New health care plan and your wallet

NEW YORK (CNNMoney.com) -- The health reform debate is still far from the finish line, but Wednesday brought an important milestone: A key senator's highly-anticipated proposal echoing many of the reforms that President Obama is calling for.

"My bill is very, very similar to the framework that the president was talking about when he gave his message the other day. It's very similar," Senate Finance Committee Chairman Max Baucus, D-Mont., told reporters.

The proposal's price tag, according to the Senate Finance Committee, is $856 billion over 10 years. It would be paid for through cuts and savings from government health programs and through new taxes and fees on health industry players. Over 10 years, estimates are that the plan could reduce the deficit.

Both Democrats and Republicans have expressed consternation about different elements in the Baucus proposal. (Read full text of the Baucus proposal.).

Still, it is considered to have the best chances of passing once amended.

So what might it mean to your wallet?

Well, first of all, the summary of the proposal alone is 223 pages. So it's impossible to offer a comprehensive rendering of all the potential effects.

But here's a quick look at several key measures that could change how much individuals end up paying for health care.

Requirement to buy insurance: With some exceptions for very low-income individuals and those with religious objections, the Baucus proposal would require that individuals buy health insurance every year.

The penalty for not buying insurance would be a fine running as high as $3,800 a year for a family that makes more than 300% of the federal poverty level. For families that forgo coverage and make less than that, the fine would be $1,500. The fines for individuals would be, respectively, $950 and $750.

Here's some context for those fines: A survey from the Kaiser Family Foundation released Tuesday found that the average cost of premiums for employer-sponsored insurance topped $13,000 for family coverage, of which the worker paid $3,515. The average cost for an individual policy was $4,824, of which the worker paid $779.

State-based insurance exchanges: The Baucus proposal like other Democratic plans would create insurance exchanges -- or supermarkets -- where individuals could comparison shop for policies.

Insurers participating in the exchange would offer four levels of coverage -- bronze, silver, gold and platinum. All plans must provide a basic level of benefits, including coverage of preventive and primary care, maternity and newborn care, dental and vision care, and prescription drugs, among other areas.

Plus, plans in most instances must cover 100% of the cost for preventive care.

Insurers would not be permitted to cap the amount of benefits a policyholder receives.

And insurers selling plans directly to individuals -- whether on the exchange or not -- would not be allowed to deny anyone coverage based on a pre-existing condition or rescind a policy when premiums have been paid in full.

Health affordability tax credits: For Americans making between 100% and 400% of the federal poverty level, the Baucus proposal would subsidize premium costs for insurance purchased on state-based exchanges. The amount of the credit would be based on a sliding scale.

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A person eligible for the affordability credit would pay his portion of the premium to the insurer and the federal governmentwould pay the rest.

In addition, the proposal would subsidize out-of-pocket health costs for co-payments and deductibles for Americans making between 100% and 200% of poverty.

The subsidy provisions in general are less generous than in other plans put forth by Democrats, raising concerns among some that insurance could still prove costly for many.

"The plan would require premium contributions from low- and moderate-income individuals and families that are likely to be above what many of them can afford," said Robert Greenstein, executive director of the liberalCenter on Budget and Policy Priorities, in a statement.

He added, however, that he believes the Baucus proposal is a good starting point and that"it would be a great mistake to reject the plan and end up with nothing."

Standardization of Medicaid eligibility: The Baucus proposal will make Medicaid benefits available to anyone whose household income is at or below 133% of the federal poverty level.

That translates into $30,000 for a family of four or $14,400 for an individual. Currently, eligibility for Medicaid can vary by state, said Paul Fronstin, director of the health research program at the Employee Benefit Research Institute.

States have been expressing concern that theywon't be able to afford a Medicaidexpansion. The proposal calls for the federal government to provide extra funding to states to compensate them for adding newly eligible Medicaid beneficiaries.

Taxes and fees on insurers: The Baucus proposal would pay for reform in part by imposing $349 billion worth of taxes and fees on insurers and other health industry players, such as pharmaceutical and medical equipment manufacturers.

The tax would be limited to insurers who provide high-cost insurance plans -- sometimes called "Cadillac plans."

It would be a 35% excise tax on insurers for plans that cost more than $8,000 a year for individual coverage and $21,000 for family coverage. The thresholds would be adjusted for inflation annually and would be set higher in the 17 highest-cost states for the first three years.

