Glenn Kessler provides a useful clarification of CBO projections for enrollment in the exchanges under the Affordable Care Act, pointing out that the numbers refer to enrollment years. This means that a person who signs up for coverage beginning on April 1 will only count as three quarters of an enrolled person since they will only be covered for three quarters of a year.
However it is important to note that many more people will be signing up through 2014. While open season, in which anyone would enroll, ended on April 1, people who experience “life events” will be able to enroll at any time. “Life event” refers to anything that qualitatively changes your insurance or financial status. The most frequent life event is leaving a job, which happens to roughly 4 million people a month. Divorces, child birth, and deaths in the family are also life events.
This means that tens of millions of people will become eligible to enroll over the course of the year. Most will not be signing up with the exchanges (they will have other insurance options, such as a new job with insurance), but a substantial fraction will enroll through the exchanges. This will raise total enrollment above the level calculated based on the March enrollment numbers.
Glenn Kessler provides a useful clarification of CBO projections for enrollment in the exchanges under the Affordable Care Act, pointing out that the numbers refer to enrollment years. This means that a person who signs up for coverage beginning on April 1 will only count as three quarters of an enrolled person since they will only be covered for three quarters of a year.
However it is important to note that many more people will be signing up through 2014. While open season, in which anyone would enroll, ended on April 1, people who experience “life events” will be able to enroll at any time. “Life event” refers to anything that qualitatively changes your insurance or financial status. The most frequent life event is leaving a job, which happens to roughly 4 million people a month. Divorces, child birth, and deaths in the family are also life events.
This means that tens of millions of people will become eligible to enroll over the course of the year. Most will not be signing up with the exchanges (they will have other insurance options, such as a new job with insurance), but a substantial fraction will enroll through the exchanges. This will raise total enrollment above the level calculated based on the March enrollment numbers.
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It is not responsible reporting to report without comment statements from prominent politicians which are almost certainly not true. For example, if President Obama said that Speaker Boehner has blown up the Washington monument, it would be irresponsible to simply report the assertion without noting that the president has no evidence for this assertion and that the Washington Monument is still standing.
In the same vein, it was irresponsible for the NYT to quote without comment Speaker Boehner saying:
“The president can go out there and tout all the people he’s signed up, but how about the young man I talked to last week out in California whose premiums have doubled? His co-pay and deductibles tripled, and his wife’s hours got cut to 29 hours. .. My insurance premiums nearly doubled. My co-pays and deductibles tripled under Obamacare.”
The Republicans have produced a number of Obamacare horror stories about people facing soaring premiums or losing good insurance policies that on subsequent investigation turned out not to be true. It is highly impluasible that the Speaker Boehner actually talked to a young man in California who both saw premium double and his deductibles triple. Insurance companies were not in the business of losing money prior to Obamacare. It is unlikely that they were offering policies that were much better and cheaper than the ones now being offered under the program.
The assertion about cutting hours to 29 per week has nothing to do with Obamacare. Presumably Boehner is referring to the employer sanctions which apply to large employers who do not insure employees who work more than 30 hours a week. Since this will not take effect until 2015, if an employer actually cut back a worker’s hours this year to 29 per week it was not due to Obamacare. A serious news article would have pointed this out to readers.
The piece later tells readers:
“It [the Ryan budget] cuts Medicaid by $1.5 trillion over 10 years, food stamps by $125 billion, education programs by $145 billion.”
Of course these numbers are almost completely meaningless to the vast majority of NYT readers as the paper has itself acknowledged. This is a silly fraternity ritual that budget reporters do that has nothing to with informing readers.
If the point was to inform readers it would have said the Ryan budget would cut Medicaid by roughly a third over the next decade. As noted in BTP’s comment on the NYT’s April Fool’s Day budget piece, the cuts to the food stamp amount to 16.4 percent of projected spending on the program. Since Ryan’s proposed cuts are first applied to years after 2019 they amount to 33.3 percent of projected spending on food stamps in these years, reducing total spending by 0.5 percent in these years. The cuts to education would reduce spending by roughly ten percent over the next decade.
Note: linked added, thanks to John Wright.
