As I was getting up this morning I turned on the radio. I was hoping for a weather forecast. Instead I got Representative Ann Wagner giving the Weekly Republican Address.
Wagner started by quoting Obama’s 2008 campaign promise to cut premiums for health care by up to $2,500. She saw this a a broken promise based on the recently released report by the Centers for Medicare and Medicaid Services on the premiums for those employed in small businesses. The violation was that premiums were going up for 11 million individuals.
The report was release a week ago and comments and arguments have been going back an fourth for the past week. See here and here for a couple of examples. But what Wagner has to say requires closer scrutiny.
First off Obama’s promise was not well respected when he made it. It seemed like a considerable overestimation of the savings that could be achieved. And Politifact.com listed it as a broken promise back in 2012.
But what exactly did he promise? Well Jay Forest has put together a series of clips of Obama’s various statements while on the campaign trail. He has done us a real service since seeing the videos as a group lets us see what Obama was trying to say. He did not say it the same way every time. Focusing only on what he seemed to repeat again and again the core of the promise was to (1) he had a plan, (2) work with employers, (3) reduce premiums, (4) the reductions would be up to $2,500 for a typical family. Wagner’s version of the promise was to sign a health care law that would “cut the cost of a typical family’s premium by up to $2,500 a year.” I did not see anything where he promised to sign such a law – so Wagner is exaggerating a bit. Regardless of how one reads the promise it really was not much of one. “Up to $2,500″ can be anything from zero up to $2,500. And what makes for a “typical family?”
Wagner is stretching the logic to make a claim that the report on the impact on premiums on small business provides evidence of a break in Obama’s promise. Just for starters can we claim those are typical workers? As I read the report they are clearly not. As the report claims and as the CNN report picked up on, small businesses tend for some reason to hire younger and healthier workers than average.
This is important because the Affordable Care Act require some averaging of premiums. Age cannot be factored in as it had been earlier. Health of the workers cannot be factored in as it had been earlier. And preexisting conditions can no longer be excluded. These features tend to force premiums towards the mean. They should reduce the variance in health care cost that exist for a whole set of reasons. Firms where workers or their families had significant medical issues were paying higher premiums. This in turn put them at a disadvantage in competing with other firms not so burdened. Premiums went up on average at least partly because the small businesses with younger and healthier workers were no longer put in such an advantageous position. They also went up because of the new preexisting condition clause in the act. Firms with older workers would expect to see their premiums decrease.
As with any change in technology, law, or practice there are winners and there are losers. Any change to the health care system will see winners and losers. The same is true in the premiums workers and employers will pay under the Affordable Health Care Act. While Wagner was happy to point out the estimated 11 million individuals who’s premiums will go up. She ignored the estimated 6 million individuals that will see a decrease in their premiums. A shortcoming of the report is that while it reports on how many will be impacted it does not tell us how much the premiums will change.
But perhaps Wagner’s biggest statistical blunder was letting the tail wag the dog. What is going on with the approximately 17 million individuals talked about in the report cannot really be used to argue a broken promise (or supposed promise – depending on how you view what Obama actually said) as it applies to the county as a whole.
I was not at all surprised last week when the Congressional Budget Office issued a report claiming that increasing the minimum wage would cost jobs. They did not do the work themselves so much as rely on work that had been done by others. The finding is in line with standard economic thinking. Think supply and demand. When the price goes up demand goes down. So when the price of labor goes up one would expect that the demand for labor to go down. That translates into lost jobs.
So is there a problem with the CBO report? Should we be concerned with the job loss estimate? Sometimes it helps to jump a bit outside of the box. So cost for labor goes up and jobs go down. But this logic applies regardless of the wage level. Would we be arguing that we should not give the middle class a pay increase because it would cost them jobs? Would we be arguing that we should not give the CEOs a pay increase because it would cost some of them their jobs? I don’t think so. If not them why are some arguing not to increase the minimum wage because it well cost jobs?
Then the models that the CBO used just may not be quite right. A business has other options on how to recoup the extra cost of the labor due to an increase in the minimum wage. They can opt for a price increase. They can choose not to give other higher paid workers a pay increase. They can look to automation and cut jobs at all levels. They can decide to move some jobs off shore where wages are lower. Some of these results in a job loss in the United States in ways the CBO may not have considered.
Interestingly Politico reported that some Republicans suggested that instead of increasing the minimum wage we expand the earned income tax credit. This sounds like a tax increase to me. Also doesn’t that amount to the taxpayers subsidizing the companies that pay the minimum wage?
Remember also that a lower minimum wage allows me to buy a cheaper hamburger at McDonald’s. Are my hamburgers being subsidized at the expense of those who cannot make a living wage?
I am just thinking some random thoughts. I am just asking some random questions that should be considered in the debate.
This past Friday the Washington Post published an opinion piece by Charles Krauthammer titled “The myth of ‘settle science.’” In it Krauthammer takes the position the he is neither a global warming believer nor a global warming denier. But then he spend almost the entire piece attacking claims of global warming. Perhaps he feels that by taking the high ground of neutrality that someone will actually believe he has an unbiased position.
His undoing comes in the third sentence of the piece where he says:
I’ve long believed that it cannot be good for humanity to be spewing tons of carbon dioxide into the atmosphere.
He has made that statement in previous pieces. But if he believes it is so bad to spew carbon dioxide into the atmosphere then why is not proposing that we do something about the problem? His problem – doing something plays into the hands of those who believe in global warming. But again why should he care it that happens if all that carbon dioxide is a problem. Thing is he does not say why he thinks it is a problem and he does not propose a solution to the problem he agrees exists.
The rest of the opinion piece goes on with bad science and poor logic to say the least. He talks about a “pause” in global temperature rise over the last 15 years. Do a simple search on “up the down staircase” and you will see that any increase comes in fits and starts. When temperatures have be rising for 100 year looking at any 15 year period is ill advised. That is Statistics 101.
Krauthammer take joy in claiming that when any storm hits, think tropical storm Sandy, or any tornado hits that climate change enthusiasts blame global warming. I don’t know what papers he reads by what I see most times is the media asking the question and the climate change researches repeating again and again and again that no one event can be specifically be linked to global warming.
But even worst he turns around and uses the same logic he criticizes when he points out that only one hurricane hit the US in 2012, and that in 2013 the Atlantic saw the fewest hurricanes in 30 years. At the very least he should avoid using the types of arguments that he so dislikes others using.