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

Tomorrow

Everyone is waiting for tomorrow to see what Mueller will tell the House. I am going to say it will be nothing other than what has already been said verbally. No one is going to read the text version and see what was really said by Mueller. Only a few of us will and I have yet to find a place to place it in my bathroom.

In Michigan in May, Congressional Representative Justin Amash had a townhall in his district to explain why he called for the impeachment of DTrump. He did not call it to first explain why he supported Trump or to say I was mistaken in giving him my support since he took office. He absolved himself of the responsibility of doing so and he marched to the same tune as the rest of the House Republicans. Instead Justin arrived at his support of the impeachment of Trump after reading the 448 page Mueller report.

Setting politics aside many of us already knew Trump was not fit for office based upon his past, his actions, and his lies. We saw through Trump and recognized what he was. After reading Special Counsel Robert Mueller’s 448-page report on Russian interference in the 2016 election and possible obstruction of justice by the president, Congressman Justin Amash finally saw the light.

As the Atlantic explains, one person in the crowd just found out.

“As far as she was aware, Trump had been totally exonerated.

Cathy Garnaat, ‘I was surprised to hear there was anything negative in the Mueller report at all about President Trump. I hadn’t heard that before. (A Republican who supported Amash and Trump, told NBC that night.) ‘I’ve mainly listened to conservative news and I hadn’t heard anything negative about that report, and President Trump has been exonerated.'”

I am not sure what Congressman Justin Amash’s excuse was for not knowing Trump was not fit (being kind here) for office. He could not see it himself and he marched right along with the rest of them until he was told by someone else Trump was unfit.

Tomorrow morning when Mueller is scheduled to testify publicly before the House Judiciary Committee and the House Intelligence Committee, Ms. Garnaat’s words will be worth considering as they represent a purposeful perception gap by the public. A tidy summary of how Americans may have navigated the time gap successfully between the 4-page Barr commentary on the Mueller report and the report itself. Her short statement underscores how successful Attorney General William Barr exploited the space of time between his release of the 448 page report as compared to his 4-page short brief of what the Mueller report said, harnessing the power of television to set his version of the narrative of the report, and knowing most people were unlikely to read it themselves and have that “aah huh” moment. Why read the book when one can read the cliff-notes? There is no test of citizenry knowledge of current events to be passed here.

The challenge faced by Democrats tomorrow’s attempt is to make Mueller’s words resonate more forcefully then Barr’s 4-page summary in an era defined by the brevity of the laws of entertainment. Mueller’s testimony if it does call out Trump may have missed the moment. Of course many of us claim, the moon landing was done in a Hollywood studio. Perhaps, I will be mistaken and much more will come out of this?

As far as Amash, he is saving his ass and he should have known better well before Mueller’s report.

Bill Barr Already Won The Atlantic, Elaina Plott, July 23, 2019

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A Voice from England

Trevor and I worked together on the supply of antennae for keyless go automobiles including Chrysler, Mercedes, BMW, Skoda, etc. I had met him while working in Germany as the Purchasing Manager for North America. He was representing a German/Czech company.

I spent time traveling around Germany, Switzerland, and the Czech Republic. Partook of Czech Budweiser beer which is many steps up from the American version. We have been exchanging words on the situations and conditions in England, Europe, and the US. It sounds as bad as the US; although, I would like to think we are far worse than what Europe is experiencing. This exchange was started with a short comment I made on Facebook:

A few racist remarks by the Pres and suddenly the imprisonment of immigrants seeking asylum from violence in their homelands is forgotten along with the poor conditions under which they are being held.

The squad of four is tough enough to take the abuse. They have heard worse. We should be angry at Republicans and Trump’s purposeful comments in an attempt to deflect our attention from the crisis on the southern border and his continued abuse of people.

Bill,

We live in scary times, some comments by your President and our possible new Prime Minister seem to echo the 1930’s in Europe!

Trevor,

My English associate, I am sure you and your country men and women will rid yourselves of Boris as soon as you can do so. For us, it is a bit more difficult as we have actors of democracy placing party and politics above country and the general welfare of this country. We do not make much of a safe or dependable ally in the world today either.

Bill,

I sincerely hope so, I see too many parallels with the rise of Hitler in our current European political environment, calling for sovereignty and blaming immigrants for the ills of a nation are not the way forward. But this kind of rhetoric appeals to the less thoughtful amongst us. I listen to people telling us that the UK must leave the European Community because of their control over us, but 95% of the legislation put before the European Parliament during the last 5 years was voted through with very close to total support of the UK MEP’s. I am watching the most divisive split of the UK driven by the media and a few MP’s who appear to be stupid. It is just unbelievable, you could not make it up. Then we have Trump who appears capable of gross stupidity, and has crowds cheering him and chanting for democratically elected senators to be sent home! It is all very scary!

I trust you are well!

Trevor,

I have been reading and watching. This is highly unusual for Europe in this age. Hungary appears to be off the rails also with Orbán as is Poland too. Radicals have also reappeared in Germany, And the US has its blood and soil marchers who are further radicalized by the stupid remarks of our President. Politicians of his party are condoning his racist hatred which empowers and mobilizes others to do stupid things. It has gone beyond verbalization.

