US has 9th* worst COVID-19 death rate in the world: WTH is Trump thinking? UPDATED

In a press conference on Thursday, April 30, the head of the illegitimate Trump regime said, "Our death totals, our numbers, per million people, are really very, very strong. We're very proud of the job we've done." Okay, we know he lies all the time, but this is ridiculous.

The United States has the 9th* worst COVID-19 death rate in the world! At 199 per million population as of 8:00pm EDT May 1, it is exceeded by only Belgium (665**), Spain (531), Italy (467), the United Kingdom (405), France (377), the Netherlands (286), Sweden (263), Ireland (256), and Switzerland (203). At recent rates, the United States will pass Switzerland to take the 9th worst spot within a week. How is this a record to be proud of?

Meanwhile, conservative darling Sweden (the first time Sweden has been a conservative darling!) is zooming up the list, and is doing far worse than its Nordic neighbors Denmark (79), Norway (39), Finland (39), and Iceland (29).

The global average death rate is 30.7 per million; the U.S. figure is more than six times that. Even if you doubt China's numbers (only 4,633 deaths, 3 per million), the figure when you remove China is still only 37, leaving the United States at more than five times the world average.

With such a wide divergence between the U.S. and world averages, it is not surprising that there are many countries with much lower death rates than the United States. Notable are Canada (90), Brazil (30), Mexico (14), Japan (4), Australia (4), India (0.9), and Taiwan (0.3). Moreover, Vietnam, with a population of 95 million, has had zero deaths. And we're supposed to think the United States is doing well?

Why is Sweden suddenly a conservative darling? Because it has not locked itself down like most of the rest of the world. As shown above, however, not only does it have a substantially worse death rate than the United States (its extra 64 deaths per million would translate to another 21,056 U.S. deaths), but it doing drastically worse than its most similar neighbors. Why Sweden is considered a success by conservatives is beyond me.

Georgia's reopening of the state beginning April 24 has generated substantial controversy. One reason this is surprising is that Georgia has a death rate of 113 per million, sixteenth highest in the country, three times the world average. One leading theory for the end of Georgia's lockdown is that it will force workers to go back to work or lose their unemployment benefits. It is certainly not a medical decision, given the state's low level of testing and inconsistent case decline (click on "daily cases" in the right bottom corner).

Don't be fooled by the goalpost moving, which we're going to see over and over as the death rate rises. The U.S. response to the coronavirus isn't "very, very strong" just because it isn't the worst in the world. No, this is just one more aspect of "winning" to get tired of.

P.S. While I was writing this, Rachel Maddow did a great segment on the sidelining of the Centers for Disease Control and Prevention. This is definitely a worrisome development to keep our eyes on.



* Excluding microstates (San Marino, Andorra) and dependencies (Sint Maarten, Isle of Man, Channel Islands, Montserrat).
** Unlike other countries, Belgium likely overcounts deaths rather than undercounting them. As The Independent notes:

According to Belgium’s Federal Public Service for Health, just 46 per cent of the country’s total official deaths were in hospitals where coronavirus cases were confirmed. But 53 per cent of the Belgian tally, or 4,100 people, were from care homes, and of these, 84 per cent are suspected but unconfirmed coronavirus deaths.

A University of Ghent virologist, Steven van Gucht, therefore says that to compare Belgium with other countries, one should "divide by two." Of course, even a 332 per million death rate is a very poor outcome. Moreover, the better other countries do at incorporating non-hospital deaths into their data, the less Belgium's death rate should be cut to be comparable.

UPDATE: On May 3, the United States passed Switzerland to move into the 9th-worst spot.

Comparative Responses to the Economic Aspects of the Crisis Show Many Drawbacks in USA

The global COVID-19 pandemic has created an associated economic crisis as many businesses have been forced to close because of lack of demand (travel, for example) or social distancing (too many to list). With predictions of a possible 32% unemployment rate in the United States, how does the response to the economic crisis here compare with those of other countries?

Both the United States and our major European allies have passed economic stimulus laws that exceed 10% of gross domestic product. The $2.2 trillion CARES Act package signed March 27 was 10.1% of 2019 GDP of $21.7 trillion. Spain passed an even larger package, equaling 20% of its GDP.

