The hidden costs of Medicare

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Business Week | By Emily Brandon, U.S. News & World Report

Watch out for these unexpected Medicare costs.

Some of the out-of-pocket costs Medicare beneficiaries face are fairly predictable, such as their monthly premiums, annual deductible and the copays and coinsurance associated with various Medicare services. However, there are other Medicare costs that are far more difficult to discern that could lead to surprise medical bills in retirement. Here are some Medicare costs you might unexpectedly incur in retirement:

During the first 12 months you have Medicare Part B, you can get a free “Welcome to Medicare” preventive care doctor’s visit, and after that retirees are eligible for a free annual wellness checkup. However, depending on what tests or services your doctor orders during this visit, you may still end up with a bill. While Medicare covers a variety of preventive care services with no cost-sharing requirements, if your doctor recommends a test or procedure that isn’t considered preventive or you get a test more often than Medicare covers it, you may have to pay coinsurance and the Part B deductible may apply.

“If the doctor orders a test and it falls under Part B, you could very well have to pay 20 percent of those test costs,” says Allison Hoffman, an assistant professor of law at the UCLA School of Law. However, supplemental plans such as Medigap and Medicare Advantage plans may fill in some of these cost-sharing requirements.

Medicare covers many, but not all, preventive care screenings with no out-of-pocket costs for retirees. However, if a screening test finds something concerning that requires additional tests or services, you will likely face a variety of out-of-pocket costs.

“The copay is reduced to zero for the preventive service, but once that part of the service is no longer preventive, now we are treating something and you are going to hit the 20 percent copay,” says Jack Hoadley, a health policy analyst at Georgetown University. For example, a colonoscopy is covered once every 120 months for most Medicare beneficiaries and typically costs nothing for the recipient. However, if a polyp or other suspicious tissue is discovered and removed during the colonoscopy, you may have to pay 20 percent of the Medicare-approved amount for the doctor’s services and a copayment to the medical establishment where the procedure was performed.

With original Medicare, retirees can expect to pay a Part B deductible, copays and coinsurance amounting to 20 percent of the Medicare?approved amount for most services. There’s no annual limit on what retirees could be expected to pay out-of-pocket. “There are types of situations where out-of-pocket costs can go extremely high,” Hoadley says. “If you have major cardiac surgery, your 20 percent coinsurance could be thousands of dollars or possibly tens of thousands of dollars.” Supplemental insurance policies can protect retirees from these sometimes catastrophically high costs.

You can sign up for Medicare Part B at any time during the seven-month period that begins three months before the month you turn 65. But if you don’t sign up during this initial enrollment period, you might have to pay a late enrollment penalty for the rest of your life. Your monthly Part B premium will increase by 10 percent for each 12-month period you were eligible for benefits but didn’t sign up for them. For example, a retiree whose initial enrollment period ended Sept. 30, 2010, but who didn’t sign up for Medicare Part B until March 2013 will pay 20 percent higher premiums due to the two full years he delayed signing up.

People who are still working after age 65 and are covered by an employer’s group health plan can avoid this late enrollment penalty by signing up for Medicare Part B within eight months of the employment or coverage ending. COBRA coverage and retiree health plans are not considered coverage based on current employment for the purpose of avoiding the late enrollment penalty.

Medigap policies, which are sold by private insurance companies, generally pay for some of the health care services Medicare doesn’t cover. However, you only have a small window in which you are guaranteed the right to buy a Medigap policy. There is a one-time Medigap open enrollment period that begins the first month you’re 65 and enrolled in Part B. It lasts for six months, during which you have the right to buy any Medigap policy sold in your state regardless of your current health. After this enrollment period ends, you may no longer have the option to buy a Medigap policy, or it could cost significantly more.

“If you sign up in that initial period, they can’t look at your whole health history and decide to charge you more because you have had cancer in the past or had heart disease,” Hoffman says. “If you don’t sign up in the initial enrollment period, then they can underwrite you. They can charge you more because of your particular health characteristics.” If you delay enrolling in Part B due to group health coverage provided by an employer, your Medigap open enrollment period begins when you sign up for Medicare Part B.

Medicare Part D also has a late enrollment penalty if you don’t sign up when you are first eligible to do so or you go 63 or more days in a row without prescription drug coverage, and the penalty increases the longer you go without coverage. “If you become entitled to Medicare and you decide you don’t want to sign up for a Part D plan – for example, if you are not taking very many medications, if down the road you get sick and you start needing some medications, you will face a late enrollment penalty unless you have had drug coverage that was at least as good,” says Juliette Cubanski, a Medicare policy analyst at the Kaiser Family Foundation. “It makes sense to sign up for Part D when you are first eligible or when you first lose coverage so as to avoid those late enrollment penalties.”