It is not responsible reporting to report without comment statements from prominent politicians which are almost certainly not true. For example, if President Obama said that Speaker Boehner has blown up the Washington monument, it would be irresponsible to simply report the assertion without noting that the president has no evidence for this assertion and that the Washington Monument is still standing.
In the same vein, it was irresponsible for the NYT to quote without comment Speaker Boehner saying:
“The president can go out there and tout all the people he’s signed up, but how about the young man I talked to last week out in California whose premiums have doubled? His co-pay and deductibles tripled, and his wife’s hours got cut to 29 hours. .. My insurance premiums nearly doubled. My co-pays and deductibles tripled under Obamacare.”
The Republicans have produced a number of Obamacare horror stories about people facing soaring premiums or losing good insurance policies that on subsequent investigation turned out not to be true. It is highly impluasible that the Speaker Boehner actually talked to a young man in California who both saw premium double and his deductibles triple. Insurance companies were not in the business of losing money prior to Obamacare. It is unlikely that they were offering policies that were much better and cheaper than the ones now being offered under the program.
The assertion about cutting hours to 29 per week has nothing to do with Obamacare. Presumably Boehner is referring to the employer sanctions which apply to large employers who do not insure employees who work more than 30 hours a week. Since this will not take effect until 2015, if an employer actually cut back a worker’s hours this year to 29 per week it was not due to Obamacare. A serious news article would have pointed this out to readers.
The piece later tells readers:
“It [the Ryan budget] cuts Medicaid by $1.5 trillion over 10 years, food stamps by $125 billion, education programs by $145 billion.”
Of course these numbers are almost completely meaningless to the vast majority of NYT readers as the paper has itself acknowledged. This is a silly fraternity ritual that budget reporters do that has nothing to with informing readers.
If the point was to inform readers it would have said the Ryan budget would cut Medicaid by roughly a third over the next decade. As noted in BTP’s comment on the NYT’s April Fool’s Day budget piece, the cuts to the food stamp amount to 16.4 percent of projected spending on the program. Since Ryan’s proposed cuts are first applied to years after 2019 they amount to 33.3 percent of projected spending on food stamps in these years, reducing total spending by 0.5 percent in these years. The cuts to education would reduce spending by roughly ten percent over the next decade.
Note: linked added, thanks to John Wright.
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The NYT took advantage of April Fools Day to do budget reporting that provided no information to almost all of its readers. An article on the budget introduced by Paul Ryan, the Republican head of the House Budget Committee, told readers how much the budget proposes to cut over the next decade in dollar terms. Since virtually no one has any idea of how much the government will spend over the next decade, this information is meaningless to almost everyone who reads the New York Times.
The NYT piece told readers:
“Mr. Ryan, the House Budget Committee chairman and a possible White House contender in 2016, laid out a budget plan that cuts $5 trillion in spending over the next decade.”
Later the piece added:
“In his plan, military spending through 2024 would actually rise by $483 billion over the spending caps established in the 2011 Budget Control Act ‘consistent with America’s military goals and strategies,’ while nondefense spending at Congress’s annual discretion would be cut by $791 billion below those strict limits.”
“As with past budget proposals, Mr. Ryan seeks to eliminate the Affordable Care Act’s Medicaid expansion, a $792 billion retrenchment, then turn the health care program for the poor into block grants to the states — saving an additional $732 billion over the decade. He would turn food stamps into a block grant program and cap spending, starting in 2020, cutting that program by $125 billion in five years.”
Of course only a tiny fraction of NYT readers have any idea what these numbers could imply for their pocket book, in terms of potential tax savings, for the total budget, or for the programs affected.
Had this been written as a real news story, these sections might have read:
“Mr. Ryan, the House Budget Committee chairman and a possible White House contender in 2016, laid out a budget plan that cuts $5 trillion in spending over the next decade. This is 12.3 percent of projected spending or roughly 2.7 percent of projected GDP over this period.
“In his plan, military spending through 2024 would actually rise by $483 billion over the spending caps established in the 2011 Budget Control Act ‘consistent with America’s military goals and strategies,’ while nondefense spending at Congress’s annual discretion would be cut by $791 billion below those strict limits. The increase in defense spending is equal to 7.4 percent of projected spending, while the cut in nondefense spending is 13.0 percent of spending in this category.
