2021 - Is inflation finally back in the conversation?

[Bozo_Casanova 26271]

4 hours ago, BeardIP said:

Raises hand. My deduction for health insurance went up YoY, for exact same PPO and benefit coverage.

You don’t use a HDHP? Do you have the option?

4 hours ago, StassneyHorn said:

I pay zero for my HDHP and in fact I receive 65 dollars in employer contributions per month into my HSA. My work pays me to have a health insurance plan that will eventually become an investment account

This is the way

[bluto 4880]

Our very small biz health premiums went up 8% this yr on renewal which seems like a monster home run sadly. They actually used lube

[Hefeweizen 5307]

Every one is a little different on health plans but after 3 years of no increases in ours we had to raise it by about 10 percent for next year.  But our dental and eye coverage dropped in price slightly.  Go figure.

[Storm the Field 5271]

Used car prices continuing to slowly come back down to earth. 

 

[Captainant 27403]

5 minutes ago, Storm the Field said:

Used car prices continuing to slowly come back down to earth. 

 

I wonder how much of that is MSRP prices coming down, vs dealerships simply removing their arbitrary $5-10k markups

[Bozo_Casanova 26271]

45 minutes ago, Captainant said:

I wonder how much of that is MSRP prices coming down, vs dealerships simply removing their arbitrary $5-10k markups

None of it yet- the rise of new car prices over the last several years was enabled by 0-3% interest rates and the dealer margin is built into that number. 

In a normal new car market car dealers typically make around 3-4% margin on new car sales. They make the real money on factory incentives, flipping trade-ins, service, and ESPECIALLY F&I. Some dealerships even operate the new car sales end as a break even or loss leader business by design and make it back on finance discount (this is especially true with subprime).

“Market adjustments” by dealers represent the extraordinarily rare circumstance that they have a scarce good- either an exceptionally popular model, or a general supply shortage, and when financing is cheap they have a partner to make high prices more palatable for a buyer. 
 

so 2021-22 was a perfect storm of 

1) low rates

2) low supply 

3) high demand driven by cheap debt and stimulus

We’re seeing the opposite now- high rates are making high MSRP new vehicles less attractive, there are few truly new concepts coming in at this moment to drive a premium, the cost of floorplan financing* has risen to dealers can’t afford to let stock sit, and the supply chains are returning to normal. 
So right now I’m seeing dealer discounts in the 15-20% range on bro-dozers that would have sold for MSRP last year, and financing incentives on vehicles that would have had a 5-10k “market adjustment” last year.

 

Cars are a fairly high price elastic product on a coat of ownership basis because the the market addressability has underwriting standards dealers can’t do much about other than eat the difference to keep the lights on if they have to.
For them the market giveth and taketh away. 
 

Edited November 17, 2023 by Bozo_Casanova

[Captainant 27403]

5 minutes ago, Bozo_Casanova said:

None of it yet- the rise of new car prices over the last several years was enabled by 0-3% interest rates and the dealer margin is built into that number. 

In a normal new car market car dealers typically make around 3-4% margin on new car sales. They make the real money on factory incentives, flipping trade-ins, service, and ESPECIALLY F&I. Some dealerships even operate the new car sales end as a break even or loss leader business by design and make it back on finance discount (this is especially true with subprime).

“Market adjustments” by dealers represent the extraordinarily rare circumstance that they have a scarce good- either an exceptionally popular model, or a general supply shortage, and when financing is cheap they have a partner to make high prices more palatable for a buyer. 
 

so 2021-22 was a perfect storm of 

1) low rates

2) low supply 

3) high demand driven by cheap debt and stimulus

We’re seeing the opposite now- high rates are making high MSRP new vehicles less attractive, there are few truly new concepts coming in at this moment to drive a premium, the cost of floorplan financing* has risen to dealers can’t afford to let stock sit, and the supply chains are returning to normal. 
So right now I’m seeing dealer discounts in the 15-20% range on bro-dozers that would have sold for MSRP last year, and financing incentives on vehicles that would have had a 5-10k “market adjustment” last year.

