Three big problems with Trump’s new NAFTA plan

Source: Iván Farías Pelcastre, Scott Lucas, The Conversation, July 25, 2017

The Trump administration has outlined its plans to renegotiate the North American Free Trade Agreement (NAFTA). It says the US will seek a “much better” agreement that reduces the trade deficit between the US and its partners, Canada and Mexico. In response, the two countries released brief statements welcoming the proposal. They say they consider a possible renegotiation as a step towards modernising NAFTA to address the new realities and challenges of the 21st century.

Despite these good intentions and purported goodwill, the US objectives for a revised NAFTA are unachievable. Three problems with the US negotiating position reveal the limited understanding of Donald Trump, the US trade representative, Robert Lighthizer (who will lead the negotiations), and their advisers about NAFTA and its side agreements…..

The Effects of the Affordable Care Act on Health Insurance Coverage and Labor Market Outcomes

Source: Mark Duggan, Gopi Shah Goda, Emilie Jackson, National Bureau of Economic Research, NBER Working Paper No. 23607, July 2017
(subscription required)

From the abstract:
The Affordable Care Act (ACA) includes several provisions designed to expand insurance coverage that also alter the tie between employment and health insurance. In this paper, we exploit variation across geographic areas in the potential impact of the ACA to estimate its effect on health insurance coverage and labor market outcomes in the first two years after the implementation of its main features. Our measures of potential ACA impact come from pre-existing population shares of uninsured individuals within income groups that were targeted by Medicaid expansions and federal subsidies for private health insurance, interacted with each state’s Medicaid expansion status. Our findings indicate that the majority of the increase in health insurance coverage since 2013 is due to the ACA and that areas in which the potential Medicaid and exchange enrollments were higher saw substantially larger increases in coverage. While labor market outcomes in the aggregate were not significantly affected, our results indicate that labor force participation reductions in areas with higher potential exchange enrollment were offset by increases in labor force participation in areas with higher potential Medicaid enrollment

A Brief History of American Health Reform

Source: Colin Gordon, Jacobin, July 25, 2017

In order to win universal health care, we have to understand what — and who — we’re up against. ….

….In health care, private providers and private financing mechanisms were well ensconced long before any meaningful public intervention. The stakes are very high and, historically, a diverse array of private health interests have spent lavishly on political campaigns, and haunted congressional hearings and anterooms. But what has shaped health policy, and stymied reform for the last century, is not so much the combined clout of private interests as it is the tangle of compromise and competition that’s emerged from the scrum as they jockey for influence over policy, for advantage over each other, and for unfettered access to public spending.

Over the last century, the terms of that corporate compromise have been altered through changes in medical care, and changes in the ways medical care is sold, underwritten, packaged, subsidized, regulated, and consumed. The influence of private interests has persisted but, from the first consideration of “health security” in the Progressive Era to the tortuous repeal of the Affordable Care Act over the last few months, which interests have weighed in — or prevailed — has shifted.

Tracing those shifts (sometimes subtle, sometimes profound) is important not just to our understanding of the history, but also to our efforts to win a more just health system…..

The Better Care Reconciliation Act: Economic and Employment Consequences for States

Source: Leighton Ku, Erika Steinmetz, Erin Brantley, Nikhil Holla, Brian Bruen, Center for Health Policy Research, Department of Health Policy and Management, Milken Institute School of Public Health, George Washington University, July 2017

From the abstract:
Issue: A draft Better Care Reconciliation Act (BCRA) has been introduced in the U.S. Senate as an alternative to the American Health Care Act (AHCA), which was passed by the House of Representatives on May 4, 2017. The Congressional Budget Office estimates the BCRA would raise the number of uninsured by 22 million by 2026.

Goal: To determine the consequences of the draft BCRA on employment and economic activity in every state. This report updates an earlier analysis of the effects of the AHCA.

Methods: We compute changes in federal spending and revenue from 2018 to 2026 for each state and use the PI+ model to project the effects on states’ employment and economies.

Findings and Conclusions: While the draft BCRA and the AHCA would have similar effects on the number of uninsured Americans, the BCRA would lead to significantly larger job losses and deeper reductions in states’ economies by 2026. A brief spurt in employment would add 753,000 more jobs in 2018, but employment would then deteriorate sharply. By 2026, 1.45 million fewer jobs would exist, compared to levels under the current law. Every state except Hawaii would have fewer jobs and a weaker economy. Employment in health care would be especially hard hit with 919,000 fewer health jobs, but other employment sectors lose jobs too. Gross state products would be $162 billion lower in 2026. States that expanded Medicaid would be especially hard hit.