Yes, yes, blame the poor and the weak, the different culture and color, who come to America having other languages and looking for safe haven amongst us. Instead they are portrayed as a class level lower than the poorest of the white American, taking advantage of our economy. This has kept the population from concentrating on the disproportionate, and growing, distribution of wealth and income in the US. For the lower white class, an allowed luxury, a place in the hierarchy and a sure form of self esteem insurance.

The political economics of it have certainly led to bad and violent reactions towards immigrants. We are not a small country. At the most only 10% of our land mass is occupied. New people keeps our median age lower, which is good for labor, and most have assimilated into society over the generations.

I am hoping with “a little patience, we shall see the reign of witches pass over, their spells dissolve, and the people, recovering their true sight, restore their government to its true principles (Jefferson).”

This bastard occupying our presidency must go.

Perhaps a couple of more Budweisers in Prachatice to dull our thought on the current events????

Bill,

I wrote this to a Brexiteer friend who I just cannot believe fails to see the reality.

Yes a difficult area as the public are not fully informed, however, there is already far too much anti immigration feeling in this country, it is clear that without immigrants our NHS would not function. The media has a great deal to answer for, during the last 20 plus years they have printed distortions and blatantly biased articles against immigrants, and indeed against the EU.

The rise of the likes of Farage and Trump with their, in my view distorted views of the world, claiming they only want to reclaim their countries for the people is dangerous rhetoric, I thought that with the end of the Second World War we had moved on from demonizing and blaming particular races of people for damaging a country.

Indeed there is the moral dilemma of ensuring that we do not create poverty, but our current crop of politicians has spent and is indeed spending multiple millions of our tax money on foolhardy adventures, HS2, PFI and yes Brexit. These same politicians, whilst cosseted in their parliamentary roles have made costly decision after costly decision without a care for those in genuine need.

Universal Credit is an absolute fiasco, it is causing immense levels of poverty for both indigenous British people and immigrant alike, just look at the rise in food bank use, also consider the absolutely appalling numbers of children living in poverty. The claims of children unable to go to school as they have no shoes are true, just ask my daughter who works for a charity.

I am no socialist or indeed liberal, I believe in freedom for the individual to make the best of their lives, I also believe in the free market. But, and this is a big but, I also believe in helping those in genuine need, the low paid workers who contribute much to society for little reward. For example those earning the UK minimum wage who are trying to feed and house themselves.

So I do not believe in squandering tax £’s on vanity projects, or things like PFI, or as I said earlier Brexit, the bill to date on this alone is in excess of £900 million in the last financial year, with 5,000 civil servants diverted from their real jobs and numerous fat cat consultants from the big four consultancy practices creaming £ millions of Tax £’s. All whilst the self-serving egotistical politicians argue amongst themselves about a deal that needs to be agreed by 27 other countries.

You can tell that I feel very strongly about the situation to which the media has misled us, I am ashamed of my country when I see homeless people on the streets, and when I see the use of food banks increasing on a daily basis, and when I hear that we have staggering numbers of children living in poverty. This is supposed to be the 5th largest economy in the World, but our politicians are squandering our Tax pounds without a care for their country.

Me: I do not believe in mislaying the people I get to know while traveling. We have issues globally and similar concerns by the sane.

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House’s SECURE Act and the Senate’s RESA Act

Congress has been busily working on a much-needed way to improve Middle Class savings and growth over the span of their employment to boost their retirement.

Dueling bills to restructure IRAs and 401ks appear to be redundant. Better known as the “Setting Every Community Up for Retirement Act” (SECURE Act) H.R.1994 and the Senate has a similar bill, the “Retirement Enhancements and Savings Act” S.792 (RESA). Both bills were passed with bipartisan support.

For the ultra rich? A major outcome of the Trump tax bill were tax breaks for the wealthy and corporations. Besides much of the resulting income increases going to 1% of the household taxpayers, the same 1% were given the ability to shelter large amounts of income in gifts to their heirs. It is a great time to be rich in income and have the ability to shelter it by making gifts of it to your heirs’ tax free!

A little history on why Congress might take this up

From 1979 to 2017, the average annual income for the 1% of the household taxpayers has increased 156%, the top 1 hundredth of 1% income increased 343%, and the average American’s income did not increase at all. In spite of increased education from 1970 when half of Americans 25 years and older had a high school degree compared to today when the proportion of Americans having a college degree tripled, income has been stagnant for much of America. Even with the increased education, as Nick Hanauer in a recent Atlantic on this topic stated, the “Education is Not Enough” or was not enough to build, to build a vibrant middle class. Nick is also reiterating what Tom Hertz said in 2006 in his article; “Understanding Mobility in America.”

“The first aspect is the question of intergenerational mobility, or the degree to which the economic success of children is independent of the economic status of their parents. The second aspect is the short-term question of the amount by which family incomes change from year to year. One very clear conclusion is children from low-income families have only a 1 percent chance of reaching the top 5 percent of the income distribution versus children of the rich who have about a 22 percent chance.”

