In the last 50 years of government accounting, the biggest curve on the charts has been the downward track of spending on health care. Since 2008, spending has declined to historic lows, due to the recession. Now, with rising employment and millions getting coverage under the Affordable Care Act, health care spending looks headed for an uptick. More use of the medical system will result in insurers paying more for procedures, and in turn, increasing premiums. The bottom line?
From the Editor
Representatives from Democratic and Republican parties have formed a bipartisan group, the Congressional Caucus for Middle Market Growth. The reason: 200,000 middle market businesses—companies with annual revenues between $10 million and $1 billion—are a major economic engine of the U.S. economy. They contribute one-third of non-government GDP and one-third of private sector employment. Middle market executives expect to grow employment by a rate of 3.2 percent over the next 12 months, higher than the ADP National Employment Report’s projections for small and large companies.
Like many other startup industries, renewable energy receives subsidies to help jumpstart an entirely new business sector. It has initially followed the example of the oil and gas industry, which has received over $470 billion in tax credits since early in the 20th century. Those “depletion tax credits” continue today, amounting to almost $5 billion annually. By contrast, the current, early-stage renewable industry receives about one-half that amount. But even those half-size subsidies have been uncertain and are often under political attack.
Recently, Congress has failed to act on several important economic issues. Bills restoring unemployment benefits to the long-term unemployed, to raise the minimum wage, and to address inequality in pay for women have either stalled or been defeated, without any viable alternatives proposed. Coupled with the last Congress’s record of being the least productive in its history, you might wonder about the leadership re. economic issues (and others) in our primary lawmaking body.
As of April 1, India is the only country in the world with legislated CSR. The Companies Act 2013 mandates that companies—including foreign firms—with a minimum net worth of $500 million and net profit of at least $5 million spend two percent of their profit on CSR. An estimated 8,000 companies are affected. Projections are that over $2 billion could be spent on CSR under the new law; there are penalties for failing to comply. There is one sticking point: the tax deductibility of the CSR spend.
Beyond the overheated rhetoric about current health care reforms, the bottom line is starting to be added up. For at least one medical group that has chosen an accountable care organization model, the results are in: $2.9 million in bonus profits. That’s the sum gained by Heartland Regional Medical Center in St. Joseph, MO, which opted for a risky, but potentially more lucrative option under a Medicare ACO called the Shared Savings Program. In its inaugural year, the program offered no guarantees, but in exchange for risking losses, Heartland could earn larger rewards.
For the first time, stocks in renewable energy companies are outgaining their oil and gas counterparts—by a lot. Over the last year, solar leaders like First Solar and SolarCity have seen their stocks soar 156 percent and 221 percent, respectively. By contrast, Exxon is up six percent, year over year, while Conoco has risen 15 percent. The CleanTech Index has grown by nearly 60 percent while various crude oil category prices are up between four and nine percent.
While debates about the wisdom of approving the XL Pipeline and of shipping U.S. natural gas to Europe dominate the headlines, renewable energy has quietly continued its strong growth in this country. In the first two months of this year, renewable energy sources accounted for 91.9 percent of the 568 MW of new installed U.S. electrical capacity, according to the Federal Energy Regulatory Commission. Coal, oil, and nuclear provided none. Natural gas and one MW of “other” resources made up the rest.
Last week, we published several articles about water-related issues as part of Water Week, leading up to World Water Day, Saturday March 22. Apparently, my request to our Justmeans staff writers for these articles opened the informational floodgates: they are still filling my inbox. So we are still publishing stories on water, the challenges and the solutions. R.P.
This week, we're publishing several stories by our Justmeans staff writers about solutions to global water problems, leading up to World Water Day this Saturday. In these articles, innovative ideas are as abundant as our water supply is scarce. Gina-Marie Cheeseman describes how a MIT researcher is developing a monolayer film made from material extracted from vegetable oil to reduce evaporation in reservoirs.
