Is Obama offering "new ways of understanding" the economy?

Political scientist Julia Azari, who has written a book about presidential rhetoric, suggests that Obama's rhetoric has so far failed to be transformative:

A more nuanced critique of Obama’s rhetoric might suggest that, especially early on, his rhetorical choices fit very neatly into existing terms of debate. His speeches have offered very little in terms of new ways of understanding the central policy issues of his presidency – healthcare, the minimum wage, immigration, climate change and the environment. I’m not arguing that with better framing, Obama would have been more successful on these issues. But the old frames have allowed opponents to define the discussion, even after policies are signed into law. Furthermore, debate about issues like immigration and minimum wage continue to invoke the same tradeoffs and considerations that they have in the past. Effective rhetoric would cast familiar issues – particularly ones like immigration, which tend to cut across party lines – in terms of values and considerations that are both novel and resonant. That might not be enough for policy change now, but it might allow for it later, under the right conditions. This is admittedly a high bar for presidential rhetoric, even for someone with Obama's facility with certain kinds of public speeches.

This may be true at the single-policy level. It is true at the sound bite level. Obama's not good at war cries, or slogans, or, less cynically, single phrases that sink into the national consciousness.

Piketty: U.S. sold its middle class birthright for a mess of Reaganite pottage

The main thesis of Thomas Piketty's Capital in the Twenty-First Century is that the accumulation of wealth in the hands of a few is subject to a kind of gravitational pull. That's what the long-term data tells Piketty. But there's a second core thesis: that gravitational pull can be countered by social policy. Markets, he asserts, are a social construct: prices and wages do not magically align themselves with intrinsic worth.

In practice, the invisible hand does not exist, any more than “pure and perfect” competition does, and the market is always embodied in specific institutions such as corporate hierarchies and compensation committees (p. 332).

In Chapter 8, Piketty traces "the explosion of inequality in the U.S. after 1980." In Chapter 9, he homes in on the explosion in compensation of top executives in the U.S. -- mirrored to a somewhat lesser extent, throughout the Anglosphere, and to a lesser but still pronounced degree, through Continental Europe, Japan, and emerging economies:

The central fact is that in all the wealthy countries, including continental Europe and Japan, the top thousandth enjoyed spectacular increases in purchasing power in 1990– 2010, while the average person’s purchasing power stagnated (p. 320).

Obama's audacious claim: U.S. is retooling foreign policy from a position of strength

Back in December 2008, in an interview with Time's Richard Stengel, Obama set for himself what struck me as a "modest and ambitious agenda" to make a significant beginning on several long-term challenges.  I posited in early 2012 that he'd done reasonably well by his own yardstick.

In an interview airing on NPR today, Obama set himself an ambitious set of benchmarks in a narrower range: not foreign policy per se, but the legal and ethical framework in which foreign policy -- and military action -- is formed and executed.  Here's the agenda:

On his foreign policy goals before leaving office:
 
"I'm going to keep on pushing because I want to make sure that when I turn the keys over to the next president, that they have the ability, that he or she has the capacity to — to make some decisions with a relatively clean slate.

"Closing Guantanamo is one. Making sure that we have the right legal architecture for how we conduct counterterrorism and that there's greater transparency, as I discussed today, that's another.

Is Obama a "superdove"? No.

Max Fisher's analysis of the foreign policy doctrine Obama laid out today at West Point includes a pretty serious misreading:

Obama argued, directly and repeatedly, that the US would have to reduce its use of military force as a tool of foreign policy. Obama argued that the US could and should not use military force, including even limited actions such as off-shore strikes, except when absolutely necessary to defend "core interests" or to "protect our people, our homeland, or our way of life."

That's a very high bar for the use of military force. Obama didn't just make the point abstractly, going through several major US foreign policy changes to explain why, in each, military force was not and should not be applied.

Obama did not suggest that the U.S. would use force only when core interests were at stake. He said that the U.S. would use force unilaterally only when core interests are at stake. Or rather, that unilateral action would be on the table only under such circumstances. Here is the distinction he actually made:

The Obama Doctrine: Pushing on a String?

