Wonkbook: The price of Obamacare obstructionism

January 7

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.


(Photo by Andrew Harrer/Bloomberg)

Wonkbook's Number of the Day: 17.2 percent. That's health care's share of gross domestic product. It ticked down in 2012, stopping a decades-long rise.

Wonkbook's Graph of the Day: Theda Skocpol shows how state cooperation on Obamacare is making a huge difference in insurance enrollment.

Wonkbook's Top 5 Stories: (1) Obamacare's greatest what-if; (2) breaking up the central banking boys' club; (3) energy-policy reads to get you through the cold; (4) Sotomayor strikes again; and (5) the jobless won't get a lucky break.

1. Top story: Obamacare's greatest what-if

The price of Obamacare obstructionism. "With three months of Obamacare enrollment completed, the effect of the Republican intransigence on health care reform can be seen in new data compiled by Theda Skocpol, professor of government and sociology at Harvard University and director of the Scholars Strategy Network.Those states, like California and New York, that have fully bought into the ACA have performed exceedingly well in enrolling their citizens. They're already 43 percent of their way toward their projected Medicaid enrollment, as calculated by Skocpol, and 37 percent of the way there on private coverage. But as involvement goes down, so does enrollment. Those states, like Florida and Texas, that decided to opt out completely have only enrolled 1.5 percent of their potential Medicaid population if they had expanded the program as originally planned. By leaving their citizens to deal with problem-plagued HealthCare.gov, private enrollment is struggling, too: Only 5.6 percent toward the mark." Dylan Scott in Talking Points Memo.

Good news! Health spending as a share of the economy is shrinking. "The new data, published in the journal Health Affairs, showed health spending grew by a relatively slow 3.7 percent in 2012, about one percentage point slower than the rest of the economy. That meant health care shrunk as a percent of gross domestic product, falling from 17.3 percent in 2011 to 17.2 percent in 2012...Federal officials caution that the current slowdown looks similar to the other periods that have followed a recession, where health spending tends to tick upward at a slower rate than the rest of the economy. They also said that the Affordable Care Act has had a "minimal" impact on health care spending. At most, they believe the law increased health spending by 0.1 percent between 2010, when it was passed into law, and 2012." Sarah Kliff in The Washington Post.

@MichaelSLinden: Continued slowdown in health care cost growth has enormous positive implications for our long-term fiscal challenges.

"Here's how that number breaks down: 2.1 million people have signed up for private insurance through the exchanges. About 4.4 million people have signed up for Medicaid coverage. And about 3.1 million young adults got coverage through Obamacare's rule forcing insurers to cover dependents up to age 26. Then there's the unknown number of people who bought Obamacare-based coverage directly from insurers" Ezra Klein in The Washington Post.

Medicaid is Obamacare’s biggest success. But neither side wants to talk about it. "[T]he fact remains that Medicaid enrolled well over twice as many people as signed up for private insurance through the exchanges. It’s “the biggest ACA success story that has not yet been told,” says Ron Pollack, head of Families USA, a nonpartisan health-care advocacy group...If the point of health-care reform is covering people who need health insurance, the expansion in Medicaid coverage should be a huge win. The people qualifying for Medicaid are, on average, poorer, sicker and more desperate than the people signing up for private insurance. Instead, it’s rarely mentioned, and when it is mentioned, it often seems, somehow, not to count." Ezra Klein in The Washington Post.

@BenjySarlin: I'm sure those minimizing effect of ACA on health care costs dropping would have done the same if opposite occurred

The battle of the anecdotes: Gird yourself for Obamacare’s newest fight. "The battle of the anecdotes is all-but-guaranteed because access to health care is really difficult to measure, even more so than the number of people who have enrolled or how well HealthCare.gov is functioning...Our health-care system is really fragmented. Since HealthCare.gov shoppers are buying private coverage, and not a government plan, we have no central clearing house to understand whether more shoppers are having an experience like Scott in Texas -- or like Browne in California...Nonprofit institutions do study these types of questions. The Commonwealth Fund, for example, regularly looks at how long patients in different countries have to wait to see a primary-care doctor or a particular surgeon. But these surveys take months to conduct and analyze, meaning that we will probably have to wait until late 2014 or early 2015 to get a sense of what access looks like under the Affordable Care Act." Sarah Kliff in The Washington Post.

FURMAN: Obamacare is slowing health inflation. "Since the ACA was signed into law in March 2010, prices for health-care goods and services have risen at a 1.8% annual rate, the slowest rate for a comparable period in nearly 50 years, and just 0.2% above general price inflation, a gap that has only been as narrow on one other occasion since the 1970s. Many factors, including the recession and one-time developments like blockbuster drugs coming off patent, have contributed to the slowdown, which started in the middle of the last decade. But the slowdown has deepened since the ACA passed, and evidence shows the law has made a meaningful contribution." Jason Furman in The Wall Street Journal.

