Immigration and the New American Reality

Standard

“I don’t want my child to grow up in the US.”

That’s a simple and direct statement from a financial professional who moved to Europe earlier this year. Her child will grow up learning between four and six languages and without the attitude/belligerence she sees in US schools. Plus college and healthcare are free.

Europeans pay high taxes. However, because so many expenses are included in those taxes, they have more money available to spend than most Americans do. That’s driving a faster economic recover in Europe than the US is seeing.

That prompted me to look at the data on migration. What are the trends? You might be surprised.

  1. Both legal and illegal immigration peaked prior to the recession in late 2008. The trends since are downward. The declines started during the Obama administration.
    • The illegal immigrant population peaked at 12.2 million in 2007.(2)
  2. Most illegal immigrants living in the US have been in the US for more than ten years. They are homeowners and taxpayers.
  3. Mexico no longer accounts for a majority of illegal immigrants. The majority now from from a combination of Central America and Asia.
  4. Mexico provides the largest number of LEGAL immigrants to the US. (1) Most Hispanic residents in the US are legal residents. (3)
  5. Recent immigrants from Mexico tend to work in the US for a few years and then return to Mexico. Pew reported in 2012 that net immigration from Mexico was zero, with the number of people leaving the US matching the number entering.
    • This “breakeven” has little to do with US immigration enforcement. People are leaving for a lower cost of living and better social services.

FT_17.04.17_unauthorized_update_2015-1The State Department estimates that 9 million US (non-military) citizens are now residents of other countries. That’s up from 4 million in 1999. However, the government has no formal mechanism for tracking citizens who move overseas. The actual number could be lower or much higher.

  • Seniors are part of the out-migration. Financial advisors recommend considering moves to places like Costa Rica in order to be able to maintain a reasonable standard of living on Medicare. (5)

The US is changing relative to other countries. There are a growing number of valid reasons for not wanting to live here, and that will have an impact on the economy and employment in the future — probably driving more jobs and business investment offshore. Don’t expect driving people and money out of the US to improve job prospects and the economy here. That’s naive in the extreme.


Sources:

  1. Homeland Security, “Yearbook of Immigration Statistics 2015.” https://www.dhs.gov/immigration-statistics/yearbook/2015/
  2. Jeffrey Passel and D’Vera Cohn, “As Mexican share declined, U.S. unauthorized immigrant population fell in 2015 below recession level,” Pew Research Center, 25 April 2017. http://www.pewresearch.org/fact-tank/2017/04/25/as-mexican-share-declined-u-s-unauthorized-immigrant-population-fell-in-2015-below-recession-level/
  3. Jie Zong and Jeanne Batalova, “Frequently Requested Statistics on Immigrants and Immigration in the United States,” Migration Policy Institute, 8 March 2017. http://www.migrationpolicy.org/article/frequently-requested-statistics-immigrants-and-immigration-united-states
  4. US State Department, “CA by the Numbers,” updated June 2016.  https://travel.state.gov/content/dam/travel/CA_By_the_Numbers.pdf
  5. “Retire Overseas . . . and Live Better for Less . . . ” International Living, undated.  https://www.internationalliving-magazine.com/?gclid=COyAv7-tytQCFYWNswodZNkMcw

The [State] Politics of Health Insurance

Standard

In the rush to repeal the Affordable Care Act, the Trump Administration has been repeating the mantra that the individual insurance marketplaces are “failing.” Like most statements made by politicians these days, the facts seem to be a little different.

Clearly, Iowa is in crisis. With the withdrawal of Aetna from the individual marketplace, there is a real risk they may have no insurers offering individual coverage through the marketplace in 2018.

My suspicion is that Aetna’s withdrawal has more to do with its stock price and financial liabilities after a failed merger attempt than with the ACA itself. Aetna has also stopped writing small group insurance in some states.

However, Pennsylvania has six carriers committed to the marketplace for 2018. The only concern is what the Trump administration might do the mess things up.

Further, another insurer, Centene, has announced that it is expanding individual marketplace coverage into three new states — Kansas, Missouri and Nevada.

So what’s the real story with Iowa? If the fault were with ACA, it would be impacting every state and every carrier, and that’s not the case. What have state officials done to mess things up?

If you know the story, please reply. I’d like to know, both about Iowa and about other states where local officials are whining about Obamacare. Let’s get the full story out into the open.

 

Economics and Crime

Standard

The old saying is that “crime doesn’t pay.” However, crime flourishes where people don’t ben_franklinget paid.

