Monthly Archives: October 2013

It’s Jobs, Not the Deficit

The deficit for FY 2013, which ended on September 30, was $680 billion.  To economists, what matter is not the amount of the deficit, but what percentage of GDP it represents.  In this case, it’s 4.1% of GDP.

For FY 2009, the deficit was 10.1% of GDP.  So the deficit has fallen by more than half.

Right now, our most immediate concern is (or should be, GOP) jobs, not the deficit.  Yes, we have longer-term deficit problems, but the most important thing to do now is not to make those future deficits worse by failing to create jobs.  To the extent we do that, we generate more tax revenue and we reduce demand for unemployment benefits, Medicaid, and food stamps, so the government automatically gets more and spends less without cutting the safety net or raising taxes.

If You Like Your Insurance…You’ll Like It Even More

“I am not terribly different than some other writers who have been in the individual market. We have BCBS covering a family of four with a variety of pre-existing (but not life threatening) conditions. Like others, BCBS of Illinois informed us that our policy would no longer be valid after January 1, 2014. They also informed us that they would role us automatically into a slightly more expensive (and largely comparable) plan if we did nothing.

“Here is where it gets a bit more interesting. The “cancellation letter” directed us to the BCBS website, where we could shop through various other options. There are a large number of options (e.g., network breadth, deductibles, co-pays, etc.), many of which are also comparable to what we have at lower rates. Relatively minor tweaks to our deductible will save us hundreds per month – more than offsetting the deductibles. And, since getting the letter, we have gotten follow-up emails and telephone calls from BCBS encouraging us to compare our options at the BCBS website.

“It has become quite clear over the past couple of weeks that BCBS does not want us shopping on the Illinois Exchange. Of course I will ultimately do that, if nothing else to check out competitive options. BCBS has huge market share here and they have the best, most comprehensive network – I won’t be a bit surprised if we stay with them. That said, we have suddenly become much more attractive and important to BCBS than we were. Getting through underwriting a few years ago was ridiculously difficult, now we are being marketed heavily and encouraged essentially to skip the exchange all together and shop exclusively at BCBS.

“Count me among those who think the ACA will ultimately work to the net benefit of the vast majority of people in the individual market – myself included.”

 

From someone who wrote to Josh Marshall at Talking Points Memo after receiving one of those “cancellation” letters.  My guess is that this guy’s experience is fairly typical, and once again the Obama Administration is doing a crappy job of ‘splaining.

Quick Thought on Jobs

I’m tired of hearing that the economy isn’t producing jobs because business lacks confidence in President Obama.  Yes, companies are sitting on a ton of cash rather than adding to payroll, but this failure to hire would be the same if Romney were in the Oval.

If England used to be a nation of shop keepers, the U. S. has become a nation of middle managers.  While it’s easy to calculate out how many people it takes to produce Fords on an assembly line, it’s not as straightforward to figure out how many people you need in cubicles writing reports and emails to each other.

As the economy has come back, a lot of jobs have been eliminated, as companies realized that they didn’t need all the people they had before the meltdown.  To some extent, they made bigger profits because people who kept their jobs were so grateful and terrified that they were willing to do a job-and-a-half rather than complain.  But remaining workers also found themselves able to get more done because meetings were shorter and there were fewer co-workers up and down the chain of command to deal with by memo or email or office visit.  Businesses realized that before the meltdown, they had a lot of employees who may have looked busy, but weren’t terribly productive.

When the economy tanked, our private sector was over-staffed, as we typically complain that the government is.  Companies that find themselves under-staffed are hiring (people doing a job-and-a-half won’t do that forever), but they won’t let themselves become over-staffed any time soon.  A lot of jobs are just gone for now, regardless of who controls Congress or the White House.

The Empty Barn Jacket Is Back

Former Massachusetts Senator Scott Brown, who briefly replaced Teddy Kennedy (because it was too damn cold for Martha Coakley to shake hands outside Fenway Park or something) and then lost his bid for a full term to Elizabeth Warren in 2012, has set up a political action committee in New Hampshire, The People’s Seat PAC.

It looks as if Brown is preparing to run against Dem NH Senator Jean Shaheen in 2014.  Brown has long owned a vacation house in Rye, NH.

Stay Well, People in Red States

Obamacare authorizes subsidies for health insurance bought on an exchange “established by a state.”  So far, 34 states have refused to establish such exchanges, and people in those states are signing up — or trying to, God bless them — for insurance and subsidies on the federal exchange.

Can people using the federal exchange get subsidies?  A federal judge has refused to dismiss a case, Halbig v. Sebelius, arguing they can’t.  Eventually, this will go to the Supreme Court.

If people in more than half the states can’t get subsidies, it’s going to be a disaster for them and for Obamacare.

The other disaster — and it’s already here, it’s not just a possibility — is that the statute doesn’t provide subsidies for people who qualify for Medicaid.  You either get Medicaid or you pay full freight.  But half the states have refused to expand Medicaid under the ACA, even though the federal government pays 100% of that expansion for three years and 90% thereafter.  We’re talking about 8 million people who would qualify for expanded Medicaid not getting it.  By upholding Obamacare as constitutional, but finding that states can refuse to expand Medicaid, the Supreme Court created the absurd situation where people making too much for Medicaid get subsidies, but their poorer brethren don’t.  The most desperate are being denied.

When the ACA was drafted, it was just assumed that every state would expand Medicaid (since it would save states billions of dollars in paying for the uninsured) and would establish an exchange.  The Dems believed that GOP governors and legislators wouldn’t cut off their noses to spite their faces.  There’s a lot of red states with unattached noses.