The late enrollment penalty is calculated by multiplying 1 percent of the national base beneficiary premium ($31.17 in 2013) by the number of months you went without Medicare Part D or other prescription drug coverage after becoming eligible for Medicare, and is then added to your monthly premiums for as long as you have Medicare Part D. For example, a retiree who was first eligible for coverage on May 1, 2009, but elected to delay signing up for a Part D plan until Jan. 1, 2013, and didn’t have other coverage during those 43 months will be charged a monthly penalty of $13.40 in 2013 in addition to her plan’s monthly premium.

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Medicare Part D plans have formularies that list which drugs are covered and the cost-sharing requirements. Some Part D plans also require priorauthorization before you can fill certain prescriptions or might require you to try similar lower-cost drugs before a plan will cover a more expensive prescribed drug. There may also be quantity limits on how much medication you can get at a time.

Most Medicare drug plans have a coverage gap that begins after a retiree incurs $2,850 in prescription drug costs and ends when drug costs reach $6,691 in 2014 and catastrophic coverage kicks in. In the coverage gap, retirees are responsible for 47.5 percent of the cost for brand-name drugs and 72 percent of the cost for generic medications in 2014. “Part D has the famous 'doughnut hole' that is going to be closed, but there’s a sizable liability there for people who have substantial prescription drug costs,” Palmer says. Some Part D plans offer additional gap coverage in exchange for higher premiums. The coverage gap is scheduled to be eliminated by 2020.

Don’t expect Medicare to pick up the tab for a nursing home or many other types of long-term care. Only short-term nursing home stays of up to 100 days after a three-day hospital stay are covered. If you need nursing home care for longer than that, you will be responsible for all costs. “Many people who have a need for long-term care services end up spending down whatever resources are available to them and may, at that point, end up qualifying for Medicaid,” Cubanski says. “While Medicare does not cover long-term care expenses, if someone is permanently living in a nursing home or some other type of assisted living facility, Medicaid does cover some of those long-term care expenses. And people can purchase private long-term care insurance that can help cover long-term care.”

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The hidden costs of bad credit

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| By Nicholas Pell, MainStreet

Your credit rating impacts many aspects of your everyday life. Here's how.

Sure, you know that having bad credit can mean paying more for a car loan or a mortgage. You know that it means you can pay more to use your credit cards. But did you know that people with bad credit also pay more for their car insurance and sometimes even for rent? There are more costs of having bad credit than you might know.

Increasingly, employers are using credit reports to help make decisions of hiring and firing. Randy Padawer, a consumer advocate with Lexington law states that more than half of all major companies are using background checks as part of a pre-employment screening. "I think it's unfair," he says, but quickly adds "it's something that consumers must remember when they're doing something as mundane as paying a credit card bill."

Gail Cunningham, vice president of membership and public relations for the National Foundation for Credit Counseling points out the reason why credit reports are increasingly used in hiring decisions. "Potential employers might view your credit report as an overall reflection of your responsibility."

What's the cost? Tim Lucas, vice president of mortgage at MyMortgageInsider.com, breaks it down. "Say that you have to take a job that pays $10,000 a year less because you have bad credit," he says. "That's $100,000 over ten years." While the math is obvious, what might not be is that, in the case of employment, you might be losing more than you would because of high interest rates on a mortgage.

"Car insurance is a big one," says Lucas, adding that drivers sometimes pay double what they would pay if they had better credit scores. Why are car insurance companies pulling your credit report to see what you should pay? "Car insurance companies assume that if you're not responsible with your finances that you might not be a responsible driver," Lucas says.

It's not just car insurance, either. "All kinds of insurance companies are pulling credit reports," explains Padawer, adding that "There's a correlation between the number of claims filed and the total cost of these claims and a person's credit report."

Perhaps the worst hidden cost of bad credit is your apartment. Padawer points out that "rentals are just about the only thing that isn't on your credit report." This means that you might be the most responsible person in the world when it comes to paying your rent on time, but your landlord will never know it: your rental history appears nowhere on your credit report.

On the other hand, Padawer is quick to point out that "there are almost no landlords who won't want to look at your credit report." To feel comfortable with renting to you, a landlord might charge you a double deposit -- no small fee, especially in a larger, more expensive city like Los Angeles or New York.

Lucas is somewhat less sympathetic. "If someone doesn't pay their credit card bills and is always late with their car payment, there's a good chance that they're going to be late with their rent," Lucas said.

If you decide that you want to own a home, you can almost always expect to pay a higher mortgage bill every month; your interest rates are going to be higher.

While you might know that you're paying higher interest rates because you have bad credit, you might not know the actual cost.

Cunningham advises clients to sit down with all of their bills and look at what the interest rates are on each of them. Then, look at what you're paying in real dollars every month. "This can add up to hundreds of dollars a month," she says.

