Category: Equitablog

Should-Read: Josh Barro: John McCain saved Republicans from themselves by killing Obamacare repeal bill: “Lindsey Graham made a demand: He would vote for the terrible healthcare bill being offered before the Senate, a bill he thought would cause health insurance market disaster… http://www.businessinsider.com/john-mccain-vote-health-care-obamacare-bill-2017-7

…as long as he received clear assurances that the House would never… make it law…. Like a lot of the weird things Republicans have said and done on healthcare in the last few months, it makes sense if you understand their underlying political goals. All the options Republicans have left themselves on healthcare are both terrible policy and dreadfully unpopular. So members haven’t set out to make good policy. They have set out to avoid being blamed for whatever becomes law—and also to avoid being blamed if nothing becomes law….

Early Friday morning, McCain arranged to vote out of alphabetical order, so he could shout the “no” that killed the bill to the applause of his Democratic colleagues. He built up as much drama as he could for the moment, telling reporters who asked about his intentions before the vote they would have to “watch the show.” Democratic Sen. Dianne Feinstein hugged him on the Senate floor. If you’ve been asking why McCain is getting so much credit for this hit job, rather than his two female Republican colleagues without whose “no” votes the bill would have also passed, one of the answers is that he has sought to make himself the fall guy. But it’s true: This was a conspiracy of three. And one thing McCain has in common with Sens. Susan Collins and Lisa Murkowski is all three were in an unusually good position to take the blame for killing Obamacare.

Collins represents a state, Maine, that voted for Hillary Clinton… is rumored to want to run for governor of Maine. As long as Obamacare stays the law, there will be a pot of Medicaid expansion funds waiting for the state to unlock, creating a windfall into the state budget Collins would oversee. Murkowski… answers to a truly moderate voter base in Alaska… 2016 with 44% of the vote, against 29% for a candidate to her right and 25% for two candidates to her left…. She can lose a Republican primary and come back to win the general election as a write-in…. McCain? Well, how do you threaten an 80-year-old man who is facing down an aggressive form of brain cancer? By threatening to back his primary challenger in 2022?

One piece of conventional wisdom in the months of debate over healthcare had been that any bill would either pass by a single vote or fail by many. Friday morning’s 49-to-51 defeat proved that wrong…. Maybe the bill needed to fail by a one-vote margin, so the maximum number of Republicans could say tried their hardest…. Republicans… will be glad for the political cover he gave them by taking the fall for a murder many of them wanted to commit, so the party would not have to take ownership of an electorally disastrous policy.

Should-Read: Simon Wren-Lewis: UK slowdown is a result of Brexit and austerity: “Those who argued that Brexit would bring a short term slowdown have been proved right: they just got their timing slightly wrong… https://mainlymacro.blogspot.co.uk/2017/07/the-uk-slowdown-is-result-of-brexit-and.html

…Have all those who earlier lambasted forecasts of a short term Brexit slowdown offered their apologies? Pigs will fly. Yet in his press release when the figures were announced, Labour’s Chancellor in waiting John McDonnell mentioned the government’s austerity policy but not Brexit. This is surprising…. Both are to blame.

After a pause, fiscal policy (to judge from the OECD’s estimate of the underlying primary balance) started taking demand out of the economy in 2015 and particularly 2016. That will have been an important factor behind the slow growth in both years. However the additional slowdown in the first half of 2017 is likely to be a Brexit phenomenon…. The Brexit depreciation immediately after the vote has led to a fall in real incomes, meaning less consumption. It has not led to any compensating increase in exports because firms are not going to expand markets that might soon disappear because of leaving the Single Market or customs union. The Brexit depreciation has brought forward some of the negative impacts of Brexit on living standards.

Yet austerity is still to blame in the following respect. The Brexit slowdown in 2017 H1 is a slowdown in demand, not supply. Monetary policy did what it could after the Brexit vote, but with interest rates at their lower bound it can do no more. (I trust there are some very embarrassed faces on the MPC right now among those suggesting a rate rise.) Fiscal policy should have helped monetary policy out by filling the demand gap, but those running the Treasury refuse to acknowledge this role for fiscal policy.

