Early Exchange Bids from NY are VERY LOW

This news is sufficiently important that I am posting sections of several articles and summaries.

From July 16, 2013 New York Times:

Health Plan Cost for New Yorkers

Set to Fall 50%

By and
Published: July 16, 2013

Individuals buying health insurance on their own will see their premiums tumble next year in New York State as changes under the federal health care law take effect, Gov. Andrew M. Cuomo announced on Wednesday.

Read Full article here. Particularly view the graphic.

http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/health_insurance_and_managed_care/index.html?inline=nyt-classifier

Comments from today:

New York Times

9) Obamacare is the Right’s Worst Nightmare
from New York Times by Paul Krugman

News from New York: it looks as if insurance premiums on the individual market are going to plunge thanks to Obamacare. This shouldn’t come as a surprise; in fact, the New York experience perfectly illustrates why Obamacare had to look the way it does. And it also illustrates why conservatives should be terrified about this legislation, as it takes effect. Americans may have had a lot of misgivings in advance, thanks to vast, deliberately spread misinformation. But I agree with Matt Yglesias – unless the GOP finds even more ways to sabotage the plan, this thing is going to work, it’s going to be extremely popular, and it’s going to wreak havoc with conservative ideology.

Wall Street Journal

10) Big Labor Wakes Up to ObamaCare
from Wall Street Journal by Editorial Board

Every revolution devours its children, but it’s still surprising to see some of ObamaCare’s keenest boosters deny paternity so soon after the birth. Witness the emotional volte-face from three top union leaders, warning that the program will “shatter not only our hard-earned health benefits, but destroy the foundation of the 40-hour workweek that is the backbone of the American middle class.”

 

11) ObamaCare’s Coalition Begins to Fracture
from Wall Street Journal by Karl Rove

The three union leaders also complained their nonprofit insurance plans are still subject to ObamaCare’s new 2%-3% tax on each insurance policy. They want their members exempted from the tax every other family with health insurance must pay. Who knew labor leaders were such staunch tax opponents? It will not help Democratic enthusiasm in the 2014 midterm elections if ObamaCare causes (a) more workers to lose their union-provided insurance and (b) their hours and paychecks to be cut. In addition, Democratic candidates could be seriously damaged if the three labor bosses follow through on their letter’s threat to stop helping elect Democrats if the law isn’t changed.

2) Obama to Tout Americans Already Benefiting from Health Law
from USA Today by Aamer Madhani

President Obama will use a speech at the White House on Thursday to tout how a provision in his signature health care law is forcing health insurance providers to return money to consumers. With his administration facing deadlines to establish health care exchanges in all 50 states by Oct. 1 and GOP lawmakers continuing to call for a repeal of the law, the president is looking to trumpet the law by highlighting one of the most tangible ways Americans are benefiting from it even as his administration struggles to fully implement it. With that objective in mind, Obama will hone in on what is known as the medical loss ratio provision of the health care law in his speech. The provision requires insurers to refund customers when they spend less than 80% of premiums they collect on medical care. This year the provision will result in 8.5 million Americans receiving $500 million in rebates later this summer, according to the Department of Health and Human Services. The agency estimates that the average rebate is about $100 per family.

Washington Post

8) Obama’s Last Campaign: Inside the White House Plan to Sell Obamacare
from Washington Post by Ezra Klein and Sarah Kliff

The focus on young, minority voters. The heavy reliance on microtargeting. The enthusiasm about nontraditional communications channels. The analytics-rich modeling. It sounds like the Obama campaign. And administration officials don’t shy away from the comparison. But the effort will have to go far beyond engineering turnout among key demographics. The administration needs to build more insurance marketplaces than they ever expected, and create an unprecedented IT infrastructure that lets the federal government’s computers seamlessly talk to the (often ancient) systems used in state Medicaid offices. They need to fend off repeal efforts from congressional Republicans – like Wednesday’s vote to delay the individual mandate – and somehow work with red-state bureaucracies that want to see Obamacare fail. And they can’t escape the fact that the law, three years after passage, remains stubbornly unpopular.

