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Did you read Sarah Kliff and Sandhya Somashekhar's story on Maryland's CareFirst BlueCross BlueShield plan -- so many capital letters! -- which is saying it'll raise premiums by 25 percent under Obamacare? Well, you should. It's a great piece. And it's a great topic with which to introduce a game that we'll be playing a lot over the next few years: Obamacare Rashomon.
Take Kliff and Somashekhar's story. Here's the question: Is the rate hike a good thing? A bad thing? Or no thing whatsoever? If the question sounds absurd to you, then, once again, you need to read the story.
The explanation for why it's a bad thing is the easiest, and most obvious: Premiums are going up. That is, by any definition, a bad thing.
But look at why premiums are going up. It's not because of paperwork, or waste and fraud, or even more generous benefits. "The company expects a huge influx of sick people that will drive up costs, according to its filings with the Maryland Insurance Administration," report Kliff and Somashekhar.
Taken at face value, CareFirst BlueCross BlueShield is saying that there are a lot of sick people in Maryland who are currently locked out of the individual insurance market because they're sick. Now, because the government won't let insurers turn sick people away or price them out, they'll be able to get insurance. Yes, that'll drive up average premiums, but isn't getting sick people insurance the whole point? This is just another way of saying covering everyone costs money -- and that, of course, is what the law's subsidies are there to cover.
Or perhaps CareFirst BlueCross BlueShield is simply full of it. This is their opening bid to Maryland regulators, who can -- and very well might -- reject it. Perhaps they're just starting high with the expectation that they'll be forced lower. Or perhaps they're just starting high in the hopes regulators will agree to it and the company can pocket the profits. Notably, insurers in Vermont and Rhode Island have also released their starting bids, and they didn't foresee anything like this kind of a rate hike.
“The rate increase is based on worst-case scenario assumptions,” Tim Jost, a law professor at Washington & Lee University, said. “They’re really predicting dramatic increases in use of services across the board.”
(Quick digression: This was always the best argument for the public option: It would've created a benchmark plan against which private insurers could be judged. CareFirst BlueCross BlueShield has an incentive to argue for a high premium so they can make more money. The public option wouldn't have had that incentive. If there was a significant spread between the public option and the private insurers, that would be a signal that either the insurers were less efficient, or they were juking the numbers. But there is no public option, and so we just need to wait for experience and competition to deliver that information. Digression over.)
None of this talk of premium hikes, by the way, takes into account subsidies. This is an individual-market insurance plan that will be offered on the exchanges. But most people on the exchanges are getting some level of federal subsidy. So will the average person be paying more after accounting for the rate hike and the subsidies? Or will they be paying much less? It's hard to say.
So those are the three ways to view this one story. Either it's proof that Obamacare is a disaster, and it's making health insurance more expensive; it's proof that Obamacare is desperately needed, and it's making it possible for many, many sick people to get insurance they've been locked out of; or it's just an insurer playing games, and we need to wait to see what these prices will actually be after negotiations with the regulators. And that's before you even try to account for the effect of the subsidies, which are at the core of the law.
Wonkbook's Number of the Day: 140,000. That's roughly the number of words in the Senate's immigration-reform legislation. Congress loves to complain about the length of bills. This one really isn't that bad -- no more than a Harry Potter novel, or a John Grisham paperback. And shouldn't our immigration policies be a little more nuanced than Harry Potter, anyway?
Wonkblog's Graphs of the Day: The presidency of George W. Bush, in 24 charts.
Wonkbook's Top 5 Stories: 1) House is biggest obstacle for immigration reform; 2) Office of Management and Budget gets new leader; 3) Dept. of Interior first to go hybrid; 4) Cantor's GOP-reform agenda fails on health care; and 5) taking on 'too-big-to-fail.'
1) Top story: Does immigration reform stand a chance in the House?
Immigration bill uncertain in House. "The last time House Republicans passed a broad immigration overhaul, they called for expedited deportations and tougher criminal penalties, but did nothing to expand guest-worker programs or address the millions of immigrants in the country illegally. Now, more than seven years later, many lawmakers who backed that bill are vowing another tough stand if the Senate passes a bill to expand work visas and create a pathway to citizenship for people now in the country illegally." Patrick O'Connor and Corey Boles in The Wall Street Journal.