Your monthly cash flow can be impacted another way: the cost of getting your utilities turned on. People with bad credit have to pay larger deposits to get water, electricity and heat turned on. Cunningham points out that you might even pay more for your cell phone every month because you have to get a prepaid instead of a regular monthly account.

Padawer and she agree that there's a far more insidious cost to having bad credit: the psychic toll. "Debt is a monster that lives with you 24/7," says Cunningham. "It makes it harder to be a good parent, spouse or employee." Padawer mentions some more concrete matters. "Debt and bad credit often lead to depression, bad self-esteem and even divorce."

The message is clear: if you have bad credit, start working to make it better. If you have good credit, maintain it. It's far easier to lose good credit than to gain it back.

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Debate rages over Obamacare, medical costs

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| By Michelle V. Rafter, MSN Money

Newly public data has shed light on wild disparities in the cost of common medical procedures and treatments, which in itself could put pressure on doctors, hospitals and other providers.

When Dr. Jeffrey Rice needed to schedule outpatient foot surgery for his son three years ago, he called the recommended facility to find out what it would cost. The estimate was so high -- $15,000 to $25,000 -- that Rice asked the surgeon for a second option. The cost for the same one-hour procedure at an outpatient surgery center in a slightly more convenient location: $1,500.

Rice's experience isn't an anomaly. Costs for identical medical procedures can vary by thousands of dollars from clinic to clinic, city to city and state to state, according to federal data and other sources.

With the next phase of the Affordable Care Act kicking in Oct. 1, when individuals can begin enrolling in state-run health exchanges, debate rages over whether health care reform will do anything to rectify such pricing disparities or help lower costs.

The 2010 law, widely known as Obamacare, is meant to address the availability and cost of health insurance, not necessarily the cost of specific services. Still, supporters believe that because it paves the way for universal health care coverage, the resulting larger pool of insured patients should lower costs in the long run. Supporters also believe the high-deductible health plans that health exchanges and a growing number of employers are offering will make consumers more cost-conscious and put downward pressure on health care prices.

Detractors say the number of uninsured who will get coverage under Obamacare is not large enough to affect the cost of health care and that expanded coverage of preventive care and other services will contribute to higher prices.

"Anybody who says they know how it's going to affect costs is smarter than me, or they're guessing," says Dr. Peter Ubel, a medical doctor, author and a professor of business public policy and medicine at Duke University. "This is the kind of stuff that will unfold over the next few years."

The uncertainties over what could happen haven't slowed a movement to make health care costs more transparent, and some argue that holding doctors, hospitals and other providers more accountable for what they charge will on its own help drive down costs.

Today, what hospitals or doctors charge isn't determined by quality of care but by market power, says Rice, who is chief executive at Healthcare Blue Book, a medical care cost-comparison website. "If you're an academic medical center with a good brand name you'll be paid more than an imaging center. If you're a hospital chain you might be paid more than an individual hospital," he says.

Last May, the federal government's Center for Medicare and Medicaid Services helped shine a light on costs by publishing for the first time Medicare charges for the 100 most frequently billed discharges at 3,000 U.S. hospitals. For example, bills for treatment of chest pain at 10 Bay Area hospitals in 2011 ranged from an average $21,044 at Chinese Hospital in San Francisco to $53,408 at Seton Medical Center in Daly City. The average Medicare reimbursement for the treatment ranged from $4,575 to $7,795.

Since May, websites such as NerdWallet and OpsCost have created user-friendly services that make it easy to browse the government data. One Oklahoma mom used OpsCost to contest a bill for her daughter's emergency room visit that included a $260 charge for acetaminophen, the pain reliever better known by the brand name Tylenol, says OpsCost co-founder George Kalogeropoulos. A Tampa man whose family doesn't have insurance used it to find a hospital for his wife to deliver their baby.

"It's also been very surprising how many hospital CFOs and billing experts have been asking us for data about their competitors, other hospitals near them," Kalogeropoulos says. "Generally speaking, there is a lot of unease in those circles as prices have been set in a fairly irrational and arbitrary way for so long, and these folks know that a storm is brewing with the push for transparency."

Other tools have popped up to help people pick low-cost health care providers. Healthcare Blue Book supplies pricing information found in the health care section of Angie's List, a subscription-based consumer review website. Healthcare Blue Book also licenses its database, which is compiled from commercial and private insurance data, to insurance carriers to share with their corporate clients' employees who can use it to choose providers.

But prices can vary widely even within an insurer's network of approved providers, Rice says. "Patients have to shop the network, that's the biggest message that I can get out," he says. "Otherwise, you don't find out until after, and pay several thousand dollars too much."