We can think of the CARES Act as having three main components. First, there are individual safety-net supports, including the $1,200 payments most individual adults will received, more money into the SNAP (formerly named Food Stamp) program, and greatly expanded unemployment insurance. Second, there are $350 billion in forgivable loans for small business, which become grants if the companies don’t lay off their employees (the “Paycheck Protection Plan”). Third, there is a $500 billion bailout fund for large companies. This is poorly designed, most importantly because it doesn’t require companies to maintain staff. Over 20 million people have filed for unemployment benefits in the last four weeks alone.

Besides the catastrophic loss of wages, the biggest problem with allowing bailed-out companies to lay off staff is that such a large percentage of the U.S. workforce gets its health insurance through work, meaning that when they lose their jobs, they also lose their health insurance. As Saez and Zucman point out, people can continue their employer’s insurance under COBRA, but it is extremely expensive since there is no employer contribution. This comes precisely at a time when they may really need it, given the length and ruinous expense of treatment incurred for people with severe cases of COVID-19.

By contrast, in all western European countries (as well as Canada, Japan, South Korea, Taiwan, etc.) health insurance is universal. Even in a country with a public/private system like Germany, when you lose your insurance due to job loss, you transition seamlessly to a public health insurance plan with no loss of coverage.

European responses have focused much more on a wage-support approach like the small business program in the United States, except applied economy-wide. The U.K. government has been described as the “payer of last resort,” as it stands to guarantee 80% of workers’ wages indefinitely. For both employees and the self-employed, this would be capped at £ 2,500 (approximately $3,125) per month. Given that the United Kingdom has the National Health Service, a true socialized medicine system completely divorced from employment status, layoffs were never going to mean a loss of health care access for workers in Great Britain and Northern Ireland. But by guaranteeing employment, the United Kingdom will have higher levels of job security than U.S. workers will, with jobs to go back to when the crisis ends. Indeed, the problem in the United States is not simply health insurance, but the fact that each of the 50 states has different rules for unemployment insurance, with inter-state variation both in the generosity and length of payments in the different programs.

An important difference between wage support in Europe and for small business in the United States is that the European plans are open-ended, whereas the U.S. plan must be renewed with Congressional legislation every time it runs out of money. This opens the possibility of deadlocks if attempts are made to attach unrelated provisions to an extension bill, something that happens frequently in Congress. And this is no longer a prediction, because the $350 billion ran out on April 16.

Absent federal leadership, we also expect “the economic war among the states” to resume, with each state offering subsidies trying to attract investment, in some cases through job piracy. From our experience during the Great Recession (when there were far more desperate politicians chasing far fewer deals), we can expect to see another surge in expensive megadeals.

Facing high unemployment and relatively few opportunities to attract large numbers of jobs, states will bid more for those opportunities than they would in more prosperous times. States will be tempted to engage in job piracy in many multi-state metropolitan areas, such as New York, Charlotte, and Memphis.

We need to remind states about the first-ever binding anti-piracy agreement, the 2019 accord between Kansas and Missouri, where research by the Hall Family Foundation had documented that the two states wasted $335 million over 10 years moving companies short distances but across the state line within Greater Kansas City.

It is imperative that we support the anti-piracy legislation pending in 13 states this year, sponsored by Chicago-based Progressive Public Affairs, which has amassed lead sponsors from both parties (nine states have Democratic sponsors, while four have Republican sponsors). And we will need to keep the pressure on states to ensure that companies which receive government support fulfill their job and other commitments.

Given the predominance of wage support in European countries, most of this funding will not be subject to EU subsidy (“state aid”) rules. That’s because the money will be available economy-wide in the Member States, not favoring one company over another. In technical terms, this use of the funds is “non-selective,” and therefore not state aid at all, as our contacts at the European Commission have explained. Nevertheless, due to the large amounts of money at stake, each Member State will be responsible to ensure that recipients maintain employment in order to qualify for government paying their wage bills.