There wasn't much to inspire in Obama's West Point speech. Dan Drezner wished in advance -- fairly, I think -- that Obama would sketch out in some detail for the benefit of allies just how he proposes to use means other than war to enhance collective security -- in the South China Sea, in eastern Europe. He didn't do that  He just touted in rather general terms the sanctions against Iran and Russia as examples of effective collective action.* He also drew a line, with perhaps more specificity than in the past, between vital U.S. interests that would be defended unilaterally if necessary and " issues of global concern do not pose a direct threat to the United States," in which collective action, usually nonmilitary, is the appropriate course. Perhaps I've grown accustomed to that distinction through Obamosmosis -- it did not surprise me.

What did strike me was a few rather caustic notes. The speech was short on rhetorical olive branches. For example:

1. China the aggressor and competitor: 

Russia’s aggression toward former Soviet states unnerves capitals in Europe, while China’s economic rise and military reach worries its neighbors

Regional aggression that goes unchecked – in southern Ukraine, the South China Sea, or anywhere else in the world – will ultimately impact our allies, and could draw in our military.

Twice Obama rhetorically yoked China's aggression with Russia's -- and once, China's economic success with its military muscle-flexing.  No "we do not seek to contain China's rise" reassurances.

When a heavily subsidized private health plan doesn't quite suffice

The Times' Abby Goodnough reported this past weekend that many hospitals have cut back on charity care, hoping to push uninsured patients into subsidized ACA coverage.  Some hospitals are targeting new payment requirements at specific groups eligible for coverage (e.g., those with incomes between 200% and 400% of the Federal Poverty Level), and some are requiring co-pays from the newly insured.  In the latter category, Goodnough spoke to one woman whose current situation points toward complex choices and tradeoffs spurred by the new law.

Here's the tale:

Beverly Jones, 51, of St. Louis, who has lupus, is the type of person targeted by Barnes-Jewish Hospital’s new policy. Ms. Jones, who already owes Barnes-Jewish thousands of dollars for emergency room treatment and other visits, said the hospital’s new co-payments for the uninsured would “throw my budget into a tailspin” on her annual income of $13,400, which comes mostly from disability checks.

She has enrolled in a subsidized insurance policy under the Affordable Care Act. But she worries that she will have trouble paying the fees and deductibles required under her new plan, even with generous subsidies.

“There’s still a lot of stuff I can’t afford to do,” she said.

This caught my because at an income of $13,400, Ms. Jones is eligible for the maximum level of Cost Sharing Reduction (CSR) under the ACA (if Missouri had accepted the Medicaid expansion, she would be eligible for that). At maximum CSR, any silver plan she chose would have a mandated actuarial value of 94%, equivalent to the best employer-sponsored plans. Her out-of-pocket expenses would not be negligible at her income level, but they would be quite low.

Political polarization correlates with rising inequality

Thomas E. Mann, arguing that U.S. political dysfunction is more extreme than political scientists are willing to acknowledge, asserts (and demonstrates) that paralyzing party polarization is asymmetric:

That mismatch between parties and governing institutions is exacerbated by the fact that the polarization is asymmetric. Republicans have become a radical insurgency—ideologically extreme, contemptuous of the inherited policy regime, scornful of compromise, unpersuaded by conventional understanding of facts, evidence, and science; and dismissive of the legitimacy of its political opposition. The evidence of this asymmetry is overwhelming.

The time frame for this accelerating dysfunction is approxmately 1980 - present:

And Norm Ornstein and I in It’s Even Worse Than It Looks document how the asymmetry developed from Newt Gingrich in the 1980s to the present. Asymmetric polarization has found its way to the public: Republican Party voters are more skewed to their ideological pole than Democratic Party voters are to theirs.

