Big insurance companies report quarterly earnings over the next two weeks, starting with United Healthcare today.
Thanks to new customers brought in by the Affordable Care Act, 2013 was a good year for health insurance companies. The extended deadlines, which ended just this week, may provide more good news: More enrollment, more premiums, more revenue. Now comes the hard part.
For one thing, new customers means new costs, in the form of claims, says Joel Shalowitz, a professor at Northwestern University's Kellogg School of Management. Insurers don't yet know the extent of those costs.
"For people who needed services provided, the insurer is not going to see the claims for another month or two," says Shalowitz. "The revenue has come in, but the expense has not yet been realized."
Those new customers also came with new restrictions on insurance companies, says Morningstar analyst Vishnu Lekraj. "They’re restricted as far as profitability, and overall there’s more competition in the market, there’s more transparency, there’s more regulation," he says. "I do still see some tough headwinds for the industry and for most of the players."
At best, Lekraj thinks the strongest companies will see flat profits for years to come.
Before a company sells for billions of dollars, it starts as an entrepreneur's big idea. Typically, somewhere in between are venture capitalists, who invest in startups with hopes of a hefty payday if the companies make it big. A recent study from researchers at New York University’s Stern School of Business and University of Munich shows VCs are more likely to back companies if the executives are the same ethnicity as the investors.
The findings have profound implications for entrepreneurs of color, though they don't come as a surprise to them. At the South by Southwest Interactive Festival recently, African-American entrepreneur Wayne Sutton recalled times he appeared at conferences and was mistaken for a member of the service staff.
“It’s hard enough just to try to launch a product that the world can use,” Sutton says. “But overcoming those biases as a minority entrepreneur is even double hard.”
The research supports what many minority startups have long believed, that investors have a tendency to back people who look like them. Entrepreneurs of color see the problem as one of investors afraid to step beyond what they know.
“A venture capitalist provides money, but also provides a lot of blood, sweat and tears,” explains Melissa Bradley, an African-American who started a venture capital firm after seeing firsthand how finding investors can be frustrating for minorities and women. “They’re there with you day in and day out and so there’s this implicit nature around if I have something in common with you already at the onset, that we’re probably gonna do pretty well down the road.”
Bradley says she’s raised tens of millions for minority and female-owned businesses and profited.
Both Bradley and Sutton say minority entrepreneurs shouldn’t despair. Both believe in the power of a great idea to break through, no matter who pitches it.
Deepak Hegde, the NYU management professor who co-authored the study, agrees. He adds that the findings may point to changes VCs could make.
“Startups tend to come from multiple communities,” Hegde says. “A venture capitalist that has a diversity of partners in its ranks might be in a better position to identify these opportunities and evaluate them better.”
After all, the last thing investors want is a billion dollar opportunity missed, lost in a blind spot.
Mark Garrison: That’s a venture capitalist investing in a startup on the HBO show “Silicon Valley.” Everybody around the table is white. The real Silicon Valley is also heavy on white guys. Minority company founders often go unrecognized, or worse.
Wayne Sutton: It’s like, what are you doing here? Or, go get me something to drink, because they think I’m working here or something.
Wayne Sutton has started companies and mentored entrepreneurs. As an African-American in tech, he’s not surprised by the study’s findings of a tendency for investors to go with people who look like them.
Sutton: It’s hard enough just to try to launch a product that the world can use. But overcoming those biases as a minority entrepreneur is even double hard.
Many American venture capitalists are white, so black entrepreneurs confront the problems the study uncovered daily. Melissa Bradley felt it firsthand when she pitched her business ideas.
Melissa Bradley: There was no one in the room that looked like me. There were no women and there were certainly no people of color in the room, oftentimes in the building.
That sometimes frustrating experience inspired her to start her own venture capital firm. She says she’s raised tens of millions for minority and female-owned businesses and profited. Bradley sees the larger problem as one of investors afraid to step beyond what they know.
Bradley: A venture capitalist provides money, but also provides a lot of blood, sweat and tears. And so they’re there with you day in and day out and so there’s this implicit nature around if I have something in common with you already at the onset, that we’re probably gonna do pretty well down the road.
Both Bradley and Sutton believe in the power of a great idea to break through, no matter who pitches it. Deepak Hegde, the NYU business professor who co-authored the study, agrees. He adds the findings may point to changes VCs could make.
Deepak Hegde: Startups tend to come from multiple communities. A venture capitalist that has a diversity of partners in its ranks might be in a better position to identify these opportunities and evaluate them better.