Some EU spending will qualify as state aid, such as the Danish’s government’s plan to partially compensate organizers of conferences and other events that were canceled due to the coronavirus pandemic. That is, it is selective, for being available to one industry. To spell out such distinctions, the European Commission published on March 19^th its “Temporary Framework” notifying Member States about likely scenarios and whether or not it was likely to approve subsidies the Member States might propose. (Note that the Commission has exclusive power to approve, modify, or deny proposed state aid projects or programs by the 27 Member States, subject to court review.) As I have shown previously, the European Union has shown itself much better than the United States at controlling economic development subsidies.

As we can see, there are major drawbacks to the U.S. response to the economic crisis. By letting people become unemployed rather than making an open-ended wage guarantee, workers lose their health insurance and have no assurance of a job to go back to when the health crisis ends. High unemployment will also pressure state and local governments to return to worst practices in economic development. There is still time to change course, but it will take constant and high levels of political pressure to make it happen.

Cross-posted with Good Jobs First.

6.6 million new unemployment claims April 2nd

As the saying goes, "Records are made to be broken." But I don't think it's too often the case that it happens at the very next opportunity. Nevertheless, one week after the United States smashed its previous record for first-time unemployment claims with just under 3.3 million, it doubled the record on April 2, with over 6.6 million new unemployment claims, adding another 4 percentage points to the unemployment rate.

After that news dropped, the Congressional Budget Office (via TPM) updated its economic projections for the nation's economy. Among other things, it expects the unemployment rate to exceed 10% in the second quarter. If you remember, the peak monthly unemployment rate during the Great Recession was 10.0%, so exceeding that figure represents yet another win for Trump. So much winning!

In fact, University of Michigan economist Justin Wolfers, writing in The New York Times, estimates the current unemployment rate to be about 13%. This would be the highest rate reached since the Great Depression, he points out.

The CBO report also expects that gross domestic product will fall by over 7% in the second quarter, an annualized rate of over 28%. "Those declines could be much larger, however," it adds. In fact, Wells Fargo economists are much more pessimistic and suggest a second-quarter GDP contraction of 14.3%, topping the current record for quarterly GDP drop, the 10% fall during the Eisenhower administration in 1958 Q1. So much winning!

Of course, these impacts would have been much smaller except for the illegitimate Trump regime's failed preparations and response to the COVID-19 pandemic. After two months of minimizing the outbreak and assuring us everything was under control, the federal government is still not doing anything to ensure that supplies goes to the places most in need at a fair price. Indeed, the evidence from the April 2 nightly pandemic briefing/campaign rally suggests just the opposite. The federal government is flying in large amounts of needed equipment from abroad, then putting it in the hands of private companies which then force the states into bidding wars for the products! Unfortunately, my commenting rules prohibiting me from saying more; just imagine a string of obscenities.

In related pandemic news, as of 7:45am EST, the Johns Hopkins Coronavirus Dashboard shows the United States not just with the most cases in the world, but more than twice as many (245,573) as second-place Spain (117,710). The number of new daily cases continues to increase, as shown in this screenshot from the dashboard:



(Click on US at the top of the country list on the left, then select daily increase in the lower right.)

Yes, on April 1, the United States topped 30,000 new cases in a day for the first time, which was just shy of 3/8 of all new cases in the world.

And the most morbid statistic for last: With over 6,000 deaths so far, doubling every 3 days, the United States is set to pass both Spain and Italy in the next six days to reach the top spot for the most deaths of any country in the world.

Yes, I'm tired of all this winning. And scared, too.

Reports of Obamacare's death are greatly exaggerated: All counties to be covered for 2018

Obamacare has now obtained an insurer for every county in the country, defying Republican claims that the program is collapsing. As reported by The Hill, "At one point or another over the past year, more than 80 counties have been at risk of having no ObamaCare insurer on the exchanges in 2018." On Thursday (Aug. 24), the last "bare" county, in Ohio, was covered by insurer CareSource. Insurance companies have until September 27 to sign contracts, so it is not yet guaranteed there will be no bare counties for 2018.

As you no doubt remember, Chicken Little Republicans have proclaimed the sky to be falling ever since the Patient Protection and Affordable Care Act was passed in 2010. We were subject to ridiculous predictions about "death panels," skyrocketing premiums, predictions of no fall in the uninsured, horror stories that weren't, and of course the ever-popular "job killing" meme.