 

Cars are a fairly high price elastic product on a coat of ownership basis because the the market addressability has underwriting standards dealers can’t do much about other than eat the difference to keep the lights on if they have to.
For them the market giveth and taketh away. 
 

When I was at the dealship getting my wife's car serviced a month or so ago, I still saw a shitload of cars on the lot with "market adjustment" markups. Not brodozer trucks, mostly Rav4's and nicer sedans. But the lot had rows and rows of them, so I don't think there's constrained supply anymore

[MonkeyDoughnut 10138]

Well... this explains the Health Insurance -34% number

 

[Incredulity 11541]

1 hour ago, Captainant said:

I wonder how much of that is MSRP prices coming down, vs dealerships simply removing their arbitrary $5-10k markups

 

there is no MSRP on used vehicles.

Manheim USED vehicle value index.

 

Edited November 17, 2023 by Incredulity

[Bozo_Casanova 26271]

1 hour ago, Captainant said:

When I was at the dealship getting my wife's car serviced a month or so ago, I still saw a shitload of cars on the lot with "market adjustment" markups. Not brodozer trucks, mostly Rav4's and nicer sedans. But the lot had rows and rows of them, so I don't think there's constrained supply anymore

Supply isn’t all that constrained right now but some cars are still commanding a premium and always will. Plus, dealers are taking advantage of information float where they can, since right now plenty of people still expect to pay through the nose. The worst case scenario is that they put a market adjustment on the car and discount from there, since all things being equal anchoring from a higher number is better for the seller. Shooters shoot.

Was this a Honda or Toyota dealership by chance? Or in Austin, any Covert dealership?

Edited November 17, 2023 by Bozo_Casanova

[Bozo_Casanova 26271]

1 hour ago, Incredulity said:

 

there is no MSRP on used vehicles.

Manheim USED vehicle value index.

 

I thought he meant the pressure new car prices exert on used car prices 

[Js1 85085]

17 hours ago, StassneyHorn said:

I pay zero for my HDHP and in fact I receive 65 dollars in employer contributions per month into my HSA. My work pays me to have a health insurance plan that will eventually become an investment account

I pay a portion of my HDHP premium, but it didn't change at all from 2023 to 2024. 

Edited November 17, 2023 by Js1

[Incredulity 11541]

20 minutes ago, Bozo_Casanova said:

I thought he meant the pressure new car prices exert on used car prices 

mea culpa.

[Captainant 27403]

34 minutes ago, Bozo_Casanova said:

Was this a Honda or Toyota dealership by chance? Or in Austin, any Covert dealership?

Toyota dealership in Houston

[Bozo_Casanova 26271]

13 minutes ago, BeardIP said:

I don’t. I have a chemo medicine I take via infusion 2x a year that is like $60k a pop, so need the Cadillac coverage work provides. It just is weird that healthcare costs are down 34% but work is telling us costs are rising and we pay more for exact same coverage and plan YoY

I'm sure you have looked into this extensively in your situation, so don't take this as pushback, but I don't understand. Does your employer not give you the option or are you saying it's not an option for you?
HDHPs are almost always better for chronic care and high cost treatments because the tradeoff for not prepaying routine care with premiums is not having a copay on medical expenses once the deductible is met. In my plan, for example, I'm on the hook for the first $5K of medical expenses, however I get there. Once that's covered, insurance pays 100% of all covered medical expenses. Part of the reason why my last two employers have done such a good job with health insurance was to make the HDHP the Cadillac plan by funding the HSA to the level of the deductible.  But the people who have done the best under those plans are people who were in your situations or had major medical events.  
Also relevant to keeping costs down is that my last two employers self-insure. 

Edited November 17, 2023 by Bozo_Casanova

[Incredulity 11541]

11 minutes ago, Bozo_Casanova said:

Part of the reason why my last two employers have done such a good job with health insurance was to make the HDHP the Cadillac plan by funding the HSA to the level of the deductible.

school me.

