Online Update

ONLINE BANKING
Making transfers from home could get clunkier

Using just a password won't be enough to let you bank online beginning Jan. 1, under new federal guidelines designed to cut down on identity theft. The guidelines require banks offering online account services to come up with more-effective ways to protect account holders' confidential information. Banks are free to choose exactly how they'll meet the new guidelines, but possibilities include an electronic "token" that generates a unique access number for each transaction, secret information shared by the bank and the customer, or software that recognizes fingerprints or voice patterns. The extra layer of security is mandated by the Federal Financial Institutions Examination Council, an interagency organization of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.

HEALTH PLANS
When patients have to choose between cost and care

The National Center for Policy Analysis recently issued a new report supporting the organization's contention that consumer-driven health plans help to control costs. But the NCPA report suggests that those savings are achieved because the higher a patient's out-of-pocket costs, the less likely he is to seek care. Researcher Jon Gruber, of the Massachusetts Institute of Technology, performed a retrospective analysis of the landmark RAND Health Insurance Experiment, which randomly assigned thousands of families to insurance with varying levels of patient copays. The researchers followed the participants for three to five years to evaluate the effects on health status and utilization. Gruber's independent review of the RAND findings revealed that total healthcare spending fell about 30 percent when patients' share of the cost grew from zero to 95 percent. And the number of face-to-face doctor visits dropped by 60 percent.

Opponents of consumer-driven health plans say that patients are less likely to seek care when they're sick. However, Devon Herrick, a senior fellow with the NCPA, reports that reduced utilization appears to have had little detrimental effect on patients' health.

INVESTMENTS
A more accurate measure of returns

A new performance measurement tool launched by Morningstar lets you find out how well investors in a mutual fund fared in a given time period, not just how well the fund itself did. Investor returns, also known as dollar-weighted returns, measure what the typical shareholder earned on average, accounting for the money that moved in and out of the fund as investors bought shares, sold shares, drew out dividends, and the like. Total return figures, on the other hand, assume that investors held shares in the fund for the entire time period studied and reinvested all their dividends. But real investors often don't act that way.

Investor returns are available for open-end mutual funds and exchange-traded funds.

SAVINGS
Young adults save less, spend more

Consumers between the ages of 25 and 34 have less money put away and larger bills than their predecessors did 20 years ago, say the results of a study released in October from the American Institute of Certified Public Accountants. Median net worth for adults between 25 and 34 was $3,746 in 2004, compared to $6,788 in 1985 (in 2004 dollars). About 55 percent of this age group has an interest-bearing account, down from 65 percent in 1985. But the average level of debt was $4,733 in 2004, up from $3,118 in 1985 (again, in 2004 dollars).