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Appendices

How killing the ACA could lead to more opioid deaths in West Virginia and other Trump states

Source: Simon Haeder, The Conversation, July 24, 2017

…. While the exact nature of Republican repeal-and-replace efforts remains unclear at this moment, all proposals made public so far would pose enormous challenges for states like West Virginia to turn the tide on the devastating opioid epidemic.

One of the most essential tools in fighting the epidemic, the expansion of Medicaid, would be rolled back either immediately or over several years. Furthermore, the entire Medicaid program, the backbone of states’ efforts to provide treatment and services for opioid addiction treatment, would be further curtailed by per capita caps.

Moreover, all proposals would either outright eliminate or allow states to waive the crucial Essential Health Benefit provisions. These provisions require insurers to provide coverage for certain specified conditions, such as pregnancy, addiction treatment and emergency room care, that they might otherwise refuse to cover because of their costs.

Under certain proposals, lifetime and annual limits could also affect those covered by employer-provided insurance to lose access to crucial treatment options. ….

Federal Share of State Revenue Rises as Medicaid Grants Expand

Source: Phillip Oliff, Justin Theal, and Brakeyshia Samms, The Pew Charitable Trusts, States’ Fiscal Health, July 25, 2017

The share of states’ revenue made up by federal dollars rose in fiscal year 2015, capturing the first full year of expanded Medicaid eligibility in some states. The federal government provided 31.9 percent of 50-state revenue in fiscal 2015—the third-largest share on record—up from 30.7 percent in fiscal 2014.
For a second consecutive year, federal dollars as a share of state revenue increased in a majority of states—29 in fiscal 2015. Health care grants have been the main driver of increases in federal funding to states in recent years.

Federal grants to states rose 10.2 percent in fiscal 2015, outpacing overall revenue growth of 6.3 percent. The $55 billion increase in federal funds boosted the share of state revenue coming from the U.S. government to its third-highest level since at least 1961. The federal share of state revenue, however, was still lower than just after the Great Recession, when an influx of economic stimulus dollars and falling state tax revenue increased the federal share to 35.5 percent in fiscal 2010 and 34.7 percent in fiscal 2011. Declines in the federal share after fiscal 2010 reflected the phasing out of stimulus funds and the recovery of states’ tax collections. Changes in either revenue source affect the ratio of federal to total dollars.

Flurry of Laws Enacted on Women’s Access to Health Care

Source: Christine Vestal, Stateline, July 24, 2017

As Washington moved to reduce federal funding for women’s health this year, adversaries in the war over affordable birth control and other women’s health services shifted the battleground to state capitals — resulting in a spate of new laws that both expand and contract women’s access to care.

It happened quickly in Iowa. In May, then-Gov. Terry Branstad, a Republican, signed a bill defunding Planned Parenthood. Medicaid dollars stopped flowing to the group July 1, and four of the state’s Planned Parenthood clinics closed within a week.

That left nearly 15,000 women in small communities without access to reproductive health services, including cancer screenings, birth control, testing for and treatment of sexually transmitted diseases, and annual checkups. ….

….In December, President Barack Obama signed a Health and Human Services rule clarifying that states could not block funding to health care providers for purely political reasons. But that policy was quickly reversed when Trump took office…..

…..At the same time, Republicans in Congress repeatedly have called for elimination of the roughly $300 million federal grant program known as Title X that funds Planned Parenthood and other local family planning clinics.

And in May, a leaked Health and Human Services proposal revealed that the Trump administration intends to undo a provision in the federal health law that requires nearly all employers to include coverage of all forms of contraception in their employee health plans. If the proposal takes effect, it would make it easy for employers to opt out of coverage of contraception for religious or moral reasons…..

For U.S. State And Local Governments, The Resilient But Shallow Expansion Complicates Budget Management

Source: S&P Global Ratings, Credit Conditions, July 24, 2017
(subscription required)

When it comes to the outlook for economic growth, U.S. state and local governments can expect the now long but shallow expansion to persist, according to S&P Global Ratings’ updated forecast. Considering GDP, the broadest measure, the pace of the expansion is likely to remain subdued, with growth of 2.2% in 2017 and 2.3% in 2018. On a more positive note, the estimated probability of a recession within the next 12 months was lowered in the forecast to 15% to 20% from 20% to 25%. The adjustment reflects that the risk of a federal policy mishap appears to have receded a bit. Putting it all together: the forecast suggests that a relatively benign if somewhat uninspired economic backdrop is taking shape for fiscal year 2018, which began on July 1 for most local governments and 46 states.