To the Sea by the T

Although Boston has many beaches, all swimmable, many people just go to the Cape and don’t think to try the beaches nearby. This link from BU TODAY, To the Sea by the T has a really cool Map showing the beaches and how to get there via the T for the cost of a subway fare. My favorite is Revere Beach (200 meters from the Blue Line Revere Beach stop), particularly for the National Sand Sculpting Festival that runs July 19-21 in 2013. Most people’s favorite is Nantasket Beach on Hull (best by car, since still a 3.1 mile walk or short taxi from the T).  Bicycling is another option…  Taking the ferry to one of the Boston Harbor Islands is another easy choice.

To the Sea by the T

A guide to MBTA-accessible beaches
Map

http://www.bu.edu/today/2013/boston-beaches-accessible-by-mbta/

National Sand Sculpting Festival

Unbelievable pictures from past sand sculpture contests at Revere Beach.

2012 and 2012

2011

2010

2006

Enjoy Summer!

Useful reference for serious SAS programmers

I often do bootstrap and simulations in my research, and for some background research, I found the following excellent short article on how to use SAS to do efficient replications/bootstrapping/jackknifing.

Paper 183-2007
Don’t Be Loopy: Re-Sampling and Simulation the SAS® Way
David L. Cassell, Design Pathways, Corvallis, OR

http://www2.sas.com/proceedings/forum2007/183-2007.pdf

Here is an elegant example that shows how to do 1000 replications of the Kurtosis of X. Note that proc univariate could be replaced with anything. Discussion of proc append and critique of alternative programs is also useful.

(I will note that it starts by creating a sample that is 1000 times as large as the original, but still, it is very fast given what is being done.)

proc surveyselect data=YourData out=outboot /* 1 */
seed=30459584 /* 2 */
method=urs /* 3 */
samprate=1 /* 4 */
outhits /* 5 */
rep=1000; /* 6 */
run;
proc univariate data=outboot /* consider noprint option here to reduce output */;
var x;
by Replicate; /* 7 */
output out=outall kurtosis=curt;
run;
proc univariate data=outall;
var curt;
output out=final pctlpts=2.5, 97.5 pctlpre=ci;
run;

31 charts to destroy your faith in humanity

This humorous web site from the Washington Post’s WonkBlog is worth a look. It will only take a couple of minutes.

31 charts that are informative but illustrates how one can put a negative spin on anything.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/24/these-31-charts-will-destroy-your-faith-in-humanity/

Here is the original post that it is spoofing.

http://www.businessinsider.com/charts-that-will-restore-your-faith-in-humanity-2013-5

Congrats to our 570 New Graduates!

I invite you to join me in celebrating our Class of 2013  Department of Economics graduates.

This past weekend, Boston University’s College of Arts and Sciences Department of Economics awarded degrees to

21    PhD students
257 MA students  of all kinds (MA, MAPE, MAEP, MAGDE MA/MBA, BA/MA)
292 BA students

Congratulations to all 570 degree recipients!

The number of graduate degree recipients (278) fell behind the number of  BA students (292) with strong grown in both!

Last year (2012) there were 15 PhDs, 245 MA degree recipients, and 257 BA recipients. Overall, we had a one year growth of over 10%!

Wennberg, Staiger et al on Observational Intensity Bias

This very interesting paper by John Wennberg, Doug Staiger et al develops a new approach for calibrating risk adjustment models so as to not over adjust for the higher intensity of coding that results when there are more visits. In short, in markets where doctors do more visits, they will also tend to code more diagnoses. Their approach takes into account both visits and diagnoses to improve model fit. There are many further questions one could ask, but this is destined to be an influential paper.

http://www.bmj.com/highwire/filestream/632298/field_highwire_article_pdf/0/bmj.f549

NEJM Study Says Eat Olive Oil and Nuts

There has been a lot of news recently about a NEJM randomized trial  Spanish study of diets that shows  statistically significant benefits of two Mediterranean diets, one providing free olive oil, the other providing free nuts (mostly walnuts), along with other diet recommendations.Scientists randomly assigned 7,447 men and women in Spain over age 55 who were overweight, were smokers, or had diabetes or other risk factors for heart disease to follow the Mediterranean diet or a low-fat diet as the control group. Here is the key paragraph from the NY Times.