Serendipity: continuing my slow plow through Thomas Piketty's Capital in the Twenty-First Century this morning,  I came across the foundational fact base:

Another survey shows: those who remain uninsured don't know about ACA subsidies

Last week, I noted that a main takeaway of the latest McKinsey survey of 2874 people seeking health insurance in the individual market in 2014 was that the majority of those who said that they could not afford insurance did not know about the subsidies provided by the Affordable Care Act. McKinsey found that 88% of those citing perceived affordability challenges were subsidy-eligible, and two thirds of the subsidy-eligible respondents who cited perceived affordability as the reason they stopped shopping were aware of neither their eligibility nor the amount for which they were eligible. Further, 90% of those citing perceived affordability challenges who did not shop were subsidy-eligible, and 79% of those were unaware of their eligibility or the amount of subsidy for which they were eligible.

Now, a survey just released by EnrollAmerica reports similar findings with regard to ignorance of ACA offerings.  Bruce Rule of Bloomberg reports:

Pence palms a card in plain sight

Obamacare must die. Medicaid is a disaster. Long live Healthy Indiana, an implementation of Obamacare and an expansion of Medicaid.

Such was the inherent logic of Indiana Governor Mike Pence's May 19 speech to the American Enterprise Institute announcing his intent to seek a waiver to use ACA funds earmarked for state Medicaid expansion  to expand an updated version of the Healthy Indiana Program, Indiana's current Medicaid alternative.

If the hospital's nonprofit, the CEO may not be

Updated, 5/19:

A footnote to Elisabeth Rosenthal's story in today's Times about how huge pay packages for hospital executives contribute to high U.S. healthcare costs: Exhibit A was Ronald Del Mauro, the just-retired president of the nonprofit New Jersey hospital group Barnabas Health, who was paid $21 million in deferred compensation, bonus and incentive pay in his final year.

The footnote concerns an explanation from a Barnabas spokesperson:

Ms. Greene also said Barnabas’s compensation program follows I.R.S. rules and is established by an executive compensation committee with “guidance from a nationally recognized compensation consultant.”

That jogged memory of a related factoid. Mr. Del Mauro was not only paid in accordance with advice from a consultant: he was also paid as a consultant, at least as of the end of 2012.

Robert Laszewski's ACA blind spot

Robert Laszewski, health insurance consultant and blogger, is among the critics of the Affordable Care Act whom supporters of the law respect the most. He knows the market, he knows the law, he wants to see everyone insured, he's not averse to calling out Republican idiocy and mendacity, and he wants to fix the law, not repeal it. Ezra Klein's Wonkblog named him "Pundit of the Year" for 2013.

Yet Laszewski has a bias, which progressive healthcare reporters, including Klein, are slow to call out.  His ur-insurance buyer is a veteran of the pre-ACA individual market, healthy, ineligible for ACA subsidies or for only limited subsidy, and so hit by rate shock.  His chief complaint seems to be that ACA-compliant plans are weighed down by unnecessary Essential Health Benefits, which drive up the base premiums and so increase the hit to the unsubsidzed.

The plight of this cohort is real, and the law could be amended to ease it. Yet Laszewski generally fails to acknowledge that such victims are far outnumbered by ACA beneficiaries, that negative responses to the law have been shaped in large part by five years of Republican disinformation, that guaranteed issue is a much larger driver of unsubsidized rate increases than the benefit mandates, and that the law is on target so far to meet long-term CBO projections.

Laszewski's bias in on display in his latest post -- which pleased progressives by acknowledging that Democrats pledging to modify the law are more in line with public opinion than Republicans vowing to repeal it. Here's the nub of his case that the law is in trouble because people do not like the core offering:

How to choose a health plan? Even Austin Frakt needed help

If you were shopping for a new health insurance plan, how much extra would you be wiling to pay for a plan that included your current doctor or doctors, or a nearby hospital you think well of, or a top cancer center that you don't need now --as far as you know?  How much more deductible and co-insurance would you take on to lower your monthly premium?

These questions are not easy to answer. Not for a 27 year-old transitioning off a parent's health plan. Not for a 35 year-old fast-food worker. Not for a 48 year-old self-employed consultant. Not even for a health economist.

