My Weekly Indicators post is up at Seeking Alpha.
The long leading forecast has now been negative for four weeks in a row. Please remember that clicking and reading, besides being educational, helps reward me for the work I put into this.
My Weekly Indicators post is up at Seeking Alpha.
The long leading forecast has now been negative for four weeks in a row. Please remember that clicking and reading, besides being educational, helps reward me for the work I put into this.
Here are the headlines on wages and the broader measures of underemployment:
Wages and participation rates
September was revised downward by -13,000. October was revised upward by +1,000, for a net change of -12,000.
The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed.
Last December 2017, Envision Healthcare Corporation paid an approximate $30 million to settle allegations for subsidiary EmCare doctors getting bonus payments for admitting patients to hospitals when it was not necessary.
A subsidiary of Envision, EmCare is a provider of physician services to emergency departments, inpatient services for hospitals, acute care surgery, trauma and general surgery, women’s and children’s services, radiology / teleradiology programs and anesthesiology services. If you have ever been hospitalized, Radiology is one service which always seems to have someone other than the hospital billing you. One study of billing practices of 194 hospitals in which EmCare handled billing and was out-of-network; the average out-of-network billing rate was 62% higher than the national average of 26%. When EmCare’s billing was compared to that of a competitor TeamHealth, the latter’s billing in other hospitals was less and there was a smaller increase in out-of-network service billing.
If you remember a while back, Rusty and I would discuss the ongoing consolidation of hospitals, clinics, and pharmacies. The reasoning behind the consolidation was to have enough market clout when negotiating with insurance and Medicare. Having a larger presence and being able to set pricing nationally and regionally is a big factor in the rising cost of healthcare.
Envision is the biggest player in staffing ERs and Anesthesiology departments with 6% of the $41 billion emergency department and hospital-based physician staffing and 7% of the $20 billion anesthesiologist staffing. Two-thirds of all Emergency Departments (ED) do some type of outsourcing even if it is short term.
United Healthcare insurance is pitted against Envision’s practice of over pricing for it’s 25,000 emergency doctors, anesthesiologists and other hospital-based clinicians charge to patients and pass through. The disagreement over pricing and how it is paid for by insurance as billed by 3rd party providers will spill over into patients being billed more frequently for higher prices not accepted by insurance.
UnitedHealthcare’s 27 million privately insured patients could face expensive and unexpected doctor bills as of 2019 if Envision doctors become out-of-network for United Healthcare. According to the research group NORC at the University of Chicago more than half of Americans have received an unexpected medical bill. In another study by economists from the Federal Trade Commission in 2017, 1 in 5 emergency-room admissions resulted in a surprise out-of-network bill.
While the ACA increased the numbers of people insured, approximately 20% of people have problems paying medical bills largely because healthcare is still rising faster than most other costs and income. One source of increased costs has been the billing from out-of-network doctors billing patients utilizing in-network facilities such as hospital Emergency Departments. NEJM recently published a Yale Study by Zack Cooper, Ph.D., and Fiona Scott Morton, Ph.D. (Out-of-Network Emergency-Physician Bills — An Unwelcome Surprise) reported on the increased occurrence of surprise-billing for out-of-network services.
Patients typically do not choose to use out-of-networks doctors or facilities. They will choose an in-network facility and expect an in-network doctor(s) to care for them. Healthcare insurance expects its buyers to use in-network services or pay a penalty for not doing so. When one arrives at an in-network Emergency Department, they expect to be cared for by an in-network doctor. I have yet to hear a doctor on duty offering up he or she is not employed by the hospital but instead by a third party. The patient is not aware of in-network or out-of-network issues until they get the bill. The market place is not working for the customer and the doctor still gets the business regardless of the price and there is no competition from other facilities or in negotiated pricing due to having insurance. The third party employer knows this issue as well as the hospital. The only fool in the room is the patient waiting to be cared for and be used. Insurance will pay a portion of the cost or negotiate with the hospital for a price. The third party company employing the doctor may yet charge the patient for the balance of the costs associated with the doctor and at a higher percentage than normal. The uncovered and unexpected higher cost is the rub.