@CEAChair: Key evidence that slowdown not all the recession is appearance in Medicare & health care prices, which are less sensitive to economy.

LASZEWSKI: Will there be an Obamacare death spiral in 2015? No. "[M]y sense is that health plans, because they are so insulated from big losses, will generally stand pat with their 2014 rate structures for 2015––no matter how bad the early claims experience looks. I expect that the health insurance industry will be content to give the Obama administration one more chance to reboot Obamacare in the fall of 2014, when the 2015 open enrollment takes place. But that is all the patience I see the industry having. While they will continue to be protected from losses in 2016, two years will be enough patience for them and they will be eager to at least begin to transition their rates to the proper level in 2016 rather than face a huge adjustment in 2017 when the reinsurance program ends." Robert Laszewski on his blog.

COHN: Why Obamacare must take away some choices. "[A] group of Angelenos is about to lose access to Cedars, because, starting January 1, their insurance companies will no longer cover treatment at the hospital. Infuriated, some of these people insist that Obamacare is to blame. And the truth is: They’re not exactly wrong...The new plans generally provide more comprehensive benefits than the ones insurers sold before. And they are available to everybody, even people with preexisting medical conditions. But those upgrades cost money. To keep prices down, insurers are sending patients only to the doctors, clinics, and hospitals that have agreed to accept lower reimbursements." Jonathan Cohn in The New Republic.

Music recommendations interlude: Sufjan Stevens, "Romulus."

Top opinion

BERNSTEIN: 50 years fighting poverty. "[A]bsent those policies, the 2012 rate would be 29 percent, meaning that the value of food stamps, unemployment benefits, the earned-income tax credit, housing subsidies and more lifted 13 percent of the population — 40 million people — out of poverty that year...If this is a war, then it is not just the anti-poverty forces that have gotten stronger over time, as revealed by the growing distance between the two top lines in the figure.  The opposing army, wielding weapons of inequality, globalization, deunionization, lower minimum wages, slack labor markets and decreasing returns to lower-end jobs, has also gained much strength." Jared Bernstein in The New York Times.

PONNURU: The ghosts of Burke and Paine. "The debate Levin describes is a family quarrel within liberalism. Both sides have sought to advance liberty as they understood it. Paine’s progressive version of liberalism championed the Enlightenment as a set of newly discovered principles for political life that needed only to be followed. Burke’s conservative version, on the other hand, thought liberty and equality were cultural achievements “built up over countless generations of social trial and error.”" Ramesh Ponnuru in Bloomberg.

GERSON: Tea Partiers, anti-conservatives. "Politics requires a guiding principle of public action. For popular liberalism, it is often the rule of good intentions: If it sounds good, do it...The signal light for government intervention is stuck on green...For libertarians and their ideological relatives, the guiding principle is the maximization of individual liberty. It is a theory of government consisting mainly of limits and boundaries. The light is almost always red...[C]onservatism is a governing vision that allows for a yellow light: careful, measured public interventions to encourage the health of civil society." Michael Gerson in The Washington Post.

BROOKS: The edamame economy. "Boutiques cater to the sort of affluent consumer who is produced by the information economy, which rewards education with money. This is a consumer who is prouder of his cultural discernment than his corporate success; who feels interested in, rather than intimidated by, a hotel room stuffed with cultural signifiers — cerulean sofas or Steichen photos. Boutique hotels hold up a flattering mirror. When guests arrive, they are supposed to feel like they are entering an edgy community of unconventional, discerning people like themselves." David Brooks in The New York Times.

ROGOFF: The folly of foreign aid. "here is a striking parallel between the problems caused by aid inflows and the “natural resource curse” (or “Dutch disease” as it is termed in Western countries), whereby inflows into one economic sector – typically oil or minerals – drive up economy-wide prices (including the exchange rate), rendering other sectors uncompetitive. Moreover, a great deal of this aid is delivered in kind and for strategic reasons, often supporting ineffective and kleptocratic governments." Kenneth Rogoff in Project Syndicate.

Ecosystems interlude: A day in the life of a crab net.

2. Breaking up the boys' club of central banking 

It’s official! Janet Yellen is the next Federal Reserve chair. "Janet L. Yellen secured enough "yes" votes to be confirmed as the next leader of the Federal Reserve Monday evening. With the vote still ongoing, she had 55 "yes" votes as of 6:03 p.m. Yellen will lead the nation's central bank for a four year term beginning Feb. 1. (The vote was still ongoing, with 18 senators having not yet voted). Yellen will be the first woman to lead the Federal Reserve, and takes office after years of experience in various roles at the institution, including the last three as vice-chair." Neil Irwin in The Washington Post.

