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What We Read Today 28 February 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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Supreme Court playing with fire in Obamacare case (Joan McCarter, Daily Kos)  The effect of SCOTUS ruling on arguments presented this coming week would be an average increase in health insurance costs of 256% for people in 34 states.  Outcome will not be known until the ruling comes in June.  The case is King v. Burwell in which one lower court has ruled that the wording of Obamacare law prohibits the payment of premium subsidies for policies purchased through the federal exchange  See two more articles discussed in Premium content (available only to newsletter subscribers.  Newsletter subscription is free.

Articles about events, conflicts and disease around the world





  • Kurds push for delay of Mosul attack (Al Monitor)  A vital ally in the war against the Islamic State (IS) is making it increasingly clear that it wants the United States to call off its planned spring offensive.




Insurance Markets in a Post-King World (Larry Levitt and Gary Claxton, Kaiser Foundation)  A ruling in favor of the plaintiff in King v. Burwell would destabilize the insurance markets in the 34 states not running their own insurance exchange marketplaces.

The immediate effect of a Court decision in favor of the plaintiff would be to cut off subsidies in affected states, which could happen within a month of the decision. Currently, in 34 states the federal government is operating the health insurance marketplace, including 7 states where the state is performing some functions. Fourteen states are fully operating state-based marketplaces. And, an additional 3 states – Oregon, New Mexico, and Nevada — are approved as state-based marketplaces but are using to handle subsidy eligibility and enrollment. These 3 states, which are referred to as Federally-supported State-based Marketplaces, could potentially continue to provide subsidies. In the 34 federal marketplace states, 7.5 million people had signed up for coverage for 2015 as of mid-February and qualified for a subsidy. That figure is expected to ramp up significantly in the next year, assuming the Court does not invalidate the subsidies.

People receiving subsidies make up 87% of those who have signed up for coverage for 2015 in states using the federal marketplace. For the vast majority of them, coverage would be unaffordable without the subsidies. The subsidies average $268 monthly per person and cover 72% of the premium, leaving enrollees to pay for 28% of the premium (or an average of $105 per month). With the subsidies eliminated, those who had been receiving them would face an increase in their out-of-pocket premiums averaging 256%.

To encourage healthy people to buy coverage, the ACA includes not only a “carrot” in the form of subsidies but also a “stick” through the individual mandate. A Court decision to cut off the subsidies would eliminate the carrot and severely weaken the stick. The ACA exempts someone from the individual mandate if the lowest-cost insurance available would cost in excess of 8% of income. With subsidies available, less than 3% of uninsured people eligible for subsidies would be exempt. However, if the subsidies are invalidated, we estimate that 83% of those formerly subsidy-eligible uninsured people would end up being exempt from the individual mandate.

At least 6 Republican states revisit their stance of resisting Obamacare (Sandhya Somashekhar, Jason Millman and Lena H. Sun, The Washington Post)  Movements are underway to try to get state legslatures to vote to establish healthcare insurance exchanges in South Carolina, Pennsylvania, Ohio, South Dakota, Maine and Utah.  In the article it is said that there are nine states with bills under consideration:

Nine states now have bills under consideration to set up their own marketplaces, ­according to the National Conference of State Legislatures, although in some cases these efforts began before the court accepted the subsidies case.

  Other states appear to be actively resisting a state exchange; specifically mentioned are Tennessee and Indiana. By implication that leaves 27 of the 38 states using with no action.

What Happened to Unions in the Midwest? (Melanie Trottman and Eric Morath, The Wall Street Journal) Unions are rapidly losing their grip on their onetime stronghold: the industrial Midwest.  Michigan, ranked # 11 in 2014, down from # 7 in 2013 leaving Illinois (# 8) as the only midwestern state in the top 10.  The top six states for union membership (in ranking order starting with # 1) are New York, Alaska, Hawaii, Washington, New Jersey and California.  For the entire country union membership fell to 11.1%, down from 11.3% in 2013.  Percentages and rankings are determined by union membership as a percentage of all employed.  Econintersect will be presenting more work using this data at GEI Analysis.

Median Household Income by State: A Look at the Latest Data (Doug Short, Advisor Perspectives  Doug Short is a regular contributor to GEI. Median household incomes vary over a wide range in the U.S.  In 2013 New Hampshire was the state with the highest median household income, $71,322.  In last place was Louisiana at $39,622.  Below is a map showing the geographic distribution of incomes in 2013 and, for comparison, in 1983.  Econintersect will be presenting more work using this data at GEI Analysis.


Why the Dip Into Deflation Should Be Short-Lived (Kathleen Madigan, The Wall Street Journal)  The current deflation in the Consumer price Index (CPI) reflects the sharp drop in oil prices.  Core inflation remains in the 1.5% to 2.0% range where it has been for the past two years.  Madigan argues that, with oil prices stabilizing (or possibly rising), the negative energy factor will disappear from CPI and the total and core will become more equal again, presumably at the same level that has held for the core CPI over the past two years.


Growing Incarceration Contributed Little to Drop in Crime, Study Finds (Michael Mitchell)  There are two things about the relationships between correlation and  causation:  (1)  Absent additional evidence correlation does not prove causation; and (2) with no additional evidence correlation can disprove causation.  The second statement is better written:  Lack of correlation disproves causation.  All that preface is directed at this excerpt:

The Brennan Center report found that while rising incarceration rates helped reduce property and violent crime rates in the 1990s, the effect was much smaller than some other studies have suggested, accounting for 0-10 percent of the total decline over the decade.  Since 2000, rising incarceration rates account for less than 1 percent of the decline in crime rates.

This report’s analysis reveals that incarceration has been decreasing as a crime fighting tactic since at least 1980,” the authors conclude. “Since approximately 1990, the effectiveness of increased incarceration on bringing down crime has been essentially zero.”  Factors such as an aging population, higher earnings, lower alcohol consumption, and smarter police tactics may have done as much or more to reduce crime, according to the study.

The Brennan Center report:   What Caused the Crime Decline? (Oliver Roeder, Lauren-Brooke Eisen and Julia Bowling).  For more on this see GEI News today.


Other Economics and Business Items of Note and Miscellanea

Negative Interest rates are Here to Stay (Frances Coppola, Pieria)

Can helicopter money be democratic?  (Mainly Macro)

What Greece Won (Paul Krugman, NYT)  Too early to be definitive, but potentially Greece won some fiscal flexibility.

Dudley: Why Fed may need to get 'more aggressive' (CNBC)  Hawks are flapping their wings while to doves are still cooing.  There are still no owls at the Fed.

The Libertarian Delusion (American Prospect)  The ideal is perfect; the reality is not.  The delusion is that there is actually a free market.

Apple vs. Exxon: What's the better buy? (CNBC)

Do whales have graveyards where they go to die? (BBC)

Where Macroeconomics Went Wrong (Simon Wren-Lewis, Pieria)

Hell no, we won't go! Homeowners who wouldn't budge (CNBC)  Great slide show.

Education Department Terminates Contracts With Debt Collectors Accused Of Wrongdoing (Huff Post)  The U.S. Department of Education, under fire for its lackluster oversight of student loan contractors, said Friday it will terminate its relationship with five debt collectors after accusing them of misleading distressed borrowers at "unacceptably high rates."

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