Wonkbook: Seven reasons Obamacare isn’t facing a “death spiral”

November 7, 2013

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

No one is quite sure how bad HealthCare.gov's problems are. The result is no one is quite sure what Obamacare's "worst-case scenario" is. But in some corners of the media, a grisly consensus is emerging: It's a "death spiral."

"Is Obamacare in a death spiral?" asks Megan McArdle.

"The death spiral is already beginning," warns David Frum.

No, it isn't.

To health wonks, a "death spiral" means something very specific. Just ask professional health wonk Larry Levitt, a vice president at the Kaiser Family Foundation. "A death spiral is a pool where you have disproportionately sick people enrolling, which causes premiums to go up, and then healthy people drop out because it’s a bad deal, and then premiums rise more, and so on," he says.

Levitt isn't very impressed by what he calls "the death spiral frenzy" that's grabbed the media. "You give a little bit of actuarial science to people and they go nuts," he sighs.

The key to a "death spiral" is the "spiral" part. Once it reaches a certain point, it becomes self-reinforcing -- and almost impossible to stop. Could that really happen to Obamacare?

Probably not. Obamacare is protected from an actual death spiral by interlocking fail-safes. Some kick in if not enough healthy people sign up. Others give healthy people reasons to sign up. Others make sure insurers don't raise premiums too fast. But together, they offer substantial protection against an actual death spiral.

1. Tax subsidies. Obamacare pumps more than a trillion dollars to subsidize lower-income people in the insurance exchanges. That's a lot of money. And, crucially, the subsidies are tied to the cost of the insurance plans. As premiums rise, so too do the subsidies.

"The tax credits are a huge piece of death spiral prevention here," Levitt says. "At least half, probably 60 percent, of the people in the exchanges will get tax credits. The risk of higher premiums is more on the federal government than it is on people."

That's particularly true for the young people the law so desperately needs. Put simply, the younger you are, the more likely you are to be poor. "The tax credit premium subsidies are disproportionately going to be helpful for the young adult population," says Ron Pollack, head of Families USA. "They’ll get the largest tax credit subsidies of any age group."

The result is that a lot of the young people needed to keep premiums down will be paying a fraction of the premium's cost -- or none of it at all. That's one brake on the dreaded death spiral.

2. The insurers. The theory of the "death spiral" goes like this: Insurers see that the people signing up for insurance are older and sicker than they thought. So they sharply raise premiums in 2014 to make sure they don't lose money. Those higher premiums drive young people out. And so the spiral begins.

The problem here? The theory relies on insurers to sharply raise rates in 2015 because the Web site wasn't working well in 2013 and 2014. But they might not cooperate.

"There’s this assumption that if the wrong people enroll in the plan, then insurers will just automatically jack up premiums in the second year," Levitt says. "But there's nothing automatic about it."

Over the long run, insurers price their plans at the expected average cost of the enrollees plus a bit for administration, profits, etc. But in the short-run, insurers badly want to grab market share in the early days of Obamacare. The reason is insurance is sticky: People don't like to change their provider. So if an insurer gets a customer now, they're likely to keep them for a long time. So long as insurers believe that young and healthy people will sign up for Obamacare -- even if they don't think it'll happen until year two -- they have a huge incentive to price their plans low enough to get those customers.

"If you have this worst-case scenario where year one is bad and a lot of sick people enroll, then the last thing you want to do is raise your premiums a lot and miss out on the healthier people who want to come in in year two," says Levitt. "That’s the worst of all worlds for you: You got the sick people in year one, and you didn’t price competitively to get the healthy ones in year two."

Of course, insurers don't want to lose a ton of money in the interim. But there's a fail-safe for that, too.

3. Risk corridors. Among the least well-known fail-safes in Obamacare are the subsidies to insurers who underprice their insurance. The way this works is that if insurers' actual costs are more than 3 percent above their "target" costs, the government gives them 50 percent of the difference. If they're more than 8 percent above their target costs, the government pays 80 percent of the difference. (The program goes in reverse, too: If an insurer overprices their insurance, they have to pay part of the excess to the government.)