Published earlier this year, the list of fifteen cities with the most rapid growth in violent crime is instructive on several points:

  • They’re medium size or smaller cities
  • They have poverty and lower economic growth
  • They’re primarily in the South and Midwest
    • Alabama (Anniston-Oxford-Jacksonville)
    • California (El Centro, San Luis Obispo-Paso Robles-Arroyo Grande)
    • Iowa (Waterloo-Cedar Falls)
    • Louisiana (Alexandria, Houma-Thibodaux, Monroe)
    • Missouri (St. Josephs, Springfield)
    • Montana (Missoula)
    • Ohio (Mansfield)
    • South Dakota (Sioux Falls)
    • Texas (Abilene, Odessa)
    • Wisconsin (Milwaukee-Waukesha-West Allis)

Monroe is the worst city on the list; violent crime has increased there by more than 80% in the last five years.

Note that the Census combines smaller communities for reporting purposes.

Milwaukee is the largest city on the list, but it also ranked No. 2 on the list of poorest large American cities in 2015. (2) Milwaukee ranked 44th on a list compiled by Wallethub for quality of education; the other cities listed here fell outside the top 150).

The argument — imperfect, of course — is that people who have goals and hope don’t commit violence. Those who think they “can’t lose” due to social status or have nothing to lose, do. Education and job prospects matter.


Sources:

  1. Michael Sauter and Samuel Stebbins, “Cities Where Crime Is Soaring,” 24/7 Wall St., 9 February 2017. http://247wallst.com/special-report/2017/02/09/cities-where-crime-is-soaring-3/
  2. Bruce Kennedy, “America’s 11 Poorest Cities,” Moneywatch, 18 February 2015. http://www.cbsnews.com/media/americas-11-poorest-cities/12/
  3. Richie Bernardo, “2016’s Most and Least Educated Cities,” WalletHub, 25 July 2016. https://wallethub.com/edu/most-and-least-educated-cities/6656/#main-findings

Healthcare Rate Increases: Guidance from Pennsylvania on What to Expect

Standard

At this moment, Pennsylvania has a fully functional Healthcare Marketplace.ben_franklin

  • All five of the insurers in the PA market have said they will stay in the market for 2018
  • Assuming the requirement for coverage and Federal subsidies stay in place, the insurers have asked for an average rate increase of 8.8% for 2018.

The requested increase in PA is much lower than the requests in every other state. In some, like Connecticut and Virginia, insurers have requested increases of more than 50% due to uncertainty about what Trump will do.

Insurers have said that the rate increase in PA would rise from the requested 8.8% to

  • 23.3% if the individual mandate is repealed (the requirement that individuals have insurance)
  • 20.3% if Federal subsidies are terminated or
  • 36.3% if both take place.

According to a spokesperson

“This proves what we already know—instability caused by adverse action from the federal government will do nothing but hurt consumers who are stuck in the middle,” Miller said. Enrollees “deserve single-digit rate increases like the ones most people will see if Congress and the Trump Administration choose not to risk consumers’ health and financial well-being by jeopardizing the stability of these markets.” (1)

Given other recent actions, it’s probably best to assume that the administration will drive health insurance costs much higher and budget accordingly. The increase of 36.5% in PA and more in other states is the most likely outcome at this time.

The relative calm in Pennsylvania also points to how much of the health insurance chaos is due to state level politics. Other states have health insurance marketplaces that are much less functional, and their residents are seeing much higher rate increases.

Old Ben would be proud of  his state.


Sources:

  1. Shelby Livingston, “Pennsylvania insurers buck trend for giant rate hikes with single-digit bump request,” Modern Healthcare, 1 June 2017. http://www.modernhealthcare.com/article/20170601/NEWS/170609996?utm_source=modernhealthcare&utm_campaign=am&utm_medium=email&utm_content=20170601-NEWS-170609996

The Latest Bearing Sign for the US Economy

Standard

The Federal Highway Administration reports that highway travel has declined from theben_franklin last quarter of 2016. That fits with weak consumer spending data from the first quarter of this year — but is a surprise to many economists.

Retail sales at gasoline stations are down 4.8% from this time a year ago. Those sales include gasoline, snacks and other items stations sell.

In reporting this, the Wall Street Journal speculates on a number of possible causes, including immigration enforcement.

The Journal doesn’t cite two obvious causes:

  • The decline in tourist visits to the US — down 16% from a year ago, and
  • Uncertainty about healthcare costs that may be causing consumers to cut spending.

