Some of the most heated controversy but most meager investigation centers on the macroeconomic aspects of Health Care Reform. Simply put, what is the impact of reform on jobs and output? Implicit in the name of the Republican house sponsored Repealing the Job Killing Health Care Act Bill is that Affordable Care Act will result in enormous job losses, an especially unsettling prospect in the kind of jobless economic recovery we have been experiencing these last two years. On the other side of the aisle, House Minority Leader Nancy Pelosi has announced that Health Care Reform will “create 4 million jobs – 400,000 jobs almost immediately.” This figure appears to be loosely (very loosely) based on a Center for American Progress Study that shows 400,000 jobs created in 2014 under a best-case cost reduction scenario.

Somewhere in the middle is the Congressional Budget Office. The CBO Director, Douglas Elmendorf, has issued the terse statement that the “effects of the legislation on overall employment would be small.” However, net job figures are not provided to quell this swirling controversy. So, speculation and hyperbole continue.

One reasonable scenario is offered in a new paper by Juergen Jung and Chung Tran. They find that an Affordable Care Act type policy produces a “7 percent increase in aggregate spending on healthcare,” “steady state output decreases by up to 2 percent,” and the public experiences an “increase in stock of health capital.” They conclude that the “reform is socially beneficial as welfare gains are observed for most generations.” In sum, there are slightly negative macroeconomic outcomes but net social benefits.

Another way of looking at the Affordable Care Act is to focus on its fiscal effects. The Act was scored by the CBO to be deficit reducing at the time it was written. In the spring of 2010, it was estimated to provide $143 billion in savings over the period FY2010-2019 with much of the savings to occur earlier in the period and most of the spending impetus beginning in 2014 when Medicaid is expanded and the subsidized insurance exchanges open. There have been several modifications since that time (such as the repeal of new 1099 reporting requirements) that affect some of the particulars but you get the general gist. In the traditional Keynesian economic modeling world, deficit reduction is contractionary fiscal policy and has a dampening effect on output and employment.

Source: Congressional Budget Office

If these annual budgetary expenditure and revenue estimates are mapped onto the policy variables of a respected commercial economic model called REMI, the employment trajectory closely follows the budget trajectory (see this paper for further methodological details) with one exception. During the budgetary surplus years, employment losses associated with the act peak in 2013 with over 800,000 jobs lost. However, beginning in 2015 when the spending kicks in, jobs are added. This pattern continues even as the federal government continues to accumulate small budget surpluses and ends on 2019 with almost 236,000 more jobs than would have occurred otherwise. This figure is net employment and includes both industry winners and losers. The winners? Health care services industries see a gain of over 470,000 jobs and insurance carriers see over 39,000 additional jobs. There are also employment gains in the pharmaceutical and medical equipment manufacturing industries. But, offsetting losses occur in many other industries, including retail trade, construction, and services.

Why might this happen? Well, Health Care Reform significantly channels spending from general consumer goods and services to health care goods and services. Moreover, health care spending is almost entirely spent in the U.S. and has a strong U.S. supply chain. But, it displaces general consumption spending that has significant import leakages. Think of it as having features of a successful “Buy American” program.

Unfortunately, this analysis is limited in many ways. For one thing, it doesn’t fully account for some perverse labor market effects of the legislation. For instance, the effect of the employer penalty (“Play or Pay”) feature of Health Care Reform is similar to instituting a higher minimum wage. Since employers can’t shift the costs of health insurance to low wage employees (as they tend to do with the costs of benefits), they will employ fewer of them or shift from employing full-time workers to part-time workers. The Lewin Group places the likely magnitude of this reduction in quantity of labor demanded at 157,300 to 366,200. The Act will also have profound effect on labor supply. The Medicaid and insurance exchange subsidies will effectively increase some household incomes and increase effective marginal tax rates. Therefore, some individuals will elect to drop out of the labor market. The CBO estimates that the net labor supply effect will be to reduce employment by approximately 800,000 by 2021.

Health Care Reform has ramifications for many other variables that could affect the macroeconomy, but they are difficult to quantify given the current state of knowledge. Mentioned earlier was the interminable debate about the impact of Health Care Reform on health care costs, an issue unlikely to be resolved anytime soon. There are also questions about the business and state government administrative costs of implementing the tax and regulatory provisions. Lastly, expanded health coverage should make people healthier. Healthier people should be more likely to work, be more productive, and live longer. In the process, they should impose lower disability and workers comp expenses (but raise retirement costs). Unfortunately, little is known about the magnitude of these other effects.

