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

Boeing Saga Ends with 51% Favoring New Contract

As I argued last month, the Puget Sound area of Washington state was easily the best place, from a strictly economic point of view, for Boeing to build its new 777x jetliner. This was confirmed when, despite the rejection of  its union contract offer by a 2:1 margin and opening an auction for a new facility, Boeing came back to the union with a second contract offer (h/t New York Times). Yesterday, by a 51-49 margin, workers voted to accept the contract.

The new contract ends the company’s pension plan in favor of a 401(k), although it does not “affect the pensions already accrued.” This was unchanged from the previous offer. However, the company did make concessions on the time to raise to the top of a pay grade (6 years instead of the originally proposed 16) and by adding a second bonus payment, of $5,000, in 2020.

The closeness of the vote shows how difficult a decision this was. In addition, there was a rift between the international office of the Machinists’ union, which all but openly supported the contract, and the local union, which quite openly opposed it. Though the workers had a good bargaining position, it’s hard to negotiate with a gun to your head, and the company had also shown its willingness to do something stupid (from an economic point of view) when it put a production line for 787 in South Carolina rather than Washington.

So, yet another company ends a true pension plan, contributing to the coming retirement crisis. Washington state gets to set another record for the largest incentive package in U.S. history, although it is surely a violation of World Trade Organization subsidy rules, as was Boeing’s 2003 package. And we see yet again the need to ban job piracy, which strengthens the kind of job blackmail we have seen in this case, like so many others.

Cross-posted at Middle Class Political Economist.

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Why Will Healthcare Insurance be Cheaper in Florida with the PPACA???

The fact of the matter is; healthcare insurance will not be cheaper in some places. Why it will not be so in Florida, I will get into later.

If you remember from 2010, the progressive state of Florida was the first to launch a suit in Federal court claiming the PPACA was unconstitutional. Eventually and after the casting of the bones by the news media and pols numerous times in attempts to predict what SCOTUS would do and why it will do it; in the end, little of the PPACA changed with the June 2012 decision. Struck down by SCOTUS was the mandate of the Medicaid Expansion for all < 138% of FPL or face a penalty of the overall defunding of Medicaid (which practice is not something unusual by the federal government as it was used with highway funding). Apparently with different SCOTUS justices, the practice is now unconstitutional. States such as Florida chose not to expand Medicaid or implement state exchanges which in the end will have an economic impact on the states besides insurance rates. In Florida’s case, the state went further to hinder the PPACA implementation. Even at the Bronze level, the PPACA provides preventative care which previously would have come after co-pays, deductibles, or not be covered. Maggie Mahar at Health Beat Blog points out the 62 new preventative services and procedure now available under the PPACA without deductibles or copays. While much of the expected increase in insurance cost from added benefits has been negated in much the same way as the elderly being covered at lower rates (through gained efficiencies brought to bear by the PPACA0 however they too will cause a much smaller increase in the cost of coverage. Even so such preventative services and products such as immunizations, anemia screening, and well women visits that were out of pocket previously are now covered.

Those uninsured who are not covered by the Medicaid Expansion will fall under PPACA coverage if the state expanded Medicaid benefits. The new PPACA coverage is made-up of the elderly, those with pre-existing disease and disorders, the healthy older and younger people. The elderly and those who have disorders and diseases will be covered at lesser cost premiums than what was before as insurance companies can no longer deny them coverage and the 3 to 1 ratio (old to young) establishes a maximum cost which previously was scored much higher. While this coverage will come at a lower premium than the back door ER in treating them, it too will have an impact on insurance rates overall. This is a component of the individual healthcare insurance market, a much smaller segment of the healthcare insurance population which has an MLR of 80% thereby giving back another 5% to the insurance companies. While gaining many benefits from the new healthcare market created by the PPACA, it still comes at a higher cost from private insurance companies then the Group Employee Sponsored Insurance.

The addition coverage has an impact on cost in the various state insurance markets; but in Florida it goes a step further. Prior to 2010 Florida was the second most expensive state for healthcare insurance premiums; but, such was not always the case.

