Moneybox
A blog about business and economics.

March 15 2017 2:44 PM

Some People Are Worried Trumpcare Would Crash the Insurance Market. The CBO Isn’t. How Come?

When House Republicans unveiled their plan for replacing the Affordable Care Act last week, a number of health policy experts, including conservatives, worried that it looked like a blueprint for insurance market chaos. The legislation had all the ingredients for a severe adverse selection problem—where sick people buy coverage, healthy people don't, and insurers can't make money, leading them to raise premiums or stop selling plans.

This week, the Congressional Budget Office disagreed. It suggested that after a brief period of turbulence, Trumpcare would result in a “relatively stable” market, in which “most areas of the country would have insurers participating” and customers would “not be subject to an unsustainable spiral of rising premiums.” In the context of a document forecasting that 24 million people stood to end up uninsured due under Trumpcare, this counted as good news.

Why are the budget wonks so optimistic? Their reasoning is sort of idiosyncratic but makes sense in the greater scheme of the CBO's report.

Let's start with a quick review of why some people, myself included, are concerned that Trumpcare could send the insurance markets into fits. In short, the legislation guarantees that sick Americans can buy coverage without balancing them out by forcing healthy people to purchase it as well. It keeps in place Obamacare's old rules prohibiting carriers from discriminating against customers with pre-existing conditions, while eliminating the individual mandate requiring people to obtain insurance or pay a tax penalty. In its place, Republicans would create a rule obligating insurance companies to charge people 30 percent extra for a year if they buy a plan after going uninsured for about two months. This is meant to encourage young and healthy people to stay covered (and pay premiums that subsidize the sick) lest they get hit with the penalty. But by making coverage more expensive, it could just as easily discourage the uninsured from enrolling in the first place.

The upshot: Sick people will still be able to buy insurance while healthy people will have incentives to hold off until they absolutely need coverage. One conservative health care expert, Avik Roy, wrote that it seemed “like a recipe for adverse selection death spirals.”

As Sarah Kliff noted at Vox, insurers themselves seemed much less worried about this than the wonks. In their view, the individual mandate hadn't been all that successful at getting people to buy coverage in the first place—adverse selection already seems to be a problem in some states, which is one reason why carriers have had trouble earning a profit under the Affordable Care Act—and Trumpcare's continuous coverage penalty probably wasn't going to work all that differently.

The CBO's analysis doesn't really mesh with either of these perspectives. Unlike the insurers, the office's staff believes that the individual mandate is extremely powerful—the agency estimates about 14 million fewer Americans will obtain health coverage in 2018, largely because the mandate will disappear. Like some of the wonks, it also thinks that Trumpcare's continuous coverage penalty is counterproductive—the office predicts that in most years after 2018, about 2 million fewer people will buy coverage because of the surcharge. And yet, after a couple years of rising premiums and fast-declining enrollment, it projects the market will settle down.

There are basically two reasons why: First, the Republican plan would nudge a lot of old, costly customers off insurers' rolls. Second, it would fork over a lot of government money to make sure carriers don't lose too much on the extremely sick.

Trumpcare is designed to lower the cost of insurance for young adults while increasing it for older Americans—it allows carriers to charge near-seniors five times as much as twentysomethings, instead of three times as much, like under Obamacare. As a result, the CBO essentially thinks a lot of 60-year-olds will get priced out and replaced by younger customers lured by cheap coverage. The result is a smaller, healthier, more profitable customer base. The Republican proposal would also give states billions of dollars each year for “stabilization funds”—which they could use to compensate insurers for the cost of covering particularly ill customers. (The Affordable Care Act had a temporary reinsurance program that did largely the same thing). That, the CBO thinks, should stabilize the industry's bottom line, even if its customers are a little more sickly than expected, and keep insurers in the market.

It's not an absurd theory of the case. But it is a depressing one. Congress' official forecaster thinks that Trumpcare would create a steady market where insurers are happy to sell coverage by making it unaffordable for the older Americans who need help most, while supplementing the system with government cash. The CBO's definition of “stable”—a market where “most areas of the country” have insurers to pick from—doesn't exactly inspire great confidence, either. After all, voters are already angry because a third of U.S. counties are down to one insurer on the ACA's exchanges. Having a functioning market in “most” of the country, rather than all of it, might not cut it politically.

And hey, the CBO also says that left to its own devices, Obamacare would end up just as stable—except 24 million more people would have insurance coverage. Just something to consider.

March 15 2017 1:43 AM

The Sliver of Trump’s Tax Return That MSNBC Obtained Tells Us Almost Nothing About His Finances. Demand More.

