Medical Debt Now Outweighs All Other Personal Debt in U.S.​​​​​​

Although Americans’ overall medical debts have decreased in the decade since the Great Recession, medical bills now outweigh all other sources of debt combined as the largest contributor to personal debt in the U.S., fiercehealthcare.com reported. Based on a sample of debt listings reported to a single credit bureau between 2009-2020, researchers found average medical debt to be highest among those living in the South and in lower-income communities, according to a new study published in JAMA. Further, the nationwide decline in medical debt that kicked off around 2013-2014 was greater in states that promptly chose to expand Medicaid in 2014 than in those that expanded a later year, the researchers wrote. Decreases in medical debt were lowest in nonexpansion states, which frequently claimed the highest levels of medical debt to begin with. “These estimates are consistent with studies that have used experimental methods to establish a causal link between Medicaid coverage and reductions in medical debt,” the researchers wrote in the study. By the tail end of June 2020, individual Americans had a mean medical debt of $429 — $39 more than the combined average of all other non-medical debts such as credit cards, utilities and phone bills, the researchers wrote. Extrapolating their findings to the entire population would suggest that Americans’ total medical debt could be as high as $140 billion. However, the researchers warned against using this number as a reliable estimate due to limitations in their data, which included the use of consumer credit reports from just a single bureau (TransUnion) and the lack of a means to measure medical debts that weren’t reported to the bureau by third-party debt collectors. The researchers also noted that their data would not reflect medical debts incurred during 2020 and the COVID-19 pandemic, which, along with accompanying financial hardships, could have a sizable impact on the country's personal debts.​​

Volatile Interest Rates Cause Mortgage Demand to Drop​​​​​​

Mortgage rates have been on a roller coaster lately, albeit a low-riding one, CNBC reported. A mixed picture of rates last week, though, was enough to put the brakes on a recent rise in refinance demand. The average rate for 30-year fixed loans with conforming balances and a 20% down payment increased slightly to 3.11% from 3.09% after two weeks of declines, according to the Mortgage Bankers Association. The 15-year fixed-rate loan, used by about 1 in 5 refinance borrowers, decreased to 2.46%, the lowest level since January. “The 10-year Treasury yield dropped sharply last week, in part due to investors becoming more concerned about the spread of Covid variants and their impact on global economic growth,” said Joel Kan, an MBA economist. As a result, applications to refinance a home loan fell a seasonally adjusted 3% last week and were 18% lower than a year ago. Refinance demand has been lower on an annual basis for a while because interest rates hit more than a dozen record lows last year, resulting in soaring refinance demand. Mortgage applications to purchase homes fell 6% last week and were 18% lower year over year. High home prices are sidelining some buyers, and while the number of new listings is finally rising, the supply of homes for sale is still historically low, especially so in the more affordable categories.
​

Analysis: Companies Push Prices Higher, Fueling Inflation. Will They Keep Going?​​​​​​

American companies are starting to test the extent of their pricing power: Faced with rising costs for materials, transportation and workers, companies are charging more for products from metal fasteners to Oreo cookies, helping fuel inflation like the U.S. hasn’t seen in more than a decade, according to an analysis in the Wall Street Journal. As customers accept the price hikes, some big companies said they expect to raise prices even more. Others are more cautious, unsure whether U.S. consumers have the appetite to absorb additional increases. What companies decide will go a long way toward answering a question that has surged to the top of executives’ and economists’ agendas this year: Is the recent jump in inflation transitory, as the Federal Reserve predicts, or persistent, as some executives warn? How hard companies continue to push to raise prices, and how well they succeed, is at the heart of the current concern about inflation. The more companies succeed, the more traction price inflation is likely to gain, keeping prices high and rising. If the price increases falter, inflation is likely to ease as labor and supply shortages diminish and the pandemic’s economic effects recede. Of about a dozen large U.S. companies examined by the Wall Street Journal, most said they have succeeded in raising at least some prices but are unsure whether they can continue to do so. Several said they plan or hope to push additional price increases through. Most economists expect inflation to decline from its current 13-year high but are divided on when, or whether, it will fall enough to satisfy the Fed.
​​

Education Dept. Shows Limits of Pandemic Relief by Fighting Borrowers in Bankruptcy​​​​​​