Austin Frakt, a health economist at the U.S. Department of Veterans Affairs and Boston University and co-Editor-in-Chief of The Incidental Economist blog, has had a personal taste of the complex decisions facing shoppers on the health insurance exchanges established by the Affordable Care Act. In many states, buyers are confronted with dozens of plan options -- though for most, price will probably narrow the feasible choice to a handful. As a federal employee, Frakt has for some time chosen his family's insurance on a yearly basis  from a precursor of the exchanges, the Federal Employee Health Benefits Program, which in Massachusetts offers more than a dozen options. He has long chosen Blue Cross Blue Shield plan for his family that has a low deductible and is "accepted pretty much everywhere" -- that is, by every doctor and hospital the Frakt family has had cause to access.

Frakt has more than once considered the possibility that higher deductible plan with a lower premium might save his family money. He tells me, though, that when he considered switching to a high deductible plan without any form of decision support,  the utility of doing so was "very hard to assess. You have to know a good deal of detail about your own plan,  the plan you're comparing it to, and your own utilization pattern. Also, the deductibles and copays for everything. You would want to know if the doctors you currently use are in the other plan's network. It's a very complicated comparison. I was overwhelmed, couldn't compare them meaningfully."

Is there a hole in the heart of U.S. healthcare cost control?

It's a given that the sine qua non of providing universal access to quality healthcare is effective cost control. That's especially true in the United States, where healthcare costs 50% more per capita than in the next most expensive country, Switzerland, and more than twice the OECD average, notwithstanding the fact that the U.S. is the only wealthy country that does not insure all its citizens.

This high-cost starting point is the Affordable Care Act's pre-existing condition, the reality underlying bitter complaints about high premiums for the unsubsidized and narrow networks in exchange plans.  As Yogi Berra might say: if you want to make healthcare affordable to all, healthcare has to be affordable. To be successful, the ACA has to bend the cost curve -- or at least, maintain the windfall spending growth slowdown that seems to have taken hold over the last ten years -- at the same time it's expanding access.

The ACA's main efforts to control costs fall broadly into two categories. First, in Medicare payments, a series of pilot programs seek to move healthcare providers away from fee-for-service, via per-patient and per-episode payments and incentives to reduce costs and meet quality benchmarks. Second, in the exchanges, competition and price pressure induce insurers to reduce costs by a) putting a good deal of the cost burden on patients, via high deductibles and co-insurance payments, and b) offering narrow networks -- that is, limiting covered doctors and hospitals to those who meet the insurer's price (and, theoretically, quality) demands. In the broad category of putting price pressure on payers of all kinds also belongs the ACA's excise tax on the most expensive employer-sponsored plans, which is driving employers too toward both narrow networks and more cost-shifting to employees.

Cost control without cost controls?

Atul Gawande has expressed the hope that by seeding myriad experiments, the ACA will grow a few cost-saving sequoias  -- as an analogous outpouring of experiments and demonstration projects spurred by the U.S. Department of Agriculture revolutionized food production and drove down food prices in the early 20th Century.

I hope Gawande is right. He may be. But it might also be argued that all this experimentation is "designing around" the one cost control element that works in every other wealthy and is lacking in the U.S.: uniform pricing per procedure, imposed or at least overseen by government. (It's "overseen" in Switzerland, where hospital rates in each canton are negotiated by hospitals and insurers acting collectively, subject to approval by the cantonal government. Physicians are paid on a national fee-for-service scale.) Without that core shift in leverage away from healthcare providers, reforms are balkanized and incentives may fly in various directions.

McKinsey's really important finding: the still-uninsured don't know about ACA subsidies

McKinsey & Company is out with a new survey -- conducted online and in English only -- of participants in the 2014 individual market for health insurance. One headline stat seized on by ACA skeptic Avik Roy (see note below) is that of those who purchased ACA-compliant plans, just 26% reported themselves uninsured in 2013.  That number is apparently at wild variance with HHS' report that of the 5.18 million Healthcare.gov enrollees who applied for financial assistance (95% of the total), 87% reported being uninsured at the time of application.The huge difference is due in large part to these factors:

1) HHS asked those applying for financial assistance whether they were insured at the time of application. McKinsey asked whether they were covered through most of 2013.

2) McKinsey's numbers include people who bought off-exchange -- and people not eligible for subsidies* (as Charles Gaba has noted).

3) McKinsey's respondents were self-selected via an online survey, and the survey was conducted in English only.