“One group assigned to a Mediterranean diet was given extra-virgin olive oil each week and was instructed to use at least 4 four tablespoons a day. The other group got a combination of walnuts, almonds and hazelnuts and was instructed to eat about an ounce of the mix each day. An ounce of walnuts, for example, is about a quarter cup — a generous handful.”

The articles in the Times and Post have emphasized that it was the Mediterranean diet, but the following important blog from Dr. Aaron Carroll, highlights that it very likely that the effects were solely due to increased olive oil and nuts, since the three groups do not differ meaningfully in their consumption of other foods (red meat, fish, vegetables, fruit, grains, red wine, etc.).  Hence instead of saying “Go Mediterranean”, it should have said “Eat Olive Oil and Nuts” to reduce heart and stroke risks.

See table linked in this blog.

Now we’re all going Mediterranean?

http://theincidentaleconomist.com/wordpress/now-were-all-going-mediterranean/

More work should be done in this area.

Here is the full cite and abstract from the NEJM.

Primary Prevention of Cardiovascular Disease with a Mediterranean Diet

Ramón Estruch, M.D., Ph.D., Emilio Ros, M.D., Ph.D., Jordi Salas-Salvadó, M.D., Ph.D., Maria-Isabel Covas, D.Pharm., Ph.D., Dolores Corella, D.Pharm., Ph.D., Fernando Arós, M.D., Ph.D., Enrique Gómez-Gracia, M.D., Ph.D., Valentina Ruiz-Gutiérrez, Ph.D., Miquel Fiol, M.D., Ph.D., José Lapetra, M.D., Ph.D., Rosa Maria Lamuela-Raventos, D.Pharm., Ph.D., Lluís Serra-Majem, M.D., Ph.D., Xavier Pintó, M.D., Ph.D., Josep Basora, M.D., Ph.D., Miguel Angel Muñoz, M.D., Ph.D., José V. Sorlí, M.D., Ph.D., José Alfredo Martínez, D.Pharm, M.D., Ph.D., and Miguel Angel Martínez-González, M.D., Ph.D. for the PREDIMED Study Investigators

February 25, 2013DOI: 10.1056/NEJMoa1200303

http://www.nejm.org/doi/full/10.1056/NEJMoa1200303?query=featured_home#t=article

Abstract: The traditional Mediterranean diet is characterized by a high intake of olive oil, fruit, nuts, vegetables, and cereals; a moderate intake of fish and poultry; a low intake of dairy products, red meat, processed meats, and sweets; and wine in moderation, consumed with meals. In observational cohort studies and a secondary prevention trial (the Lyon Diet Heart Study), increasing adherence to the Mediterranean diet has been consistently beneficial with respect to cardiovascular risk. A systematic review ranked the Mediterranean diet as the most likely dietary model to provide protection against coronary heart disease. Small clinical trials have uncovered plausible biologic mechanisms to explain the salutary effects of this food pattern. We designed a randomized trial to test the efficacy of two Mediterranean diets (one supplemented with extra-virgin olive oil and another with nuts), as compared with a control diet (advice on a low-fat diet), on primary cardiovascular prevention.

Steve Brill Interview on the Daily Show

Steve Brill, who just wrote a 36 page article for Time Magazine, conducted an informative interview on the daily show on Thursday, Feb 21, 2013. Here is the link to the unedited version. It is in three parts, and lasts about 12 minutes (including some ads). Worth watching if you have time.

http://www.thedailyshow.com/watch/thu-february-21-2013/exclusive—steven-brill-extended-interview-pt–1

Myths, Presumptions, and Facts about Obesity

There is a very interesting article about obesity in this week’s New England Journal of Medicine. I recommend it highly to anyone interested in the topic.

