Tuesday Highlights

Good morning.

  1. Global warming and predictions.
  2. And some economics and law. More here.
  3. Stupid academic work.
  4. Radiation dosage measurements explained in graphical form.
  5. Progressive taxation.
  6. Obama/Libya and the Constitutional question. Upshot, as I read it there, no Constitutional problem just a strongly worded promise broken … surprise!
  7. Obamacare restatement of the obvious, that is it remains solvent by pusing costs to the States, therefore findings that States healthcare costs rise shouldn’t be surprising.
  8. Signs of recession.
  9. Two men and manliness, then and now.
  10. What this spot for future essays inspired by Zizioulas.
  11. Fatherhood and the blink of an eye.

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  1. Obamacare restatement of the obvious, that is it remains solvent by pusing costs to the States, therefore findings that States healthcare costs rise shouldn’t be surprising.

    Taking the word of paid liars again. Wikipedia:

    The Heartland Institute is a libertarian American public policy think tank based in Chicago, Illinois which advocates free market policies…

    In the 1990s, the group worked with the tobacco company Philip Morris to question the science linking secondhand smoke to health risks, and to lobby against government public health reforms. More recently, the Institute has focused on questioning the scientific consensus on climate change, and has sponsored meetings of climate change skeptics.

    The Texas Public Policy Foundation (TPPF) is a conservative think tank based in Austin, Texas. It is a member of the State Policy Network, a network of free-market leaning think tanks.

    The TPPF also puts out global warming denial publications.

    It’s scary how many of your opinions are formed by people paid to put a libertarian or conservative spin on things. I don’t understand how you can fall for it over and over again. These people have no credibility. Their jobs literally depend on them taking that side of the issue in every argument.

  2. Boonton says:

    I agree with JA that it’s helpful to know where this outfit is coming from, but some valid points are raised so let’s look at this ‘study’.

    1. It asserts that the reform might cause Texas to raise its Medicaid spending by $2-3B per year over the next ten years. “Per year” probably indicates that this isn’t a cumulative figure (i.e. $200M-$300M per year) but the ‘over ten years’ probably means something like a small amount in year 1, a larger amount in year 2 and so on until you get to year ten when spending is $2-3B more than it would have other wise been. OK but what’s the base?

    Well http://www.statehealthfacts.org/profileind.jsp?sub=47&rgn=45&cat=4 tells us that in 2009 Texas spent $23B on Medicaid. So $2-3B is about a 10% increase. But from 1990-2001 it has been growing at a rate of about 12.9% per year. Let’s round down to 10%. Starting at $23B 10% growth would take you to $54B after ten years. So if that’s what you would have been spending then spending $57B instead would be a 5% increase.

    In terms of ‘solvency’….well you’re not really talking about a lot of money here. Texas is already spending $23B and is on track to spend $54B….it’s not like $3B more requires crazy insane tax increases or budget cuts etc.

    Take a look at http://www.usgovernmentspending.com/texas_state_spending.html….. Today Texas’s overall state and local spending is close to $200B with a GDP that is nearly $1.1T and is estimated to be closing in $1.5T by 2015. Even if the $3B figure is correct you’re basically talking about an increase that isn’t even within the margin for error for forecasting the world of 2019.

    2. Why would Texas’s spending go up $2-$3B? Well that sounds straight forward. The reform increases the cut offs to qualify for Medicaid and requires everyone more or less get covered. But even that’s problematic. Who is paying for this $2-$3B in care now? On possibility is that it’s being paid for OOP by the patients themselves or employers. That’s possible I suppose but likely? You still have to be relatively poor to get Medicaid which means you probably are not working a great job or have the ability to lay out thousands of dollars on hospitals. If that’s the case, though, you’re basically lowering expenses for the poor and/or businesses so that positive should be netted against the negative. Likewise if the people paying for the care now is already the gov’t because these ‘near poor’ people are basically tapping ER rooms, charity care etc. then you’re basically just changing the accounting to be more transparent. You’re also possibly lowering costs since Medicare basically means you can take your inflamed toe to a regular doctor and get antibiotics for a cost of less than $100 rather than an ER for a cost closer to $1000 or more.

    2.1 The related question is how did they get $2-$3B. I bet one possibility is that they took the total spending by Texas divided by the # of Medicaid patients and got a ‘cost per patient’. That’s about $4,555 in 2007 if you look at the link (almost certainly more today). But then what about my questions? Are you telling me these people are paying nearly $5K cash out of their pocket for medicare care today? If not then whose paying today? More importantly, though, this assumes the population of new Medicaid enrollees will look like the average present population. The cost per enrollee table tells us this isn’t the case. Children are cheapest with only $2400 in payments on average, adults $3,185 while the elderly and disabled are most expensive ($8,437 and $13,572). But most of the elderly and disabled who are nearly qualified for medicaid are probably already on it. Likewise many children and adults on Medicaid probably have sought it out because they *need* coverage. More likely the new enrollees are probably cheaper to cover on average than present enrollees….but I bet you dollars to donuts that the ‘study’ estimated the cost of the new enrollment by simply multiplying the estimated number of new people by the average cost per present patient.

    3. What likewise seems ignored is the fact that Medicaid is a joint state-federal program. What more or less happens is that states decide what and how to cover and the Federal gov’t matches what the states spend. So if a state decides, say, to cover some dental care under Medicaid for $100 per person, it really only costs the state $50 because the Fed. gov’t will match say $50. On the flip side, if the state decides they have to cut their budget, cutting Medicaid isn’t so easy. If adding a co-pay to the dental coverage lowers the cost to $90, the state doesn’t really save $10 because they will loose $5 in Federal matching. The real formula is more complicated because the Fed. gov’t chips in extra for things like a state having hospitals that serve a huge population of poor people who can’t pay their bills. We see from the chart that Texas’s spending has really been coming from the Fed. gov’t at a rate of about 60 cents on the dollar. Assuming that holds, $3B more in spending would only really require a bit less than $1.5B on Texas’s part.

    So what’s the takeaway here:

    1. Scarey numbers are usually scarey because the true context is being (purposefully?) left out.

    2. If you’re forecasting a macrochange to the entire system then you need to be a bit more holistic. For modest changes like year to year population growth straight line estimates for Medicaid probably make sense. When changes go far out into the future (ten years) or make alter the program in more systematic ways (increasing eligilibity) you need to be a bit more sophisticated if you’re trying to make a reasonable forecast.