The drop-off in tourism affects all industries that serve tourists:

  • Hotels and recreational facilities
  • Transportation, including air, rental cars and gasoline
  • Restaurants

The decline in this industry is a big deal and affects a lot of jobs as well as city and state tax  revenue.

It doesn’t look like consumer spending is going to drive economic growth.  If it doesn’t, is there anything else that can? Historically, the answer largely is no.

Further, Trump has alienated trading partners who might be interested in seeing our economy recover — Mexico, Canada, China, Germany. The downside of “America First” might be “America Alone”.


Sources:

  1. “Americans Tap Breaks on Driving,” The Wall Street Journal, 27-28 May 2017, p. B12.
  2. Kate Taylor, “Tourism in the US has drastically declined since Trump was elected,” Business Insider, 17 May 2017. http://www.businessinsider.com/trumps-rhetoric-hurt-us-tourism-and-retail-2017-5

ACA Repeal: Update

Standard

I’ve been quiet about the recent AHCA legislation. Frankly, the House bill isn’t good for ben_franklinmost Americans, but the assumption is that the Senate will heavily revise the bill before it has a chance for passage. So it’s hard to say what the final legislation will be at this point.

Then it goes to conference committee and the result will return to each chamber for a vote.  So this is a long way from being done.

There are a number of articles enumerating the problems in the House bill. The major issues are

  • Loss of health insurance for millions of Americans
  • Impact on the solvency of hospitals and clinics serving rural areas — where most of the poor live
  • Reductions in Medicaid coverage, especially for children
  • Allowing states to reduce coverage standards in insurance (depart from the ACA’s Minimum Essential standards) — reducing what the insurance buyer gets for their money
  • Raising costs drastically for consumers between the ages of 50 and 64 (1)

With all of these issues, we are still expecting the repeal bill to result in sharply higher premiums for health insurance.

The only positives in this bill are tax reductions for the wealthy.

My major concern is with health screening and checkups. The ACA recognized that the main way to reduce health care expenditures is through early detection and treatment of disease. Removing access to doctors means later detection and much higher costs.

Example: breast cancer, cost of treatment by tumor stage

Stage

0                                         $71,909

I/II                                      $97,066

III                                      $159,442

IV                                      $182,655 (2)

Reduction is access to health care is a commitment to higher medical spending or to reduction of life expectancy.


Sources:

  1. Harris Meyer, “15 quick facts from CBO report on Obamacare repeal bill,” Modern Healthcare, 24 May 2017. http://www.modernhealthcare.com/article/20170524/NEWS/170529946?utm_source=modernhealthcare&utm_medium=email&utm_content=20170524-NEWS-170529946&utm_campaign=mh-alert
  2. Helen Blumen, Kathryn Fitch, Vincent Polkus, “Comparison of Treatment Costs for Breast Cancer, by Tumor Stage and Type of Service,” Am Health Drug Benefits. 2016 Feb; 9(1): 23–32.  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4822976/

Paradox: Breast Cancer Survival and Healthcare Costs

Standard

Metastatic breast cancer — where the cancer has spread to distant part of the body — is ben_franklinthe most severe form of the disease.

A new study from NIH documents improvement in life expectancy among women with this form of the disease.

The researchers estimated that between 1992-1994 and 2005-2012, five-year relative survival among women initially diagnosed with MBC at ages 15-49 years doubled from 18 percent to 36 percent. Median relative survival time between 1992-1994 and 2005-2012 increased from 22.3 months to 38.7 months for women diagnosed between ages 15-49, and from 19.1 months to 29.7 months for women diagnosed between ages 50-64. The researchers also reported that a small but meaningful number of women live many years after an initial diagnosis of MBC. More than 11 percent of women diagnosed between 2000-2004 under the age of 64 survived 10 years or more. (1)

Obviously, the survival rates, while better, aren’t good. The best results occur when the cancer is caught at a much earlier stage where it is more easily treatable.

While improving the life expectancy of people with advanced cancer is a good thing, it means higher costs in treating the cancer. Simply, the patient is under treatment for a longer period of time.

The current health insurance system in the US basically penalizes everyone for patients surviving for a longer time with advanced disease. Costs go up, driving health insurance rate increases.

The ACA attempted to address the paradox by driving consumers to have more frequent exams and earlier detection of disease.

The AHCA, by reducing enrollment in health insurance, actually makes the situation worse. 


Sources: National Institutes of Health, “Study estimates number of U.S. women living with metastatic breast cancer,” press release, 18 May, 2017. https://www.nih.gov/news-events/news-releases/study-estimates-number-us-women-living-metastatic-breast-cancer