All the education in the world may not make a bit of difference in upward mobility as Nick and Tom Hertz concluded unless the income and the status is already there. A successful middle class with good income has to be present.

What Congress is doing.

The House passed the SECURE Act with an almost unanimous bipartisan 2nd vote. Prior to the first vote, Republican NC Representative Patrick McHenry made a motion for an affirmative vote (page H4147) stating they stand together against the anti-Semitic BDS movement. How this applies to the average citizen’s IRA is beyond me. It is a tagalong to the SECURE Act with the hope it would pass. It lost with 222 in opposition.

A few things about the House “Setting Every Community Up for Retirement Act (SECURE).

• It lengthens the amount of time a person can contribute to an IRA beyond 70.5 years of age.
• Raised the required minimum distribution (RMD) age to 72 from 70 1/2 years old.
• Increased the Safe Harbor percent from 10 to 15%.
• Allowed long-term, part-time employees to contribute.
• Put in place an small employer tax credit for enrollment.
• Revised how benefits are paid out to a non spousal from 5 to 10 years (page H4234).
• Allowed automatic enrollment.
• Etc.

“The House SECURE Act would eliminate the current rules allowing non-spousal IRA beneficiaries to use (stretch IRA) minimum distributions (RMDs) from an inherited account over their own lifetime (and potentially allow the funds to grow for decades). With the SECURE Act, all funds from an inherited IRA would have to be distributed to non spousal beneficiaries within 10 years of the IRA owner’s death (The rule would apply to inherited funds in a 401(k) account or other defined contribution plan, too.).”

Other than the elimination of the Stretch IRA, these changes were needed and they will improve the amounts accumulated for retirement. As I mentioned earlier, much of America has not incurred the same income increases as the 1% or the 1 tenth of 1% of the household taxpayers. Pre-inflation YOY income growth for non supervisory Labor has been ~3%. Subtract out inflation of 2% and income has grown by 1% for much of America not leaving a lot to put into a 401k. I am waiting for the next shoe to drop of increasing the age of when people can take SS.

The Senate RESA bill is similar in content except for a provision buried in it taking aim at the Middle Class. The Senate’s RESA Act shortens the time period for non-spousal beneficiary withdrawal who have inherited an IRA with greater than $400,000 (IRA, Roth IRA or 401k). RESA exempts the first $400,000 inherited to a life time of RMD withdrawals and then it forces beneficiaries to cash out over a 5-year period any amount greater than $400,000. It could have tax implications if the amount over $400,000 was large or one’s income tax bracket was high.

As one reader pointed out, many people with 401Ks have less than $400,000 in their accounts when they retire. Then too with little growth in income occurring (mentioned earlier), one can see why people are not saving for retirement and why there is less in their 401ks.

Under today’s Stretch IRA rules, heirs of IRA owners were allowed to extend the taxable distributions of an inherited IRA over their lifetime, hence being called “stretch IRAs.” The proposed Senate bill labeled RESA—allows $400,000 of aggregated IRAs to stretch per beneficiary, but chops the cash-out period down to five years for the balance greater than $400,000.

What are the implications in the Senate bill? As I said it affects non spousal beneficiaries of the heads of families who have accumulated money greater than $400,000 over their lifetime to pass on as inheritance to their families. Non-spousal beneficiaries on inheriting sums of money greater than $400,000 could have a substance portion of the inheritance taxed by Uncle Sam and also end up in a higher tax bracket as a result. Ok, I said it enough times.

Similar would hold true for the House bill which eliminates the stretch IRA, does not have an exemption for 400,000 of inheritance, and forces a beneficiary to use up inheritance funds in 10 years rather than a lifetime or RESA’s 5 years. The proposed Acts do not impact spousal beneficiaries or minor children named as beneficiaries until pf a majority age, children with disabilities, etc.

The forced 5 year annual distribution of these savings and retirement plans by beneficiaries is the primary revenue vehicle (taxes) of RESA. Senate Finance Committee Chairman Chuck Grassley, (R-Iowa), who proposed the bill, said on the Senate floor recently that the RESA bill “is paid for” by this provision (as he takes his agricultural benefits resulting from tariffs).

No worries for the 1 percenters.

Back to the 1-percenters, Trump’s Tax Overhaul law doubles the estate-tax exemption to $22 million a couple and possibly avoiding taxes in dynasty trusts. The new law doubles the amount that can be passed to heirs without worrying about estate and gift taxes, to about $22 million for a married couple (redundant, I know). But the thresholds are in place only until 2025, and the ultra-rich are turning to a key tool — the dynasty trust — to secure the financial futures of their children, grandchildren, great-grandchildren, and beyond.

Assured wealth and income giving descendants a place on the ladder of mobility as being necessary to move upwards on that same ladder by Tom Hertz and Nick Hanaeur.

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Protecting The Fed

Mark Thoma has a post up on Facebook. Apparently, Trump intends to nominate Dr. Judy Shelton to the Fed. I knew Trump was bat-sh*t crazy and now he has confirmed he is bat-sh*t stupid too (if you did not already know this). It is hard to know which is worse as they come in a daily stream of excesses.

