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Read the Bill! (3.3 MB)

The House Bill is out. It’s different, at a minimum in its numbering, ‘Sec 113’ and ‘Sec 116’ don’t mean what they did yesterday. I’m going to take some time to read through the naughty bits, maybe some of you could too. Discussion/updates later.

Update one. (Sec 102) Medical Loss Ratios set at a minimum of 85% but could be set higher. Cue the squealing from AHIP.

Two (Sec 105) Group plans required to offer optional coverage of kids up to the age of 26.

Three (Sec 107). In (I think) 22 states it was legal to treat a history of Domestic Violence as a pre-existing condition that could be denied coverage. This bill would eliminate that particular barbarity.

(Sec 110). Sweet!! No longer can you screw over retirees after the fact. If you retire with health care coverage you keep it. (Corporations are infamous for pulling this particular chair out from under former employees.)

(Sec 202) is the new Sec 102, the one certain wingnuts insisted banned individual private insurance altogether. Wingnut 102: How HR3200 Outlaws Private Health Insurance. Ah! Good times! To recap: if you got shitty individual insurance now you can keep it, but after Jan 1, 2013 new individual plans have to be offered through the Exchange and so be QHBPs (Qualified Health Benefit Plans)

(Sec 213) is the new Sec 113, Insurance Rating Rules. As in the original the premium ratio due to age can’t be higher than 2:1 (insurance companies were pushing for 5:1 or even 7:1),

(Sec 262) Anti-trust exemption repealed.

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New look for Angry Bear


The new template is done for the most part and will be replacing the current template in November, about mid-month. It is faster and cleaner and should serve us well. There will be additional services included. Anyone who wants to take a look at the proto-type can in the near future.

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Public Option Hardest Ball

Robert Waldmann

The proposal made here in “Public Option Harder Ball” received enthusiastic support when it was coincidentally semi proposed as opt-in by Sen Carper (D-Bankruptcy Reform) and modified to to opt-out by Senator Schumer (D-tough guy). As presented here on September 4 it was clearly unconstitutional and needed work.

Now I have another idea. I’m not sure if it is a joke or a debate transforming proposal. I got the idea from Rich Lowry who asked “Does a state get to opt-out of the taxes too?” Hmmm now that is an interesting idea.

First don’t give Lowry too much credit for originality. The bogus argument is clearly the right wing talking point of the day. I have no way of knowing who thought of it or how it spread.

Lowry is pretending that “the taxes” pay for the public option. Since the cost of a robust public option is negative $ 100 B over ten years*, I guess the way to implement his proposal is to give states a second option — the option to voluntarily send money to the Federal Treasury to make up for the extra cost due to their choice to opt out of the public option. the value of this second option is zero, so, taken literally, Lowry’s proposal amounts to nothing.

But one can make sense of it. States could be allowed to opt out of federal financing. That is they get the medicare tax, the excise tax on cadillac plans. the share of income taxes that go to medicare and medicaid the whole boodle and, in exchange they must provide medicaid, medicare and health care reform insurance subsidies to their citizens.

That way no state would subsidize health care in any other state.

If Rich Lowry were sincere he would support such a proposal. he would also be unable to travel safely in Red America if the massive subsidies they get from Blue America were actually cut off. Of course that won’t happen. Senators from states which get more back from the Federal government than they pay in taxes will make very sure that the proposal is blocked. The utter hypocritical dishonesty of Lowry’s argument will be made clear.

OK semi serious modified proposal. This just concerns health care reform. The hard part is to decide how to distribute the Medicare budget cuts. I’d say a state can opt out of the fiscal consequences of health care reform if it
1) pays all of the cost of expanding medicaid
2) pays the subsidies.
3) keeps all excise tax revenues collected in the state
4) Gets a share of the medicaid cuts proportional to medicare payroll taxes paid collected in the state.

4 is the hard part. Medicare is largely funded with income taxes. I just use payroll tax revenues as a rough yardstick. The plan would probably work fine if the share of Medicare savings were proportional to population.

