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Obamacare Enrollment Hits 7 Million, Putting Downward Pressure on 2015 Premiums; Word-of-Mouth Spreads the Truth

Maggie Mahar at The Health Beat Blog has been keeping track of the progress made by people in enrolling in the PPACA. Cross posted from The Health Beat Blog.

As the “train wreck” called Obamacare pulls into the station it’s becoming clear that some 7 million Americans are signing up to purchase insurance in the Exchanges. Ten days ago I went out on a limb and predicted that we would hit 7 million, if not by March 31, by early summer. Now it appears that we’ll break through that target by midnight.

Seven million was the Congressional Budget Office’s (CBO’s) initial estimate, but when the roll-out proved rocky, the administration lowered its expectations to 6 million. Reform’s opponents groused that this still was too optimistic, and before long the consensus estimate fell to 4 to 5 million. (Conservatives, who had helped lower the consensus, then accused Democrats of moving the goal-post to make it easier to claim success.)

Younger Americans Join the Pool

Who are these last-minute shoppers? According to the Wall Street Journal,carriers are beginning to report that many are under 40. Today, more insurers confirmed the trend. This should come as no surprise.

We always knew that people in their 50s and 60s would join the Exchanges first. Healthy 20-somethings and 30-somethings who rarely see a doctor would be in no rush to sign up. Why begin paying premiums before you have to?

Momentum Builds

Now, younger Americans are  jumping into the pool, and, most importantly, the pace of enrollments is building. Friday, March 28, Charles Gaba, the “numbers Geek” who has correctly predicted earlier enrollment milestones, wrote: “We’re in uncharted territory. . . Things are moving VERY quickly now, and events are quickly overtaking my ability to keep up.”  Yesterday (Saturday, March 29), Gaba hiked his March 31 estimate to 6.7 million, up from 6.22 million earlier in the week.

Keep in mind that, in most states, anyone who gets on line before the March 31 deadline, begins an application, and experiences technological difficulties, can complete that application in April.  By the time those late entries are tallied,enrollments will top 7 million. How high will they go? All bets are off.

Some in the Media Downplay the News

Inevitably, enterprising journalists are trying to distinguish themselves from their colleagues by finding a new angle on the story: “National Enrollment Looks OK, But States Matter More,” NPR’s Julie Rovner declared.

Newsweek’s Zach Schonfeld was downright snarky::Obamacare Reaches Its Target. Can We Stop Pretending That Number Matters Now?” According to Schonfeld, whether 6 million or 7 million people sign up, this is a “minor victory for the president.”

What Schonfeld fails to understand is that what matters is not the number of people who have enrolled in a particular state, but the momentum. The sudden surge suggests that as the number of people who have bought insurance reaches a critical tipping point, the public’s view of Obamacare is changing.

Indeed, a recent Kaiser Foundation study reveals that the public is warming to reform. Over the past two months the share of respondents who supported the ACA rose from 34% to 38%. Tellingly, since February, opposition among the uninsured has dropped 11%, while support had increased by 15%.

A significant majority oppose repealing Obamacare. Fifty-nine percent of those surveyed said they wanted Congress to either “keep the law in place and work to improve it,” or simply “leave the law as is.”

What is happening?  Over the past two months, as more Americans bought coverage, they began talking to friends and relatives who, until now, didn’t know who or what to believe about the Affordable Care Act (ACA). Now those friends are learning about premiums and generous government subsidies from people they know and trust. At last, the fog of disinformation is lifting, and the reality of Obamacare is sinking in.

By early summer, we’ll see the effect even in states where enrollments have lagged. Just in the past two days, sign-ups in Red States have surged. Who knows? Maybe the mainstream media will replace anecdotes about “Obamcare’s victims,”  with the facts that people need to know..

Today Kaiser’s polling shows that about one-third of the uninsured are not aware that the law includes subsidies that could help them buy insurance. Forty percent to 50% don’t know about the most popular provisions of the law: the guarantee that people cannot be denied coverage–or charged more– because of pre-existing conditions; the expansion of Medicaid ;and  the rule eliminating out-of-pocket costs for preventive care.

Perhaps our newspapers and networks will begin tospread the word that, thanks to government subsidies,  millions of people who will be able to buy a “zero-premium policy.”

Who Knew That Insurance Could Be Free?

That’s right. What most people don’t know—and what Fox News hasn’t been telling them–is that that roughly 6.5 million Americans will be able to purchase insurance without paying a penny.  The insurance will cost them nothing because the tax credit that they receive from the government will cover the entire cost of a bronze plan.