In another sign of transparency, some hospitals are starting to advertise their fees. In August, the Surgery Center of Oklahoma posted prices for common procedures, including $1,925 for putting a cast on a broken arm and $6,990 to repair a knee ligament. North Carolina Gov. Pat McCrory recently signed a bill requiring hospitals to disclose prices for 140 common medical procedures.

"More states are starting to put requirements out there for hospitals to post prices," says Ubel, the Duke University professor. "That's going to change the culture of medicine almost as much as anything else. That's not from Obamacare, it's more just everyone realizing they have to look at why they're spending so much money on health care."

One way that Obamacare could eventually help drive down health care costs is if hospitals are motivated by it to join accountable care organizations, or ACOs, groups of service providers who band together to offer coordinated care at lower prices. "Obamacare gives (providers) incentives to do this, and if that has a big effect on how medical practice works, it could lower costs," Ubel says.

According to Kaiser Health News, more than 428 hospitals have joined ACOs, serving an estimated 4 million Medicare recipients and about 14% of the U.S. population.

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Burger costs rise with beef supply at 21-year low

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| By Elizabeth Campbell, Bloomberg

Surging feed costs spurred ranchers to cut herds, leading to higher costs for buyers and record prices for consumers.

U.S. beef production is plunging to a 21-year low after surging feed costs spurred ranchers to cut herds, signaling record prices for consumers and higher costs for buyers from McDonald's Corp. (MCD) to Ruth's Chris Steak House.

Production in the U.S. will decline 4.9% to 10.93 million metric tons in 2014, retreating for a fourth year, the government says. The herd on July 1 was the smallest for that date since at least 1973, according to the average of four analyst estimates compiled by Bloomberg. The most-active cattle futures will rise 6% to $1.33 a pound next year, a level last seen in February, the median of nine forecasts shows.

Ranchers still haven't recovered from last year's drought that sent grain costs to a record and spurred them to slaughter more cattle. While feed costs are now slumping as U.S. farms prepare to reap the biggest corn crop ever, it takes more than two years to raise enough animals to expand supply. Retail ground-beef prices in June were up 13% from a year earlier and near a record set in January.

"The drought has really affected the cow herd," said Tucker Hughes, a 65-year-old rancher in Stanford, Mont., who predicted the number of animals he retains for breeding may drop as much as 20% over the next two years. "Some people had to downsize their herds. When you get these droughts, you have to reduce your numbers."

Traders are anticipating that this year's 5.1% drop in futures to $1.25525 a pound on the Chicago Mercantile Exchange will reverse. Their prediction would take prices close to the record of $1.35175 reached Jan. 11. Futures averaged about $1.249 since the start of January, heading for the highest-ever annual level.

The Standard & Poor's GSCI Agriculture Index of eight commodities fell 17% this year, and the MSCI All-Country World Index of equities rose 10%. Treasuries lost 2.6%, the Bloomberg U.S. Treasury Bond Index shows.

McDonald's, the world's largest restaurant chain, probably will pay 2.5% to 3.5% more for beef this year, according to Jack Russo, a St. Louis-based analyst at Edward Jones & Co. That's more than the forecast 1.5% to 2.5% increase in total commodity costs that Chief Financial Officer Peter Bensen predicted on a July 22 conference call.

While the Oak Brook, Ill.-based company will consider charging more for food, competition and price-sensitive consumers mean "we have less pricing power in 2013 versus a year ago," Bensen said.

Wholesale beef prices dropped 12% since reaching a record $2.1137 a pound on May 23, as the acceleration in slaughtering boosted supply, government data show. Prices probably will exceed that peak next year, said Ron Plain, a livestock economist at the University of Missouri in Columbia.

Global meat prices rose 2.1% in June, the most in nine months, while the overall cost of food dropped 0.9% to the lowest since February, United Nations data show. Retail ground beef averaged $3.382 a pound in June, the second-most ever behind the record of $3.407 in January, Bureau of Labor Statistics data show. Prices will top the record next year, said Steve Meyer, president of Paragon Economics in Adel, Iowa. The government estimates consumers will pay as much as 3.5% more for beef in 2014.

Beef costs for Ruth's Hospitality Group Inc. (RUTH), the Heathrow, Fla.-based steakhouse owner, climbed 17% over two years, Chief Financial Officer Arne Haak said during a presentation on June 25. The restaurant raised its prices in February. Next year and 2015 will still be tough because of the lack of supply, Chief Executive Officer Michael O'Donnell said in a presentation June 18.

Higher prices are curbing demand, with U.S. beef shipments tracked by the government down 2% this year through May. The dollar's rally to a three-year high in July is also eroding the appeal of U.S. exports and China and Russia are restricting meat with ractopamine, a feed additive that some U.S. producers use to increase lean muscle.