The truth probably lies somewhere in between. Charles Gaba estimates that about half of ACA exchange signups were previously uninsured. The question of who was previously uninsured is in any case complex, given the high volatility of the individual market for insurance (and of the job market). According to an estimate by healthcare scholars Rick Curtis and John Graves, less than half the people who will be eligible for ACA enrollment at the end of 2014 will have been eligible a year prior. According to Graves and Jonathan Gruber, 7.6 million people lost health insurance in 2012; approximately the same amount must have gained it.  That kind of churn is perpetual.

While the questions, "how many signups were uninsured?" and "how many paid?" suck up all the political air, the real import of the McKinsey survey (to the extent that it is representative) lies elsewhere, in my view. The survey indicates pervasive ignorance among the subsidy-eligible of what the ACA had to offer them.

Reporters read insurance execs' testimony before yesterday's House ACA hearing. Looks like GOP reps didn't

Last week, the House Energy & Commerce Committee put out a mendacious report claiming that insurance company executives had submitted data to them showing that just two thirds of ACA private plan enrollees had paid their first month's premium. ACA signups tracker Charles Gaba shot that rotten fish in a barrel within an hour of the report's release:.

...they're VERY clear about what they're claiming: that as of 4/15/14, only 67% of all QHP enrollments via Healthcare.Gov had paid their first month's premium, right?

Well, there's a serious problem right there, because out of the 8 million or so enrollments as of 4/15, only 5 million of the first month's premiums were even due.

Gaba was the first of many; the claim was widely debunked. That didn't deter the Committee from calling health insurance executives to a May 7 hearing,  presumably to ratify their statistical legerdemain.  Unsurprisingly, the hearing, conducted by the Oversight and Investigations Subcommittee, did not go as planned. Jonathan Bernstein marvels at the manifestation of an apparent feedback loop:

But yesterday, a House subcommittee invited insurance company executives to testify and, according to the Hill, Republicans on the panel were “visibly exasperated, as insurers failed to confirm certain claims about ObamaCare, such as the committee's allegation that one-third of federal exchange enrollees have not paid their first premium.”

We don’t have to rely on reporter interpretations (here’s another one). It made no sense to hold the hearing unless Republicans were (foolishly) confident that the testimony would support their talking point, instead of undermining it.

The only plausible explanation is that closed feedback loop. Either members of the committee managed not to be aware of the criticisms of their survey, or they mistakenly wrote off the criticism as partisan backbiting.

Kevin Drum piles on:

Obviously Republicans were caught off guard at yesterday's hearing, and that could only happen if they really and truly believed their own flawed survey. And that, in turn, could only happen if they get pretty much all their information from Fox News and don't bother with anything else. 

The bubble is apparently more airtight even than Bernstein and Drum fathomed, because the executives' prepared testimony had already hit the newswires before the hearing started. Bloomberg's Alex Wayne had the whole gist in a story that ran on Wednesday morning, prior to the hearing:

Is health insurance worth the money? Would you do without it?

A rigorous study* of the effects of health reform in Massachusetts since its 2006 launch yielded powerful evidence that the state's expansion of access to health insurance improved health and reduced mortality, particularly among poorer citizens. Adrianna McIntyre summarizes the core finding:

Benjamin Sommers, Sharon Long, and Katherine Baicker estimate that overall mortality in Massachusetts declined 2.9 percent relative to control counties between 2007 and 2010; mortality amenable to health care declined 4.5 percent. This translates to one death prevented for every 830 people who gain insurance, and the effects were larger in counties with low income and low pre-reform insurance rates—the counties we would expect to be most favorably impacted by reform.

Health economists, as is their wont, have put  (tentative) price tags on lives saved.  The ever-humane Harold Pollack pegged the cost-per-life at $3.3 million, adding the essential caveat:

Don't deny ACA-driven rate-shock. Do put it in perspective

Most Obamacare horror stories trumpeted by Americans for Prosperity, Fox News et al did not hold up to scrutiny because the protagonists turned out to be eligible for subsidies. The law's enemies wanted real hardship cases, and even modest affluence apparently takes the edge off for propagandists.

