I don’t claim to be an economist, but I will use this space to relate and comment on what I hear and read regarding the economy.  At a recent United Way of Dane County Board Meeting I was fortunate to participate in a discussion with Dennis Winters, Chief Labor Economist for the State of Wisconsin regarding the current and near future status of our economy.

My takeaways from this discussion were:

• Many of the Government’s economic measurements indicate that this is the worst recession since the 1930’s and the longest in duration in the post-war era.
• Many economic experts says we are at or near the bottom of this recession.  While there is always a risk of another dip, there seems to be light at the end of the tunnel.  And no the light isn’t another train coming at us.
• Consumer confidence is climbing; however, industry is taking longer to turn around.
• Consensus among economists forecasts an upturn in the economy in the late summer or early fall of 2009.  However, unemployment rates will most likely not improve significantly until six to twelve months after the upturn occurs.
• A wild card in the recovery effort will be the banking situation.  If businesses can’t get access to cash from banks to ramp up production the slope of the expected upward trend will flatten.
• Now is the time to invest in human capital.  Increasing the level of competency in your organization pays off in any economy, but the current state of the economy allows this to occur at a lesser cost.
• Employees should be investing in themselves as well.  Employees making more than $30,000 annually are expected to have secondary education along with specialized skills.

Thanks to continued strong growth in our revenue, TASC is weathering the economic storm just fine.  Operational effectiveness and efficiency will be a focus area for us.  Increasing “cash available to invest” is important for a company like TASC, who relies on its own resources and traditional banking (not a public company with no venture capital or private equity, etc.) to fund our growth.  With small operational adjustments that won’t reduce TASC’s level of overall customer satisfaction, TASC will be positioned well for the short-term moves necessary to ensure long-term stability and enhance TASC’s customer relationships.

The headlines are appearing at a frenetic pace.  “Array of Taxes Considered for Overhaul,” Senate Finance Members Look for Ways to Shrink Price Tag,” and “Democrats Work to Pare Cost of Health Care Bill” are just a few that caught my eye this week.  These headlines, of course are talking about the initiative to reform the U.S. health care system.  According to these articles, Legislators are considering everything from lowering the amount of subsidies offered to help uninsured Americans buy coverage, to raising the payroll tax that funds Medicare in an attempt to afford this overhaul of our health care system.

TASC applauds the effort to reform our nation’s health care system and believes that making health care coverage more affordable and accessible is long overdue.  Helping make health care affordable is really at the core of what TASC does.  However, several of the financing options under consideration seemingly run counter to that objective.

The employer-based system and the range of coverage options available have succeeded in extending coverage to millions of working Americans and their families.  I agree with the President when he says that anyone satisfied with the health coverage they currently receive through their employer should be able to keep that coverage.  If I had the opportunity to sit with the President or my Representatives to discuss this issue, the points I would share are as follows:

• Any attempt to materially alter the current exclusion for health coverage will be a burdensome tax on working Americans at a time when our economy can least afford it.
• Many policy makers have pledged to ensure that Americans who like their current coverage will be able to keep it in a reformed health care system.  Any initiative to abolish account-based plans is counter to that pledge.
• Account-based plans lead to better consumer engagement in their health care decisions, which has been shown to help reduce unnecessary health care spending.
• Account-based plans are particularly important for individuals with chronic illnesses. Even if cost-sharing is nominal, out-of-pocket spending for a person with a chronic illness can quickly add up.
• Account-based plans are beneficial in helping working Americans afford health care in areas like dental, orthodontia and vision.  These are areas where traditional coverage falls short or should not be extended.

Now, I am not encouraging or discouraging you from talking to your Legislators.  However, if you are so inclined, these bullets would be a good starting point for that discussion.  Whether or not you have occasion to speak with your Representatives, these remain interesting points.  At the very least, keep these in mind as this process to reform our health care system continues to play out.  More headlines to follow…stay tuned.

It is important to keep in mind that even as the President and others push for a health care reform bill to be sent to the House prior to Congress’ recess this August, that two common occurrences could affect the timing of any proposed legislation.  First, the creation, mark-ups, and the resulting floor action often delays bills.  Second, in a lot of cases, not just one single bill or piece of legislation on an issue is put forth.  For example, in the case of health care reform, at the same time you have action in the House, you may have two actions in the Senate.  Or even more.  At this point, Senator Max Baucus (D-Montana), Chair of the Senate Finance Committee and Senator Edward Kennedy (D-Massachusetts), the Chair of the Health, Education, Labor and Pensions Committee are potential sources of proposed legislation.

It will be important for TASC to evaluate and respond to the multiple proposals and various components of the proposals.  It will be equally important that we do so in a prudent manner.  You will find TASC’s response to be methodical in nature.