K. Casazza and Others | N Engl J Med 2013;368:446-454

To tempt you to look at the full article, here is the list of what the team considers myths.

___________________________

Myths

Small sustained changes in energy intake or expenditure will produce large, long-term weight changes

Setting realistic goals in obesity treatment is important because otherwise patients will become frustrated and lose less weight

Large, rapid weight loss is associated with poorer long-term weight outcomes than is slow, gradual weight loss

Assessing the stage of change or diet readiness is important in helping patients who seek weight-loss treatment

Physical-education classes in their current format play an important role in preventing or reducing childhood obesity

Breast-feeding is protective against obesity

A bout of sexual activity burns 100 to 300 kcal for each person involved

____________________________

Read the article to learn about “presumptions” and “facts”.

#5 “Let the Children and Grandchildren Pay?”

Time to Change the Tax Discussion #5

This is the  fifth and final posting in a five part series about taxes.

Every time congress passes legislation to increase public spending, they should have to specify which taxes they favor increasing to balance the budget. If not, then congress should have to openly discuss why they believe it is appropriate to LET THE CHILDREN AND GRANDCHILDREN PAY. If every unfunded benefit increase included this selfish labeling of the congressmen who voted for it, perhaps it would make it more stigmatizing to fight unfunded wars, increase discretionary spending (e.g., disaster relief) or resist Medicare payment increases without other spending cuts or tax increases.

Case in point: as I write this blog the House is debating how large the Hurricane Sandy relief fund should be, in the neighborhood of $50 billion ($160 per American). While I favor this expenditure, but I also favor committing to how we will pay for it (even if we only start next year…) This is a large enough expense that Congress should also be committing to the tax increase that will pay for it. For example 1% more income tax on the wealthy, or eliminating one subsidy or tax subsidy would do it. Note that ObamaCare legislation was forced to do this. It is possible.

Almost every Republican in Congress has signed Grover Norquist’s No Tax Pledge not to increase any taxes, ever. This pledge is highly destructive of rational discussion of taxes and deficit reduction. I would be much happier if fiscally conservatives  instead signed a pledge not to increase our budget deficit ( and hence national debt) unless it is specifically part of an economic stimulus to deal with a potential or actual recession. Too often we have cut taxes even in times of a growing economy, effectively pushing onto our children and grandchildren (who do not even vote yet) the burden of paying for our overspending.

Increasing taxes will never be attractive, but why should we LET THE CHILDREN AND GRANDCHILDREN PAY?

Here are links to my four previous blogs on Taxes

#1 All Taxes and Budgets Should be Expressed as Dollars per Person

#2. Include Social Security and Medicare taxes when discussing tax burdens

#3 Tax Bads (or at least don’t subsidize them!)

#4 State Tax Rates are Not Related to State Income or Growth

#5 “Let the Children and Grandchildren Pay?”

#4 State Tax Rates are Not Related to State Income or Growth

Time to Change the Tax Discussion #4

This is the fourth in a five part series about taxes.

It has  become common in the media to argue that state income or sales taxes cannot be increased or it will dampen incentives and hurt the state or local economy. While this might be true at sufficiently high tax rates, there is no evidence that tax rates currently imposed on income or sales by states has any effect on the level or growth rates of the state economy. The following nine plots will let you decide for yourself whether there is any relation between

{Sales tax revenue, income tax revenue, or total state and local government revenue}

and

{Levels of Gross State Product per Capita, One year changes in Gross State Product (the “recovery”) and Ten year changes in Gross State Product per Capita)

If there is, it is a very weak relationship, not worth worrying about. Instead we should be debating whether we want more or fewer government services relative to private goods.

All data used state-level rates as stored on the  web site http://www.usgovernmentrevenue.com maintained by Christopher Chantrill, self-described “writer and conservative”.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I intentionally chose a strong title for this blog. My academic colleagues will reasonably argue that sales and income taxes DO have some dampening effect on a state economy. I do not disagree that there is some effect. But these graphs reveal that it is not detectable when it is realized that tax increases are used to pay for public services. For political decision-making, which of the following two statements is more nearly true? I would go with the latter.

