Relevant and even prescient commentary on news, politics and the economy.

Joe Biden: “How Are We to Pay for Single Payer Healthcare Alias Medicare for All?”

Joe knows the answer to this question and he is baiting the other candidates. Joe has a history of supporting big business interests as witnessed by his aggressive support of the banking industry with bankruptcy laws favoring banking against the needs of citizens and with a special intended harshness when it comes to student loans. Joe has sponsored or cosponsored every bankruptcy bill since 1997. With his question and his healthcare bill, I believe Joe  is courting the healthcare industry and the healthcare insurance industry’s support. Other candidates need to call Joe out on this.

Much of the payment for improved healthcare will come from negotiating with pharmaceutical companies, reducing the increasing cost of hospital inpatient and outpatient care, rolling back unnecessary pricing increases, reducing costs to 120% of Medicare costs today, etc. There are enough cost targets to attack which should provide a wealth of lower costs and funding for expansion. Healthcare Cost Drivers Pharma, Doctors, and Hospitals

Kocher and Berwick gave an outstanding recital of how we will get from Medicare and Commercial Insurance to just Single Payer Medicare4All. “While Considering Medicare For All: Policies For Making Health Care In The United States Better.” It is unlikely, Congress will move on Medicare4All in the beginning. It will take time. Today’s Medicare is not free from issues.

As the Director of Medicare and Medicaid and upon departing the position, Donald Berwick made this observation of today’s Medicare:

“20 to 30 percent of health spending is ‘waste’ that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by Medicare and Medicaid.

He listed five reasons for what he described as the ‘extremely high level of waste.’ They are overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud.

Much is done that does not help patients at all and many physicians know it.”

Within the PPACA, the issues with ACOs must be fixed. The initial PPACA ACO strategy has given hospitals the ability to exploit the market through consolidation, eliminating or minimizing competition in regions, leading to increased pricing, and enabling the employment of specialist doctors, making them “must haves” in insurance networks. As planned, the ACOs should have generated administrative cost synergy and quality benefits instead of enabling ACOs to consolidate and control prices.

Single payer does not use ACOs. In single payer, the government will pay hospitals, healthcare professionals, pharmaceutical and healthcare supply companies. The government will also set the budgets for hospitals and healthcare. Single Payer in Vermont was going to fail and failed due to cost because it used 3 ACOs to manage its plan. Bernie Sanders is also using ACOs in his plan. “Why the Bernie Sanders Bill Is Not Single Payer” The only fear I have of this type of arrangement is the influence of the healthcare industry on those determining pricing and accepting costs. The healthcare industry is attempting to establish a methodology using value brought to the patient clinically and in quality of life with resulting benefits to the health-care system and society also. It is an argument on the issue of the morality of higher prices. Single Payer will have to contend with this as much of the pricing argument is not justified.

The plan should be to gradually move from insurance administered healthcare (what Kocher and Berwick propose) to a single payer system similar to what Sanders proposes but minus ACOs. As I explained, there are enough cost targets to pay for much of the implementation to be derived from reducing costs in the present healthcare system.

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The Crushing Burden of Household Debt

If there is one thing that Presidential candidates, pundits, and bloggers agree on, it’s that Americans suffer under a heavy burden of debt. We have passed from alarm over predatory credit card lending, to underwater and deliquent mortgages to student debt, but in any case, we agree that debt is a huge problem. There are those who aim to save us from ruthless bankers and those who scold us for living beyond our means and eating avocado toast (personally I eat my avocados straight which is, I guess to avocado toast as crack is to cocaine) but all agree that the burden of debt has become intolerable.

Few mention that household debt service payments as a fraction of disposable personal income are near an all time low.

I think the reason is that we tend to assume that this is a brief temporary reprieve due to unsustainably low interest rates.

I think that people got used to thinking that interest rates are tiny to zero, because of desperate and temporary efforts by the Fed to fight the great recession. But the Fed shifted to worrying about inflation (as central bankers do) in late 2016. The US is currently believed to be near a business cycle peak and one reason for worry is that spending is depressed by the crushing burden of debt, which will become even less crushing if interest rates fall as they do in recessions.

I think that while economists have begun to ask if extremely low interest rates are the new normal and about what this means for fiscal policy (pdf ) I haven’t read any argument that persistently low interest rates imply that households will be able to manage student debt plus mortgage debt.

I stress I am not advising people with student debt to buy a house anyway, so it’s ok (never ever ever buy a house when I decide it is time to buy a house — I have a perfect record of buying at the peak).