I do not necessarily agree with my former Econ Prof (not Mark) from time to time; but, he does have a deeper knowledge on the topic than I, to which I listen even though the politics of it may differ from mine. I do get the impression he is deeply concerned as is Mark Thoma and disappointed with the present administration and their impact on the nation, its financial status, and the economy.

Dr. Judy: “How can a dozen … people meeting eight times a year decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?

Given the alternatives of Congress or the President determining national economic policy, I would stick with the dozen. I can figure out what they are doing. Crazy and/or political people are off the books. I will not get too deep into this as you can read the article “Protecting the Federal Reserve” at Money Banking yourself. Some of Judge Judy (first thought which came to mind), er Dr. Judy’s thoughts:

– “Following the 2007-2009 recession, during the weakest post-WWII recovery on record, with inflation below the Federal Reserve’s stated target, she argued against ‘suppression of interest rates’ (see quote above). By contrast, despite the lowest unemployment rate since the 1960s, in recent weeks she has argued for cutting rates ‘as expeditiously as possible.‘ This apparent willingness to pander to President Trump’s preferences, rather than setting policy to meet the Federal Reserve’s longer-term goals of stable prices and maximum sustainable employment, would diminish the Fed’s independence,”

No comment on my part as either action has a negative reaction given the environment.

– Dr. Judy “argued for replacing the Federal Reserve’s inflation-targeting regime with a gold standard, along with a global fixed-exchange rate regime. In our view, this too would seriously undermine the welfare of nearly all Americans.”

– “Should Dr. Shelton become a member of the Board, and should President Trump win re-election in 2020, there is a chance that she could become the Chair of the Federal Reserve when Chairman Powell’s term ends in 2021. Given her unsuitability for the Board, making her Chair would seriously undermine Fed independence.”

– Dr. Shelton has proposed eliminating the Fed’s key tool (in a world of abundant reserves) for controlling interest rates—the payment of interest on reserves (for a description of the Fed’s current operating regime, see here). She argues that the Fed doesn’t know what the correct interest rate is (see citation). But that ignores the constant learning process—based on observations about the state of the economy and financial conditions—that allows the Fed to make rapid policy corrections to achieve price and economic stability. U.S. central bankers are credibly committed to their legal mandate to promote “maximum employment, stable prices, and moderate long-term interest rates.”

I do not Tweet, I do not read Tweets as they are the lowest form of communication outside of a belch. Trump tweeted his intention to nominate Dr. Judy Shelton to the Board of Governors of the Federal Reserve System.

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The Mutt Speech

One Mutt’s Speech for You to think about after celebrating the long Weekend from the nationalistic holiday called the Forth of July while others are fleeing terror and violence.

John Winger: “Cut it out! Cut it out! Cut it out! The hell’s the matter with you? Stupid! We’re all very different people. We’re not Watusi. We’re not Spartans. We’re Americans, with a capital ‘A’, huh? You know what that means? Do ya? That means that our forefathers were kicked out of every decent country in the world. We are the wretched refuse. We’re the underdog. We’re mutts! Here’s proof: his nose is cold! But there’s no animal that’s more faithful, that’s more loyal, more loveable than the mutt. Who saw ‘Old Yeller?’ Who cried when Old Yeller got shot at the end?

Nobody cried when Old Yeller got shot? I’m sure.

I cried my eyes out. So we’re all dogfaces, we’re all very, very different, but there is one thing that we all have in common: we were all stupid enough to enlist in the Army. We’re mutants. There’s something wrong with us, something very, very wrong with us. Something seriously wrong with us – we’re soldiers. But we’re American soldiers! We’ve been kicking ass for 200 years! We’re ten and one!”

“Stripes” Bill Murray the Mutt Speech

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United States Women beats the Netherlands 2-0, wins its fourth World Cup

This clip is of Rose Lavelle scoring the second goal in the 69th minute of the game. The clip has been disabled and must be seen on YouTube. Click on the arrowhead first and then the “Watch this video at YouTube” and it will take you there. United States’ Rose Lavelle doubles lead vs. Netherlands | 2019 FIFA Women’s World Cup™ Highlights, Fox Sports, Fox News, July 2, 2019.

Nothing like going in for the winning insurance goal coming after Team Captain Megan Rapinoe converted a penalty kick. Megan Rapione went on to win the Golden Ball as the most valuable player during the Women’s World Cup and the Golden Boot for being the top scorer.

A Huge Well Done!

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Destroying Social Security to Save It

Connecticut Representative John Larson Proposes Plan To Destroy Social Security In Order To Save It, by Dale Coberly

Connecticut Congressman John Larson introduces H. R. 860, Social Security 2100 Act which will cuts taxes, strengthen benefits, prevents anyone from retiring into poverty, and ensure Social Security remains strong for generations. larson.house.gov

It sounds good, but of course he wants it to sound good. In the past we have had to be worried mostly about plans from the “Right,” the crazy people who want to Save Social Security in order to destroy it. Their plans sounded good, too.