Given the current state of the knowledge, however, a few things seem reasonably clear. Health Care Reform is likely to have a relatively small effect on the macroeconomy. But, it is more likely to be a modest negative than modest positive impact. Which brings us back to the Jung and Tran study. If the effect of Health Care Reform is to effectively “kill” some jobs but make many more people better off, is that necessarily a bad thing?

Source: Bureau of Economic Analysis, Regional Economic Information System

Better yet, when adjustments are made for differences in the cost-of-living using a new regional price parity index, it bests the U.S. by almost 10% and even manages to inch past Virginia with $43,449 compared to $43,406.

Source: Bureau of Economic Analysis, Regional Economic Information System and Aten, Figueroa, and Martin (2011)

At the beginning of the period, this convergence reflected Roanoke’s growth as a manufacturing center and regional transportation hub as well as the same rising tides that have lifted boats throughout the southeast. But, more recently, the causes have been varied.  As the region began to lose some of its industrial luster, the services sector gradually picked up much of the slack and the economy became more diversified.  Another factor is the much slower population growth of the Roanoke metro area compared to the rest of the U.S. and Virginia in the last three decades. 

Source: Bureau of Economic Analysis, Regional Economic Information System

The population growth has been uneven among age groups, with younger adult cohorts more likely to migrate for education, employment, and lifestyle reasons at the same time that the region attracts retirees because of its natural amenities, low cost-of-living and excellent medical services. This continued migration pattern combined with aging-in-place baby boomers has produced a relatively much larger senior and near-retirement population and much smaller young-adult population than Virginia as a whole.

Source: U.S. Census Bureau, 2010 Census

These demographics are reflected in personal income statistics.  Transfer payments as a percentage of total personal income have grown at a faster clip than elsewhere and now constitute almost 20 percent, compared to 18 percent for the U.S. and just 13 percent for Virginia.

Source: Bureau of Economic Analysis, Regional Economic Information System

The key factor in the growth of transfer payments, particularly over the last 10 years, are government medical payments for programs like Medicare and Medicare.  The recent recession has also created a recent spurt in retirement, disability, and public assistance transfers.

Source: Bureau of Economic Analysis, Regional Economic Information System

The enormous growth in medical transfer payments helps to explain some industrial restructuring that is occurring in the Roanoke region. As people retire and age, their disposable income generally decreases with a decline in earnings but their medical spending increases as a result of greater need for medical care and eligibility for public insurance such as Medicare and Medicaid. Therefore, health services has displaced retail trade (which has remained largely flat in terms of employment) as the largest industrial sector in the region.

Source: Virginia Employment Commission, Quarterly Census of Employment and Wages

Whether the continued upward trajectory in per capita income is sustainable is questionable.  Federal entitlements cuts are increasingly eyed as key to federal deficit reduction efforts, and the Affordable Care Act tasks government agencies with finding ways to reduce spiraling health care costs.  Moreover, the continued attrition of young adults from the workforce could erode the economic competitiveness of the region. On the other hand, economic and population growth are not the same as economic development. Indeed, one recent study found that slow-growing counties in non-metropolitan areas tend to prosper more than fast-growing counties.  But, more about that later. 

Source: Health Resources and Services Administration, Area Resource File

A couple of things stand out.  Not surprisingly, dentists like other health professionals are relatively more abundant in more urbanized areas.  The most rural of the continuum categories have fewer than half of the relative number of dentists as the larger metro area categories.  On the other hand, the disparities for dentists in private practice are lower.  These dentists are more responsive to local demand characteristics.

Part of the reason for the lower relative number of private practitioners in more rural areas is the existence of speciality care.  Relatively few dental specialists (e.g., orthodontists, oral surgeons, periodontists, endodontists) operate in rural markets because they must draw from a much wider market diameter to maintain a profitable practice. It makes good business sense for them to locate in more centralized urban locations.  Even after accounting for these specialists, there is still a sizable disparity.  A large reason for the remaining difference is the tendency of dentists like other professionals to locate in commercial areas.  More rural counties have fewer and smaller commercial activity centers.

Source: Health Resources and Services Administration, Area Resource File

Regional dentist disparities have grown over the previous decade for both professionally active and private practice dentists with large metro counties gaining the most dentists on a per capita basis.  Only one rural continuum category (8=”Completely rural or less than 2,500 urban population, adjacent to a metro area”) actually saw a slight decrease in dentists.

