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Article Artículo

Affordable Care Act

Health and Social Programs

United States

The Collapse of Obamacare: Big Problem in Republican States

President Trump and Republicans in Congress have repeatedly charged that the Affordable Care Act (ACA) is collapsing. They point to insurers dropping out of the exchanges and endlessly cite the fact that more than 1300 counties across the United States only have one insurer operating in the exchanges and that some will not have any in 2018.

The lack of competition in the exchanges is a serious problem. While people can still buy insurance in the individual market off of the exchange, and still benefit from the ACA prohibition against discrimination based on pre-existing conditions, they are not eligible for ACA subsidies unless they buy insurance through the exchanges. These subsidies are necessary to make insurance affordable for millions of people.

So, the lack of a vibrant market in many counties is a serious issue for the ACA. However, there is an important part of the story that Trump and other Republicans forget to mention. The lack of competition in the exchanges is overwhelmingly a problem for people living in states controlled by Republican governors.

The graph below shows the number of people living in counties that only have one insurer in their exchange by the party of the state’s governor.

health_insurance_by_governor_chart1

As can be seen over 40 million of the people in counties with only one insurer in the exchanges live in states with Republican governors. By comparison, just 10.7 million people who only have one insurer in the exchanges live in states with Democratic governors.

Dean Baker and Brian Dew / July 03, 2017

Article Artículo

Paul Krugman Warns Us of the Terror of Tariffs

Donald Trump is apparently considering imposing some tariffs on some imports from our trading partners. This prospect has many folks, including Paul Krugman, terrified. I don’t share his fear.

Before getting into any substance, I should be clear. I have no idea what Trump may be planning by way of tariffs. During the campaign, he threatened to put a 35 percent tariff on imports from Mexico and 45 percent tariffs on imports from China. These tariffs would, in fact, be scary. They would certainly create large disruptions of the type Krugman talks about. It would also be almost certain that they would lead to a trade war with both countries retaliating.

I should also say that tariffs are not my preferred way of dealing with the country’s trade deficit, which I do consider a problem. Anyone who thinks secular stagnation (i.e. not enough demand in the economy) is a problem should believe the trade deficit is a problem. If the trade deficit were 1.0 percent of GDP rather than 3.0 percent of GDP, we would have been approaching full employment many years ago.

But the normal mechanism for reducing a trade deficit is an adjustment in currency values. This means that the currency of the country (the United States) with the deficit falls and the country with the surplus (much of the rest of the world) rises. When the dollar falls in value relative to other currencies, U.S. made goods and services become more competitive internationally. That will lead to more U.S. exports, and fewer imports, bringing trade closer to balance.

This adjustment in currency values has not taken place primarily because foreign governments have bought up massive amounts of dollars. This is partly as a reserve currency to protect themselves against financial crises. (It is a failure of the International Monetary Fund that large amounts of reserves are considered necessary for this purpose.)

CEPR / July 03, 2017