...And if it does make it through, the House will pull reform way to the right. "Lawmakers in the House are expected to include a longer path to citizenship and a larger guest-worker program than the Senate did in its rival plan for immigration reform, people with knowledge of the discussions said. Members of the House coalition have been tight-lipped about their proposal, but two lawmakers in recent days have signaled that it will be more conservative than the 844-page plan released last week by the Senate’s Gang of Eight." Russell Berman in The Hill.
...And why you should watch Rep. Ryan on immigration. "This week, there was a new development in the House: Paul Ryan may be the key to passing comprehensive immigration reform. But that should hardly come as a surprise. Long before he was a vice-presidential nominee, Ryan was an adviser to former New York congressman Jack Kemp at Empower America, a conservative think tank. It was there, in his early twenties, that Ryan began to share Kemp’s politics." Robert Costa in National Review Online.
@robertcostaNRO: Interesting 2016 narrative: Rubio and Ryan seen as rivals, but on critical issue of immigration, they're now partners behind the scenes
House Dems get immigration-reform briefing. "House Democratic members crafting a bipartisan immigration bill briefed fellow Democrats on Wednesday. It’s the first time that the secretive negotiators had formally informed the rest of the House Democratic Caucus on their efforts...The briefing to House Democrats could be a signal that the under-the-radar House group — which had met on and off for roughly four years — is nearing a deal." Seung Min Kim in Politico.
Sierra Club backs immigration reform. "Immigration reform supporters have a new ally — the environmental lobby. The Sierra Club's board voted Wednesday to support comprehensive immigration reform, POLITICO has learned. The backing from the nation's oldest environmental group is a major shift that could help immigration reform supporters gain momentum as they try to push the measure through the Senate. It is another sign that some of the historical opponents to overhauling the country's immigration laws, like evangelicals, are switching sides in this controversial debate." Anna Palmer and Darren Samuelsohn in Politico.
@petersuderman: The phrase "illegal immigrant" should say more about the immigration system than the immigrant.
Stop complaining: The immigration bill is not a long read. "The bill is, as Cruz claimed, 844 pages. Which might at first sound like a heavy tome. But bear in mind that bill text isn’t like pages of a novel — or even those of a standard document. The font is bigger, the margins wider, and there are big spaces in between relatively short paragraphs. So how many words are in the bill? We pasted the bill into a Word document, which said it contains 161,346. And that includes a number on each line — so if you subtract those, you get roughly 140,000 words. That’s fewer than in your typical John Grisham paperback. Fewer than in most of the Harry Potter books." Emily Heil in The Washington Post.
Music recommendations interlude: Uncle Tupelo, "Screen Door," 1990.
BAUM: Obama's bad idea on retirement savings. "A bullet point on Page 18 of President Barack Obama’s 2014 budget sounds ominous: “Prohibit Individuals from Accumulating Over $3 Million in Tax-Preferred Retirement Accounts.”...Why, at a time when the government is looking to reform entitlement programs because it can’t keep the promises it has made to future generations, does Obama want to reduce the incentive to save? It makes no sense." Caroline Baum in Bloomberg.
WESSEL: Tax breaks as spending. "Congress has done a lot of the tax-break approach, which has been dubbed "backdoor spending through the tax code."...If only conventionally defined spending is on the table in the deficit negotiations, what happens? Spending subsidies are vulnerable, the ones aimed exclusively at low-income families. Tax breaks, even those that go to families that could afford child care without them, are spared." David Wessel in The Wall Street Journal.
KLEIN: Republicans will clobber Obamacare until they hug it. "The kinks in the program were eventually worked out. Today Medicare Part D is widely considered a success...There are lessons here about the difficulty of implementing large programs, the dangers of extrapolating from a program’s first months to gauge its long-term success and what it means to be a loyal opposition. The Republican Party isn’t learning them." Ezra Klein in Bloomberg.