My point is that the twin problems of persistently slack demand (that is high desired saving) and high household debt do tend to cancel out. It almost looks as if we aren’t headed for a macroeconomic catastrophe (in any case before Antarctica melts and we all drown, but that’s another problem).

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Real average and aggregate wage growth for August

Real average and aggregate wage growth for August

Now that we have the August inflation reading, let’s take a look at real wage growth.

First of all, nominal average hourly wages in June increased a strong +0.5%, while consumer prices increased +0.1%, meaning real average hourly wages for non-managerial personnel increased +0.4%. This translates into real wages of 97.5% of their all time high in January 1973, a new high following revisions to prior months:

On a YoY basis, real average wages were up +1.7%, still below their recent peak growth of 1.9% YoY in February:

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Why Are There More Uninsured Kids?

Ms. Seema Verma is the Administrator of the Centers for Medicare & Medicaid Services. She is the over seer of Trump’s attempts to repeal the ACA. She is smiling now as there has been a reduction in the numbers of people enrolled in public healthcare such as Medicaid and CHIPS. Why did this occur? States having work requirements for Medicaid, adding more red tape to the application process, cutbacks in in outreach and enrollment funds by the Administration, and instill fear, a chilling purposeful effect, to cause immigrant and mixed-status families to not enroll and even withdraw their children from Medicaid/CHIP. The fear of being deported or given a lower status because you are dependent upon Medicaid and other government programs does much to keep them away and in hiding.

Georgetown University Health Policy Institute, Center for Children and Families sorts through the data provided by the Census Bureau in one of its Current Population Surveys. The Bureau actually released a mini-special report focusing on children, “Uninsured Rate for Children Increases To 5.5% in 2018.” The percentage represents a loss of  ~425,000 insured by these programs or 0.6 percentage points decrease from the previous year. A job well done by Administrator Verma.

Joan Alker: What do we know about the kids who have higher uninsured rates?

  • Hispanic children saw a large jump of 1 percentage point from 7.7% to 8.7%. White children were the other racial category to see a statistically significant increase, clear evidence of impact of the Administration’s ongoing campaign of hostility and intimidation directed at immigrant families and the recent issuance of the public charge rule will only make this worse. Many of the children are born in America citizens who have immigrant parents.
  • Young children (age 0-5) saw a large increase as well with their uninsured rate jumping from 4.5% to 5.3%. Without healthcare, a young child’s health care needs are less likely to be met and this is especially troubling when they are in this critical time period when a child’s brain develops rapidly and is building a foundation for future educational and economic success.  Regular visits to a pediatrician for checkups helps children in being healthy and disease and disorders are caught early on in the development.
  • Children in the South are the worst off regionally and saw the highest increases in uninsured jumping from 6.5% as a region to 7.7%. As can be expected, southern states such as Texas, Florida, and Georgia have some of the highest rates of uninsured children in the country already.

More data on the impact of the new polices will be available month end when more American Community Survey looks at the state specific changes for children.

Three main Causes for the increased uninsured:

  •  As I mentioned earlier, mixed families with parents being legal or illegal immigrants and the children citizens. People are afraid of being deported or having their children snatched from them. No prior modern administration has ever separated children from their parents unless their was an overwhelming need to do so such as healthcare.
  •  The administration and Congress’s cuts in outreach and enrollment funding to undermine ACA, one of Barack Obama’s achievements and Trump’s failure to repeal.  Outreach grants for CHIP were delayed significantly by the purposeful congressional funding CHIP till the end of 2017. CHIP was not accepting new enrollments due to a lack of funding and some states cut back. People missed the deadlines as a result. Another purposeful ploy.
  •  Besides ignoring the problems on the increased uninsured rates for children, Seema Verma and CMS are supporting state efforts to tighten up eligibility in CHIP and put in place  stricter verification procedures causing eligible children to lose coverage.

More to Come on What Can be Done.

Why are There More Uninsured Kids and What Can We Do About It?,” Center for Children and Families, Joan Alker, September 12, 2019.

Children’s Public Health Insurance Coverage Lower Than in 2017,” US Census Bureau, Edward R. Berchick and Laryssa Mykyta, September 10, 2019.

Bill H – run75441

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Has 21st century conservatism contributed anything useful at all ?

(Dan here…lifted from Robert’s Stochastic Thoughts)

by Robert Waldmann

Has 21st century conservatism contributed anything useful at all ?