The program exists only for the first three years of the law. But it basically gives insurers a huge incentive to price their insurance low. They don't want to go too low because the program ends in 2016 and they'll lose their customers if they need to raise rates by 500 percent. But for an insurer who's just trying to wait out a bad 2014, the risk corridors are a real buffer. As Adrianna McIntyre wrote, they help plans "weather 2014′s uncertainty and probably keep the following year’s premiums relatively unchanged as the risk pool normalizes."

4. Reinsurance. This is the little brother of the risk corridors. For the first three years of Obamacare, the government basically subsidizes particularly expensive enrollees. So if someone buys insurance and their claims break $50,000 in 2014, the federal government picks up part of the cost. The result is that, for the first few years, really sick people cost insurers less than they normally would, and so can be expected to have less of an effect on premiums than would typically be expected.

5. The individual mandate. The reason the Obama administration is so dead-set against delaying the individual mandate is that it's a key fail-safe against a death spiral.

There's a lot of confusion over the actual costs of the individual mandate, so here's a reminder: In 2014, it's $95 or 1 percent of adjusted income (which is income minus the tax filing threshold, which is $10,000 for individuals and $20,000 for families), whichever is greater. In 2015, it's $325, or 2 percent of adjusted income, whichever is greater. In 2016, it's $695 or 2.5 percent of adjusted income, whichever is greater.

The reason I keep italicizing "whichever is greater" is because it's the part that really matters. A lot of people believe the mandate's penalty in year one is $95. It isn't. Almost everyone who faces the mandate makes more than $9,500. So imagine someone making $53,000. For them, the mandate's cost in year one is $430. By year three, it's $1,075. That's a lot of money.

In Massachusetts, sign-up only accelerated when the mandate loomed and people realized they either needed to buy insurance or give the government money in exchange for nothing. Something similar might happen with Obamacare.


6. 51 death spirals? There's no such thing as "Obamacare." Instead, there are 50 state exchanges (and one for D.C.). It's possible that risk pools in some of those could go awry. But to say "Obamacare will enter a death spiral" is to say that 51 exchanges, with 51 different risk pools, will all go totally off the rails. Much more likely is that some of the exchanges end up with strong risk pools and some end up more troubled.

Bonus 7. Web literacy, or Drew Altman's crazy theory. "This is a crazy theory, and almost no one but me believes it," prefaces Drew Altman, president of the Kaiser Family Foundation. I think it makes sense, though, so I'm including it here.

"We have a Web first, Web-driven enrollment system," Altman says. "So it’s possible that what we’ll get are people who are Web savvy. Young people are Web savvy. They’re the ones who know how to work their way through Web sites. What we won’t get are the long-term uninsured who require other forms of outreach. So it’s not at all clear to me that the conventional wisdom that young people will stay disproportionately stay away is right. I think they might disproportionately show up."

Bottom line: Obamacare's problems are real and severe. But assuming the Web architecture eventually gets fixed -- and it likely will -- there's little chance the law will collapse in on itself. Premiums might rise, Democrats might lose more seats than they hoped in 2014, and it might take some time -- even years -- until all the marketplaces are working smoothly, but a "death spiral" is hard to imagine.

Wonkbook's Number of the Day: 4. That's the total number of people who have enrolled in Obamacare in all of Delaware over the last month. Delaware is a small state, but this is shockingly low enrollment.

Wonkbook's Graph of the Day: A quick look at GDP data. Today's the day of the next release.

Wonkbook's Top 5 Stories: (1) Obamacare's errors; (2) equitable growth gains new thinkers; (3) the carbon tax is coming; (4) cutting of the hand that votes for you; and (5) immigration reform and the moderate right.