As with any business tax, the expectation is that insurers will pass that added cost along to consumers.

It's not clear whether insurers would spread the added cost to policyholders in all of their plans or only to those who buy the high-priced ones.

"Premiums are going up for somebody," Fronstin said.

Indeed, America's Health Insurance Plans, the insurance industry trade group, said as much in a statement following release of Baucus' proposal. "New taxes on health care coverage will have the opposite effect by making coverage less affordable for families and employers across the country."

- CNN's Dana Bash and CNNMoney's Jennifer Liberto contributed to this report.  

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Get out of a career rut

NEW YORK (Fortune) -- Rick Smith likes to tell stories, and none more than the time his doctor happily announced to him after a routine physical, "Rick, you're completely unremarkable!"

Looking at Smith, one can appreciate the doc's point of view: With his booming laugh, floppy hair, and impressive frame, Smith appears to be both the picture of health and a dead ringer for every nice, middle-aged, Midwestern gym teacher I ever had. Everything about him screams regular guy, and that, it turns out, is the quality that has defined Rick Smith's career.

But perhaps not for the reasons you think. "Diagnosis: Ordinary" may have been an ill-advised attempt at medical humor, but for Smith, it was an all too apt description -- of his professional life. And recognizing that rut spurred him to get himself out of it.

He took on a big research project at his firm, executive search company Spencer Stuart; turned it into the 2003 national bestseller "The Five Patterns of Extraordinary Careers," written with fellow recruiter Jim Citrin; promptly got fired once it became clear he was far more engaged in authoring than in headhunting; and used that opportunity to launch his true labor of love, World 50, a global network for senior executives.

That leap -- the incredible trajectory of seemingly unlikely events that took Smith from lackluster to thought leader -- is the basis of his new book "The Leap: How 3 Simple Changes Can Propel Your Career from Good to Great," out today.

And it's based on Smith's fundamental notion that a normal person -- a person like him -- doesn't have to suffer in indefinite obscurity unless he wants to, as demonstrated by everyone from Bill Gates and Live Aid founder Bob Geldof to Unilever SVP Silvia Lagnado, who launched Dove's "Campaign for Real Beauty." (There's also a fair amount of industrial psychology, theories of brain evolution, and a discussion of Aristotle's "Invitation to Philosophy" by way of evidence -- and all written in Smith's lively, conversational style -- but you'll have to get the book for that.)

However encouraging the anecdotes, though, unrutting oneself is difficult at any stage of life, and it poses a particular challenge for us Gen Yers, who -- faced with today's down market and our own high expectations --can quickly find ourselves stuck. So just how can Yers take the leap?

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1. Beware the "right" path. One might think that, given the plethora of career options available to college grads these days, we'd be excited to explore a few. But too many of us enter the workforce with that perfect plan in mind -- doctor, lawyer, um, I-banker.

"People think there are such a finite set of assumed right career paths," Smith says, "and they sort of judge each other by how well they're all doing on that same path. But that set path is right for maybe 1% of the people, and even if you get that right job, it might not be right for you."

So focus instead on figuring out what fits you best, and realize that the recession may actually be an advantage. As Smith puts it, "The bad economy doesn't let you fool yourself for another 10 years."

2. Do the work. It's hardly a shock that transformation takes work, but just how much can sometimes surprise us.

Most people don't discover their calling in a flash, and even those who think they have can end up in trouble. So rather than changing jobs -- which Smith calls the "most expensive way possible to find out about yourself" -- avoid late-breaking revelations by doing some low-risk research on your prospective paths through volunteering or seeking out mentors.

And be prepared to put in some hard time, as Spanx underwear creator Sara Blakely did. Knowing she needed to lose her corporate gig but unable to decide between stand-up comedy and her own business -- yes, you read that right -- she spent months performing for pennies as a comic and pitching her crazy unmentionables idea to incredulous manufacturers.

Only one concept panned out, of course, but she needed to explore both to be sure she'd made the right call.

3. Passion equals engagement. Passions are not just things we're good at, as we validation-obsessed Yers -- myself included -- can sometimes be made to believe. And they definitely aren't hobbies; you may love listening to music, but that hardly a music career makes.

And take Smith's friend, who dreamed of opening a bed and breakfast, only to realize four months into the experiment that, while he loved the idea in the abstract, he did not in fact like cleaning up after people.

