WASHINGTON – President Barack Obama's top health care official put health insurers on notice Monday that the new health overhaul law requires them to cover kids with medical problems, trying to dispel uncertainty over a much-publicized benefit.
It remained unclear if the sternly worded letter from Health and Human Services Secretary Kathleen Sebelius would settle a dispute over a widely touted achievement of the health care law that Obama signed last week.
The fine print of the law appears to have been less than completely clear on whether kids with health problems are guaranteed coverage starting this year. If there's a problem, some parents and their children may have to wait a long time: The legislation's broad ban on denying coverage to any person on account of a health condition doesn't take effect until 2014.
The sticking point is that the immediate benefit for children may not be as sweeping as Obama has claimed in extolling the legislation.
That's because the law can also be read to mean that if an insurance company accepts a particular child, it cannot write a policy for a child that excludes coverage for a given condition. For example, if the child has asthma, the insurer cannot exclude inhalers and respiratory care from coverage, as sometimes happens now.
But the company could still turn down the child altogether.
"The industry seems to be saying, 'You didn't write it the way you meant it'; the government is saying, 'Yes, we did,' " said health policy consultant Robert Laszewski, a former insurance executive. "Now we need to see what the industry does. Is the industry going to fight this? It would create some real public relations problems."
In a letter to the main industry trade group, Sebelius attempted to remove any doubt.
"Health insurance reform is designed to prevent any child from being denied coverage because he or she has a pre-existing condition," she wrote America's Health Insurance Plans. "Now is not the time to search for nonexistent loopholes that preserve a broken system."
Sebelius specified that children with a pre-existing medical problem may not be denied access to their parents' coverage under the new law. Furthermore, insurers will not be able to insure a child but exclude treatments for a particular medical problem.
"The term 'pre-existing condition exclusion' applies to both a child's access to a plan and his or her benefits once he or she is in the plan," Sebelius wrote, adding that her department will shortly issue a regulation to that effect. The new protections will be available starting in September, she said.
There was no immediate public response from the industry group.
Obama has conveyed the impression that the law provides ironclad protection.
"Starting this year, insurance companies will be banned forever from denying coverage to children with pre-existing conditions," the president said in a recent speech at George Mason University in Virginia.
But House and Senate staffers on two committees that wrote the legislation said it stopped short of a full guarantee. House leaders later issued a statement saying their intent was to broadly require coverage for kids with medical problems.
NEW YORK – Bank bailouts are turning out to be great business for the government. Unfortunately for taxpayers, other federal rescues will almost certainly wind up in the red.
The Treasury Department said Monday it will begin selling its stake in Citigroup Inc. at a potential profit of about $7.5 billion — not a bad haul for an 18-month investment.
The move is a major step in the government's effort to unravel investments it made in banks under the $700 billion Troubled Asset Relief Program at the height of the financial crisis.
Yet a year and a half after Congress passed the big bailout, other parts of it — particularly troubled automakers General Motors and Chrysler and insurer American International Group — show no signs of being profitable.
Despite the returns from Citi and other banks, analysts and even the Treasury Department predict the bailout will wind up costing taxpayers at least $100 billion. The bailouts of mortgage giants Fannie Mae and Freddie Mac, which were not included in TARP, will add billions more.
But the money the government makes off banks helps offset the damage. With the sale of the Citi shares, the eight major banks that got bailout money funds will have repaid the government in full. Those investments have netted the government $15.4 billion from dividends, interest and the sale of bank stock warrants, which gave the government the right to buy stock in the future at a fixed price.
Based on Monday's share price, selling its 27 percent stake in Citi would add about $7.5 billion in profits. The stock fell 3 percent to $4.18 a share Monday after news of the planned Treasury sales. But that still puts it well above the $3.25 a share the government paid. The government also still holds Citi stock warrants, which will add to its profits down the road.
Overall, it's a 14 percent rate of return on the $165 billion invested in the biggest banks. Hundreds of smaller banks also received money and have been paying the government a steady stream of dividends and interest.
By comparison, someone who invested money in the Standard & Poor's stock index in early October 2008, when the bailout was passed, would actually have lost about 3 percent.
"Overall, TARP may cost taxpayers money. But the banking part of it is going to be a moneymaker," banking analyst Bert Ely said. "When you strip away all that emotion," he added, "this has turned out to be a good bet."
The government's bank profits can be misleading. The banks benefited heavily from other subsidies, including the $182 billion bailout of AIG. Tens of billions of that money went to banks that had suffered losses with AIG, and the banks didn't have to repay a penny.
"It's baloney to say we've made money off the bank bailouts," said Simon Johnson, a professor at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund. "You have to add up all the money we've put into the economy and other firms" related to banks.
Douglas Elliott, a fellow at Brookings Institution and former investment banker at J.P. Morgan, predicted the government will lose about $100 billion on the overall bailout program. That's slightly less than Treasury's own estimate of $117 billion.
Most of those losses are for the bailouts of AIG, General Motors and Chrysler, and automaker financing arms GMAC and Chrysler Financial.
And those estimates don't include losses expected from the takeover of Fannie Mae and Freddie Mac. In September 2008, the government seized the mortgage companies and has since pumped $126 billion into them to keep the housing market from plummeting further. That number is only expected to grow, and the Obama administration has not detailed any exit strategy.
