Month: October 2023

How disadvantage became deadly in America

Mary Pat Campbell

Link: https://www.ft.com/content/6d8bad29-3147-44a2-bc61-70f8ceff6c6f?accessToken=zwAGB5lW9184kc9ti60pMUdEotO8YXD4zv9sbw.MEUCIBrMWnKTNAovwoanjaXAlP0CCkAObuApixHcx7P0kp59AiEA9jdxWJNbfckzoDKgEmmH7uFUtPa-vSeZlmAr7O6ilxc&sharetype=gift&token=d188b24b-de79-4e0e-b16a-9b22a4e17e42

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Excerpt:

Much has been made of America’s life expectancy deficit, but focusing on a statistic which is an average for the whole population masks truly staggering disparities at the extremes. For men at the bottom of the US economic ladder, it’s even worse. My calculations suggest the average age of death in that group is just 36 years old, compared with 55 in the Netherlands and 57 in Sweden.

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In most wealthy countries, if you’re desperately unlucky in the longevity stakes, you succumb to cancer before you reach 60. But if you’re unlucky in the US, you die from a drug overdose or gunshot wound by 40. Which brings us again to the most shocking statistic: among the least fortunate 10 per cent of American men, the average age at death is 36.

Looking at different regions within the US paints a similar picture. Conditions such as obesity shorten the lives of rich and poor alike, but the most uniquely American afflictions have steep socio-economic gradients. Wealthy Americans who live in the parts of the country with high opioid use and gun violence live just as long as those who live where fentanyl addiction and gunshot incidents are relatively rare. But poor Americans live far shorter lives if they grow up surrounded by guns and drugs than if they don’t.

Author(s): JOHN BURN-MURDOCH

Publication Date: 13 October 2023

Publication Site: Financial Times

The day the Social Security funding crisis became inevitable

Mary Pat Campbell

Link: https://thehill.com/opinion/finance/4258578-the-day-the-social-security-funding-crisis-became-inevitable/

Excerpt:

What wasn’t inevitable was a funding crisis. In fact, from 1950 to 1971, Congress was able to increase benefits nine times. That changed in 1977 when Social Security Amendments responded to a technical error in 1972 legislation which caused retirement benefits to skyrocket and threatened insolvency by 1979. 

The 1977 law sought to slow the rapid growth in benefits for future retirees. At the time, Congress considered two options. The first, recommended by an expert commission headed by Harvard economist William Hsiao, would link the growth of the initial benefits paid to new retirees to the rate of inflation. The second approach, favored by the Carter administration, would index initial benefits to national average wage growth. 

While differing only in seemingly technical ways, the two approaches had dramatically different effects on Social Security’s long-term finances. Simply put, the Hsiao Commission’s recommendation was fully sustainable under then-legislated tax rates. It would allow, as the commission wrote, “future generations to decide what benefit increases are appropriate and what tax rates to finance them are acceptable.” 

In contrast, the alternative approach of “wage-indexing” initial benefits could not be sustained without substantially higher future taxes. 

The Hsiao Commission bluntly criticized that policy, saying that it “gravely doubts the fairness and wisdom of now promising benefits at such a level that we must commit our sons and daughters to a higher tax rate than we ourselves are willing to pay.” Congress, nevertheless, opted for wage indexing.   

 

Author(s): ANDREW G. BIGGS, JOHN F. COGAN AND DANIEL HEIL

Publication Date: 17 Oct 2023

Publication Site: The Hill

Fired head of Colorado’s public pension system will get a year’s salary — more than $400,000 — as severance

Mary Pat Campbell

Link: https://coloradosun.com/2023/05/17/ron-baker-pera-severance/

Excerpt:

The fired head of Colorado’s $60 billion-plus public pension system will receive a year’s salary — more than $400,000 — as severance, under his contract and because of the way his employment was terminated. 

Ron Baker was fired May 1 by the 16-member Public Employees’ Retirement Association board nearly two months after he went on a leave of absence. 

Neither the board nor PERA has disclosed why Baker was fired, and Colorado Sun attempts over the past several months to contact Baker have been unsuccessful. Emails, texts and voicemail messages to Baker from The Sun, including for this story, were not returned.

Baker will get $412,108.80 in severance because the board terminated his contract without cause. Had he been fired for cause, he wouldn’t have been eligible to collect the severance. 