Cheaper feed and the easing drought conditions in most places may encourage ranchers to expand. Corn futures on the Chicago Board of Trade are now 44% lower than the record reached in August. The USDA rated 44 percent of pasture and rangeland in good or excellent condition in the week ended July 28, compared with 17% a year earlier.

"There's an awful lot of people wanting to expand," said Steve Foglesong, 56, who raises 9,000 head of cattle and farms 1,800 acres of corn and soybeans about 65 miles southwest of Peoria, Ill. "The market signals are kind of there."

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As the temperatures drop, heating costs rise

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Jeffrey Hamilton / Getty Images

With winter coming on and the temperatures fall U.S. homeowners will see their heating bills to rise in the coming months.

By Jonathan Fahey associated press
Americans to heat their homes this winter, feel that something felt they are not much of last year pay more: cold.

Fuel prices are relatively stable, but customers need to use more energy, keep warm than even a year ago after the annual winter fuels Outlook by the energy information administration of the U.S. Department of energy.

Last winter was the warmest on record. Temperatures this year are expected to be close to normal.

Creation of heating bills for heating oil customers 20 percent, 15 percent for natural gas customers, rising 13 percent for propane customers and 5 percent for electricity customers, the energy information Administration announced today.

Fuel oil, customers should oil prices always pay the highest heating. This will lead record heating bills, with an average of $2,494. That's high, set in the winter of 2010 almost $200 more than the previous.

Customers who use natural gas, electricity or propane will see lower bills, as they have in the previous typical winters - also with the increase in comparison with the previous year - because the prices are relatively low.

"It's two different worlds." "For most families is, that this still goes on an affordable year, with the exception of those who use oil heat," said Mark Wolfe, Executive Director of the national energy assistance Directors Association. "For them, it will be very difficult."

Only 6 percent of the country's households use heating oil, but they tend to in some of the coldest parts of the country, where the heating requirements are high. This is mainly in the Northeast. Natural gas use for heat and 38 percent electricity about half of the houses in the region. Five per cent of households use propane and 2 percent wood.

Natural gas prices are $10.32 per thousand cubic metres average. This is 0.8% higher than in the previous year but 13 percent below the five year average. Electricity prices will fall 2.3 percent to 11.4 cents per kilowatt hour. Propane prices fall 8 percent in the Midwest to $2.02 per gallon and 13 percent in the northeast to $2.95 per gallon.

Prices are relatively low, due to a dramatic increase in domestic natural gas production in the last five years natural gas, propane and electricity. Natural gas is used to power generate about one-third of the country, and it is instrumental in determining the price of electricity. Recently, drills have increased production of so-called natural gas liquids including propane.

Heating oil is a record-high of $3.80 per gallon average, because it is made from petroleum. Crude oil costs worldwide and has stayed high due to increasing world demand, fears of supply disruptions in the Middle East and economic programmes of central banks around the world, the promotion of investment in oil and other commodities.

But the year's increase is because forecasters expect a typical winter. East of the Rocky Mountains, weather is expected to be about 2 percent warmer than normal but 20 to 27 percent colder than last year. In the West, temperatures were closer to normal last year so the expected increase in for this winter is only 1 percent.

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Prices until July; Energy costs decline

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US producer prices rose in July at the fastest pace in five months on higher costs for light trucks, drugs and cigarettes, despite falling energy prices on subdued inflationary pressures.

On Tuesday, the Labor Department said that the seasonally adjusted producer price index climbed 0.3 percent last month. By Reuters respondents analysts expected that the index to increase 0.2 percent.

By gains in consumer goods, this increase is due with light truck by 1.6 percent and pharmaceuticals to 0.9 percent.

The increase in the overall index fueled higher food costs. U.S. cultures is struck by a drought in parts of the country.

Energy prices fell however 0.4 percent last month. They were down for the fifth straight month, in a trend that inflationary pressure was for most of last year cooling has. Wholesale dropped gasoline prices by 3.1 percent in July.

While overall inflation has cooled recently, underlying inflation at higher levels took place. Some policymakers at the Fed worry that further moves, to reduce borrowing costs could higher inflation, fuel pump, said even though the Central Bank was ready to it, do more to help the economy, if necessary.

The decline which should energy prices, the economy as lower costs for fuel and other input help leave more money for other things, such as equipment or even rent prices companies.

Copyright 2011 Thomson Reuters.

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Energy costs raise concerns on growing economy

4:35 AM concerns, costs, economy, energy, growing, raise No Comments

The U.S. economy kept growing moderately in the late winter months but rising prices for gasoline and other energy products were beginning to worry producers and consumers across the country, the Federal Reserve said on Wednesday.

"Reports from the 12 Federal Reserve districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March," the central bank said in its latest "Beige Book" summary of national activity.