The authors of the Yale study analyzed the claim’s data of a large commercial insurance company insuring tens of millions of people, focusing on ED visits for people under 65 years of age, occurring between January 2014 and September 2015, and at hospitals registered with the American Hospital Association. They chose hospitals with over 500 ED visits and identified the Hospital Referral Region (HRR). Utilizing the breakdown criteria yielded “more than 2.2 million ED visits Broken in 294 of the 306 HRRs, covering all 50 states, and capturing more than $7 billion in spending.” The map of the United States (above) is a pictorial representation of the data.
Summarizing their finding and estimating cost impact, Yale: “of the 99.35% of ED visits occurring at in-network facilities, 22% involved out-of-network physicians. The greater than 1 in five ratio (22%) masks a significant geographic variation in surprise-billing occurrence to patients among HRRs. 89% and 62% of surprise-billing rates occur in McAllen, Texas and St. Petersburg, Florida as compared to Boulder, Colorado and South Bend, Indiana with the surprise-billing rate there near zero.”
Envision questions the validity of the study and blames United Healthcare for not paying the billing and claiming insurance is the problem. Insurance coverage is a problem; but, it is not of the same magnitude when one starts to look at the increase in costs of $1 trillion from 1996 to 2013 of which 50% was due solely to price increases.
And yes there are “potential” extra costs for patients who are treated by an out-of-network ER physician or any out-of-network service. In one hospital I was in, Radiology was out of network as well as one surgeon. Both negotiated a rate with United Healthcare. Then too, this was written into the ESI policy. I had no choice in doing in-network as I came through the ER each time and was too ill to decide and/or go to another hospital.
In a Kaiser/New York Times Survey: Among the insured with problem medical bills, a quarter (26%) said they received unexpected claim denials and about a third (32%) say they received care from an out-of-network provider that their insurance wouldn’t cover. The out-of-network charges were a surprise for a large majority: 69 percent were unaware that the provider was not in their plan’s network when they received the care.
The same NEJM/Yale study which had looked ay frequency of surprise Out-of-Network Emergency-Physician Bills also looked at the costs of the bill and what was left over for patients to pay. On average, in-network emergency-physician claims were paid at 297% of Medicare rates. For reference in the Yale study, the authors used other medical disciplines as a benchmark. Orthopedists are paid at 178.6% of Medicare rates for knee replacements and internists are paid at 158.5% of Medicare rates for routine office visits. The Yale study showed out of-network emergency physicians charged an average of 798% of Medicare rates resulting in a calculated, potential, and additional cost for patients. The difference between the out-of-network emergency physician charge and 297% of the Medicare rate for the same services in the patient’s location could be billed for an average balance of $622.55 (unless their insurer paid the difference). It is also important to note that the potential balance bills can be extremely high; the maximum potential balance bill faced by a patient included in our data set was $19,603.
The suggested solution from the study was for states to require hospitals to sell a bundled ED care package that includes both facility and professional fees. In practice, that would mean that the hospital would negotiate prices for physician services with insurers and then apply these negotiated rates for certain designated specialties. The hospital would then be the buyer of physician services and the seller of combined physician and facility services. If physicians considered the hospital’s payment rates too low, they could choose to work at another hospital.
The hospital, doctors, and the insurance companies would compete for the best package to service the patients utilizing them. In the end, this is a stopgap measure until healthcare costs can be brought under control in a better manner.
Brookings Institute points us to:
Big, techy metros like San Francisco, Boston, and New York with populations over 1 million have flourished, accounting for 72 percent of the nation’s employment growth since the financial crisis. By contrast, many of the nation’s smaller cities, small towns, and rural areas have languished. Smaller metropolitan areas (those with populations between 50,000 and 250,000) have contributed less than 6 percent of the nation’s employment growth since 2010 while employment remains below pre-recession levels in many ‘micro’ towns and rural communities (those with populations less than 50,000).