This is the biggest challenge Janet Yellen will face as Fed chair. "Do we use the tools in our arsenal, even aware of the risks? Or do we allow growth to underperform its potential, leaving millions of jobless by the wayside when we may just be able to help, out of fear of some theoretical risks of a new credit bubble and ensuing crisis. The Fed's answer this past three years -- with strong support from Yellen -- has been that the unemployment crisis is so severe and the risks from interventionism are small and theoretical enough that, yes, the Fed should employ its full set of tools to try to boost growth. But as financial markets get closer to levels that suggest they are fully valued, and flirt with bubble territory, the cost-benefit analysis may well change." Neil Irwin in The Washington Post.

Sperling to continue as top WH economic adviser through February. "National Economic Council adviser Gene Sperling will extend his White House tenure once more, he told reporters Monday, serving through most of February before handing the job over to his successor Jeffrey Zients. Zients was originally supposed to take over for Sperling by the end of 2013; Sperling has occupied the post since January 2011, and is joining his family in California...Still, Zients said he needed some time to get up to speed before replacing Sperling. Initially, the handover was supposed to take place at the beginning of February." Juliet Eilperin in The Washington Post.

Pace of U.S. economic growth slows. "The pace of growth in the services sector slowed for a second consecutive month in December with business activity expanding at a lower rate and new orders contracting, according to the Institute for Supply Management. The I.S.M. index fell to 53 last month from 53.9 in November, dropping to its lowest reading since June 2013 and under expectations for a reading of 54.5. Separately, the financial data firm Markit said its services sector Purchasing Managers Index eased slightly from the previous month, slipping by 0.2 point to 55.7." Reuters.

Income gap takes shape as central issue for both parties ahead of 2014 midterms. "Ahead of the 2014 midterm campaign season — and as the nation marks the 50th anniversary of President Lyndon B. Johnson’s “war on poverty” this week — Democrats and Republicans alike are trying to convince voters they are on the side of the middle class and those striving to break into it...For the GOP, the challenge is to move beyond the rhetoric of past campaigns and focus on specific policies showing the party would be effective on behalf of the poor. While some leading Republican figures are developing their own policy prescriptions in anticipation of the 2016 presidential race, there is little consensus within the party about a shared poverty agenda." Philip Rucker and Robert Costa in The Washington Post.

Will the value of the dollar keep rising? "[I]nvestors, analysts and economists are predicting a resurgent run for the dollar. After a torrid few years the US economy is showing signs of life again. The housing market – epicentre of the financial crisis – is recovering and unemployment is falling. As a result the budget deficit is being steadily trimmed...Adding to the dollar’s tailwinds, the development of shale reserves is crimping energy imports and narrowing the current account deficit. Some analysts are contemplating the prospect of a surplus thanks to an industrial renaissance fuelled by shale gas." Robin Wigglesworth and Delphine Strauss in The Financial Times.

Getting married makes female economists poorer and male economists richer. "For females, however, getting married was associated with a 23 percent salary growth penalty relative to other females, perhaps reflecting compromises incurred in a two-career job search...[T]he data suggest that women are more often the ones who sacrifice for their husbands' careers. That could mean that women tend to be the ones who move so that their partners can take better jobs. But it also likely correlates with the fact that marriage tends to come with kids, and the burden of caring for them falls more heavily on women." Lydia DePillis in The Washington Post.

Attention Tyler Cowen, there is no great stagnation interlude: Introducing the Copenhagen wheel.

3. Brr! These energy-policy reads might cure your shiver.

Can global warming be real if it’s cold in the U.S.? Um… yes! "It's quite cold across much of the United States right now, thanks to the dread "polar vortex." Bitterly cold. Horrifically cold! So what does this tell us about global warming? Not much. Sorry...Global warming refers to the whole planet, not just the United States. The term "global warming" typically refers to the rise in the Earth's average temperature since the late 19th century. A key phrase there is "Earth's average temperature." It can be very cold in one part of the world and very hot in another at the exact same time. What we're interested in is how that global average is changing over a longer period." Brad Plumer in The Washington Post.

How global warming can make cold snaps even worse. "The key factor is a feedback mechanism of climate change known as Arctic amplification. Here’s how to explain the nuts and bolts of it to your under-informed family and friends...Since the difference in temperature between the Arctic and the mid-latitudes helps drive the jet stream (which, in turn, drives most US weather patterns), if that temperature difference decreases, it stands to reason that the jet stream’s winds will slow down. Why does this matter?...When these exceptionally wavy jet stream patterns occur mid-winter, it’s a recipe for cold air to get sucked southwards. This week, that’s happening in spectacular fashion." Eric Holthaus in Quartz.