2003 2010 Comp

“The average annual health insurance premium in Florida was $15,032 in 2010, a 61 percent increase since 2003. Only New Hampshire was more expensive, although the District of Columbia had the highest average premium in the nation.

That 61 percent premium increase in Florida put the state behind only Mississippi for the most rapidly rising costs.

That health insurance premium in Florida represented 24 percent of the average family’s income in 2010, up from 16 percent in 2003, according to the study.” Florida Second Most Expensive

Florida has gone from a state which had premiums at < 17% of Median House Income in 2003 to one >20% of Household Median Income in 2010 well before the PPACA was signed into law. Another way to look at this is Healthcare Premiums represent ~ 24% of average income. The loosening of regulatory guidelines by prior administration(s) to lower costs has not done what it was intended to do (introduce competition) and has led to an abundance of bare bones healthcare plans doing little and being just as costly. Many have sought to blame the PPACA for premium increases in Florida when it was already in place. As shown by the charts, healthcare insurance in Florida has increased, is the 2nd most expensive in the nation, and will increase even more if left unchecked.

Projected Premiums

Employer Health Insurance Premiums Increased 50 Percent From 2003 to 2010; Employees’ Share of Premiums Increased 63 Percent

For far less insurance coverage then what the PPACA offers, the insurance premium trend has been upwards in Florida hitting ~24% higher in 2010 and projected to be ~25% higher than this for some states (which category Florida is in) by 2015. Even with the greater numbers of the elderly living in Florida in 2003, the insurance premiums were more moderately priced. Florida went from a moderately priced state (redundant alert) for healthcare insurance to one of the highest cost states (#2 in healthcare premiums) in a matter of 7 years (2010). The increase does not appear to be the result of a large number of older people as much as the increase and the potential increase in the cost of healthcare based upon providing services for fees of higher cost procedures and technology and a lack of regulation.

So what ELSE is driving the cost increase? In lightly regulated states such as Florida, Ohio, South Carolina, etc.; insurance companies were allowed to sell bare bones insurance plans before and after 2010. The Florida Insurance Regulatory Agency recently did a comp between a hypothetical silver based plan considering the offerings then as compared to coverage under the state exchanges. Drawing a comparison to plans available on the state exchanges, they found there would be a range of ~7% to an ~ 58% increase in premiums or an average of 35% increase in cost. The state also looked at the numbers of uninsured within the state.

“’The main driver of the premium increases is the Obamacare mandate that coverage be offered to everyone,’ said Kevin McCarty, Florida’s insurance commissioner. There are just short of a million enrollees in the individual market in Florida, while 3.8 million are uninsured. The state does not allow new entrants into a ‘high-risk pool,’ which provides coverage to the sick.” PPACA Premiums Florida is also the 4th highest with an uninsured population.

The large numbers of uninsured becoming insured and the large number of uninsured who will remain uninsured due to the failure to expand Medicaid to 138% FPL will feed into higher costs. Those who had been denied insurance previously will rely on the individual market and those who will be denied coverage due to a lack of expansion of Medicaid will continue to use the ER at a greater cost. This is something the state and insurance companies do not explain.

A key component of premium increase has been the politics of the Republicans within the nation to overturn the PPACA and to hand President Obama a political defeat. It is no secret the Republicans work solely against President Obama to defeat him regardless of cause or circumstance. To wit, for 20 years the nation has waited for a government or an industry solution to the rising cost of healthcare with neither offering up much except for more of the same. To add to this, there is little hope of a concerted effort by both parties jointly to reach a viable solution to rising healthcare costs.

Politics in the State of Florida differ little than what has been experienced nationally as the Republican State legislature and Governor had turned down the state exchanges long after SCOTUS ruled, have made it difficult to apply for the PPACA Healthcare Insurance by limiting assistance, and have stripped the Florida State insurance Commissioner of the ability to review and regulate healthcare insurance premiums. The last point prevents any state intervention in lowering or altering insurance rates.