I woke up Tuesday morning planning to write yet another article on President Trump’s refusal to release his tax returns despite almost every other president and presidential candidate over the past 50 years having done so. Trump’s actions were troubling enough during the campaign, when his willingness to violate this norm set a dangerous precedent for future presidential contests. Now that he is president, that worry seems quaint. As Trump makes foreign and domestic policy decisions that impact us all, the public needs to understand where his loyalties lie, and how he might personally benefit from some of the decisions he makes. And absent his tax returns, we don’t.

On Tuesday evening, MSNBC began to tout what seemed to be a major scoop: It had a Trump tax return. The investigative journalist David Cay Johnston had received documents in the mail, and Rachel Maddow would tell all at the appointed hour. A previous leak during the campaign, to the New York Times, suggested that Trump had taken a $1 billion tax loss in the 1990s under circumstances that suggested aggressive tax planning at the best and flat-out cheating at the worst. However, we didn’t have the full returns to figure out what had actually happened.

Would this be the moment that we finally learned about Trump’s dealings with Russians, which might explain his solicitude to Vladimir Putin and Russian interests? Would we discover that, contrary to his claims, Trump has made very little in income or paid no income tax? After all, there must be some reason he refused to release his returns. Here, it was tempting to hope, was the moment it might all become clear.

Sadly, what Johnston received was not actually a complete copy of Trump’s tax returns, but rather his two-page Form 1040 from 2005. This is still big news in that we now know more than we did—assuming it is authentic, which the White House seemed to confirm in a statement Tuesday night—but it answers precious few of the questions many people have.

So, what did we learn? For one thing, we learned that Trump actually has earned substantial amounts over the years. Only about $100 million of the nearly $1 billion in losses from the early 1990s was still available in 2005, meaning Trump must have earned about $900 million (about $81 million per year) in the intervening years, assuming no additional losses. Based on this slice of the return, we can rule out the theory that, at least up until 2005, Trump wanted to obscure his income because it was far less than he would otherwise have us believe. Of course, he likely paid precious little in taxes on that income because of the aforementioned losses.

We also now know that he has actually paid some taxes, contrary to some speculation (speculation he has only fueled by refusing to release his returns). We learned he would have owed only about $5 million in taxes on about $150 million in income (about 3 percent) but for the alternative minimum tax (or AMT). As it was, he paid about $36 million in income taxes, representing a rate of about 25 percent, far lower than the regular statutory rate. This might help explain his proposal to eliminate the AMT.

And we know most of his income was business-related, as opposed to salary, but most people assumed that to be the case, anyway.

Oddly, the fact that he made a lot of money and actually did pay taxes helps him, making one wonder why he didn’t just release this on his own, assuming it’s real. Johnston actually raised the possibility that Trump may have leaked this himself, noting that he has been known to pull such stunts in the past.

What didn’t we learn? Without the schedules associated with this return and the returns of the various companies and partnerships whose income likely fed into this Form 1040, we can’t know who his business partners are, where he makes most of his money, or whom he pays and how much. In other words, this leak tells us very little about the core issues of Trump’s business entanglements that may—or may not—affect his policy decisions.

We also don’t know much about Trump’s itemized deductions, which came to about $17 million, according to the form. During the campaign, Trump claimed to be quite generous when it came to charity. Thanks to the dogged reporting of the Washington Post’s David Farenthold, we know a lot about his foundation and how he talked others into donating to it so that he could distribute those funds and take credit. Without a Schedule A form, we don’t know how much of his own money Trump actually gave in 2005.

Much has been made of the Emoluments Clause and the question of what Trump receives from foreign governments, whether it is through stays at Trump properties or trademarks for his various business interests in China. One great hope for the release of the tax returns has been that we would be able to see what favors Trump might be doing for others as he formulates U.S. policy and how he himself might benefit from his own decisions. Understanding the sources of Trump’s income, including the countries in which he makes most of his money and the people with whom he does business, might help explain why he threatens some countries with tariffs and not others. Or it could reveal that his foreign policy is completely disconnected from his financial interests. Trump’s behavior to date certainly suggests that he is self-regarding. He could go a long way toward addressing that reputation by revealing what his interests actually are.

Tuesday’s leak is certainly a step in the right direction for those interested in transparency and the important norm that presidents should make clear to the American people where their interests lie so that we can evaluate their motives. Nonetheless, it falls far short of what one might hope for. The leak simply reinforces Trump’s claim that he has made a lot of money without answering any of the questions about his financial dealings and potential conflicts of interest.

