“Widening Disparities”: Maine Props Up ‘Two Americas’ With No Medicaid Expansion
The Affordable Care Act, as originally passed, holds tremendous promise to decrease health care costs and increase insurance coverage rates across rural states like Maine. But federal court opinions and repeated vetoes of Medicaid expansion are putting all that into jeopardy. Already, data is pointing to widening disparities between the states embracing health reform and those that have resisted — in the numbers of uninsured, in new health care jobs and in the finances of local hospitals.
Historically, the United States has maintained the highest health spending in the world, but it still had lower life expectancies and the highest rates of infant mortality in the developed world. Health costs have sucked up 18 percent of our gross domestic product, leaching out wage gains and damaging America’s global competitiveness.
These factors drove Congress and the president to enact health care reform. Since then, despite the fact that health care utilization typically increases as the economy recovers from recession, health care cost growth has been held in check and health economists increasingly agree that this is due to the structural reforms initiated by the ACA.
And, with federal subsidies and Medicaid expansion to help cover the working poor, the number of people who are uninsured in the country is going down. These are promising trends, but die-hard reform opponents continue to work to reverse them. Every recalcitrant governor, every contentious court decision impedes health reform from realizing its full potential, despite its proven success to date.
There are two Americas. One is prosperous, long-lived and healthy. The second comprises the working poor who are short-lived, disabled early and beset by chronic illnesses that could have been prevented — diabetes, heart failure, pulmonary disease. Those in this second America are people who have a job — maybe two — but do not earn enough to make ends meet.
We make special provisions for some of the most vulnerable in this group — children, the elderly and disabled — but millions of hard-working Americans fall through the gaps. And unfortunately, the ranks of America’s working poor are increasing, not shrinking.
An American born in one of our rural counties is likely to live a shorter life than a person in Algeria or Bangladesh. Meanwhile, Americans who live in prosperous urban regions have life expectancies that rival the healthiest places in the world. This disparity exists, and it takes money. It costs our economy, through lost worker productivity and the high price of treating people in emergency rooms when they cannot afford less expensive preventive care.
As designed, health reform aimed to erase health disparities. It pumped money into making affordable health care available to Americans in poorer, more rural states like Maine. It offered good jobs and billions in economic impact while improving the quality of care to all Americans wherever they live, whatever their income. It directed money to cost-effective primary care and dedicated scholarship funds to increase the number of doctors in rural and underserved areas, like much of Maine.
The New York Times recently reported that state-level refusal to expand Medicaid combined with the recent court ruling jeopardizing subsidies to residents of states on the federal exchange threaten to undo the national reform and create a state-by-state patchwork. This would effectively maintain the two Americas. The states that declined to expand Medicaid or design state exchanges are mostly the poorer, less healthy states. Right now, Maine is on this list.
Gov. Paul LePage has vetoed majority votes to expand Medicaid five times. If we continue in this direction, 12 percent of Mainers will continue to be uninsured while 96 percent of residents in nearby Massachusetts are insured.
Politics threaten to block health reform from fulfilling its promise: to bridge the yawning gap in health and economic potential between the two Americas. Partisan politics shouldn’t block Maine from reaping the benefits of health reform — both in better health outcomes and in expanded economic opportunity.
By: Christy Daggett, Policy Analyst, The Maine Center for Economic Policy; Published in The Bangor Daily News, August 19, 2014
“Bizarre Looking-Glass Ideology”: Deficit Scolds Are The Most Crazed Ideologues In America
A new Congressional Budget Office report shows that the projected increase in the national debt has slowed dramatically. Good news for deficit scolds, right? Not for Ron Fournier, who still thinks the nation is on its last legs:
Only in Washington, the place where you land when you fall through the looking glass, could this be hailed as good news… Our deficit levels (annual totals of red ink) are stalled at breathtakingly high levels — and are projected to soar again in a few years… Scary news, right? Not according to many media outlets and a cynical leadership class in Washington. Some news organizations focused on the sugar-high of good news — the (temporary) dip in deficits.
Think of a reporter covering a shooting. The police tell him the victim is dying of blood loss. Is the headline “Shooting Victim Expected to Die” or “Blood Flow Slows for Shooting Victim”? [National Journal]
Fournier’s economic analysis, if it may be so dignified with the phrase, is comprehensively wretched. As I’ve argued, the real problem with the deficit is that it’s coming down way too fast. Premature austerity has crippled the economic recovery and kept millions out of work. The biggest economic problem facing the nation is unemployment, which outweighs the stupid deficit by Graham’s Number levels of importance.