Raising sales or income taxes by one percent in order to invest in bridges, public transit and education will have a meaningful negative effect on the state economy.

Raising sales or income taxes by one percent in order to invest in bridges, public transit and education will have a meaningful positive effect on the state economy.

Here are links to the previous three blogs on Taxes

#1 All Taxes and Budgets Should be Expressed as Dollars per Person

#2. Include Social Security and Medicare taxes when discussing tax burdens

#3 Tax Bads (or at least don’t subsidize them!)

#3 Tax Bads (or at least don’t subsidize them!)

Time to Change the Tax Discussion #3

This is the third in a five part series about taxes.

Introductory economics tells us that when the government taxes something, unless it is perfectly inelastically supplied or demanded, the tax will cause a distortion in a market and reduce the taxed activity. For most things (labor, profits, food, etc.) this reduction is considered a bad thing, and causes welfare losses. Yet taxes on BADS (i.e., goods with strong negative externalities) are welfare improving, since they reduce something that you want to reduce anyway.  Almost all economists will agree with this conceptually. Yet politicians and consumers are not forced to confront this reality. Perhaps economists could do a better job holding politicians accountable to this, by speaking out more. Here are six examples from recent policy debates. Why are economists not lining up behind these?

1. Tax the Sale of Guns.

The constitution asserts the right of people to own “arms” but says nothing about them being free or cheap. Econmists should favor taxing the sale of all guns, and even taxing the annual ownership of guns (similar to what we do for cars and housing) because of their large negative externalities. Higher taxes on more dangerous weapons (e.g. assault weapons), would also be appropriate. We could raise several billion dollars a year this way, and even earmark it for the extra medical care and law enforcement made necessary by the widespread ownership of guns. (In theory, I prefer not to earmark revenues, but history shows it is much easier to pass legislation if this is done, such as taxes on cigarettes. Hence in practice I support it.)

2. Tax Carbon

We will never have unanimous agreement that our excess carbon is a major cause of global warning, but we don’t need to believe this unanimously to be willing to act on it. British Columbia (Canada) implemented a carbon tax in 2008 which is raising billions of dollars while nudging people to use less fuel. Look at two recent postings here

Climate Action Through a Tax Swap Describes a currrent initiative in Washington State to implement a state carbon tax. See numerous links within it.

More on BCs carbon tax shift. Posted in 2009 this discusses the reasons for the British Columbia’s tax

3. Remove US Subsidies on Corn and Sugar

It is totally bizarre that at the same that we are thinking of taxing soft drinks for their sugar content, we are still spending billions on subsidizing corn (and hence high fructose corn syrup). US Department of Agriculture numbers show that in 2011 alone we spent 4.9 billion dollars subsidizing corn, which is  $16 per American. Visit the excellent website of  Environmental Working Group, which tracks agricultural subsidies and focus on Corn if you wish.

Remarkably, even farmers in Massachusetts benefit from the corn subsidy:

Corn Subsidies** in Massachusetts totaled $16.8 million from 1995-2011.

That works out to $4 per Massachusetts resident over 17 years. But the Massachusetts subsidy is nothing compared to Iowa which received

14.9 billion dollars ($4,866 per resident, or $286 per Iowa resident per year) over the same period. 2011 is not a particularly large outlier.

For further discussion of the serious problems with our crop insurance program consider this quote about US crop insurance.

“The most stunning evidence of the need to overhaul the current system is Dr. Babcock’s estimate that taxpayers
send $1 dollar to insurance companies and agents for every $1 dollar that goes to farmers.”

Bruce Babcock “Giving It Away free: Free Crop Insurance Can Save Money and Strengthen the Farm Safety Net”
April 2012, (Professor of Economics at Iowa State University)

http://static.ewg.org/reports/2012/farm_bill/babcock_free_crop_insurance.pdf

4. Remove subsidies on US fossil fuel production, consumption, and depletion.

This follows from point #2 above. I know it is hard to do, but so is a Carbon Tax.