1. Top story: Should Obamacare start planning for a delay?

Top U.S. insurer sees weak Obamacare sign-ups, prepares for delay. "A top U.S. health insurer gave the first detailed view of how the problem-plagued rollout of President Barack Obama's signature healthcare law is affecting the industry, saying on Wednesday it had cut its enrollment forecasts by at least a half and expected the government to delay the sign-up deadline. Humana Inc said that because of technical problems preventing millions of Americans from accessing the federal HealthCare.gov website since it opened on October 1, the company had slashed its expectations of signing on 500,000 new plan members to an estimate of closer to 250,000." Caroline Humer and Susan Cornwell in Reuters.

Actuaries: ACA delays would cause chaos. "An organization representing the country’s actuarial industry warned lawmakers on Wednesday that proposed delays to the Affordable Care Act (ACA) would cause chaos in the marketplace. “Delaying the implementation of the ACA’s individual mandate or extending the enrollment period for obtaining coverage could have negative consequences for health insurance coverage and costs,” the American Academy of Actuaries (AAA) said in a statement. AAA said the delays could result in premium-collections that aren’t sufficient to cover claims, a higher than anticipated number of uninsured individuals, increased costs to the federal government and higher insurance premiums in 2015." Jonathan Easley in The Hill.

What enrollment numbers can and can't tell us. "For starters, the number is sure to be small. Democrats anticipated low take-up in the first month, and they have acknowledged that HealthCare.gov’s technical problems will make October’s numbers even lower than expected. Republicans might be able to crow over a small number of enrollments, but it won’t be a surprise. Moreover, focusing on the total number of enrollees leaves other important questions unanswered. Obamacare’s success will depend not only on how many people enroll, but also on who they are and where they sign up—information a top-line enrollment figure won’t necessarily provide." Sam Baker in National Journal.

Labor might have just gotten a pass on an Obamacare fee. "Weeks after denying labor’s request to give union members access to health law subsidies, the Obama administration is signaling it intends to exempt some union plans from one of the law’s substantial taxes. Buried in rules issued last week is the disclosure that the administration will propose exempting “certain self-insured, self-administered plans” from the law’s temporary reinsurance fee in 2015 and 2016. That’s a description that applies to many Taft-Hartley union plans acting as their own insurance company and claims processor." Jay Hancock in The Washington Post.

HealthCare.gov’s head tech guy is out. "A Medicare official who oversaw HealthCare.gov's botched launch will leave the federal government for the private sector, according to an e-mail sent late Tuesday to Medicare employees. Tony Trenkle is the chief information officer at the Center for Medicare and Medicaid Services, the agency that built the Affordable Care Act's online portal...Bataille did not response to reporters' questions of whether Trenkle had been asked to leave the agency." Sarah Kliff in The Washington Post.

Inside the Obamacare War Room, HealthCare.gov’s launch was chaos. "Mostly though, the war room notes underscore how significant it was that the federal government ended up running the majority of health law insurance marketplaces, and how that increased the Obama administration's workload.... Each state on the federal marketplace uses the same homepage for HealthCare.gov. The application process looks the same, whether you're buying coverage in Alaska or Wyoming. But behind the scenes, the war room notes paint a completely different narrative, where each state's idiosyncratic issues didn't lend themselves to scale. Alaska and Wyoming, in other words, had totally different problems — ones that couldn't be addressed with a singular fix." Sarah Kliff in The Washington Post.

@strobetalbott: #Obamacare rollout debacle shifts focus of public ire over a government that can't deliver from Congress to POTUS & executive branch

Documents: Healthcare.gov could only take 1,000 users at a time when it was launched. "A test on a central component to the ObamaCare website conducted the day before launch revealed that the system could only handle 1,100 concurrent users before overloading, according to internal documents released by House Republicans. "Currently we are able to reach 1,100 users before response time gets too high," reads the document...“One of the items we have ticked off our punch list is response times for page loads, which we have reduced dramatically from eight seconds to less than one second,” Peters said. “Moving forward, the team is focused on diagnosing and fixing every tech issue as it is identified.”" Justin Sink in The Hill.

