Your Health: The Right to Life?

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The US was founded on the promise of “the Right to Life, Liberty and the Pursuit of ben_franklinHappiness” in Jefferson’s Declaration of Independence.

From the start, the relationship between the country and this promise has been at best inconsistent and sometimes ironic. After all, the principal writer of the Declaration, Jefferson, was a slave-owner.  So for whom was this promise made? Everyone? Or the wealthy, the planters, the slave-owners and the merchants? (Remember, there were no factories — that was before the industrial revolution.)

The inconsistency continues to this day.

We have groups concerned with whether babies or born, but not with what happens to them after they are born. How long do they live? What’s their quality of life? As Ed Cara notes, in some areas of the US, children will now have shorter lives than their parents. (2)

A new study in the Journal of the American Medical Association talks about discrepancies in life expectancy. I’ve blogged about this before, but it’s nice to see authoritative sources recognizing the issue.

The new statistical analysis shows that there is a difference in life expectancy of up to 20 years based on the county in which you live. In this analysis, the issues affecting life expectancy are

  • Income and poverty
    • The wealthy live longer
  • Race/ethnicity
    • Both Native Americans and African Americans have a shorter life expectancy
  • Regular exercise
    • Those who do live longer
  • Obesity, Diabetes and Hypertension
    • Shorten life expectancy
  • Education
    • Each level completed adds to life expectancy
  • Quality of health care
    • Higher quality is associated with living longer
  • Having health insurance
    • Having health insurance promotes longer life
  • Access to physicians
    • Having more physicians in an area helps

These factors translate into differences in life expectancy in the US based on where one lives:

  • Residents of central Colorado, coastal California and the New York Metro area live longer
  • Residents of eastern Kentucky and much of the Old South, especially along the lower Mississippi River, have a shorter life expectancy
    • The Old South in this case includes Alabama, Arkansas, Georgia (outside of Atlanta), Louisiana, Mississippi, Oklahoma and Tennessee (outside of Nashville)
    • The two metro areas, Nashville and Atlanta, offer much better life expectancy than the rest of their states

The states with the lowest life expectancy are those with the lowest spending on public health and health education.

One limitation of this study is that the analysis is at a county level, and there is only selected data available at that level regarding health. In particular, suicide is now one of the top 10 causes of death in the US. Suicide isn’t reported accurately or consistently, and there is limited data available on the causes of suicide.

A second limitation is the inter-relationships between some of the factors measured. For example, wealth is associated with having health insurance, with less use of cigarettes, and with living in an area with better access to medical professionals. By breaking the analysis into this much detail, does the report understate the role of wealth in life expectancy?

By the way, I use the image of Ben Franklin on some of these posts for the following reasons:

  • His brilliance
  • His common sense
  • His skill at negotiation
  • And among the Founding Fathers of the US, he became a profound opponent to slavery

Sources:

  1. Laura Dywer-Lindgren, et. al., “Inequalities in Life Expectancy Among US Counties,1980 to 2014,” JAMA Intern Med. Published online May 8, 2017. doi:10.1001/jamainternmed.2017.0918. http://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2626194
  2. Ed Cara, “Kids Will Die Younger than Their Parents in Some Parts of the US,” Vocativ. 9 May 2017. https://www.aol.com/article/news/2017/05/09/kids-will-die-younger-than-their-parents-in-some-parts-of-us/22077174/

 

 

The EB-5 Immigration Program (and you thought H1-Bs were a problem)

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The EB-5 program allows  rich investors from China and India to bypass waiting lists to get visas and green cards for permanent immigration to the US.  The program was created during the first Bush administration as a way to stimulate foreign investment in the US.

Frankly, the requirements aren’t much. The minimum is the creation of 10 new full time jobs — and those jobs can be created by companies with which you do business, not the company in which the investor puts money. If investing in a “troubled company,” the requirement is maintaining the existing headcount.