So McDonnell is correct to blame austerity, but his failure to also blame Brexit I’m afraid reflects darker political motives. The silence on Brexit as a cause of the current stagnation is because Labour, like the government, supports Brexit. No one wants to say that the Brexit vote is already causing considerable damage. Just like courtiers to a monarch, no one dares tell the king (the 52%) the bad news that their decision have brought harm in case the king takes his anger out on the messenger (the political parties).

Should-Read: Martin Longman: A Glimpse Back at the Old Senate: “two stories I found last night while researching my Murkowski-Collins defection piece…

…from the Senate floor on January 5th, 2001 as the agreement on how to organize the 50-50 Senate was being announced and debated. The first story comes from Republican Senator Pete Domenici of New Mexico and talks about his experiences dealing with the legendary Democratic senator, Russell Long of Louisiana:

Did I have any real friends in the Democratic Party who went to exceptional ends to be helpful to me?

Let me tell you a brief story.

I was a pipsqueak in the Senate, and Senator Long was a very big Senator. I was just starting my first term. I passed only one bill. It was a big bill. It imposed a 10-cent gasoline tax–Senator Byrd, you remember that–on the users of the inland waterways. Do you remember that fight?

It went on forever, but I won fair and square, and I went home to campaign. And, believe it or not, a Senator from that side of the aisle, in my absence–I was in New Mexico–was going to undo my victory because they had the votes and he had the floor. A staffer called me and said: You better come back, get off the campaign trail and come over here and defend the only legislative victory you have, of any significance, in the first 6 years. I was prepared to do it.

Guess what the next call was, in about a half hour–Russell Long. I had defeated him on the floor in that debate.

And he said: Pete, they won’t do that.

I said: What? They will not upset your victory. You won. You stay home and campaign.

Think of that, telling a Republican to stay home.

You stay home and campaign and I will take the floor in your place and object to what is contemplated. And the victory that you got will not be undone here on the floor by a Democrat.

That is friendship, right? But, listen, I didn’t agree with Russell Long on a lot of things–and he knew that–here on the floor of the Senate.

I say to my Democrat friends on the other side of the aisle, all kinds of expressions have been used talking about what is going on: “We extend a hand to you,” and all those other wonderful words. All I can say is, I am going to do my best to work with you, and I hope you will do the best you can to work with me on the Budget Committee and get something done.

The second story comes from Republican Senator Ted Stevens of Alaska and likewise involves his early experiences in the Senate:

When I was a very new and appointed Senator, I asked a Senator here who was managing the bill on the other side of the aisle to call me when it came time to offer an amendment. I was tied up in a committee. I was surprised that the bell rang in the committee and the vote was going on. I came to the floor. I am not one to be shy in expressing my opinions, and I went to the then manager of the bill and started to berate him. Senator Mike Mansfield came to me and said: Senator, you should not use language like that on the floor of the Senate. I told Senator Mansfield what had happened. He, as the majority leader, looked at that Senator and said: Is that true? The manager of the bill said: “That’s true, but that amendment would not have passed.” Senator Mansfield said: “Have you got your amendment, Senator?”

He took the amendment from me, he stopped the vote that was going on, he returned the bill to second reading, and he offered my amendment. That amendment passed, and it has benefited my State for a long time.

I merely state it here today to say every Senator on this floor has equal rights. The 50/50 that we have is the result of the voters of the country, but there need not be a division between this body in terms of the 50. We work on the basis of a majority. We can have a tie at almost any time, or a majority with a quorum.

We are looking at a process where every Senator has the right now to understand the responsibility that comes from this agreement that has been reached. I congratulate the Democratic majority leader; I congratulate our future Republican majority leader for reaching this conclusion. I share the feelings of my friend from West Virginia [Sen. Robert Byrd] that this is an act, really, of true statesmanship. I believe those who have not agreed should help us make it work because it will take the relationships that exist between myself and my great friend from West Virginia to make this work. I not only trust the Senator from West Virginia, I trust him with my life, and he knows that. We have never had an argument. I have served with him as chairman; he has served with me as chairman. We have resolved every difference we ever had before we came to the floor. That is what is going to happen now.

Most of the work we do will be in committee. This resolution gives us the ability to work in committee on the basis of trust. I honor the two leaders for what they have done. I am proud of the Senate today.