Tax Day is fast upon us. In a normal world, our president would release his tax returns for all to see. This ritual both reinforces the idea that we are all subject to the law and allows the American people to know that their president is not a crook. It also lets us know where the president’s financial interests lie so that we can be sure he has our interests at heart when he sets policy.

Perhaps Trump will surprise us all by releasing his taxes in the next few weeks. I’m not counting on it. While we cannot force him to behave as his predecessors have, we can at the very least refuse to let his nondisclosure pass unremarked upon. This still isn’t normal. And no one, whether Democrat or Republican, should let it become so.

March 14 2017 5:31 PM

One Conservative Wonk Tried Really Hard to Debunk the Blockbuster CBO Report. It Didn’t Go Well.

Republican officials have been at a complete loss for how to handle the Congressional Budget Office's blockbuster report estimating that their plan to replace Obamacare would leave an additional 24 million Americans uninsured by 2026. Many are staying silent. Others have tried, unconvincingly, to wave it off. House Speaker Paul Ryan has mysteriously decided to embrace the results, which seems about as wise as a hiker trying to fend off a grizzly by hugging it.

Into this rhetorical vacuum steps Avik Roy, a conservative health care wonk known for his strident criticisms of the Affordable Care Act. Roy is no fan of Trumpcare, either; he recently wrote a post titled “GOP's Obamacare Replacement Will Make Coverage Unaffordable for Millions—Otherwise, It's Great.” But he does think the CBO is greatly overestimating how damaging the legislation would be. In the end, Roy suggests that as few as 5 million Americans could end up uninsured because of the Republican plan. In other words, he believes the official estimate could be off by a whopping 19 million.

I don't think Roy's case is particularly strong. Unlike the attempts by Republican politicians to simply discredit the CBO in the run-up to its report, he is making a good-faith effort to question some of the assumptions underpinning its results, which is a fair and useful thing to attempt. But his own back-of-the-envelope math doesn't make a great deal of sense, in part because he conflates short-term issues the budget office identifies with long-term coverage declines.

Roy starts by noting a very technical but important point: The CBO's new report is unfortunately based on an outdated, overly optimistic assessment of how many Americans would buy insurance through Obamacare's exchanges if the law stayed in place. Specifically, the office starts from its March 2016 budget baseline, which forecast that within a couple of years 18 million people would enroll in health plans on the ACA's federal and state marketplaces. That's obviously not going to happen. If anything, the exchanges are shrinking right now (just 12 million people selected plans this year, down slightly from a year before) and in its most recent January update, the CBO lowered its expectations. It now thinks 11 million people will sign up for Obamacare coverage in 2018.

To be clear, there's no conspiracy here. The CBO did not decide to jump off from old, inaccurate numbers in order to undermine the GOP. The report says up top that it picked the March 2016 baseline in consultation with congressional committees, who were likely using it to craft their own legislation. But Roy thinks the decision massively distorts the office's forecast. The “baseline is off by 7 to 8 million in future exchange enrollment,” he writes, “hence, the impact of the [American Health Care Act] is also off by the same amount.”

That's probably wrong for at least a couple reasons, but the major one is this: Over the long term, the CBO doesn't actually think the individual market will shrink by much. Initially, many people would drop out after the individual mandate, which requires Americans to buy coverage or pay a tax penalty, was repealed. But over time, the availability of cheaper insurance would lure back more young people, so the individual market would shrink by just 2 million, on net. That's 2 million in a world where 24 million lose their coverage.

The CBO “ended up with a baseline that’s demonstrably inflated,” former CBO Director Douglas Holtz-Eakin, now president of the conservative American Action Forum, told me. “That’s a little misleading in the eyes of some.” But, he added: “I don’t think that’s driving the results, by any means, especially if you get to 2026, 10 years out.”

Douglas Elmendorf, dean of the Harvard's Kennedy School and another former CBO director named Doug, told me something similar in an email. “The bottom line is that CBO's baseline is uncertain, and the estimated effects of the AHCA would be different under the new baseline than the previous one. But there is no reason to think that the differences would be substantial.” In other words, on this issue Roy is really quibbling.

Now on to Roy's second big qualm: He believes the CBO is exaggerating what will happen if Republicans kill the Affordable Care Act's individual mandate. By 2018, the office thinks Trumpcare will cause 14 million fewer Americans to carry insurance, with “most of the reductions” stemming from the mandate's death. This strikes Roy as unbelievable. “The CBO has long believed that Obamacare’s individual mandate has near-magical powers to compel people to buy health insurance. There is little evidence to support this claim.” He thinks the CBO is overcounting its impact on insurance by maybe 9 million enrollees.