So when it comes to professional passions, look beyond what you enjoy. "If you're going to get paid for something," says Smith, "you've got to be solving a problem. So ask yourself, 'What are the problems that I'm most energized about solving?'"

4. Think trajectory. As adventurous as we Yers can be with social networking and speed dating, Smith points out that, when it comes to advancement, we get far too fixated on the next promotion.

So he recommends thinking of five ways to get promoted -- the traditional one and four others. "The whole Darwinian process is not about making the right decision," he says, "but about making many decisions till you hit on the right one."

And should that promotion pan out, try to be sure you actually want it: Envision your promoted self five years down the road, write down that role's daily activities, and whether you cringe or somersault, you'll know what to do.

5. Be open -- and selfless. Before you dismiss this last bit as a hippie delusion, consider Unilever SVP Lagnado. An extremely mild-mannered middle manager, Lagnado was a "brand manager for Dove with very little power and a team of six people stuck somewhere in Dilbert land," Smith says.

But charged with a new Dove campaign and motivated by frightening statistics on female self-perception, Lagnado became convinced the ads ought to be about real women with real bodies. To enlist reluctant senior leaders, her team taped executives' daughters talking about their own body flaws and presented the tape to shocked silence and tears.

What started out as a selfless notion is today an iconic campaign -- and Lagnado is now in charge of Unilever's most important brands.

But there is perhaps no better example of leaping than Men Without Youth -- Rick Smith's garage band. As his research started to show real patterns, Smith wondered where else he could apply it, and naturally, he settled on his "local band of dads," who played parties in Atlanta but were admittedly "not that good."

Pondering if the band could make the leap, too, Smith shot a joking e-mail to a promoter he'd met in passing long before. And last January, Men Without Youth opened for Lynyrd Skynyrd in front of 1,200 people.

It was so unexpected that, two months after the gig was booked and practice had begun, the band's lead guitarist still didn't think Smith was serious. "The point is that we had no right to aspire to that," Smith says, "but once you open yourself to the possibility, it just happens; the path starts to reveal itself."

For more on "The Leap," and to take Smith's new "Primary Color" career assessment test, visit leapbuilder.com .

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Dollar at risk of steep drop vs. yen

TOKYO (Reuters) -- The yen may surge against the dollar in coming days if it breaks through the ¥90 level, with traders worried that a complacent market may be caught off guard and add fuel to a sharp move.

A confluence of factors -- a new government stepping in with a hands-off view on currency intervention and a long holiday weekend in Japan -- is leaving the dollar prone to a deeper drop, possibly even beyond the 14-year low of ¥87.10 hit earlier in the year.

"A move below ¥87.20 runs the risk of a sharply accelerating move," said Gerrard Katz, head of North Asia foreign exchange trading at Standard Chartered in Hong Kong. He said some players were not as exposed at these levels as last year.

The yen pushed higher on Wednesday after incoming Finance Minister Hirohisa Fujii made clear he was not prepared to step into the market, saying he is opposed to intervention unless the market is volatile and he sees the current rise as rapid.

One senior FX options dealer in Tokyo is even staying close to town during next week's five-day break through next Wednesday, fretting that there could be a disorderly dollar fall below ¥90 because so many market players are not expecting such a move.

The steady climb against the dollar and other currencies has kept gauges of volatility subdued and made hedge funds and other players reluctant to buy implied volatility, especially before the long weekend and an upcoming stretch lacking market-moving events.

Speculators pushing yen

Implied volatility shows how the options market is bracing for a currency pair to move over a given time frame, with realized volatility an important factor in the pricing.

A consensus has formed that even if the dollar falls below ¥90, the U.S. currency is unlikely to slide very far. Thus market players who normally seek protection in the options market are not buying yen calls or taking other, similar positions.

Over the weekend, Japanese importers and other companies that are typically buyers of the dollar for trade settlements are going to be absent even as speculators might try to push the yen as far as they can.

On the other hand, exporters that are not sufficiently hedged against a stronger yen may be forced to buy into a dollar/yen slide, exacerbating the move.

One senior yen trader at a European bank in Hong Kong said: "You can hear the exporters screaming from here."

The latest Bank of Japan tankan survey and individual company reports show that many of the biggest exporters had planned for a dollar/yen rate near ¥95 for the business year to March, meaning that current levels are likely testing their pain threshold.