Is drilling a bigger force in water pollution than we've been led to believe? "In at least four states that have nurtured the nation's energy boom, hundreds of complaints have been made about well-water contamination from oil or gas drilling, and pollution was confirmed in a number of them, according to a review that casts doubt on industry suggestions that such problems rarely happen. The Associated Press requested data on drilling-related complaints in Pennsylvania, Ohio, West Virginia and Texas and found major differences in how the states report such problems. Texas provided the most detail, while the other states provided only general outlines. And while the confirmed problems represent only a tiny portion of the thousands of oil and gas wells drilled each year in the U.S., the lack of detail in some state reports could help fuel public confusion and mistrust." Kevin Begos in The Associated Press.

So meme. Very Internet. Wow interlude: Now everybody can make "doge" images.

4. Sotomayor strikes again!

U.S. Supreme Court halts same-sex marriages in Utah. "The Supreme Court on Monday ordered a temporary stop to same-sex marriages in Utah, the high court's first intervention in a new case that asks whether gays have a constitutional right to wed. The state had asked the Supreme Court to halt further marriages while its appeal of the trial-court ruling is pending. The state filed its emergency request with Justice Sonia Sotomayor, who oversees the region. She referred the issue to the full court, which granted the request without written dissent." Brent Kendall in The Wall Street Journal.

Utahan couples are in limbo. "Although Utah had warned gay couples that their marriages could be dissolved if it succeeded in its legal appeals, the state had also begun granting benefits to newlyweds. Some state employees have already applied for health insurance for their same-sex spouses. Many of the couples are planning to file joint tax returns. And parents are planning to add their new spouses as legal parents through adoption." Jack Healy and Adam Liptak in The New York Times.

Meteorological interlude: The record for the fastest temperature change ever.

5. The jobless won't get a lucky break

Unemployment insurance extension lacks GOP support. "With inclement weather gripping most of the nation, Senate leaders were forced to postpone a vote Monday evening on a bipartisan plan to once again provide federal unemployment insurance for more than 1 million Americans. The proposal appears to be falling short of the Republican support needed to clear procedural hurdles and advance in the Senate. The proposal by Sens. Jack Reed (D-R.I.) and Dean Heller (R-Nev.) would provide benefits to eligible workers for three months, at a cost of $6.5 billion. With more than a dozen senators still absent Monday evening due to delayed flights, Majority Leader Harry M. Reid (D-Nev.) agreed with Republicans to postpone a procedural vote on the proposal and said it would occur instead on Tuesday. The plan needs at least 60 votes of support to survive a threatened GOP filibuster. With Heller and 55 members of the Senate Democratic caucus, supporters still need at least four votes." Ed O'Keefe in The Washington Post.

...Democrats are trying to sway moderate Republicans. "Obama spoke with Sen. Susan Collins (R-Maine) about the need to extend the benefits. The White House also reached out to the office of Sen. Mark Kirk, but the senator said he wasn’t able to connect with Obama. The Illinois Republican said Obama’s outreach was evidence that the Senate Democrats don’t have the votes." Burgess Everett in Politico.

It's pretty terrible being young and jobless. "Persistent high unemployment among young people is adding up to $25 billion a year in uncollected taxes and, to a much smaller degree, increased safety net expenditures, a new report says...Each jobless worker between 18 and 24 accounted for $4,100 a year, they concluded, and those between 25 and 34 accounted for $9,875, the study said. Based on those figures, if youth unemployment were reduced to its prerecession rate, the study said, the federal government would recoup $7.8 billion, or $53 per taxpayer, and state and local governments would recoup $1.1 billion." Shaila Dewan in The New York Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Getting married makes female economists poorer and male economists richerLydia DePillis.

Click farms are the new sweatshopsLydia DePillis.

From unemployment to the farm bill: Here are 7 things Congress has to do this monthBrad Plumer.

This is the biggest challenge Janet Yellen will face as Fed chairNeil Irwin.

It’s official! Janet Yellen is the next Federal Reserve chair. Neil Irwin.

Good news! Health spending as a share of the economy is shrinkingSarah Kliff.

Can global warming be real if it’s cold in the U.S.? Um… yesBrad Plumer.

The battle of the anecdotes: Gird yourself for Obamacare’s newest fightSarah Kliff.

Has Obamacare really signed up 10 million peopleEzra Klein.

Medicaid is Obamacare’s biggest success. But neither side wants to talk about itEzra Klein.

Et Cetera

Can banks mix green with green? They've asked Justice if they can get into marijuana transactionsDevlin Barrett in The Wall Street Journal.

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

Wonkbook is produced with help from Michelle Williams.

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