Who will qualify? In the fall Credit Suisse published a table revealing that, in many states:

  • an individual earning somewhere between $11,490 and $20,100;
  • a family of three with joint income under $34,170; 
  • and a family of four earning less than  $41,200

will be able to find a $0 premium bronze policy.

McKinsey & Co, a leading global management consulting firm, agrees, and estimates that roughly half of those 6.5 million will be under 39.

Even if a family’s household income is somewhat higher, many will discover that, after applying the government subsidy, health insurance may well cost significantly less than their monthly cable bill.

Based on that analysis, back in September,  Credit Suisse’s Ralph Giacobbe predicted that “affordability may not be a roadblock” to achieving the CBO projection that 7 million people will buy insurance in the exchanges in 2014. “Simply put,” he wrote, “we don’t see any logical reason why anyone in this population wouldn’t take free healthcare coverage vs. remaining uninsured.”

But, Giacobbe added, much will depend on “education, outreach and logistics /IT.”

As we all know logistics/IT didn’t work out very well—though as time passes, that matters less and less. (Granted, even today, there were computer glitches, but they were fixed quickly) And it’s clear that his month’s outreach effort worked. Going  forward I believe that word-of-mouth will continue to drive “education.”

A “Tipping Point”

Many of us who had read the law knew that once people experienced Obamacare, they would like it. Now I think we have reached that threshold where “an idea, trend, or social behavior crosses a threshold, ‘tips’, and spreads like wildfire. Just enough people have signed up, and are happy with the policies that they have found, that others are learning the truth about the Affordable Care Act.

In the months ahead it will become harder and harder for reform’s opponents to confuse the public with half-truths and outright lies. People will say, “But that’s not what happened to my brother, or my neighbor next door.”

Desperate Deniers

Little wonder,  reform’s opponents are getting desperate. In a last-ditch effort to deny reality, they are claiming that we can’t count someone as enrolled unless they have paid their first month’s premium.

But as Gaba explains, “the percentage of enrollees who haven’t paid that initial premium “is a rolling average. People who enrolled between 2/16 and 3/15 don’t even start coverage until April 1st, while anyone who enrolls between 3/16 – 3/31 won’t start coverage until May 1st.

“In many cases, their first month’s premium won’t even be due until up to 6 weeks or more after they enroll. . . it’s silly to write these people off as deadbeats. The vast majority of these will eventually be paid up; it’s just that we won’t have confirmation of many of them until well into May.”

After all, how many people do you know who pay their bills before they get them? How many pay two or three weeks before they are due?

2015 Premiums

Finally, as enrollments soar, what will this mean for Exchange premiums in 2015? Will they really “sky-rocket” as so many for-profit insurers want us to believe?

No. Climbing enrollments will mean larger, more diverse pools which, in turn, will attract more carriers vying for market share. Because of the way the Exchanges are designed, they will have to compete on price.

But that’s my next post.

– See more at: Maggie Mahar, The Health Beat Blog

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The IMF and Ukraine

by Joseph Joyce

The IMF and Ukraine

The International Monetary Fund last week announced an agreement with Ukraine on a two year Stand-By Arrangement. The amount of money to be disbursed depends on how much other financial support the country will receive, but will be total at least $14 billion. Whether or not this IMF program will be fully implemented (unlike the last two) depends on the government’s response to both the economic crisis and the external threat that Russia poses. There is also the interesting display of the use of the IMF by the U.S., the largest shareholder, to pursue its international strategic goals even though the U.S. Congress will not approve reforms in the IMF’s quota system.

Ukraine’s track record with the IMF is not a good one. In November 2008 as the global financial crisis intensified, the IMF offered Ukraine an arrangement worth $16.4 billion. But only about a third of that amount was disbursed because of disagreements over fiscal policy.  Another program for $15.3 billion was approved in 2010, but less than a quarter of those funds were given to the country.

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Seattle University Symposium on Inequality, Nick Hanauer

The following video was posted in Ed’s Post by Marko.  I thought it deserved a wider audience.

The symposium included a discussion regarding raising the minimum wage to $15.  Mr. Hanauer, being an honest to goodness real billionaire talked about what that would mean for his situation.  I like the way he put it.  He earns 1000 times the median wage and yet he still only needs 1 pillow when he sleeps at night, not 1000.

You might also know of him from his TED talk that was originally  refused for posting.  He has been talking for a while about the wrongness and dangers of income inequality.

Now, if only he would team up with one or 2 more billionaires and start fighting against the Koch et al’s money in the political arena.  Then we just might see some balance.