I understand what they have executed, but am wondering how that keeps plan cost down?  or is cost not what "good job with health insurance" is describing?

[Dbeasy 14962]

6 minutes ago, Incredulity said:

school me.

I understand what they have executed, but am wondering how that keeps plan cost down?  or is cost not what "good job with health insurance" is describing?

A high deductible plan encourages people to think hard before they spend on healthcare, keeping claims down. 

[Incredulity 11541]

6 minutes ago, Dbeasy said:

A high deductible plan encourages people to think hard before they spend on healthcare, keeping claims down. 

But wouldn't fully funding the HSA counter-act that?

[Bozo_Casanova 26271]

17 minutes ago, Incredulity said:

school me.

I understand what they have executed, but am wondering how that keeps plan cost down?  or is cost not what "good job with health insurance" is describing?

Our costs or their costs? So it's worth mentioning that both companies have relatively young, healthy, well educated and affluent workforces relative to the general population, and that helps a lot, but in addition my last employer bargained extremely hard for their policy and made it a priority for a senior executive to deliver. They self-insured. They made extensive use of health and wellness education programs, provided a concierge service to coordinate and price-shop things like radiology and phlebotomy, and educated the workforce on how to use health insurance, for example, the difference between urgent care and emergency care, and how using those impacts both out of pocket costs and future premiums. 
 

15 minutes ago, Dbeasy said:

A high deductible plan encourages people to think hard before they spend on healthcare, keeping claims down. 

That's *sort of* true, but that's because insurance only makes sense when we use it to manage *risk*, not predictable events. HDHPs keep claims down in part because it makes us better consumers- when we aren't prepaying through high cost premiums that come out of the paycheck before it hits the bank we don't perceive things that we are paying real money for as "free," the way we tend to do with a PPO when we prepay for stuff that will definitely happen. 
 

13 minutes ago, Incredulity said:

But wouldn't fully funding the HSA counter-act that?

Not really, because you're still paying it. It's not their money. It's income.

 

[Bozo_Casanova 26271]

17 minutes ago, BeardIP said:

Hey, I appreciate you taking the time to pushback-- we have this global webinars to explain during open enrollment, but I'm probably only grasping 50% of all this stuff.

The below on the left is the EPO and the right is the HDHP. The difference in cost (paycheck deduction) is $115/bi-weekly, so $230/month.

 

and here is what I've used and paid to date (I'm on some expensive stuff):

First of all, you have good insurance. So you're doing well regardless. But how much are the actual premiums you are paying for both plans, do you you have any covered dependants and how much would your employer contribute to your HSA, if anything?

[Incredulity 11541]

7 minutes ago, Bozo_Casanova said:

Our costs or their costs?

Whichever you have knowledge of.

9 minutes ago, Bozo_Casanova said:

They made extensive use of health and wellness education programs, provided a concierge service to coordinate and price-shop things like radiology and phlebotomy,

How big of an employee pool is this for?   Is price shopping phrenology part of the concierge shopping service?

[Trey3216 15325]

1 hour ago, BeardIP said:

I don’t. I have a chemo medicine I take via infusion 2x a year that is like $60k a pop, so need the Cadillac coverage work provides. It just is weird that healthcare costs are down 34% but work is telling us costs are rising and we pay more for exact same coverage and plan YoY

Because healthcare costs aren’t down 34% 

[Bozo_Casanova 26271]

4 minutes ago, Incredulity said:

Whichever you have knowledge of.

How big of an employee pool is this for?   Is price shopping phrenology part of the concierge shopping service?

A couple thousand at the last place, under 300 at the current shop. 
Alas, neither phrenology nor elective high colonics are covered services.

[Incredulity 11541]

5 minutes ago, Bozo_Casanova said:

A couple thousand at the last place, under 300 at the current shop. 
Alas, neither phrenology nor elective high colonics are covered services.

does the 300 count employer offer same or similar concierge?  

