Kevin Drum

The Economy is Improving, But Not For Everyone

| Thu Apr. 17, 2014 10:08 PM PDT

The BLS reported today that weekly earnings for full-time wage and salary workers rose 3 percent in the first quarter of 2014 compared to a year ago. Since inflation is running at 1.4 percent, that's good news. Earnings are going up.

But wage gains are pretty unevenly distributed. Jeffrey Sparshott passes along a recent Labor Department note which concludes that all of the wage gains since 2009 have gone to the top 40 percent. The poor, the working class, and the middle class have seen no gains at all. This is reflected in the chart on the right, which shows weekly earnings for production and nonsupervisory workers. Weekly earnings for this group have been rising at a rate slightly above inflation for the past year, but not by much. Nor is that number getting better: In the first quarter of 2014, weekly earnings rose only 1.8 percent.

There are some positive signs that the labor market is tightening a bit—decent job creation rates, fewer unemployment claims, rising earnings for full-time workers—but not everyone is benefiting. This remains a pretty uneven recovery.

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The Good News on Obamacare Just Keeps Rolling In

| Thu Apr. 17, 2014 2:08 PM PDT

The open enrollment period for Obamacare is finally (almost) over, and today the White House announced the final figures for signups via the exchanges:

8 million people signed up for private insurance in the Health Insurance Marketplace. For states that have Federally-Facilitated Marketplaces, 35 percent of those who signed up are under 35 years old, and 28 percent are between 18 and 34 years old, virtually the same youth percentage that signed up in Massachusetts in its first year of health reform.

That's a little better than I expected. I was figuring the final number would be around 7.7 million or so. We Americans sure do like to procrastinate, don't we?

Anyway, once some of these new enrollees drop out for not paying their premiums, the final number will be around 7 million, which matches the CBO's original estimate—the one they made before the website debacle. That's pretty amazing. It suggests that either the CBO was overly pessimistic or else that the website problems really didn't have any effect at all. I suppose the latter is plausible if you assume that hardly anyone was ever going to sign up in the first couple of months anyway.

And the 28 percent number for young enrollees is pretty good too. It's below the administration's goal, but Jon Cohn points out that what really matters is whether it matches what insurance companies expected:

The worry has always been that older and sicker people would sign up in unusually high numbers, forcing insurers to raise their prices next year and beyond.

But insurance companies didn’t expect young people to sign up in proportion to their numbers in the population. They knew participation would be a bit lower and they set premiums accordingly. Only company officials know exactly what they were projecting—that’s proprietary information—but one good metric is the signup rate in Massachusetts, in 2007, when that state had open enrollment for its version of the same reforms. According to information provided by Jonathan Gruber, the MIT economist and reform architect, 28.3 percent of Massachusetts enrollees were ages 19 to 34, a comparable age group.

So what were insurance companies expecting? As Cohn says, we don't know for sure, but there's good reason to think that it was around 28 percent. First, there's the Massachusetts precedent. And second, we learned yesterday that insurance companies are now expected to raise premiums a modest 7 percent next year. This suggests that that the age and health profile of exchange enrollees is pretty close to their projections.

All in all, another day of pretty good news for Obamacare.

It Turns Out That the Beautiful People Really Do Look Down on the Rest of Us

| Thu Apr. 17, 2014 11:29 AM PDT

It turns out that beautiful people really do look down on the rest of us. Danielle Kurtzleben reports on a new study that assessed the attitudes of people after asking them to rate their own attractiveness:

Participants who perceive themselves as attractive also tend to not only believe they are of higher social status but also to believe in group dominance — that some groups are just inferior. They also were more likely to believe in ideas that legitimized their status, like the idea that all Americans have equal shots at making it to the top.

....People who thought they were more attractive also tended to think that America's steadily growing inequality came about because of individual characteristics, like talent and hard work. People who thought they were uglier, meanwhile, thought outside factors — discrimination, political power — had more to do with inequality.