But the main problem is that his scold case is weak even on its own terms. Fournier understands neither what is driving the increase in the national debt nor why that might be a problem — all of which betrays a bizarre ideology that holds that pain must be inflicted before any gains can be made.
The huge increase in the annual deficit in 2008-09 was driven by two things: first, the economic collapse, which caused revenues to fall and spending to increase as people drew on safety net programs like unemployment insurance. Second, the Recovery Act, aka the stimulus, which provided a one-time surge of spending to restore aggregate demand and get people back to work. Though the stimulus was not nearly large enough to fill the hole in demand, this is what macroeconomic policy is supposed to do in a recession (a fact that Republicans were happy to accept when they were in power).
The long-term debt and deficit projections, on the other hand, are entirely about health-care spending. As Peter Fisher once said, the government is basically an insurance company with an army, and for many years the price of health care increased much faster than the rate of economic growth. This made government spending on health care (mostly Medicare and Medicaid) consume an ever-greater portion of the federal budget. Past CBO projections just assumed this trend would continue, which accounts for past reports predicting that the national debt would eventually eat the whole budget.
What this means is that Fournier’s preferred solution for dealing with this trend — higher taxes, fewer entitlements — is completely pointless. We have to fix the problem of rising prices, otherwise eventually a single tablet of aspirin will consume the entire federal budget. And the price problem is driven by awful policy design, not excessive generosity. America manages the rare trick of having very patchy and stingy social insurance that is simultaneously incredibly expensive. We spend more government money per person than Canada does — and the Canadians have universal single-payer coverage.
Fewer entitlements or higher taxes will get you a few years of breathing room before price increases eat up all the savings — and the whole point of Fournier’s column is that a couple decades of breathing room is still grounds for hair-on-fire panic.
Luckily, since the passage of ObamaCare, price increases have indeed slowed dramatically. That, plus a new projection that interest rates will stay low for a long time, accounts for the new CBO analysis showing slower debt growth. Just why this is happening is a matter of some dispute; I suspect it is partly the result of several programs in ObamaCare designed to bring prices down, and partly that health-care prices are already so high they’re running into resource constraints.
I think the fact that Fournier is patently uninterested in any of these things, and favors a policy that would accomplish nothing whatsoever on the deficit by his own standards, reveals that the pro-austerity school of punditry isn’t about the deficit at all. Instead, he says that his entitlement-cutting agenda is “going to happen sooner or later, painfully or more painfully.” As with David Gregory, the pain is the operative concept. The centrist definition of responsible politics holds that the American people must suffer a little more to keep the nation healthy. It’s only the “hateful partisans” who are keeping the wise, reasonable moderates from making those tough bipartisan compromises to slash social insurance and inflict pain.
But make no mistake: This has nothing to do with economics, and everything to do with the bizarre looking-glass ideology of “serious people” in Washington, D.C.
By: Ryan Cooper, The Week, July 24, 2014
“The Fiscal Fizzle”: An Imaginary Budget And Debt Crisis
For much of the past five years readers of the political and economic news were left in little doubt that budget deficits and rising debt were the most important issue facing America. Serious people constantly issued dire warnings that the United States risked turning into another Greece any day now. President Obama appointed a special, bipartisan commission to propose solutions to the alleged fiscal crisis, and spent much of his first term trying to negotiate a Grand Bargain on the budget with Republicans.
That bargain never happened, because Republicans refused to consider any deal that raised taxes. Nonetheless, debt and deficits have faded from the news. And there’s a good reason for that disappearing act: The whole thing turns out to have been a false alarm.
I’m not sure whether most readers realize just how thoroughly the great fiscal panic has fizzled — and the deficit scolds are, of course, still scolding. They’re even trying to spin the latest long-term projections from the Congressional Budget Office — which are distinctly non-alarming — as somehow a confirmation of their earlier scare tactics. So this seems like a good time to offer an update on the debt disaster that wasn’t.
About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.
Things are expected to deteriorate after that, mainly because of the impact of an aging population on Medicare and Social Security. But there has been a dramatic slowdown in the growth of health care costs, which used to play a big role in frightening budget scenarios. As a result, despite aging, debt in 2039 — a quarter-century from now! — is projected to be no higher, as a percentage of G.D.P., than the debt America had at the end of World War II, or that Britain had for much of the 20th century. Oh, and the budget office now expects interest rates to remain fairly low, not much higher than the economy’s rate of growth. This in turn weakens, indeed almost eliminates, the risk of a debt spiral, in which the cost of servicing debt drives debt even higher.