Obama, Biden meet with Senate Democrats on health-care woes. "President Obama and Vice President Biden met with 16 Democratic senators at the White House on Wednesday afternoon to discuss the administration's response to problems with the federal health care Web site, HealthCare.gov. Among the lawmakers who participated in the meeting were several -- including New Hampshire's Jeanne Shaheen, Arkansas's Mark Pryor, Alaska's Mark Begich and Louisiana's Mary Landrieu -- who have urged the administration to either delay the open enrollment period beyond the March 31 deadline or take other steps to mitigate potential penalties on the uninsured in light of the enrollment difficulties." David Nakamura in The Washington Post.

@jimgeraghty: Sure, Obamacare wasn't a factor in Virginia. The president just met with Democratic Senators up for reelection in 2014 for fun today.

Delaware health insurance exchange off to slow start, with only 4 enrollments reported. "More than a month after the launch of Delaware’s health insurance exchange, officials report only four Delawareans enrolled for insurance coverage under the Affordable Care Act. As of Wednesday, Delaware’s marketplace guide organizations reported four enrollments, 31 enrollment applications completed and 218 accounts created for possible enrollment. Four community organizations were hired to provide marketplace guides, using a $4 million federal grant." The Associated Press.

Obama defends Obamacare in Texas. "Mr. Obama again expressed regret for the troubles at the federal website that have prevented many people from enrolling for insurance. But he said the Texas government — by refusing to take federal funds and expand Medicaid eligibility — had left more than a million people uninsured. He promised to get problems with the health program fixed. “As challenging as this may seem sometimes, as frustrating as HealthCare.gov may be sometimes, we are going to get this done,” Mr. Obama told about 150 volunteers and paid navigators helping in enrollment who had gathered to meet him at Temple Emanu-El here. “We’re on the right side of history.”" Jackie Calmes and Jonathan Weisman in The New York Times.

@philipaklein: Tonight Obama pitching Obamacare to a synagogue with a "social justice council." At this point I think he's just trolling me personally.

Sebelius team working on 200 fixes to Obamacare Web site. "Health and Human Services Secretary Kathleen Sebelius said Wednesday that her team is working on some 200 fixes to the ailing federal health insurance Web site, and that once it is fixed, officials plan to formally “re-invite” people who were turned off by the technical glitches. At a hearing before the Senate Finance Committee, Sebelius did not offer an exact date for when this outreach effort would begin." Sandhya Somashekhar in The Washington Post.

No delays, though, Sebelius says. "Sebelius, appearing before the Senate Finance Committee, rejected calls from politicians in both parties to delay aspects of the health-care law, including by extending the initial open enrollment period beyond March 31 for buying insurance on the new online marketplaces. People who don’t buy coverage by then risk being fined...The White House is expected on Thursday to announce $150 million in grants to establish new community health centers, which would help provide care to more than 1 million people." Sandhya Somashekhar and Sarah Kliff in The Washington Post.

Sebelius tells senators Obamacare site is operating more smoothly. "Nor did she provide much in the way of new information about the launch of a website that she has conceded was deeply flawed. She disclosed that the so-called punch list for repairs had included “a couple of hundred functional fixes” at the time the administration launched its urgent rescue mission last month. Even now, she said, “we’re not where we need to be.” She added that the web portal now is handling large volumes of material with fewer errors." The Associated Press.

