The Wrong Way to Do Paid Family Leave

From today’s New York Times:

Senator Marco Rubio just made a small bit of history: He became the first of his party to put forward a national paid family leave program. On Aug. 2, he introduced a bill that would allow any American to take paid time off to be with a new child.

It marks a surprising step forward: Paid family leave has become bipartisan. Unfortunately, smart policy design has not. Instead of creating a new, desperately needed benefit, Mr. Rubio’s bill would make parents cash in their retirement to take care of their children today.

All developed countries — except for the United States — guarantee at least some paid maternity leave, ranging from six weeks in Portugal to 43 weeks in Greece. Americans are only entitled to up to 12 weeks of unpaid leave.

Even securing unpaid time off was a bruising political battle. The former speaker of the House, John Boehner, called unpaid family leave “another example of yuppie empowerment,” and Representative Cass Ballenger reportedly smeared it as “socialism.” The unpaid Family and Medical Leave Act suffered two vetoes from President George H.W. Bush, a Republican, and was signed into law only after Bill Clinton, a Democrat, won the White House.

Read the complete article here.

Amazon, JPMorgan, Berkshire Hathaway team up to lower healthcare costs for their workers — and maybe everyone

From today’s LA Times:

Three of the nation’s most formidable companies — Amazon.com, Berkshire Hathaway Inc. and JPMorgan Chase & Co. — sent shock waves through the healthcare industry Tuesday by announcing a joint plan to reduce healthcare costs for their U.S. employees.

Although the companies said their focus mainly would be on providing improved healthcare for their own U.S. workers, which total nearly 1 million, the move immediately triggered speculation that any solutions they develop could spread throughout the industry.

That sent healthcare, drug and health-insurance stocks tumbling even though the three companies provided few initial details about their venture, with investors guessing that the trio’s initiative eventually could crimp sales growth and profits for others in the healthcare field.

Consumers might see a benefit if the companies could develop a blueprint for curbing the surge in healthcare and drug costs while maintaining or enhancing patient care, a scenario that government and the industry so far have struggled to achieve.

The speculation of a disruption to the industry was fueled by the stature of the three companies’ billionaire chief executives: Amazon’s Jeff Bezos, who already has radically changed the retail industry; Warren Buffett, the famed investor who also oversees dozens of companies under Berkshire’s umbrella; and Jamie Dimon, whose JPMorgan Chase is the nation’s largest bank with $2.5 trillion in assets.

Bezos and Buffett also are two of the nation’s richest people, with net worths of $119 billion and $92 billion, respectively, while Dimon’s net worth is just over $1 billion, according to Forbes.

The three said they would start “an independent company that is free from profit-making incentives and constraints” and that its early focus “will be on technology solutions” that would provide “simplified, high-quality and transparent healthcare at a reasonable cost.”

Read the complete article here.

Individual Mandate Now Gone, G.O.P. Targets the One for Employers

From the New York Times:

Having wiped out the requirement for people to have health insurance, Republicans in Congress are taking aim at a new target: the mandate in the Affordable Care Act that employers offer coverage to employees.

And many employers are cheering the effort.

While large companies have long offered health benefits, many have chafed at the detailed requirements under the health law, including its reporting rules, which they see as onerous and expensive. Now that relief has been extended to individuals, some companies believe they should be next in line.

The individual mandate and the employer mandate are “inextricably entwined,” said James A. Klein, the president of the American Benefits Council, an influential lobby for large companies like Dow Chemical, Microsoft and BP, the oil and gas producer.

“It is inequitable to leave the employer mandate in place when its purpose — to support the individual mandate — no longer exists,” Mr. Klein said. “We are urging Congress to repeal the employer mandate.”

Opposition to the employer mandate could increase as more employers are fined for not offering coverage or for not meeting federal standards for adequate, affordable coverage. Since October, the Internal Revenue Service has notified thousands of businesses that they owe money because they failed to offer coverage in 2015, when the mandate took effect.

Representatives Devin Nunes of California and Mike Kelly of Pennsylvania, both Republicans, recently introduced a bill, supported by party leaders, to suspend the mandate, canceling any penalties that would be imposed for any year from 2015 to 2018.

“The employer mandate is a job-killer, a wage-killer and a business-killer,” Mr. Kelly said.

But Tom Leibfried, a health care lobbyist at the A.F.L.-C.I.O., called the proposals to repeal or weaken the employer mandate “a very bad idea.”

“The Affordable Care Act was built on a framework of shared responsibility,” Mr. Leibfried said. “If you get rid of the employer mandate, you will see people lose coverage from their employers.”