ROHATYN: To save cities, pull together. "Stockton, California, is bankrupt. In Detroit, a bankruptcy lawyer serving as emergency manager is trying to save the city from financial collapse. Chicago plans to close more than 50 schools to help with a $1bn education budget deficit. These and many other cities confront financial crises similar to that faced by New York four decades ago." Felix Rohatyn in The Financial Times.
DIONNE: A political culture of preconception. "Opponents of immigration reform used the fact that the brothers are immigrants as a lever to derail the rapidly forming consensus in favor of broad repairs to the system. Supporters countered, defensively, that if there is any lesson here, it’s that our approach to immigration needs to be modernized. In truth, this horrifying episode has little to do with immigration reform one way or the other." E.J. Dionne in The Washington Post.
KLEIN: Bush wasn't dumb. But he was a poor president. " To see Bush’s failures — or Wall Street’s failures — as a failure of insufficient intelligence is comforting, but very wrong. These are stories about how smart people can lead themselves and others down the wrong paths. To a large degree, they wouldn’t be able to do it if they weren’t smart, but that just proves that not all mistakes are dumb, and that being smart isn’t the same thing as being wise, right or capable." Ezra Klein in The Washington Post.
Inspiration interlude: How a child overcame cerebral palsy through wit and humor.
2) New leader of OMB
Burwell confirmed to lead OMB. "By a unanimous 96 to 0 vote, the Senate confirmed Sylvia Mathews Burwell to be the next director of the Office of Management and Budget on Wednesday. Burwell served as deputy budget director and a top White House aide during the Clinton administration. She will take the place of Jeffrey Zients, who has served as acting director since Jack Lew left in January 2012 to become White House chief of staff. Lew is now Treasury secretary." Steve Vogel in The Washington Post.
Explainer: 5 things to know before Sen. Wyden takes over the Finance Committee. Rachel Weiner in The Washington Post.
Major contractors report little damage from sequestration. "Defense contractors warned the automatic spending cuts known as sequestration would cause layoffs and facility closures, but nearly two months in, the biggest companies are reporting only a slight drop in sales. Falls Church-based contracting giant General Dynamics saw its profit hit $571 million in the first quarter of the year, up 1.2 percent from the same period last year. Revenue dropped 2.3 percent to $7.4 billion." Marjorie Censer in The Washington Post.
Read: Senate releases text of Reid's sequester replacement legislation. Pete Kasperowicz in The Hill.
...But senators are looking for a way to ease the impact on the FAA. "Any new bill aimed at the air-travel woes would likely come to the Senate floor shortly after lawmakers return from next week's recess, a Senate Democratic aide said." Kristina Peterson, Jack Nicas, and Susan Carey in The Wall Street Journal.
IRS issued billions in improper EITC payments. "The Internal Revenue Service issued more than $11 billion in improper payments through its Earned Income Tax Credit program last year, according to an inspector general’s report released this week...The IRS estimates that at least 21 percent of its EITC payments in 2012 were faulty. That rate showed a decline compared to the previous nine years, but improper payments over the same period increased about 22 percent, rising to at least $11.6 billion, according to the inspector general’s report." Josh Hicks in The Washington Post.
...More outrage? Feds spend $890k per year on fees for empty accounts. "It is one of the oddest spending habits in Washington: This year, the government will spend at least $890,000 on service fees for bank accounts that are empty. At last count, Uncle Sam has 13,712 such accounts with a balance of zero. They are supposed to be closed. But nobody has done the paperwork yet." David A. Fahrenthold in The Washington Post.
Does Sen. Baucus's retirement make tax reform easier? "Baucus’s retirement cuts both ways. It releases him from certain pressures. But it exposes him to new ones. So there are two questions here. First, does his retirement make tax reform likelier? And, if so, exactly what kind of tax reform does it makes likelier? Answering them requires being a bit more systematic about Baucus’s new groove." Ezra Klein in The Washington Post.
Q&A interlude: Wonkblog answers your questions.
3) How Interior went green
Department of Interior, first federal agency to go hybrid. "The Department of the Interior plans to replace one-third of its gas and alternative-fuel vehicles with hybrids, becoming the first agency to take part in a new federal program that covers additional costs for greening up government auto fleets as opposed to buying new gas guzzlers." Josh Hicks in The Washington Post.
