As inflation continues to spiral upward at multi-decade highs and with the U.S. economy now in recession…
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Amid Recession and High Inflation, Groups Like the "National Consumer Law Center" Seek to Narrow Rather Than Expand U.S. Consumer Lending Options

As inflation continues to spiral upward at multi-decade highs and with the U.S. economy now in recession, maintaining an "all of the above" array of lending options for American consumers becomes more and more important.  Unfortunately, activist groups like the "National Consumer Law Center" aim to do the opposite and limit rather than expand consumer options.

For a sense of consumers' growing desperation, consider a Federal Reserve report on exploding credit card debt, as highlighted by Steve Cortes:

How have consumers dealt with these skyrocketing prices? The simple answer, unfortunately: via credit cards, particularly for working-class households. Just last week, the Federal Reserve Bank of New York issued a damning report on this credit binge for consumers, into a pronounced economic…[more]

August 18, 2022 • 06:06 PM

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Detroit’s ObamaCare Bailout Could Bankrupt the Young and Healthy Print
By Ashton Ellis
Tuesday, July 30 2013
If cities start dumping hundreds of thousands of older Americans into the exchanges, premiums will spike and young healthy people will stay away in droves.

With the Obama administration gearing up to spend $700 million on an advertising blitz to convince the young and healthy to sign-up for insurance under ObamaCare, cash-strapped cities like Detroit are emerging as the biggest obstacle.

The reason: Tens of thousands of retired public employees are owed billions in lifetime health care coverage.

In the Motor City alone, about 19,000 retired public employees are owed an estimated $5.7 billion in lifetime health benefits.

Nationwide, health care legacy costs for cities run north of $126 billion, according to a study by the Pew Charitable Trusts. The problem is that only around 6 percent of these guaranteed benefits are actually funded.

The chasm between union promises and fiscal reality is forcing cities to consider alternatives to raising taxes or slashing benefits. Thanks to a perverse incentive embedded in ObamaCare, they may have found one.

As currently understood, the text of ObamaCare does not treat the health benefits of retirees any differently than those of workers still on the job. In this area, there is also no important difference between public or private employers. By Detroit’s logic, that means the city is free to reduce or eliminate its health coverage agreement with retirees in order to get out of bankruptcy, just as a private employer is.

Retirees under the age of 65 – that is, those who don’t yet qualify for Medicare – would be transferred to Michigan’s federally operated ObamaCare insurance exchange. Families making less than 400 percent of the federal poverty level would qualify for federal subsidies to help pay for their annual premiums.

If such shifts are successful, the savings to financially squeezed cities are substantial. Last year Detroit spent $177 million on retiree health benefits, but expects that to drop to $28-40 million a year by shifting up to 7,500 people to the ObamaCare exchange. Chicago Mayor Rahm Emanuel, President Barack Obama’s Chief of Staff when the health law passed, has already announced that his city plans to save even more money by moving 30,000 public employees onto Illinois’ exchange.

Other municipalities are expected to follow suit if these Democratic strongholds are allowed to unload billions of local financial obligations onto the federal treasury.

And there’s only one group that can stop them: young healthy people.

In order for ObamaCare’s insurance exchanges to function properly, each state’s risk pool must be filled with lots of people who will pay for health insurance but not really use it. Young healthy people are already one of the largest cohorts of uninsured Americans, and the one most valuable to the Obama administration’s efforts to make the exchanges financially viable.

From the liberal perspective, the danger is this: If not enough young healthy people enroll in ObamaCare exchanges, the system’s entire cost structure will balloon out of control as older Americans with expensive health needs use more services than their premiums pay for. 

Already, the Obama administration is worried that masses of the young and healthy will opt to pay the one-time $95 penalty rather than spend $200-300 a month on health insurance. If cities start dumping hundreds of thousands of older Americans into the exchanges, premiums will spike and young healthy people will stay away in droves.

That’s why the future of ObamaCare’s solvency may hinge on a $700 million dollar advertising campaign launching in August. The White House plans to use a combination of Hollywood celebrities and community organizing tactics on a massive scale to convince the young and healthy to participate in a program designed to benefit them the least.

With Republicans divided on whether there is a viable way to defund ObamaCare before it goes into effect, maybe the best way to get the same result is to show how bad a deal it is for young and healthy Americans.

Quiz Question   
How many U.S. Presidents have donated virtually all their presidential salaries to various causes?
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Notable Quote   
 
"The surest sign that public policies are simply virtue signals is when the messages don't cost anything. The easiest way to tell when that signal starts to fail is to watch politicians flounder as the costs start to rise and voters demand relief. ...Changes like this happen when voters realize the old virtue signals actually entail serious costs -- and that they will have to pay them. That is exactly…[more]
 
 
—Charles Lipson, the Peter B. Ritzma Professor of Political Science Emeritus at the University of Chicago
— Charles Lipson, the Peter B. Ritzma Professor of Political Science Emeritus at the University of Chicago
 
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