“As with past budget proposals, Mr. Ryan seeks to eliminate the Affordable Care Act’s Medicaid expansion, a $792 billion retrenchment, then turn the health care program for the poor into block grants to the states — saving an additional $732 billion over the decade.This cuts total federal spending on non-Medicare health programs by 26.0 percent over the 10-year budget period. Since the cuts are phased in, the cuts in 2024 amount to 49.6 percent of projected spending on non-Medicare health programs in that year.
“The cuts to the food stamp amount to 16.4 percent of projected spending on the program. Since Ryan’s proposed cuts are first applied to years after 2019 they amount to 33.3 percent of projected spending on food stamps in these years, reducing total spending by 0.5 percent in these years.”
The NYT took advantage of April Fools Day to do budget reporting that provided no information to almost all of its readers. An article on the budget introduced by Paul Ryan, the Republican head of the House Budget Committee, told readers how much the budget proposes to cut over the next decade in dollar terms. Since virtually no one has any idea of how much the government will spend over the next decade, this information is meaningless to almost everyone who reads the New York Times.
The NYT piece told readers:
“Mr. Ryan, the House Budget Committee chairman and a possible White House contender in 2016, laid out a budget plan that cuts $5 trillion in spending over the next decade.”
Later the piece added:
“In his plan, military spending through 2024 would actually rise by $483 billion over the spending caps established in the 2011 Budget Control Act ‘consistent with America’s military goals and strategies,’ while nondefense spending at Congress’s annual discretion would be cut by $791 billion below those strict limits.”
“As with past budget proposals, Mr. Ryan seeks to eliminate the Affordable Care Act’s Medicaid expansion, a $792 billion retrenchment, then turn the health care program for the poor into block grants to the states — saving an additional $732 billion over the decade. He would turn food stamps into a block grant program and cap spending, starting in 2020, cutting that program by $125 billion in five years.”
Of course only a tiny fraction of NYT readers have any idea what these numbers could imply for their pocket book, in terms of potential tax savings, for the total budget, or for the programs affected.
Had this been written as a real news story, these sections might have read:
“Mr. Ryan, the House Budget Committee chairman and a possible White House contender in 2016, laid out a budget plan that cuts $5 trillion in spending over the next decade. This is 12.3 percent of projected spending or roughly 2.7 percent of projected GDP over this period.
“In his plan, military spending through 2024 would actually rise by $483 billion over the spending caps established in the 2011 Budget Control Act ‘consistent with America’s military goals and strategies,’ while nondefense spending at Congress’s annual discretion would be cut by $791 billion below those strict limits. The increase in defense spending is equal to 7.4 percent of projected spending, while the cut in nondefense spending is 13.0 percent of spending in this category.
“As with past budget proposals, Mr. Ryan seeks to eliminate the Affordable Care Act’s Medicaid expansion, a $792 billion retrenchment, then turn the health care program for the poor into block grants to the states — saving an additional $732 billion over the decade.This cuts total federal spending on non-Medicare health programs by 26.0 percent over the 10-year budget period. Since the cuts are phased in, the cuts in 2024 amount to 49.6 percent of projected spending on non-Medicare health programs in that year.
“The cuts to the food stamp amount to 16.4 percent of projected spending on the program. Since Ryan’s proposed cuts are first applied to years after 2019 they amount to 33.3 percent of projected spending on food stamps in these years, reducing total spending by 0.5 percent in these years.”
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Many economists have difficulties with simple arithmetic. That is why so many of them failed to recognize the rising and unsustainable ratios of house prices to rent and income. Apparently arithmetic problems still figure large in policy at the European Central Bank (ECB).
The NYT noted a slightly lower than expected inflation measure for February and told readers:
“The ECB, which targets inflation of just below 2 percent, left borrowing costs unchanged at 0.25 percent in March and has argued that deflation risks in the bloc are limited.
“ECB President Mario Draghi suggested after the ECB’s March meeting that the bank will either do nothing or take bold action should the outlook deteriorate.
“He has also said the bank has been preparing additional policy steps to guard against possible deflation, and that the longer inflation remained low, the higher was the probability of deflationary risks emerging.”