Now if Texas were to opt out of the fiscal aspects, they would give a huge gift back to the rest of the USA. They have a huge number of currently uninsured people many of whom would get subsidies. They have a lot of poor people. Generally a larger fraction of the population of states with Republican senators are poor enough to qualify for expanded medicare. Also a larger fraction are poor enough for subsidies.

In contrast, my proposal would be wonderful for New York, Massachusetts and, especially Maine. Maine surely would gain from opting out of subsidizing Texas.

Basically all egalitarian Federal programs transfer from Blue states to right wing, anti big government, states rights states. Their representatives make a career of biting the hand that feeds them. They keep doing it, because the hand keeps coming back to be bit again. I think offering to leave them fiscally alone will make them sputter and gasp and maybe even deal with reality (I’m a dreamer).

*Update: One correction and one update. I remembered the CBO score of the robust public option incorrectly. The CBO said it would save $ 110 Billion over 10 years not just $100 billion as I wrote. I apologise for the error.

The update is that this is no longer relevant. There will be no robust public option. Democratic leaders in the house have given up on it and are going with a level playing field public option

In the end, Pelosi, D-Calif., and other House leaders were unable to round up the necessary votes for their preferred version of the government insurance plan — one that would base payment rates to providers on rates paid by Medicare. Instead, the Health and Human Services secretary would negotiate rates with providers, the approach preferred by moderates and the one that will be featured in the Senate’s version.

The CBO estimates much lower savings from this version of the public option. However, it has scored it. The CBO estimate of the cost is negative $ 25 billion.

So thank the moderates in the House and Senate dear US taxpayers**. According to the CBO, you just donated roughly $85 billion over 10 years to health insurance companies and health care providers. You can hope that more money for providers will lead to better care.

** I live in Italy and pay roughly 0 US taxes due to the foreign earned income exclusion and my meager wealth. I do pay lots and lots of taxes. A larger share of my income than anyone in the US I guess. Of course all of my earned income comes from taxpayers, so I can’t complain.

Also note “earned” is a legal term and expresses no opinion about whether it is possible for me to really earn that money while spending so much time typing away on the web.

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By Spencer (2009)


The issue of a jobless recovery is getting a lot of attention recently.

I’ve found the best way to look at the issue is to compare the change in real growth and productivity over the long run. There have been three periods of different productivity trends in modern US economic history.

Prior to about 1973 productivity growth averaged 2.8%. In the second or low productivity era, running from 1974 to 1995, productivity growth slowed to 1.5% before rebounding to 2.4% since 1995.

But real GDP growth also slowed over this period. As a consequence, the ratio of real GDP growth to productivity growth fell from 68% in the early strong productivity to 50% in the weak productivity era before rebounding to over 80% in the most recent era. Basically, real GDP growth equals productivity growth plus hours worked or employment growth. A consequence of stronger productivity in an era of weaker GDP growth this suggests that each percentage point increase in real GDP growth generates a much weaker increase in hours worked or employment. Currently, a percentage point increase in real GDP growth now generates under a 0.2 percentage point increase in hours worked versus 0.3 in the pre-1974 era and 0.5 percentage points in the low productivity era.

But to a certain extent comparing productivity and real GDP is comparing apples to oranges. To be accurate one should look at productivity versus output in the nonfarm sector. GDP includes the farm sector of course, but also the nonprofit and government sectors where productivity is assumed to be zero.

If you look at what happened in the 1990s and early 2000s recoveries in the nonfarm business sector, you see that productivity growth significantly outpaced output growth in the early recovery phase of the cycle. As a consequence hours worked or employment fell, generating the jobless recoveries. It looks like the problem in these two cycles was much weaker growth rather than strong productivity.

This shift to an environment of stronger productivity and weaker real growth generated an interesting development that has received little attention among economists or in the business press.

