Category: Equitablog

I think, yet again, that this New York Times story on the Burr-Hatch-Upton ObamaCare replacement proposal would have been much better if it had been assigned to David Leonhard’s The Upshot rather than to the New York Times’s national news desk. The indispensable link that should be in Robert Pear’s story but isn’t is here. And it should have been compared to last year’s equivalent

Robert Pear’s article:

Robert Pear does not provide a link to any piece of paper about the plan, not even to Burr, Hatch, and Upton’s own op-ed.

Over at the Washington Post’s Wonkblog, Jason Millman writes, much more usefully, that:

The GOP plan outlined by congressional aides Wednesday is similar to one that the senators offered last year, which the GOP never united around… no actual timetable yet for… writ[ing] a bill or hold[ing] hearings…

Indeed. Last year’s plan and this year’s plan are the same, save for three moderate substantive differences. Comparing:

• the two-pager for last year’s Patient CARE Burr-Coburn-Hatch proposal at http://www.hatch.senate.gov/public/_cache/files/95dd4672-5012-4ae0-99b2-6b2d450df6d4/The%20Patient%20CARE%20Act%20-%20Summary.pdf
• the two-pager for this year’s Patient CARE Burr-Coburn-Upton proposal at http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/114/20150205-PCARE-Act-Two-Pager.pdf

reveals that:

• This year, the regulation of malpractice insurance is no longer left to the states.
• This year, the plan no longer promises to “blunt the worse” of ObamaCare’s Medicare cuts
• This year Cadillac Tax replacement is
  • no longer a modest cap of the employer-sponsored insurance tax break that begins at 65% of the cost of the current average high-option plan;
  • rather a generous exclusion from taxation of $12,000/year for an individual and $30,000 for a family.

Otherwise the documents are, substantively, the same.

There are a number of rhetorical changes from last year’s document:

• The subtitle of the document has been changed from “A Legislative Proposal” to “Lower Costs, More Choices”.
• In the first paragraph: “patient-centered” has been changed to “patient-focused”; “patients and taxpayers” has been changed to “patients, families, small businesses, and taxpayers”.
• A footnote has been deleted. The deleted footnote is: “We believe it was unfair and wrong that Obamacare effectively treated Medicare as a piggybank to pay for new programs. Certainly, Medicare is in dire need of structural reforms that will put the program on a sustainable path and prevent its insolvency. That’s why we each have supported a range of proposals that would help shore up Medicare’s financing. We believe these reforms should be adopted–as soon as possible–as part of blunting the worst of Obamacare’s cuts to providers and plans. Over the longer-term, we believe that broader changes to Medicare should be addressed in the context of larger bipartisan Medicare reforms that not only put Medicare on a sustainable path, but modernize the Medicare benefit for seniors.”
• The change of “patient-centered” to “patient-focused” appears to have been made throughout.
• In the second paragraph, “common-sense patient protections” has been changed to “patient protections”; “mandates which drive up health-care costs” has been changed to “mandates”.
• In the bullets below the second paragraph:
  • “NO ONE can be denied coverage” has been changed to “no one can be denied coverage”;
  • “‘continuous coverage protection’ that rewards individuals moving from one health market to another” has been changed to “‘continuous coverage protection’ for individuals moving from one health plan to another”.
  • An added sentence: “An individual could not be medically underwritten, denied health coverage, or be forced to pay a higher premium solely because of a pre- existing condition if they were continuously enrolled in a health plan without a significant break in coverage.”
• In the third paragraph: “Empowering Small Business and Individuals” has been changed to “Empowering Small Businesses and Individuals”.
• In the bullets below the third paragraph:
  • “States would be allowed to use” has been changed to “States could elect”;
  • “auto-enrollment to design sustainable insurance” has been changed to “auto-enroll into insurance plans”;
  • “tax credits for individuals who have a health tax credit” has been changed to “individual’s tax credit”;
  • “high-risk pools will help patients who are otherwise without health insurance” has been changed to “high-risk pools could help patients”;
  • “balancing the cost impact” has been changed to “reducing premiums”.
• In paragraph four: a typo–“patients'” where it should not be possessive–has been corrected; “long-term care insurance and COBRA” has been changed to “COBRA”; “on bipartisan proposals of the past” has been changed to “upon bipartisan proposals”.
• In paragraph five: “The Patient CARE Act envisions adopting or incentivizing states to adopt a range of solutions to tackle the problem of junk lawsuits and defensive medicine” has been changed to “The Patient CARE Act adopts common-sense reforms to tackle the problem of junk lawsuits and defensive medicine”.
• Paragraph six has been deleted, rewritten, and replaced:
  • The old: “While recognizing the role of the employer sponsored system in our health care system, it is also important to address the unfair tax treatment of individuals and families who do not receive the same tax preference as those with employer-sponsored health insurance. This proposal repeals the employer mandate in Obamacare, a major reason for employers dropping coverage, and leaves the employer deduction untouched. To help lower the cost of health coverage, the Patient CARE Act reduces a distortion in the tax code—the unlimited exclusion from a worker’s taxes of employer- provided health coverage. This proposal institutes a modest cap on the exclusion for the most generous high-cost plans; specifically, a cap at 65 percent of the average market price for a high-option plan. The cap would be indexed to grow at an annual rate of CPI +1.”
  • The new: “We recognize that employer-sponsored insurance is an important feature of our health care system that provides coverage to nearly 150 million Americans, so we scrap the job-killing employer mandate and preserve the employer deduction. However, the open-ended tax preference encourages higher costs and increased spending. Our proposal maintains the employer deduction, so employers continue to have incentive to provide quality coverage to their employees. At the same time, we institute a cap on the exclusion for employees’ health coverage valued at a generous $12,000 for an individual and $30,000 for a family and index it at CPI+1 for perpetuity. Unlike the punitive Cadillac Plan Tax in current law which imposes an onerous excise tax of 40 percent on cost of coverage of health plans that exceed the annual limit, our proposal treats every additional dollar after the generous threshold at the individual’s tax rate–a more balanced approach for middle class Americans.”