Of course those familiar with economics and arithmetic know that there is no special problem associated with deflation. The problem is a lower than desired inflation rate. This makes the real interest (the nominal interest rate minus the inflation rate) higher than desired and it also means that debt burdens will be more difficult to bear, since the debtors were anticipating a higher rate of inflation. It also means that it will be more difficult for peripheral countries like Spain, Italy, and Greece to restore their competitiveness within the euro zone since they will have to see actual price decline if they are to improve their position relative to countries like Germany with very low inflation rates.
But these issues do not change when the inflation rate crosses zero. The drop from 0.5 percent inflation to 0.5 percent deflation is no worse than the drop from 1.5 percent inflation to 0.5 percent inflation. People who know economics understand this simple point. Apparently the shortage of skilled workers is hitting the ECB.
Many economists have difficulties with simple arithmetic. That is why so many of them failed to recognize the rising and unsustainable ratios of house prices to rent and income. Apparently arithmetic problems still figure large in policy at the European Central Bank (ECB).
The NYT noted a slightly lower than expected inflation measure for February and told readers:
“The ECB, which targets inflation of just below 2 percent, left borrowing costs unchanged at 0.25 percent in March and has argued that deflation risks in the bloc are limited.
“ECB President Mario Draghi suggested after the ECB’s March meeting that the bank will either do nothing or take bold action should the outlook deteriorate.
“He has also said the bank has been preparing additional policy steps to guard against possible deflation, and that the longer inflation remained low, the higher was the probability of deflationary risks emerging.”
Of course those familiar with economics and arithmetic know that there is no special problem associated with deflation. The problem is a lower than desired inflation rate. This makes the real interest (the nominal interest rate minus the inflation rate) higher than desired and it also means that debt burdens will be more difficult to bear, since the debtors were anticipating a higher rate of inflation. It also means that it will be more difficult for peripheral countries like Spain, Italy, and Greece to restore their competitiveness within the euro zone since they will have to see actual price decline if they are to improve their position relative to countries like Germany with very low inflation rates.
But these issues do not change when the inflation rate crosses zero. The drop from 0.5 percent inflation to 0.5 percent deflation is no worse than the drop from 1.5 percent inflation to 0.5 percent inflation. People who know economics understand this simple point. Apparently the shortage of skilled workers is hitting the ECB.
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The Washington Post is still having a hard time understanding Obamacare. It repeated the silliness about the exchanges needing young people to sign up. (The issue is health, not age, as we have been trying to explain to elite reporters for years.)
A front page article on the political impact of Obamacare told readers:
“Still, Democrats may be disappointed if they expect the newly insured to emerge as a politically powerful constituency, as senior citizens did for Medicare. Robert J. Blendon, a professor of health policy and political analysis at the Harvard School of Public Health, said polls suggest that nine of 10 people who vote in midterm elections are insured. Thus, they are unlikely to benefit from the law.”
This is not true. Just as tens of millions of people who file no claims in the course of a year benefit from having insurance, the people who already have insurance benefit from Obamacare. They now are in a situation where if they lose their job or decide to quit they will still be able to get insurance. That was not previously true, especially if a worker or someone in their family has a serious medical condition.
The political benefit of this ability to buy insurance outside of employment will depend on the extent to which people are aware of it. Insofar as major media outlets try to hide what is arguably the most important feature of Obamacare, it will not benefit the Democrats politically. However that is a function of media coverage of the law, not the law itself.
The Washington Post is still having a hard time understanding Obamacare. It repeated the silliness about the exchanges needing young people to sign up. (The issue is health, not age, as we have been trying to explain to elite reporters for years.)
A front page article on the political impact of Obamacare told readers:
“Still, Democrats may be disappointed if they expect the newly insured to emerge as a politically powerful constituency, as senior citizens did for Medicare. Robert J. Blendon, a professor of health policy and political analysis at the Harvard School of Public Health, said polls suggest that nine of 10 people who vote in midterm elections are insured. Thus, they are unlikely to benefit from the law.”
This is not true. Just as tens of millions of people who file no claims in the course of a year benefit from having insurance, the people who already have insurance benefit from Obamacare. They now are in a situation where if they lose their job or decide to quit they will still be able to get insurance. That was not previously true, especially if a worker or someone in their family has a serious medical condition.
