TSP investors get a bargain in 2014

Wednesday - 1/28/2015, 1:05pm  ET

Emily Kopp

@ekoppWFED
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If you've invested your money in the Thrift Savings Plan, then you can pat yourself on the back for getting a deal. The plan's annual expense ratio for last year came in at 0.0285 percent. Put another way, every participant paid less than 29 cents in administrative costs per $1,000 invested. It's miniscule compared to 0.63 percent, the average expense ratio for 401(k)s invested in equity mutual funds, according to the Investment Company Institute. 

"People need to be aware of that when they make decisions to roll their money out. You need to be aware that fees really do add up," said Kim Weaver, external affairs director for the Federal Retirement Thrift Investment Board, which administers the TSP. The board can keep its expenses so low because it has a simple and small line up. 

"We use only passively managed index funds, and we have economies of scale," Weaver said Tuesday on In Depth with Francis Rose. "We have 4.7 million participants and $440 billion invested. All of those add up." 

Weaver shared other highlights of this month's board meeting. Here's a brief recap: 

Board sets its sights on IT security and other risks

The agency's 2-year-old Office of Enterprise Risk Management has helped senior leaders identify, then tackle, the things that keep them up at night. 

A few years ago, hackers penetrated network security at the agency's data centers, which were maintained by a contractor. They compromised information of 123,000 plan participants. Since then, the agency has doubled down on efforts to strengthen IT security. So it's no wonder that's the office's top priority, Chief Risk Officer Jay Ahuja told board members at the meeting. Other priorities include streamlining business processes, strengthening project management discipline and increasing emphasis on human capital management. 

The office also plans to check up on service providers, such as the investment firm BlackRock, which manages the C, S, I and F Funds. 

"We want to make sure that BlackRock is doing everything it needs to be doing and that it is a healthy organization," she said, adding that the firm had an "excellent risk posture," based on a recent assessment the board did.

New way to set priorities

The board is working hard to make lifecycle funds, which are determined by age, the default for new federal employees by this fall. That priority was dictated by a lawCongress passed in December. 

"It's to the top of the chart with a bullet because it's something we absolutely have to get done," Weaver said. 

But to make it happen on time, the agency may have to delay other items on its agenda. It has developed a formula to help make those decisions. Criteria includes whether a project is mandated by law, helps mitigate risks, or supports a strategic goal (or two or three). The criteria is weighted, with a legal mandate being a "10" and something that improves customer service being a "2." Other criteria fall somewhere in between. Then each project is scored.

"What we want to get better at is saying 'no' to things. Saying, 'Here's what is on our desks and we've committed resources to. The next idea might be a great idea but we either have to wait or bump something else," she said.

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Speaker of the House John Boehner (R-Ohio) acknowledges that there've been "a couple of stumbles" in the opening weeks of the new Republican-run Congress.

By Dana Milbank Opinion writer January 27 at 6:52 PM

“Yes, there have been a couple of stumbles,” John Boehner acknowledged Tuesday.

The House speaker had spoken with dry understatement.

What has happened since Republicans took full control of Congress three weeks ago has been less a stumble than a pratfall involving the legislative equivalent of a banana peel, flailing arms, an upended bookcase, torn drapes and a slide across a laden banquet table into a wedding cake. 

1.  On Monday, a rebellion by House conservatives forced Boehner to scuttle plans to pass border-security legislation — a topic on which Republicans had supposedly been unified. 

2.  Last week, a rebellion by Republican women caused Boehner to pull from the House floor a bill that would have banned abortions after 20 weeks. 

3.  More than one House Republican has since complained about the “females” in the caucus.

4.  At the same time, Boehner managed to provoke an international incident, and split the American Jewish community, by inviting Israeli Prime Minister Benjamin Netanyahu to address Congress on the eve of the Israeli elections — without consulting the White House. The invitation, intended to boost prospects for tough new sanctions against Iran, seems instead to have emboldened opposition to the sanctions.

5.  In the Senate, meanwhile, Democrats used procedural powers to delay passage of the Keystone XL pipeline bill — new majority leader Mitch McConnell’s top priority — after McConnell retreated on his promise to allow freewheeling amendments.

6.  The Republican majority in both chambers remains divided over the scope of legislation authorizing the use of force against the Islamic State, over a bill granting President Obama new trade powers and over whether to force a showdown next month — and risk a partial government shutdown — to protest Obama’s executive actions on immigration. 

7.  The House Select Committee on Benghazi, which began with dignity last year, spun out of control Tuesday as Democrats complained that Republicans were abusing their authority and Republicans threatened to spray the Obama administration with subpoenas.

The Republican majority is discovering that running Congress is harder than it looked.

Chaos could be found around every corner of the Capitol on Tuesday morning: Boehner, after meeting with his House GOP caucus, explaining the failure of the border bill; Benghazi panel chairman Trey Gowdy promising, “We’re going to ratchet it up” and engage the administration in “formal legal proceedings”; and not much of anything happening on the Senate floor, where the pipeline debate had stalled.

