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Archive for the ‘Economic Program’ Category

As the ACA Stands Up, Can Programs for the Uninsured Stand Down?

March 25th, 2014

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It is clear that HealthCare.Gov is working better. Enrollment figures are climbing. Over 5 million Americans have selected a plan through the federal and state marketplaces, and another 6.3 million are getting coverage through Medicaid. While problems remain, the level of interest in getting coverage has grown—to as many as 2 million visits to the federal website in one day.

But amid these public proof points will be another less obvious measure of success—a decline in the need for a patchwork of programs designed to help the poor who continue to lack coverage despite the Affordable Care Act (ACA).

One of those programs, called the 340B Drug Pricing Program, however, shows no signs of slowing down. The 340B program supports clinics and hospitals that serve a high proportion of low-income and elderly patients. 340B requires drug manufacturers to provide discounts to hospitals and clinics that generally serve low-income patients or other groups like HIV-AIDS patients. The program allows hospitals and clinics to dispense the drugs purchased through 340B to their patients who may have their own private insurance coverage and pocket the difference between their deeply discounted purchase price and the amount that a health plan reimburses for the drug. For example, hospitals like Denver Health, which is the public safety-net provider for the city, have used 340B to expand services for at-risk patients. The discounts range from 20% to 50% off the cost of drugs. Those discounts are often bigger than the discounts required of drug manufacturers for Medicaid patients. Federal auditors have found that Denver Health is compliant with program requirements. But they also have found many other facilities to be out of compliance under current federal policy. Moreover, current law and regulations may be inadequate to ensure 340B is truly helping vulnerable Americans.

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GOP Health Care Reforms would Affect Jobs, Too

February 10th, 2014

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Lost in the back-and-forth over the most recent CBO report on the Affordable Care Act (ACA) is a simple fact that any expansion of health care coverage for Americans will inevitably have an impact on America’s working habits. It is no less true of GOP proposals than Obamacare.

To make coverage more affordable, any proposal must provide some sort of subsidy. For example, the recent Republican proposal from Sens. Tom Coburn (R-OK), Richard Burr (R-NC), and Orrin Hatch (R-UT) includes a tax credit for lower income workers. The act of giving someone financial assistance for health care will naturally reduce the need to work somewhat.

Rep. Paul Ryan (R-WI) thinks this creates a poverty trap. While Ryan neglects the fact that millions of Americans are bankrupted every year due to medical bills, he instead focuses on the ACA’s subsidies to buy coverage through the federal and state marketplaces. These subsidies decline as workers earn more money, which means that workers have to work a little harder to keep another dollar in take-home pay. So yes, some people will choose to work less to keep their subsidy. But does that make the ACA a poverty trap? Of course not. We have dozens of social insurance programs ranging from food stamps to the Earned Income Tax Credit, and yet we remain the world’s greatest economy.

The alternative to phasing out benefits by income is to provide the same benefit to rich and poor alike, as many European nations do. But that requires higher tax rates or cuts in government services, which, in turn, leads to greater burdens on everyone.

Here is how CBO describes this problem in their most recent report:

CBO’s estimate that the ACA will reduce employment reflects some of the inherent trade-offs involved in designing such legislation. Subsidies that help lower- income people purchase an expensive product like health insurance must be relatively large to encourage a significant proportion of eligible people to enroll. If those subsidies are phased out with rising income in order to limit their total costs, the phaseout effectively raises people’s marginal tax rates (the tax rates applying to their last dollar of income), thus discouraging work. In addition, if the subsidies are financed at least in part by higher taxes, those taxes will further discourage work or create other economic distortions, depending on how the taxes are designed. Alternatively, if subsidies are not phased out or eliminated with rising income, then the increase in taxes required to finance the subsidies would be much larger. 

This is nothing new. CBO had previously estimated that the ACA would have some impact on jobs. What’s new is that the CBO has refined his estimate and made it more precise based on the latest research.

Some conservative commentators like Avik Roy have acknowledged that GOP plans will also affect working habits due to income-based subsidies. But conservatives persist in the belief that GOP alternatives are morally superior even though their actual solutions are just different choices about the amount of the subsidies and the degree of security offered to American workers.