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Higher global unemployment is the result of lower global labor share… thank you Michael Pettis

There is so much to reflect upon with Michael Pettis’ new post, Economic Consequences of Income Inequality. I have been in total agreement with the way he looks at income inequality. Yet, he said some things that surprised me… things I hadn’t realized.

He restates his view of how changes in labor share, which he calls household share, affects national savings. And then how changes in national savings can only be resolved with certain economic reactions. Some reactions are sustainable, some are not.

A brief summary is that a fall in labor share causes a rise in national savings, which can only be resolved by 1) increased investment, productive (S) or non-productive (NS), 2) rising inventories (NS), 3) a rise in credit-fueled consumption (NS), 4) a rise in unemployment (S).            … Sustainable = (S), Not-sustainable = (NS)

There are only two sustainable outcomes. A rise in productive investment or a rise in unemployment. The problem with productive investment is that when effective demand is low, there is less incentive to invest in productive activity. Therefore, when labor share falls, and productive investment is not the outcome, eventually unemployment rises on a sustainable basis.

This is in agreement with the equation from my research into effective demand

effective labor share rate > utilization rate of capital * utilization rate of labor

The labor share rate is the upper bound on the utilization of capital and labor. If labor share falls, we would eventually realize a sustainable fall in the utilization rates of capital and labor. The result is increased unemployment just as Mr. Pettis explains, and explains very well.

But here are two things that surprised me from his post…

  1. “If Spain leaves the euro, Spanish unemployment will decline sharply, but total unemployment will not, which means that German unemployment will rise.” … Thus, Germany has a selfish reason to fight for countries like Spain and Greece to stay within the Euro-zone.
  2. “The solution to excess savings, in other words, is not for low-saving countries (Spain for example) to cut back on consumption. This will only increase global unemployment. … What is very clear from this analysis is that there are really only three sustainable solutions to the global crisis in demand. Either the world has to embark on a surge in productive investment, or we need to reduce the income share of the state and of the rich, or we must accept that unemployment will stay high for many more years.”

Number 2 is what I have been writing about here on Angry Bear blog. What surprises me is how clear he has made the case. He has put it into simple terms. You either raise labor share or accept higher unemployment. Take it or leave it. Those are strong words, which give policy makers really no choice.

But think some more… Krugman and other economists are calling for loose accommodative monetary policy to push unemployment down. Yet, high unemployment in the US and other countries is the result of the imbalance in global savings. If we push down our unemployment without raising labor share, that only pushes up unemployment in other countries. We will experience a push-back on this from the other countries. Eventually someone has to be stuck with high unemployment, all due to the fall in global labor shares.

Mr. Pettis says…

“So what are the policy implications? Clearly Europe, the US, China, Japan, and the rest of the world must take steps to reduce income inequality.”

“But redistributing income downwards is easier said than done in a globalized world, especially one in which countries are competing to drive down wages. The first major economy to attempt to redistribute income will certainly see a surge in consumption, but this surge in consumption will not necessarily result in a commensurate surge in employment and growth. Much of this increased consumption will simply bleed abroad, and with it the increase in employment.”

So if a country takes the lead and raises its labor share in order to bring down unemployment, most likely they will just bring down unemployment in another country, not domestically. Wow! The global economy is in a trap. and the only way out looks to be global cooperation to raise labor share. We are doomed because we live in a world of people who think like Milton Friedman. Unions and minimum wages are bad. Maximization of profit to shareholders is the prime goal.

Less global trade, in other words, will create both the domestic traction and the domestic incentives to redistribute income. In a globalized world, it is much safer to “beggar down” the global economy than to raise domestic demand, and so I expect that there will continue to be downward pressure on international trade.”

The ramifications of his words are staggering. He knows it and others deny it.

“This means that rising income inequality must eventually lead to more productive investment or to more unemployment. There is no other conclusion. Can this argument be attacked? Of course it can.”

He is absolutely right… and I defend his argument.

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Turns out Alito isn’t the only justice who conflates the Securities Exchange Act with state-law corporate-structure statutes. Roberts does, too! (Unless, that is, racial-minority-owned corporations are denied access to restaurants and hotels when traveling. Or something.)

Roberts suggested that he believes Hobby Lobby and Conestoga Wood can bring forth claims of religious freedom, saying courts have held that “corporations can bring racial discrimination claims as corporations” and that “those cases involve construction of the term ‘person.'”