Instead, three years of the ACA (Q4 2013 to Q4 2016) brought the uninsured rate for adults 18-64 down from 20.8% to 13.1% (but an increase to 14.2% in Q2 2017) while unemployment fell from 6.7% in December 2013 to 4.7% in December 2016 (and 4.3% in July 2017). In addition, personal bankruptcies fell from 1.5 million in 2010 to just 771,000 in 2016, according to Consumer Reports.

As the recent increase in the uninsured rate shows, the ACA is still vulnerable to sabotage by the Republicans. Given that the increase occurred disproportionately among younger adults, Gallup speculates that uncertainty about the consequences for disregarding the individual mandate may explain a large amount of the change. There remain several routes for sabotage to take place. At the same time, there is a bipartisan effort in the Senate to stabilize the individual marketplace, potentially with explicit funding for individual subsidies.

Constant vigilance!

h/t David Ayon

Senate healthcare bill costs 15 million their health insurance next year, 22 million by 2026

One consequence of electing the popular vote loser is that the official winners act as if they have a mandate for the most extreme version of their policies. Thus, we have proposed legislation, the misleadingly titled Better Care Reconciliation Act, that will not only roll back Obamacare's expansion of Medicaid, but impose further large cuts on the program in addition. In total, the Medicaid cuts will come to $772 billion through 2026.

As a result primarily of ending the individual mandate, the Congressional Budget Office (CBO) estimates that 15 million fewer people will be insured in 2018 than would be the case with current law. As healthier people remove themselves from the individual market, this will cause increases in insurance premiums and the likelihood of further collapse of the market. As Tierney Sneed points out, there will be some premium reductions in the individual market, but this will be due to the plans being much less generous and having higher out-of-pocket costs. Tellingly, the CBO report judges that low-income people will not buy insurance under these circumstances. As a result, by 2026 there will be 22 million fewer people without insurance.

On the revenue side, of course, the Republican bill cuts taxes on the rich by $541 billion.

It's hard to know where to begin. The chutzpah of such a gigantic transfer from the poor to the rich staggers the imagination. As with everything surrounding Trump, this is completely surreal.

The good news is that it's not a done deal. Three Republican Senators (Collins, Paul, and Heller), one more than McConnell can afford to lose, are currently opposed to the bill in the Senate. Republican governors who have expanded Medicaid (Sandoval of Nevada and Kasich of Ohio), plus Baker of Massachusetts (which expanded Medicaid under former Governor Deval Patrick) have also come out against the bill.

It's no secret, then, what to do. Keep the pressure on your Republican Senators. If there is no vote this week, you'll have the opportunity to see them over the July 4th recess as well. The stakes have never been higher.

Cross-posted at Angry Bear.

Consumer Reports: Obamacare reduced bankruptcy rate

A new article at consumerreports.org suggests that the Patient Protection and Affordable Care Act* (PPACA) played a substantial role in the decline of annual personal bankruptcies that we have seen since the high of 1.5 million in 2010.

As I showed several years ago, international bankruptcy data support the oft-heard claim that medical bills make up one of the biggest, if not the biggest, causes of personal bankruptcy. That is, if the United States has a bunch of medical bankruptcies and other countries don't, all other things equal you would expect the U.S. to have a higher overall bankruptcy rate than other countries. And the only article I was able to find on this showed that it was true: In 2006, the U.S. had a rate (6000 per million population) that was twice Canada's (3000 per million), which in turn far outstripped #3 Germany (1200 per million). The U.S. and Canadian rates have long been the highest because they had the most debtor-friendly bankruptcy systems, so debtors took advantage of it when they could.

Canada and the U.S. had similar rates in 1982, but thereafter the U.S. rate increased substantially more rapidly than Canada's did. As this period was also marked by U.S. health care costs outstripping those of other OECD countries, this is definitely evidence that medical bills were contributing to the higher U.S. bankruptcy rate.

Now, as suggested by Consumer Reports, the increase in insurance coverage rates and the many consumer protections due to the Affordable Care Act are contributing to a falling bankruptcy rate. Certainly, part of the fall is due to the passing of the worst part of the Great Recession, but the numbers are still striking.




