Data! You want data! Sure, Obamacare premiums are going up and so are the subsidies. But how much are the subsidies going up? The chart below—which I want everyone to look at because it was a pain in the ass to create—shows this for the 15 states with the highest premium increases:

As you can see, subsidies are increasing more than premiums in every state—and by quite a bit. This comparison data is for a 27-year-old with an income of $25,000, and comes from Tables 6 and 12 here. (Arizona is literally off the chart: premiums increased 116 percent and subsidies increased 428 percent.) Here's the same chart for the 15 states with the smallest premium increases:

There are plenty of caveats here. Premiums and subsidies will be different for different kinds of households. Upper middle-class families don't get any subsidies at all. And this doesn't tell us what the average net increase is, once subsidies are accounted for.

However, it gives us a pretty good idea that for a substantial majority of Obamacare users, the net amount they pay for health insurance in 2017 isn't going to be much more than it was this year. For many, in fact, it will be the same. For those who shop around, it's quite likely to be less.

Bottom line: if your income is low enough to qualify for a subsidy, there's no need to panic over the Obamacare premium news. The higher premiums will help stabilize the market, and the cost will be covered almost entirely by Uncle Sam. Your pocketbook is safe.

This is from a guy who works for a healthcare advocacy group in New Mexico:

I don't want to minimize the pain that this year's premium hikes are going to cause for a subset of insurance buyers. But the vast majority of low-to-mid-income Obamacare users are eligible for federal subsidies—and as premiums go up, so do their subsidies. They may end up paying a bit more in 2017 for their health coverage, but probably no more than a few percent.

So yes: headlines matter. Or, at the very least, the first few paragraphs of news stories matter. Coverage of this issue should make it clear that the average price people pay will go up much less than 25 percent, and for low-income folks it probably won't go up at all.

Last week, a self-driving truck delivered 50,000 cans of Budweiser from Loveland to Colorado Springs. This was obviously meant as a big FU to Coors, since the route "coincidentally" took all this frosty Bud right past Coors headquarters in Golden, Colorado. Most people, however, are interpreting this event as merely technological: it represents the dawn of the era of self-driving trucks. Tim Lee comments:

According to Otto’s blog post on the trip, “our professional driver was out of the driver’s seat for the entire 120-mile journey down I-25, monitoring the self-driving system from the sleeper berth in the back.”

But this doesn’t mean the nation’s truck drivers need to start working on their résumés. Technology like this may eventually displace human truck drivers, but the tech is several years away from causing mass unemployment. The key reason is that Otto’s self-driving technology is initially limited to highways. When the truck reaches ordinary city streets, it hands control over to a human driver to handle tricky traffic situations. This means that even after a truck is outfitted with Otto’s self-driving technology, it will still need a human driver in the truck.

Hmmm. "Several years" sounds ominously near-term, so truck drivers might want to start worrying about their jobs right now. Beyond that, there's a way this could put truckers out of business well before that. Here's how.

Pick a route that has a lot of truck traffic. Let's say, Chicago to Cleveland. Outside of each city, you build a big truck depot and dispatch center. In Chicago, teamsters drive the trucks from the city out to the depot. Autopilots drive the trucks to the Cleveland depot, where a driver gets in and takes the truck to its destination. Rinse and repeat. The job of a truck driver is to drive back and forth from destinations in the city out to the depot, which they can do five or six times a day. Trucking firms save a ton of money even though the autopilot is designed for highway driving only.

Building the depots would be cheap and easy, since you don't really need much there. It's basically just a dispatch center. You could pretty easily have hundreds of them dotted across the country near all of our biggest cities. The only thing that would stop this from happening is the knowledge that they'll only last a few years before they're put out of business by fully automated trucks that can go from dock to dock with no human intervention. Either way, truck drivers are in big trouble.

There's been a lot of talk about "fixing" Obamacare lately. Here's my two-step plan:

  1. Increase the subsidy levels.
  2. Increase the penalty for not buying insurance.

That would pretty much do it. I could add lots of other small-bore things that need some tweaking, but why bother? These two things would do most of the job—and Republicans will never agree to them. They won't agree to any of the small-bore stuff either. So take your pick. You can support a detailed 11-point plan for Obamacare that will never get passed, or you can support my 11-word plan that will also never get passed.

But since we're all lightweight wonks around here, we should take a guess at how much we need to change the subsidy and penalty levels to make everything work. Basically, Obamacare's big problem is that not enough young people are ponying up for insurance. To fix this, we need to get to a point where it's cheaper for young people to buy insurance than it is to pay the penalty. This can be done by either increasing subsidies or increasing the penalty. Here's my swag at what it would take:

You could increase subsidies by 100 percent and leave the penalty alone, or you could increase the penalty 250 percent and leave the subsidies alone. Or you can pick any point in between.