Too many times I have seen wasted energy spent on items that are incorrect, premature, or not likely to come to fruition.  A lot will be thrown against the wall, but only a small amount will stick.  Expect TASC to respond in a manner that supports our brand promise:

• Help protect the customer’s bottom line…by not wasting your time in unwarranted areas and instead spending time helping our customers capitalize on valued opportunities.
• Give the customer peace of mind…by keeping you informed of the potential impact these proposals could have on you, on them and on TASC.
• Provide innovative solutions…by placing energy into making health care more affordable, including but not limited to, by retaining the tax exclusion of their health care expenses.

At this time, June 2009, there isn’t any legislation on the floor. On Tuesday, June 4, 2009, President Obama stated that mandates on employers should not include small businesses and that any mandates on individuals requiring them to have insurance coverage should include hardship waivers for those who cannot afford the coverage.  At this same time and not in total alignment with the President or Senator Baucus, Senator Kennedy is expected to unveil a sweeping health care reform plan that requires every American to have insurance and mandating that employers contribute to workers’ coverage.

I suggest that our customers and representatives give this issue two to four weeks to gain a more clear picture.  In support of our previously stated objectives, TASC and TASC’s CEO Blog will remain focused on fact-based communication during this time and keep the opinion-based communication to a minimum.

We knew the push for health care reform and the corresponding debate over health care reform, would eventually heat up.  The idea of health care reform, with the impending debate and its potential impact on our customers’ lives is nothing new for TASC.  We have watched, participated, and reacted to this debate for more than three decades.  I personally have lived through this for the last 26 years.

So what is so special about this time?  Certainly not the fact that health care costs are going up.  We are not going to stop that.  Look at two simple facts: (a) the largest segment of our population are becoming senior citizens, followed by the next largest group moving into their fifties, and (b) our life expectancy is longer.  I am not a scholar, but I can read the writing on the wall.

So what do we do?  We make some changes, shifts, and adjustments to our behavior to contain costs.  And, we attempt to do it in a manner that does not leave even more people behind.  What makes this time so special is the alignment of control in the House, Senate and the administration.  With the legislative and executive branches working together, the potential of making something happen exists now more than at any time in recent history.  This, of course, does not mean something will happen, there’s a lot more to it than that.

The latest debate is about more than just how to finance health care reform.  It includes improving our health care delivery system and the health related behavior of our society.  However, for the purpose of future TASC CEO Blogs we will focus solely on the financing portion of the debate.  Some in the media will sensationalize this debate and will promote the whole idea of “winners and losers” in an attempt to sell more magazines and newspapers.  I will not do that. I am here to help you understand the issues and to continue to serve you as a premier third-party administrator of tax advantaged health accounts and related services.

Each one of the following posts to the TASC CEO Blog will have a link back to this post to remind you and us of why we are here and why we need to be heard.

As we watch our nation’s economy taking baby steps towards turning around, there is still a lot of talk regarding stimulus packages.  While the politicians argue the merits of one package over another, I know of a stimulus package that’s been in place for years.  The one I’m thinking of continues to reap benefits, benefits that bear talking about again and again…  It’s the TASC AgriPlan and BizPlan stimulus package of course!  This tried and true approach is based on saving tax dollars for self-employed individuals and small business owners.

It’s long been known that every dollars that comes into a local economy produces more than just a dollar’s worth of benefit to the community before it leaks back out.  Simply stated, every dollar created by a locally-owned business will turn over many times within that same local economy.  This “Multiplier Effect” purports that a dollar spent at a local business will stay in the local economy for quite awhile.  For example, spend $1 at the corner grocery store, and that dollar will have a good chance of being spent at another local shop; from there it may be used at the farmers’ market before making its way to the local movie house.  Besides turning over as many as six times in the local economy — thereby helping three to four businesses — that dollar is paying local employees, consumers who will in turn put money back into the local economy.

Now, let’s look at the impact AgriPlan and BizPlan can have locally.  The average AgriPlan and BizPlan Client saves $3,000 in taxes just by participating in the Plan.  That means $3,000 extra dollars are available to that small business owner to spend.  The business owner may use some of that savings to pay vendors (most likely other small local businesses) for products and services they use in their business.  They may use some of the savings to pay wages to an employee, who in turn spend some of the wages locally.  And finally, some of that tax savings is spent by the business owners for their own personal needs.

Some economists figure that original $3,000 in tax savings will turn over as many as six times, with the potential multiplier effect climbing to $18,000.  That’s $18,000 fueling the local economy.  And that’s from just one AgriPlan or BizPlan Client saving the average amount.  Now, add several more Clients in one geographical area, and take into consideration the reality that some will save substantially more than the average Client.  I’ve done the math … it’s easy to see what an impact this could have on a local economy.  Now if that doesn’t help Main Street, I don’t know what will!