I can get impatient with pundits and commentators who wax poetic about the good old days in the Senate when everyone went to each other’s homes for dinner and drinks and bipartisanship was in vogue. But there really has been something lost in the last two or three decades, and it has to do with honor and decency.

In my opinion, while it’s true that there is some measure of “both sides” being responsible for the breakdown, by far the most damaging development has been the emergence of Senator Mitch McConnell as the leader of the Republicans. I can get into all the reasons why I believe this some other time, but here I just wanted to give you a little peek at how things used to be different, and better.

Must-Read: A good way forward on health care:

Neera Tanden and Tophir Spiro: The bipartisan way to strengthen health care: “Provide greater certainty for insurers by guaranteeing continued payments of ACA subsidies, a step that could help reduce average premiums by as much as 19 percent… https://www.washingtonpost.com/opinions/the-bipartisan-way-to-strengthen-health-care/2017/07/18/b2e2b444-6bef-11e7-b9e2-2056e768a7e5_story.html

…reimburse insurers for covering high-cost patients who need more expensive medical treatments. Such a solution has already proved effective in Alaska, which cut the rate of premium increases by 75 percent, and in Maine, where premiums fell by 20 percent in the first year after it was enacted. We estimate that providing $15 billion to states for this kind of reinsurance would help lower premiums by more than 14 percent. Furthermore, because this funding would lower premiums, it would save money on tax credits—resulting in an overall cost of slightly more than $4 billion per year. Working together, Congress could easily find health-care savings to pay for this reinsurance. There should easily be majority support for both these proposals, as guarantees of ACA subsidies and reimbursements for high-cost patients are already found in the BCRA.

Finally… assist those areas of the country that have one or no insurers. Republican senators such as Bob Corker and Lamar Alexander of Tennessee and Democratic Sen. Claire McCaskill of Missouri have previously supported the idea of filling insurance gaps for these underserved counties. There are several gap-filling options…. In counties that were underserved as of July 1, insurers could be exempted from paying the health-insurance tax. The government could offer a public option in the form of a guaranteed choice plan in communities without sufficient competition, particularly rural areas. People in underserved counties could be allowed to buy into the Federal Employees Health Benefits Program. The three components of this proposed bipartisan solution would quickly earn the overwhelming support of insurance commissioners, actuaries, economists and policy experts from across the political spectrum…

Must-Read: Matthew Yglesias: Senate Republicans’ approach to health care is bizarre and appalling: “Nobody can tell exactly what Senate Republicans are doing with Americans’ health care, largely because they keep lying about it… https://www.vox.com/policy-and-politics/2017/7/27/16040284/senate-republicans-health-care-lies

…Five days ago, John McCain called on senators to pay more heed to governors’ words of caution about steep Medicaid cuts. Then he made a dramatic return to the Senate floor, denounced the entire process through which the Senate health care bill had been assembled, and then voted with leadership to continue the process. Nonetheless, he insisted that he opposed the underlying Better Care Reconciliation Act. But then when the BCRA came up for a vote, he voted for it, offering the excuse that the vote was procedural. But if denouncing both the process by which a bill has been assembled and the substantive ideas it contains doesn’t lead you to vote against leadership on procedural matters, then what do your words even mean?…

The health bill keeps shambling forward, since Republicans seem comfortable lying to the American people about essentially all aspects of the process, up to and including their own position on it…. The saga of the “skinny” repeal concept that emerged suddenly Tuesday morning with no hearings, stakeholder discussions, or public debate makes the point. In one interpretation, Republicans are now prepared to radically lower their horizons… skinny repeal would modestly cut taxes and blow up the exchanges while leaving Medicaid intact. In another interpretation, skinny repeal is… a placeholder and then go to a conference committee… [so] Senate Republicans will be faced with an up-or-down, no-joke binary choice between the hardline bill and no repeal at all, at which point they will presumably swallow the hardline bill…. Even as the Senate GOP caucus appears to be coalescing around the skinny repeal strategy, its members cannot agree as to which version of the strategy they are pursuing. The other is that neither interpretation accords at all with Senate Republicans’ stated public commitments…. And yet ahead they go.