As the article points out and the chart above emphasizes, protections that surely reduced bankruptcy rates were contained in even the initial phase of the ACA. In 2011, the Obama administration rolled out the ban on yearly and lifetime limits, guaranteed coverage for pre-existing conditions, and implemented the rules allowing adult children to remain on their parents' policies until they were 26. By the time all ACA provisions were in effect in 2014, there was already a decline of over 600,000 bankruptcies per year. In the next two years, bankruptcies declined by a further 160,000 per year.

With the possibility that the American Health Care Act (AHCA) could reverse many of those protections, the conclusion is inescapable that medical bankruptcies will once again increase. Just how much, of course, depends on the particulars after (and if) the bill goes through the Senate, but this new study shows us just how much we have gained, and how much we have at risk.

* I use the full name of the law because both the patient protection and affordability aspects of the legislation contributed to this outcome.

Consumer Reports has not responded to my request for permission to use the chart. I will remove it if so requested.

Cross-posted at Angry Bear.

Third Way trade agreements study leaves out a lot

Third Way (h/t TPM), a Democratic pro-trade think tank, has released a new study, "Are Modern Trade Deals Working?" It examines the various "free trade" deals the U.S. has signed since 2000 to conclude that 13 of 17 have led to an improvement in our goods (not including services; see more below) trade balance with the countries involved, giving a net improvement over the 17 agreements studied of $30.2 billion per year.

Long-time readers of this blog may remember that I did a similar analysis (though in less detail than the Third Way study) in 2012. Unlike the Third Way report, my post included all U.S. free trade agreements (rather than starting in 2001 like Third Way) as well as the effect of the 2000 agreement for Permanent Normalized Trade Relations (PNTR) with China. So, compared to the Third Way study, my post includes the FTAs with Israel, Canada, and Mexico, but did not consider the Panama FTA, which had not yet come into effect when I posted. My conclusion was essentially the same as Third Way's, that the effects of the agreements on our trade in goods were usually positive, but of small size (the effect of the Israel FTA was also small). Because the Third Way study begins in 2001, however, it omits the impacts of NAFTA and PNTR with China. However, as my post showed, they are the most important by far.

This fact is not lost on opponents of the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Lori Wallach of Public Citizen Global Trade Watch told the Associated Press that "studies such as Third Way's make a big deal out of modest trade improvements with countries like Panama, and gloss over huge trade deficits with major trading partners such as South Korea, Mexico and Canada." She's right.

In 1993, the year before NAFTA went into effect, the United States had a surplus with Mexico on trade in goods of $1.7 billion. In 1995, it went to a deficit of $15.8 billion, and in 2014 the goods trade deficit was $53.8 billion, down from 2007's peak of $74.8 billion. This was in sharp contrast with the analysis of Gary Hufbauer and Jeffrey Schott, who predicted trade surpluses on the order of $9-12 billion through the 2000s, even as they admitted that the peso was overvalued (it collapsed in value in the December 1994 "Tequila crisis").

Meanwhile, the balance of trade in goods with Canada went from a deficit of $10.8 billion in 1993 to $34.0 billion in 2014. Note that the U.S. had a peak deficit of $78.3 billion in 2008, which collapsed to  $21.6 billion in 2009.

In 2000, the year PNTR was adopted, the United States had an $83.9 billion goods trade deficit with China. In May of that year, the International Trade Commission (h/t David Cay Johnston) released a report estimating that the trade balance would worsen by a further $4.3 billion. According to the article, the U.S. Trade Representative and the White House both criticized this study strongly. And in fact, the 2001 deficit fell to $83.1 billion. However, in 2002 it was $103.1 billion, an increase more than four times the ITC prediction, and by 2014 it had grown to $342.6 billion.

By including trade in goods but not trade in services, Third Way is admirably the stacking the deck against its own position. It points out that the U.S. has a global surplus in trade in services of $232 billion in 2014, including a $45 billion surplus with Canada and Mexico. However, it doesn't mention that the U.S. goods trade deficit was $737 billion in 2014, or that the country's overall 2014 trade deficit was $505 billion, up from $477 billion in 2013.