“’since it became law in 2010, Florida had repeatedly refused — first challenging the constitutionality of the law, then waiting to see if a new president would offer a reprieve.

But with the law upheld by the Supreme Court and President Barack Obama back in office, the state was stuck. It had refused federal money to help with the transition. Now it was also running out of time.

A state Senate committee in 2013 said it sought a “rational, reasonable approach.” State law needed an update to match federal requirements of the Affordable Care Act. The committee sought to do as little as possible.

‘We want to make sure that we’re in compliance, that we’re doing what we’re required to do,’said Sen. David Simmons, R-Altamonte Springs, at a March committee meeting.

The Affordable Care Act assumed that states would continue to take a lead role in setting insurance rates, just as Florida had done in the past. It encouraged states to strengthen their rate-setting authority, offering millions of dollars in grant money to help. But it didn’t require that.

The Florida Office of Insurance Regulation faced a serious time-crunch to get up to speed on a host of new requirements under the law. Legislators offered a compromise. If the federal government wanted to impose new coverage requirements — well, it could set rates, too.

‘Since the federal government is requiring these additional coverage that will cost more,’said Sen. Joe Negron, Republican chair of the Affordable Care Act Committee, ‘then to me it makes sense for them to be responsible for approving rate increases that are certain to come.’

Democrats on the committee agreed with this approach at its final meeting on March 18.

‘I think we’re going to find it’s going to cost us a lot of money to set rates here in Florida,’ said Sen. Eleanor Sobel. ‘… I think we should rely on the federal government.’

She expressed confidence the federal government would have a “greater wealth of knowledge.”

‘If we have concerns about the rates that the feds do set, then we should work with them,’ she said.

One hitch she didn’t mention: the federal government didn’t give itself rate-making authority.

What resulted was Florida Senate Bill 1842, which among other things, suspended for two years the requirement that insurers get state approval for rates for new plans — such as those that will appear on new marketplaces. Companies would still have to file rate changes with the state. But they could act on those changes without approval.” Democrats say Florida stripped insurance commissioner of power to set health plan rates ‘”

Healthcare insurance companies now have a freehand in establishing pricing with no interference from the state insurance regulators leaving the constituency to bear whatever it deems reasonable. As the Federal Government can not intervene, the only impediment in the way of companies going hog-wild is the PPACA MLR which sets the percentage of premiums applied to healthcare costs at 80% for the individual market. When one takes the law passed to block regulators, the failure to pass the Medicaid expansion, and the past history of healthcare insurance in Florida; it is no surprise that Florida Healthcare Insurance premiums will be higher even with the PPACA in place. The state of Florida bears much of the responsibility for the increase in healthcare insurance premiums in the past and also after on the PPACA implementation.

Somewhere else I have read that the low turnout of voters has resulted in the Republican controlled government in Florida. I would guess Florida Republicans hope the constituency will blame the PPACA and Obama for the health care insurance premium increase they are faced with in 2014. The media and the Republicans have assigned blame to the PPACA as well as some bloggers who have not dug deeper into examining the reasons why the premium increases. The greater part of the premium increase can be assigned to the state’s practices in the past and even more so to the recent law giving insurance companies free rein.

References:

“Florida second most expensive state for health insurance” South Florida Business Journal, Brian Bandell

“Obamacare Premiums” CNN Money, Tami Luhby

“Democrats say Florida stripped insurance commissioner of power to set health plan rates” Politifact, Ted Deutch

“Obamacare facts separated from spin by Wendell Potter” The Center for Public Integrity, Bill Buzenberg

“Florida says health insurance prices will spike; feds disagree” Miami Hearld, Daniel Chang and Patricia Borns

“The Florida Health Care Landscape” Henry J. Kaiser Family Foundation, Rachel Arguello and Alexandra Gates

“Florida health insurance exchange” Health Insurance Org., Carla Anderson

“PPACA Cost Sharing and Maternity . . . “ Growing Family Benefits

“States Rejecting Medicaid Expansion Under the Affordable Care Act Are Costing Their Taxpayers Billions” The Commomwealth Fund; Bethanne Fox