Such a move could also increase costs for the federal government. Even though Congress has eliminated the penalties for people who go without insurance, millions of consumers are still eligible for financial aid in the form of tax credits to help them pay insurance premiums. These subsidies increase with the rapidly rising cost of insurance. If fewer people receive coverage from employers, more will qualify for subsidized coverage in the public marketplaces created by the Affordable Care Act.

“The employer mandate holds down the cost of premium tax credits for the federal government,” said Catherine E. Livingston, a tax lawyer at the law firm Jones Day who was the health care counsel at the I.R.S. from 2010 to 2013. “Any employee who receives an offer of affordable coverage from an employer is not eligible for the tax credit. And the employer mandate provides a strong incentive for employers to offer affordable coverage.”

Read the complete article here.

KY Gets OK To Require Work From Medicaid Recipients, Most Already Do

From National Public Radio:

Poor residents in Kentucky will have to work or do volunteer work if they want to keep their Medicaid benefits after the Trump administration on Friday approved the state’s request to add the requirements to its Medicaid program.

The new requirements apply only to “able-bodied” adults who get their health insurance through Medicaid, the federal-state health insurance program for the poor. People with disabilities, children, pregnant women and the elderly are exempt from the requirement.

“Kentucky is leading the nation in this reform in ways that are now being replicated all over the nation,” said Kentucky Governor Matt Bevin, in announcing the plan’s approval.

Kentucky’s program was approved a day after the federal Centers for Medicare and Medicaid Services announced it would look favorably on proposals from state to require poor Medicaid beneficiaries to work, go to school, get job training or do volunteer work to earn health coverage.

Nine other states — Arizona, Arkansas, Indiana, Kansas, Maine, New Hampshire, North Carolina, Utah and Wisconsin — have asked CMS to allow them to add “community engagement” requirements to their Medicaid programs.

CMS Administrator Seema Verma says the work requirement option is designed improve people’s financial status and health outcomes.

In addition to the work requirement, some of Kentucky’s Medicaid beneficiaries will have to begin paying premiums for their coverage and will have to meet certain milestones to earn dental and vision care.

Before Verma joined CMS she was a private consultant and an architect of the Kentucky plan that was approved Friday.

It’s not clear how many people would be affected by the new rules in Kentucky and elsewhere.

study by the Kaiser Family Foundation found that about 60 percent of “able-bodied” Medicaid beneficiaries already work. And a third of those who don’t have jobs say it’s because they are ill or disabled.

Why the U.S. Spends So Much More Than Other Nations on Health Care

From today’s New York Times:

The United States spends almost twice as much on health care, as a percentage of its economy, as other advanced industrialized countries — totaling $3.3 trillion, or 17.9 percent of gross domestic product in 2016.

But a few decades ago American health care spending was much closer to that of peer nations.

What happened?

A large part of the answer can be found in the title of a 2003 paper in Health Affairs by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.

The study, also written by Gerard Anderson, Peter Hussey and Varduhi Petrosyan, found that people in the United States typically use about the same amount of health care as people in other wealthy countries do, but pay a lot more for it.

Ashish Jha, a physician with the Harvard T.H. Chan School of Public Health and the director of the Harvard Global Health Institute, studies how health systems from various countries compare in terms of prices and health care use. “What was true in 2003 remains so today,” he said. “The U.S. just isn’t that different from other developed countries in how much health care we use. It is very different in how much we pay for it.”

A recent study in JAMA by scholars from the Institute for Health Metrics and Evaluation in Seattle and the U.C.L.A. David Geffen School of Medicine also points to prices as a likely culprit. Their study spanned 1996 to 2013 and analyzed U.S. personal health spending by the size of the population; its age; and the amount of disease present in it.

They also examined how much health care we use in terms of such things as doctor visits, days in the hospital and prescriptions. They looked at what happens during those visits and hospital stays (called care intensity), combined with the price of that care.

The researchers looked at the breakdown for 155 different health conditions separately. Since their data included only personal health care spending, it did not account for spending in the health sector not directly attributed to care of patients, like hospital construction and administrative costs connected to running Medicaid and Medicare.

Over all, the researchers found that American personal health spending grew by about $930 billion between 1996 and 2013, from $1.2 trillion to $2.1 trillion (amounts adjusted for inflation). This was a huge increase, far outpacing overall economic growth. The health sector grew at a 4 percent annual rate, while the overall economy grew at a 2.4 percent rate.

You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population. But that explains less than half of the spending growth. After accounting for those kinds of demographic factors, which we can do very little about, health spending still grew by about $574 billion from 1996 to 2013.

Did the increasing sickness in the American population explain much of the rest of the growth in spending? Nope. Measured by how much we spend, we’ve actually gotten a bit healthier. Change in health status was associated with a decrease in health spending — 2.4 percent — not an increase. A great deal of this decrease can be attributed to factors related to cardiovascular diseases, which were associated with about a 20 percent reduction in spending.