If I read the regulations correctly, buying a pizza joint or car wash could entitle someone to permanent residency in the US. Or investing on one of Donald Trump’s family properties.

This came into focus today because of a Washington Post story about members of the Kushner family hawking real estate investments to wealthy Chinese as a device for gaining US residency.  (Remember, these are Trump’s inlaws.) The sales pitch is invest now before the regulations change.

Selling citizenship to the highest bidder. Is that what making American great again really means?

 


Sources:

  1. US Customs and Immigration Service, “EB-5 Immigrant Investor Program.” https://www.uscis.gov/eb-5
  2. Emily Rauhala and William Wan, “In a Beijing ballroom, Kushner family pushes $500,000 ‘investor visa’ to wealthy Chinese,” The Washington Post, 6 May 2017. https://www.washingtonpost.com/world/in-a-beijing-ballroom-kushner-family-flogs-500000-investor-visa-to-wealthy-chinese/2017/05/06/cf711e53-eb49-4f9a-8dea-3cd836fcf287_story.html?utm_term=.81a547273401

The Definition of Idiocy

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Been there. Done that. Tried it. It failed. So let’s do it again!

To paraphrase Einstein’s famous quote, stupidity is doing the same thing over and over again and expecting a different result.

In surfacing the concept of “high risk pools”, Congress is reusing an idea that has failed repeatedly in the past when used with either auto insurance or healthcare.

The idea of the high risk pool is to group people who are very ill and provide a special pool of funding for their insurance. With government subsidy, the pool would in principle provide “affordable” rates for these people.

The ACA in fact used a high risk pool for people with pre-existing conditions (PCIP) during the transition period between 2010 and 2014. It produced the result that high risk pools have always produced:

  • Excessive costs to consumers
  • Cost overruns requiring bailouts
  • Fewer people being insured.

As Kaiser comments:

PCIP was operational in all 50 states by the fall of 2010.  By late 2012, just over 100,000 individuals were enrolled and program expenses had consumed nearly half of the $5 billion appropriation.  For the final 12-month period for which PCIP expense data were reported, net losses for the program were over $2 billion. (1)

State health insurance pools restricted access to only a small fraction of those needing coverage, and even then require huge bailouts from taxpayers.

New Jersey tried a high risk pool for auto insurance. It failed to prevent rates from soaring, and went bankrupt.

My interpretation: Basically, what Congress is doing in the AHCA bill is “passing the buck” either to future Congresses or to taxpayers.

 


Sources:

  1. Karen Politz, “High-Risk Pools For Uninsurable Individuals.” Updated 22 February 2017. http://kff.org/health-reform/issue-brief/high-risk-pools-for-uninsurable-individuals/

Disposal Income = (Economic Growth)squared

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That’s not quite Einstein’s formula, but it’s worth remembering.

The front page of the Tuesday Wall Street Journal included a story, “Parents Are Drowning in College-Loan Debt.” (1) Subsequent days brought reports of subpar GDP growth (2), disappointing job creation numbers (4) and very low levels of consumer spending (5). Duh.

People spend money when they have money to spend. Really.

Apparently, that’s a difficult concept for retailers and many government officials. When you

  • Increase health care costs (doing away with subsidies and driving insurers to sharply higher premiums),
  • Increase taxes (doing away with tax deductions for state and local taxes will  wipe out any benefit from tax reform that most people get),
  • Cut back on Federal assistance with student loans, and
  • Get into trade wars that drive up the cost of things Americans buy

you reduce the ability of Americans to spend money on cars, vacations or anything else non-essential that helps to drive the US economy.

The stock market and the economy got a modest boost from the election. Now reality is rearing its ugly head.

  • Layoffs aren’t just for the retail sector; they’re reportedly happening even in big pharma companies like BMS.
  • Auto inventories are piling up and there have been reports of planned factory shut downs this summer.
  • Airline passenger load factors (passengers versus capacity) are down from a year ago.
  • There’s a new crop of college graduates with the wrong skill sets for what business needs.