“Employer Health Insurance Premiums Increased 50 Percent From 2003 to 2010; Employees’ Share of Premiums Increased 63 Percent” The Commonwealth Fund; Charts

“The Pricing of U.S. Hospital Services: Chaos Behind A Veil of Secrecy” Health Affairs; Uwe E. Reinhardt,

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Sunday Reads

The 1% are Still Stealing Our Homes Hat Tip Crooks and Liars Diane Sweet

Following the bank’s instructions, Laura and her partner missed three months of their mortgage payments to qualify for a loan modification. But instead of working with the family, Bank of America put the home in foreclosure, using the highly controversial process of “dual tracking” in which banks simultaneously put families in the process of modifying their loans and put the loan in the foreclosure pipeline.

In Laura’s case — as with so many other homeowners across the country — the foreclosure process won.

Her home was sold at an auction and bought back by the government-owned mortgage giant Fannie Mae — which then allowed a private equity firm, The Cogsville Group, to buy the right to manage her house and collect rent from the family. But when her home flooded this past spring, the company did not help her with clean up, mold remediation or repairs.

100% Of New Power Capacity in US Came from Renewable Energy In November (2nd Month 2013) Hat Tip Crooks and Liars

Here are the full details from FERC on the split for November:

•0 natural gas power plants placed into service = 0 MW
•0 oil power plants placed into service = 0 MW
•0 coal power plants placed into service = 0 MW
•0 nuclear power plants placed into service = 0 MW
•0 waste heat power plants placed into service = 0 MW
•1 water power plant placed into service = 4 MW
•4 wind power plants placed into service = 81 MW
•1 geothermal steam power plant placed into service = 25 MW
•8 biomass power plants placed into service = 108 MW
•14 solar power plants placed into service = 177 MW

Bad news for the GOP and possible good news for average Americans Hat Tip Digsby

House Republicans, including Speaker John Boehner, face a sharp backlash from voters for pushing a budget deal that denies the extension of unemployment benefits for 1.3 million Americans past Dec. 28, according to a collection of polls being released Monday.

In Boehner’s Ohio district, for example, 63 percent of voters support extending the benefits, 34 percent don’t. As part of the budget compromise and at the urging of the GOP, the benefits were not extended.

Chart ‘o the decade Hat Tip Digsby

Chart of the Decade

Digsby: I’ll just note one little thing and then move along. The 1981, 1990 and 2001 recession recoveries all happened under Republican presidents. And a Democratic congress . . .

Americans Surprisingly Supportive of Unemployment Insurance Hat Tip Washington Monthly Ryan Cooper

With conservatives’ bitter hatred for any government spending on the lower 80 percent or so of the income ladder, and the public’s approval of Congress falling into the single digits, one could be forgiven for thinking that regular people aren’t too concerned with unemployment insurance.
But a small set of polls from PPP shows that is not exactly the case. They took some measurements in four Republican-held swing districts, as well as John Boehner’s district. Here’s what they found:

Support for Unemployment Benefits

How Sotomayor undermined Obama’s NSA Hat Tip Washington Monthly for pointing to this MSNBC article

If Edward Snowden gave federal courts the means to declare the National Security Agency’s data-gathering unconstitutional, Sonia Sotomayor showed them how.

It was Sotomayor’s lonely concurrence in U.S. v Jones, a case involving warrantless use of a GPS tracker on a suspect’s car, that the George W. Bush-appointed Judge Richard Leon relied on when he ruled that the program was likely unconstitutional last week. It was that same concurrence the White House appointed review board on surveillance policy cited when it concluded government surveillance should be scaled back.

“It may be necessary to reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties,” Sotomayor wrote in 2012. “This approach is ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks.”

Health Care Is Expensive In This Country Hat Tip Atrios

The NYT’s perpetual pity party for its affluent readership is genuinely annoying.