Two graphs demonstrate part of the geography of markets and growth. Of course even the 1 per cent metros have divergent economic trends within them. The graphs make useful visualizations for discussion. Market forces are unlikely to change this on its own even if it is considered a problem generally:
Michigan Electablog “Lame Duck Republican Majority at work in Michigan.”
• Accrued Sick Time: This was one of the proposals not allowed to go to the ballot. Why? Because if it passed and it would have, Repubs would have needed 2/3rds vote to overturn it. Instead they passed it before November 6th and now they are altering it by taking coverage responsibility from over 93% of Michigan’s firms. The threshold for exemption from the law was raised from 5 in the proposal to 50 in proposed legislation.
Out of 173,309 businesses in Michigan, 162,003 firms have fewer than 50 employees.
The amount of required leave will be cut in half from 72 to 36 hours. It will also take hundreds of hours of work to accrue a few days of leave as employees must work 40 hours to earn an hour of leave instead of the 30 established in the citizens-backed initiative.
• One Fair Wage: Michigan Senate Republicans voted to gut the minimum wage increase.
An amendment to the minimum wage increase passed earlier this year to deny voters a chance to vote on the citizens-backed initiative as a Proposal. Instead Senate Bill 1171 will add eight years to the deadline for increasing the minimum wage to $12, from 2022 to 2030. Tipped workers will be hurt the most with their pay capped at $4 an hour.
• Unions: In an effort to stop union leaders from being able to take paid leave to do their jobs as union stewards, etc. Republican Senator Marty Knollenberg introduced Senate Bill 796. Democratic Senator Vincent Gregory had this to say about the bill:
“Bills like this only serve one purpose, they are just another step in the systematic destruction of unions and workers’ rights. Union leave time arrangements are an efficient, cost-effective way to quickly resolve employee disputes, disciplinary issues and other matters, and they help not just workers but also management.”
• Puppy Mills: State legislators are working to protect puppy mills by ensuring they can continue to sell puppies to Michigan pet stores. House Bills 5916 and 5917 narrowly passed the Michigan House of Representatives last Thursday. It now goes to the Senate.
Ohio based Petland is the backer of these bills. Over 280 localities across the country have passed laws to prohibit the sale of puppies in pet stores, in order to protect animals and consumers. Petland has gone state-to-state lobbying lawmakers to shield the corporation from local regulation. In the past two years, they have failed in Florida, Georgia, Tennessee, and Illinois.
• Recycling aluminum and PET. District 17 House Representative Joseph Bellino:The bill removes aluminum and PET plastic away from community-based recycling systems. Rerouting these materials into local recycling programs would provide the boost recyclers need to sustain their programs and expand access to even more communities.”
What he fails to say is that ALL of the returned containers are now recycled. If the 1976 “Bottle Bill” is repealed, many of those returned containers would end up in landfills.
• Wetlands: Michigan State Republican Senator – Escanaba Tom Casperson proposed Senate Bill 1211 redefining which wetlands require state Department of Environmental Quality permission to modify or fill and doubling the size threshold at which regulation is required, from 5 acres to 10 acres.
Senate Bill 1211 would remove 70,000 wetlands statewide from protection totaling about a half-million acres. In most Michigan counties, it would include about half of their remaining wetlands. These wetlands, lakes and streams can be filled, dredged, and constructed on without a permit according to Tom Zimnicki, agriculture policy director for the Michigan Environmental Council.
• Mackinaw Tunnel: Lame Duck Republican Gov. Rick Snyder struck a tunnel agreement in October with the Canadian oil transport giant. The company would pay to build a $350-million tunnel beneath the straits that would encase a replacement pipeline to prevent a spill and allow the existing line to be decommissioned. The state is also expected to kick in $4.5 million in infrastructure costs for the tunnel.