It found several hopeful signs for growth, including steady hiring and shortages of skilled workers as well as brisk new-vehicle sales and improving residential real estate markets but with a strong dose of concern about energy costs.

"Manufacturers in many districts expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices," the Fed said.

Similarly, while immediate prospects for consumer spending were seen as bright, "contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come."

According to the report:

Activity in the Boston, Atlanta, Chicago, Dallas, and San Francisco Districts grew at a moderate pace, while Cleveland and St. Louis cited modest growth. New York reported that economic growth picked up somewhat. Philadelphia and Richmond cited improving business conditions. The economy in Minneapolis grew at a solid pace and Kansas City's economy expanded at a faster pace.

Hiring was steady or showed a modest increase in most districts, the report said. But companies continued to have difficulty finding qualified workers for high-skilled jobs.

The Beige Book, prepared this time by the Cleveland Fed based on information collected by April 2, has market interest because it is based on anecdotal reports from business people from coast to coast and thus reflects real-life conditions. 

Reuters contributed to this report.  

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Consumer prices up slightly as electricity costs fall

11:07 PM consumer, costs, electricity, prices, slightly No Comments

The Consumer Price Index rose 0.3% in March, coming in line with estimates. CNBC's Rick Santelli and Michael Darda, MKM Partners, discuss.

U.S. consumer prices rose modestly in March as falling electricity costs countered higher gasoline prices, boosting the view the U.S. Federal Reserve has room to provide more support for the economy if needed.

The Labor Department said on Friday its Consumer Price Index increased 0.3 percent after advancing 0.4 percent in February. That was in line with economists' expectations.

Outside the volatile food and energy category, inflation pressures appeared to be modest. Core CPI edged up 0.2 percent after gaining 0.1 percent in February.

The U.S. Federal Reserve has said it will probably hold interest rates super low into 2014 to help the economy, which is limping back from the 2007-2009 recession.

Amid recent signs of weakness in the labor market, investors are betting the Fed could unleash further monetary stimulus to boost growth, although comments by Fed officials this week suggested the central bank is on hold as it waits to see whether the recovery gains traction.

Last month, overall inflation was pushed up by gasoline prices, which rose 1.7 percent. That was a much more mild increase than the 6 percent gain in February.

But electricity prices fell 0.8 percent, the steepest decline since June.

Food prices climbed 0.2 percent last month.

Overall consumer prices rose 2.7 percent year-on-year, down from a reading of 2.9 percent in February.

In the 12 months to March, core CPI increased 2.3 percent after rising 2.2 percent in February. This measure has rebounded from a record low of 0.6 percent in October.

Copyright 2011 Thomson Reuters.

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Soaring borrowing costs push Italy to the edge

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ROME/LONDON — Italian borrowing costs reached a breaking point on Wednesday after Prime Minister Silvio Berlusconi's promise to resign failed to raise optimism about the country's ability to deliver on long-promised economic reforms.

Italy's president moved swiftly to reassure anxious markets, promising that Berlusconi would soon be vacating the premier's office and unexpectedly lavishing praise on economist Mario Monti, who might lead the debt-plagued country's next government.

The former European competition commissioner is widely considered to be a top contender to be the next Italian premier, now that Berlusconi has pledged to resign as soon as urgently demanded economic reforms are approved by Parliament.

President Giorgio Napolitano's office announced he had named Monti, who now runs the prestigious Bocconi University in Milan, as a senator-for-life. Senators-for-life include notable figures outside of politics and have voting privileges in the Senate. The honor could reinforce Monti's widely viewed status as a respectable figure above party politics.

Chat transcript: Why should US care about Europe?

Earlier in the day, Italian 10-year bond yields shot above the 7 percent level that is widely deemed unsustainable, reflecting investors' concerns that they may not get their money back, prompting German Chancellor Angela Merkel to issue a call to arms.

Merkel said Europe's plight was now so "unpleasant" that deep structural reforms were needed quickly, warning the rest of the world would not wait.

She called for changes in EU treaties after French President Nicolas Sarkozy advocated a two-speed Europe in which euro zone countries accelerate and deepen integration while an expanding group outside the currency bloc stayed more loosely connected -- a signal that some members may have to quit the euro if the entire structure is not to crumble.

Portugal and Ireland were forced to seek EU-IMF bailouts when their borrowing costs reached similar levels and clearing house LCH.Clearnet sounded another alarm by increasing the margin it demands on debt from the euro zone's third largest economy, effectively raising the cost of holding Italian bonds.

Stocks in Europe and the U.S. tumbled amid worries that the growing debt crisis would drag the global economy down. Mohamed El-Erian, well-respected co-chief investment officer of top bond manager PIMCO, told Reuters that Italy's debt problems signaled "a new, even more dangerous phase in Europe's debt crisis."

