Bailing out homeowners may be tricky, blogger says
By Scott Kirsner, Globe Correspondent | October 13, 2008
McCain's mortgage proposal. During last Tuesday's presidential debate, Senator John McCain said that, if elected, he'd order the Treasury Department to purchase up to $300 billion worth of consumer mortgages and renegotiate the loans to match each home's current value. Waltham investor Mike Feinstein reacted on his blog:
The idea is to get people into a loan they can afford so they don't lose their house. It sounds like a nice idea to help out homeowners, but I think that it is an incredibly slippery and expensive slope.
First of all, the taxpayer will be taking the loss on all of these mortgages. That seems like one of the biggest government handouts ever. Secondly, this loan will bail out banks who over-extended credit, falsified appraisals to inflate home values, or engaged in other practices to over-mortgage properties. These banks will be made whole.
However, the most complicated part is bailing out the homeowners who over-mortgaged their property and spent the money on something else. There are plenty of people who mortgaged their homes to the hilt and spent the money on new cars, vacations, etc. This was encouraged by banks. Now, the taxpayer is going to pay for this profligate spending . . .
The worst is that this rewards all the people who took advantage of the easy credit at the expense of those people who lived conservatively and didn't end up in trouble. www.thefeinline.com
Areas of agreement. There may be a few ideas for reforming the nation's healthcare system that Democrats and Republicans can agree on, writes Harvard Pilgrim chief executive Charlie Baker. He says that on several recent panel discussions, at least four suggestions for dealing with exploding healthcare costs and bureaucracy had "pretty broad ideological support."
Encourage Medicare to pay more for primary care, and less for specialty care. The whole evolution of the Medicare physician fee schedule for the past 30 years has been to pay more for technology and less for time. As a result, the whole healthcare system pays more for technology and less for time, since all the payors shadow Medicare payment policy. This trend has resulted in more specialists, fewer primary care providers, and an increasingly fragmented care delivery system.
Start doing some Medicare demonstrations in which Medicare pays for clinical outcomes and not simply for volume. As it stands now, the whole system is primarily built on a fee for service platform - so the key to revenue generation is to do more stuff. If we ever want to encourage quality first, we have to figure out a way to pay for it, one illness at a time.
Fix the relationship between Medicare and Medicaid for low-income seniors who qualify for both programs. As it stands now, neither program coordinates any of its activities or payment policies with the other, and the result is a tangled mess of incredibly expensive, overly bureaucratic ping pong between the two agencies - with the often frail, medically needy, low income senior sitting in the middle.
Make living healthier lives a priority. Professor David Nash at Jefferson College has estimated that only three percent of Americans do the four simple things that matter most in living a healthy life:
Don't smoke (we've actually made a lot of progress on this one, and it shows)
Eat a decent amount of fruits and vegetables
Get some exercise (20 minutes, three times a week)
Advice for prospective partners. Small start-up companies often seek alliances with bigger firms to lend them credibility or to help with marketing or distribution. Cambridge software entrepreneur Dharmesh Shah says he often advises start-ups to avoid partnerships, no matter how alluring.
Let's dig a bit deeper into some of the analysis that I'd put into making the decision.
Beware The Distraction: Big companies have something you don't. Time. They can commit one or more people to the ongoing task of "exploring partnership opportunities." You probably can't. You have a day job (and probably a night job, too).
PR Glow Lasts A Day, Lock-In Lasts Longer: One of the reasons big partnerships are so tempting for a start-up is you envision the positive press. It adds legitimacy. It makes your start-up feel more "real." . . . But this glow is short-lived. On the other hand, even after the PR glow fades, the terms of your deal don't. There are a number of tricky deal terms that could be problematic later.
What Do They Have To Lose? What About You? As you overcome your initial excitement about all the opportunities that a partnership with [Some Big Powerful Company] would bring, it's extremely important to try and think through the down-side scenario. What's even more important is ensuring you have some way "out" in the event that things don't work out the way everyone had hoped.
Have they succeeded with partnerships before? Not all partnerships are created equal, and there are many different types of partnerships . . . When exploring a partnership with Some Big Powerful Company, one of the key things to figure out is if they've succeeded with prior partnerships they've done. If they haven't done these kinds of things before, and you're one of the first, you're in for some pain. www.onstartups.com