People have a well-known cognitive bias in which they attribute positive outcomes to internal factors (hard work, smarts) and negative outcomes to external factors (bad luck, enemies who have it in for you). This is a similar kind of thing. People who are attractive tend to do better in life, but they resist the idea that this is partly due to the simple good luck of being tall or having regular features. And yet, there's abundant evidence that physical attractiveness makes a difference. Just ask political candidates.

Ditto for being white, male, healthy, middle class, etc. A lot of people might dislike the invocations of "privilege" that seem so endless these days, but it's a real thing. And it's everywhere.

Americans Wildly Overestimate the Impact of Routine Mammographies

| Thu Apr. 17, 2014 9:46 AM PDT

Aaron Carroll passes along the following stunning chart about the actual efficacy of routine breast cancer screening on 50-year-old women:

Obviously, there are circumstances where routine screening is a good idea—perhaps if you have a family history of breast cancer or other specific risk factors. But the best recent evidence suggests that routine screening for all women has a negligible effect. At best, it's very slightly positive. At worst it's literally zero because false positives lead to interventions that themselves carry a risk of death.

The problem is that people don't believe this. They think that routine screening has a far greater impact than it really does. The perception of 50-year-old women is that routine screening saves the lives of about 80 women out of a thousand:

Therein lies the problem. If you think that breast cancer is going to kill 16% of all 50-year-old women in the next 10 years and that mammography makes a huge difference in the mortality rate, then you’re going to demand a universal screening program. Hell, I’d demand it if that were the case. Until we can change the perception of the public to more closely match reality, and make them realize that the harms may outweigh the benefits, we’re going to get nowhere in trying to make changes.

We're all complicit in the level of overdiagnosis in American health care. Over the past few weeks, I've probably gotten something like $20,000 worth of tests and other care—with more to come—in an effort to try and figure out why my breathing suddenly went south. I didn't push back on any of it, and the reason is obvious: when a doctor tells you that your problem might be an embolism or a bad heart or interstitial lung damage, then you damn well want to find out if it is. (It's not. We still don't know what's going on.)

Obviously an acute problem like mine is not the same as routine testing. But I do that too. I've resisted the routine colonoscopy so far because my risk profile is low, but I do get a biannual echocardiogram. Why? Because I have high blood pressure, high cholesterol, and a family history of cardio problems. Routine heart monitoring makes sense in my case.

Routine mammographies make sense too—for some women. But for all of them? The best evidence says it doesn't.

Latest Gallup Result: 9-10 Million Newly Insured Under Obamacare

| Thu Apr. 17, 2014 8:38 AM PDT

Speaking of the uninsured, I inexplicably failed to blog about the latest Gallup results yesterday. Based on polling that goes through mid-April, Gallup now estimates that about 9-10 million people have gained insurance since Obamacare rolled out last year. If you assume that perhaps a million people lost insurance, that's a net increase of 8-9 million. Of this, about half gained insurance through the exchanges. The rest gained it through Medicaid and increased participation in employer plans.

I'm not going to try to analyze this number any further. It basically represents good news, since it's a higher estimate than we've seen before, and it also jibes with the recent Rand numbers suggesting a large rise in people covered by employer plans. Apparently the individual mandate is having a bigger impact on this than anybody predicted. However, it's one data point in a noisy series, and I suspect we still have to wait another month to get a reliable set of numbers from all the polling outfits. By the end of May, unless the various polls are in wild disagreement, I imagine we'll have a fairly good idea of just how big the impact of Obamacare has been so far.

UPDATE: Sorry, everyone else has been leading with a number of 12 million, so that's what I used. But the Gallup poll estimates that 4 percent of US adults are newly insured, not 4 percent of the entire country. That's in the range of 9-10 million. I've corrected the text.

Note, however, that this ignores children who are newly insured, either via exchanges or Medicaid. So the real number is probably a bit higher. Maybe in the 10-11 million range? It's hard to say. There are a lot of different surveys that are all measuring slightly different things, and they're all working on data that's still incomplete. That's why it's probably wise to wait another month or two before we get too confident in any of these numbers.