This is a question I haven’t asked myself. I have long looked for reasonable and reasonably honest conservatives. It is frustrating, because I have found many, but few are still conservative. I don’t want to get distracted from my distraction; but there is a pattern of me finding a conservative whom I consider reasonable, then that guy breaks with the conservative movement within a year.The new topic is conservative ideas. The question is, is there any conservative thought which is worth consideration, which they hadn’t already written and which not been said by 1900. I suppose this might be considered an unfair question, since I demand something new from a school centered on suspicion of the new. However, they have embraced many new and worthless ideas and proposals (see below) so I don’t think I am being unfair.

This is a long very self indulgent post. It is twitter overload. I am going to:

1) bring a twitter discussion over here,

2) try to think of worthwhile 21st century conservative ideas, and

3) try to think of worthwhile 21st century non-conservative ideas (to be fair — it might just be that my effort under 2 fails because of my ignorance or my interpretation of “worthwhile” and “2st century”).

OK the twitter thread (which will make it painfully clear why I surfed over to blogger I mean “4.1/3” really ???).

It starts with this very interesting post on challenges to liberalism and liberals’ responses.

Ross Douthat asked a constructive and interesting (implied) question

Ross Douthat @DouthatNYT

18h

The question I’m left with at the end of this interesting @zackbeauchamp crisis-of-liberalism survey is whether he thinks there’s anything that liberalism can learn or drawn on from the *right* in order to survive and flourish anew?

I replied @robertwaldmann

Obviously the reason you are left with that question is that neither he nor you can think of anything useful that anyone can learn from conservatives. The reason is that all alleged conservative insights have been disproven by massive evidence.

In fact I challenge you. I suspect the answer will be to claim for conservatism universal values and widespread beliefs or to pretend that the only alternative to conservatism is something like Marxism. I say conservatism has the same epistemic standing as astrology.

Dilan Esper contributed reasonable thoughts aiming for constructive discussion. I want to thank Dilan Esper for being helpful and constructive. I fear my tone on twitter and here does not communicate my sincere appreciation of a good faith effort. Also MuchTL:DR , his effort confirms my prediction.

 

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An update on forecasts

by New Deal democrat

An update on forecasts

I have a new post up at Seeking Alpha, describing the order in which data has tended to deteriorate before consumer-led recessions. A few conditions have been met; most others have not.

I have previously written that if a recession is in the works over the next few quarters, it is more likely to be a producer-led recession, a la 2001. In that regard, a few weeks ago I said that Q2 corporate profits would be a crucial report.

Well, they were reported a couple of weeks ago. I hadn’t linked to that article before, but that too was posted at Seeking Alpha.

The bottom line is that both the nowcast and the long-term 12+ month forecast are reasonably clear. The short term, 3 – 9 month forecast, is a lot dicier, and depends greatly on whether Tariff Man can resist the impulse to keep adding on de facto tax increases on American producers and consumers.

As usual, clicking over to SA and reading the posts should be educational for you, and helps reward me with a little $$$ for the effort I put

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Whither Ukraine?

Whither Ukraine?

Or “wither Ukraine?” some might suggest?  But no, after nearly 30 years of serious economic stagnation and massive corruption, along with losing territory to neighboring Russia with whom it has on ongoing military conflict, things are looking up there.  GDP grew at 4 percent annually last quarter.  The  hryvnia currency has been the second most rapidly rising currency in the world during 2019.  There has even been a prisoner exchange with Russia.  All this comes under its new president, Volodymyr Zelensky, who until recently was playing a Ukrainian president on a TV show. That sounds like a joke, but so far he seems to be delivering the goods, including an apparent effort to combat the deeply entrenched corruption practiced by both his pro-Russian and pro-EU predecessors.

A curious aspect of this so far successful presidency seems to be the effort by President Trump to undermine it, or at least not help it.  $250 million in military aid has been canceled.  Is this more payoff to Vladimir Putin for a future Trump Tower in Moscow?  There have also been reported efforts led by Rudi Giuliani to get the Ukrainian government to open an investigation into alleged misdeeds by a son of Joe  Biden who worked for a Ukrainian company for awhile. There have also been efforts to get them to denny charges made against former Trump campaign manager, Paul Manafort.  Rumors are that the military aid is being held up until The Ukrainians deliver on the firrst of these items, which would be pathetic.  So far they do not seem to be going along.