Economics is called the dismal science because it shows the downside to any choice. But there’s nothing dismal about having security and stability in your health care. As Jason Furman, Chairman of the Council of Economic Advisors at the White House explains, the ACA provides many economic benefits. Today, under Obamacare, millions of Americans no longer have to worry about getting coverage for a pre-existing condition.  They don’t have to stay in a job that they don’t like because of their health insurance. And they don’t have to worry about losing their health care coverage if they lose their job. The GOP needs to make it clear whether they disagree with the goals of Obamacare or the means.

NSA Snooping’s Negative Impact On Business Would Have The Founding Fathers ‘Aghast’

December 20th, 2013

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James Madison would be “aghast.” That was one of the incendiary charges leveled at the National Security Agency and its mass surveillance activities by Judge Richard Leon in his December 16 opinion ordering the government to stop collecting some of the data that it’s been gathering on private citizens here and abroad.

But Thomas Jefferson might be horrified as well, because the NSA collection efforts are having a fairly profound effect on American business and its efforts to sell goods and services abroad. Jefferson, a big believer in the American “taste for navigation and commerce,” would be dismayed that our government was doing things that could hurt our competitiveness and our ability to set the terms of global trade.

To be sure, there has always been some tension between U.S. high-tech industries and our national security. In the 90s, the rules were fairly primitive, such as limitations on exports of high-performance computing designed to prevent countries from developing weapons of mass destruction. Those restrictions were quickly rendered outdated by Moore’s Law, but had they remained they would have prevented the exports of game consoles like Xbox.

Since then, increased globalization and the rise of terrorist organizations operating in the shadows and across national boundaries have complicated both the security and economic issues. The current debate about Edward Snowden’s intelligence revelations may seem like an unlikely place to see that tension emerge, but beyond the discussions of civil liberties and counterterrorism, it is becoming clear that the post-9/11 surveillance apparatus may be at cross-purposes with our high-tech economic growth.

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Response to “Conscience of a Liberal”

December 6th, 2013

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In a recent blog post, Paul Krugman writes of Third Way’s “fact-free denunciations of progressives for not being willing to cut entitlements.” In response, I offer three points.

First, Mr. Krugman says the “[Social Security] system might possibly have to pay lower benefits in the future.” If you believe the Congressional Budget Office or the Social Security Actuaries, there is no “might possibly” about it. Without changes to either benefits or revenue, the Social Security Trust Fund will be insolvent. The only question is whether that occurs in 2031 (CBO) or 2033 (the actuaries).

Second, our support for balanced fixes to Social Security and Medicare is not to reach some magic budget number, but based on the fact that over the past five decades the balance of federal spending has shifted. At the dawn of the Great Society in the 1960s, federal investments (as defined by the Office of Management and Budget) outstripped federal entitlement spending three-to-one. While that balance obviously needed to change to address poverty and elderly health care, by last year the ratio flipped to one-to-three. In ten years, the ratio will be five dollars for the three major entitlement programs for every one dollar in federal investments. As we’ve seen with the recent budget deals and sequestration, investment programs are the first on the chopping block and entitlements are treated as sacrosanct.

Third, Mr. Krugman says that it is his “strong guess” that Third Way means “raising the retirement age” to address Medicare cost containment. That is incorrect. We do not support raising the retirement age for Medicare eligibility. He also says that we do not offer any ideas to reduce Medicare spending, but on our website are several ideas to do so. They include means testing Medicare premiums for high income seniors, dealing with end of life care, bundled payments to improve care and reduce duplicative treatment, and medical homes. And of course, we fought alongside other progressive groups in Washington to pass the Affordable Care Act.

To be sure, Republicans have been intransigent in their refusal to consider new taxes and their opposition to the Medicare cost saving measures in the ACA. But we believe that Democrats must also be willing to take on some sacred cows if we are going to be able to invest in the future and meet our obligations to our seniors and our poor.

Economic Populism Is a Dead End for Democrats

December 3rd, 2013

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If you talk to leading progressives these days, you’ll be sure to hear this message: The Democratic Party should embrace the economic populism of New York Mayor-elect Bill de Blasio and Massachusetts Sen. Elizabeth Warren. Such economic populism, they argue, should be the guiding star for Democrats heading into 2016. Nothing would be more disastrous for Democrats.

