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Article Artículo

Affordable Care Act

Medicare for All 64-Year-Olds

The push for universal Medicare was given new momentum by Bernie Sanders campaign for the 2016 Democratic nomination. While it is still quite far from becoming law in even an optimistic scenario, it is certainly now treated as a serious political position. This is probably best demonstrated by the fact that the Medicare for All (M4A) bill put forward by Washington representative Pramila Jayapal has 107 co-sponsors, nearly half of the Democratic caucus in the House.

As much progress as M4A has made, it will still be a huge lift to get it implemented. A universal Medicare system would mean shifting somewhere around 8 percent of GDP ($1.6 trillion at 2019 levels) from the private system to a government-managed system. It would also mean reorganizing the Medicaid program and other government-run health care programs, as well as the Medicare program itself. The current system has large co-pays and many gaps in coverage, such as dental care, that most proponents of M4A would like to fill. It also has a large role for private insurers in the Medicare Advantage program, as well as the Part D prescription drug benefit.

The difficulty of a transition is demonstrated by the fact that there is no agreed-upon mechanism for paying for this expansion of Medicare. Instead of a specific financing mechanism, the Jayapal bill features a menu of options. Actual legislation, of course, requires specific revenue sources, not a menu. The fact, that even the most progressive members of the House could not agree on a financing proposal that they could put their names to, shows the difficulty of the transition.

If it is not likely that we will get to M4A in a single step, then it makes sense to find ways to get there piecemeal. There have been a variety of proposals that go in this direction. Many have proposed lowering the age of Medicare eligibility from the current 65 to age 50 or 60. The idea is that we would bring in a large proportion of the pre-Medicare age population, and then gradually go further down the age ladder. (We can also start at the bottom and move up.)

CEPR / April 12, 2019

Article Artículo

Predicting the Next Recession and Other Things to Do with Your Time

The people who completely missed the housing bubble, the collapse of which sank the economy in 2008 and gave us the Great Recession, are again busy telling us about the next recession on the way. The latest item that they want us to be very worried about is an inversion of the yield curve. There has been an inversion of the yield curve before nearly every prior recession and we have never had an inversion of the yield curve without seeing a recession in the next two years.

If you have no idea what an inversion of the yield curve is, that probably means you’re a normal person with better things to do with your time. But for economists, and especially those who monitor financial markets closely, this can be a big deal.

An inverted yield curve refers to the relationship between shorter- and longer-term interest rates. Typically, a longer-term interest rate, say the interest rate you would get on a 30-year bond, is higher than what you would get from lending short-term, like buying a three-month Treasury bill.

The logic is that if you are locking up your money for a longer period of time, you have to be compensated with a higher interest rate. Therefore, it is generally true that as you get to longer durations, say a one-year bond compared to three-month bond, the interest rate rises. This relationship between interest rates and the duration of the loan is what is known as the “yield curve.”

We get an inverted yield curve when this pattern of higher interest rates associated with longer-term lending does not hold, as was at least briefly the case last week. For example, on Wednesday, March 27th, the interest rate on a three-month Treasury bill was 2.43 percent. The interest rate on a ten-year Treasury bond was just 2.38 percent, 0.05 percentage points lower. That meant that we had an inverted yield curve.

CEPR / April 05, 2019

Article Artículo

United States

Workers

Labor Market Policy Research Reports, March 2019

CEPR regularly publishes a curated collection of original research from academic institutions and nonprofits on the state of the US labor market. The compilation is part of our ongoing effort to promote informed debate on the most important economic and social issues that affect people's lives.


The Brookings Institution

Advancing Opportunity in California’s Inland Empire

California’s Inland Empire has seen exceptional growth over the years due in large part to its affordability and close proximity to the Pacific Ocean. However, a series of busts and booms within trade and technology coupled with the Great Recession threatened to diminish the growth of the region and left many of the workers behind. This report finds ways to advance jobs opportunities in the area. The authors found the Inland Empire must increase competitiveness and diversity in “opportunity industries”— industries that contain good and promising jobs.

CEPR and Adewale Maye / March 29, 2019

Article Artículo

Putting Numbers in Context: A Winnable Battle Our Side Doesn’t Want to Fight

Polls consistently show that the public hugely overestimates the share of the budget that goes to items like SNAP (food stamps), Temporary Assistance to Needy Families (TANF), and foreign aid. People will typically give answers in the range of 20 to 30 percent of the budget for these categories of spending. In reality, the shares are 1.5 percent for SNAP, 0.4 percent for TANF, and 0.4 percent for foreign aid.

I would argue that this matters, since the public’s willingness to support a program depends in part on how much they think we are spending on it. This is for two reasons, the first is simply that people are only willing to pay a limited amount in taxes to help the poor here and abroad. If they already think they are spending a lot for this purpose, they will be reluctant to spend more.

The other reason is that people will reasonably be concerned about the efficiency of the programs. If all our tax dollars are going to help poor people, and yet we still have so many people in poverty, then our anti-poverty programs must not be very efficient. If that is the case, added additional dollars probably will not do much to help the poor. Nor will modest cuts do much to harm them.

All of this seems pretty straightforward and not really debatable, yet when it comes to educating the public on the true size of these programs, interest is very close to zero. That is hard to understand, especially when the route to a better-educated public is pretty easy to see.

The most obvious reason that people grossly overestimate the amount of spending on these programs is that their budgets are always discussed as billions of dollars. No one knows how much billions of dollars are, except that it means lots of money.

Discussing budget numbers in millions, billions, and trillions is incredibly irresponsible reporting. It is the job of the media to be informing their audience. Writing that food stamps cost $70 billion a year, or that TANF costs $20 billion, is not informing readers. It is just putting down numbers, equivalent to a mindless fraternity ritual, that serves no informational purpose.

CEPR / March 28, 2019