N.C.'s attempt to repeal renewable-energy mandate fails. "A bill that would have repealed North Carolina's renewable-energy mandate failed in a committee vote on Wednesday, a setback in a state that had been considered a bellwether for similar efforts across the country...North Carolina is one of at least 14 states considering repealing or watering down renewable-energy mandates this year. So far, many of those bills appear unlikely to become law." Ryan Tracy in The Wall Street Journal.
Read: Excerpts from national security adviser Tom Donilon's speech on energy policy. Juliet Eilperin in The Washington Post.
Lawmakers float bill to encourage financing of renewable-energy development. "Lawmakers unveiled the Master Limited Partnerships Parity Act — spearheaded in the Senate by Sens. Chris Coons (D-Del.) and Jerry Moran (R-Kan.), and in the House by Reps. Ted Poe (R-Texas) and Mike Thompson (D-Calif.) — during a Wednesday news conference. The bill would extend master limited partnerships to renewable energy projects ranging from wind power to energy efficiency. Currently, only oil-and-gas projects can use the financing mechanism." Zack Colman in The Hill.
Many power plants heading toward retirement. "The federal Energy Information Administration says installations representing 51 percent of all generating capacity were at least 30 years old at the end of 2012. Coal-fired plants could be the best candidates for retirement because 74 percent were built before 1980, according to the agency, meaning they are approaching the end of their typical life spans...The American Clean Skies Foundation, a nonprofit energy policy group, projects that 30 to 50 gigawatts of generating capacity could be retired over the next decade, representing 10 to 15 percent of the nation’s coal-fired capacity." Jim Witkin in The New York Times.
Experts: We're moving slowly but surely towards tighter energy taxation. "A panel of experts expressed pessimism Wednesday that lawmakers can tackle broad-based tax reform this Congress, but they stressed that the coming months will be crucial in shaping the eventual outcome on energy tax policy." Andrew Restuccia in Politico.
What Fisker's failure tells us about Obama's energy programs. "It’s time for another round of scrutiny over the Obama administration’s clean-energy programs. On Wednesday, House lawmakers held a fractious hearing over federal loans that had been made to struggling electric-car manufacturer Fisker Automotive...The main question at Wednesday’s hearing is whether the federal government should have known earlier that Fisker would stumble — or whether this was a reasonable bet that simply didn’t pan out, a risk built into the loan program when Congress first set it up in 2007." Brad Plumer in The Washington Post.
...But in the Obama second term, a slow start on environmental issues so far. "[A]fter winning re-election in November, President Obama promised assertive leadership on climate change and energy. In his State of the Union address in February, he vowed that if the assembled lawmakers failed to pass broad climate legislation, he would act unilaterally. And yet in the ensuing months, little more has been heard from the president or his cabinet on the matter" John Broder in The New York Times.
If Keystone XL gets blocked, can trains save Canada's tar sands? "There’s a key question at the center of the debate over the Keystone XL pipeline. If President Obama rejects the pipeline, will all of that Canadian heavy crude find another way to get to market?...The counterargument here, meanwhile, is that Alberta’s tar sands will keep expanding no matter what. If Keystone is rejected, the oil will just get transported via other pipelines or by rail. And if that’s true, well, there’s really no point in blocking Keystone, is there?" Brad Plumer in The Washington Post.
As oil falls below $100/barrel, no reaction from OPEC. "As Brent crude dipped below $100 a barrel last week, investors switched their attention to Riyadh, Caracas and Tehran, looking for a response from Opec. Rightly or wrongly, the triple-digit price for oil is seen as a “soft” floor, below which members of the oil cartel could cut production to support prices." Ajay Makan in The Financial Times.
Coming next, nuclear power plants in miniature? "[T]he hot idea now is to think small — small enough to fit a reactor on a railroad car or even a heavy-haul truck. Such a reactor could be built in a factory, sidestepping the problems of assuring high-quality fabrication in the field and allowing fast installation. And such reactors would have a built-in safety feature: in an emergency, natural convection could help a small core cool faster than a big one, just the way a cup of coffee cools faster than a pot of coffee. Proponents say that makes meltdowns far less likely." Matthew L. Wald in The New York Times.