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"An unexpectedly sharp slide in dollar/yen, breaking below a significant level, could trigger panicky dollar selling from investors and corporates who had been delaying their dollar selling, and such selling may snowball," said a senior options trader for a big Japanese bank in Tokyo.

"It is only a risk scenario, but we may have to come in even during the holidays if something drastic happens. People don't want to be called in and have to drive long hours returning to Tokyo, as happened to some people after the Lehman collapse. It is a better idea to stay in Tokyo."

Intervention hard to justify

Implied volatility on one-month dollar/yen options were quoted at 13.9% late in Tokyo on Wednesday as the dollar fell to ¥90.12, below the ¥90.18 hit on Monday -- its weakest level since January when it fell down to ¥87.10 on trading platform EBS.

That level of implied volatility, or vol, is well within a rough range of 12.5% and 15.5% that has held in place for the last four months because the spot market moves lately have been so subdued.

Indeed, when looking at how much dollar/yen has moved on a rolling one-month basis -- its realized volatility -- it is only 8.5% and fell as low as 7.3% last week, what was the lowest since early 2008.

The low realized volatility is keeping a lid on implied vols and also means it would be hard for officials to justify intervening based on volatility, which is commonly cited by Group of Seven powers and others in justifying intervention.

Traders said a hefty barrier option, which is activated once the underlying reaches a certain level, is located at ¥90 and due to expire on Sept. 28. The option, which is believed to be held by a Japanese corporate for hedging needs around the fiscal half-year end, may help keep dollar/yen around that level in coming days.

Highlighting how market players are not positioned for a further dollar fall against the yen, benchmark one-month risk reversals are only favoring options to buy the yen by 2.2%, according to broker GFI.

That level is up slightly from August but is still showing very little positioning after dollar/yen risk reversals, which show how the options market is leaning in different currency pairs, reached 3.5% in July when the dollar started breaking down against the yen.

Those risk reversals reached historical extremes at 11.5% last October during the yen's surge as huge carry trades and related derivatives blew up during the post-Lehman market plunge -- levels that option dealers in Tokyo had never thought they would see.

Dealers are worried that more forced derivative desk hedging to buy the yen could emerge on a drop below ¥87.10 and around levels such as ¥85.

"The timing is not good for Tokyo players. We cannot take risks before half fiscal year-end," said a proprietary trader at a Japanese bank in Tokyo. 

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Retail Sales

NEW YORK (CNNMoney.com) -- Retail sales surged in August, with the Cash for Clunkers program giving auto sales an extra boost, the government reported Tuesday.

The Commerce Department said total retail sales jumped 2.7% last month, compared with July's revised decline of 0.2%. Economists surveyed by Briefing.com predicted August sales increased 2%.

Sales excluding autos and auto parts rose 1.1%, compared to a 0.6% decrease in July. Economists expected a gain of 0.4% in August sales, excluding auto purchases.

"With broad-based gains, it's hard to say any sector is a standout, which is great," said Adam York, analyst at Wells Fargo Securities. "We had promising core numbers, but we don't want to call a trend out of one month."

Clunkers revs up auto sales: The decline in July had snapped two straight months of gains, surprising economists who expected an increase on car sales from the Cash for Clunkers trade-in program.

However, the August index got a lift from the Clunkers program, which launched July 27. Vehicles purchased after July 1 were eligible for refund vouchers worth $3,500 to $4,500 on traded-in cars with a fuel economy rating of 18 miles per gallon or less.

The program ran through its initial $1 billion in its first week, and lawmakers approved an additional $2 billion in funding on Aug. 7. Car dealers had until Aug. 24 to sign deals under the program.

The Clunkers benefit was clear in the auto sales index, which rose 11.9% over July. Some of the other biggest sales winners were gasoline stations, whose sales rose 5.1%, as well as clothing and department stores, which each rose 2.4%.

"We expected a big jump in autos, obviously, but we got decent increases elsewhere when we expected only modest gains," said Wells Fargo's York.

But furniture store sales slipped by 1.6%, and building/garden equipment fell by 1.2%.

The Clunkers program may have had "unintended consequences" in that it cannibalized sales in non-auto sectors, said Ellen Davis, a vice president at the National Retail Federation.