There is a very active debate about how effective the mandate has been at making people buy insurance (my general take: not effective enough). It's certainly fair to question whether ending it will have the dramatic near-term effects the CBO expects. But if we look at the long haul again, the mandate just isn't as important a factor in the CBO's analysis. Most people would lose coverage in its Trumpcare model because of outright cuts to Medicaid, which come in later years, and because fewer people would get insured through their employers, who would no longer be required to offer their workers health plans. The demise of the mandate might fuel some of those declines—the CBO thinks some workers might be less likely to pay for an employer plan if they weren't forced to, for instance—but not all of them.

Finally, Roy doesn't like how the CBO forecasts the future of Medicaid, because it assumes that were Obamacare to survive, about 5 million people would get coverage under the program's expansion, as more states decided to participate. This, he says, is also unrealistic.

“The states that haven’t expanded Medicaid have done so because they are concerned about exposing their taxpayers to significant and growing liabilities that the federal government may back away from over time. Those liabilities aren’t getting smaller as time goes forward, but larger,” he writes. “It’s equally, if not more likely, that Medicaid expansion in new states accounts for fewer than 2 million more enrollees by 2026.”

This is basically a political judgment. Maybe Roy has it right. But maybe he doesn't. Red and purple states like Louisiana and North Carolina that initially rejected Obamacare's Medicaid expansion have moved toward accepting it after electing Democratic governors (Republicans have tried to stop Roy Cooper's effort in the Tar Heel State). There's even a movement to make it happen in Kansas. If Florida alone were to take the expansion, it would make a huge difference. Roy's guess about how things would shake out is ultimately no better than the CBO's.

So Roy shaves 15 million uninsured from the CBO's estimate based on shorter-term issues that don't necessarily drive the office's 10-year outlook, and another 3 million based on his political instincts. This does not exactly strike me as a searing takedown.

Of course, the CBO's estimates aren't infallible. They involve a great deal of uncertainty, which the office admits up front, especially since some of the projections involve guessing how states will react to Trumpcare's various pieces. Will New York and California try to keep paying for the Medicaid expansion out of their own taxpayers' pockets once federal funding recedes? Will states use the money Congress would set aside to stabilize their individual markets for its intended purpose, or blow it patching up various budget holes? “There’s lots of room for reasonable disagreement on those things,” Holtz-Eakin told me. Indeed. I just haven't seen a compelling reason to disagree with the CBO's main point, which is that Trumpcare would leave a staggering number of people without insurance. And it's telling that so few conservatives are even trying to offer one.

March 14 2017 12:38 PM

One Good Thing About a Warm Winter? No Salt.

With a week to go until spring, the 50 million residents of the Northeast megalopolis have greeted today’s snowy, sleety nor’easter with mixed emotions.

On the one hand, there are new leaves on the rose bushes, the daffodils are pushing up, and a giant snowstorm feels a bit out of place.

On the other, no winter feels complete without a big blizzard. And as the big storm bookends a winter of extreme warmth—February was 7.3 degrees warmer than average, and cities set 11,743 record highs (vs. just 418 record lows)—it feels like a tonic for the fever of the anthropocene.

But there’s one reason to feel good about a winter with no snow: no salt. For a snowbound lunch today, you may notice how a little salt can change the flavor of a big bowl of soup. That’s essentially what’s happening to the wintry regions of the third soup bowl from the sun each year, as we dump millions of tons of sodium chloride on the roads to melt snow. In 2014, the U.S. used 24.5 million tons of the stuff on roads, compared to just 1.76 million tons for food processing. That’s more than twice as much road salt as we used in the ’80s, thanks in part to the high asphalt-per-capita ratio of urban sprawl. But salt use is still a response the weather, and when all is said and done, a year when cities from Chicago to Syracuse haven’t had much snow will probably be one of the lower salt consumption years in recent memory.

March 13 2017 7:05 PM

The Republican Health Care Plan Is a Nightmare for the Old and Nearly Poor

There are lots of losers under the Republican plan to replace Obamacare, but perhaps nobody would suffer as badly as older Americans who live just above or around the poverty line. According to the new estimates from the Congressional Budget Office, that group could see its insurance premiums rise by 750 percent within a decade under the House GOP's American Health Care Act, compared with what they'd pay under current law for more comprehensive coverage.

Yes, 750 percent. That's not a typo. That devastating increase is spelled out in the table below, in which the CBO models how premiums might change for Americans of different ages and incomes under the legislation Republicans have proposed. With Obamacare, a 64-year-old earning $26,500 per year in 2026—175 percent of the poverty line—would have to pay $1,700 for insurance, after tax credits. That plan would cover 87 percent of their medical costs, on average. Under the AHCA, or Trumpcare, that same person would owe a full $14,600 after tax credits for a plan that only covers 65 percent of their medical costs.