Because the last thing they want is a billion dollar opportunity missed, lost in a blind spot. I'm Mark Garrison, for Marketplace.
With recent attitudes towards the tech industry sometimes bordering on chilly, Americans are surprisingly optimistic about what technology has to offer them in the next 50 years.
According to a new report published by the Pew Research Center, 59 percent of those surveyed thought that technology would lead to peoples' lives being generally better, though what most people hope for is a little different than the expectations of yester-year:
When it comes to health technology, a majority of Americans (81 percent) believe they will be able to receive a transplant of an organ that has been custom grown in a lab. That's not to say that there is general approval of high-tech healthcare: 66 percent of those surveyed think society would be worse off if parents could alter the DNA of their prospective children to create custom-designed wunderkinder.
The idea of robots taking care of the elderly was also met with disaproval; 65 percent thought this would be a change for the worse. Inspiring even less confidence is the prospect of one day being able to pull off this stunt (only 39 percent of Americans believe that scientists will achieve teleportation in the near future):
Among current hot topics (i.e. drones and Google Glass), 63 percent thought we would be worse off if drones were given permission to fly through U.S. airspace, and 53 percent thought it would also be a negative development if people wore devices that constantly showed them information about the world around them.
In terms of that age-old expectation of flying cars, 19 percent of Americans said they would like to own a travel-related invention like said flying vehicle, but 50 percent said they would not ride in a self-driving car. Go figure.
In spite of skepticism surrounding certain aspects of technological advancement, the results of the study show that Americans' feelings are mixed-to-positive when it comes to how technology affects their lives -- Dystopian sci-fi aside, of course.
A crowd of around 300 men armed with stun grenades and Molotov cocktails attacked the base, in the south-east part of the country late Wednesday, the interior ministry said in a statement.
Scientists and food activists are launching a campaign to promote seeds that can be freely shared, rather than protected through patents and licenses. They call it the Open Source Seed Initiative.
The two cases are the first in the country since 1999. The virus spread from neighboring Cameroon. When polio is on the move in Central Africa, the toll can be tragic.
Once status symbols for newly minted millionaires, horses are now the voiceless victims in Spain's economic crash. Two sisters are adopting horses that might otherwise end up in the food supply.
Most often, when married business owners divorce, both relationships sour. But that's not always the case. Some couples have figured out a way to make their companies succeed even after they've split.
The Sichuan peppercorn that makes our mouths tingle activates the same neurons as when our foot falls asleep. Scientists are hoping the connection unlocks clues for how to turn those neurons off.
The former U.S. senator and Democratic presidential hopeful is one of three attorneys representing a boy in a medical malpractice case in North Carolina.
Poor weather conditions hamper an increasingly anxious search for 287 missing passengers. The ferry flipped onto its side and sank in cold waters off the southern coast of South Korea a day earlier.
A new study adds to growing evidence that free drug samples influence doctors' prescribing habits. The cost difference to patients can be hundreds of dollars per office visit.
According to the Nigerian military, all but eight of the girls kidnapped from a Nigerian boarding school have been rescued. As many as 100 girls had been abducted by militants earlier in the week.
Young ultra-Orthodox Jews are increasingly pursuing college degrees or joining the workforce. That's challenged matchmaking customs and led to a new service that connects like-minded men and women.
More than a dozen business school deans gathered at the White House today to talk about how to make the workplace work better for women and people with families. The meeting was part of the lead-up to a bigger Working Families summit coming up in June.
The White House holds a lot of these sorts of gatherings. There have been summits on everything from job creation to food marketing to diversity in the tech industry. So what actually gets done?
“Everybody likes to come to the White House, come to Washington, have their picture taken,” says Bob Guttman, who teaches media and politics at Johns Hopkins University. “ In terms of policy, I think it’s less important.”
One way to make the events more than a photo-op is for organizers to ask for specific commitments, as the White House did last year when college presidents gathered to talk about expanding opportunity for low-income students.
“So just that one project alone – clearly there’s been some great momentum from the convening in January,” says Daniel Porterfield, president of Franklin & Marshall College, one of 10 schools that pledged scholarships after the summit.
The sometimes strange world of White House summits
by Marc Sollinger
Summit on Food Marketing: Michelle Obama is concerned with childhood obesity. So much so that last year her office convened a summit to get food companies and the media to push healthier food to America’s kids. Speaking to a group of parents, scientists, and representatives from the food industry, the First Lady urged everyone to make children’s health a priority.