 

 

Source: Health Resources and Services Administration, Area Resource File

These disparities are likely to grow worse before they become better.  Non-metro counties, particularly those down the rural-urban continuum, have a much higher percentage of dentists at retirement age (65+ years) and near retirement age (55-64 years) and proportionally few young dentists.

Source: Health Resources and Services Administration, Area Resource File

This pattern may be partly related to changing graduate locational preferences. Recent cohorts of dental school graduates have indicated a strong preference for more urban or suburban practice locations. For instance, only 5.2 percent of recent graduating seniors stated that they intend to practice in areas with fewer than 10,000 residents (Okwuje, Ifie, Eugene Anderson, and Richard W. Valachovic. 2009.  Annual ADEA survey of dental school seniors: 2008 graduating class Journal of Dental Education 73, 8: 1009-1032).  If this trend continues, the price of dental care will need to increase in order to attract more dentists to rural areas absent any policy intervention.

Apparently nothing is safe from the global makeover. For instance, take the Real American Hero, G.I. Joe. Strip him of his American character, add brawny sidekicks drawn from the world’s exotic hotspots and voilá, you’ve now got yourself a violent international special force that will appeal to the lowest common denominator worldwide.

And, let’s face it, the message is not that different from the motto one Armed Forces branch (in this case, the Navy) fashioned for itself: “A Global Force for Good” and the perorations of a Commander in Chief from nowhere in particular who views himself as a Messianic postmodernistic antidote to national identity.

So, is what’s good for Hollywood, good for the United States? It all depends on what you mean by “is” and of course what you mean by “the United States.” If it’s the bigger, better, and badder borderless one envisioned by the new international media oligopolies, it’s plenty good and profitable to boot. If it’s the distinctive North American republic that George Washington warned in his farewell address to avoid “foreign entanglements,” it’s pretty much the end of the line. And, if you don’t particularly like that situation, the new G.I. Joe will see to it that you do.

Join the Army. Visit exotic places. Meet strange people. And, bill them.

You don’t need to buy that new Twitter for Dummies book. Way too much filler. It is redacted to fewer than 1,600 characters on eQuotient.net.

Done. It took only 117 or so characters, which means that I was far more frugal than required to post on the Twitter social networking and microblogging system, which allows up to 140 characters. That’s the first thing you need to know in order to use Twitter. The next is to register your account on http://www.twitter.com. But, not too many people are tripping up on this last part because there are purportedly over 24 million registered users at the moment.

Here’s the rest:

Killer apps

Twit and nittwit on Twitter @joebiden

That's twellow, not gold.

Tweet dreams.

That’s gone now. In its stead we have a hyperprocessed Madison Avenue product. It’s still vaguely rural or rather ex-urban but there’s no discernable place. It’s been deracinated. Also, no more drinking and carousing. The forgetable themes seem to be chosen by focus groups and increasingly celebrate different aspects of politically correct consumerism. The melodies are often recycled from older songs and given a pop beat. A procession of perfect blonde twenty-something singer-models strut around in music videos to sexually titillate. In sum, it’s been so thoroughly mainstreamed that it’s practically been absorbed into the global monoculture.

Therefore, it was pleasure to see George Jones in concert last night at the Charlottesville Pavillion. Simple alliterative name. Two syllables. The young waitress at The Nook couldn’t fathom who was performing that evening: “Just some old guy from the 70s.” Seventy-eight years old in September to be precise. He sported a paunch. He missed the high notes.

But, he lived the lyrics that he wrote and the songs are a spontaneous reflection on the challenges and passions of life. Here in the real world.

Or, as he tells it in “The Grand Tour”

Step right up, come on in
If you’d like to take the grand tour
. . .
I have nothing here to sell you.
Just some things that I will tell you.

Ladies and Gentleman, Mr. George Jones.

Round up the usual suspects

Clearly, this is not the citizen engagement that was promised. Instead, it’s fairly noxious stuff and seems designed to cause irreparable harm to civil discourse, squelch public participation, and even foment violence. I’m looking for a precedent in recent U.S. presidential history, but can’t find it.

How did we get to this point? Before anyone makes the unsubstantiated assertion that the audiences coming out to these events are “rent-a-mobs” organized by special interest groups who are interested in squelching serious debate about health care, let’s make one thing clear. If you don’t have basic ground rules in place and create an environment where everyone feels comfortable, it doesn’t matter. The meeting will get unruly without any outside efforts or ill intentions.

