Obamacare may be more confusing than many people realized. Apparently even the NYT is unable to get it straight.
In an article that detailed the cost of the plans in the exchange for various types of families in each of the 50 states, the NYT told readers:
“The figures, almost by definition, provide a favorable view of costs, highlighting the least expensive coverage in each state.”
This is clearly not true. The numbers featured in the article were for the second lowest cost silver plan in the exchanges. Silver plans are supposed to cover approximately 70 percent of patients’ medical expenses. By definition they would be expected to cost more than bronze plans, which target 60 percent of patients’ health care expenses. The silver plans by definition are not the least expensive coverage in the state. (To get a bit technical, the second lowest cost plan is also more expensive than the lowest cost plan.)
The numbers featured in the article (which apparently are being highlighted by the Obama administration) are likely to be typical of the costs that patients will see. As the article notes, there are variations within states and people will have an option to find both higher and lower cost plans, but these numbers are not obviously skewed to either the high or low side.
Obamacare may be more confusing than many people realized. Apparently even the NYT is unable to get it straight.
In an article that detailed the cost of the plans in the exchange for various types of families in each of the 50 states, the NYT told readers:
“The figures, almost by definition, provide a favorable view of costs, highlighting the least expensive coverage in each state.”
This is clearly not true. The numbers featured in the article were for the second lowest cost silver plan in the exchanges. Silver plans are supposed to cover approximately 70 percent of patients’ medical expenses. By definition they would be expected to cost more than bronze plans, which target 60 percent of patients’ health care expenses. The silver plans by definition are not the least expensive coverage in the state. (To get a bit technical, the second lowest cost plan is also more expensive than the lowest cost plan.)
The numbers featured in the article (which apparently are being highlighted by the Obama administration) are likely to be typical of the costs that patients will see. As the article notes, there are variations within states and people will have an option to find both higher and lower cost plans, but these numbers are not obviously skewed to either the high or low side.
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The Washington Post had a lengthy article on Florida Representative Steve Southerland’s efforts to cut food stamp spending by $40 billion over the next decade. Since it never put this figure in any context, many readers may have mistakenly been led to believe that there is real money at stake.
While this proposed cut may make a huge difference to the affected population, it will have no noticeable impact on the federal budget.
The Washington Post had a lengthy article on Florida Representative Steve Southerland’s efforts to cut food stamp spending by $40 billion over the next decade. Since it never put this figure in any context, many readers may have mistakenly been led to believe that there is real money at stake.
While this proposed cut may make a huge difference to the affected population, it will have no noticeable impact on the federal budget.
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The hit to Europe’s economy from the collapse of its housing bubbles has been larger than the downturn it suffered in the Great Depression. So naturally the assessment of columnist Charles Lane on the Post op-ed page is:
“So far, Merkel has managed the crisis of the euro zone well.”
It’s not clear what would count as managing the crisis poorly, although Lane does tell us in the next sentence that in his view the breakup of the euro would be the ultimate disaster. If keeping the euro together is the sole criterion, regardless of how many trillions of dollars of lost output results, and however many millions of lives are ruined by prolonged unemployment, then I guess the euro crew is a winner.
Lane’s piece is deeply mired in confusion. Early on he tells readers;
“Two contradictory fears threaten these Germans’ contentment: what might happen if the government spends their hard-earned national savings on a bailout for Greece or Italy, and what might happen to Europe if someone doesn’t prop up those spendthrifts.”
Of course the most obvious route to restarting Europe’s economy would be to have the European Central Bank (ECB) act like a central bank and agree to underwrite the sort of deficits that will be needed to bring Europe’s economy back to full employment. This does not require using any of Germany’s savings. In fact, by boosting Europe’s growth it is likely to increase Germany’s “hard-earned national savings.”
Lane is also confused about the nature of budget deficits in Europe when referring to Greece and Italy as “spendthrifts.” While the former characterization has some real foundation, this description of Italy might seem a bit dubious to folks familiar with the data. Here’s a chart showing the primary deficits (this excludes interest payments) of two euro zone countries since 2000.
Source: International Monetary Fund.
If you guessed that Country B, the one that has generally had the larger primary budget surplus, is that spendthrift Italy, you got it right. In fact, Italy has had substantial primary budget surpluses for most of this century. It did have a large debt built up over prior decades which gives it a large interest burden now. The other reason that it has a large interest burden at present is the decision by the ECB to maintain a degree of ambiguity as to whether it would stand behind Italy’s debt. If it ended this ambiguity, the interest rate on Italy’s debt would be little different than the interest rate on German debt. This would make the country’s debt burden easily manageable.