...And will, by 2023, there be an energy revolution? "Electric cars may be popular. Solar energy could be cheap enough that millions of households and businesses deploy solar panels to generate their power needs. Fossil fuels will probably still dominate, but most trucks and many trains could run on natural gas rather than more polluting diesel. And the United States could be a major oil exporter." Clifford Krauss in The New York Times.
EPA employees to see 10 furlough days. "Acting Administrator Bob Perciasepe has notified the agency’s 17,000 employees that no more than 79 hours of unpaid pay will be required before the end of the fiscal year on Sept. 30 — the equivalent of just under 10 working days." Lisa Rein in The Washington Post.
Study finds weak protections on pollution from coal power plants. "Many of the man-made ponds for storing toxic sludge from coal-fired power plants have dangerously weak walls because of poor construction methods, according to the synopsis of a study for the Office of Surface Mining Reclamation and Enforcement obtained by The Washington Post." Juliet Eilperin and Steven Mufson in The Washington Post.
Humorous interlude: David Letterman's top ten hacked AP tweets.
4) Cantor's GOP-reform agenda fails first test
House GOP leadership has epic fail on health vote. "House Republican leaders suffered a humiliating legislative setback Wednesday when a large faction of GOP lawmakers rebelled against a leadership proposal that had drawn the opposition of powerful outside activists. The mutiny forced House Majority Leader Eric Cantor (Va.) to abruptly pull from the floor legislation to shore up a program that allows people with preexisting health conditions to buy into an insurance pool for high-risk patients before they are able to transition to coverage under President Obama’s health-care law." Paul Kane in The Washington Post.
...More on why this is a big blow to Rep. Cantor. "Representative Eric Cantor of Virginia, the House majority leader, has been trying for months to remake the image of the Republican Party, from one of uncompromising conservatism to something kinder and gentler.It isn’t working so well...So it has gone. Items that Mr. Cantor had hoped would change the Republican Party’s look, if not its priorities, have been ignored, have been greeted with yawns or have only worsened Republican divisions." Jonathan Weisman in The New York Times.
Can 'accountable care organizations' keep health costs down? "Under the agreement, hospital admissions are down 6 percent. Days spent in the hospital are down nearly 9 percent. The average length of a stay has declined, and many other measures show doctors providing less care, too. This approach is one small part of a growing effort by providers to hold down costs without restricting needed care." Annie Lowrey in The New York Times.
...Is a bad economy, or better health care practices, behind the cost inflation slowdown? "A new study from the Kaiser Family Foundation helps sort out definitively what is the bad economy and what is not. All in all, Kaiser estimates that 77 percent of the cost slowdown is due to the recession, with the remaining quarter due to “continuing changes in the way health care is delivered, but also to rising levels of patient cost-sharing in private insurance plans that discourage use of services.” A quarter might not seem like much, but in an interview, Drew Altman, the president of the Kaiser Family Foundation, described it as “the whole ballgame” for holding down costs as time goes on." Annie Lowrey in The New York Times.
How one mistaken vote killed Montana's Medicaid expansion. "Some states have declined to expand Medicaid because they oppose Obamacare. Others worry about the financial burden of expanding the entitlement. But there appears to be only one state where the Medicaid expansion failed due to a Democratic legislator accidentally voting against it. Congratulations, Montana." Sarah Kliff in The Washington Post.
Why does Sen. Harkin have a hold on Obama's Medicare pick? "Harkin is demanding, according to spokeswoman Katie Cyrul Frischmann, “An ongoing conversation about the future of the prevention fund.”...Harkin has been the Prevention Fund’s main advocate since it was part of the health reform debate. While the fund’s appropriations dropped from $80 billion when it was initially proposed to $15 billion in the final version of Obamacare, that was still a significant commitment." Sarah Kliff in The Washington Post.
With Obamacare looming, one insurer wants to hike rates 25 percent. "Maryland’s biggest health insurer proposed raising premiums for individual policies by an average of 25 percent next year, saying that President Obama’s health law would require it to accept even the sickest applicants, driving up costs. The CareFirst BlueCross BlueShield plan must be approved by the state, and officials immediately indicated that there would be close scrutiny of the double-digit boost." Sarah Kliff and Sondhya Somashekhar in The Washington Post.