The size of the problem is daunting: 1.2 billion people live where water is scarce, with another 500 million living in almost similar circumstances. Another 1.6 billion people live near groundwater, but lack the infrastructure to move it from rivers and aquifers. By 2025, 1.8 billion people will be living in regions with absolute water scarcity.
The Department of Energy is reporting some hard figures that help explain the recent boom in the clean tech industry: 1) the cost of solar panels has dropped 75 percent since 2008 2) the cost of LED lights has fallen 85 percent in the same time and 3) electric vehicles now cost 50 percent less than in 2010. Lower costs have been predicted since the beginning of the renewable power industry, as innovations move to mass manufacturing and as R & D experiments result in scalable production and larger sales.
“Rich world” firms have invested $3 trillion in emerging economies since the breakup of the Soviet Union, the opening up of China, and growth surges in Brazil and India in the 1990s. Lately, this mega-deal is not going well. Political instability, sinking currencies, weak commodity prices, and slowing growth have caused Investments by rich world firms with above-average exposure to emerging markets to lag 40 percent behind the U.S. stock market for the last three years. What to do?
The Food and Drug Administration regulates 25 cents of every dollar of the national gross domestic product. The agency oversees food safety, tobacco products, dietary supplements, prescription and over-the-counter medications, vaccines, biopharmaceuticals, medical devices, cosmetics, and veterinary products. Another special area of focus has been added to its portfolio: increased oversight of high-risk “compounding pharmacies,” whose products killed dozens and sickened hundreds in Massachusetts in 2012. In the proposed 2015 budget for 2015, this agency gets a 1% increase, to $2.6 billion.
China has announced some good energy news: the country will install more solar power in 2014 than previously planned. The revised forecast by the Chinese Bureau of Energy now projects 12 GW of solar power will be added to the country’s grid throughout ten provinces. Here’s the catch: China’s toxic air pollution is becoming so severe, warn Chinese scientists, that the country is at risk of creating a “nuclear winter” effect, in which photosynthesis in plants slows down due to lack of sunlight, threatening the country’s food supply.
More companies are adding to their in-house economist staffs. The number of private-sector economists rose 57 percent in 2012 from 2009, to 8,680 from 5,510, according to the Bureau of Labor Statistics. The reason is the need to review large amounts of information—Big Data—to better determine opportunities and risks. Increased volatility in global markets, the growing complexity of operations, and rapid, disruptive change driven by technology have created a huge, fast-moving, and fluid flow of information that needs to be evaluated for more accurate business projections.
The Sustainability Accounting Standards Board is releasing new accounting standards that include, for the first time, banks and other financial companies in their all-industry sectors scope. The new reporting asks for data on basic environmental issues such as greenhouse gas emissions and on more qualitative, reputational concerns, such as the number of complaints handled by compliance departments.
California has attracted special scrutiny since the Affordable Care Act’s rollout in October, due to its large uninsured population: about 15 percent of the national total. With six weeks to go in the open enrollment period, a recent checkup charts the state’s progress: 828,000 Californians have signed up through the online health care exchange, more than 20 percent of the 3.3 million who have enrolled nationwide. That’s 90 percent of the state’s target for the initial four-month period.
Raising the minimum wage to $10.10 an hour, as proposed by President Obama, would increase income for about 15 percent of low-wage working Americans—about 16.5 million working Americans— and perhaps benefit an additional 8 million workers whose earnings are around that level. The raise would lift about 900,000 people above the poverty line. That’s according to a recent report by the Congressional Budget Office. The CBO also projects that the raise could cost 500,000 jobs, about 0.3 of the workforce, due to employers laying off low-wage workers or hiring fewer of them.
You could guess that millennials want to work for companies on the cutting edge of innovation, even without a study by PricewaterhouseCoopers. However, the figure measured - 78 percent - is surprisingly high in this time of widespread millennial unemployment, low wages, and lower job expectations. Equally eye-opening are other figures that quantify this generation's CSR interests: 63 percent of those surveyed gave to charities and 43 percent either volunteered or joined a community organization, according to a Deloitte study.