Note: Country reversal corrected, thanks Joe.
The hit to Europe’s economy from the collapse of its housing bubbles has been larger than the downturn it suffered in the Great Depression. So naturally the assessment of columnist Charles Lane on the Post op-ed page is:
“So far, Merkel has managed the crisis of the euro zone well.”
It’s not clear what would count as managing the crisis poorly, although Lane does tell us in the next sentence that in his view the breakup of the euro would be the ultimate disaster. If keeping the euro together is the sole criterion, regardless of how many trillions of dollars of lost output results, and however many millions of lives are ruined by prolonged unemployment, then I guess the euro crew is a winner.
Lane’s piece is deeply mired in confusion. Early on he tells readers;
“Two contradictory fears threaten these Germans’ contentment: what might happen if the government spends their hard-earned national savings on a bailout for Greece or Italy, and what might happen to Europe if someone doesn’t prop up those spendthrifts.”
Of course the most obvious route to restarting Europe’s economy would be to have the European Central Bank (ECB) act like a central bank and agree to underwrite the sort of deficits that will be needed to bring Europe’s economy back to full employment. This does not require using any of Germany’s savings. In fact, by boosting Europe’s growth it is likely to increase Germany’s “hard-earned national savings.”
Lane is also confused about the nature of budget deficits in Europe when referring to Greece and Italy as “spendthrifts.” While the former characterization has some real foundation, this description of Italy might seem a bit dubious to folks familiar with the data. Here’s a chart showing the primary deficits (this excludes interest payments) of two euro zone countries since 2000.
Source: International Monetary Fund.
If you guessed that Country B, the one that has generally had the larger primary budget surplus, is that spendthrift Italy, you got it right. In fact, Italy has had substantial primary budget surpluses for most of this century. It did have a large debt built up over prior decades which gives it a large interest burden now. The other reason that it has a large interest burden at present is the decision by the ECB to maintain a degree of ambiguity as to whether it would stand behind Italy’s debt. If it ended this ambiguity, the interest rate on Italy’s debt would be little different than the interest rate on German debt. This would make the country’s debt burden easily manageable.
Note: Country reversal corrected, thanks Joe.
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That is undoubtedly the question that many NYT readers were asking when they read an article warning that insurance companies in the exchanges were not paying enough money to attract many doctors. At one point the piece told readers;
“Dr. Barbara L. McAneny, a cancer specialist in Albuquerque, said that insurers in the New Mexico exchange were generally paying doctors at Medicare levels, which she said were ‘often below our cost of doing business, and definitely below commercial rates.'”
The claim that Medicare payments are “below our cost of doing business” might seem rather dubious to readers since most doctors accept Medicare patients. The median earnings of physicians are well over $200,000 a year (net of malpractice insurance), which means they are heavily represented in the one percent. Given their extraordinary incomes, which they vigorously protect by excluding foreign and domestic competition, it seems implausible that many doctors are willing to lose money by treating Medicare patients.
It is more likely that doctors are getting less than their desired pay when they treat Medicare patients, but still pocketing far more money than the overwhelming majority workers for their time. It would have been useful to clarify this point for readers rather than letting Doctor McAneny’s assertion pass unchallenged.
That is undoubtedly the question that many NYT readers were asking when they read an article warning that insurance companies in the exchanges were not paying enough money to attract many doctors. At one point the piece told readers;
“Dr. Barbara L. McAneny, a cancer specialist in Albuquerque, said that insurers in the New Mexico exchange were generally paying doctors at Medicare levels, which she said were ‘often below our cost of doing business, and definitely below commercial rates.'”
The claim that Medicare payments are “below our cost of doing business” might seem rather dubious to readers since most doctors accept Medicare patients. The median earnings of physicians are well over $200,000 a year (net of malpractice insurance), which means they are heavily represented in the one percent. Given their extraordinary incomes, which they vigorously protect by excluding foreign and domestic competition, it seems implausible that many doctors are willing to lose money by treating Medicare patients.
It is more likely that doctors are getting less than their desired pay when they treat Medicare patients, but still pocketing far more money than the overwhelming majority workers for their time. It would have been useful to clarify this point for readers rather than letting Doctor McAneny’s assertion pass unchallenged.
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Robert Samuelson used his column to tell readers that people in the United States really are different than in other countries. Samuelson wrote:
“One standard question asks respondents to judge which is more important — ‘freedom to pursue life’s goals without state interference’ or ‘state guarantees [that] nobody is in need.’ By a 58?percent to 35 percent margin, Americans favored freedom over security, reported a 2011 Pew survey. In Europe, opinion was the opposite. Germans valued protections over freedom 62 percent to 36 percent. The results were similar for France, Britain and Spain.”