And, yes, Obamacare isn’t perfect and the subsidies aren’t generous enough. But here are the options to make it better:
1) Nationalize the health care system (or much of it) as the NHS was, at least before the Tories started wrecking it.
2) Have a single payer insurance system in which the government doesn’t run the medical system, but essentially sets the rates (and is empowered to do so).
3) Increase the subsidies in Obamacare, so that the not-quite-rich-enough also have taxpayers pay for at least part of their insurance bill, and the insurance companies can continue to take their pointless cut.

1) and 2) will help to control actual costs if done right, while 3) will just spread it around differently.

This Is the Golden Age of Deficit Reduction Hat Tip Daniel Gross at The Daily Beast

As Washington chewed over the Paul Ryan-Patty Murray budget deal, the Treasury Department announced a walloping drop in red ink. Turns out government didn’t need a “grand bargain” to get its fiscal house in order.

The Murray-Ryan budget deal was anti-climactic. After all this—three years of failed grand bargain talks, the sequester, a shutdown—we have a deal that will cut deficits by a grand total of $22 billion over ten years. No wonder the Tea Party crowd is incensed. Yet the outrage over the federal debt—$17 trillion and rising—won’t stand in the way of this deal. That’s because, thanks in part to the sequester; but thanks largely to the miracle of sustained growth, the annual deficit is shriveling.

Homeless Couple Gets A Home On Christmas Eve, Thanks To Innovative ‘Occupy’ Group Hat Tip to Think Progress – Scott Keyes

run75441: I raised my family in Mad-City, Wisconsin, a liberal enclave amongst a sea of conservatism. We always found a way to do something positive in the city. Red vested Gov. Dreyfus once described Madison, WI “Madison is 30 square miles surrounded by reality.” It appears there are still some innovative minds in Wisconsin in spite of the Governor Scott Walkers.

“For many couples, the thought of living together in a 96-square-foot house sounds awful. But for Chris Derrick and Betty Ybarra, it’s a Christmas miracle.

That’s because Derrick and Ybarra have spent the better part of a year braving Madison, Wisconsin’s often-harsh climate without a roof over their head.

They’ll spend this Christmas in their own home, thanks to more than 50 volunteers with Occupy Madison, a local Wisconsin version of the original Occupy Wall Street group in New York. The group, including Derrick and Ybarra, spent the past year on an innovative and audacious plan to fight inequality in the state’s capital: build tiny homes for the homeless.”

Scott Walker makes Wisconsin No. 1 — in jobless claims The Cap Times – Editorial

How’s this for a 2016 presidential campaign theme?

“‘Under Scott Walker, Wisconsin led the nation in first-time unemployment claims.’

That’s not the narrative Walker wants as he plots his run for the Republican presidential nomination. But it’s the one that has developed.

According to the U.S. Department of Labor, 4,420 Wisconsinites filed initial unemployment claims in the final week of November. The next two highest states combined — Ohio with 2,597 and Kentucky with 1,538 — couldn’t match Wisconsin’s total. And what’s particularly notable is that these numbers come at a point when states such as California, Texas, Florida and Michigan are seeing significant declines in jobless claims.

Walker ran for governor on a promise to create 250,000 new jobs.”

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What to Do When a High-Profile U.Chicago Economist Says the Airline, Telephone and Package-Shipping Industries Prohibit Use by Preexisting Flyers, Callers and Shippers: If you’re a liberal, take this ball and run with it!

There’s no question that the Affordable Care Act’s rollout has been “rocky,” to borrow the common parlance of the Beltway. The Web site troubles and shifting health coverage for some Americans, despite over-assurances from President Obama during the 2010 political debate, have naturally turned off some people. A much-ballyhooed poll from CNN yesterday shows that support for “Obamacare” has dropped to an all-time low.

But conservatives toasting the apparent turn in public opinion ought to look a little closer at the polling data. It’s true that only 35 percent of Americans favor the law, while 43 percent oppose it. But there’s a crucial third group: 15 percent oppose the ACA because it’s “not liberal enough.” That means that 50 percent of Americans either support the law or want policy changes that shift leftward.