Is there a link between Obama's move on Planned Parenthood and Gosnell? No. "Anti-abortion groups were quick to welcome the news that President Obama would not be attending Planned Parenthood‘s Thursday night gala. They attributed the decision to controversy surrounding abortion clinic doctor Kermit Gosnell, who is standing trial in Philadelphia on first-degree murder charges involving the deaths of babies whose spinal cords he allegedly severed after they were born alive...Actually, White House spokesman Jay Carney told reporters Wednesday the president had delayed his appearance at Planned Parenthood’s annual gathering so he could spend more time with victims of last week’s explosion in West, Texas." Juliet Eilperin in The Washington Post.
Americans interlude: Portraits of Boston.
5) Taking on TBTF
Can Sens. Brown and Vitter end 'too-big-to-fail'? "Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) introduced legislation Wednesday that aims to end what the markets perceive as an implicit guarantee that the government will rescue big banks if they run into trouble. That implied backing has given firms a green light to engage in risky activities that pose a threat to the financial system, the lawmakers said...The legislation “presents Wall Street megabanks with a clear choice: Either have enough of your own capital to cover your own losses or downsize until you are no longer a risk to taxpayers,” Brown said at a news conference announcing the bill Wednesday." Danielle Douglas in The Washington Post.
Study: No shortage of STEM graduates. "A study released Wednesday by the left-leaning Economic Policy Institute reinforces what a number of researchers have come to believe: that the STEM worker shortage is a myth. The EPI study found that the United States has “more than a sufficient supply of workers available to work in STEM occupations.”" Jia Lynn Yang in The Washington Post.
Quiz! How's your economic literacy? Catherine Rampell in The New York Times.
Factory orders dropped sharply in March. "Orders for long-lasting factory goods fell in March by the most in seven months. The drop reflected a steep decline in commercial aircraft demand and little growth in orders that signal future business investment. The Commerce Department said on Wednesday that orders for durable goods declined 5.7 percent in March. That followed a 4.3 percent gain in February, which was revised lower." The Associated Press.
Introducing Janet Yellen, contender for the head of the Fed. "Ms. Yellen is now widely viewed as a logical candidate to succeed the current Fed chairman, Ben S. Bernanke, when his term ends in January 2014. She has worked closely with him in shaping and building support for the Fed’s campaign to stimulate the economy and bring down unemployment...[H]er nomination [may] be unlikely to shake financial markets because she already exercises considerable influence, so any shift in policy would most likely be modest." Binyamin Appelbaum in The New York Times.
Inside the economics department that debunked Reinhart-Rogoff. "It was surprising to learn last week that Harvard professors Kenneth Rogoff and Carmen Reinhart’s argument for austerity is based in part on an Excel blooper. What’s not surprising is who found it out. The rebuttal came in the form of a paper released by the Political Economy Research Institute, a group at the University of Massachusetts – Amherst with close ties to its economics department." Dylan Matthews in The Washington Post.
Watch: Even Stephen Colbert is piling on Reinhart-Rogoff. Dylan Matthews in The Washington Post.
Regulators look at trading after Twitter hoax. "Commodity Futures Trading Commissioner Bart Chilton said agency officials were looking into the trading of 28 heavily traded futures contracts during a five-minute period after a false tweet from the Associated Press's Twitter feed said there were two explosions at the White House and President Barack Obama was injured." Jessica Holzer and Scott Patterson in The Wall Street Journal.
Reading material interlude: The best sentences Wonkblog read today.
The presidency of George W. Bush, in 24 charts. Dylan Matthews.
Can we end poverty by tracking the identities of 1.3 billion Indians? Howard Schneider.
Even Stephen Colbert is piling on Reinhart-Rogoff. Dylan Matthews.
Does Max Baucus’s retirement make tax reform easier? Ezra Klein.
GE Capital cuts off lending to gun shops. Joe Palazzolo and Kate Linebaugh in The Wall Street Journal.
Senate votes 75-22 to advance online sales tax bill. Ramsey Cox in The Hill.
Wonkbook is produced with help from Michelle Williams.