Is the Census Recount of the Uninsured a Legitimate Scandal?

| Thu Apr. 17, 2014 8:14 AM PDT

A friend of mine thinks the decision by the Census Bureau to change the way it counts the uninsured—which will make it more difficult to make pre and post-Obamacare comparisons—is sleazier than I give it credit for:

To me this is all about 2016. I think Democrats really want to be able to show a sharp contrast that will demonstrate the dramatic impact of an attempted repeal of the ACA, and stronger numbers on the uninsured would only help the ads that much more. The administration knows that a Republican president will be under terrific pressure to undercut and thwart the law regardless of its popularity (even if with as few fingerprints as possible) and that they will use whatever tools they have to do so. So 2016 is extremely important.

The reason I lost it is because even with independent agencies, there is a certain measure of influence. No, the executive doesn't have a large measure of direct control over independent agencies, but they damn sure know what they are doing — or at least somebody does. They don't operate in a vacuum. (Except, perhaps, some of the security services.) So, this is either:

  1. Something started years ago with a drop date of Spring 2014 that (a) no one picked up on until now and no one can derail the train; or (b) the executive saw coming and was willing to let it happen to help put the best read on the numbers in advance of 2016.
  2. Something that has been out there (sure, everything is "out there") but languishing, which the executive decided to speed up and put in place well before 2016. The goal was to get the most positive read on the numbers, so they indirectly applied pressure to the Census to put it in place — and since the Census wants it anyway there's really no stick here.

Of these, (1)(a) seems most implausible (even if certainly possible) and (2) seems most likely if 2016 is the primary issue. Thus, I am assuming that this is going forward with the executive's blessing on the timing, and a calculation has been made that the blowback — if any — will be among the right's base and they are already energized so this won't change the dynamic much.

And if my assumption is correct, I still think it's a cheap / too-cute-by-half tactic that I would be calling out if the roles were flipped.

I have a hard time buying this for several reasons. First, it is too cute by half. Obama's political shop is not the runaway train that, say, Chris Christie's apparently is. It's implausible to me that anyone there would give this more than a moment's thought before dismissing it. It's just too stupid.

Second, it's not at all clear that the change made by the Census will make Obamacare look better. We're still going to have a clean 2013-14 comparison, after all, just not a longer-term one. Besides, surely any number is better than one with such a big cloud around it that it's open to merciless attack. Especially when it's one that the boffins at the Census Bureau won't defend.

Third, there are loads of other numbers about the uninsured—Gallup, Rand, HRMS, etc. Playing games with the Census numbers won't change any of that.

Bottom line: I continue to think this is most likely something dreamed up by technocrats in the Census Bureau who were oblivious to the political implications. I'll acknowledge that the political implications are obvious enough that this is a little hard to believe, but that's where Occam's Razor takes me. In any case, Darrell Issa is sure to open hearings on this, so I imagine we'll hear from Census officials soon enough.

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Putin: Eastern Ukraine is Really "Novorossiya"

| Thu Apr. 17, 2014 7:36 AM PDT

The Guardian reports that Vladimir Putin held a long, "meticulously stagecrafted" press conference today:

Accusing the Kiev authorities of pulling the country into an "abyss", he called on Ukraine to pull back its heavy artillery from the east of the country, asking: "Who are you going to use it against? Have you completely lost your marbles?"

....Putin referred to the region in question by its tsarist name "Novorossiya", or "New Russia", as it was referred to in the 19th century under tsarist rule, and suggested it was a historical mistake to hand it over to Ukraine.

"It's new Russia," he told millions of watchers "Kharkiv, Lugansk, Donetsk, Odessa were not part of Ukraine in Czarist times, they were transferred in 1920. Why? God knows. Then for various reasons these areas were gone, and the people stayed there — we need to encourage them to find a solution."

That does not sound very promising, does it?