The Dirksen Senate Office Building became a legislative three-ring circus Tuesday. On the ground floor met the Armed Services Committee, divided over whether to authorize the use of ground troops in Syria and Iraq. On the fifth floor, Democrats on the Banking Committee withdrew their support for rapid passage of an Iran sanctions bill — fallout from Boehner’s Netanyahu gambit. And, on the second floor, Finance Committee Chairman Orrin Hatch (R-Utah) faced down hecklers. 

Just as Michael Froman, the U.S. trade representative, began his testimony, a half-dozen hecklers rose in succession, waving banners and shouting, “They’re going to offshore American jobs and lower our wages! They’re going to poison us!”

Capitol police and members of Froman’s entourage wrestled the demonstrators away from the witness table. The courtly Hatch, competing with a squawking police radio, appealed for calm. “We would appreciate having the signs removed. . . . Show some courtesy here. . . . Let’s have no more of that.”

When one demonstrator continued to disrupt, Hatch told the police: “Take him out.” (He presumably meant to have the man removed from the room.) “Let’s just stop the cheap politics,” Hatch pleaded.

Tall order, Mr. Chairman. Cheap politics is about the only thing still happening on Capitol Hill.

Cheap: House leaders called off a vote, scheduled for Wednesday, on the border-security bill because they didn’t have enough votes after a conservative mutiny. They claimed they pulled the bill because of the snowstorm, but that obvious fiction was exposed by Sen. Charles Grassley (R-Iowa), chairman of the Judiciary Committee. “Thanks to house of Rep not moving ahead w BorderSecurity bill,” Grassley tweeted. “It wld not secure border.”

Cheap: The Benghazi committee’s Gowdy, who began his investigation last year with a bipartisan flourish, spent Tuesday’s hearing shouting at administration witnesses. Democrats on the panel countered with bitter complaints that Gowdy and his staff had interviewed witnesses without informing the Democratic side or sharing exculpatory information they found. Rep. Adam Smith (D-Wash.) told him that if a prosecutor were to conceal evidence the way Gowdy had done, “you go to jail.” 

BLOGGER'S NOTE:    I'm so happy for them all.  

A knee replacement surgery could cost $17k or $61k. And that’s in the same city.

By Jason Millman January 21 at 12:45 PM

(Image courtesy of Flickr user Kenny Holston, under a Creative Commons license.)

Thanks to recent efforts to make health-care prices more transparent, we have a better idea that Americans pay much more for a doctor's visit or common procedures in some parts of the country versus another. And a new report from a major health insurance organization shows how even within the same market, surgery prices can vary by tens of thousands of dollars.

The Blue Cross and Blue Shield Association, whose member organizations cover about one in three Americans, for the first time on Wednesday released prices that its insurers are charged by health-care providers. The group's report cover prices for knee and hip replacement surgeries, which are among the fastest growing procedures in the country.

The report, which analyzed three years of BCBSA companies' claims data in 64 markets, found that the average price for a knee replacement surgery is $31,124. But that price, which doesn't reflect what the patient actually pays, can vary greatly within the same city. In Dallas, for example, a knee surgery will run anywhere between $16,772 and $61,585 depending on the hospital. That's a 267 percent price variation, the largest within any of the markets that BCBSA analyzed.

The analysis reinforces that in health care, cost doesn't bear much relation to quality, said BCBSA chief strategy offier Maureen Sullivan. And with consumers generally bearing more of the cost of health insurance these days — in the forms of higher deductibles and co-pays — people are also becoming more price-conscious.

Consumers could be surprised by the savings if they shopped around more, though reliable information could be difficult to obtain. Prices varied by at least 100 percent in 11 other markets, according to the claims data. This map from the BCBSA report gives you an idea of what this variation looks like within markets across the country:

The health insurance organization reported a similar pricing disparity for hip replacement surgeries, which averaged $30,124 across the country. In the Boston area, the price ranged anywhere between $17,910 and $73,987 — the largest variation within any market for the procedure. The surgery cost as little as $11,327 in Birmingham, Ala., according to the report. Hospitals that reported fewer fewer than six surgeries were excluded from the analysis.

As expected, the average price of hip replacement surgery also varied greatly across the markets. The procedure cost on average $16,399 in Montgomery, Ala. but cost as much as $55,412 in Fort Collins, Colo.

The BCBSA report comes almost two years after Medicare for the first time disclosed the prices that hospitals charge for the 100 most common inpatient procedures. It was an unprecedented data dump, but the prices were the amounts advertised by hospitals, which often don't reflect what the vast majority of people actually pay.

A number of factors start to explain why charges vary so greatly across hospitals, though they're not immediately clear to patients. It could depend on the mix of private versus public insurance, how much free care the hospital provides, competition, its location and more.

Wednesday's report was the first in a series that BCBSA plans to release as it tries to nudge customers into choosing higher-quality, lower-cost providers. The association has a program highlighting hospitals that perform better on quality metrics, such as lower rates of complications and readmissions, while also meeting affordability standards.

Some past studies show that such health price transparency tools can bring consumers some modest savings, but they're often underused. In 2013, 98 percent of health plans reported offering cost calculator tools, but they reported only 2 percent of patients made use of them.

"High cost doesn't necessarily mean high quality," Sullivan said. "It's very important for patients, when going to seek care, to ask questions and learn the information on cost and quality."