Loyal Obama supporters, canceled by Obamacare. "San Francisco architect Lee Hammack says he and his wife, JoEllen Brothers, are “cradle Democrats.” They have donated to the liberal group Organizing for America and worked the phone banks a year ago for President Obama’s re-election. Since 1995, Hammack and Brothers have received their health coverage from Kaiser Permanente, where Brothers worked until 2009 as a dietitian and diabetes educator. The couple — Lee, 60, and JoEllen, 59 — have been paying $550 a month for their health coverage — a plan that offers solid coverage, not one of the skimpy plans Obama has criticized. But recently, Kaiser informed them the plan would be canceled at the end of the year because it did not meet the requirements of the Affordable Care Act. The couple would need to find another one. The cost would be around double what they pay now, but the benefits would be worse." Charles Ornstein in ProPublica.

The hidden marriage penalty in Obamacare. "Any married couple that earns more than 400 percent of the federal poverty level — that is $62,040 — for a family of two earns too much for subsidies under Obamacare. But if that same couple lived together unmarried, they could earn up to $45,960 each — $91,920 total — and still be eligible for subsidies." Garance Franke-Ruta in The Atlantic

One of Obamacare's most popular provisions, guaranteed issue, is responsible for one of its most unpopular consequences, rate shock. "When setting premiums for next year, insurers baked in bigger-than-usual adjustments, driven in large part by a game-changing rule: They can no longer reject people with medical problems. Popular in consumer polls, the provision in the health law transforms the market for the estimated 14 million Americans who buy their own policies because they don’t get coverage through their jobs. Barred from denying coverage, insurers also can’t demand higher rates from unhealthy people." Julie Appelby in Kaiser Health News.

AMA panel takes steps toward more transparency. "The American Medical Association panel that plays a key role in setting payment rates for physicians has voted to make public more of its deliberations and is revamping some of the methods it uses for determining the values of services...In October, the panel voted to publish to the Web the dates and locations of meetings, vote tallies and meeting minutes. The panel’s methods for calculating the value of physicians’ services are also changing to ensure data consistency and integrity. The estimates are based on surveys of doctors, and the panel is moving to centralize the process of conducting the surveys, which had previously been done independently by specialty societies. The panel also set new minimums for the number of doctors who must be surveyed." Peter Whoriskey in The Washington Post.

COHN: Obamacare will force some to pay more for the same coverage. "The truth is that, until now, people in this situation have been among the few, fortunate souls for whom American health insurance is a bargain. They’ve been relatively healthy, and they’ve had relatively good incomes, making it possible to buy comprehensive policies at prices they could afford. But the practices that made insurance cheap for them made it expensive — and in many cases unavalable — for others. Their good fortune was the by-product of bad fortune for many others. As one ends, so must the other." Jonathan Cohn in The New Republic.

BEUTLER: The right’s Virginia delusion: Somehow, a Democratic win is bad for Obamacare! "[T]he phenomenon is also a twist on the question begging conservatives engage in to ward off all sources of ideological doubt. Conservatism can’t fail, it can only be failed. Republicans have invested too much in a scorched Earth campaign against the Affordable Care Act to acknowledge that their strategy is out of proportion to the law’s contentiousness." Brian Beutler in Salon.

Music recommendations interlude: Pearl Jam, "Sirens."

Top opinion

SHILLER: Is economics a science? "My belief is that economics is somewhat more vulnerable than the physical sciences to models whose validity will never be clear, because the necessity for approximation is much stronger than in the physical sciences, especially given that the models describe people rather than magnetic resonances or fundamental particles. People can just change their minds and behave completely differently. They even have neuroses and identity problems, complex phenomena that the field of behavioral economics is finding relevant to understanding economic outcomes." Robert J. Shiller in Project Syndicate.

BERNSTEIN AND BAKER: Washington, you're aiming at the wrong deficit. "[L]owering the budget deficit right now leads to slower growth. But reducing the trade deficit would have the opposite effect. Not only that, but by increasing growth and getting more people back to work in higher-than-average value-added jobs, a lower trade deficit would itself help to reduce the budget deficit. Running a trade deficit means that income generated in the United States is being spent elsewhere. In that situation, labor demand — jobs to produce imported goods — shifts from here to there." Jared Bernstein and Dean Baker in The New York Times.

