The New York Times carries this chart:

Doesn’t leave much doubt about how import health care cost control is, does it?

Washington Post economics reporter-columnist Steven Pearlstein in a column about a missed opportunity for a single payer health bill during the Nixon era summarizes what he understands to be the general consensus in the Congress on health care reform.  Here is that quite impressive list:

Universal coverage — everyone has insurance.

State-run exchanges — a ‘connector’ or marketplace where one can shop for policies. (We already have the framework ready in WA state.)

Insurance options — alternative forms of coverage allowed.

Subsidies – help for low income people up to 300% of federal poverty level.

Employer mandate — all except smallest businesses required to participate.

Tax on ‘extravagant’ plans — gold plated coverage would be taxed.

Malpractice reform — a federal cap on punitive damage awards (not, apparently, on actual damages).

Independent cost containment board — biennial package of reforms and rate adjustments from expert panel.

Evidence-based best practices — increased research on medical procedure effectiveness.

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That is one heck of a list.  Pearlstein goes on to report that this framework could gain significant number of Republican votes because it includes a number of “Republican” ideas.

I’m going to use this as the start of a checklist to see just how much the Congress and the White House can achieve in the 2-3 months ahead. Pearlstein suggests it could take longer. If we get all that done this entire effort will definitely be worth the candle.

One of the go-to economics blogs is Baseline Scenario.  Co-blogger Jame Kwak notes that their commenters are considered among the best, most thoughtful.  Kwak approves one of his commenter’s analysis of weakenesses in “Team Obama’s” health care plan.  I include the full comment below the jump.

Read the rest of this entry »

Harvard economist Jeff Frankels notes in his blog the recent BLS data showing that hours worked has stopped shrinking.

This is a big deal.  As I recall, hours worked had dwindled to a bit less than 33 — meaning that on the average American workers — normally putting in well above 40 per week — were only getting paid for 33.  This was/is an extra hurdle for unemployment since that number will not start to decline seriously until hours worked by existing employees climbs back to normal levels.  Here’s Frankel’s chart — note that it is not positive yet — just not shrinking any more.

net monthly change, percent

Here’s another ominous sign: the foreclosure problem keeps getting worse.
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The economics blog The Baseline Scenario looks at the problem.  They see willful, self-pocket-lining mortgate bankers at work — the same folks who brought us this crash in the first place.

Housing starts, which were trending up, have dropped this month per the Economics & Statistics Administration:

Building permits in July 2009 decreased 1.8% from June and declined 39.4% from July 2008, to 560,000.  Housing starts decreased 1.0% from the prior month and declined 37.7% from the prior year, to 581,000.

And the New York Times notes how frail the economy is. Any slippage is going to hurt health care reform because it raises the cost of covering the uninsured (of whom there are more) and cuts revenues thus making the ‘budget neutral’ challenge tougher.

Washington Post has this excellent survey of the headwinds likely to slow recovery.  But the reporter finds surprising expectations of a strong, U- or even maybe a V-shaped recovery.  Color me doubtful.

This is a telling graphic.  Follow this link to the Slate page and hit the play button.  You’ll see the evolving unemployment problem spread across the country — and you’ll see some pockets of net job gain.

Belgian economist Dr. Paul De Grauwe recently published an important article in the Financial Times.  His argument: classical macroeconomics is not working — it may be elegant and appealing, but we need to shift paradigms if we are to understand the modern economy and our policy choices. As the cartoon suggests, it is causing a real stir among economists.  Worth thinking about — especially now when we’re betting the farm (i.e. national economy) on health care reform.  I find his thinking quite persuasive.

I’ve included the full text below the jump. Read the rest of this entry »

The New York Times editorializes today on the Massachusetts model. MA was the first in the nation to require a (nearly) all-in requirement. They also pioneered the insurance “connector” or “exchange” concept — a government-regulated marketplace where one could purchase health care insurance.

Opines the Grey Lady:

Massachusetts requires everyone to take out health insurance or pay a tax penalty (unless they are deemed unable to afford coverage). It requires employers to offer coverage or pay a modest fee. It has expanded Medicaid to cover more of the poor and provides subsidies to help other low- and moderate-income residents buy insurance. And it has established an exchange where people not covered at work can choose from policies offered by private insurers who compete for their business.

All told, this program has raised state and federal health care spending in Massachusetts from $1 billion a year in fiscal 2006 to a projected $1.7 billion for fiscal year 2010 - with the federal and state governments each paying half of the added costs, or about $350 million. Massachusetts’s overall budget for 2010 is $27 billion.

A remarkable and encouraging development is that employers, who faced only a modest penalty if they dropped or failed to provide coverage, have chosen instead to expand coverage, in part because their workers were clamoring for group coverage. Indeed, employers and their workers have made a greater contribution to expanding coverage than the state has.

I remain skeptical.  More from the editorial:

What Massachusetts has not yet figured out is how to slow the relentless rise in medical costs and private insurance premiums, although premiums within the exchange have been held to 5 percent annual increases. The state’s political leaders decided to expand coverage first, while postponing the hard decisions about cutting costs until lots of people, businesses and institutions had a stake in the success of the enterprise.

But to give MA credit, there is hope:

Now the state seems poised to tackle costs - with an approach that is far more ambitious than anything currently being contemplated on Capitol Hill.

A special commission has just recommended that the state try, within five years, to move its entire health care system away from reliance on fee-for-service medicine, in which doctors are paid more for each additional test or procedure they provide.

In its place, the commission wants a system in which groups of doctors and hospitals would receive fixed sums to deliver whatever care a patient needed over the course of a year. The hope is that doctors would be motivated to deliver only the most appropriate care, not needless and excessively costly care, with safeguards to ensure that they do not skimp on quality.

Even if MA gets their costs under control — and we may never know because the national reform will submerge the state’s reforms in a new framework — I see neither political will nor practical proposals to get a grip on costs as fast as we need to.  Let’s not forget we’re deep into the 2nd worst recession of the century.