That sloppiness has made it relatively easy for some of the law's supporters, including Paul Krugman (see update #7 here), to gloss over the substantial price hikes suffered by those who 1) are in the individual market for a relatively long haul, 2) earn too much to qualify for ACA subsidies, and 3) do not have a pre-existing condition or a family member who has one.

eHealth, the nation's best-known online health insurance broker pre-ACA, has published statistics indicating the extent of  premium price hikes for the unsubsidized under the ACA. The latest snapshot is based on 213,000 insurance applications completed on eHealth during the ACA's first open enrollment period, from October 2013 through March 2014;  a 2013 baseline is published here.   According to eHealth's most recent stats, the average individual plan premium rose from $197 in 2013 to $271 in 2014, a 38% increase. The average family plan rose from $426 to $667, a 57% hike.

The larger jump in family plan premiums is partly explained by a larger reduction in average deductibles, which shrank from $10,568 in 2013 to $7,771 in 2014 (that's for the whole family; each individual would have a smaller deducible). The average individual plan deductible fell less dramatically, from $4,900 to $4,164.  As open season wore on, eHealth customer trended toward lower premiums and higher deductibles.

Fauxbamacare freebie No. 1: Covering those with pre-existing conditions

In their burgeoning promotion of Fauxbamacare -- promises to repeal the ACA while retaining its most popular features, without specifying how -- dozens of Republican incumbents and candidates are promising to maintain affordable coverage for people with pre-existing conditions. Small wonder: approval of the provision is at 70% nationally, according to the Kaiser Family Foundation's March poll.

Of course, Republicans also love to bash the ACA for driving up the cost of private-market insurance for the unsubsidized.  They blame the rise -- which is real for those who earn too much to qualify for ACA subsidies and have no pre-existing conditions in their household -- on the ACA's new rules for what all insurance policies must cover, which took full effect on Jan. 1, 2014.

Here's the thing, though. Guaranteed issue -- the prohibition against varying the price or scope of insurance on the basis of the buyer's health and medical history -- is the prime driver of the increase in the base price of private insurance triggered by the ACA.

Republicans wouldn't scrap the main driver of ACA rate shock

As the reality that millions have benefited from full implementation of the Affordable Care Act takes hold, more and more Republicans are resorting to what Ezra Klein has dubbed Fauxbamacare: propose to repeal the hated law, replace all its popular components without providing any details.

Progressives counter that if you claim you want to make health insurance affordable to all, unless you come out in favor of a single payer system there is no real alternative to the basic structure of the ACA: guaranteed issue (that is, no variation in health plan price based on a person's medical history), an individual mandate or equivalent* to offset the influx of sick people into the risk pool, and subsidies (or Medicaid) for those who can't afford the premiums.

While that's mostly true, it's also true that some plans crafted to current conservative specs look significantly if not radically different from the ACA. The vast majority of Republican elected officials have shied from putting forward such a plan -- or ignored the one put forward by Senators Coburn, Burr and Hatch --  since such alternatives require tough tradeoffs. The main difference is that conservative schemes give insurers more leeway to sell plans with skimpier benefits and lower premiums. They eliminate or vastly reduce the Essential Health Benefits (EHBs) mandated by the ACA. They loosen the allowing "age banding" of premiums -- the degree to which older buyers can be charged more than younger ones -- from the ACA-mandated 3-to-1 to the pre-ACA norm of 5-to-1.

It's true that for healthy people who were buying insurance in the individual market prior to the ACA, the law's coverage rules substantially drove up the premium price. Rate shock is a real phenomenon. As the complaints poured forth, the EHBs were a prime attack point.  "I'm 55 -- I don't need childbirth coverage." "I'm of sound mind -- I don't need mental health coverage."  Limited age-banding was also a rallying point, since the 5-to-1 ratio was based on actuarial calculations.  Why should a 23 year-old pay more so that a 58 year-old can pay less?

These complaints have some legitimacy. The EHBs and age-banding limits involve tradeoffs that can be argued from either side. But they are not the prime drivers of the rate hikes caused by the ACA.