Category Archives: Politics

77 cents on the dollar

The key problem with the “77 cents on the dollar statistic” cited in President Obama’s SOTU speech is that it is based upon a naive comparison of average earnings for females compared with males. There are a number of other wage determinants (e.g., differences in occupations, positions, education, job tenure, hours worked, etc.) which must also be taken into consideration.  AEI scholar Christine Sommers notes (in the Daily Beast article linked below): “When all.. relevant factors are taken into consideration, the wage gap narrows to about five cents. And no one knows if the five cents is a result of discrimination or some other subtle, hard-to-measure difference between male and female workers.”

www.thedailybeast.com
“It’s the bogus statistic that won’t die—and president deployed it during the State of the Union—but women do not make 77 cents to every dollar a man earns.”
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On the role of health insurance as an "enabling technology" that facilitates risky behaviors…

ACA Ad The vast majority of the ads shown on the www.doyougotinsurance.com website promote health insurance as an “enabling technology” that facilitates various risky behaviors; e.g., uncelibate sex, binge drinking, bungee jumping, white water rafting, etc. These ads are (condescendingly and stereotypically) targeting millenials whose overpriced premiums are needed in order to cross-subsidize premium costs for older, sicker people. It turns out that the financing model underlying the so-called Affordable Care Act (ACA) critically depends upon such cross-subsidies in order for ACA to be financially sustainable. Without these cross-subsidies, the more likely outcome for ACA is what Cutler and Zeckhauser (1998; cf. http://dx.doi.org/10.2202%2F1558-9544.1056) refer to as an “adverse selection death spiral” (see also AEI Resident Fellow Scott Gottleib’s Forbes piece on this very same topic @ http://is.gd/jnh04G). Since the ACA is designed to vastly expand Medicaid and offer subsidies to households with incomes up to 400% of the federal poverty level, then somebody has to pay for it. And if the plan works as it is supposed to, young middle class workers will have to enroll in droves to pay for overpriced insurance. However, based upon the early returns from enrollment at the Federal and state websites, this does not appear likely. Thus the aggressive ads designed to convince otherwise reticent millennials to sign up for overpriced insurance.  Apparently health insurance can be “fun” because it makes it possible to not have to fully internalize the costs of risky behaviors.  This would be the Peltzman effect on steroids… The aforementioned website (doyougotinsurance.com) is “…a project of the Thanks Obamacare campaign, created by the Colorado Consumer Health Initiative and ProgressNow Colorado Education to educate everyone about the benefits of the Affordable Care Act.”  ]]>

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On the role of health insurance as an “enabling technology” that facilitates risky behaviors…

ACA Ad

The vast majority of the ads shown on the www.doyougotinsurance.com website promote health insurance as an “enabling technology” that facilitates various risky behaviors; e.g., uncelibate sex, binge drinking, bungee jumping, white water rafting, etc. These ads are (condescendingly and stereotypically) targeting millenials whose overpriced premiums are needed in order to cross-subsidize premium costs for older, sicker people. It turns out that the financing model underlying the so-called Affordable Care Act (ACA) critically depends upon such cross-subsidies in order for ACA to be financially sustainable. Without these cross-subsidies, the more likely outcome for ACA is what Cutler and Zeckhauser (1998; cf. http://dx.doi.org/10.2202%2F1558-9544.1056) refer to as an “adverse selection death spiral” (see also AEI Resident Fellow Scott Gottleib’s Forbes piece on this very same topic @ http://is.gd/jnh04G).

Since the ACA is designed to vastly expand Medicaid and offer subsidies to households with incomes up to 400% of the federal poverty level, then somebody has to pay for it. And if the plan works as it is supposed to, young middle class workers will have to enroll in droves to pay for overpriced insurance. However, based upon the early returns from enrollment at the Federal and state websites, this does not appear likely. Thus the aggressive ads designed to convince otherwise reticent millennials to sign up for overpriced insurance.  Apparently health insurance can be “fun” because it makes it possible to not have to fully internalize the costs of risky behaviors.  This would be the Peltzman effect on steroids

The aforementioned website (doyougotinsurance.com) is “…a project of the Thanks Obamacare campaign, created by the Colorado Consumer Health Initiative and ProgressNow Colorado Education to educate everyone about the benefits of the Affordable Care Act.”