The ultimate question is whether TPP and TTIP are going to be more like the U.S.-Australia Free Trade Agreement, or more like NAFTA and PNTR. Considering that the TPP includes all the NAFTA countries, Australia, Chile, Japan, and six others, comprising "nearly 40 percent of global GDP," I think it's safe to assume that it will have a much bigger impact than the FTAs with Australia or Chile, for instance. Similarly, since the European Union has an economy about the same size as the U.S. economy, I believe the TTIP will also have big consequences.

Moreover, we have to remember that these are much more than trade agreements. Both of them have increased protections for investors, patents, trademarks, and other intellectual property, and in both of them the U.S. is advocating the inclusion of investor-state dispute settlement so companies can sue governments through arbitration rather than courts, something that has proven more favorable for companies vis-a-vis both governments and consumers. So, in addition to the negative effects on U.S. workers that we would expect on the basis of the Stolper-Samuelson Theorem, all signatory countries are likely to suffer from higher prices for medicine and assaults on their regulations through investor-state dispute settlement.

Thus, while the Third Way study is right as far as it goes, what it leaves out is far more significant and worrisome.

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: Vox.com, 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.

Hawaii Cuts Uninsured Population in Half

In case you haven't seen Charles Gaba's great website ACAsignups.net, you really need to see it. It is the best source available for tracking Obamacare enrollments, covering all categories of signups, including Medicaid, the federal and state exchanges, off-exchange signups, and estimated under-26ers.

One of the most notable achievements of Obamacare is in the President's birthplace, Hawaii, where the number of uninsured people has already fallen by more than half, despite having a horrible website for the state-run exchange. The biggest chunk of this is through Medicaid enrollments, both people newly eligible and those previously eligible who had not signed up ("woodworkers," people who've come out of the woodwork). Here are the totals:

Uninsured: 102,000
Medicaid: 48,000
Exchange: 4,661
Off-exchange: 4,000

Total newly insured: 56,661, or 55.6%.

Moreover, approximately 10,000 Hawaii residents are ineligible for Medicaid or ACA subsidies due to their immigration status, so the state is doing very well indeed.

For those of you who haven't seen it, below is Gaba's pride and joy, "The Graph." It's the best visual interpretation we have of how signups have proceeded since the rollout of Obamacare October 1. Note that we can expect a big last-minute rush over the final weeks of open enrollment, so we will see soon just how well the first year's signups have gone.

Cross-posted at Angry Bear.

Source: ACAsignups.net

The Graph

Obamacare Roundup: Great enrollments for Wellpoint; "Bette from Spokane" debunked

Via Joan McCarter, we learn that Wellpoint, which runs a number of for-profit Blue Cross/Blue Shield insurance plans, reported on an investor's conference call that it expects to add over one million new policyholders this year and that its enrollments are much better than expectations. Of 500,000 enrolled so far, fully 80% of them came to the company via the exchanges. Of that amount, 2/3 were eligible to receive subsidies for their insurance premiums.

Of course, for those of us who support single payer, giving money to private insurers is a mixed blessing. We'd be better off without them, but under our current political situation, this is the best we will be able to do for the uninsured for a while. As McCarter points out, stories like this mean that Obamacare is going to be unrepealable soon, if it isn't already.

Meanwhile, if you could stomach listening to the first Republican response to President Obama's State of the Union address Tuesday, you heard Rep. Cathy McMorris Rodger (R-WA) tell the plight of a woman she called "Bette in Spokane," who supposedly had to pay "nearly $700 per month" more for her health insurance, after her insurance company canceled her old plan.

As with many other such stories, this one has collapsed under scrutiny. As the linked article shows, Bette Grenier had had a catastrophic plan canceled, and she only compared it to the price of a Gold-level policy her insurer suggested as a replacement. Not only were cheaper policies available, she told the paper she would not go on the state exchange to look for a policy, even though this would likely have saved her even more money compared to the one her insurance company offered. She told the paper she and her husband planned to go without insurance.

As Paul Krugman (who pointed me to the Spokane link) notes, there is a reason why catastrophic plans aren't allowed: "If you’re allowed to have insurance that barely covers anything, that’s almost the same as not participating at all." Which appears to be exactly what's happening in this case.

Cross-posted at Angry Bear.