To bypass environmental approvals and accelerate required land condemnation, Snyder wants the tunnel overseen and owned by the Mackinac Bridge Authority.
• Finally, Staff Allocations: Newly elected Democratic Senator Jeff Erwin revealed; Democratic members of the state Senate are given $129,700 plus two staff benefit packages (for two staff members.) Republican senators, in sharp contrast, are given $212,700 plus four staff benefit packages (for FOUR staff members). Democratic Senators get HALF of the staff and 61% of the financial resources of Republican Senators to run their offices.
These allocations are hold overs from the budgets created by outgoing Senate Majority Leader Arlan Meekhof. According to Irwin, legislative staff salaries range from $25,000-$75,000 with some exceptions. “As a minority member, I have learned, we can buy benefit packages from the Senate business office and squeeze a third staff member into that budget as long as the salaries are less than the total,” he told me.
I guess we will have to pound them into the ground again.
Persuasive Case of Voter Fraud and Republicans Do Not Care North Carolina: The first public indication things were not right in Bladen County occurred weeks ago. The North Carolina State Board of Elections did not certify the results of the closely watched 9th Congressional District race. Republican Mark Harris appeared to defeat Democrat Dan McCready by just 905 votes.
Atlantic Staff Writer: David A. Graham “A congressional race in North Carolina suggests that the likeliest threats to the integrity of elections are not the ones GOP lawmakers are addressing.”
Documents released by the NCSBE on Tuesday revealed a political-consulting firm contractor for the Harris campaign had requested almost 600 absentee ballots in Bladen County. According to reporters and in sworn affidavits, Dowless had a team of workers going around collecting absentee ballots from voters, a violation of state law. The affidavits also allege, the Harris campaign workers helped to complete ballots for voters, another violation of the law.
Both Bladen and Robeson Counties had an unusually high number of unreturned absentee ballots indicating they were collected by someone and never turned in. It is unclear to the extent whether these workers were aware they were breaking the law. Harris’s campaign says he was unaware of any illegal activity. The Harris campaign and Red Dome consulting firm, Red Dome received NCSBE subpoenas.
Dowless was hired to get the vote out, and he got results. More absentee votes came in by mail from Bladen County than any other county in the 9th district. Bladen was also the only county in the district where Harris beat McCready in mail-in votes. even though the district’s party registration leans Democratic.
Republicans Stymie Democrats in After the Election Wisconsin: In the early-morning hours Wednesday, Republicans in majority control of the Wisconsin legislature carried out their plan to neuter the Democrats who were elected to office in November.
In party-line votes, Republicans passed legislation to limit the ability of the incoming governor (Tony Evers) and the new attorney general, (Josh Kaul), to deliver on their campaign promises of protecting the ACA, expanding infrastructure spending, and overhauling the state’s economic-development agency. The Republican legislature scaled back early voting in Wisconsin. They shifted power from the state’s executive branch to be administered by Democrats in January back to the Republican legislature.
In Lame Duck session, Republicans did all this over the protests of demonstrators who swarmed Madison and those of Democrats. Republicans did little to dispute what Democrats called a power grab.
In both North Carolina and Wisconsin, let alone Georgia and Florida; the battle over voting and aftermath election practices is still going on today. More on Michigan.
The markets are closed today in observation of former President George H.W. Bush’s funeral. In the meantime, let me offer a brief few observations (pontifications?) about my sense of the immediate and longer term trend.
First off, here is a broad look at the last 10 years for the S&P 500 (blue, right scale) and 10 year Treasury bond (red, left scale):
The moves in the bond market look exaggerated, because the values are between 1.4% at its lowest, and 4% at its highest. Basically in the last 10 years yields on the 10 year bond completed their slow decline from about 20% in 1980, then went sideways 2011 and 2017, and this year started what I suspect will be an equally long term climb (although whether they will peak in a few decades at 6% or 600%, I have no clue).