 

[Bozo_Casanova 26271]

7 minutes ago, BeardIP said:

1.) I am privileged in that I won't work for an employer that doesn't offer good insurance. I refuse to do so in the sense that I can't, with my health issues and the options I have for employment. In the other thread about healthcare I mention that when you have chronic issues or bad health, in our system you are shackled to your employer and can never be a small business owner or entrepreneur due to the costs for the specialists and meds you need.

2) I mentioned in the thread, the HDHP is like $400/month and the EPO/PPO options is $680/month for 2024, premiums deducted from my check biweekly. This is what I was saying was weird because costs were down 34% according to that graphic yet the premiums went up and the company is citing higher costs being passed to them. For 2023 the costs were $600/month for the EPO/PPO and not sure about the HDHP because I didn't choose it. So the difference is $80/month increase YoY despite healthcare costs going down YoY 34%.

3) I'm a single income earner for a family of 7 (including myself) so yes, the entire family rides this train with me. 

4) It looks like contribution would be $100, see below:

5) Thank you so much for reviewing this with me as a derail to this thread. I'm still in open enrollment so if it makes sense I could change.

Agree on your first point- ACA helped a little but the greatest restraint on entrepreneurship and price distortion in healthcare is the link between health insurance and employment.

anyway-  I think an HDHP might be better for you, for the following reasons:

1) the family max HSA contribution pre-tax is greater than your out of pocket maximum, so you are getting a discount on that spending equivalent to your marginal tax bracket

2) the premiums are a lot lower

3) the out of pocket max is lower

4 your employer is giving you $1200/yr or pretax spending power for choosing the HDHP 

what I can’t see is coinsurance or copay details with the HDHP so please, for the love of God, DO NOT take my word for it. I am not a professional and I didn’t do the math because I’m in the car. You should definitely talk to your benefits specialist at work, but I think you may be surprised. 
 

also, obligatory:

Spoiler

WYDEN-BENNETT YOU MOTHERFUCKERS®️

 

10 minutes ago, Incredulity said:

does the 300 count employer offer same or similar concierge?  

 

Yep. Pay a little to save a lot.

[Incredulity 11541]

19 minutes ago, Bozo_Casanova said:

Yep. Pay a little to save a lot.

are you privy to the detailed economics of this?

[Bozo_Casanova 26271]

1 hour ago, Incredulity said:

are you privy to the detailed economics of this?

I’m not, but it’s very cheap from what I understand and might actually be negative net cost because the carriers like it. 

Edited November 17, 2023 by Bozo_Casanova

[Incredulity 11541]

Just now, Bozo_Casanova said:

I’m not, but it’s very cheap from what I understand and might actually be negative net cost because the carriers like it. 

Is it a third party service or company employee 

[Bozo_Casanova 26271]

18 minutes ago, Incredulity said:

Is it a third party service or company employee 

third party

[jimmyjazz 45538]

On 11/17/2023 at 1:03 PM, Trey3216 said:

Because healthcare costs aren’t down 34% 

I am principal engineer at a small startup (10 employees).  We all wear multiple hats.  My short straw draw graced me with the "manage the company insurance plan".  

Based on my admittedly micro-sample anecdotal evidence, no way are healthcare (or at least insurance) costs down 34%.  We've been up 10-20% every year for years.

[Guest]

Read up. Warning, I have a graduate degree and don't know what the hell they are trying say:

https://www.bls.gov/cpi/additional-resources/improvements-cpi-health-insurance-index.htm

[StassneyHorn 6535]

There have now been 3 articles posted on how it was measured and how it will be measured

[elfenix 34169]

On 11/18/2023 at 3:45 PM, FirstTimeCaller said:

Read up. Warning, I have a graduate degree and don't know what the hell they are trying say:

https://www.bls.gov/cpi/additional-resources/improvements-cpi-health-insurance-index.htm

the first thing to understand is that the line item "health insurance" already has benefits payments stripped out of it, which are included in line items like "hospital services," "medical care commodities," and "professional services" (along with your copays, cash payments, etc).  what the "health insurance" line item is trying to measure is the cost of the insurance operations - underwriting, claims processing, etc.

