July 12, 2009

WSJ: RomneyCare’s Failures in MA Not ‘Widely Known’; I Wonder Why?

Filed under: Economy,Health Care,MSM Biz/Other Bias,Taxes & Government — Tom @ 10:57 am

RomneySignsHealthBill0406An editorial in yesterday’s Wall Street Journal bemoaned the fact that the state-run health system in Massachusetts is failing, and that its implosion isn’t common knowledge.

Formally known as CommonwealthCare, the Massachusetts scheme has the political name of “RomneyCare,” in “honor” of the Bay State governor and former presidential candidate who championed its passage in 2006.

The Journal understands that the Bay State Blowup is one of the media’s least-covered stories because exposure of CommonwealthCare’s true results would make all too clear the awaiting disasters found in the various versions of ObamaCare Congress is considering for the entire country.

The Journal editorial yesterday primarily addressed what I’ll call the “free rider” problem (link to outside blog post added by me; bolds are mine):

In a rational world, the prognosis for ObamaCare would wait on the evidence in Massachusetts, given that the commonwealth’s 2006 program closely resembles what Democrats are trying to do in Washington. If the results were widely known, it might be dead on arrival.

The Massachusetts law, which was championed by former GOP Governor Mitt Romney, imposed an individual mandate, requiring nearly all residents to buy health insurance or else pay a penalty. (The exceptions are those who qualify for the state’s public program.) This was supposed to cover everybody and save money too. We’ve written before about how costs have exploded, but it also turns out that consumers have other ideas.

Well, the returns are rolling in, and a useful case study comes from the community-based health plan Harvard-Pilgrim. CEO Charlie Baker reports that his company has seen an “astonishing” uptick in people buying coverage for a few months at a time, running up high medical bills, and then dumping the policy after treatment is completed and paid for. Harvard-Pilgrim estimates that between April 2008 and March 2009, about 40% of its new enrollees stayed with it for fewer than five months and on average incurred about $2,400 per person in monthly medical expenses. That’s about 600% higher than Harvard-Pilgrim would have otherwise expected.

The individual mandate penalty for not having coverage is only about $900, so people seem to be gaming the Massachusetts system. “This is a problem,” Mr. Baker writes on his blog, in the understatement of the year. “It is raising the prices paid by individuals and small businesses who are doing the right thing by purchasing twelve months of health insurance, and it’s turning the whole notion of shared responsibility on its ear.”

Mr. Baker is right, though he underestimates the extent to which it is rational for people to do this, considering the government-mandated incentives. To one degree or another all insurance pools require the younger and healthier to subsidize the older and sicker, though part of the risk-sharing bargain is the hedge against unanticipated or future health problems — i.e., true insurance. The combination of guaranteed issue and community rating actively encourages parts of the healthier population to forgo coverage and thus blow up voluntary risk pools. No doubt our politicians will conclude that the solution is to raise the penalty for going uninsured, though it would be easier and more rational to let insurance markets function without mandates.

But the statist politicians who dominate the Massachusetts legislature didn’t want “easier” and “more rational”; they wanted “more controlled” and, with Ted Kennedy cheering them on (see picture above), “more national.” The failure to recognize this ultimate objective, and to thus get co-opted into concocting a scheme that he naively thought would be enough to appease the statists, is Mitt Romney’s most obvious economic policy failure as Bay State governor.

As to the media, almost nothing of what is going wrong in Massachusetts gets reported outside of New England. Even when problems do get noticed, newspapers like the Boston Globe persist in describing CommonwealthCare aka RomneyCare as a “grand experiment” and “trailblazing.” Rationing is already occurring; yet a Globe reporter recently described the 12% cost cuts necessary to stay within budget as mere “trimming.”

If the failures of state-run health care in Massachusetts were more widely known, the clear and imminent failure of what might become ObamaCare would be drop-dead obvious. That would seem to explain the statist solutions uber alles establishment media’s disinterest.

Cross-posted at NewsBusters.org.

With Obamanomics, We’re Not Even $eeing Green

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 10:00 am

Note: This item originally appeared at Pajamas Media and was teased at BizzyBlog on Friday morning.

Money flowing into the Treasury has been on a yearlong downward spiral.


In much of the Midwest, 2009 thus far has been a year of record rains, lots of snow, and lots of record low temperatures.

The bad news is that this year’s weather has presented unwanted challenges to farmers attempting to get their planting done in time, and that flooding has caused terrible hardship in some areas. The upside, besides the fact that it’s yet another anecdotal nail in the coffin of global warming alarmists, is that 2009′s weather thus far has made keeping the grass green a much easier task for most homeowners. When they look outside, they see usually see healthy green growth, and would agree that this year’s climate, for all of its other problems, has been pretty good for growing a lawn.

What in the world does this have to do with government receipts? Plenty, in a metaphorical sense. You see, in the spring of 2008, U.S. government coffers, like this spring’s Midwestern grass, also experienced a lot of healthy green growth. That’s because, despite the fact that the alleged recession-deciders at the National Bureau of Economic Research (NBER) still believe otherwise, the U.S. economy’s climate was pretty good. In fact, the results were so positive that the NBER’s apparent failure to consider federal receipt growth in their recession determination decision should be seen as almost negligent.