Meanwhile the stock market quadrupled in value (!), although with a few hiccups along the way, particularly in 2010, 2011, 2015-16, and this year.
In other words, in the past 10 years bonds paid you very little, while stocks rewarded you handsomely.
Next, let me take a look at a few of those hiccups. First, here is the 2010-11 period:
Note that on several occasions (roughly mid-2010 and mid-2011) stocks declined by roughly 10%, and bond yields declined in tandem.
The same pattern appears in October 2014 and January 2016:
This is called a “flight to safety.” Stock investors get spooked for some reason or other, and run into the relative safety of bonds. Stock prices fall, and bond prices rise, which means bond yields fall.
That’s what I think is happening at the moment. After a 40% run-up beginning immediately after the 2016 US Presidential election (20% of which was in December 2017 and January 2018 alone):
this year stocks have gone sideways in roughly a 15% range:
In the broad view, investors got too exuberant in 2017 mainly, I suspect, in anticipation of the tax cut goodies, and once the goodies took effect, realized that all of their value – and then some – was already priced in. In the close-up view, the past month looks like another “flight to safety.”
NOTE: Complete speculation alert!: Because these things tend to inflict surprise on as many people as possible, my *guess* is that the carnage will continue until roughly the moment that 2 to 10 year bond yields invert. Then, once people are sure that the end is nigh, both will reverse higher, at least temporarily ending the inversion.
Finally, what is also interesting about this year is that it appears to mark a “change of season” in the relationship between stock and bond performance. From 1981 through 1998, stock prices and bond yields generally moved in the opposite directions (stocks up, yields down). Then, from 1998 until this past January, bond yields and stock prices tended to move in the same direction — not on a daily basis, but in the longer view. This year, as the first and third graphs above show, stock prices and bond yields have again generally become mirror images of one another.
This year’s pattern (with rising bond yields) last happened in the 1950s, which was a period of “reflation,” i.e., bond yields and the YoY change in prices gradually increased. That’s another reason why I think we have started a new secular financial era.
End of observations/pontifications.
At the CEPR blog, Beat the Press, Dean Baker and Jason Hickel are debating degrowth. Dean makes the excellent point that “claims about growth” from oil companies and politicians who oppose policies to restrict greenhouse gas emissions, “are just window dressing.” I also agree, however, with the first comment in response to Dean’s post that his point about window dressing could be taken much further.
I would add that economic growth is window dressing for what used to be referred to much more aggressively as “man’s triumph over nature” or the “control of nature.” Climate change deniers are more forthright about this connection between aggression and so-called growth: “Is “Strive on — the control of nature is won, not given” a controversial statement? What does it mean for science if it is?” asks Linnea Lueken at the Heartland Institute website.
If advances seem to come but are based on sentimentality, they are valueless; reaction must surely set in, and the advances had better never have been made. In sentimentality there is repressed or unconscious hate, and this repression is unhealthy. Sooner or later the hate turns up.
The most thorough discussion by Winnicott of his aversion to sentimentality is probably his 1939 article, “Aggression and its roots.” As it is only three paragraphs, I quote it in its entirety:
Finally, all aggression that is not denied, and for which personal responsibility can be accepted, is available to give strength to the work of reparation and restitution. At the back of all play, work, and art, is unconscious remorse about harm done in unconscious fantasy, and an unconscious desire to start putting things right.
Sentimentality contains an unconscious denial of the destructiveness underlying construction. It is withering to the developing child, and eventually it can make him need to show in direct form destructiveness which, in a less sentimental milieu, he could have conveyed indirectly by showing a desire to construct.
It is partly false to state that we ‘should provide opportunity for creative expression if we are to counter children’s destructive urges’. What is needed is an unsentimental attitude towards all productions, which means the appreciation not so much of talent as of the struggle behind all achievement, however small. For, apart from sensual love, no human manifestation of love is felt to be valuable that does not imply aggression acknowledged and harnessed.