The banks have been the one bright spot in the government's portfolio. And few benefited as much from taxpayer help as Citigroup.
Citi, one of the hardest-hit banks during the credit crisis and the recession, received a total of $45 billion in bailout money, one of the largest rescues in the TARP program.
Of the $45 billion, $25 billion was converted to the government's ownership stake in the bank. Citi repaid the other $20 billion in December.
The government received 7.7 billion shares of Citigroup in exchange for the $25 billion. It said it will sell the shares over the course of this year, depending on market conditions.
Understandably, the government will probably hold on to its shares if prices fall steeply. But Citi stock has been steadily rising with the broader market in recent months, which means the Treasury Department stands to pocket a hefty profit.
The Treasury had been planning to sell 20 percent of its stock at the time Citi was issuing new shares late last year. At a price of $3.15 a share, the government would have lost $158.7 million on the sale, so it opted to wait.
Selling at today's prices would give the government an 18 percent return on its $45 billion investment in Citigroup, according to Linus Wilson, a finance professor at the University of Louisiana at Lafayette.
But he said taxpayers could have done even better if the government had paid market value when it bought the bank's preferred shares. Instead, it paid a hefty premium to help boost the bank's capital.
"Citigroup stands to be our most profitable bank investment, bar none," Wilson said. "But we also took the most risk with Citi."
Others say that even if the government were to lose money on the deal, it was worth it.
"It kept the recession from getting considerably worse," Brookings' Elliot said. "That's worth whatever amount we end up losing."
AP Business Writers Daniel Wagner and Marcy Gordon in Washington and Stephen Bernard in New York contributed to this report.
NEW YORK – Consumers are more willing to spend, and that's making investors more optimistic about the economy.
The Dow Jones industrial average rose 46 points Monday and broader indexes also climbed after the Commerce Department said consumer spending rose for the fifth straight month in February. The 0.3 percent gain was in line with economists' expectations and raised hopes that the biggest driver of the economy is continuing to rebound.
Job creation and solid consumer spending are considered crucial to a sustained recovery. At the end of the week, investors will get the Labor Department's monthly employment report. Analysts predict that employers added jobs in March for only the second time since the recession began in December 2007.
Meanwhile, easing concern about debt problems in Greece reduced demand for the safety of the dollar. The dollar's drop in turn lifted demand for commodities, which become more attractive to foreign investors when the dollar falls because most of them are priced in dollars. Energy and materials stocks including Exxon Mobil Corp. and Alcoa Inc. rose.
The debt-strapped Greek government raised $6.74 billion Monday by issuing seven-year bonds. The country's ability to borrow is an important sign of confidence after European leaders and the International Monetary Fund last week agreed to provide a financial safety net for Greece and other countries that use the euro if they couldn't issue debt.
Financial shares were mixed after the Treasury Department said it would start to sell the shares it owns in Citigroup Inc. The government took 7.7 billion Citigroup shares in exchange for $25 billion it gave the bank during the 2008 credit crisis. The planned sale during the next year could result in a profit of about $7.5 billion.
The advance Monday extended a run of incremental gains since early February on expectations that the economy is improving.
"It's more of a slow steady grind higher," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.
The Dow rose 45.50, or 0.4 percent, to 10,895.86. The index is at its highest level since September 2008 and closer to the psychological threshold of 11,000.
The broader Standard & Poor's 500 index rose 6.63, or 0.6 percent, to 1,173.22, and the Nasdaq composite index rose 9.23, or 0.4 percent, to 2,404.36.
Bond prices mostly fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.87 percent from 3.85 percent late Friday.
The Dow is up 987 points, or 10 percent, since its lowest close of the year on Feb. 8. Some analysts say the steady pace of the advance is a sign the market isn't getting ahead of itself by bursting higher.
"The market seems to be holding up pretty well and probably will for a while," said Frank Haines, chief investment officer at Christian Brothers Investment Services in New York. Haines said low interest rates will help stocks for now but that longer-term threats like uncertainty about policies in Washington and rising debt levels in the U.S. and other countries could eventually hurt markets.
Investors will be looking to the Labor Department's March employment report due Friday. The stock market will be closed for Good Friday.
Economists predict employers added 190,000 jobs. Some of the expected gain could come from hiring of temporary census workers.
The market's gain followed two mixed days. On Thursday and Friday, shares rallied in the morning only to retreat to near flat levels by the closing bell when buying faded. The Dow has climbed in 18 of the past 22 days.
The dollar fell against other major currencies. Gold rose.
Crude oil rose $2.17 to $82.17 per barrel on the New York Mercantile Exchange.
Shares of Citigroup fell 13 cents, or 3 percent, to $4.18.
Exxon Mobil rose 76 cents to $67.30, while aluminum-producer Alcoa rose 17 cents to $14.44.
More than two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.4 billion shares compared with 4.7 billion Friday. Trading volume was light ahead of the start of Passover.
The Russell 2000 index of smaller companies rose 3.28, or 0.5 percent, to 682.25.
Britain's FTSE 100 rose 0.1 percent, Germany's DAX index rose 0.6 percent, and France's CAC-40 gained 0.3 percent. Japan's Nikkei stock average fell 0.1 percent.