 

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Today's page 1 Wall Street Journal story…

Software, Design Defects Cripple Health-Care Website“) is THE page 1 story in today’s issue of the Wall Street Journal. It provides a fascinating case study which corroborates historian John Steele Gordon’s essay from May 2009 entitled “Why Government Can’t Run a Business” (available from http://on.wsj.com/BZpZW); in that essay, Gordon notes (among other things) that “Politicians need headlines. Executives need profits.” Software, Design Defects Cripple Health-Care Website online.wsj.com

The federal government acknowledged for the first time Sunday it needed to fix design and software problems that have kept customers from applying online for health-care coverage.
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Today’s page 1 Wall Street Journal story…

This (an article entitled “Software, Design Defects Cripple Health-Care Website“) is THE page 1 story in today’s issue of the Wall Street Journal. It provides a fascinating case study which corroborates historian John Steele Gordon’s essay from May 2009 entitled “Why Government Can’t Run a Business” (available from http://on.wsj.com/BZpZW); in that essay, Gordon notes (among other things) that “Politicians need headlines. Executives need profits.”

Software, Design Defects Cripple Health-Care Website

online.wsj.com

The federal government acknowledged for the first time Sunday it needed to fix design and software problems that have kept customers from applying online for health-care coverage.

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US federal government indebtedness relative to US GDP: an historical perspective

I think most people understand that the United States has a debt problem, but I am not sure all that many people necessarily understand the magnitude of this debt. According to the treasurydirect.gov website, US federal government debt (as of Monday, February 4) stands at $16.48 trillion (source: http://www.treasurydirect.gov/NP/BPDLogin?application=np)). Since US GDP (as of Q4 2012; see http://bit.ly/kM8cxa) is $15.83 trillion, this implies that the US debt to GDP ratio currently stands at more than 100%.

Using the resources cited in the previous paragraph, one can determine US debt totals and debt to GDP ratios at various points in recent history. On the day that George W. Bush was first inaugurated (January 20, 2001), US federal government debt stood at $5.73 trillion, and the US debt to GDP ratio at the time was 57%. By the time that President Bush’s second term came to an end (on January 20, 2009), US federal government debt had grown by $4.9 trillion (to $10.63 trillion), and the US debt to GDP ratio stood at 74%.  Since President Obama first took office on January 20, 2009, US federal government debt has grown by an additional $5.85 trillion, going from $10.63 trillion to $16.48 trillion.

Thus, the Obama administration (after one full term plus two weeks into a second term in office) accounts for 5.85/16.48 = 35.5% of the current national debt, President Bush’s two administrations account for 4.9/16.48 = 29.7% of the current national debt, and the previous 42 presidents cumulatively account for 5.73/16.48 = 34.8% of total US federal government debt.

The graph below (source: http://bit.ly/PxbO63) shows the US debt to GDP ratio over the period 1966-2012. I don’t about y’all, but the fact that this ratio is accelerating as we move through time is very disconcerting. Economists Carmen Reinhart and Ken Rogoff note that episodes in world history where debt ratios exceed 90% are not only rare, but also impede economic growth (see “Debt and growth revisited” (source: http://www.voxeu.org/article/debt-and-growth-revisited)).

Debt ratio, 1966-2012

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Actor Gérard Depardieu Surrenders French Passport

Apparently there is a diaspora of rich French citizens surrendering their French passports so as to avoid having to pay a recently passed top marginal income tax rate in France of 75 percent.  Quoting from the article accompanying this video, “French Premier Jean-Marc Ayrault said it was pathetic that people move to another country to avoid taxes after a Belgian mayor said that actor Grard Depardieu was moving to Belgium possibly to pay lower taxes.”

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Aetna CEO Sees Obama Health Law Doubling Some Premiums

Aetna CEO Sees Obama Health Law Doubling Some Premiums – Bloomberg.

From Bloomberg News: According to Aetna Inc.’s chief executive officer, health insurance premiums may as much as double for some small businesses and individual buyers in the U.S. when the Affordable Care Act’s major provisions start in 2014…

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