The phantasied attacks on the mother follow two main lines: one is the predominantly oral impulse to suck dry, bite up, scoop out, and rob the mother’s body of its good contents.… The other line of attack derives from the anal and urethral impulses and implies expelling dangerous substances (excrements) out of the self and into the mother.… These excrements and bad parts of the self are meant not only to injure the object but also to control it and take possession of it.
Whether or not the infant has such unconscious aggressive fantasies about the mother’s body, Rex Tillerson, when he was CEO of Exxon, expressed similar, fully-conscious ones, “My philosophy is to make money. If I can drill and make money, then that’s what I want to do…” Robert White-Stevens, the corporate-designated nemesis of Rachel Carson following the publication of Silent Spring, exemplified the “control of nature” faction of science:
Miss Carson maintains that the balance of nature is a major force in the survival of man, whereas the modern chemist, the modern biologist and scientist, believes that man is steadily controlling nature.
White-Stevens’s vision of a “feeble creature” penetrating “every corner of the planet,” and “contest[ing] the very laws and powers of Nature, herself,” could have been written as a Kleinian parody of the of the infantile arrogance of scientistic triumphalism:
Within the past 100 years, man has emerged from a feeble creature, virtually at the mercy of Nature and his environment, to become the only being which can penetrate every corner of the planet, communicate instantly to anywhere on earth, produce all the food, fiber, and shelter he needs, wherever he may need it, change the topography of his lands, the sea and the universe and prepare his voyage through the very arch of heaven into space itself.
This is the stuff that science is made of, and man has learned to use it. He cannot now go back; he has crossed his Rubicon and must advance into the future armed with the reason and the tools of his sciences, and in so doing will doubtless have to contest the very laws and powers of Nature herself. He has done this already by expanding his numbers far beyond her tolerance and by interrupting her laws of inheritance and survival. Now, he must go all the way, for he cannot but partially contest Nature. He has chosen to lead the way; he must take the responsibility upon himself.
Governor Rick Snyder:
I would ask you to block any legislation from the Michigan Lame Duck Legislature which would overturn the will of the constituents as determined through the November 6th vote or endorsed by petition and thereby blocked from being placed on the ballot due to deliberate legislative action passing it in the Michigan House and Senate pre-November 6th. As you already know proposals passed through elections require a two-thirds legislative vote to overturn them or alter.
It bothers me to have to write to you and urge you to block something which will subvert the will of your constituents in favor of a political party and which should also be very apparent to our State Senators and Representatives. I should not have to pen this email to you as they should know by now which is the more important of the two choices . . . we the constituents who they “should represent” in the Michigan State House/Senate or a gaggle of special interests such as big business, PACs funded by the Koch Brothers etc., or the 1% of the Household Taxpayers making greater than $500,000 annually in income. It was far greater than 51% of those who voted favorably in this last election for the proposals. It was those who also signed petitions to place other proposals on the ballot which were deliberately blocked and passed by legislative action in the State Legislature so they could later be overturned or changed in Lame Duck session. Do not allow the Legislature to:
– Change the intent of the Michigan One Fair Wage initiative by delaying and diminishing an increase in the minimum wage, something which came about as a result of a constituent Initiative.
– Change the intent of the Michigan Time To Care initiative by delaying and decreasing the amount of a worker’s earned sick leave, something which came about as a result of a constituent Initiative.
– Weaken the authority of the Michigan State Attorney General to bring suit or interfere with the Michigan Courts.
– Weaken the authority of the Secretary of State in monitoring elections and associated practices within Michigan.
– Block the new, popularly elected, State of Michigan Governor by diminishing the authority of the position making it less than what it is today under yourself.
I am adding my voice to the tens of thousands in Michigan calling upon you to act responsibility in representing us the constituents of your state and veto any and all changes to the recent proposals passed through a vote and those deliberately passed through legislative action (to be overturned after the election) before the November 6th election and endorsed by petition.
Thank you for your time and consideration.