In reality, you could probably get by with smaller numbers, since nearly everyone will sign up if the penalty is within shouting distance of the net premium cost. You don't have to literally make the penalty as high as the premium cost. I also assumed silver coverage in this chart, and you can assume lower numbers if you're happy with kids buying bronze coverage.1

Anyway, that's it. This chart is my proposed Obamacare reform. It represents something of an upper bound, and I imagine that someone who has actual working knowledge of all this stuff could do a lot better. Call your congressman today and demand that this chart be made into law.

1I'm not, especially, which is why I went with silver.

Physicist Eugene Wigner is the author of a famous paper called "The Unreasonable Effectiveness of Mathematics in the Natural Sciences." Brad DeLong comments:

We are all, potentially, the Friends of Wigner. It has always seemed to me that anyone with the empathy and imagination to think of him or herself as one of the Friends of Wigner is then driven inescapably to either "quantum mechanics is totally wrong wrong wrong wrong and just predicts well for incomprehensible reasons" or "many-worlds". There really are no other alternatives, or at least what alternatives there are are even stranger.

Au contraire. I consider quantum mechanics to be evidence that we are all constructs in somebody else's virtual reality. All of the peculiarities of quantum mechanics are easily explainable if the universe is merely a computer-generated world subject to the whims of a programmer.

The only question left is why the programmer has created such a world. Whimsy? Amusement? As a test of some sociology theorem? Bad design?

Perhaps the last one is most likely. In reality, quantum mechanics is a desperate, ugly patch glued onto a poorly working universe by a stressed freshman at 2 am. Basically, the poor kid waited until the last minute, as freshmen everywhere do, and hadn't really understood much of the text for the required "Plenum Creation and Maintenance" class. The result was a mess that kept falling apart even for small taus of only a few billion years. One thing led to another, and eventually the whole project became a Rube Goldberg monstrosity of black holes, 11 dimensions, wavicles, arbitrary speed-of-light caps on velocity, and observer-induced wave collapse as a last-ditch way of reducing the computing power needed to run it.

In the end it received a gentlemen's C- from a sympathetic professor. That's the universe we live in.

With only 14 days left before Election Day, it hardly feels worth it to highlight Donald Trump's latest public declaration of ignorance, but I have another point to make about today's Trump Follies. Here is Donald on Obamacare:

Well, I don't use much Obamacare, I must be honest with you, because it is so bad for the people and they can't afford it. And like, for instance, I'm at Trump National Doral in Miami, and we don't even use Obamacare. We don't want it. The people don't want it, and I spend more money on health coverage, but we don't use it.

The obvious point to make is that Trump obviously has no idea what Obamacare is. He's apparently under the impression that it's some kind of option that employers can choose as group insurance for their employees. Ha ha. What an idiot.

And that's true enough. But did you notice something else? Once again, Trump has made it clear that he has no idea how his own businesses are run. This is hardly the first time, either. As near as I can tell, Trump's job as CEO of the Trump Organization is to (a) watch a lot of TV, (b) appear on a lot of TV, (c) make command decisions about what kind of marble to use in the bathrooms, and (d) threaten to sue people who get in his way. Beyond that, he appears to play no real role in running things.

This explains, for example, his promise last year to release his tax returns. He made that promise because he had no idea what was in them. It was only later, when someone on his finance team apparently pointed out what they contained, that he reneged on his promise. It also explains his frequent business failures. He was in love with the Plaza Hotel but had no idea what it was worth or how to run it. He loved the idea of owning an airline but had no clue about the shuttle market. He loved the casino business, but was entirely ignorant about casino operations. He loves to play golf, but doesn't understand the business of golf. Etc. He's spent his whole life diddling around in businesses that seemed interesting, but without knowing anything about them or understanding how to run them.

His presidential campaign is the same thing. He thought it sounded neat to run for president but had no interest in how campaigns are actually run. If he ever became president, it would be more of the same. He'd run the country the way he runs his golf courses: making windswept exits from helicopters to deliver grand statements, and then quickly losing all interest. At best, things would toddle along without catastrophe if he picked decent people to run things. At worst, he'd pick fellow con men who would embroil him in endless scandals that made Teapot Dome look like a child's lark.

Luckily, we'll never have to find out.

A few days ago Brad DeLong tagged a piece by David Warsh that promises to be a preface of sorts to a 14-part series about some new research into the nature of finance and the origins of the Great Recession. It actually looks pretty interesting, but I confess I'm a little unclear about one of its central points.