This development was a secular decline in labor’s share of the pie. Prior to the 1982 recession there was a strong cyclical pattern of labor’s but it was around a long term or secular flat trend. But since the early 1980s labor’s share of the pie has fallen sharply by about ten percentage points. Note that the chart is of labor compensation divided by nominal output indexed to 1992 = 100. That is because the data for each series is reported as an index number at 1992=100 rather than in dollar terms. So the scale is set to 1992 =100 rather than in percentage points. But it still shows that labor payments as a share of nonfarm business total ouput has declined sharply over the last 20 years and prior to the latest cycle we did not even see the normal late cycle uptick in labor’s share.

If this chart gets a lot of attention it will be interesting to see how the libertarian and/or conservative analysts who keep coming up with all types of excuses to explain away the weakness in real labor compensation in recent years explain this away. If you really want to raise a stink you could look at this as a great example of the Marxist immiseration of labor that Marx believed was one of the internal contradictions of capitalism that would eventually lead to its self destruction.

additional chart in response to comments.

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Lieberman Says He Will Support a Filibuster

Robert Waldmann

Sen. Joe Lieberman (I-Conn.) said Tuesday that he’d back a GOP filibuster of Senate Majority Leader Harry Reid’s health care reform bill.

Lieberman, who caucuses with Democrats and is positioning himself as a fiscal hawk on the issue, said he opposes any health care bill that includes a government-run insurance program — even if it includes a provision allowing states to opt out of the program, as Reid has said the Senate bill will.

Sorry for the link to Manu Raju at Politico who thinks that to support increased spending and deficits makes one a fiscal hawk.

Recently, a Lieberman aid publicly said he would vote for cloture. This is a stab in the back. I may be abusing my angrybear password, but I think readers might be interested in this link

update: Some actual economic news for AngryBears. Lieberman climbs Mt Aetna

update 2: If it’s not too much bother, could people who e-mail Liberman copy their e-mail and post it as a comment here. Trying not to clog angrybear comment threads.

For those who think Lieberman is a puppet of the insurance industry I say

final ?

And to those who think that they can claim to be fiscal hawks while demanding that more public money be sent to the insurance companies I recall Gary Larson’s warning as posted on Doug Elmendorf’s office door 20 years ago.


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A Real Public Option

One of the most notable things about ski trips to the States from Canada was that they offered “U.S. medical insurance”—a buy-in that cost around the same as a lift ticket if you wanted to ski Stowe instead of Tremblant.

One of the scariest moments in Sicko is when the Canadian relatives note that they don’t dare go to the States, telling about a friend whose injury while golfing in Florida ended up costing him about US$60,000 out of pocket.

U.S. native Tina Fetner at Scatterplot recapitulates those feelings in relating her ASA experience. Fortuantely, her experience has a cheerful happy ending. And her closing line summarizes why there is such a push among people for a “public option,”; the current U.S. system doesn’t work:

The idea that the insurance payouts are an unproblematic obligation that the insurance company just lives up to without question had become so foreign to me that this feels like bonus cash. This is what insurance should be.

The Devil will still be in the details, but at least there might be details, instead of a 300% increase in non-treatment insurance payments.

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Greenberg returns


Greenberg is back using the same business strategies he used at AIG.

(hat tip Ruthie Ackerman, assoc. ed. New Deal 2.0) To point to Marshall Auerback an investment strategist who writes at New Deal 2.0 “Happy Halloween: Pay Curbs are a Trick on the Taxpayer, Not a Treat” feels like an anti-climax…Greenberg is way ahead of the curve. Worth saying but who will read it?

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Report from Chicago

guest post by run 75441

While the American Banking Association held their “Roaring Twenties” party to kick off their annual meeting, people from 20 different states, as far away as California, came together to kick off “Showdown Chicago” protesting the loss of jobs and the harsh and speculative practices put in place by banks and W$ since 2000. Friday’s events were spent teaching the group the various chants and acquainting them with how to conduct a peaceful protest.