Various measures of economic sentiment, such as business confidence, that were decidedly upbeat after the 2016 presidential election, have begun falling into alignment with the “hard” data indicators. And with unemployment at a low 4.4%, state and local governments can expect the monthly pace of job creation to slow. The economic forecast no longer assumes Congress and the administration will enact a public infrastructure-spending bill. Without the potential bump in growth from a federal infrastructure package, the forecast for 2017 GDP growth was lowered to 2.2% from 2.3%. Crucially for the municipal sector, we continue to expect solutions to the problem of deferred maintenance and inadequate capacity in public infrastructure will depend heavily on strategies developed at the state and local government levels.

Overview:

  • Economic growth, as measured by real GDP, will increase at a subdued 2.2% in 2017 and 2.3% in 2018;
  • The risk of a recession within the next 12 months has fallen to 15% to 20% from 20% to 25%;
  • There will be no federally funded public infrastructure package this year or next;
  • and The Mountain region will have the fastest growing economy while the Mid-Atlantic will be slowest.
  • H.R. 1628, Better Care Reconciliation Act of 2017

    Source: Congressional Budget Office, Cost Estimate, July 26, 2017

    From the summary:
    Selected provisions of an amendment in the nature of a substitute (ERN17500), as requested by the Democratic staff of the Senate Committee on Finance and the Senate Committee on Health, Education, Labor, and Pensions hr1628selectedprovisions.pdf View Document 107.21 KB Summary Three tables: Table 1. Estimate of the direct spending and revenue effects of selected provisions from H.R. 1628 Table 2. Estimate of the net budgetary effects of the insurance coverage provisions of selected provisions from H.R. 1628 Table 3. Effects of selected provisions from H.R. 1628 on health insurance coverage for people under age 65

    Related:
    H.R. 1628, American Health Care Act of 2017
    Source: Congressional Budget Office, Cost Estimate, June 26, 2017

    The Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) have completed an estimate of the direct spending and revenue effects of the Better Care Reconciliation Act of 2017, a Senate amendment in the nature of a substitute to H.R. 1628. CBO and JCT estimate that enacting this legislation would reduce the cumulative federal deficit over the 2017-2026 period by $321 billion. That amount is $202 billion more than the estimated net savings for the version of H.R. 1628 that was passed by the House of Representatives. The Senate bill would increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law, slightly fewer than the increase in the number of uninsured estimated for the House-passed legislation. By 2026, an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law. Following the overview, this document provides details about the major provisions of this legislation, the estimated costs to the federal government, the basis for the estimate, and other related information, including a comparison with CBO’s estimate for the House passed act.

    H.R. 1628: The American Health Care Act (AHCA)
    Source: Annie L. Mach, Congressional Research Service, CRS Report, R44785, May 4, 2017

    ….This report contains three tables that, together, provide an overview of all the AHCA provisions. Table 1 includes provisions that apply to the private health insurance market, Table 2 includes provisions that affect the Medicaid program, and Table 3 includes provisions related to public health and taxes. Each table contains a column identifying whether the AHCA provision is related to an ACA provision (e.g., whether it repeals an ACA-related provision). In addition to the three tables, the report includes more detailed summaries of each AHCA provision, and two graphics showing the effective dates of AHCA provisions. Figure 1 covers AHCA provisions related to the private health insurance market, public health, and taxes. Figure 2 covers AHCA provisions related to the Medicaid program…..

    H.R. 1628, American Health Care Act of 2017
    Source: Congressional Budget Office, Cost Estimate, May 24, 2017

    From the summary:
    CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting the legislation—which would repeal or modify many provisions of the Affordable Care Act—would reduce federal deficits by $119 billion over the coming decade.

    CBO and JCT estimate that in 2018, 14 million more people would be uninsured under the legislation than under current law. After additional changes to subsidies for insurance purchased in the nongroup market and to the Medicaid program took effect, the increase in the number of uninsured people would rise to 19 million in 2020 and then to 23 million in 2026.