As we all know, one of the problems the Great Recession uncovered was the brave new world of rocket science derivatives, which were so complex that no one truly knew what they represented. Warsh suggests that this is no accident:

Stock markets existed to elicit information for the purpose of efficiently allocating risk. Money markets thrived on suppressing information in order to preserve the usefulness of bank money used in transactions and as a store of value. Price discovery was the universal rule in one realm; an attitude of “no questions asked” in the other.

....This new view of the role of opacity in banking and debt is truly something new under the sun. One of the oldest forms of derision in finance involves dismissing as clueless those who don’t know the difference between a stock and a bond. Stocks are equity, a share of ownership. Their value fluctuates and may drop to zero, while bonds or bank deposits are a form of debt, an IOU, a promise to repay a fixed amount.

That economists themselves had, until now, missed the more fundamental difference — stocks are designed to be transparent, bonds seek to be opaque — is humbling, or at least it should be. But the awareness of that difference is also downright exciting to those who do economics for a living, especially the young. Sufficiently surprising is this reversal of the dogma of price discovery that those who have been trained by graduate schools in economics and finance sometimes experience the shift in Copernican terms: a familiar world turned upside down.

I can't do justice to the whole idea in an excerpt, but this gives you a taste of Warsh's thesis. But it confuses me. Certainly he's right that mortgage-backed securities of the aughts were astonishingly opaque, but why does that lead us to believe that bonds, in general, "seek to be opaque"? For most of the 20th century and before, bonds were considerably simpler than the derivatives of the 21st century. The value of a corporate bond depended on the likelihood of bond payments being made, which in turn depended on the profitability and overall growth prospects of the firm. The value of a company's stock also depended on the profitability and overall growth prospects of the firm. If you knew one, you knew the other. Bonds, in general, were no more opaque than stocks. And none of this had any relation to bank money, did it?

Maybe this will all be explained later. If Warsh is arguing that the transparency of the debt and equity markets have changed over the past decade or so, that's one thing. But if he's arguing that they've always been fundamentally different, then I have some questions. I hope he answers them over the next 14 weeks.

The federal government announced today that Obamacare premiums are set to rise 22 percent next year. Charles Gaba estimates that premiums will go up 25 percent. Those numbers are close enough that there's probably no need to dive into the weeds to see if there are any gotchas. Premiums really are going up an average of about 25 percent next year. Here are five things to keep in mind:

  1. Yikes. That's a big number.
  2. The biggest increase is 145 percent in Phoenix. I have no idea why. However, you can be sure that Donald Trump and others will be bleating about Obamacare premiums going up "as much as 145 percent." (For the record, the lowest increase is -12 percent in Indianapolis. See Table 13 here for a full list.)
  3. The vast majority of people on Obamacare have incomes under 400 percent of the poverty level. All of them are shielded from ever paying more than a cap set by income level. At the lowest income level, they never have to pay more than 3 percent of their income. At the highest income level (about $100,000 for a family of four) they never have to pay more than 9 percent of their income.1 This means that in practice, the amount people pay will rise considerably less than 25 percent.2
  4. The 25 percent number assumes that you keep the same policy that you have in 2016. You can do better if you shop around. For example, HHS estimates that if everyone switched to the lowest-price plan in their metal level (bronze, silver, etc.), premiums would go down an average of 20 percent. Combined with point #3, this means that nearly all individuals will be able to avoid huge increases if they're really in dire financial straits.
  5. As painful as this is, all that's happening is that after being underpriced for years, Obamacare premiums are finally catching up to the original estimates from the Congressional Budget Office. A couple of months ago I suggested that premiums still had another 25 percent increase ahead, and this would likely be spread out over a couple of years. I was right about the size of the hike, but it's happening in one year instead of two. The good news is that these prices hikes truly should help to stabilize the market and prevent more insurers from abandoning Obamacare. It might even prod a few new ones to enter the market.

So that's that. Basically, this increase is painful, but was probably inevitable as insurers got more experience with the market. Subsidies and caps should shield a lot of people from the full pain of the increases, and the higher premium levels should be good for the long-term health of Obamacare. As for Republicans who plan to yell and scream about this, I have a deal for them: anyone who's serious about reducing the suffering of folks who will be hurt by higher premiums has my full support for boosting subsidy levels.

1The precise numbers for 2017 are 3.06 percent and 9.69 percent.

2There are other subsidies too that shield people from premium hikes. In particular, Andrew Sprung will be mad at me if I don't mention Cost Sharing Reductions, which many people can use to buy silver plans at reasonable prices.