Still, rising debt isn’t good. So what would it take to avoid any rise in the debt ratio? Surprisingly little. The budget office estimates that stabilizing the ratio of debt to G.D.P. at its current level would require spending cuts and/or tax hikes of 1.2 percent of G.D.P. if we started now, or 1.5 percent of G.D.P. if we waited until 2020. Politically, that would be hard given total Republican opposition to anything a Democratic president might propose, but in economic terms it would be no big deal, and wouldn’t require any fundamental change in our major social programs.
In short, the debt apocalypse has been called off.
Wait — what about the risk of a crisis of confidence? There have been many warnings that such a crisis was imminent, some of them coupled with surprisingly frank admissions of disappointment that it hadn’t happened yet. For example, Alan Greenspan warned of the “Greece analogy,” and declared that it was “regrettable” that U.S. interest rates and inflation hadn’t yet soared.
But that was more than four years ago, and both inflation and interest rates remain low. Maybe the United States, which among other things borrows in its own currency and therefore can’t run out of cash, isn’t much like Greece after all.
In fact, even within Europe the severity of the debt crisis diminished rapidly once the European Central Bank began doing its job, making it clear that it would do “whatever it takes” to avoid cash crises in nations that have given up their own currencies and adopted the euro. Did you know that Italy, which remains deep in debt and suffers much more from the burden of an aging population than we do, can now borrow long term at an interest rate of only 2.78 percent? Did you know that France, which is the subject of constant negative reporting, pays only 1.57 percent?
So we don’t have a debt crisis, and never did. Why did everyone important seem to think otherwise?
To be fair, there has been some real good news about the long-run fiscal prospect, mainly from health care. But it’s hard to escape the sense that debt panic was promoted because it served a political purpose — that many people were pushing the notion of a debt crisis as a way to attack Social Security and Medicare. And they did immense damage along the way, diverting the nation’s attention from its real problems — crippling unemployment, deteriorating infrastructure and more — for years on end.
By: Paul Krugman, Op-Ed Columnist, The New York Times, Julo 20, 2014
“Willful Republican Obfuscation”: The GOP Takes Another ObamaCare Study Way Out Of Context
It’s no secret that Republicans are pinning their midterm election hopes on ObamaCare.
So it should be no surprise that the GOP has tried to cast virtually all news about the health care law as proof that ObamaCare will kill jobs and send insurance costs soaring. The only problem with that strategy is that the underlying arguments are often disingenuous.
In the latest case, a new report from the Centers for Medicare & Medicaid Services estimates that ObamaCare could raise insurance premiums for nearly two-thirds of small businesses, affecting some 11 million employees. Before ObamaCare, those small businesses were paying below-average rates — often by having younger, healthier workers whom insurers could charge less to cover — but new rules designed to level the insurance marketplace will cause those rates to rise, according to the report.
Naturally, right-wing blogs and Republican lawmakers seized on the report to bash ObamaCare. The report revealed another “broken promise” from the Obama administration, House Speaker John Boehner (R-Ohio) said in a statement, calling it “another punch in the gut for Americans already struggling in the president’s economy.”
The reality of the report’s conclusions, though, are a bit more nuanced.
While the report did find that insurance premiums would probably go up, it did not determine that insurance costs overall would spike. That’s because the report focused only on the impact of ObamaCare’s new rules, and not, crucially, on the impact of its new benefits.
ObamaCare contains a wealth of subsidies, tax breaks, and the like — many of them geared specifically toward small businesses — that are intended to drive down individuals’ insurance costs. When you factor in all the positives, “Obamacare may well be the best thing Washington has done for American small business in decades,” The New Yorker’s James Surowiecki wrote last year.
The CMS report acknowledged that fact, hedging that there was “a rather large degree of uncertainty associated with this estimate” and that the true impact “will be based on far more factors than the three that are focused on in this report so understanding the effects of just these provisions will always be challenging.” And the report specifically mentioned one nongovernmental analysis of the entire law which found that it would have a “minimal” impact on small business premiums.
Moreover, the report estimated that costs would drop for the remaining one-third of small businesses. Why? They’re currently paying above-average rates, so the market-leveling rules will actually benefit them.
The GOP hand-wringing comes on the heels of its failed attempt to claim a separate federal report confirmed that ObamaCare will be a job killer. That nonpartisan Congressional Budget Office report actually found that the law would lead to a reduction of labor, not jobs, as incentives made it easier for people to work less or retire early. The GOP’s claim was so bogus, in fact, that the CBO released a follow-up statement thoroughly debunking it as an egregious distortion of the truth.
Republicans understandably want to make the health care law look bad to boost their election prospects. But skewing the findings on ObamaCare only hurts their credibility and reveals the party’s willful obfuscation on the issue.
By: Jon Terbush, The Week, February 25, 2014
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