Suffice to say, an almost-senior citizen cannot afford to pay 55 percent of their income for health insurance.

cbo_table

CBO

Why the drastic increase? There are two main reasons: Under Trumpcare, insurers would be allowed to charge older Americans more, while the government would give lower-income Americans smaller subsidies to pay for coverage. Currently, insurers are only allowed to charge older customers three times what they charge younger individuals. The Republican plan would allow them to charge five times as much. Meanwhile, under the Affordable Care Act, the federal government gives people tax credits based on their income and the cost of insurance, which cap premiums as a percentage of their earnings. Trumpcare's premiums are only based on age—they don't take income or cost coverage into account—so poorer households tend to lose out. They're also set to grow more slowly, which doesn't help matters.

There are some winners in this bargain. Obamacare doesn't offer premiums subsidies for households that earn more than 400 percent of the poverty line. So some middle- and upper-middle-income Americans may come out ahead. A 40-year-old making $68,200 in 2026 would pay $6,500 under Obamacare; with Trumpcare's tax credit, he'd pay just $2,400 for an insurance plan that was only slightly less comprehensive. A 21-year-old with the same salary would benefit similarly, while a 64-year-old would pay slightly less than under Obamacare.

The CBO has often been criticized—perhaps unfairly—for its estimates about Obamacare's coverage effects. But its budgeteers were largely on target regarding the Affordable Care Act's effects on premiums. Republicans are already objecting that the office's estimate did not account for the way deregulation through the executive branch will bring down costs, by allowing insurers to sell less expansive policies. But that doesn't help older Americans with significant medical costs much. And as I mentioned before, these premium comparisons assume customers will buy far less comprehensive coverage. There's every reason to believe the projections on this table are at least directionally correct about what the effects of Trumpcare would be.

So you could call it a trade-off. Younger, higher-income Americans pay less, while older, poorer Americans—many of whom are likely Trump supporters—pay far, far more for less useful insurance. This is part of a bill, mind you, that would force many of these lower-income households into the individual market by cutting hundreds of billions from Medicaid. These trade-offs might be less severe if Republicans weren't determined to turn their legislation bill into a vehicle for massive, regressive tax cuts. But hey, everybody has their priorities.

March 13 2017 5:18 PM

Silicon Valley Is Having a Meltdown Because It Can’t Use Uber and Lyft at SXSW

Last May, voters in Austin, Texas, backed their city government’s hard line on background checks for Uber and Lyft drivers. Both companies exited the city immediately, putting regular users of the ride-hailing services in a fix—and leaving more than 10,000 drivers high and dry.

What has happened since has been considered a free-market success story, as the absence of the Silicon Valley duopoly made room for a handful of newer alternatives—by August, 10 licensed ride-hailing services had registered drivers with the city. "Austin is showing the world that yes, there is life after Uber,” CNN Money trumpeted on March 8. "And it's pretty good."

And then came South by Southwest, which brings about 70,000 people to downtown Austin each March. On Saturday evening, outages hit the new taxi startups, and overwhelming demand cascaded from one broken app to the next, leading to a ride-hail breakdown and conferencewide freakout.

And lo, the elites called out in one voice, and what they said was: Where the hell is my Uber?

“Austin is broken without Uber or Lyft,” tweeted Ryan Hoover, the founder of ProductHunt.

TechCrunch summed up the view from Silicon Valley. "Austin definitely missed its chance to prove that cities are ready to fully-function without Uber or Lyft,” a reporter wrote.

It was a convincing demonstration of how thoroughly Uber and Lyft have pervaded the habits of high-level American executives. According to Certify, a company that analyzes business expenses, business travelers in the fourth quarter of 2016 spent more than half of all ground transportation expenses, including rental cars, on Uber alone. It has been only six years since Uber launched in San Francisco, and already, its absence is like a phantom limb making founders writhe in frustration. In this wholesale class allegiance to a single transportation company, however, these people are outliers. Only 15 percent of Americans had ever used a ride-hailing service as of last year, according to Pew.

The outrage is dumb: Cities don’t function so differently now, by any metric, than they did before the ride-hailing apps debuted five years ago.

But it's also pernicious. It also illustrates how a happy reliance on Uber has blinded a whole group of influential Americans to a real mobility crisis in the U.S. that is getting worse, not better. For people without a car, the American city hasn’t been fully functioning for more than 50 years. Recent downtown improvements like streetcars and bike shares do little to address the transportation challenge of job sprawl. Bus ridership is plummeting nationwide; ridership on the nation’s second-busiest heavy rail system has fallen by 14 percent. For people who don’t drive, transportation networks are not getting them where they need to go. And no, ride-hailing services, no matter how much they subsidize fares, can’t fill that gap.