While New Yorkers think of their city as the center of the universe, the last time its mayor won a race for governor or senator—let alone president—was 1869. For the past 144 years, what has happened in the Big Apple stayed in the Big Apple. Some liberals believe Sen. Warren would be the Democratic Party’s strongest presidential candidate in 2016. But what works in midnight-blue Massachusetts—a state that has had a Republican senator for a total of 152 weeks since 1979—hasn’t sold on a national level since 1960.

The political problems of liberal populism are bad enough. Worse are the actual policies proposed by left-wing populists. The movement relies on a potent “we can have it all” fantasy that goes something like this: If we force the wealthy to pay higher taxes (there are 300,000 tax filers who earn more than $1 million), close a few corporate tax loopholes, and break up some big banks then—presto!—we can pay for, and even expand, existing entitlements. Meanwhile, we can invest more deeply in K-12 education, infrastructure, health research, clean energy and more.

Social Security is exhibit A of this populist political and economic fantasy. A growing cascade of baby boomers will be retiring in the coming years, and the Social Security formula increases their initial benefits faster than inflation. The problem is that since 2010 Social Security payouts to seniors have exceeded payroll taxes collected from workers. This imbalance widens inexorably until it devours the entire Social Security Trust Fund in 2031, according to the Congressional Budget Office. At that point, benefits would have to be slashed by about 23%.

Undeterred by this undebatable solvency crisis, Sen. Warren wants to increase benefits to all seniors, including billionaires, and to pay for them by increasing taxes on working people and their employers. Her approach requires a $750 billion tax hike over the next 10 years that hits mostly Millennials and Gen Xers, plus another $750 billion tax on the businesses that employ them.

Even more reckless is the populists’ staunch refusal to address the coming Medicare crisis. In 2030, a typical couple reaching the eligibility age of 65 will have paid $180,000 in lifetime Medicare taxes but will get back $664,000 in benefits. Given that this disparity will be completely unaffordable, Sen. Warren and her acolytes are irresponsibly pushing off budget decisions that will guarantee huge benefit cuts and further tax hikes for Gen Xers and Millennials in a few decades.

As for the promise that unrestrained entitlements won’t harm kids and public investments like infrastructure, public schools and college financial aid, haven’t we seen this movie before? In the 1960s, the federal government spent $3 on such investments for every $1 on entitlements.

Today, the ratio is flipped. In 10 years, we will spend $5 on the three major entitlement programs (Social Security, Medicare and Medicaid) for every $1 on public investments. And that is without the new expansion of entitlement benefits that the Warren wing of the Democratic Party is proposing. Liberal populists do not even attempt to address this collision course between the Great Society safety net and the New Frontier investments.

On the same day that Bill de Blasio won in New York City, a referendum to raise taxes on high-income Coloradans to fund public education and universal pre-K failed in a landslide. This is the type of state that Democrats captured in 2008 to realign the national electoral map, and they did so through offering a vision of pragmatic progressive government, not fantasy-based blue-state populism. Before Democrats follow Sen. Warren and Mayor-elect de Blasio over the populist cliff, they should consider Colorado as the true 2013 Election Day harbinger of American liberalism.

This piece was originally published via The Wall Street Journal. 

Don’t Waste This Free Trade Opportunity

December 2nd, 2013

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Within the next 20 years, the Asia Pacific region will need 12,820 new airplanes, valued at $1.9 trillion. Who will build them?

With half of the world’s air traffic growth revolving around the Asia-Pacific region, there are massive opportunities for American manufacturing and middle-class jobs in this one sector alone. But opportunity is not destiny. In the last decade, America’s share of exports to key Asia-Pacific markets fell by 43 percent. Our performance was last among our major trade competitors in the region.

We do not have to idle on the runway, however, as other foreign countries fly by. If we can regain our historical share of these export markets – which are set to approach $10 trillion by the end of this decade – it would add $600 billion to our economy and 3 million jobs by 2020 alone. The first step to seizing this growth opportunity rests with Congress and passage of a tool called Trade Promotion Authority.

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