Nauseating Health Care Idiocy from Forbes

A non-blogging friend points me to this new article at Forbes by Chris Conover purporting to show that the "typical family of 4" will see its health care spending rise by $7450. He quotes the Center for Medicare and Medicaid Services (CMS), saying "in its first ten years, Obamacare will boost health spending by 'roughly $621 billion' [that's the CMS quote]  above the amounts Americans would have spent without this misguided law." How stupid is this? Let us count the ways.

First of all, this is not $7450 per year, but over the entire 10-year (or more likely 9-year; he usually refers to 2014-22) period. So he's hyping shock value that isn't there. As he explains, he divides the $621 billion by total population over the period to give a per capita cost, which he then multiplies by 4 to get the cost to his "typical family of 4." So what we're actually looking at, before we start tearing up his calculation, is ($7450/9)/4 = $207 per capita higher spending per year on average. Recall that in 2011 the United States spent $8174.90 per person on health care (see link on how to navigate to the ultimate source for this data, stats.oecd.org).

Second, Conover doesn't understand present value. He writes, "Of course, all these figures are in nominal dollars. In terms of today’s purchasing power, this annual amount will rise steadily." Of course, it is just the opposite. A dollar in 2022 is worth less than a dollar today. In 2013 dollars, the amount is less than $207 per person per year (how much less depends on what you consider an appropriate discount rate). How does an editor not catch this? I have a screen shot to memorialize the error after it eventually gets fixed.

Third, Think Progress's Igor Volsky is completely right when he quotes Paul van der Water of the Center on Budget and Policy Priorities that none of this will apply to the "typical American family" because that family gets its insurance at work. More money will obviously be spent over time, but it won't be spent at the center of the health insurance distribution, if you want to look at it that way. But Conover can't see this point. Instead, he points the finger at President Obama for promising that the ACA would reduce premiums for the typical family by $2500 per year. Not only do two wrongs not make a right, but...

Point four is that what he says is impossible just isn't: "It’s simply not possible for national health spending to rise by $621 billion and for the “typical” family to expect a $2500 (per year!!!!) premium reduction." I don't know if it will happen, but it certainly isn't impossible. Conover is overlooking the fact that the increase in health spending is being funded in ways that don't come out of individual health care spending. High-income taxpayers ($200,000 single, $250,000 filing jointly) are paying 0.9% points more in Medicare tax and an extra 3.8% on investment income. According to Robert Pear of the New York Times, "The new taxes on wages and investment income are expected to raise $318 billion over 10 years, or about half of all the new revenue collected under the health care law." The medical device tax will raise $29 billion over 10 years, over $100 billion will come from insurance companies, $34 billion from drug companies, and $150 billion from the "Cadillac" tax, according to the Obama administration. (We can debate the wisdom of this tax, but it doesn't fall on the "typical" family.) We're already at $631 billion over 10 years. If we increased these taxes more, yes, we could use the money to fund premium reductions, most plausibly by increasing the income levels eligible for subsidies.

Then, there's the little matter of the newly insured. By 2022, according to the CMS report Conover cites, 30 million more people will have insurance than would be the case without Obamacare. While many of those people will be receiving subsidies, a lot of them will be paying something for their insurance, adding even further to the sources of income that don't come out of what the "typical family" will pay.

Finally, the new 30 million people will be covered very efficiently. $621 billion divided by 9 years is $69 billion per year, divided by 30 million people is $2300 per person per year. While that figure is too low because we won't be insuring all 30 million immediately, remember that 2011 U.S. health spending per capita was $8174.90. Any way you look at it, the newly insured will be costing far less per person than those currently in the insurance system.

There you have it. Forbes' most-read story of the day (with over 26,000 Facebook shares and 3400 tweets as I write this) is simply false. Between all the new taxes and the premiums from the newly insured, you can cover the total increase in health care spending. The typical, already insured family isn't going to see increases due to the rise in overall health care spending. You add 30 million new insured at a far lower cost than what we currently spend per person. And the editors didn't catch a blatant error on present value.

Cross-posted at Angry Bear.

Republicans' "Market-Oriented" Health Care Reforms Won't Work, Part 2

Last time we examined a common conservative "solution" to the country's health care problems, allowing insurance companies to sell policies across state lines. What we found, though, is that this would lead to a race to the bottom in state regulation of insurance products, and that there is no reason to think that further marketization of healthcare in the U.S. will lower costs.