Planners like to debate the extent to which the rise of ride-hail and the decline of transit are related. I tend to think transit’s wounds are mostly self-inflicted. But ride-hail takes advantage of those shortcomings, pitching itself to regulators, investors, and consumers as a necessary patch for ailing transportation networks.

And the outburst from SXSW reminds me that so many loud voices don’t just not participate in that conversation about general mobility improvements in cities, they’re not even conscious of its existence. They think a city like Austin could reach "full function" with a handful of multinational taxi companies. They didn’t even think to complain about how Austin’s transit system has cut service in recent years, and ridership has fallen along with it—down an astounding 12 percent in 2016. Looking for a bus isn’t an instinct they have anymore.

It may be naïve, but I’d like to think that the culture of armchair transit experts agitating for better service has some incremental political effect in New York, creating a grassroots knowledge that filters up and out through reporters and political staffers.

I doubt the panelists of South by Southwest would ever have been lining up for Cap Metro bus service, even if the alternative was to call a taxi service. But would it kill them to complain about it? Among large U.S. cities, only San Juan lost more transit riders than Austin last year. That's a problem that the problem-solvers at SXSW could turn their attention to.

March 13 2017 5:07 PM

Trumpcare Would Leave 24 Million Without Insurance by 2026, Says Congressional Budget Office

The House Republican plan to replace Obamacare would leave 24 million additional Americans without health insurance by 2026 and cut $880 billion from Medicaid over a decade, according to a new, widely anticipated estimate from the nonpartisan Congressional Budget Office.

As a point of comparison, the Affordable Care Act extended insurance to an estimated 20 million Americans.

The Republican health care plan would cut spending on subsidies to help Americans purchase health insurance while rolling back the ACA's Medicaid expansion and capping per-person spending on the program, which insures lower-income Americans, going forward. It would also eliminate the requirement that Americans buy insurance or pay a tax penalty, as well as rules requiring employers to offer insurance to their workers.

The CBO expects that the law's combined effects would cause millions to lose coverage immediately, with losses growing over time. By 2018, 14 million fewer Americans would have health insurance—about 6 million fewer would purchase insurance on the individual market, while 5 million fewer would benefit from Medicaid. By 2026, Medicaid's projected enrollment would be 14 million lower than under current law.

The longer-term effects on the individual market are slightly more complicated. By 2020, 9 million fewer people would buy insurance on their own, compared with under Obamacare. By 2026, the losses would be down to 2 million, as “people would gain experience with the new structure of the tax credits and some employers would respond to those tax credits by declining to offer insurance to their employees.”

That's what passes for good news on the coverage front.

The CBO is slightly more sanguine about the legislation's effects on the federal budget. It would still shrink the 10-year deficit by $337 billion.* That's largely because it slashes that $880 billion from Medicaid, while shrinking spending on insurance subsidies by around $300 billion. That makes it possible for Republicans to pack in more than $590 billion in tax cuts, largely directed at the wealthy and health insurers, without swelling the national debt. So, you know, Trumpcare's got that going for it.

*Correction, March 13, 2017, at 5:30 p.m.: This post originally misstated that the CBO believes the Republican health care plan would shrink the 10-year deficit by $337. The estimate is $337 billion.

March 13 2017 12:31 PM

The White House Is Still Lying About the Obama Economy, and Journalists Are Letting Them Get Away With It

During the 2016 campaign, Donald Trump's go-to tactic for attacking President Obama's economic record was to simply assert that the numbers were all fake. The unemployment rate? It was “phony,” a “fiction,” “one of the biggest hoaxes in modern politics,” Trump suggested. In reality, he told voters, the job market was a disaster.

On Friday, the Bureau of Labor Statistics released the first jobs report covering President Trump's time in office. It was solid—U.S. businesses added 235,000 workers to their payrolls. So, naturally, a reporter decided to ask press secretary Sean Spicer during his afternoon briefing that day whether, given his past statements, Trump thought this jobs report was “accurate and a fair way to measure the economy”—you know, whether it was still a sham.

Spicer was ready. “I talked to the president prior to this, and he said to quote him very clearly,” the press secretary said, grinning like a 12-year-old about to win a spelling bee. “They may have been phony in the past, but it’s very real now.”