Wall Street rallies amid progress in Europe

And GM said Wednesday that its third-quarter net profit fell 15 percent from a year earlier, dragged down by losses in Europe. The drop in income is forcing GM's management to look at  more ways to cut costs in the region.

The European Central Bank, the only effective bulwark against market attacks, intervened to buy Italian bonds in large amounts.

If Rome burns, US will feel the heat

"The ECB is buying aggressively," one trader said.

Italy has replaced Greece at the center of the euro zone debt crisis and is on the cusp of requiring a bailout that Europe cannot afford to give. Unlike Greece, an Italian default would threaten the entire euro project.

Having lost his majority in a key parliamentary vote, Berlusconi confirmed he would resign after implementing urgent economic reforms demanded by the European Union, and said Italy must then hold an election in which he would not stand.

He opposed any form of transitional or unity government -- which the opposition and many in the markets favor -- and said polls were not likely until February, leaving a three-month policy vacuum in which markets could create havoc.

Even with the exit of a man who came to symbolize scandal and empty promises, it will not be easy for Italy to convince markets it can cut its huge debt, liberalize the labor market, attack tax evasion and boost productivity.

"There is no guarantee (Berlusconi's) successor will be able to do a better job. Just keep your eyes on the Italian yield for now," Christian Jimenez, fund manager and president of Diamant Bleu Gestion, said.

While Italian bonds blew out, worries that the debt crisis could be infiltrating the core of the euro zone were reflected in the spread of 10-year French government bonds over their German equivalent blowing out to a euro era high around 140 basis points.

Policymakers outside the euro area kept up pressure for more decisive action to stop the crisis spreading.

Christine Lagarde, head of the International Monetary Fund, told a financial forum in Beijing that Europe's debt crisis risked plunging the global economy into a Japan-style "lost decade.

"Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand ... we could run the risk of what some commentators are already calling the lost decade."

Berlusconi has reluctantly conceded that the IMF can oversee Italian reform efforts.

Euro zone finance ministers agreed on Monday on a roadmap for leveraging the 17-nation currency bloc's 440-billion-euro ($600 billion) rescue fund to shield larger economies like Italy and Spain from a possible Greek default.

But there are doubts about the efficacy of those complex plans, and with Italy's debt totaling around 1.9 trillion euros even a larger bailout fund could struggle to cope.

Lagarde said she was hopeful the technical details on boosting the European Financial Stability Fund (EFSF) to around 1 trillion euros would be ready by December.

Euro zone officials said they had no plans for a financial rescue of Italy. "Financial assistance is not in the cards," one euro zone official said, adding the euro zone was not even considering extending a precautionary credit line to Rome.

The euro zone bailout fund, the European Financial Stability Facility (EFSF) will be able to extend such a precautionary credit line to countries which may be cut off from markets, once euro zone finance ministers agree on technical and legal details of the operation by the end of November.

The EFSF will also then be able to buy bonds on the primary and secondary markets, using various insurance schemes that would boost four to five-fold its currently free funds of around 250 billion euros.

But the size of the potential bailout for Italy, which needs to repay 326 billion euros in maturing debt only in the next 12 months, is too big to handle for the EFSF.

It would be up to Italy to reassure investors it would pay back what it borrowed, the official said.

"They will just have to prove that the yields are not justified, because they aren't," the official said.

Many outside Europe are calling on the ECB to take a more active role as other major central banks do in acting as lender of last resort. German opposition to that remains implacable, seeing it as a threat to the central bank's independence.

German central bank chief Jens Weidmann, a key member of the ECB, rejected a separate proposal to use national gold and currency reserves or IMF special drawing rights to boost the bailout fund, welcoming opposition from Merkel to the same.

But with the ECB just about the only buyer of Italian bonds, according to traders, it will have to act more aggressively to contain the latest wave of crisis, despite internal opposition to its bond-buying program.

It could call on limitless power if it began printing money as the Federal Reserve and Bank of England have. But for it, and Berlin, that is a step too far.

© 2011 msnbc.com

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A frugal Britain keeps costs for royal wedding

8:06 PM Britain, costs, frugal, keeps, royal, wedding No Comments

LONDON - can it the stuff fairy tales are out - but Prince William and Kate Middleton's wedding comes with a strong real price.

And in the middle of the country's joy, that has some British grumble that such waste for age of strict is unsuitable.

For thousands of newly unemployed, the poor fight facing sharp in tuition fees of crossed-out services of general interest and students, is there to celebrate a little.

The couple and Palace officials have repeatedly said that they are aware of the harsh environment.

The wedding on Friday are certainly not on the scale of the total grandeur of the wedding of Prince Charles and Lady Diana Spencer in 1981, as the procession route to St. Paul's Cathedral was much longer and the honeymoon lasted almost three months.