The meeting was brokem up into an introduction of instruction and then a meeting listening to a panel of speakiers including Senator Durbin of Illinois who has been leading the effort to pass the Consumer Finance Protection Agency in the Senate. Having been rejected twice, he promised to continue his efforts in getting the CFPA passed. Including Senator Durbin, many of the same Senators backing the CFPA also voted “yea” for the Financial Services Modernization Act in 1999/2000 and the restriction on governing the derivaives market. They now find themselves voting for bills that will protect consumers which will still fail to fix the fundamental problem with W$ and banking.

The meeting broke up ay 6:30PM and the group formed outside to march to the ABA’s “Roaring Twenties” party. Like myself, others found it ironic the ABA would use this as a theme for their annual meeting in Chicago.

Some clips from the Showdown Chicago Site:

Wells Fargo protest
One Foreclosure
Goldman Sachs
Pictures of Protestors
by run 75441

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Opt Out Going to the Senate Floor

Robert Waldmann

Harry Reid is sending a health care reform bill with a public option and an opt out clause to the floor of the Senate. . Josh Marshall explains why it is good policy and notes “the importance that an outside-the-box idea can have in significantly changing the terms of a major policy debate.”

I really think you read it here first. (not saying that it wasn’t written somewhere else, but I assume you are an angrybear reader because you are reading this post.

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Public Option Opt Out and the Commerce Clause

by Bruce Webb

Well it looks like Harry Reid is going to introduce a bill that includes a Public Option with a state opt-out provision. Which I guess means the Tenthers won’t have to secede from the Union after all. But it raises some questions.

Let’s say I am from Washington State and have an individual plan through the Public Option and am visiting relatives in Indiana, an opt out state. And I fall down on the ice and break a bone. Under those circumstances I would think they would have to accept my insurance, opt out can’t mean that you just become uncovered every time you fly over Mississippi. That’s scenario one.

Scenario two. I move to Indiana temporarily for a contract job lasting more than a year. Surely I can maintain my coverage?

Scenario two A. I move to Indiana on that temporary contract and get engaged and marry my High School crush. (Hi LT!). Am I prevented from adding her to my plan?

Scenario three. I am an executive in Seattle for a company that buys insurance from the PO but maintain my full time residence in Coeur d’Alene Idaho (which as a live free or die red state opted out) and commute by plane. Is my Public Option plan affected?

Scenario four. I am a self-employed consultant based out of my lake front house in Coeur d’Alene but spend much of my time working for clients in Portland and Seattle. Whether or not I maintain a residence in either city what prevents me from stopping by the insurance office and signing up for the PO through the Exchange? Can one state actually prevent you from buying a perfectly legal product in another state and having your local doctor accept that product? What use then is the Commerce Clause?

Scenario five. I run a consulting shop incorporated in Idaho but with a small office in Portland and Billings and a larger one in Seattle. If Idaho has opted out I am actually prevented from buying a group plan on the Washington Exchange and including myself and my small Oregon and Montana staffs in it along with my larger Seattle group?

I could multiply scenarios endlessly but the question remains: how do individual states enforce an opt-out and under what circumstances? How much presence do you have to maintain in a state that offers the public option to be able to buy through their exchange?

Under our system states have a certain amount of freedom to decide what gets bought and sold within their state boundaries plus some rights to regulate what crosses those borders (for example fireworks). But I just don’t see how they can block medical providers from accepting health insurance policies written in another state or realistically how they can block their own citizens from purchasing such insurance. And certainly I can’t see setting up a system where tourists and part-time residents have their insurance honored but full time residents don’t.

Unless states can mandate that all individuals and employers purchase insurance in-state in addition to whatever coverage they may have through another state I just don’t see how opt-out does anything but prevent insurance sales on your own state exchange.

Which is why I don’t think supporters of the PO have much to worry about as concerns Opt-Out. It seems to just be a sop thrown to more conservative states who don’t want to get tinged with accusations of collaboration with socialism (or something). From a mechanical standpoint I just don’t see how you enforce this. Any ideas?

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