"While this is good news for automakers, it might not be good news for retail," Davis said. "Many Americans are now saddled with another monthly bill that will take away from what they're able to spend on discretionary merchandise."

York said it was "tough to say" whether the broad gains will hold in future months, though September auto sales will certainly reverse without the Clunkers benefit.

"We'll be watching whether these core numbers will hold onto gains or give them back," York said. "It's unclear whether this can continue despite the weak labor market." 

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Gas boosts producer prices

WASHINGTON (Reuters) -- U.S. producer prices rose more than twice as much as expected in August on the biggest surge in gasoline prices in more than 10 years and prices declined less than expected compared with a year ago, a government report showed on Tuesday.

The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate jumped 1.7% last month and fell 4.3% from August 2008. Analysts expected producer prices to rise 0.8% on the month and to fall 5.3% on the year. 

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Industrial Production

WASHINGTON (Reuters) -- U.S. industrial production rose more than expected in July, Federal Reserve data showed Friday, supporting hopes the longest recession since the 1930s was finally drawing to a close.

Aside from a hurricane-related rebound in October 2008, this was the first monthly increase since December 2007, which marked the start of the current recession.

Industrial production rose 0.5%, stronger than the 0.3% that economists polled by Reuters had expected and well above June's 0.4% decline.

Manufacturing output rose 1% in July, mostly because of a jump in motor vehicle assemblies which rose to an annual rate of 5.9 million units in July from 4.1 million in June.

Auto sales got a big boost from the government's "cash for clunkers" program, which provides incentives to buy new cars. The program's initial $1 billion funding was exhausted in its first week, and it has since been expanded to $3 billion.

Excluding motor vehicles and parts, industrial output fell 0.1% in July.

The capacity utilization rate, a measure of slack in the economy, edged up to 68.5%, slightly higher than economists had expected but still 12.4 percentage points below the 1972-to-2008 average.

The output of utilities fell 2.4%, reflecting unseasonably mild temperatures in July, while mining output rose 0.8%. 

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Recession likely over but slog ahead

WASHINGTON (CNNMoney.com) -- In his first speech since he was reappointed, Federal Reserve Chairman Ben Bernanke said the recession is "very likely over" but detailed the tough road ahead for the economy.

Bernanke also said that despite delays, he is confident that Congress will pass changes to financial rules to ward off future collapses.

He hit hard on the "challenges" for the Fed and all policymakers in dealing with a sluggish unemployment rate as the economy recovers from a recession that began in December 2007.

"That's one reason why, even though from a technical perspective, the recession is very likely over at this point, it's still going to feel like a very weak economy for some time," Bernanke said. "As many people will still find their job security and employment status is not what they wish it was."

Bernanke's speech to experts and Washington insiders at the Brooking's Institution in Washington on Tuesday was a repeat of the one he gave to economists in Jackson Hole, Yo., last month, when he cautioned the economy would start growing again, although slowly.

While answering questions, on Tuesday, Bernanke said the pace of recovery in 2010 would be "moderate" and added that the unemployment rate would come down "quite slowly," due to "headwinds" on ongoing credit problems and the effort by families to reduce household debt.

Stock investors took note of Bernanke's remarks, and the leading measures moved slightly higher.

Bernanke also said he believes Congress will pass changes to the nation's regulatory structure, while acknowledging that the effort had been slow-going.

"While maybe the focus on regulatory reform in the Congress has not yet been as intense as I expect it will be ... I feel quite confident that a comprehensive reform will be forthcoming," he said.

Bernanke played down concerns that turf wars between regulatory were getting in the way of legislation. "There are legitimate interests and there are interests that are more self-interested ... and that's just true with everybody, including all the members of Congress involved in the discussion," he said.

He said one proposal that he advocates "has nothing to do with the Fed's own powers" -- that's the creation of a new type of power, called "resolution authority," to unwind giant financial firms whose failure puts the economy at stake. Current proposals would give that power to the Federal Deposit Insurance Corp., since it already monitors and unwinds bad banks.

The economic downturn and slow recovery were also the subject of remarks Tuesday by President Obama. Obama spoke to employees at an assembly plant in Lordstown, Ohio.

"There's little debate that the decisions we have made and the steps we have taken have helped stop our economic free fall. In some places, they've helped us turn the corner," Obama said. "It's going to take some time to achieve a complete recovery." 

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