To appreciate just how good the supposedly recessionary second quarter was for Uncle Sam, it’s useful to look at the numbers in two ways. Here’s the first (the analysis excludes 2008 stimulus payments, which the government should have classified as expenditures; all figures are in millions):


The chart shows strong inflows in two of the three specific line items. First, taxes paid by employees basically kept pace with inflation excluding food and energy.

Second, confounding the alleged experts, taxes directly paid by individuals continued to soar in the year during which the effect of Bush 43′s supply-side tax cuts was supposed to wear off. April’s inflows in this category led to an all-time one-month record for federal receipts. What’s more (not shown), June 2008′s analogous figure, which consisted almost entirely of estimated payments, came in slightly above that of June 2007, indicating that entrepreneurs, investors, businesspeople and others who pay quarterly estimates remained mostly optimistic about the state of the economy — at least on June 16, when the payments were due. Additionally, collections from economic activity during June 2008 were an all-time record for that month.

A very likely explanation for the decline in corporate receipts, and their larger decline to be revealed shortly, is that companies could not increase prices for their goods and services fast enough to recover the 25%-plus increases they saw in gas and other fuel prices during the quarter.

Well, what about the lines for all other receipts and the refunds? That’s why there’s a second chart:


This chart shows even more convincingly that the treasury’s second quarter of 2008 was a large improvement over the same quarter in 2007, thanks to a boomlet in receipts from individuals. The 5.1% overall increase in collections makes absurd the claim that the second quarter’s annualized Gross Domestic Product growth of 2.8% (vs. 4.8% in the second quarter of 2007) – only 0.3% lower than the median GDP growth of the past 50 years (!) — was somehow “artificial” because of 2008′s stimulus payments (which didn’t affect tax collections at all) or the run-up in fuel prices.

Someday, the alleged gurus at the NBER will have to make a convincing case why they think the economy slipped into recession during the first half of 2008 with two quarters of positive GDP growth, lower job loss (as a percentage of the workforce) than any other recession on record, and a boom in receipts from economic activity that kept going strong until June. They haven’t done so yet. If they don’t, it’s looking ever more likely that history will have to ultimately rule that these elitist emperors had no clothes.

Sadly, the receipts boom ended in 2008′s third quarter. Since then, the economy has been heading downhill and has been in a recession as normal people define it, i.e. two or more consecutive quarters of GDP contraction.

Why this has happened is not difficult to understand. It can be summarized in one word: “scared.” As Investors Business Daily noted on July 2 after the latest horrid employment report, “The private sector — the real engine of economic and job growth — won’t hire because it’s scared of what it sees coming out of Washington.” They also won’t expand, invest, or take most risks. Some, including yours truly, have characterized the reaction as a form of “going Galt.” The year-old scared posture has nothing to do with cowardice, and everything to do with preservation and protection of the economic well-being of one’s self, family, employees, and other stakeholders.

The fright began with the inception of what I have been calling the POR (Pelosi-Obama-Reid) Economy over a year ago. That’s when Nancy Pelosi, Democratic nominee Barack Obama, and Harry Reid began advancing their energy-starving, high-taxing, business-blaming agenda in earnest. In capsule form, the Terrible Triumvirate promised to destroy the necessary conditions for economic growth. In doing so, they (conveniently?) forgot that the collective expectations of the marketplace are a necessary ingredient for healthy green growth. The metaphorical grass began to turn brown. In the very next quarter, Uncle Sam’s year-over-year collections haul went negative.

The collections situation has only gotten worse, as Pelosi, Obama, and Reid have done everything they can to inject intolerable uncertainty into seemingly every corner of the economy.

This, folks, is what a serious recession looks like from Treasury’s vantage point:


The earth is now indeed parched. The prospects of a return to healthy green growth appear very remote, especially since unaffordable energy taxes and statist health care are at the top of the elitists’ agenda. The more pertinent matter at the moment should be how to keep the grass from dying.


UPDATE, July 15: The chart at the right in the final graphic above (“Monthly Receipts by Type — Second Quarter 2009 and 2008″) was updated here on Tuesday. June receipts per the Monthly Treasury Statement came in even $15 billion lower than I thought they would after reviewing the final Daily Treasury Statement.

Positivity: Remembering Tony Snow (1955-2008)

Filed under: Positivity — Tom @ 8:30 am

TonySnowNoel Sheppard has a post at NewsBusters with, among other things, the video of Tony’s speech at the MRC Gala dinner in April 2008. I was privileged to have attended that event, and to briefly speak with Tony after the event’s conclusion.

Sheppard also has videos and text of tributes from Fox New reporters and others.

Princeton High School, Tony’s alma mater, dedicated a memorial to him last year:


Tony’s successor as White House Press Secretary, Dana Perino, has a moving remembrance at Politico. Read the whole thing.