John Roberts Offers Conservatives A Way Out Of Birth Control Dilemma, Sahil Kapur, TPM, yesterday

Late Tuesday afternoon, after I’d read two or three early reports on the argument at the Supreme Court that morning in the Hobby Lobby and Conestoga Wood cases, I posted a piece here titled:

“My early take on the ACA-contraception-mandate-case argument: Alito conflates the Securities Exchange Act with state-law corporate-structure statutes (yikes); Kennedy really, really wants to give corporations the full complement of human constitutional rights; and Scalia really, really needs to limit this ruling to an interpretation of the Religious Freedom Restoration Act.”

That post harked back to one I’d posted the day before about what to look for in the upcoming argument.  What to look for, I said? Mainly whether “the court will back away somewhat from its Citizens United claim that corporate CEOs can, in the name of the corporation, access the constitutional rights of citizen-association members.”  I predicted that it would–that the Court “will find some way to segregate speech rights from other constitutional rights, and will rule against the plaintiffs in these two cases.” I wrote:

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Institutionalist Economics did not come up short

I am confused about something Paul Krugman wrote today in his post Dare to be Silly. What he wrote seems… silly.

“Before I turn to Syll’s critique, let me summarize my understanding of one of the great turning points in the practice of economics – the turn away from institutional economics in the 1940s and 1950s… Why did this happen?… No, what happened was the Great Depression… American Keynesians said, “We have inadequate demand. Increase government spending!”… And the Keynesians were right, confirming the sense that they had something useful to offer, while the institutional tradition came up short.”

The Institutional tradition came up short??? That statement does not make sense. The Institutional tradition gave us the New Deal. Keynes’s great book came in 1936.

Let’s go back in time a bit… a century ago in the United States, Institutional economics was centered in the Wisconsin School.

“The Wisconsin school in economics was based at the University of Wisconsin–Madison, and played a prominent role in American economics in the first half of the 20th century. The Wisconsin school was central to institutionalism in the United States, and also played a prominent role in labor economics and in the development of the policy ideas associated with the New Deal. The central figures in the Wisconsin school were Richard T. Ely and his student John R. Commons. Notable students of Commons included Edwin E. Witte, largely responsible for the drafting of the Social Security Act.”

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Silver vs Academic Election Forecasters

In a recent post, I mentioned a blog post by Nate Silver which I hadn’t managed to google. It is here

Models Based on ‘Fundamentals’ Have Failed at Predicting Presidential Elections

I think this is a serious effort worthy of publication in a top political science journal (not that anyone asked me). Silver attempted to find all election forecasts in a well defined population (there is a long borin definition in the post) and see how they performed. Notably all of the models showed excellent fit within the sample used to estimate parameters. He is particularly hard on models which use only (mostly economic) fundamentals not supplemented with data from polls.

The “fundamentals” models, in fact, have had almost no predictive power at all. Over this 16-year period, there has been no relationship between the vote they forecast for the incumbent candidate and how well he actually did — even though some of them claimed to explain as much as 90 percent of voting results.

The R-squared of the regression of outcome on forecast is 0.0371.

It is certainly true that Silver has limited respect for prominent academics who attempt to forecast presidential elections using fundamentals. But it seems to me that his lack of deference is justified by solid data analysis.

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My early take on the ACA-contraception-mandate-case argument: Alito conflates the Securities Exchange Act with state-law corporate-structure statutes (yikes); Kennedy really, really wants to give corporations the full complement of human constitutional rights; and Scalia really, really needs to limit this ruling to an interpretation of the Religious Freedom Restoration Act.

When [U.S. Solicitor General Donald] Verrilli said the Court has never found a right to exercise religion for corporations, Alito wondered if there was something wrong with the corporate form that it would not be accorded religion freedom rights.  Did Verrilli agree, Alito said, with a lower court’s view that the only reason for a corporation to exist was to “maximize profits?”  Verrilli said no, but Alito had made his point.

Argument recap: One hearing, two dramas, Lyle Denniston , SCOTUSblog, reporting on this morning’s Supreme court argument in Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius

That paragraph was one of two in Denniston’s recap that dismayed me, albeit only momentarily. Unquestionably, a threshold issue in these cases is whether or not the proverbial corporate veil–a shorthand legal term that conveys that the very purpose of the state-created corporate structure is a severance of the rights and liabilities of corporations from those of its shareholders–can be “pierced” in order to allow the shareholders in these two closely-held corporations to confer to the corporation their personal legal right of religious exercise under the First Amendment or under a federal statute called the Religious Freedom Restoration Act, the latter which expressly uses the term “person” to identify its beneficiaries.  I addressed this in detail in this post here yesterday.

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