The political benefit of this ability to buy insurance outside of employment will depend on the extent to which people are aware of it. Insofar as major media outlets try to hide what is arguably the most important feature of Obamacare, it will not benefit the Democrats politically. However that is a function of media coverage of the law, not the law itself.
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Abby Huntsman, the daughter of Jon Huntsman, a millionaire and unsuccessful presidential candidate, seems determined to press the idea of cutting Social Security and Medicare, apparently unaware that people from her class have been doing the same for decades.
As I wrote in response to her previous diatribe, there is no way that paying for Social Security will have a major effect on the standard of living of people of Huntsman’s age. Even if we resolved the projected shortfalls entirely by raising the payroll tax, as opposed to raising the cap on income subject to the tax, apply revenue from other sources, or any reductions in benefits, the necessary tax increase would be less than 10 percent of projected average wage growth over the next three decades.
The far greater risk to the living standards to the people of Huntsman’s generation is the risk that we will continue to see the upward redistribution of income over the next three decades that we have seen over the last three decades. As a result of this upward redistribution of income, people like Ms. Huntsman’s father have benefited enormously, while most workers have seen little or none of the gains from economic growth. If this pattern continues then most people in Ms. Huntsman’s cohort will not fare well financially even if we eliminated their Social Security taxes altogether.
Huntsman points out that the burden from Medicare is far worse. This is due to the fact that health care costs per person in the United States are more than twice as high as the average for other wealthy countries, with nothing to show for it in terms of outcomes. This is why serious people focus on trying to bring our costs more in line with costs elsewhere in the world. This would likely come at the expense of doctors (who comprise one sixth of the richest one percent), drug companies, insurers, and other powerful interest groups who benefits from the waste in the health care system. (One simple method to reducing waste is to open up the sector to more trade.) The issue here is whether we look to reduce the quality of care received by seniors or whether we look to reduce the waste in the system that further enriches the rich.
Finally, anyone concerned about the plight of young people should be asking about global warming. Current trends in greenhouse gas emissions imply a world that will be suffering massive damage from global warming in two or three decades. Hundreds of millions of people will be facing risks to their livelihood and survival due to extreme weather, floods, and droughts. This will lead to large-scale social unrest in much of the world. That is likely to matter much more to most people of Abby Huntsman’s generation than the possibility that their Social Security tax rate may increase by one or two percentage points.
Abby Huntsman, the daughter of Jon Huntsman, a millionaire and unsuccessful presidential candidate, seems determined to press the idea of cutting Social Security and Medicare, apparently unaware that people from her class have been doing the same for decades.
As I wrote in response to her previous diatribe, there is no way that paying for Social Security will have a major effect on the standard of living of people of Huntsman’s age. Even if we resolved the projected shortfalls entirely by raising the payroll tax, as opposed to raising the cap on income subject to the tax, apply revenue from other sources, or any reductions in benefits, the necessary tax increase would be less than 10 percent of projected average wage growth over the next three decades.
The far greater risk to the living standards to the people of Huntsman’s generation is the risk that we will continue to see the upward redistribution of income over the next three decades that we have seen over the last three decades. As a result of this upward redistribution of income, people like Ms. Huntsman’s father have benefited enormously, while most workers have seen little or none of the gains from economic growth. If this pattern continues then most people in Ms. Huntsman’s cohort will not fare well financially even if we eliminated their Social Security taxes altogether.
Huntsman points out that the burden from Medicare is far worse. This is due to the fact that health care costs per person in the United States are more than twice as high as the average for other wealthy countries, with nothing to show for it in terms of outcomes. This is why serious people focus on trying to bring our costs more in line with costs elsewhere in the world. This would likely come at the expense of doctors (who comprise one sixth of the richest one percent), drug companies, insurers, and other powerful interest groups who benefits from the waste in the health care system. (One simple method to reducing waste is to open up the sector to more trade.) The issue here is whether we look to reduce the quality of care received by seniors or whether we look to reduce the waste in the system that further enriches the rich.