Baker’s contract says he could only be fired for cause if there was a breach of his employment agreement, for gross negligence, or if he had committed or pleaded guilty or no contest to a felony criminal charge. The contract says he could also be fired for cause for “wilfully engaging in any activity which is contrary to the best interest of the association (for) which activity is uncured by the executive for a reasonable period of time after he receives written notice concerning such activity.”  

Author(s): Jesse Paul

Publication Date: 17 May 2023

Publication Site: Colorado Sun

Ron Baker, the head of Colorado’s public pension system, is fired after two-month leave of absence

Mary Pat Campbell

Link: https://coloradosun.com/2023/05/02/ron-baker-pera-fired/

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Ron Baker, the executive director of Colorado’s Public Employees’ Retirement Association, was fired Monday night by the 16-member board overseeing the state’s $60 billion-plus public pension system. 

Baker’s firing comes nearly two months after he went on a leave of absence. PERA refused to say why Baker went on leave or to say whether his absence was self-initiated or initiated by the PERA board.  

The PERA board convened in downtown Denver on Monday evening for a special meeting to discuss Baker’s employment status. The board immediately voted unanimously to enter a secret executive session, which lasted more than six hours. 

When the board emerged from its closed-door session, Vice Chair Suzanne Kubec made a motion to terminate Baker, which was seconded by Colorado Treasurer Dave Young, who sits on the board. The motion passed unanimously and the meeting adjourned.

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Baker was appointed to be PERA’s executive director in 2018 and made an annual salary of more than $400,000, In January, the PERA board voted to award Baker a 19% performance bonus and increased his salary by 4%, according to meeting minutes.

Author(s): Jesse Paul

Publication Date: 2 May 2023

Publication Site: Colorado Sun

Social Security’s 2024 COLA, While Modest, Could Still Trigger Higher Taxes

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2023/10/13/social-securitys-2024-cola-while-modest-could-still-trigger-higher-taxes/

Excerpt:

And, as Mary Johnson, the league’s Social Security and Medicare policy analyst, highlighted in a call with ThinkAdvisor, there is also widespread concern about what the relatively modest 2024 COLA could mean for the taxes seniors pay on their federal government benefits.

As many as 26% of survey participants who have received Social Security for more than three years reported paying taxes on a portion of their benefits for the first time during the 2023 tax season — i.e., for tax year 2022.

“Because Social Security recipients received an even higher COLA of 8.7% in 2023, we expect more beneficiaries to become liable for federal income taxes on their Social Security benefits for the first time in the upcoming 2024 tax season,” Johnson warned.

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“Up to 85% of Social Security benefits can be taxable when income exceeds certain thresholds,” Johnson explains. “Unlike other parts of the federal income tax code, though, the income thresholds that subject Social Security benefits to taxation have never been adjusted for inflation.”

Author(s): John Manganaro

Publication Date: 13 Oct 2023

Publication Site: Think Advisor

The insurance industry’s renewed focus on disparate impacts and unfair discrimination

Mary Pat Campbell

Link: https://www.milliman.com/en/insight/the-insurance-industrys-renewed-focus-on-disparate-impacts-and-unfair-discrimination

Excerpt:

As consumers, regulators, and stakeholders demand more transparency and accountability with respect to how insurers’ business practices contribute to potential systemic societal inequities, insurers will need to adapt. One way insurers can do this is by conducting disparate impact analyses and establishing robust systems for monitoring and minimizing disparate impacts. There are several reasons why this is beneficial:

  1. Disparate impact analyses focus on identifying unintentional discrimination resulting in disproportionate impacts on protected classes. This potentially creates a higher standard than evaluating unfairly discriminatory practices depending on one’s interpretation of what constitutes unfair discrimination. Practices that do not result in disparate impacts are likely by default to also not be unfairly discriminatory (assuming that there are also no intentionally discriminatory practices in place and that all unfairly discriminatory variables codified by state statutes are evaluated in the disparate impact analysis).
  2. Disparate impact analyses that align with company values and mission statements reaffirm commitments to ensuring equity in the insurance industry. This provides goodwill to consumers and provides value to stakeholders.
  3. Disparate impact analyses can prevent or mitigate future legal issues. By proactively monitoring and minimizing disparate impacts, companies can reduce the likelihood of allegations of discrimination against a protected class and corresponding litigation.
  4. If writing business in Colorado, then establishing a framework for assessing and monitoring disparate impacts now will allow for a smooth transition once the Colorado bill goes into effect. If disparate impacts are identified, insurers have time to implement corrections before the bill is effective.

Author(s): Eric P. Krafcheck

Publication Date: 27 Sept 2021

Publication Site: Milliman