The unemployment figures are political. The Bureau of Labor Statistics report from 7 April lists 7.2 million people as unemployed. However, there’s another 1.6 million who are unemployed but haven’t looked for work in the last four weeks and who aren’t counted as unemployed. Add them, and the unemployment rate shoots up, not down.

The most recent jobs report showed 98,000 people gaining work in March. Prior to the 2008 recession, the benchmark for a robust economy was 300,000 jobs per month — enough to keep up with growth in the workforce.  The last time the US came close that 300,000 figure was in June 2016. The last time the US surpassed that target was in September 2015.

Disposable income means everyone. It’s the ability of Joe Sixpack to buy a car that drives the US economy. Giving tax breaks to the Walton clan doesn’t help Wal-Mart sell anything.

Are we about to start the next recession?


Sources:

  1. Josh Mitchell, “Parents Are Drowning in College-Loan Debt,” The Wall Street Journal, 25 April 2017, p.1.
  2. Trading Economics, “United States GDP Growth Rate,” 28 April 2017. http://www.tradingeconomics.com/united-states/gdp-growth
  3. US Dept of Transportation, Bureau of Transportation Statistics, “U.S Air Carrier Traffic Statistics through January 2017.” https://www.transtats.bts.gov/TRAFFIC/
  4. US Dept. of Labor, Bureau of Labor Statistics, “The Employment Situation — March 2017,” 7 April 2017. https://www.bls.gov/news.release/pdf/empsit.pdf
  5. Douglas Gillison, “US growth hits 3-year low in Trump’s first quarter,” https://www.yahoo.com/news/us-growth-hits-3-low-0-7-trumps-132946497.html

US Economy: the incredible shrinking farmer

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The US has lost its dominant position in global agriculture. The Wall Street Journal reports that since 1985, the US share of global sales has shrunk from

  • Soybeans: 77% down to 38%
  • Corn: 56% down to 37%
  • Wheat: 30% down to 15%

Brazil alone farms the same amount of land for soybeans as does the US, and has almost matched the US in annual production.

US farmers are now watching weather and crop reports for Brazil in order to time when to sell crops.

While farming is much less important to the US economy than it was in the 1920s, weakness in the sector was cited as a contributor to the Great Depression. It certainly contributes to balance of payments issues today.


Sources:

  1. Jesse Newman and Jacob Bunge, “U. S. Farmers Fall Behind New Powers,” The Wall Street Journal, 11 April 2017, p.1.

Sources of a No Growth Economy

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ben_franklinYounger people are putting off marriage, children and buying  homes because they lack financial security — unstable jobs and too  much student loan debt.

That’s one of the interpretations of a new report from the Census Bureau on Millenials. (1)

In looking at generational change, the report compares 18 to 34-year-olds in 2016 versus 1975.  In looking at just the older portion of this group, 25 to 34-year-olds, there are striking differences:

  • 1975: 45% lived on their own, were working, had married and had a child.
  • 2016: 24% live on their own, are working, have married and have a child.

From the point of view of the economy, the difference is huge. Buying a home drives spending on furniture and appliances, as well as painters and a range of other services. Having children drives demand for larger cars and clothing. Doing neither reduces spending in all of these categories.

The average income for 25-34-year-olds in 1975 was $30,101. In 2016, it was $43,751. That sounds good until you factor in inflation.

  • A salary of $30,101 in 1975 dollars is worth $134,283 in 2016 dollars.
  • The percent of people with student loans has climbed from 17% in 1975 to 41% today.

More people have gone to college, but they’re paying more for education in order to earn functionally less than their parents.

The report also notes that among the growing percentage who live with their parents, there are issues with health or grandchildren that interfere with employment. There’s also an issue with a cohort of younger white males who lack a college degree and have very limited employment prospects.

As long as politicians ignore these trends, efforts to keep the economy going will run out of steam.  In this context, Andrew Cuomo, the government of New York, seems especially prescient in eliminating college cost as a burden for many New York residents.

