Tag Archives: health insurance

August 3, 2016

Trump Mixes Things Up, Unwittingly Says Something Accurate About Economics
An unlikely occurrence, but true nevertheless. Speaking to Fox Business yesterday, Trump sought to defend himself against criticism from billionaire investor Warren Buffett, who supports Hillary Clinton. The result was somewhat remarkable, as a leading candidate for president accidentally made accurate statements about economics.
In particular, Trump basically advised people to sell their stocks (more on this shortly) to avoid “very scary scenarios”. The problem according to Trump is that “interest rates are artificially low” and the “only reason the stock market is where it is, is because you get free money.”
By “free money” here, we’ll give him the benefit of the doubt and assume he’s referring to the various central bank initiatives around the world to inject liquidity into the markets. While this could sound like a very complicated and technical program–in fact, the broad contours are quite straightforward. Injecting liquidity just means that the central banks create money and use it to buy financial assets–typically, but not exclusively, government bonds. As we’ve written before, this has the effect of pushing financial asset prices higher than they otherwise would be and simultaneously pushing interest rates lower than they would be.
(Theoretically, the created money would be pulled out of the system in the future, when the economy is sufficiently stable, returning things to normal. However, in post-2008 period, economic stability always seems a few months or quarters away. For practical purposes therefore, the new money should be thought of as roughly permanent increases to the money supply.)
In any case, Trump’s remarks were strangely spot on, and it is nice to hear a presidential candidate get something right on economics for a change, especially in this election cycle.
Of course, Zero Hedge points out that economic convictions might not be the primary driver of Trump’s comments. Performance of the stock market in the three months preceding an election is one of the most reliable predictors (causes?) of election outcomes. Rising stock prices benefit the incumbent party; falling prices do the opposite. Trump may be betting that his comments will help convince some investors to sell off, placing downward pressure on stock prices and, if history holds, upward chances on his electoral prospects.
NY Police Commissioner Bill Bratton Resigns; Here’s Hoping He Takes ‘Broken Windows’ Policing with Him
Controversial New York Police Commissioner Bill Bratton announced his resignation yesterday. The move comes amid protests against police, but the protests do not appear to be the cause. New York City was the site for high-profile police killing of Eric Garner that garnered nationwide attention and helped galvanize the Black Lives Matter movement and the newfound focus on police brutality generally. Recent high-profile cases have been outside of New York City, however.
A career police officer and administrator, Bill Bratton had a law-and-order reputation and was not exactly amenable to reform. He was perhaps best known in connection to the ‘Broken Windows’ theory of policing, whereby officers focused significantly on minor offenses as a means of cleaning up the streets.
The theory has its proponents, but it also leads to extra encounters with police, which always carry the risk of  lethal escalation. The Eric Garner case itself was an example of this. Recall that Garner’s interaction with the police began because he was allegedly selling loose cigarettes on the sidewalk, which is illegal. It seems questionable whether police should even expend resources to enforce such a law, but it is certainly intolerable that a man would ultimately die because of it. No police officer was charged in that incident, in spite of the fact that it was caught on film in graphic detail.
Though in a different city, a similar story could be told about Philando Castile who was recently killed in Minnesota. His initial offense was driving with a broken taillight.
In an ideal world, we could make innovative reforms that allow police officers to be held accountable when they use excessive force. Until we get there, however, decreasing the number of nonessential interactions between police and individual citizens would be an excellent step toward reducing police brutality incidents.
In the press conference announcing Bratton’s departure, officials emphasized continuity. But with every change in leadership, there’s a chance of improvement. In case of the New York, we should hope that policy of ‘Broken Windows’ policing leaves with Mr. Bratton.
Another Health Insurer Reports Massive Losses in Obamacare Exchange Business
This week Aetna, one of the nation’s largest health insurance companies, announced that it expected to lose some $300 million on customers enrolled through the Obamacare exchanges this year.
These projected losses have the company changing its tune on the likely profitability of the markets generally. Already in 15 states, Aetna was considering expanding its Obamacare exchange offerings into 5 additional states. Now, however, they have cancelled expansion plans and are reevaluating their participation in the Obamacare exchanges altogether.
Ultimately, this is yet more evidence of the inherently unsustainable nature of the Obamacare system, as we wrote about recently. Architects of the plan were effectively betting that the program would force enough healthy people to join the rolls that they could absorb the costs associated with covering new patients that had pre-existing conditions. They have been proven thoroughly wrong.
Now, hardly a month goes by without news of massive planned increases in premiums or another insurance organization suffering major losses on the Obamacare exchanges and withdrawing. The only remaining questions are how long an obviously hemorrhaging system can continue to limp along, and what system will rise out of its ashes.