To make it easier on myself, I am going to just list Larson’s points and offer a few words about them in the hope you will think twice.

Larson: The Social Security 2100 Act Expands Benefits

There is a benefit bump for current and new beneficiaries — Provides an increase of 2%.

Me: A 2% increase in benefits would mean nothing to beneficiaries. Unlike the reduced inflation indexing the bad guys were proposing, this increase will not accumulate over time.

What Social Security faces is a potential 20% cut in benefits if the payroll tax is not increased to keep up with increases in life expectancy. The increase needed would be about 2% of payroll. 2% of payroll becomes 20% of benefits because the 2% you pay is matched by 2% your employer pays for. That extra 4% over 40 years of working becomes 8% over 20 years of life expectancy, and that 8% becomes roughly 20% due to the effective interest that arises automatically from pay as you go financing.

Larson: Protection against inflation. Increases the COLA formula to better reflect costs incurred by seniors.

Me: Probably a good idea. But the “normal” inflation adjustment, if paid for by that 2% increase in the payroll tax, will provide increased benefits that may be adequate. The question is how are we going to pay for a higher COLA? My suggestion is that a tiny bit larger increase in the payroll tax would not be felt, and would avoid the politically suicidal “make the rich pay” part of Larson’s plan unnecessary.

Larson: Protect low income workers. A new minimum benefit will be set at 25% above the poverty line.

Me: Again, probably a good idea. But not if it changes the “worker paid” feature which is so important to Social Security’s political future.

If the workers want to pay more for a higher benefit dedicated to those who paid for the insurance against ending among the poorest, then that’s fine. It’s not so fine if the increase is paid for by “the rich,” because the rich will not pay for it. And it’s not so fine if it becomes subject to increased hiding of income to free-ride on others paying the tax. Not to mention the costs of managing the means testing that this implies.

Larson: Cut taxes for beneficiaries.

Me: Social Security is supposed to be insurance against ending up poor. Currently no one pays taxes on their Social Security income unless they have other income over $25.000 per year. Combined with their SS income this would suggest an income in retirement of about $45,000. This is not poverty.

There are other ways to jiggle around the SS ‘break points” or taxing of benefits. The tax on part of SS income for those with enough other income to stay out of poverty turns out to be the simplest and fairest. Might be important to remember that SS is not only “what you paid in,” but is about double what you paid in because of the effective interest of pay as you go.

You pay taxes on gains from every other investment. So there is nothing immoral or counterproductive about taxing part of SS benefits for those who otherwise have sufficient income. This tax is returned to the Social Security trust fund and is part of what helps pay those increased benefits for the poor.

Larson: Strengthens the Trust Fund

Have millionaires pay the same rate as everyone else.

Me: This is the bit that destroys Social Security. Currently millionaires pay the same rate as everyone else: 12.4% of the first $130 thousand per year. This is enough for them to pay for what they get from Social Security… an effective real interest of around 1 or 2 percent, plus the insurance value in case their millions of dollars disappear before they retire, or when they become disabled or die leaving dependents.

They only get that 1 or 2% compared to your 2 or 3% and the poorest up to 10% or more because the money they would get if everyone got paid the same interest is what enables SS to pay the bigger “interest” needed to pay for basic needs of the poorest.

“Making” them pay 12% on ALL of their income would be a huge tax increase they would get nothing out of. They would fight it forever.

It would be like having a cop watch the check-out line at the grocery and demanding every customer show their tax returns and “making” anyone with “too much” income pay for the groceries of the next ten people in line.

This sounds fair to some people who think that the “rich” stole their money from the “poor.”
Maybe some did, but this is not the way to fix that problem. If you want to tax the rich more, fine. If you want more welfare, fine. But don’t do it to Social Security, which works, and has worked for eighty years exactly because it is NOT welfare. NOT “soak the rich.”

Larson: 50 cent per week to keep the system solvent. Gradually phase in an increase in the tax by an average of 50 cents per week.

Me: Sounds familiar. Question is why stop at 50 cents when a dollar will keep the system solvent forever without the political dangers of “make the rich pay”?

Do we think an extra 50 cents per week out of an income of 50k per year is going to be felt? Note that for the poorest people making 20K per year, the “dollar per week” turns out to be 20 cents per week (The increase needed to keep SS solvent forever is one tenth of one percent of income per year.)

This is mindless greed. Greed so stupid it defeats itself.

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Democratic Presidential Candidates Addressing Maternal Healthcare

Back in April, I finished up an article for ConsumerSafety.Org called A Woman’s Right to Safe Healthcare Outcomes. The topics covered in this as given to me by ConsumerSafety.Org were Clinical Trials, Essure, and Maternal Mortality. All of the topics dealt with women’s healthcare. Of the three issues addressed, I found Maternal Mortality to be the most compelling.

I told the story of a white upper middle class couple, Lauren Bloomstein a nurse and her husband Larry a surgeon. They went to the hospital to have their first baby. Lauren was a healthy young woman who did everything right. Unfortunately Lauren’s OB before and during her delivery missed many of the signs she was suffering from preeclampsia or high blood pressure. Lauren died after giving birth to a healthy baby girl. It is not unusual for doctors failing to heed the warning signs a women or her symptoms are alerting them too.