No official figures for the wedding costs have been published. But Palace officials recently said reporter, that will be Bill for William and Middleton's wedding in the six figures.

The wedding not so expensive as people think, the Palace stressed, because the monarchy already employs many of the participants in the wedding, such as caterers and chefs for the champagne reception.

The wedding no State is different than, say opportunity - we, a coronation. This means the Royal family is paying for the most points at the wedding Checklist: the flowers, the carriage procession, the clothes, the service and reception.

Rental Westminster Abbey was free of charge, so a large part of expenditure on is entertainment. Queen Elizabeth II is the account to receive the couple for about 650 guests at Buckingham Palace, basics, during William's father, Prince Charles, the dinner for 300 Friday night host.

Although much public money already flows of the British Royal family - taxpayer ? 38 million ($ 60 million) sent the Royal household last year - the monarchy earned millions from his large land and real estate portfolio. The Royal family will pay millions in his income taxes.

Kate's parents have agreed to chip-in with a private contribution"", although neither amount nor the products of numbers is known.

What the Palace "consequential issues" calls it remain - the significant cost of security.

Taxpayers are the tab for the massive security operation, which will include picking up the installation of 5,000 police officers. Because the day is declared a public holiday, the cost will be higher than usual as officers receive overtime.

The security cost will be estimated at least $ 11 million. A similar figure is the cost of security for Pope Benedict XVI visit in the UK last year added approximately 18.7 million (12 million pounds).

The wedding is to inject money into the economy. Analysts predict that it, provides a boost of up to 1 billion pounds ($ 1.6 billion), due to the sale in the retail, booking hotel rooms and the hospitality trade. Millions of Britons plan to celebrate road or private parties, and this is welcome news for pubs, food and alcohol seller.

However, each public holiday costs ? 6 billion in lost productivity in general the economy – leave a deficit of ? 5 billion.

The day may be a blessing to retail based in London as wedding-happy shoppers Pack the aisles. But still yet another blow after losses by a severe winter storm and a new VAT hike saw other companies, such as manufacturer, the day.

To make their big day less over-the-top as William's parents, the Prince and Middleton have chosen at the Abbey, Wed the parade route make much shorter compared to St. Paul's Cathedral on the other side of London. Only the procession, it will take about five minutes to get to the Abbey from the Palace.

Middleton has also decided not to arrive at the Abbey in horse-drawn carriage, to show opting in a car and to reserve the carriage for which to trip. The decision, but probably more out of the desire, their transition from the common Princess, rather than a cost reduction strategy symbolize was born.

The couple probably had some difficult decisions to make - while deliberately suffer the strict, they have also promised to deliver pomp and circumstance, that best can the United Kingdom.

The public has a look, how the wedding as a worker and florist eight trees to the course to the Abbey Tuesday line is supplied. The trees - and many flowers - were of Middleton create what promises to be a rich, English garden ordered themed service.

So it looks like the masses get their spectacle and the champagne is on Friday.

Copyright 2011, the associated press. All rights reserved. This material may not be published, broadcast, rewritten or distributed.

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Quake helped triple-2010 disaster costs

12:46 AM costs, disaster, helped, quake, triple2010 No Comments

Geneva - jumped the economic cost of natural disasters and man-made disasters three times to $218 billion in the year 2010 of $68 billion in the previous year, with earthquakes the main cause of death and destruction, insurer Swiss reinsurance co. said Tuesday.

Some 304,000 died a strong increase of 15,000 2009. Haiti in disasters in the last year, earthquake alone died claimed 222,000 life, while nearly 56,000 people have been killed by Russian summer heatwave and over 6,200 people by floods in China and Pakistan.

The Zurich company said insurers $43 billion for the cost of disasters in the last year an increase of 60% last year-port. The earthquake in Chile and New Zealand losses of 12 billion US $ had assured it was. Eight other disasters, costs including storms in the United States, Germany, France and Australia insurers more than $1 billion last year.

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The only man-made disaster to the top ten most expensive was the deepwater horizon explosion, caused a massive oil spill in the Gulf of Mexico.

In its annual report, Swiss Re predicted that losses from the recent earthquake in New Zealand and Japan 2011 will be another expensive year for insurers.

"Although no long-term trend of increasing global earthquake activity, are the number of casualties and insured losses of earthquake on the rise," Balz Grollimund was one of the authors of the report, words. "The main reasons are population growth, the higher number of people living in urban areas as well as increasing prosperity and rapidly growing demands."

With its industry interests in mind Swiss Re Chief Economist Thomas Hess also indicated that many developing countries have poor disaster insurance. To improve some new-found prosperity in countries like China should be used, technisches Hilfswerk and insurance against extreme weather events like floods, he said.

Copyright 2011, the associated press. All rights reserved. This material may not be published, broadcast, rewritten or distributed.

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