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Thursday, July 31, 2014

Jon Stewart nails corporate tax inversions

Last night Jon Stewart (h/t BruinKid) went after tax inversion with style, showing up Republican hypocrisy on welfare programs vs. "corporate welfare," all the subsidies one company has received from multiple levels of government, government contracts, and government-funded research. His primary target was Mylan, a Pennsylvania-based generic drugmaker. Mylan, as Ron Fournier recently pointed out, has as its chief executive officer Heather Bresch, the daughter of West Virgina Senator Joe Manchin. Manchin now says inversions should be illegal, according to Fournier in a follow-up article.

As Stewart shows, while Republicans are outraged by one person apparently abusing the Food Stamp program while mainly surfing in California, they all cheer inversions, at least on Fox News. Mylan has benefited from millions in government subsidies and billions in government contracts. But it has to move to the Netherlands anyway. Stewart concludes that since corporations have been people only since the 2010 Citizens United decision, they are just toddlers and we need to be firm with them: "You're grounded!"


"Inversion of the Money Snatchers"

Tuesday, July 29, 2014

Medicare report shows Obamacare is bending the cost curve

The 2014 Medicare Trustees Report has just been released, and it shows that the program is on noticeably sounder financial footing than it was just a year ago. One of the biggest signs of this is that the projected depletion date of the Hospital Insurance (Part A) Trust Fund has been pushed back by four years just since last year's report.

Indeed, Sarah Kliff points out that Part A actually spent $600 million less in 2013 than in 2012, even though it insured 1.6 million more people. As she emphasizes, the big news in this is that per capita Medicare Part A spending has been falling. This is a great sign that there is forward movement in controlling the actual cost of care.

Source:, link above

This is a big deal because not only are Baby Boomers like myself inching towards Medicare eligibility in large numbers, but hospitals and other providers (unfortunately, these two groups are merged in OECD statistics) account for most of the excess of US health care spending compared to other industrialized nations. In fact, comparing the United States to Canada, specifically, I found that payments to providers made up 85% of the per capita cost difference between the two countries.

Moreover, as Kliff points out, even when you include Part B and Part D into the calculation, Medicare's per capita cost showed no increase in 2013. Zero.

Indeed, if you want to see a very graphic demonstration in the change in the cost curve, Louise Sheiner and Brendan M. Mochouk of the Brookings Institute (h/t Matt Yglesias) have just what you're looking for.

Source: Brookings Institute, link above

Yes, in just five years, the estimated federal health expenditure has dropped by more than 2 percentage points of GDP by 2035, what would be a difference of $320 billion per year today.

Of course, the Patient Protection and Affordable Care Act cannot take all the credit for this improvement. But, as the Washington Post reported, the law "is slowing payments to Medicare Advantage" and, as also mentioned here, the penalty for hospitals with high re-admission rates has produced a substantial fall in the 30-day re-admission rate, from about 19% in 2011 to less than 18% in 2013. With better care, fewer re-admissions means lower costs.

Thus, while no phenomenon this complex can have a single cause, it is clear that Obamacare is having an impact beyond insuring 10.3 million uninsured, working as designed to improve health outcomes and reduce costs.

Cross-posted at Angry Bear.