UPDATE:
In email, Harold Pollack summarizes the provisions he knows of. The expansion of Medicaid is reversed, the individual and employer mandates to acquire and provide coverage dropped, and:

• Subsides would go up to 300% of FPL [rather than 400%]… [adversely effecting] middle-class people even more.
• Their own version of the Cadillac tax [on high-cost health plans]….
• Ban on lifetime and annual insurance payment caps remains.
• Young adult provision [for their remaining on their parents’ insurance] kept, but states could opt-out.
• HIPAA-type back-door individual mandate for those with continuous coverage, “a one-time open enrollment period in which individuals would be able to purchase coverage regardless of their health status or pre-existing conditions.”
• lock-granted Medicaid,
• Letting age gap to to 5:1 [rather than 3:1]
• Various taxes in ACA repealed or reduced.

Another observer writes:

A non-shocking CBO score… [would] be because of cuts to Medicad–not the expansion, but cuts on pre-ACA Medicaid. Overall, just eyeballing it, it looks like 1/5 tax increase on the middle class, 4/5 benefit cuts for the poor, in exchange for no guarantee of health coverage at all…

I keep on thinking that we are going to uncover some subtle and accidental bias in the construction of the data that Greg Clark uses. Thus, I keep on thinking, we are eventually going to conclude his results are overstated. But there is no doubt that social mobility across generations is extraordinarily low–much slower than any reasonable assessment of the obvious channels for the intergenerational transmission of status advantage would lead one to expect. This suggests to me, and to Greg, that the “right to rise” in the form of formal meritocratic equality of opportunity is worth remarkably little to all except the children of immigrants. I therefore share Greg’s conclusion that compression rather than churning should be our goal to maximize any utilitarian conception of societal welfare:

Must- and Shall-Reads:

• Zoltan Poszar: A Macro View of Shadow Banking: Levered Betas and Wholesale Funding in the Context of Secular Stagnation
• Ken Rogoff: “Europe needs to be much more generous in permanently writing down debt and, even more urgently, in reducing short-term repayment flows. The first is necessary to reduce long-term uncertainty; the second is essential to facilitate near-term growth…”
• Matthew Yglesias: Obama’s new budget proves the grand bargain is finally dead

1. Scott Lemieux: What Happens if the Court Goes ACA Troofer?: “Just as some Democrats took a hit for passing the ACA (and were right to do so, because the point of winning elections is to do stuff), Republicans who are opposed to the idea of helping people without medical insurance will be willing to take some political risk to severely damage the ACA…. That said, I’m not sure how much political risk there will be. At the federal level… Obama is likely to take the primary blame for the failure of ‘Obamacare’ no matter who’s really responsible…. At the state level… it will… be Republican governments that are unwilling to set up exchanges, and this will hurt some middle class people. But I’m still not sure what the political hit will be… [if] low-information voters… correctly assess blame for a problem that still only affects a minority of voters…. I think Republicans would be able to stand by and do nothing as a Republicans in black robes wreck the exchanges and largely get away with it.”