Invading Crimea May Have Cost Russia $200 Billion So Far

| Wed Apr. 16, 2014 9:07 PM PDT

Russia's military actions are costing it dearly:

Russia's annexation of Ukraine's Crimea region last month and the instability it created in Russian financial markets were cited by government officials for record capital flight and sharply downgraded growth forecasts for the country. Finance Minister Anton Siluanov said that instead of projected 2.5% growth this year, Russia's economy might show no growth at all.

....U.S. and European sanctions to punish Russia for occupying and annexing Crimea have so far targeted only a few dozen officials and businessmen. But the prospect of broader penalties, such as a Western boycott of Russian oil and gas, have scared investors into cashing out their ruble-denominated assets for hard currency and taking their money abroad. Russia's foreign exchange reserves were drained of a record $63 billion in the first quarter of the year, Economic Development Minister Alexei Ulyukayev said Wednesday in an address to the lower house of the parliament.

....Russian stocks fell 10% last month, wiping out further billions in capital. The ruble has lost 9% of its value since the start of the year, boosting prices for the imported food and manufactured goods on which the Russian consumer market is heavily dependent. "The acute international situation of the past two months" was the cause, Ulyukayev said, referring to the Ukraine unrest.

That's a helluva big drop in economic growth. Just by itself, it represents a cost of $50 billion. Add in the flight of cash and the stock market decline, and you're somewhere in the neighborhood of $200 billion.

Is that enough to make Russia blink? Maybe not. But it hurts, and the prospect of losing even more has got to be enough to give even Vladimir Putin a few second thoughts.

An Update From Our 1 Percent World: Southern California Housing Edition

| Wed Apr. 16, 2014 11:24 AM PDT

The LA Times reports that the Southern California housing market is once again getting frothy:

But a deeper look at the market reveals a recovery divided between the rich and everyone else.

The market for high-dollar homes is hopping, with sales on the rise and buyers launching bidding wars. But sales of low- to medium-priced homes have plummeted during the same period — with many potential buyers priced out....Those declines came even as sales of high-end homes increased. Sales of homes costing $800,000 or more grew 12%, while sales of homes costing less than $500,000 fell at twice that rate.

...."We're getting multiple offers on just about everything," said Barry Sulpor, an agent with Shorewood Realtors in Manhattan Beach, where he said there is a new wave of tear-downs and new construction in prime beachfront locations. "The market is really on fire."

I think partly this is a bit of a statistical artifact: a lot of investors were buying cheap houses a year ago, figuring they could rent them out and make a killing. That didn't work out so well, and now a lot of those houses are back on the market. Long story short, some of the increase in low-end housing prices over the past year or two has been a bit of an investor-fueled mirage, and now reality is catching up to that.

Still, the overall picture is clear: At the lower end of the market, ordinary people have been increasingly locked out for a while, and that's still the case. Nor is it any surprise. After all, median wages have stagnated during the entire period that we so laughingly refer to as a "recovery." As always in our brave new 1 percent era, things are going pretty well for the rich. For the not-so-rich, not so well.

In Red States, the Uninsured Are Up the Creek

| Wed Apr. 16, 2014 10:03 AM PDT

Gallup has previously reported a drop in the uninsurance rate among Americans following the rollout of Obamacare last year. Today, they broke down these numbers between states that embraced Obamacare by setting up their own exchanges and expanding Medicaid vs. states that have resisted implementing the law.

The results are no surprise. States that embraced Obamacare—which presumably were more committed to public health in the first place—had lower uninsurance rates to start with and saw bigger declines. The states that resisted were the ones with the biggest uninsurance problems to start with and saw only token declines. In fact, the decline in states that embraced Obamacare was more than triple that in the other states, 2.8 percent vs. 0.8 percent.

These numbers will change a bit over the next couple of months as things settle down and signups are complete, but the relative differences will almost certainly remain huge. Republican governors have been almost unanimously dedicated to sabotaging Obamacare and withholding health care from their own residents, and they've been successful. I hope they're proud of themselves.