How do I know? As a two-term councilman, I’ve seen the dynamic in action and even stirred the pot a little myself. Eventually, the mayor and council needed to revise the ground rules, and I needed a little attitude adjustment. It made an extraordinary difference to the tenor of the meetings.

So how do you combat meetings turning ugly? Here are a few suggestions:

(1) Don’t come to a public meeting with your mind already made up. There’s nothing that makes citizens angrier than going through the motions of public meetings when it is clear that the official will not entertain any other possibilities. The race to pass health care bill before adequate public input was received solidified in many citizens’ minds that the town halls were mere exhibitions.
(2) As a public official, choose your words carefully. Definitely no name-calling. Don’t make allegations about peoples motivations (anyway it’s is a logical fallacy). Don’t make messianic claims about your own unique talents and ability to solve all the problems. Also, make it clear that you value citizen input. Demonstrate good listening skills.
(3) Have an organization with no stated opinion on the issue organize the meeting. Often it will be a local civic organization. Don’t allow partisans to organize and control the meeting.
(4) Make sure that the venue is large enough to accommodate the expected audience size. Err on the size of caution. Better for the facility to be too large than too small.
(5) Distribute a copy of the ground rules, including expectations of citizen and public official behavior. You might use Robert’s Rules of Order. You might supplement Robert’s Rules with something else more specific.
(6) Have a sign in sheet where citizens can register their intention to speak, and have a neutral party chair the meeting and select the citizens from that list.
(7) Assign a time limit of, say, 3-5 minutes for each citizen on the list to speak. If they have more to say, ask them to provide their remarks in writing and make it part of the public record.
(8) Summarize the remarks of citizens at the end to make clear that you understood them, and demonstrate that you will give them serious research and thought.

Hope you realize the mess you've made

If these suggestions don’t work, it’s time to go into a new line of business.

Henry Louis Gates, Jr. or “Skip” Gates as he is known in these parts started at Pot. State (a fact noticeably whitewashed from his Wikipedia page), which was located a few miles away from his hometown of Piedmont. However, he had the “right stuff” and was able to defy the usual local gravity that forces earthward the academic trajectory. Not only did he grow at Pot., he actually went on from there to become the region’s most illustrious intellectual export. After spending a year at Pot., he transferred to Yale University and earned a bachelor degree Summa Cum Laude. He completed a doctorate at Cambridge University. He was hired by Harvard University and became, along with Cornell West, one of the premiere black intellectuals in America, helping to shape the field of Black Studies into what it is today. Over his academic career he has produced reams of books and articles and loads of cellulose, software, and web media. All of it top-notch, ground-breaking stuff.

For a region that produces below its quota of national talent (a few ballplayers, musicians, and a handful of movie actors) and no national caliber intellectual, Professor Gates is a much under-recognized and underappreciated role model. Low expectations, inadequate funding, and extracurricular activity that revolves largely around physical competition: marching, cheerleading, and sportsplay means that schoolchildren grow up and graduate without even hearing the name of Professor Gates. That’s a shame. Gates not only rose to national prominence but wrote an elegiac memoir about races and places, Colored People, that celebrated (and sometimes gently admonished) the region of his birth. He did so with style and sensitivity and without demonization and canonization.

This background makes the current brouhaha a little hard to decipher. The facts are relatively clear. Gates returns from an overseas trip. Fatigued and jetlagged, he finds that the front door of a home that he recently moved into is lodged shut. Understandably frustrated, he attempts without success to pry open the door. A neighbor reports the disturbance. An officer arrives and asks him for identification. Dr. Gates understandably irritated, provides proof and remonstrates. The officer after a period of verbal abuse understandably places Gates under arrest to restore order. A picture of the brouhaha conveys the depth of Gates’s indignation, which after the handcuffs are clasped has now become pure fury. That photo in one fell swoop undermines Dr. Gates’ argument that his exchange was low key.

Gates attacks!

There are a few issues that complicate matters here. A vast amount of commentator ink and presidential pabulum has been spent on the role, if any, of racial profiling in the case. Completely overlooked, however, is a more enduring principle at risk here. The proverbial expression “A man’s home is his castle” conveys the importance of government sensitivity to place and appreciation of the individual’s need for sanctuary and privacy in his home, a hallmark of the American legal system. Although order was restored in this situation and plenty of feelings were hurt in the process, do those who acquiesce to beating the drums for “law and order” or racial reductionism risk losing sight of the fact that special places require a gentle touch?

There's no place like home.