Should Democrats press the public option?, George Zornick, The Plum Line, Washington Post, Dec. 24

Wow.  A man after my own heart.  It’s a recognition that, with the single exception of the disastrous rollout of Healthcare.com, which is purely a technology issue, the high-profile issues concerning Obamacare since Oct. 1 highlight not generic problems with government involvement in healthcare insurance but instead the problems of a system that piggybacks on the for-profit private insurance industry and neo-federalism-structured federal programs that rely heavily or entirely upon cooperation of state governments.

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Pet Industry Figures

Via American Pet Products comes these figures on yearly expenditures for product and care of our pets, in the range of over $53 billion a year lately.  It doesn’t look like that includes dog walking.

Pet Industry Market Size & Ownership Statistics

U.S. Pet Industry Spending Figures & Future Outlook

The following spending statistics are gathered by APPA from various market reseach sources and are not included in the organization’s bi-annual National Pet Owners Survey.

Total U.S. Pet Industry Expenditures

Year                 Billion

2013                 $55.53 Estimate

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A Story at Christmas time

by Rev. Nathan Detering (Unitarian Universalist Church at First Parish Sherborn, MA)

Once upon a time in those days after Thanksgiving when Rt. 9 is transformed from its normal craziness into something like a hornet’s nest after you poke it with a stick,there was a minister, a pastor, who thought it was a good idea to pick his children up from school and take them to Shopper’s World.

Earlier that day he had been planning with his staff team all those worship services in December, including two children’s pageants, one Quaker service, a sermon on the four kinds of prayer (oops, please, thanks and wow!), a Music Sunday last week in which the choir was singing things about The Christian God that this minister knows many of them have at least some doubts (which is maybe why the music director Joe had them singing in German), and, last but not least, this Christmas Eve worship.

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SETTING THE RECORD STRAIGHT ON SOCIAL SECURITY

by Dale Coberly

SETTING THE RECORD STRAIGHT ON SOCIAL SECURITY

HOW THE “COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET”

LIES TO YOU

A group that calls itself “Committee For A Responsible Federal Budget” wrote what it claims to be “Setting the Record Straight on Social Security.”  The article needs to be responded to at some length, both to correct its errors and to show how it goes about its business of lying to people.

A lie is a statement or statements intended to deceive another person. Professional liars can usually manage to lie to their victims and lead them to harm by carefully selecting “facts” so as to lead to a false conclusion without ever actually saying anything that is “technically not true.”

CRFB statements follow in italics.  My replies in plain text.

This post recently appeared in CRFB’s Bottom Line Blog.

Recently, many policymakers and commentators have called for expanding Social Security benefits rather than slowing the program’s costs, suggesting that the program’s current shortfalls are modest and easily addressed. Below, we answer some questions about Social Security to help explain why many of these calls are misguided.

Is Social Security’s Financing Problem Real?

Unfortunately, suggestions that Social Security does not face a financing problem are not based in fact. Already, the costs of  benefits are well in excess of revenue from payroll taxes. Social Security’s cash-flow deficit will add $75 billion to the deficit in 2014, $1.0 trillion over the next decade, and $3.8 trillion in the decade following. As  we’ve explained, the program’s past surpluses do nothing to change its very real current cash deficits. Regardless of whether past surpluses were saved in an economic sense or not, the federal government will have to borrow more to make up for the Social Security system’s cash flow deficit.

I am not sure that anyone has suggested Social Security does not face a financing problem. The question is, or should be, what is the best way to address this problem… and how big is it anyway?

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Identity theft

America’s fastest growing crime problem points us to some numbers:

When we talk about crime at the city level, we tend to focus on violent crime and property crime. These two categories don’t encompass the entire universe of illegal behavior, but they cover crimes that a) have victims, and b) local police can actually  investigate. Property and violent crime affect us where we live and work, and we expect local government to do something about them.

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