WESSEL: Overhauling the student-loan system. "Dynarski and colleague Daniel Kreisman are proposing "a single, simple income-based repayment system to replace the current bewildering array of repayment options." No websites with decision trees. No forms to fill out when times are tough. And no choice. For every borrower, monthly payments would be set as a percentage of income: 3% of earnings for the first $10,000, rising to 10% for earnings above $25,000. Allocating between 6% and 9% of earnings would pay off the typical loan in 10 to 15 years; those with lower earnings would end up paying more interest because they'd take more time to pay. Any borrower who hasn't earned enough to pay off a loan in 25 years would have the balance forgiven. Loan payments would be deducted from paychecks—just as Social Security taxes are and thus would adjust automatically to rising or falling earnings." David Wessel in The Wall Street Journal.

WATKINS: Stop subsidizing climate change. "Next week, governments will gather in Warsaw, Poland, for a crucial round of climate negotiations, with both expectation and ambition running at an all-time low. But it does not have to be like this: The Warsaw meeting provides an opportunity to galvanize action on one of the most potent forces driving climate change – the billions of dollars spent by governments on fossil-fuel subsidies.... [B]old climate-change targets are being undermined by business-as-usual subsidies." Kevin Watkins in Project Syndicate.

DIONNE: The U.S. shifts left. "The center of gravity in American politics moved left in Tuesday’s off-year elections. Republicans took a big step back from the tea party. An ebullient progressive was elected mayor of New York City. And a Democrat was elected governor of Virginia after campaigning unapologetically as a supporter of gun control and a liberal on social issues." E.J. Dionne in The Washington Post.

I can't believe it's Tumblr interlude: How high are Xi Jinping's pants today?

2. How can the U.S. get to equitable growth?

Podesta starting think tank on inequality. "John Podesta, a longtime adviser to Bill and Hillary Clinton and President Obama, is starting a research center in Washington to investigate the causes and effects of growing economic inequality. J. Bradford DeLong, one of the best-read economics bloggers, will move a significant portion of his writing to a new blog being started by the center...The center will be called the Washington Center for Equitable Growth and be housed at the Center for American Progress, a left-leaning advocacy and research group that Mr. Podesta founded 10 years ago. Heather Boushey, an economist at the Center for American Progress, will become executive director of the new center." David Leonhardt in The New York Times.

The next 48 hours are crucial for the global economy. "Thursday morning, we also will find out how much momentum the U.S. economy carried into the final months of the year, as the Commerce Department reports on third quarter gross domestic product growth.  Also Thursday, the European Central Bank will announce the results of its policy meeting and its president, Mario Draghi, will take questions from the media. Then Friday, the Labor Department offers its report on how the job market fared in October." Neil Irwin in The Washington Post.

40 percent of Americans experience poverty before age 60. "Americans have a habit of talking about poverty as if it were a deep gulch somewhere at the fringe of the U.S. economy. We imagine a few unfortunate souls fall in forever—but only a few...Between the ages of 25 and 60, [Washington University in St. Louis professor Mark] Rank has found, almost 40 percent of Americans will live at least one year below the poverty line. Yet over time, most also pull themselves back above of it." Jordan Weissmann in The Atlantic.

Treasury delays plan to trim borrowing. "The U.S. Treasury Department on Wednesday said it will hold government borrowing steady amid fiscal uncertainty, a shift from the summer, when declining budget deficits allowed it to scale back...In an announcement outlining quarterly borrowing plans, the Treasury said it will "continue to monitor projected financing needs" and adjust as necessary. But the department said further reductions in borrowing are on hold while the shape of 2014 spending remains uncertain and another fight over the federal borrowing limit looms." Jeffrey Sparshott in The Wall Street Journal.