The surprising reason that Oil Subsidies Persist: Even Liberals Love them. Forbes, April 25, 2012.

We should not be subsidizing oil, coal and natural gas: 15.1 billion dollars in 2010 ($48 per American in 2010), according to OECD estimates.

5. Tax (more) people who do not purchase health insurance

As a health economist, I had to add at least one health related “bad”.

The Affordable Care Act of 2010 includes provisions for taxing people who choose not to purchase health insurance, as it should, since they impose costs on the rest of us who do by: relying on charity care when they have emergency medical needs, relying on bankruptcy when they have high uninsured costs, and raising average premiums for insurance buyers since the people not buying insurance are on average healthier (and lower cost) than average. Hence this tax will be welfare improving, overall.

I thought about discussing/supporting taxes on obesity, smoking, or alcohol abuse, but see lots of problems with that, even those these are bads, often under the control of consumers.

6. Don’t subsidize war

War is bad, and has a lot of negative externalities. (Yes, there are also some benefits.) In 2013 the US will spend $902 billion  on national defense (excluding police, fire, law and prisons). That is $2863 per American in 2013 alone on “defense”. (Health and Education have mostly positive externalities.)

Brown University researchers maintain a web site on the cost of wars since 9/11

Here is one sobering sentence from a recent press release.

“The war bills already paid and obligated to be paid by the U.S. federal government as of fiscal year 2012 are $3.7 trillion in constant dollars.”

That is $11,746 per US citizen…

There are many more bads that should be taxed and not subsidized, but I will end here.

For related discussion see the earlier blogs

#1 All Taxes and Budgets Should be Expressed as Dollars per Person

#2. Include Social Security and Medicare taxes when discussing tax burdens

2007-2011 MarketScan Data at Boston University

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Letter calls for gun injury research

Colleague Austin Frakt forwarded to me the link to an open letter to VP Joseph Biden and members of the Gun Violence Commission.

http://crimelab.uchicago.edu/sites/crimelab.uchicago.edu/files/uploads/Biden%20Commission%20letter_20130110_final.pdf

The letter is signed by over 100 well-known health professionals, policymakers and economists.

The letter addresses the fact that both teh CDC and the NIH agencies are currently prohibited from funding research on the health effects of guns.

Anyone serious about wanting to understand how to control gun violence should support the letter’s two recommendations:

RECOMMENDATION ONE: We call for the removal of the current barriers to firearm-related
research, policy formation, evaluation and enforcement efforts.

RECOMMENDATION TWO: We call on the federal government to make direct investments in
unbiased scientific research and data infrastructure.

The following table in the letter tells the story clearly.

9 Branas, C., Wiebe, D., Schwab, C. & Richmond, T. (2005) Getting past the “f” word in federally funded public health research, Injury Prevention 11(3): 191.
10 http://projectreporter.nih.gov/reporter.cfm
11 Calculated updated numbers for 2002 -2012 for cholera and rabies using average case occurrences per year

Commonwealth Fund Report on Health Care Cost Control

The Commonwealth Fund has just come out with a new report outlining a strategy for containing health care costs in the US. It seems rather optimistic to me. Here is the opening two paragraphs and link.

Confronting Costs: Stabilizing U.S. Health Spending While Moving Toward a High Performance Health Care System, Authored by The Commonwealth Fund Commission on a High Performance Health System
January 10, 2013

Michael Chernew (Harvard) is the only economist on the Commission, which is mostly MDs and MBAs.

“Overview

The Commonwealth Fund Commission on a High Performance Health System, to hold increases in national health expenditures to no more than long-term economic growth, recommends a set of synergistic provider payment reforms, consumer incentives, and systemwide reforms to confront costs while improving health system performance. This approach could slow spending by a cumulative $2 trillion by 2023—if begun now with public and private payers acting in concert. Payment reforms would: provide incentives to innovate and participate in accountable care systems; strengthen primary care and patient-centered teams; and spread reforms across Medicare, Medicaid, and private insurers. With better consumer information and incentives to choose wisely and lower provider administrative costs, incentives would be further aligned to improve population health at more affordable cost. Savings could be substantial for families, businesses, and government at all levels and would more than offset the costs of repealing scheduled Medicare cuts in physician fees.” from The Commonwealth Fund Report

The heart of their analysis is in the technical report by Actuarial Research Corp.