2. Cardiff Garcia: US Treasury Yields and Shrinkage, Sovereign Bond Availability Edition: “Sometimes the simplest explanation is the only one needed, and in economics it doesn’t get much simpler than supply and demand. Competing reasons have been offered for the sustained, vigorous decline in 10-year and long-dated US Treasury yields…. Stories about the factors that influence the demand for safe debt…. The supply of safe sovereign debt is a more straightforward story…. Thanks to the anticipated debt purchases by the ECB and the continuing purchases by the Bank of Japan, net issuance of sovereign debt from advanced economies that’s available to the private sector will turn sharply negative this year and next…. Net issuance of US Treasuries will grow… but not by enough to offset the collective decline of European and Japanese sovereign debt. And the US is still the prettiest pig in the global barnyard…. Will the weakness in long yields and how it affects inflation expectations alter the expected trajectory of US monetary policy? Possibly not. Members of the Fed are increasingly comfortable scoffing at market-based measures of inflation expectations…”

3. Diane Coyle: How Technology Will Disrupt Education–and How It Won’t: “The Khan Academy is one impressive online resource…. MOOCs have not yet lived up to their original expectations…. Yet, having observed the capacity of the web to torpedo the existing structure and distribution of profits in one industry after another since the mid-1990s, it’s certain education will not remain unchanged. But if not MOOCs, what?… Reputation [is] an important selling point in the higher education market. Excellent courses contribute to an institution’s reputation, but do not define it. The quality and profile of the research… social status and success of its students matter at least as much…. Does this mean higher education will be immune from digital disruption? Of course not…. Work out which tasks performed by universities can be substituted for by online technologies, and which are complements to them…”

4. Morris Kleiner: Reforming Occupational Licensing Policies: “Occupational licensing has been among the fastest growing labor market institutions in the United States since World War II. The evidence from the economics literature suggests that licensing has had an important influence on wage determination, benefits, employment, and prices in ways that impose net costs on society with little improvement to service quality, health, and safety. To improve occupational licensing practices, Kleiner proposes four specific reforms. First, state agencies would make use of cost-benefit analysis to determine whether requests for additional occupational licensing requirements are warranted. Second, the federal government would promote the determination and adoption of best-practice models through financial incentives and better information. Third, state licensing standards would allow workers to move across state lines with a minimal cost for retraining or residency requirements. Fourth, where politically feasible, certain occupations that are licensed would be reclassified to a system of certification or no regulation. If federal, state, and local governments were to undertake these proposals, evidence suggests that employment in these regulated occupations would grow, consumer access to goods and services would expand, and prices would fall.”

Should Be Aware of:

• Annie Karni and Celeste Katz: “Obama was ‘unsmiling during the call, and slightly irritated when it was over,’ Axelrod writes. The president hung up and said Romney admitted he was surprised at his own loss, Axelrod wrote. ‘”You really did a great job of getting the vote out in places like Cleveland and Milwaukee”, in other words, black people’, Obama said, paraphrasing Romney. ‘That’s what he thinks this was all about’…”)
• Red Scott: “The Queen of Code,” new short documentary on computing pioneer Grace Hopper
• Lisa Abramowicz: “The 2008 financial crisis gave a few credit products a bad reputation… CDOs… credit-default swaps. But now… Goldman Sachs Group Inc. is… peddling… a ‘bespoke tranche opportunity.’”