The whole room laughed. Loudly. Then the press conference moved on. It was almost a tender moment. Except the entire White House press corps was chuckling at the president's habit of spreading conspiracy theories about his political opponents—sometimes it’s wiretapping, more often it’s about unfriendly numbers—and then reversing himself once convenient. Apparently, pathological dishonesty is now a winking joke. That's our Trump!

The gag took another soul-crushing turn on Sunday, when White House Office of Management and Budget Director Mick Mulvaney sat down for an interview with CNN's Jake Tapper. Since the White House was now trumpeting the formerly phony jobs report, Tapper asked whether the Bureau of Labor Statistics had changed its methodology. What followed was an awkward, factually inaccurate attempt at evasion, in which Mulvaney insisted that, while he didn't want to bore the viewers with specifics, the Obama administration was definitely up to something fishy and the Trump administration was most definitely not.

“We’ve thought for a long time—I did—that the Obama administration was manipulating the numbers in terms of the number of people in the work force to make the unemployment rate, that percentage rate, look smaller than it actually was,” Mulvaney said. “And we used to tell people back home, the only thing you should really look at, number of jobs created. And as long as that number is above $250,000 [Note: He seems to have meant above 250,000 jobs], then the economy is doing extraordinarily well. And that was the number we hit last week.”

Nothing in this garble was true, except perhaps for the fact that Mulvaney might believe his own nonsense. The economy did not add 250,000 jobs in February. More importantly, the Obama administration did not manipulate any percentages—there are different ways to calculate unemployment and underemployment, some of which are broader than others. The Obama administration reported the same ones as past presidents. The Trump administration is reporting the same exact numbers as Obama, tallied in the same way. The figures haven't even changed much since Trump took office—the official unemployment rate is still 4.7 percent, like it was in December.

In his follow-up question, Tapper almost got Mulvaney to admit so much, before dropping the subject, seemingly out of exhaustion.

Tapper: But just to—I don’t want to spend the whole interview talking about this.
Mulvaney: Sure.
Tapper: But just a point on it—you’re not the one that was attacking the numbers as phony. There’s nothing that changed that made them real today?
Mulvaney: Right. The BLS did not change the way they count. I don’t think. But you could have a long conversation, when you have got a numerator and a denominator, how to arrive at a percentage. But again, I don’t want to bore people.
Tapper: This isn't a claim that you made, so I'm not going to spend too much time on it.

And that was it. Lame as his bit about the complexities of long division may have been, Mulvaney was allowed to end on the utterly baseless note that, somehow, the Trump administration was doing something differently, the specifics of which were just too dull for a television audience. And Tapper, typically one of the most aggressive interrogators on television, was content to leave it there as if this is, somehow, a B-level story.

It's not. The idea that Obama was lying about the state of the economy is a keystone in Trump's claim that he is actually making the job market great again. It's a core part of the the administration's narrative. And yet, even good reporters like Tapper barely seem to have the heart to press them on it. The rest have just decided to laugh it off.

Update, March 13, 3:50 p.m.

During Monday's press briefing, a reporter asked Spicer to elaborate on Mulvaney's comments about the unemployment rate. As usual, Spicer's response consisted of barely comprehensible verbal gymnastics. Here they are in full:

Reporter: Director Mulvaney said yesterday that he felt the Obama administration had been manipulating the unemployment rate. I wonder if that’s a view that the president shares and what evidence is there of that.

Spicer: I think he was clearly referring to Obamacare. [Note: No, he wasn't] With the number of people, but I would refer you back to him and his comments with respect to how he characterized that. I think he can discuss the precise nature of what he meant on that.

Reporter: Does the president think that the Obama administration had been manipulating the unemployment rate.

Spicer: I think you know what the president’s view is. He’s made it very clear in the past what his comments were on how those numbers were, were articulated in the past. I think there’s a question between the total number of people that are employed. And the president’s comments in the past have reflected that his big concern was getting to the bottom of how many people are working in this country, and that the denominator, meaning that the percentage rate of the total number of people, is not the most accurate reflection of how many people are employed in this country. How many jobs we’re creating, how many people are getting back to work, how many companies are committing to hiring more people is a much more accurate assessment of where we’re heading as a country, where our employment is, where our economy is headed. But to look at a number and say we have 4.7 or 4.8 or 5.9 percent unemployment is not necessarily an accurate reflection of how many people are working, seeking work, or want to work, and if you know how they conduct those surveys, there’s a lot of time when a lot of people, whether they’re older or younger or because of how long they’ve been searching for work are not considered statistically viable anymore and they’re washed away. So I think how you look at the percentage of people working can sometimes be a manipulated number. The number of people that are added to the rolls every year, every month rather, is a much more accurate understanding of what’s happening in the economy.