Jim Mays, Dan Waldo, Rebecca Socarras, and Monica Brenner “Technical Report: Modeling the Impact of Health Care Payment, Financing, and System Reforms” Actuarial Research Corporation, January 10, 2013

The areas they simulate are revealed in the table of content headings. Nice recent references.

Introduction ……………………………………………………………………………………………………………………………….. 1
I. Improved Provider Payment ………………………………………………………………………………………………….. 4
II. Primary Care: Medical Homes ………………………………………………………………………………………………… 7
III. High-Cost Care Management Teams …………………………………………………………………………………….. 13
IV. Bundled Payments ……………………………………………………………………………………………………………… 16
V. Modified Payment Policy for Medicare Advantage …………………………………………………………………. 22
VI. Medicare Essential Benefits Plan ………………………………………………………………………………………….. 26
VII. Private Insurance: Tightened Medical Loss Ratio Rules ……………………………………………………………. 30
VIII. Reduced Administrative Costs and Regulatory Burden ……………………………………………………………. 32
IX. Combined Estimates …………………………………………………………………………………………………………… 35
X. Setting Spending Targets …………………………………………………………………………………………………….. 37
Appendix A. Creating the “Current Policy” Baseline ……………………………………………………………………….. 40

 

Be Ready for the Trillion Dollar Coin!

In case you have not been paying attention, there is growing sentiment in favor of the Platinum Coin Seigniorage (PCS) and the Trillion Dollar Coin.

Here are two solid posts on it, one by economist Paul Krugman, the other by Philip Diehl, former director of the US mint .

The crux of the issue is that the debt ceiling,  created by legislation of our congress, is inconsistent with the powers enumerated in the constitution, specifically the fourteenth amendment.

Be Ready To Mint That Coin

http://krugman.blogs.nytimes.com/2013/01/07/be-ready-to-mint-that-coin/?smid=tw-NytimesKrugman&seid=auto

Co-author of platinum coin law weighs in on trillion dollar coin

http://www.dailykos.com/story/2013/01/08/1177211/-Co-author-of-platinum-coin-law-weighs-in-on-trillion-dollar-coin?detail=email

Here is the relevant sentence in section 4, of the 14th amendment of the US constitution.

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

This amendment was passed in July 9, 1868 and “Section 4 confirmed the legitimacy of all United States public debt appropriated by the Congress.” Wikipedia.

Here is the Wikipedia discussion of the issue, somewhat dated.

The issue of what effect Section 4 has regarding the debt ceiling remains unsettled.[52] Legal analyst Jeffrey Rosen has argued that Section 4 gives the President unilateral authority to raise or ignore the national debt ceiling, and that if challenged the Supreme Court would likely rule in favor of expanded executive power or dismiss the case altogether for lack of standing.[53] Erwin Chemerinsky, professor and dean at University of California, Irvine School of Law, has argued that not even in a “dire financial emergency” could the President raise the debt ceiling as “there is no reasonable way to interpret the Constitution that [allows him to do so]“.[54]

 

US Cardiovascular Diseases Rates are Improving But…

I browsed to the following overview of US research on Heart, Lung, and Blood diseases in the US. This report documents the dramatic improvements in cardiovascular health in the US, which they estimate costs the US about $300 billion or about $1000 per American in 2008 (Direct of treatment and indirect costs from premature mortality).  This makes the US look good, until they compare this trend to trends in other countries, which are almost all better, and have also had large decreases in mortality from 2000 to 2008. We currently spend $3 billion per year on research on Heart, Lung and Blood diseases ($10 per American per year). Below are three figures all from this one report.

http://www.nhlbi.nih.gov/about/factbook/FactBook2011.pdf

 

 

 

 

 

1994 assault weapons ban may have saved 6000 lives per year

Although not a statistical statement, there is a noticeable association between when the 1994-2004 assault weapon ban was in place and the observed decline in gun-related deaths. That ban also contained other provisions that will have affected availability of guns.