Beer Summit: One of the most recognizable White House Summits wasn’t actually an official summit at all. But after a national uproar over the 2009 arrest of Harvard Professor Henry Gates, Obama met with both Gates and his arresting officer at what came to be known as the “Beer Summit.”
SelectUSA Investment Summit: As part of Obama’s push to bring jobs and investment money to the US, the White House convened a 1,300-person summit last fall that let global investors mingle with government officials and representatives from U.S. Companies.
Tech Inclusion Summit: This January summit was the highlight of an initiative to encourage diversity in the tech industry. Over 200 people participated and discussed ways to achieve President Obama’s goal of producing one million additional STEM graduates over the next decade.
Summit on Black Male Success: More a series of summits than a single event, this was an effort by EBONY magazine and the White House to host discussions throughout the country about the issues that face African American males. This series is a follow up to Obama’s “My Brother’s Keeper” campaign.
White House Summit on Working Families: Part of the reason business college deans are traveling to the White House, this summit will focus efforts on creating a more workable and equitable workplace. Taking place this June, it will convene business leaders and experts to talk about the issues.
Former New York Mayor Michael Bloomberg is committing more of his considerable fortune to getting gun safety laws passed. The initiative will support a grass-roots effort that seeks to enlist women.
Another day in which I pass on what I read in the Wall Street Journal this morning, comment on it, and have you guys tell me how wrong I am:
The Journal has a story about fish sticks, and how the fish stick industry is looking to get kids excited about fish sticks again. They say fish are transitioning from the frozen stick model to "a fillet that can be cut into a fish stick" instead.
I personally think that's gonna be a tough haul because... ew.
You should know, by the way, that I appear to be in a minority here at Marketplace Global headquarters, when it comes to feeling that way.
The big banks have been releasing their first quarter earnings reports over the last week, and they’re all over the map: Profits are down at JPMorganChase, up at Wells Fargo.
But one trend is clear from nearly all the banks: Consumers are doing a better job paying down their mortgages and credit cards.
“This is not an unusual phenomenon,” says Nancy Bush, banking analyst and founder of NAB Research, LLC. “It normally goes on after a financial brush with death like the one we had in the years 2005 to 2008.”
Both consumers and the big banks have changed their ways since those dark days. Banks are more cautious about who they lend to. And, we, the public, are a lot more careful with our credit cards and other loans.
“Credit card and auto delinquencies have been hovering around all time lows for the last several quarters,” says Steve Chaouki, head of financial services at the credit reporting agency TransUnion.
Look at just about any big bank’s earnings report lately, and the trends are clear. JPMorgan Chase’s earnings, for instance, shows four charts under the heading "delinquency trends". All of them—whether home loans or credit cards—point straight down since 2010.
Total US home loan delinquencies are down more than 12 percent versus last year, according to Black Knight Financial Services.
But this isn’t just because Americans are getting better at managing debt. Banks have also been much stricter.
"In order to get a mortgage loan these days, you need to have a high credit score, so these borrowers are already more responsible,” says Kostya Gradushy with Black Knight’s Data & Analytics division.
But all this responsibility can have a downside for the economy: Careful, responsible Americans tend to spend less - which means retailers won't be thrilled.
Former New York City mayor Michael Bloomberg is spending $50 million to fight the National Rifle Association on gun control. This is not the first time Bloomberg has used his private foundation to contribute huge sums of money to nonprofits. He’s has given $50 million to fight coal companies, to clean up the oceans and to promote women’s reproductive rights.
In terms of gun control, Bloomberg’s $50 million is a huge amount to spend in a single year. The NRA spent just under $3.5 million on lobbying in 2013, and the Brady Campaign, a gun control advocacy group, has an annual budget of just over $3 million. Bloomberg’s $50 million will fund a network of smaller nonprofits organized under one large umbrella group called Everytown for Gun Safety.
Stacy Palmer is the editor of The Chronicle for Philanthropy. She says this money will help these smaller grassroots groups eliminate some of the redundancy in their organizatio,n “and make them a lot more efficient.”
Professor of philanthropic studies Mark Hager says large donations allow a group to fund big campaigns on a particular issue. “It can stop and take stock of that and really give its attention to marketing or lobbying efforts,” says Hager.
Private foundations are prohibited from lobbying for legislation and supporting political campaigns. But, says writer Joanne Barkan, “private foundations are allowed to spend as much money as they want on educating.” For private foundations like Bloomberg’s, the Koch brothers’ and the Gates', the difference between Gates’ educating a member of Congress and lobbying one is often impossible to distinguish.