of these changes would have more meaningful effects…..