The Education Department is routinely contesting requests for bankruptcy discharges from people deep in debt and short on resources, according to court documents, the Washington Post reported. Consumer advocates say the practice runs counter to the Biden administration’s interest in helping distressed borrowers and undermines the department’s effort to reform its restrictive bankruptcy policy. What’s more, advocates say the department has been making unreasonable demands on borrowers in the middle of the public health and economic crisis. The Washington Post reviewed dozens of bankruptcy cases from New York to Arizona involving federal student loans and found a similar pattern of demands. “Why is the government continuing to take such harsh stances against these struggling borrowers at this moment?” questioned Dan Zibel, chief counsel at the National Student Legal Defense Network, a nonprofit organization. “The department should take a hard look at what it’s doing, what message it’s sending to borrowers.” As the creditor for $1.6 trillion in federal student loans, the Education Department has the right to contest a bankruptcy discharge to maintain the fiscal integrity of the lending program. But consumer groups argue the department also has an obligation to help struggling borrowers. Even the department has given a second thought to its policy, asking the public in 2018 for feedback on whether updates were needed. At the time, the agency questioned whether borrowers were being discouraged from seeking help because its standard is too prohibitive. The Education Department said it is still committed to reviewing its policy on bankruptcy discharges to assess the types of changes that could better protect borrowers.
​​

Analysis: Bankruptcy-Friendly U.S. Extends Lead as Haven of Foreign Filers​​​​​​

There’s still at least one thing Americans do better than anyone else in the world: Corporate bankruptcies, Bloomberg News reported. Since 2013, hundreds of foreign businesses have taken advantage of U.S. bankruptcy courts to slash debt and clean up their balance sheets, according to an analysis of legal filings by Bloomberg News. The reason is simple, lawyers and former judges say: America has the most company-friendly bankruptcy rules in the developed world. “The lawyers and judges know how to move things through the system quickly,” said Prof. Bruce Markell, a law professor at Northwestern University School of Law, a former U.S. bankruptcy judge who consults with the International Monetary Fund on insolvency issues, and the primary drafter of the bankruptcy law used by the country of Kosovo. At least a dozen big foreign corporations, including airlines, oil drillers and satellite companies, filed bankruptcy cases last year in the U.S., according to court records and a law school tally. That’s more than double the previous high mark in 2002 found in the Bankruptcy Research Database at the UCLA School of Law. When smaller cases are counted, the numbers climb even higher. Nearly 1,300 chapter 11 petitions were filed by hundreds of companies based outside the U.S. from March 2013 to March 2021, according to annual reports compiled by the Administrative Office of the U.S. Courts. The actual number of companies that seek chapter 11 is lower than the number of petitions in the record because larger firms typically file a separate petition, or case, for each subsidiary. Although some countries, including the U.K and Germany, are changing their bankruptcy laws to be more like America’s, the system in the U.S. is still the premier destination for the biggest, most complicated restructuring cases, said Markell.
​​

U.S. Jobless Claims Rise to 419,000 from a Pandemic Low​​​​​​

The number of Americans seeking unemployment benefits rose last week from the lowest point of the pandemic, even as the job market appears to be rebounding on the strength of a reopened economy, the Associated Press reported. The Labor Department said Thursday that jobless claims increased last week to 419,000, the most in two months, from 368,000 the previous week. The number of first-time applications, which generally tracks layoffs, has fallen steadily since topping 900,000 in early January. Economists characterized last week’s increase as most likely a blip caused by some one-time factors and partly a result of the inevitable bumpiness in the week-to-week data. Applications for jobless aid jumped last week, for example, in Michigan, where some auto plants have temporarily shut down production because of supply shortages. “I do not worry that this reading signals a sudden weakening in labor demand,” said Stephen Stanley, an economist at Amherst Pierpont Securities. “In fact, I am quite confident that it does not.” Americans are shopping, traveling and eating out more as the pandemic has waned, boosting the economy and forcing businesses to scramble for more workers. Complaints by companies that they can’t find enough workers have led 22 states to prematurely end a $300-a-week federal unemployment benefit, which comes on top of state jobless aid. Twenty states have ended their participation in two other federal programs — one of which provides benefits to the self-employed and gig workers, and another that serves people who have been out of work for six months or longer.
​​

Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!

Tap into Rochelle’s Daily Wire via the ABI Newsroom and Twitter!