The warning signs of life-endangering problems were there, were missed (pain in the kidney area), or ignored (abnormal high blood pressure for Lauren). Excuses for other causes of the pain (reflux) were made, and pain killers administered to dull the pain and other symptoms (blood pressure) not explored while she deteriorated in front of her husband who suspected preeclampsia. The missing part of this was the protocol to diagnose early on and prevent Lauren from slipping into late stages of preeclampsia. This is not an isolated incidence as the deaths of women giving birth keep increasing as evidenced in the chart.

Even with the PPACA, expanded Medicaid in place; and when compared to their Canadian sisters, American women are three times more likely to die from the start of a pregnancy up till one year after the birth of a child (defined by the Centers for Disease Control). The death rate for American women is 26.4 deaths per 100,000 as opposed to 7.3 deaths per 100,000 in Canada (Chart). The ratio worsens when compared to Scandinavia countries as American women are six times as likely to die as Scandinavian women.

There are two stories, one for economically secure women and another for minority, native American, rural, and lower income women.

The statistics worsens for women of color with their being more likely to die in pregnancy or childbirth and are nearly four times more likely to die from pregnancy-related causes than white women. In high-risk pregnancies, African-American women are 5.6 times more likely to die than white women. Amongst women diagnosed with pregnancy-induced hypertension (eclampsia and pre-eclampsia), African-American and Latina women were 9.9 and 7.9 times in danger of dying than white women with the same complications. Native American and Alaskan Native women experience similar discriminatory care. Half of all U.S. births are covered by Medicaid and covers women up to two months past delivery leaving a substantial gap after child birth when other issues can arise.

Barbara Levy, vice president for health policy/advocacy at the American Congress of Obstetricians and Gynecologists; “We worry a lot about vulnerable little babies and we don’t pay enough attention to those things catastrophic for women.”

The emphasis has been on safe baby care and safe birthing which lead to a significant decline in baby mortality. As reported in a Propublica, NPR report, the difference in “maternal mortality numbers contrast sharply with the impressive progress in saving babies’ lives.” Maternal death rates while giving birth and up to one year later has increased by an approximate 10 deaths per 100,000 since 2000 till 2015 or greater than the 9.2 deaths per 100,000 in the U.K, (Chart).

In my email account, I found my usual Health Affairs article with a lead off title “The Maternal Health Crisis: Policies of 2020 Candidates

“Many of the Democratic presidential candidates met in Columbia, SC at the Planned Parenthood Women’s Health Forum to share their reproductive health proposals, including plans for maternity care. On Thursday, June 26th, they will engage in their first debate. Donald Trump launched his re-election bid on June 18th, 2019. While his campaign website does not include any specific reference to maternal mortality, members of his administration have recently brought attention to rural maternal health challenges.

This renewed focus on maternity care is desperately needed: U.S. rates of maternal mortality are the highest in the developed world and have been rising since the 1990s, with women giving birth today more likely to die in childbirth than their mothers. These adverse outcomes are also marked by significant racial disparities, with non-Hispanic black and American Indian/Alaska Native women at least 3 times as likely as non-Hispanic white women to die around the time of childbirth.”

About time.

run75441 (Bill H)

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Supreme Court to hear cases over ACA risk-corridor funds

Supreme Court to hear cases over ACA risk-corridor funds

“The U.S. Supreme Court said Monday it will take up cases over whether the federal government must pay billions of dollars to health insurers that sold coverage on the Affordable Care Act exchanges.

Letter to The Editor – Modern Healthcare Alert

If you are going to report on this particular incident with the Cromnibus Act which passed December 11, 2014, why not give the complete history of how the Risk Corridor Program was stymied?

Initially, then Budget Committee Republican Ranking Member Senator Sessions wrote a letter to the GAO asking whether the Risk Corridor payments were being appropriated correctly. In a letter back to Sessions the GAO said Agencies can only appropriate funds at the discretion of Congress. Funding had not been properly secured for the Risk Corridor Program. This effectively stopped any new funding from being used for the Risk Corridor Program; however, funding could be transferred from other healthcare programs.

With the aid of House Energy and Commerce Chair Fred Upton and House Appropriations Chair Jack Kingston, Section 227 was inserted into the Cromnibus Act.

“None of the funds made available by this act from the Federal Hospital Insurance Trust Fund or the Federal Supplemental Medical Insurance Trust Fund, or transferred from other accounts funded by this act to the “Centers for Medicare and Medicaid Services – Program Management “ account may be used for payments under section 1342(b)(1) of Public Law 111-148 (relating to risk corridors).”

This was far more nefarious than Congress as a whole making this budget neutral and its hides what Republican Senator Sessions, and House Representatives Upton, and Kingston did to sabotage the ACA, drive up premiums, bankrupt Coops, cause companies to leave the healthcare exchanges, and cause constituents to lose coverage.