Read the complete article here.

By Pulling Out on Paris, Trump’s Policy “America First” Means “America Last”

Today President Donald Trump announced that the U.S. would pull out of the Paris Climate Accord signed by his predecessor President Barack Obama less than two years ago. At the time, the agreement was hailed as the single most important policy initiative for countries to curb carbon emissions in an effort to slow the massive and potentially cataclysmic climate changes that have been accelerated by human activity and energy pollution over the last 100 years.

In pulling out of the agreement, Trump fulfilled a campaign pledge based on soliciting the fear of working class Americans that they would suffer economically and stoking their false hopes that doing so would bring back jobs in destructive industries such as coal-fired energy plants.

The truth is coal suffers not merely from the fact that it is pollution heavy, but also from the fact that is costly to retrieve, refine, and burn—so much so that cheap and plentiful natural gas, and not the alleged bogey-man of environmental regulations, was the single largest factor leading to the market decline of coal and, to a lesser extent, oil.

So, pulling out of the Paris Climate Agreement will not bring back jobs to those parts of the country that have historically relied on pollution-heavy technologies such as coal (in wide ranging places like West Virginia and Montana), and for that reason is economically inefficient and filled with false hope. What is worse, Trump’s policy change signals to the rest of the world that “American First” means American will no longer lead the world in making smart decisions to leave future generations with a habitable planet and ecology.

In short, Trump just said “Fuck You” to future generations who should be concerned about the lasting effects that relying on polluting technologies now will leave for our children and their children to clean up after we are long gone. Americans are rightly outraged, and we must work to ensure that this disastrous policy change is reversed—yet again!—in 2020.

Tax subsidies and incentives to work

From the NYT “Economix” Blog” by Uwe Reinhardt:

Last week a brouhaha erupted over a passage in Appendix C of a Congressional Budget Office report, Budget and Economic Outlook 2014-24.

In that appendix, “Labor Market Effects of the Affordable Care Act: Updated Estimates,” the agency reported its estimate that the Affordable Care Act “will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive.”

The agency estimated this reduction in hours worked as the “full-time-equivalent workers of about 2 million in 2017, rising to about 2.5 million in 2024.” The agency hastens to point out that this number does not represent jobs no longer offered by employers but, for the most part, the decision of employees not to work.

Opponents of the Affordable Care Act and many news reports quickly seized upon this estimate, characterizing it as “dropping a bomb” or having “nuked” Obamacare. Joseph Rago of The Wall Street Journal attributed this interpretation of the data to an exposé by my fellow Economix blogger Casey B. Mulligan.

Commentators supporting the Affordable Care Act pointed out that the pro-growth effect of the law’s lower health costs would swamp any antigrowth effects from a lower labor supply and that ifsome Americans decided to work less, given the incentives they face, they would yield available jobs to others willing to work but unable to find a job, which on balance would be a good thing.

Read the entire article here.

Hidden tax on expensive health care coverage may hurt public workers

Under the Affordable Care Act (ACA) many states that see the wisdom of compliance are setting up health insurances exchanges, but under a little known provision called the “Cadillac Tax,” public unions in particular may be punished for winning their members generous plans with little flexibility for changing them.

The tax was inserted into the ACA at the last minute with the encouragement of many economists who argued that generous plans made consumers insensitive to the spiraling costs of health care. Plans with greater benefits and coverage gained popularity among government employees, police officers, firefighters and teachers unions, but effectively insulated the individually insured from absorbing the skyrocketing costs of coverage.

The tax will affect public unions employees adversely because their plans, which are covered by collective bargaining measures, are more difficult to change without incurring substantial losses. As a result workers will be penalized by the ACA for having good health care coverage, a result that was not intended according to many economists.

“I think it was misguided all along,” said former labor secretary Robert Reich. He complained that the tax amounted to “a blunt instrument that could too easily become a bargaining chip for cutting back benefits of workers. Apparently, that’s what it’s become.”

According to the tax measure, any plan with a cost above a certain threshold in 2018, $10,200 annually for individual plans and $27,500 for family plans, will be taxed at 40 percent of their costs in excess of the limit. Although some cutoffs exist for retirees and some workers in high-risk professions such as police officers, the tax will hurt a number of public union employees.

Many see a disadvantage here that runs contrary to the spirit of ACA to make health insurance more accessible by making it more affordable. Public employee unions from Boston to Orange County are now trying to find ways of cutting health care benefits to avoid the tax charge set to take place in 2018. However, some economists contend that reining in the costs of health care is what the ACA is primarily designed to do.

“This is intended to shift compensation away from excessively generous health insurance toward wages,” said Jonathan Gruber, an economist at MIT and Obama health care policy advisor.