 


Sources:

  1. Vespa, Jonathan, “The Changing Economics and Demographics of
    Young Adulthood: 1975–2016,”Current Population Reports,P20-579, U.S. Census Bureau,Washington, DC, 2017.

ACA Rule Changes

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If you were waiting for changes that would actually help consumers, don’t hold your breath.

Absent the actual repeal the administration sought, it announced rule changes late yesterday affecting consumer access to healthcare and the percent of costs health insurance will cover under marketplace plans. The point of the changes is to incent insurers to continue offering health insurance on the ACA marketplaces. The technical term for this is “market stabilization.”

A cynic might wonder why these changes come out on the even of holidays when most people will be distracted and might not notice.

The rule changes focus on what the insurance industry calls “adverse selection.” Insurers are concerned about people buying coverage only when they expect they will use it, and then dropping it immediately — which forces the insurer to take a loss on the policy.  The rule changes are designed to prevent that.

Here’s the basics:

  • Silver level plans will cover 66% of consumer medical costs, down from the original 70% requirement.
  • The new rules increase also increase subsidies to consumers buying these plans — provided the administration actually commits to making these payments.

At issue are cost-sharing payments that low-income people enrolled under the healthcare law receive to help cover out-of-pocket expenses. Trump has threatened to withhold the payments as a means to force Democrats to negotiate on healthcare legislation.(2)

[Actually, these subsidies can help people making up to $60,000 per year, which is more than “low income.” Half of US households earn less than that.]

  • As previously noted, the enrollment period is being shortened from three months to six weeks, starting November 1st.  Given the problem that CMS has had in handling the volume of people applying for coverage in the longer period in the past, it’s essential for consumers to apply as early as possible.
  • The administration is making it harder for consumers to qualify for special enrollment periods (SEPs). More people will be required to submit supporting documentation than in the past, which will extend the time required for enrollment. If approval is delayed by three months, the consumer will be required to pay for coverage for two of those months.
  • Consumers are being restricted in terms of their ability to change levels of coverage using a SEP.
  • Insurers can refuse to cover people who have failed to pay premiums for this insurance in the past. If you’ve had coverage and dropped it, you may have to wait a year or more before being able to get coverage again.
  • The determination of whether an insurer has an adequate network of doctors and hospitals in a state will be turned over to the state. Some states are much more rigorous than others.

The new rules don’t address some of the key issues challenging insurers:

  • Will the government continue to pay subsidies to help people afford insurance?
  • Will the government use financial penalties to force consumers to carry insurance?

Trump has said that he would eliminate the penalties and the subsidy, but his bill didn’t pass and no one knows about  his current thinking. A negative on the first question will drive insurers out of the market. A negative on the second will raise costs for everyone who needs insurance.

There’s speculation that the reduction in benefits for the silver policy might allow insurers to reduce the cost of these policies. However, any reduction will be subject to higher out-of-pocket costs for consumers who do incur expenses. The net impact isn’t clear.

Are these rule changes even needed? The Congressional Budget Office has stated that it expected the insurance markets to be stable in 2017 without these changes.  So, what is the point?


Sources:

  1. Virgil Dickson, “White House finalizes ACA rule to strengthen individual market,” Modern Healthcare, 13 April 2017. http://www.modernhealthcare.com/article/20170413/NEWS/170419936?utm_source=modernhealthcare&utm_medium=email&utm_content=20170413-NEWS-170419936&utm_campaign=am
  2. Associated Press, “Democrats seek to resolve health payments on spending bill,” 14 April 2017.
  3. Timothy Jost, “Examining The Final Market Stabilization Rule: What’s There, What’s Not, And How Might It Work?” Health Affairs Blog, 14 April 2017. http://healthaffairs.org/blog/2017/04/14/examining-the-final-market-stabilization-rule-whats-there-whats-not-and-how-might-it-work/