Yes indeed, Congress did vote for the Cromnibus Act in the waning day(s) left before a government shut down. Section 227 was inserted during those last few days and more than likely overlooked in the process of passing a budget bill so the government would not shut down.

run75441 (Bill H)

Should these companies win at SCOTUS review, the costs and blame should be assigned to these three as their motives were “solely” party politics over country thereby penalizing citizens.

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Does President Trump Read “JAMA Network Open?”

It is doubtful Trump reads much beyond his own signature on Executive Orders and Twitter commentary. Someone is attempting to align him with current thinking creating a persona of his being a thoughtful and reasoning president as opposed to . . . ?

In “Again, Healthcare Cost Drivers Pharma, Doctors, and Hospitals ,” I had posted stats from a 2016 JAMA paper covering the period from 1996 to 2013. Healthcare costs had increased $1 trillion of which 50% was due solely to pricing. One significant factor in the JAMA report was the $66 billion increase in costs for diabetes treatment of which $44 billion was due to pharmaceuticals pricing. One impact to diabetes treatment was Eli Lilly’s increases for Humalog which was $21 per vial in 1996. By 2017, the price increased to $275 (700%) for a vial, a one-month supply. Humalog is a decades old drug and the manufacturing has not changed significantly.

“JAMA Network Open” has issued an end of May 2018 paper on pharmaceutical pricing trends covering the years from the period 2012 – 2017, “Trends in Prices of Popular Brand-Name Prescription Drugs in the United States.” The question it asks:

• What are the prices of top-selling brand-name prescription drugs in the United States and how have these prices changed in recent years?

answer:

• In this evaluation of 49 common top-selling brand-name drugs; 78% of the drugs have been available since 2012, have seen an increase in insurer and out-of-pocket costs by more than 50%, and 44% have more than doubled in price.

and concludes:

• Brand-name drug pricing associated with government-protected market exclusivity is likely to continue to increase and warrants greater price transparency.

Similar to what President Trump has proposed which “still” does not empower constituents to seek alternatives and typically the alternatives are just as costly.

Study Methodology

Data was obtained of 35 million individuals from the Blue Cross Shield Axis (data base) for the time period of January 2012 through December 2017. The researchers reviewed prescribed drugs exceeding $500 million in US sales or $1 billion in worldwide sales.

Within the identified parameters of 2012-2017 sales, 132 brand-name prescription drugs were identified. 49 of the 132 top-selling drugs exceeded 100 000 pharmacy claims, substantial cost increases among these drugs was experienced within the inclusion parameters with a 76% median cost increase, and 48 of the drugs had regular annual or biannual price increases.

Thirty-six of the 49 drugs were available since 2012. Twenty-eight had experienced an increase in insurer and out-of-pocket costs exceeding 50% and 16 more than doubled in price. Insulins such as Novolog, Humalog, and Lantus and tumor necrosis factor inhibitors such as Humira and Enbrel experienced highly correlated price increases coinciding with some of the largest growth in drug costs.

The results of the study revealed the median sum of out-of-pocket and insurance costs paid by patients or insurers for common prescriptions and presented both annually and monthly.
Pricing increases for 13 new drugs from January 2015 through December 2017) and entering the market in the last 3 to 6 years was not different than those (36) having been on the market longer, a 29% increase [median] from January 2015 through December 2017.

Nor did the study differentiate between drugs with or without a FDA approved therapeutic equivalent (number of drugs, 17 vs 32; median, 79% vs 73% price change).

Changes in prices paid were highly correlated with third-party estimates of changes in drug net prices (ρ = 0.55; P = 3.8 × 10−5), suggesting that the current rebate system incentivizes high list prices and greater reliance on rebates resulting in increased overall costs.

“The study concludes the growth of drug spending in the United States associated with government-protected market exclusivity is likely to continue. Greater price transparency is warranted.”

Interpretation? Pharmaceutical companies (and I will include companies such as Mylan [EpiPens]) are using the patent drug laws and resulting exclusivity time period to maximize profit margins ($14.50 for every $1 invested [WHO]) protecting their products from competition. A similar exclusivity holds true for generic products also (time periods for the introduction for a similar generic product). “Can You Patent The Sun (Jonas Salk)?

I sat over dinner with one Exec. VP from a major pharmaceutical company who confirmed what I had said in an earlier post (Can You Patent The Sun?) and here. A new pricing strategy is being used by pharmaceutical companies which maximizes return based upon benefits achieved in treatment, life, healthcare system, and in society. It is a well thought out reasoning being delivered by intelligent purveyors of healthcare supplies portraying a modicum of caring or concern for societal welfare while pursuing the profit motive. Novartis CEO Vas Narasimhan (not the one I talked to);

“Cell and gene therapies are bringing about a new era of cancer medicines going beyond ‘just improving lives and are saving them.’ The new therapies are challenging the traditional model for paying for medical treatment and the industry is divided on this approach. Pricing for these one-time usage therapies are to be based on four key measures of value – the improvements they offer to patients both clinically and in terms of their quality of life, and the resulting benefits to the health-care system and society.”

The pricing application is not limited to new drugs, cancer meds and gene/cell therapies; it is also being applied to older drugs and also generic replacements.