US to sell $15B of floating rate debt. "Investors will be able to buy up to $15bn of Treasury bonds offering protection from a rise in interest rates, in the first new type of debt to be issued by the US government since 1997. Strong demand is expected when the Treasury next year begins selling floating rate notes, the first new sovereign US debt product since the introduction of inflation bonds. Washington plans to sell between $10bn and $15bn of two-year floating rate notes in January. Traders expect that over time there will be a cumulative $30bn of so-called “floaters” issued each quarter, providing investors with a liquid market. The introduction of the securities has been planned for two years and the move is seen as providing investors with a security that offers portfolio protection in a climate of rising interest rates. The index rate for floaters will be based on the 13-week Treasury bill yield." Michael Mackenzie in The Financial Times.

Typographical interlude: What dyslexia is like.

3. The carbon taxers cometh 

Concentrations of warming gases break record. "The levels of gases in the atmosphere that drive global warming increased to a record high in 2012. According to the World Meteorological Organization (WMO), atmospheric CO2 grew more rapidly last year than its average rise over the past decade. Concentrations of methane and nitrous oxide also broke previous records Thanks to carbon dioxide and these other gases, the WMO says the warming effect on our climate has increased by almost a third since 1990." Matt McGrath in the BBC.

Carbon tax advocate seeks to shake up EPA power plant debate. "Thursday’s Environmental Protection Agency (EPA) public hearing on carbon emissions rules for existing power plants will feature a twist in the familiar plotlines. Brookings Institution scholar Adele Morris will urge the EPA to let states impose a carbon emissions excise tax as an option for meeting the planned federal guidelines. “EPA could ... say, ‘well, states, if you want to do an excise tax on carbon, here’s the price point that EPA views as equivalent to those other measures,’ ” she said of her proposal to tax the carbon in fuels used at power plants. Morris has a catchphrase for her idea: a “SIP swap.” SIPs are “state implementation plans” that states provide the EPA to show how they will meet or maintain various air quality standards." Ben German in The Hill.

Enbridge to move ahead with U.S. pipeline. "[The firm] is forging ahead with efforts to build a pipeline to move oil from North Dakota to Midwestern U.S. refineries, despite regulatory hurdles and local opposition. Talks with shippers who might use the Sandpiper pipeline have been promising enough that Enbridge filed a permit request with North Dakota regulators last week. The pipeline company's new line would move up to 225,000 barrels a day of oil from the Bakken shale formation to refineries in Wisconsin and Illinois and could link up with another pipeline that connects to the east coast of Canada." Lynn Cook in The Wall Street Journal.

Keystone XL developer: Other pipeline companies will face similar hurdles. "TransCanada’s Alex Pourbaix told analysts Tuesday that it would be “pretty naive” to assume other projects would face lower hurdles...“I think ... all of the issues that have made Keystone XL contentious with the opposition would be equally applicable to both of those projects you identified and I think it would be pretty naive to assume any future project certainly in the near future would be going through a significantly lower hurdle in terms of the Presidential permit process,” Pourbaix, TransCanada Corp.’s president for energy and oil pipelines, told an analyst with Credit Suisse." Ben German in The Hill.

Science interlude: The best science journalism this year.

4. Can Republicans cut off their right hand?

New Jersey voters approve higher minimum wage. "[They backed an] amendment to the State Constitution that would take the minimum hourly wage to $8.25 [from $7.25] on Jan. 1 and then step it up annually to keep pace with inflation. Indeed, the measure passed easily on Tuesday: With 99 percent of precincts reporting, voters approved it by a margin of 61 percent to 39 percent, an outcome that pleased labor leaders and dismayed representatives of the business community." Patrick McGeehan in The New York Times.

Republicans weigh plans to replace caucuses with open primaries to reduce power of right wing. "[T]he party leaders pushing for changes want to replace state caucuses and conventions, like the one that nominated Mr. Cuccinelli, with a more open primary system that they believe will draw a broader cross-section of Republicans and produce more moderate candidates. Similar pushes are already underway in other states, including Montana and Utah, and last week Mitt Romney said Republicans should consider how to overhaul their presidential nominating process to attract a wider range of voters." Jeremy W. Peters and Jonathan Martin in The New York Times.