Finally, anyone concerned about the plight of young people should be asking about global warming. Current trends in greenhouse gas emissions imply a world that will be suffering massive damage from global warming in two or three decades. Hundreds of millions of people will be facing risks to their livelihood and survival due to extreme weather, floods, and droughts. This will lead to large-scale social unrest in much of the world. That is likely to matter much more to most people of Abby Huntsman’s generation than the possibility that their Social Security tax rate may increase by one or two percentage points.
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The NYT, even more than other newspapers, tried to maintain a clear separation between its news and opinion sections. It apparently abandoned this distinction in an article today that could have been a press release from the California farmers’ association.
The article tells readers:
“A work force that arrived in the 1990s is aging out of heavy labor, Americans do not want the jobs, and tightened security at the border is discouraging new immigrants from arriving, they say, leaving them to struggle amid the paralysis on immigration policy.”
The piece never tells readers how much farmers look to pay their workers, but it does give us the bad news:
“Last year, the diminished supply of workers led average farm wages in the region to increase by roughly $1 an hour.”
If these workers were getting the median wage then it would imply a pay increase of 5 percent, which hardly seems especially lavish. if the workers were getting much less than the median, then it says a great deal about the NYT’s assertion that “Americans do not want the jobs.”
In a market economy, when there is a labor shortage wages are supposed to rise. Apparently the NYT doesn’t want wages to rise for farmworkers. Newspapers usually try to restrict such editorializing to the opinion page,
The NYT, even more than other newspapers, tried to maintain a clear separation between its news and opinion sections. It apparently abandoned this distinction in an article today that could have been a press release from the California farmers’ association.
The article tells readers:
“A work force that arrived in the 1990s is aging out of heavy labor, Americans do not want the jobs, and tightened security at the border is discouraging new immigrants from arriving, they say, leaving them to struggle amid the paralysis on immigration policy.”
The piece never tells readers how much farmers look to pay their workers, but it does give us the bad news:
“Last year, the diminished supply of workers led average farm wages in the region to increase by roughly $1 an hour.”
If these workers were getting the median wage then it would imply a pay increase of 5 percent, which hardly seems especially lavish. if the workers were getting much less than the median, then it says a great deal about the NYT’s assertion that “Americans do not want the jobs.”
In a market economy, when there is a labor shortage wages are supposed to rise. Apparently the NYT doesn’t want wages to rise for farmworkers. Newspapers usually try to restrict such editorializing to the opinion page,
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Floyd Norris has an interesting discussion of the Conference Board’s consumer confidence index in his “Off the Charts” column. The main takeaway is that the current conditions index has been on a consistent upward path since the trough of the recession while six-month expectations index has gyrated erratically with little clear trend.
It is worth adding a bit more to this analysis. The current conditions index does actually tend to track current consumption reasonably closely. On the other hand, the six-month expectations index doesn’t really tell us much about what consumers are doing. Even purchases of big-ticket items like cars and houses have little correlation with the expectations index.
As a practical matter, the expectations index tends to follow news reporting of economy. This makes sense since not many people are sitting around with their economic models making predictions about inflation, unemployment, and growth over the next six months. Rather than being a meaningful measure of consumer confidence, this expectations index is telling us whether the media is highlighting positive or negative news about the economy. That might be worth knowing, but it is has little to do with consumer behavior.
Note: Typo corrected.
Floyd Norris has an interesting discussion of the Conference Board’s consumer confidence index in his “Off the Charts” column. The main takeaway is that the current conditions index has been on a consistent upward path since the trough of the recession while six-month expectations index has gyrated erratically with little clear trend.
It is worth adding a bit more to this analysis. The current conditions index does actually tend to track current consumption reasonably closely. On the other hand, the six-month expectations index doesn’t really tell us much about what consumers are doing. Even purchases of big-ticket items like cars and houses have little correlation with the expectations index.
As a practical matter, the expectations index tends to follow news reporting of economy. This makes sense since not many people are sitting around with their economic models making predictions about inflation, unemployment, and growth over the next six months. Rather than being a meaningful measure of consumer confidence, this expectations index is telling us whether the media is highlighting positive or negative news about the economy. That might be worth knowing, but it is has little to do with consumer behavior.
Note: Typo corrected.
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