This is obfuscatory nonsense. One can argue about whether the headline unemployment rate, which Trump has criticized, tells us anything useful about the health of the economy. For what it's worth, I think there are better, more informative stats out there. But the administration has not accused Obama of emphasizing the wrong number. It has accused him of manipulating the numbers, which is a lie. The facts here are simple: The Department of Labor is publishing the same exact statistics it reported under the last administration, tallied the exact same way. But Trump and his underlings refuse to admit that, because it would undercut their message about the economy.

Still, it's good to see that the White House press corps  didn't let this issue drop today. Again, it isn't something that should be chuckled away.

March 10 2017 6:56 PM

Corporate Incentives Cost U.S. $45 Billion in 2015, Don’t Really Work

The corporate tax breaks you tend to hear about are the outliers: Tesla’s $1.3 billion from Nevada, Boeing’s $8.7 billion from Washington state, Mike Pence’s deal to keep some Carrier jobs in Indiana.

Less flashy but more important, a February report from the Upjohn Institute for Employment Research suggests, are the run-of-the-mill economic development incentives built into state law across the country and designed either to attract companies, to keep them in place, or to get them to add positions. In 2015, incentives for new or expanding export-based industries (i.e., manufacturing, tech, media, any company that sells its goods or services beyond the local economy) offset average state and local business taxes by 30 percent, costing the U.S. $45 billion.

The report, based on a database of 26 years of incentives in 33 states, affirms the consensus that these tax breaks—which have tripled since 1990, when the database begins keeping track—don’t do much to convince companies to move.

“There’s big disparity in incentives across even adjacent states,” explained Timothy Bartik, a senior economist at Upjohn and the author of the report. Incentives can vary by as much as 3 to 1 across state lines, and there’s little evidence they exert a strong effect on corporate geography, said Bartik, or respond to in-state economic trends. “The largest predictor of whether a state is offering a lot of incentive deals is whether they offered them the year before.” In other words: States don’t offer these deals to companies because they need to, but because it’s simply what they already do.

March 10 2017 6:41 PM

Trumpcare’s Only Fan Is a Massive Insurance Company That Really Needs a Favor Right Now

By gawd, there's finally someone out there who says they like Trumpcare—or parts of it anyway. Anthem, the nation's second largest health insurer, expressed its support for the Republicans' Obamacare replacement in a letter to the House Energy and Commerce and Ways and Means committees, as Morning Consult reports Friday. In the note, CEO Joseph Swedish says that without major changes to the Affordable Care Act, his company will begin to “surgically extract” itself from the individual insurance market in 2018, and that the “time to act is now.”

Anthem has previously said that it might bail on the Obamacare markets in 2018, so this letter doesn't come as a great shock. It's also worth noting, as Politico does, that Anthem has been trying to win approval from Washington to buy up its rival, Cigna—which suggests it has some incentive to play nice with the administration.

The question is whether Anthem really supports the whole Republican plan, or just really likes a few key parts. Swedish writes that, “The American Health Care Act addresses the challenges immediately facing the Individual market and will ensure more affordable health plan choices for consumers in the short term,” then name-checks a few “critically important” provisions. Namely:

  • "Establishment of the Patient and State Stability Fund" (This would compensate insurers that lose a ton of money on sick patients.)
  • "Repeal of the ACA’s health insurance tax" (Health insurers don't want to be taxed.)
  • "Continuation of the Cost Sharing Reduction (CSR) subsidies" (This is complicated, but these federal payments to insurers are basically essential to making Obamacare work, and some have worried Trump would cut them off.)
  • "Allowing the use of tax credits for ‘off exchange’ health plans.” (That would make it easier for insurers to sell whatever the heck they want.)

In short, health insurer Anthem is very much in favor of the provisions that would be obviously beneficial to the health insurance industry. “These provisions are essential and must be finalized quickly,” Swedish writes.

Does this mean Swedish backs everything in the bill? It's hard to tell. The letter never says anything clear-cut like: “We would like to see the current incarnation of this legislation pass.” And the CEO is silent on one aspect of the bill that's worried other insurers and the industry's major lobbying group—the elimination of Obamacare's requirement that Americans buy insurance or pay a tax penalty, which Republicans would replace with a much weaker provision. Swedish also says Anthem is still “thoroughly reviewing and evaluating the legislation further to better understand the changes to both the Individual market and the Medicaid program.” But in the meantime, the company apparently likes Trumpcare enough to write a mostly supportive letter, and maybe win itself a little goodwill and influence in the process. Someone had to cheer for this thing, eventually.

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