Worrying signs for Democrats in Virginia’s exit poll. "Though Virginia's GOP chose a candidate who turned off moderate Republicans and motivated Democrats, and though the Democrats had vastly more money, the exit polls still showed the kind of demographic drift that could help Republicans make gains next year...[T]hese sorts of numbers in race this tilted for the Democrats makes it clear that Democrats will be on more challenging ground in 2014 than they were in 2012." Ezra Klein in The Washington Post.

No, Obamacare didn’t decide the Virginia election. "These arguments outline an emergent consensus on the Virginia election, which holds that McAuliffe (D) would've won by 10 or 15 points if not for Obamacare's troubled launch...So Obamacare almost lost the election for the Democrats despite being almost exactly as popular as it was in 2012? That's hard to believe. If anything, the surprise of the Virginia election is that Obamacare's approval was as high as 45 percent." Ezra Klein in The Washington Post.

Internet interlude: How hackers work for good.

5. Is immigration reform's best hope the moderate right?

New immigration campaign will target vulnerable House Republicans. "With one year to go until the midterm elections, immigration reform advocates hoping to jump-start debate on Capitol Hill are planning to target a handful of Republican lawmakers most likely to suffer political consequences next year if Congress fails to act on immigration reform...The campaign will target GOP representatives Jeff Denham, David Valadao, Howard P. “Buck” McKeon and Gary G. Miller of California; Scott R. Tipton and Mike Coffman of Colorado; and Daniel Webster of Florida, Stevan Pearce of New Mexico and Joseph J. Heck of Nevada." Ed O'Keefe in The Washington Post.

Lessons on immigration from two governors' races. "Republicans in Congress studying the results from the governors’ elections in New Jersey and Virginia on Tuesday see two starkly different test cases for how the party should move on immigration...In New Jersey, Gov. Chris Christie was boosted to a blowout victory by more than 20 points in part because he won half of Latino voters...Christie came into the race with a record on immigration that was strikingly at odds with the dominant views of his party. He has long supported a pathway to citizenship for illegal immigrants, which many Republicans oppose. During the campaign, he reversed himself, and said New Jersey should offer in-state college tuition rates to young undocumented immigrants." Julia Preston in The New York Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

The grisly economics of elephant poachingNeil Irwin.

What Toronto’s crack-smoking mayor can teach us about political scienceBrad Plumer.

Car rental companies keep merging. That might not be such a bad thingLydia DePillis.

HealthCare.gov’s head tech guy is outSarah Kliff.

The next 48 hours are crucial for the global economyNeil Irwin.

Inside the Obamacare War Room, HealthCare.gov’s launch was chaosSarah Kliff.

No, Obamacare didn’t decide the Virginia electionEzra Klein.

Worrying signs for Democrats in Virginia’s exit pollEzra Klein.

Et Cetera

Things keep getting in the way of reforming the Postal ServiceRon Nixon in The New York Times.

ENDA poised for final Senate voteBurgess Everett in Politico.

Got tips, additions, or comments? E-mail me.

Wonkbook is produced with help from Michelle Williams.

SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business, subsection=null}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: !!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=m6yzjj840m, display_more=true, moderationrequired=false, includefeaturenotification=true, comments_period=14, defaultsort=reverseChronological, canvas_allcomments_id=washpost.com/km4ey0dajm, includevoteofftopic=false, allow_videos=false, childrenitemsperpage=3, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, includesorts=true, includeheader=true, defaulttab=all, includeverifiedcommenters=true, includerecommend=true, maxitemstop=2, includereport=true, source=washpost.com, allow_photos=false, maxitems=7, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments
Most Read Business
Next Story
Brad Plumer · November 6, 2013