1. Kevin Drum: Here’s the Big Problem With Liberals’ “Middle Class” Agenda: “President Obama recently advanced two proposals designed to help the middle class… a mortgage plan available to anyone who bought a home…. a college tuition plan that would have helped middle-income workers with money saved by eliminating 529 college savings plans. The mortgage plan has met with considerable enthusiasm. The tuition plan, by contrast, flamed out…. In theory, universal programs like Obama’s mortgage plan are designed to help the middle class, and this is what makes them both popular and politically palatable. In practice, though, the bulk of their benefits usually go to the well off, and this is what really makes them politically palatable. That’s why the tuition program met an instant death. It really did help the middle class—and only the middle class—and this meant it lacked the all-important political support of the well off. In fact, since the well off would be losing a benefit to pay for it, it attracted their instant opposition. And that was that…”

2. Jeff Spross: Obama’s middle-out economics is good. Bottom-up economics is better.: “The Democrats’ new proposals to boost the middle class feature a number of design aspects that render them almost useless to the lower class. More broadly, the Democrats have spent the last few decades turning away from a commitment to a broad and generous social safety net, and towards shrinking government and mandating work requirements. (Though ObamaCare was a welcome exception to this trend)…”

3. Elias Asquith: America’s vaccination nightmare: “[Chris] Christie went against the vast majority of medical professionals…. ‘It’s more important what you think as a parent than what you think as a public official,’ said Christie, who claims his own children were vaccinated… ‘parents need to have some measure of choice in things as well’…. You should not be surprised to hear that Christie’s comments were not well-received…. He earned finger-wagging and derision from ostensibly nonpartisan media figures and GOP operatives… criticism became so vociferous and widespread that the National Review was moved to publish not one but two posts that halfheartedly defended Christie…. Christie… seemed to tacitly endorse the conspiratorial belief that the science on vaccinations is up for debate… yet another sign that Christie will do absolutely anything whatsoever to be the Republican Party’s presidential nominee…. Rand Paul’s mistake… was an inverse of Christie’s…. Paul told Evans that he didn’t believe there was ‘anything extraordinary about resorting to freedom’… cite[d] unspecified, secondhand anecdotal evidence ‘of many tragic cases of walking, talking normal children who wound up with profound mental disorders after vaccines.’… Paul comes off quite poorly in the CNBC exchange, sounding patronizing and defensive… seemed to confirm a lingering suspicion about Paul: specifically, that his name is far from the only way you can tell that he’s the son of conspiracy theorist, ex-congressman and two-time Republican presidential candidate Ron Paul…”

4. Elizabeth Stoker Bruenig: Rand Paul, Libertarians Have Horrifying Views on Parenting: “Confronted with the question of whether or not discouraging vaccination is a threat to children’s health, Paul launched into a meandering consideration of public health and liberty that concluded with the assertion that ‘the state doesn’t own your children, parents own the children.’ Paul’s bizarre rendering of the parent-child relationship as unilateral ownership is not the most unhinged thing a well-regarded libertarian has ever said about children. In fact, libertarians exhibit a historical inability to adequately explain how parents should relate to their children, why parents are obligated (if at all) to care for their children, and whether or not moral nations should require that parents feed, clothe, and shelter their children within a libertarian frame. Consider Lew Rockwell… a professed fan of child labor…. Murray Rothbard… imagined that laws against child labor were passed in order to artificially inflate the wages of adults… [said] a parent… ‘should have the legal right not to feed the child, i.e., to allow it to die.’… Such dark fantasies are not restricted to the weird world of libertarian academia…. Libertarianism rests on the whimsical notion that all people are isolated, entirely free agents with no claims on others except those that they can negotiate through consensual contracts…. To avoid a hellish death spiral of infectious disease and neglect, we would all do well to reject Paul and his cohort on the subject of child rearing.”

The disconnect between who takes actions in Washington and who receives political responsibility whenever anything goes wrong continues to be a big problem with our modern system of governance. Another possible example for Norm Ornstein and company to chew over:

People have been asking me about this recently, and I keep thinking it is a set of issues I should revisit, reconsider, expand, and write about at length. But I have failed to do so.

So here it is again, hoisted from the archives:

Event – Income and Wealth Inequality in the United States: Evidence, Causes and Solutions | Rice University’s Baker Institute:

• WELCOME AND INTRODUCTION: John W. Diamond, Ph.D., Edward A. and Hermena Hancock Kelly Fellow in Public Finance, Baker Institute
• PANELIST: R. Glenn Hubbard, Ph.D., Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School
• PANELIST: J. Bradford DeLong, Ph.D., Professor of Economics, University of California, Berkeley
• MODERATOR: George R. Zodrow, Ph.D., Allyn R. and Gladys M. Cline Chair of Economics; and Baker Institute Rice Faculty Scholar