There are many people in the United States who do not recognize that Medicare is a government program. (Hence the frequent demand from Tea Party conservatives that the government keeps its hands off their Medicare.) It is likely they believe the same about Social Security. These people may highly value the security provided by these programs while at the same time denigrating the importance of state guarantees because they don’t recognize the connection of these programs to the state.
Insofar as this is the case, the difference in polling on this question may reflect differences in knowledge rather than differences in values.
Robert Samuelson used his column to tell readers that people in the United States really are different than in other countries. Samuelson wrote:
“One standard question asks respondents to judge which is more important — ‘freedom to pursue life’s goals without state interference’ or ‘state guarantees [that] nobody is in need.’ By a 58?percent to 35 percent margin, Americans favored freedom over security, reported a 2011 Pew survey. In Europe, opinion was the opposite. Germans valued protections over freedom 62 percent to 36 percent. The results were similar for France, Britain and Spain.”
There are many people in the United States who do not recognize that Medicare is a government program. (Hence the frequent demand from Tea Party conservatives that the government keeps its hands off their Medicare.) It is likely they believe the same about Social Security. These people may highly value the security provided by these programs while at the same time denigrating the importance of state guarantees because they don’t recognize the connection of these programs to the state.
Insofar as this is the case, the difference in polling on this question may reflect differences in knowledge rather than differences in values.
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This is an impressive accomplishment that deserves some attention.
This is an impressive accomplishment that deserves some attention.
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The Washington Post had an interesting article on the sharp rise in disability rates in the downturn. It would have been helpful to include some additional information.
One important reason for the rise in disability not connected to the recession, is the increase in the normal retirement age. This was increased from 65 for people who turned 62 before 2002, to 66 for people who turned 62 after 2008. The rise in the normal retirement age means that people on disability can collect benefits for an extra year before they have to turn to their Social Security retirement benefits, which will typically be less. The increase in the retirement age would have led to a substantial rise in disability rates even if there had been no underlying change in the incidence of disability.
A second point that would have been worth noting is that it is not easy to get disability. More than 60 percent of applicants are originally ruled ineligible. While many successfully appeal their rejection, the final approval rate is still below 50 percent. It is reasonable to believe that the vast majority of frivolous claims are rejected.
At one point the article discusses the notion put forward by economists David Autor and Mark Duggan that workers with little education may have substantial incentives to turn to disability:
“Benefits are hardly generous. They average $1,130 a month, and recipients are eligible for Medicare after two years. But with workers without a high school diploma earning a median wage of $471 per week, disability benefits are increasingly attractive for the large share of American workers who have seen both their pay and job options constricted.
“In 2004, nearly one in five male high school dropouts between ages 55 and 64 were in the disability program, according to a paper by economists David Autor and Mark Duggan. That rate was more than double that of high school graduates of the same age in the program and more than five times higher than the 3.7 percent of college graduates of that age who collect disability.”
While the difference between median earnings and the average disability payment is considerably lower for less-educated workers there are two other important factors that affect disability rates. First, less educated workers are far more likely to have worked at physically demanding jobs that could result in a disability. For example, someone who works as a mover is more likely to develop back problems than an office worker with a desk job.
The other difference is that the jobs that are available to less educated workers are likely to be more physically demanding. A back problem that may be an inconvenience for a desk worker may make it impossible for someone to find work as a custodian or some other low-paying job. These differences undoubtedly explain much of the difference in disability rates by education.
The Washington Post had an interesting article on the sharp rise in disability rates in the downturn. It would have been helpful to include some additional information.
One important reason for the rise in disability not connected to the recession, is the increase in the normal retirement age. This was increased from 65 for people who turned 62 before 2002, to 66 for people who turned 62 after 2008. The rise in the normal retirement age means that people on disability can collect benefits for an extra year before they have to turn to their Social Security retirement benefits, which will typically be less. The increase in the retirement age would have led to a substantial rise in disability rates even if there had been no underlying change in the incidence of disability.
A second point that would have been worth noting is that it is not easy to get disability. More than 60 percent of applicants are originally ruled ineligible. While many successfully appeal their rejection, the final approval rate is still below 50 percent. It is reasonable to believe that the vast majority of frivolous claims are rejected.
At one point the article discusses the notion put forward by economists David Autor and Mark Duggan that workers with little education may have substantial incentives to turn to disability:
“Benefits are hardly generous. They average $1,130 a month, and recipients are eligible for Medicare after two years. But with workers without a high school diploma earning a median wage of $471 per week, disability benefits are increasingly attractive for the large share of American workers who have seen both their pay and job options constricted.
