The third anniversary edition of the Cavalcade of Risk is up at InsureBlog.
You are currently browsing the monthly archive for June 2009.
Tags: CoR
The N.Y. Times recently reported that the recession has threatened many loan forgiveness programs. Loan forgiveness programs are common for nurses and teachers. This made me think, why would a firm offer loan forgiveness instead of higher wages?
- Cost of capital. Businesses may take advantage of lower borrowing costs. ”After-loan” wages would be higher for workers if businesses offered loan forgiveness for a given labor cost to the firm.
- Self-control. Workers may prefer lower wages with loan forgiveness to higher wages without loan forgiveness. The loan forgiveness is in essence forced savings; compelling workers to take a lower wage in order to pay off their loan.
- Employee selection. Loan forgiveness is often used to attract workers to rural and/or low-income areas. Loan forgiveness is most attractive to workers who are most liquidity constrained. By attracting liquidity constrained workers initially, these workers will also be the least likely to move–since moving also involves large fixed costs. It could also be the case that employers are searching for workers who are more motivated by the work they do then the wage they make; these workers would be willing to start a career in a low wage sector in exchange for debt forgiveness. Thus, short term costs may accrue to the firm, but they may be able to reap long-term savings.
Any other reasons you can think of?
Tags: Loan Forgiveness
- That sucking noise: Taxpayer bailout dollars for the now bankrupt GM.
- GM Bankruptcy on retiree health benefits: Imagine the city larger than Peoria, Illinois losing health insurance.
- Japan has its first trade deficit in 28 years.
- Ranking Health Insurers.
- Bet on your life, win cash.
Why does Medicare spend $7,500 for patients in El Paso, Texas but spends $15,000 for patients in McAllen, Texas? It McAllen richer? Does McAllen receive better care? Are patients sicker in McAllen?
“Come on” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here pure and simple.” Doctors, he said, were racking up chanrges with extra tests, services, and procedures.
The surgeon came to McAllen in the mid-nineties and since then he said, “the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’”
Tags: Cost, Medicare, Supplier-induced demand
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