I was in Kyiv (Kiev) last weekk for a nonlinear economic dynamics conference and can confirm that the optimistic feelings are shared by Ukrainian economists I met there, some of whom I have known for a long time and who have not been like this in the past.  Maybe it will not work out, but for now there definitely is optimism there. Ironically an advantage of not having had much economic growrth over the last 30 years is that there are few modern glass and steel buildings downtown, with many very beautiful per-revolutionary ones there, with sculptures on them and painted bright colors.  This goes along with various historical buildings and sites dating back nearly a 1000 years.

Barkley Rosser

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F**king Old Enough to Vote

It’s That Day again. I mostly stayed off Facebook (except for birthday greetings) and Twitter, but even LinkedIn has posts of now-yellowed newspaper articles of survivors–and probably some of those who didn’t.

In another ten years, it will be as far from 11 Sep 2001 as that date was from 11 Sep 1973.

At least now, most people know what a sh*t Rudy Giuliani was, both in setting up the firefighters for disaster and moving the NYC Office of Emergency Management Command Center from the safest location in the city–the basement of 1 Police Plaza–to the 23rd floor of a building in a complex that had already been bombed once before he did it. While he and Bernard Kerik got to Be Adulterers on taxpayer money, somewhere between one-third and one-half of the 343 firefighters they murdered outright certainly could have been saved. Though that would have been more people who, but for the grace (and anger) of Jon Stewart, would still be trying to get health care. Rudy’s tombstone should read: ““This group’s finding is that the security of the proposed O.E.M. Command Center cannot be reasonably guaranteed” — July 1998″

Yes, I’m still bitter. No, I’m not going to post anything nearly as subtle as this, which is probably my ultimate contribution to the genre of In The Shadow of The Towers. I’m going to talk about Milton Friedman. Because it’s the 18th anniversary, so it’s now old enough to vote–or, especially in the pre-26th Amendment world–be drafted.

Let’s be clear: Milton Friedman had one good idea in his life, and that was that his alma mater should not sponsor a football team. Even a broken clock, and the program whose highlights are Ray Rice and Greg Schiano (whose skills included guiding the team to a money-losing Bowl appearance) isn’t exactly something that could justify Superstar Economics Theory.

Milton Friedman, like Gary Becker, was wrong about almost every social policy recommendation he made. While it might be difficult to identify what he was most wrong about, a leading contender is The Elimination of the Draft, which he championed for years and finally shepherded through the Nixon Administration.

After all, people should be Free to Starve Choose, and conscription is certainly not a “choice.” Choice can discriminate; conscription means mandatory attendance or a demonstrable reason to be excused. Friedman’s ghost, twirling at Mach 3 in the Eighth Circle, probably rues that males still must register for Selective Service.

So we have a story published just over two years ago on America’s only remaining news source becoming evermore real. While before people who didn’t want to be subject to two years of training and possibly warfare had to at least come up with a somewhat reasonable excuse (*cough* bone spurs *cough*) or face jail time, the scions of the elite have no “skin in the game.” So the Longest War in U.S. History continues: planned as well as it was executed, executed as well as its objectives were planned. While the planners well know that their sons (and daughters) will not even have to come up with the lies they did to avoid any chance of being killed.

Because Milton Friedman said that would not be Freedom. And people believed him, because “freedom” means you don’t have to “have skin in the game” (literally, in this case) if you don’t want to, even if your actions caused the problem.

I suspect Rudy Giuliani approves.

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Tariffs and Price Changes

I have been looking at the data recently to find economic series that would quickly reflect the impact of rising tariffs on the consumer.

One is Retail Sales: GAFO.  Think of it as department store type merchandise  — goods excluding autos, food and energy. It is reported every month in both the Census retail sales press release and in the BEA measures of retail sales they compile in putting together personal spending and GDP.  I have long preferred the BEA data because it provides very detailed measures of retail sales and real growth. Moreover, the practice of some to deflate the Census retail sales data with the CPI overstates retail price increases and under states real sales growth.As the chart shows price changes in GAFO sales moves very closely with prices of consumer goods imports excluding autos, food and fuels.

However, there is a problem with using the price index for imports as a measure of the impact of tariffs. It is a measure of prices FoB,  or freight on board. So it does not include tariffs that are added as the merchandise moves through customs. In the current environment importers reaction to tariffs could show up here.  One, if China absorbs some of the price increase while consumers would see higher  import prices, this measure of import prices would actually fall  as it shows prices China receives. Alternatively, if production is shifted to other countries their prices could be higher that the original Chinese price but less than the new Chinese price including the tariff. In this case, this measure of import prices would rise. So we do not know ahead of time how this price index will change.

Just a footnote, GAFO is about a quarter of all retail sales and this measure of consumer imports is also about  a quarter of all imports.

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