Findings:

Between 2012 – 2017, the study reveals an industry wide increase in costs for top-selling brand-name prescription drugs and less costly generic replacements. The increase in costs, biannual, and annually for 36 pharmaceuticals since 2012 can also be seen in newer drugs coming on the market after 2012. A pattern or practice of pricing determination based upon 4 values in the pharmaceutical market which will continue into the foreseeable future.

This particular chart depicts annual net price and annual paid price increases showing the percentage increases. This becomes more interesting where I cover “rebates” and whether the reduce costs.

Given median cost increases of 9.5% annually, the yearly increases will result in a doubling of costs for brand name drugs in this study every 7 to 8 years.

New and old brand-name competition does little to control rising costs of products which can be used interchangeably (hence this shoots transparency in the foot for constituents talking to pharmacists) such as Humira and Enbrel or diabetes drugs such as Humalog, Humulin, and Novolog. “Relative cost changes are highly synchronized” resulting in large increases over the last 6 years. As mentioned there appears to be a pattern or practice of pharmaceutical companies acting in concert.

There is little evidence of price changes associated with the existence of therapeutic equivalents such as generics, biosimilar drugs, or drugs entering the market later.

Legislated pricing transparency may lead patients to seek alternative drugs if available which may result in different pricing trends than what was observed over the six years of when the study was done. The impact of such is unknown as is the likelihood of those trends as they may already be in progress due to volume changes or speculation of volume changes due to expiration of exclusivity.

Neither was there evidence of products entering the market 3 to 6 years ago having different trends compared with other drugs in the first years of availability.

Transparency is need in the costing of drugs and the setting of prices by manufacturers. Only in the US, does the manufacturers of the product set the pricing. In Europe, pricing is influenced by governments.

Research and Development

There is a balancing act between reasonable pricing for consumers and the costs for bringing innovative drugs to market. The United States does provides strong patent laws globally. However, legal strategies by the pharmaceutical industry such as patenting the peripheral aspects of a drug (think EpiPen and its cap) extend protections beyond the original patent and delay generic and biosimilar versions. Furthermore, if a generic version brought to market by one company can not be used in the same manner by following the instructions of the brand name version; the company of the patented version can ask the FDA to block the generic version (again think Mylan’s Brand EpiPens and the TEVA generic [See; “Can You Patent The Sun?“]).

Healthcare and pharmaceutical companies can maintain exclusivity and pricing as set by the manufacturer much longer and well beyond the original patent limits with a range of new innovations. In similar countries as the US as found in western Europe, governments set pricing. The end result is a large discrepancy in pricing between the US and European countries for the same drug.

It is near impossible for private insurers to negotiate pharma pricing and Medicare is forbidden to do so. The Institute for Clinical and Economic Review’s value-based price benchmark is one approach to establish appropriate pricing. Using the four key measures the ICER assigned a cost effectiveness value of up to $1,688,000 for Kymriah for its use in children. This analysis takes into account all of the R&D cost in developing a drug, bringing it to market, and the cost save as measured against other therapies. Using the same ICER 4-point value-based analysis and understanding the range effectiveness determined by the ICER, Novartis set Kymriah list price for pediatric use at $475,000, well below the ICER’ cost effectiveness value, and $373,000 for adult cancers.

So, how is this drug paid for by the less financially endowed patients? Coupons by the manufacturer and rebates to the insurance payor set a net price for the patient which is price and profit neutral.

Rebates

Several points; Transparency of how rebates occur and affect net pricing is limited as to the impact of them on the pharmaceutical industry and healthcare insurance, rebates on list prices set by manufacturers are given by the manufacturers to commercial healthcare insurance and some government programs not including Medicare, and the rebates will vary by drug, by payer, and constitute “16% of all private insurer-branded drug spending returned as rebates in 2016.”

Whether rebates lower or increase costs is debated due to the lack of transparency of their application.

Due to the lack of data, this particular JAMA study used third party information or estimates of net price data on each drug. The observations did reveal a high correlation between increases in the rates of insurer and out-of-pocket costs paid for each drug and the net prices (ρ=0.55). The association suggests the offered industry supposition of higher list prices and greater reliance on rebates reducing costs may not be true.

Instead and a bit redundant by me, the paper offers an opposing supposition of increases in list prices, and the resulting increases in insurer and out-of-pocket costs paid, may coincide with increases in net prices, which in turn make these drugs more expensive overall. Seemingly biannual price increases should not be considered benign pricing strategies to offset paid against net price discrepancies in the current rebate system.

If true, this would be a façade making it appear rebates have an impact on final costs to the healthcare system and pricing to the patient. Rebates may only be a shuffling $dollars around.

Greater transparency of the process is needed to determine what is and what is not a cost save. The transparency is not for the purpose of patients deciding what to buy or pharmacists to recommend alternatives; although, it could be used by constituents to support healthcare proposals to bring prices down.

A healthcare system and its coverage without a foundation or mechanisms to control or account for costs is simply a blanket to pricing and hides its impact.

Run75441 (Bill H)

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