A decline of more than 6000 gun-related deaths per year appears to be  associated  with that legislation before it expired. See linked picture.

 

Another articles on this issue also has compelling graphs. The title of the paper could be its abstract..

S Chapman, P Alpers, K Agho, M Jones. 2006. Australia’s 1996 gun law reforms: faster falls in firearm
deaths, firearm suicides, and a decade without mass shootings.
Injury Prevention 2006;12:365–372. doi: 10.1136/ip.2006.013714

 

Two Great Articles in the December JEL

Journal of Economic Literature, December 2012

Two great articles.

Racial Discrimination in the Labor Market: Theory and Empirics

Kevin Lang and Jee-Yeon K. Lehmann

We review theories of race discrimination in the labor market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy. (JEL J15, J31, J64, J71)
Wonderful synthesis from Kevin and Lehmann, a recent BU Ph.D. alum.

Full-Text Access | Supplementary Materials 

Psychologists at the Gate: A Review of Daniel Kahneman’s Thinking, Fast and Slow

Andrei Shleifer

The publication of Daniel Kahneman’s book, Thinking, Fast and Slow, is a major intellectual event. The book summarizes, but also integrates, the research that Kahneman has done over the past forty years, beginning with his path-breaking work with the late Amos Tversky. The broad theme of this research is that human beings are intuitive thinkers and that human intuition is imperfect, with the result that judgments and choices often deviate substantially from the predictions of normative statistical and economic models. In this review, I discuss some broad ideas and themes of the book, describe some economic applications, and suggest future directions for research that the book points to, especially in decision theory. (JEL A12, D03, D80, D87) 

Nice short summary of key themes from the extraordinary Kahneman book.

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#2 Include Social Security and Medicare taxes when discussing tax burdens

Time to Change the Tax Discussion #2

This is the second in a five part series on Taxes.

Far too much of the discussion of tax burdens has focused on the federal income tax rates while the federal payroll taxes – Social Security and the Medicare tax – get minor attention. This was epitomized by Mitt Romney’s reference to 47 percent of Americans as not paying any taxes, when what he meant was not paying any Federal income taxes. This line of discussion ignores the fact that low income earners pay Social Security and Medicare taxes. Almost every economist would agree that these payroll taxes affect net pay and incentives in fundamentally the same way as income taxes and hence matter greatly. While true that these are earmarked taxes, they are nonetheless important contributions to federal revenue and affect deficits. In 2012 The federal income tax contributed 32 percent of total federal revenue, while social security and medicare payroll taxes contributed 23.9 percent.  Since these social insurance taxes are either proportional (Medicare tax) or regressive (SSI, since it stops after $110,000 in 2012), they substantially change the overall progressivity of the taxes. the following figure is from the Concord Coalition, based on US Treasury data.

https://spreadsheets.google.com/spreadsheet/oimg?key=0AqDf7XX8MI2BcGVxYmhHME92YWgtTXQ1bm84YTlpZkE&oid=2&zx=n74qil40ph5k

U.S. Treasury Department, Final Monthly Treasury Statement from Sept. 2012

http://www.concordcoalition.org/learn/budget/federal-budget-pie-charts

In an earlier blog (What are current marginal tax rates?), I calculated marginal tax rates for various levels of taxable income, which show that currently people earning $70,700 to $142,700 pay the highest marginal tax rates (38.1% including federal, SSI and Medicare taxes, higher if you add in Massachusetts income taxes).Warren Buffett basically referred to this same phenomenon when he said that his secretary paid higher taxes than he does on earned income.

Allowing the Bush tax cuts to expire will return those earning over $388,350 to paying the highest marginal rates (43.4% including the Medicare and ACA taxes).

For related discussion see the earlier blogs

#1 All Taxes and Budgets Should be Expressed as Dollars per Person

#2. Include Social Security and Medicare taxes when discussing tax burdens