the first issue with how they used to do it is the data was only updated once a year, and it was pretty late for something trying to figure out inflation *recently*.  the example in the explanation is that data from 2021 only updated in october of 2022, and then became incorporated into the monthly releases over the next year, which meant it wasn't fully processed through the monthly releases until september of 2023.  obviously a place to find improvement.  they've gone to updating twice a year (in october and april), though this change doesn't apply to long term care or medicare-D (i guess more recent numbers aren't available). 

another issue is the amount leftover after you subtract benefits from premiums is pretty noisy.  premium cost is usually set once a year, with expectations of what benfits payout might be.  but if you have a year with higher or lower than expected benefits expense then the cost of the insurance operations can appear lower or higher, respectively.  ex: $1 trillion in premiums, expecting $900 billion in expenditures, but actually had $950 billion in expenditures, then the insurance operations cost $50 billion instead of $100 billion.  oh, consumers got a discount on the insurance services!  or did they?  insurance companies will try to make that up the next year.  so BLS introduced smoothing based on a 2 year rolling average because generally the insurers will adjust their premiums the next year based on the previous year. 

because switching from an unsmoothed index to a smoothed one does weird things there's a correction factor. 

it's also going to be a couple years before the changes work their way all the way through. 

still not sure why it's down 34%.  based on the explanation, we're now getting 2022 data (all of it) crammed in over the next 6 months.  if 2022 were an unexpectedly very heavy year for health insurance benefits then the insurance services cost would be lower (see example above).   edit: maybe inflation in benefits cost though you'd have expected that to also be reflected in last year's figures.  might need to dig into the charts to see what the other medical-related line items were. 

anyway, it is historically a noisy line item.  last october it was up 20.6%, 2021 down 6.4%, 2020 it was up 10.2%, 2019 up 20.1%.  doing some math that's a total of up 4.6% on insurance operations since 2018.  but we're also measuring different things. 

Edited November 21, 2023 by elfenix

[Guest]

Because I think gas prices are one of the main "anecdotal" pieces of inflation everyone likes to talk about (especially at Thanksgiving)...

Here is oil for the past month:

I filled up about a week ago at $2.59. Passed by HEB literally two days later and the price had jumped to $2.87, where it is now. A jump of about 10%, due to what?

[StassneyHorn 6535]

Oil and Guess

[bernorange 8348]

The effects of inflation:

Quote

...
A record-breaking share of auto loan applicants say they’ve been rejected for loans this year, according to the Federal Reserve Bank of New York.

Based on surveys collected in February, June and October, an average of 11% of automobile-loan applicants said they had been rejected, the highest yearly car-loan rejection rate since the New York Fed began tracking the figure in 2013.

That speeds past the previous record on car-loan rejections, which was set in 2020, when 7.9% of applicants said they were turned away from a car loan.

The potential potholes awaiting car shoppers were just one part of the New York Fed’s quarterly survey on consumer access to credit. Overall, consumer credit is tightening, the report found. Fewer people are applying to see what terms and rates they could get on cars, credit cards, mortgages and mortgage refinances.

Across the board, reported rejection rates for loans climbed while application rates dropped year to date. The report showed hints of households facing financial pressure.
...

https://www.msn.com/en-us/money/personalfinance/a-record-share-of-people-applying-for-car-loans-were-rejected-this-year-new-york-fed-survey-finds/ar-AA1kfuKH

Quote

November 20, 2023 –  According to the latest data from Fidelity Investments®’ Q3 2023 retirement analysis, account balances have decreased slightly since last quarter, while withdrawals and loans are inching up, showing the impact economic events such as inflation and market volatility can have on Americans‘ wallets—and ultimately their retirement savings. ...
...
Hardship withdrawals: In Q3, 2.3% of workers took hardship withdrawal, up from 1.8% in Q3 2022.  The top two reasons behind this uptick were avoiding foreclosure/eviction and medical expenses.