At every step along the way, the argument that appears to propel Republicans forward is the notion that they have an obligation to fulfill their promise to repeal and replace Obamacare. In reality, everything they have done in pursuit of repeal is breaking promises…. Trump promised to protect Medicaid, lower premiums and deductibles, and cover everyone. Every single version of repeal that Republicans have considered does the opposite on every front…. Along the way, key senators have made up new tests to violate. Louisiana’s Bill Cassidy spent several weeks touting the “Jimmy Kimmel test” for legislation and then voted “yes” on a bill (ORRA) that the CBO says would cost 32 million Americans their health insurance coverage. Dean Heller did a joint press conference with his state’s Republican governor in which they promised to protect Medicaid expansion, and then he voted yes on the key procedural vote that has kept Medicaid at risk. Shelley Moore Capito from West Virginia, likewise, flip-flopped on the BCRA after changes were made that were totally irrelevant to her stated concerns….

This kind of up-is-down behavior where stated preferences are unrelated to underlying behavior is bizarre. After all, if Capito ends up eliminating West Virginia’s Medicaid expansion after promising not to, she isn’t going to be able to trick people into thinking it hasn’t been ended. Why pretend she was opposed to ending it if she actually wasn’t?… It’s striking how much the heaping piles of bullshit that surround the health care debate have nothing in particular to do with Trump. McConnell and his staff spent all of 2016 looking reporters in the eye and touting his commitment to “regular order” as a legislative approach. He sent a senior staffer to the Vox office who very seriously attributed 2015’s relatively productive legislative session to a return of regular order and promised that regular order would continue no matter who won the presidential election. McConnell and Paul Ryan then, entirely of their own volition, with no evident input from Trump, proceeded to enact the most fantastically irregular legislative process anyone has ever seen. And dozens of Republican senators proceeded to repeatedly bemoan the slipshod process even while continually voting to continue the process….

Since nobody involved can be trusted to keep a promise for even a full afternoon, nobody knows what they’re really thinking or what they’re genuinely trying to do. Millions of lives are at stake, and the best Republicans can do to explain what’s happening is to congratulate themselves on distracting some people with a piece of petty bigotry. It’s bizarre and, frankly, appalling.

Should-Read: Mike Bird and Christopher Whittall: The Speech That Transformed European Markets—Five Years Later: “European Central Bank chief Mario Draghi…. ‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro and believe me: It will be enough’… https://www.wsj.com/articles/the-speech-that-changed-european-marketsfive-years-later-1501061404

…The speech is seen as pivotal…. Perceptions that a country would exit the eurozone in short order never returned to the heights that they reached in the summer of 2012. (And the ECB has never used the “outright” tools it developed.)… “‘Whatever it takes’ was a defining moment for the market, the turning point in terms of fighting the crisis, when the redenomination risk was priced out of government bonds,” said Matthew Cairns, senior strategist at Rabobank. “But even now, growth has really yet to pick up to the levels that the ECB would like to see it at”…

Must-Read: Naughty, naughty, Marty…

You know better.

You say: “Patients in the Oregon Medicaid study show no significant improvement in clinical physical health outcomes”. You know as well as I do that you should say: “Patients in the Oregon Medicaid study showed the expected and clinically significant improvement in physical health outcomes, but the study had low statistical power, and so the researchers could not dismiss, at conventional levels of statistical significance, the possibility that the improvement was due to chance.”

Back in the early 1980s you used to try very hard to teach your students not to confuse statistical significance with economic significance.

What has happened?

Martin Feldstein: How Would Health-Care Reform Affect Patient Health?: “People who qualify for Medicaid do receive substantially more care than those without formal insurance… https://www.project-syndicate.org/commentary/us-health-care-reform-medicaid-cuts-by-martin-feldstein-2017-07

…have substantially lower out-of-pocket medical costs… much less likely to skip paying other bills because of medical debts or to have nonmedical bills sent to collection. If reform legislation reduces Medicaid benefits, the individuals who lose benefits would continue to receive free care in outpatient departments, emergency rooms, and as hospital in-patients…. Individuals who are billed for services understand that providers generally do not attempt to collect from low-income patients. Moreover, those who are no longer in the Medicaid program do not lose care from the many doctors who now refuse to serve Medicaid patients because of the low fees allowed in the program. The most important fact to bear in mind is that enrollees in Medicaid show no significant improvement in clinical physical health outcomes. This was the main finding of a large “natural experiment” supported by the federal government…