“In 2004, nearly one in five male high school dropouts between ages 55 and 64 were in the disability program, according to a paper by economists David Autor and Mark Duggan. That rate was more than double that of high school graduates of the same age in the program and more than five times higher than the 3.7 percent of college graduates of that age who collect disability.”
While the difference between median earnings and the average disability payment is considerably lower for less-educated workers there are two other important factors that affect disability rates. First, less educated workers are far more likely to have worked at physically demanding jobs that could result in a disability. For example, someone who works as a mover is more likely to develop back problems than an office worker with a desk job.
The other difference is that the jobs that are available to less educated workers are likely to be more physically demanding. A back problem that may be an inconvenience for a desk worker may make it impossible for someone to find work as a custodian or some other low-paying job. These differences undoubtedly explain much of the difference in disability rates by education.
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Laura Tyson used her NYT column to warn about increasing wage inequality as more middle class jobs are eliminated. The centerpiece in this argument is that most of the jobs being created in the recovery are in low-paying sectors of the economy. In effect retail and restaurant jobs are replacing manufacturing and construction jobs.
This is a serious concern, since obviously we care not just that workers have jobs, but also that the jobs pay enough to support them and their families. However, the story of job quality and the story of too few jobs are arguably the same story. There are always employers offering bad jobs, but workers don’t take them in a good economy. In a bad economy they have no choice.
The chart below shows the relationship by state between the unemployment rate and the increase in the share of restaurant jobs. The upward slope (which is significant at a 1.0 percent level), shows that a higher rate of unemployment is associated with proportionately more growth in restaurant work. (Arin Dube has a related post showing that an increasing number of college educated workers are being employed in fast food restaurants.)
Click for a more detailed version of the graph.
The point here is that the shortage of jobs and the poor quality of the jobs that are being created are not different stories, they are the same story. The fact that we see the highest rise in the share of restaurant employment in states with the highest unemployment rates indicates that these low-paying jobs are associated with weak growth rather than being the direction of the future economy. If we got more job growth, then the share of low-paying jobs would surely diminish.
As another angle on this, even the wages in low-paying jobs would likely rise if we again got the economy close to full employment levels of output. This was certainly the case in the late 1990s when even workers at the bottom of the pay ladder were seeing substantial gains in wages.
This is not to say that we don’t have structural problems in the economy. An out of control financial sector continues to siphon off hundreds of billions of dollars a year from the productive economy. Our health care system is incredibly wasteful, causing us to pay more than twice as much per person as the average for other wealthy countries. However, the bad jobs story is largely the same thing as the too few jobs story. If we can just get the forbidden topics of stimulus or a lower valued dollar back on the agenda, we could address both.
Laura Tyson used her NYT column to warn about increasing wage inequality as more middle class jobs are eliminated. The centerpiece in this argument is that most of the jobs being created in the recovery are in low-paying sectors of the economy. In effect retail and restaurant jobs are replacing manufacturing and construction jobs.
This is a serious concern, since obviously we care not just that workers have jobs, but also that the jobs pay enough to support them and their families. However, the story of job quality and the story of too few jobs are arguably the same story. There are always employers offering bad jobs, but workers don’t take them in a good economy. In a bad economy they have no choice.
The chart below shows the relationship by state between the unemployment rate and the increase in the share of restaurant jobs. The upward slope (which is significant at a 1.0 percent level), shows that a higher rate of unemployment is associated with proportionately more growth in restaurant work. (Arin Dube has a related post showing that an increasing number of college educated workers are being employed in fast food restaurants.)
Click for a more detailed version of the graph.
The point here is that the shortage of jobs and the poor quality of the jobs that are being created are not different stories, they are the same story. The fact that we see the highest rise in the share of restaurant employment in states with the highest unemployment rates indicates that these low-paying jobs are associated with weak growth rather than being the direction of the future economy. If we got more job growth, then the share of low-paying jobs would surely diminish.
As another angle on this, even the wages in low-paying jobs would likely rise if we again got the economy close to full employment levels of output. This was certainly the case in the late 1990s when even workers at the bottom of the pay ladder were seeing substantial gains in wages.
This is not to say that we don’t have structural problems in the economy. An out of control financial sector continues to siphon off hundreds of billions of dollars a year from the productive economy. Our health care system is incredibly wasteful, causing us to pay more than twice as much per person as the average for other wealthy countries. However, the bad jobs story is largely the same thing as the too few jobs story. If we can just get the forbidden topics of stimulus or a lower valued dollar back on the agenda, we could address both.
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