Supreme Court nominee Merrick Garland has been waiting patiently for months to discover his fate. Here is Rick Hasen's prediction via Twitter:

Here's why I think @EdWhelanEPPC is wrong and Judge Garland gets confirmed in lame duck IF Democrats take Senate. First, Obama will be loyal to Garland and not withdraw nomination and Garland won't withdraw unless Clinton asks. Clinton won't ask despite pressure from the left to withdraw Garland for younger and more liberal candidate.

Getting Garland out of way during lame duck clears her first 100-day agenda without a nasty Supreme Court fight that eats other things. RBG has signaled she and/or Breyer will leave the court while Dems still control Senate (before 2017). This means she can get 1 or 2 more liberal Justices on Court and/or make it a big issue in the midterms, in the hopes of turning about Dem turnout problem in the midterms. With Garland done in [lame duck], Clinton has very good chance of 1, and some chance of 2, liberal appts before 2018 elections.

This is kinda sorta my take too. I agree that Obama will be loyal to Garland. That's all part of the implicit bargain when he nominated him. And I agree that Hillary Clinton will go along with that, partly for the reason Hasen outlines, and partly because it demonstrates a deeper loyalty: not just from Obama, but from Team Obama, which Hillary is part of. I think that was part of the implicit bargain too.

But will Republicans go along and confirm him? On the one hand, they've said they won't, and their base (i.e., talk radio) will go ballistic if they renege on that promise. On the other hand, in the real world (i.e., not talk radio) they know perfectly well that Garland is the best they're going to get. If they hold out, Clinton will nominate someone more liberal, and Harry Reid has already promised that if they go into endless obstruction mode, Democrats will nuke the filibuster and confirm Clinton's choice.

So here's where this leaves them. If they break their promise, they'll be tarred as feeble RINOs who pretend to be conservative but crumble at the first sign of Democratic opposition. If they keep their promise, they' tarred as feeble RINOs who pretend to be conservative but always have some lame excuse for losing. We don't control every branch of government. What could we do? What a bunch of whiners.

In other words, talk radio is going to scorch them no matter what happens. This means that if they're smart, they'll go ahead and confirm Garland. It's their least bad option.

That doesn't mean it will happen. Fear of the base is powerful in the Republican Party. Still, the GOP leadership has some decisions to make, and how they're going to handle the tea party faction is one of their most important ones. There's not much question that they have to take them on sometime. The only question is whether November 9 will be the time.

NOTE: If Republicans hold onto the Senate, all bets are off. They'll still have some leverage in the next Congress, and might reasonably think they can negotiate a better candidate with Hillary Clinton.

With 15 days left until a possible nationwide rout of the Republican Party, National Review editor Rich Lowry complains about Democratic hypocrisy:

As Jonah pointed out in a G-File a week or two ago, the Democrats started out by arguing that Donald Trump was such an outlandish figure that he couldn’t even truly be considered a Republican; now, with Election Day just two weeks away and Trump performing badly, they are seeking to use him to sink as many Republicans up and down the ballot as possible.

Maybe we tune into different liberals, but that's sure not how I remember it. My recollection is that it was conservatives who argued that Trump wasn't a real conservative. Lowry, for example, called Trump a "philosophically unmoored political opportunist" and a "menace to American conservatism." Liberals, conversely, spent a vast amount of ink arguing that Trump was, in fact, the apotheosis of everything conservatives had been doing for the past 30 or 40 years. They had supported extremist talk show hosts. They had tolerated endless appeals to racist sentiment. They had impeached a Democratic president. They had adopted a strategy of pure obstruction after losing in a landslide to Barack Obama. They had promoted a bubble of cocky ignorance by convincing their followers that the mainstream media was entirely untrustworthy. They had indulged an endless series of bizarre conspiracy theories and pseudo-scandals for purely political benefits.

After all that, liberals argued, conservatives could hardly act shocked when Republican primary voters were attracted to a guy like Donald Trump. They had been poking this particular tiger for years, and now that it was biting back they had no idea how to stop it. That's how I remember things, anyway. Anyone disagree?

And as long as we're on political topics, I noticed this morning that Sam Wang's Senate forecast, which has been sneaking upward for the past week, has finally reached the point where he's now predicting Democrats will likely win control of the Senate 51-49. The overall Democratic probability of Democratic control is 83 percent. As near as anyone can tell, Donald Trump is now actively working toward this end, hoping that an epic Republican loss across the board will make his personal loss less of an insult. Or something. Nice work, conservatives!