401(k) Loans: Inflation and cost of living pressures have resulted in increased loan activity over the last 18 months. In Q3, 2.8% of participants took a loan from their 401(k), which is flat from Q2 and up from 2.4% in Q3 2022. The percentage of workers with a loan outstanding has increased slightly to 17.6%, up from 17.2% last quarter and 16.8% in Q3 2022.
...

https://newsroom.fidelity.com/pressreleases/fidelity--q3-2023-retirement-analysis--workers-commit-to-the-long-term-while-navigating-uncertain-ma/s/d5824701-cdfa-4cd2-8796-602b7b1dc541

Quote

...
Americans outside the wealthiest quintile have run out of extra savings generated early in the pandemic and now have less cash on hand than they did when the pandemic began, according to the latest Federal Reserve study of household finances.
...

https://www.bloomberg.com/news/articles/2023-11-20/consumers-pull-cash-from-retirement-accounts-amid-budget-stress?srnd=premium&sref=6uww027M

Quote

Americans now owe $1.08 trillion on their credit cards, according to a new report on household debt from the Federal Reserve Bank of New York.

Credit card balances spiked by $154 billion year over year, notching the largest increase since 1999, the New York Fed found.
...
Credit card delinquency rates also rose across the board, according to the New York Fed, but especially among millennials, or borrowers between the ages of 30 and 39, who are burdened by high levels of student loan debt.

With most people feeling strained by higher prices — particularly for food, gas and housing — more cardholders are carrying debt from month to month or falling behind on payments, and a greater percentage of balances are going more than 180 days delinquent, according to a separate report from the Consumer Financial Protection Bureau.

Nearly one-tenth of credit card users find themselves in "persistent debt" where they are charged more in interest and fees each year than they pay toward the principal — a pattern that is increasingly difficult to break, the consumer watchdog said.
...

https://www.cnbc.com/2023/11/07/credit-card-balances-jump-to-1point08-trillion-record-how-we-got-here.html

Also:

 

"Don't concern yourself - these are just side effects"

 

[bernorange 8348]

So, about those egg prices...

https://www.reuters.com/legal/litigation/kraft-others-seek-damages-after-winning-us-egg-pricing-verdict-2023-11-22/

[Captainant 27403]

3 minutes ago, bernorange said:

So, about those egg prices...

https://www.reuters.com/legal/litigation/kraft-others-seek-damages-after-winning-us-egg-pricing-verdict-2023-11-22/

The verdict on Tuesday followed a more than five-week antitrust trial against a group of egg producers including Cal-Maine Foods (CALM.O), the country's largest egg producer and distributor, and Rose Acre, the second-largest, over claims that they had "rigged" the market by conspiring to charge artificially high prices.

[jimmyjazz 45538]

Witch hunt.  You just don't understand.  Something something something . . .

[Fudge Nuggets 19144]

2022 had a hell of a baking season. 

[52-80 19076]

They did it. They identified the true cause of inflation. 
 

 

 

[Hefeweizen 5307]

Oh no they’ve cornered the market on dogshit sandwiches!

[Bozo_Casanova 26271]

I sorta like Subway

[Incredulity 11541]

1 hour ago, Bozo_Casanova said:

I sorta like Subway

[B00M 6280]

4 hours ago, Hefeweizen said:

Oh no they’ve cornered the market on dogshit sandwiches!

They’ll never take Thundercloud!!

[jimmyjazz 45538]

1 hour ago, B00M said:

They’ll never take Thundercloud!!

Thundercloud >>> Jimmy John's > McAlister's >>> Subway

Edited November 27, 2023 by jimmyjazz

[tx 3 putt 76295]

world of sourdough >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> jersey mike's or mcalisters >>>> jimmy johns >>>>>>>>>>>>>>>>>>>> everyone else 

[jimmyjazz 45538]

Needs more PotBelly.

[Bozo_Casanova 26271]

IYKYK

[babysdaddy 2718]

1 hour ago, Bozo_Casanova said:

IYKYK

'twas the bread.  haven't tried the new bagel spot yet