Today, we turn our attention to tort reform. It figured prominently in Karl Rove's Wall Street Journal article last week (paywalled). This has been a conservative theme for so long that most states have already done it. In fact, since 1986, 39 states have limited noneconmic damages, punitive damages, or both, making it hard to see how further tort reform can yield much in terms of gains that haven't already been achieved. The current conservative battle cry is for federal tort reform, in other words forcing the states to reduce protection against medical malpractice whether they want to or not.

And make no mistake, malpractice happens a lot. According to a New York Times article by Dr. Sanjay Gupta, about 200,000 people die each year because of what he calls "medical mistakes," up from an estimated 96,000 in 1999. This makes it the third-leading cause of death in the United States, after only heart disease and cancer. Yet Republican proposals would reduce the legal rights of their survivors, and of the many more patients who are only sickened or injured, but not killed, by malpractice.

The conjunction of plenty of malpractice with plenty of tort reform should make us skeptical that the cost of malpractice laws can be reduced much more. According to Aaron Carroll, the biggest proportion of the estimated $55.6 billion (a figure Rove accepts, by the way) that malpractice adds to the health care system comes from defensive medicine, for $47 billion of the total. We should start out by noting that this is only about 2.35% of the country's $2 trillion health care system. While it isn't nothing, we are talking about approximately $150 per capita, compared with U.S. spending of over $3000 per capita more than the OECD average for doctors and hospitals alone. But if tort reform has already reduced a lot of malpractice exposure, how much more of that $47 billion can doctors cut with even more tort reform? Not much, I'd argue.

No analysis of tort reform can go without mentioning Texas' 2003 Big Bang of tort reform, which conservatives widely tout as a stunning success. A July 2013 Heritage Foundation report by Joseph Nixon and the Texas Public Policy Foundation claims that not only did tort reform result in many doctors moving to Texas, but that tort reform "is the foundation of the Texas economic miracle." (I've expressed my skepticism of a Texas miracle before here.) It claims that there has been substantially increased access because of all the new physicians.

However, there are a couple of teenie-weenie problems with this analysis. First of all, as Politifact pointed out when Governor Rick Perry was running for President, the number of doctors per capita rose much more rapidly in the 1990s than it has since tort reform in 2003. From 2003 to 2011, growth in the number of doctors barely outpaced population growth, 24% vs. 20% over those eight years. Despite Nixon's claim that doctor growth was double population growth since tort reform, Politifact shows that it was only during the 1990s that this held true. Perry's "false"-rated claim that the state had gained 21,000 doctors since tort reform was based on ignoring the distinction between doctors licensed in the state and those who actually practiced in the state. Nixon's report appears to do this as well, because he says, "By the end of 2013,...Texas will have close to 60,000 doctors to care for its citizens." However, the Texas Medical Board source that he cites shows in January 2013 only 52,707 licensed doctors were practicing in Texas. The May update, which I presume was not available when he wrote, shows only 528 more. Texas will not be anywhere near 60,000 by the end of the year.

Second, while the state has improved its ranking since 2003, in 2010 the state had only 216 doctors per 100,000 population, far below the national average of 273 This makes it #40 of the 50 states. Massachusetts, a state conservatives love to hate, and which has not had either kind of tort reform, had 474 doctors per 100,000 population, first in the nation.

Third, contra Nixon, having more doctors is not the same thing as having access to health care. There is the little matter of insurance. Texas continues to have the highest rate of uninsured people in the country, 24% of its total population, which is six times as high as Massachusetts, with 4%.

Finally, tort reform has not done anything for the cost of medicine. As Aaron Carroll (link above) shows, since 2003 Medicare spending per patient  has risen more rapidly in Texas than for the country as a whole. He sends us to an analysis by Public Citizen, which produced the table he uses:



Source: Public Citizen, via Aaron Carroll

Summing up, tort reform has not produced more doctors (in Texas, population growth did), does not increase access because it does not give people insurance, and does not reduce costs. Even more tort reform isn't going to give us any savings, either, though it will reduce consumer protection for the hundreds of thousands of victims of malpractice annually.

Don't believe the hype.

Cross-posted at Angry Bear.