- Delivering Truth Around the World
Custom Search

Obamacare's Rocky Week

Ezra Klein's Wonkbook

Smaller Font Larger Font RSS 2.0

July 5, 2013

Welcome to Wonkbook, Ezra Klein and Evan Soltas’s morning policy news primer. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook’s Numbers of the Day: 160,000 and 7.5 percent. That’s what the consensus expects the Bureau of Labor Statistics to report for the monthly growth in payroll employment and the unemployment rate, respectively. The announcement comes out this morning.

Wonkblog’s Graphs of the Day: The latest data on employment-based health insurance, from the U.S. Census Bureau.

Wonkbook’s Top 5 Stories: 1) delaying Obamacare’s employer mandate; 2) oil and the economy; 3) BOLO, YOLO, and other acronyms; 4) immigration reform watch; and 5) spies, spies everywhere.

1) Top story: Much ado about the employer mandate

Health law penalty delay clouds individual mandate. “[B]y declining to enforce the rules on employers, the Obama administration might find it harder to carry out the individual mandate under which people must carry health insurance or pay a tax penalty…To get subsidized coverage on exchanges, people are supposed to show they can’t get employer-backed coverage. But without information from employers on their health-insurance offerings--or lack thereof--it isn’t clear how the Internal Revenue Service would determine an individual’s eligibility.” Louise Radnofsky, Anna Wilde Matthews and Christopher Weaver in The Wall Street Journal.

…It also emboldened Republicans. “Republican leaders of the House Energy and Commerce Committee demanded documents and other information from the Treasury secretary and the secretary of health and human services about the decision announced Tuesday to put off for a year, until 2015, the law's reporting requirements and penalties. Some Republicans said the White House was trying to help Democrats by postponing the changes until after the midterm elections, but others saw no gain for Democrats either way.” Jackie Calmes and Robert Pear in The New York Times.

Blows to health care law pile up, cutting its sweep. “While the unexpected move received attention, it is at least the third time that a development since the law’s passage has potentially limited the expansion of insurance. The two earlier snags involve Medicaid, a federal-state program for the poor, and the new health-insurance exchanges where individuals can buy coverage. The law was supposed to expand Medicaid to include more of the poorest Americans, but a Supreme Court ruling last year allowed states to opt out of that expansion; at least half are poised to do so.” Louise Radnofsky and Christopher Weaver in The Wall Street Journal.

Obama's legacy on the line as healthcare implementation challenges mount. “The delay in the healthcare employers mandate has dealt the Obama administration a black eye, at a time when the president desperately needs a political win. Political observers agreed that the decision to delay the mandate until 2015, which the administration announced on Tuesday, is a setback for Obama, who is currently attempting to shoehorn immigration reform legislation through the House to secure one of his legislative priorities in his second term.” Amie Parnes in The Hill.

National insurance plans slow to emerge under new health law. “National health insurance plans aimed at giving consumers more choice might be unavailable in some states next year, leaving residents with fewer options and potentially higher premiums. Such "multi-state" plans were included in the federal health law to boost competition among insurers, particularly in states with few carriers. They were also seen as a consolation to supporters of the failed effort to require a government-run "public option."… The law requires at least two national plans in every state within four years, overseen by the federal Office of Personnel Management, which will negotiate rates and contracts. The law says at least one of the multi-state insurers must be a nonprofit organization and at least one must not offer abortion services.” Julie Appleby in The Washington Post.

Does the Obama administration have the power to delay the employer mandate? “Section 1513 of the law, which lays out the employer mandate, states unambiguously that it is set to begin Dec. 31, 2013. However, that isn’t technically the part of the law that Mark J. Mazur, an assistant secretary in the Department of the Treasury, said was being deferred. It’s the reporting part. Here, the law begins to get fuzzy — which might be exactly why the administration is taking this roundabout path. They might think they have authority to suspend reporting but not the mandate.” Evan Soltas in Bloomberg.

In CT, it’s a struggle to launch Obamacare. “Facing tight deadlines and daunting workloads, states across the country are scaling back ambitions for implementing the Affordable Care Act. At a monthly board meeting of Connecticut's health insurance exchange, members of the standing-room-only crowd got a reminder that they, too, were behind schedule. The insurance marketplace they were working on nights and weekends won't be completely ready on time…When a consumer asks to be exempted from the individual mandate, for instance, the request will probably have to handled manually, by an exchange worker, rather than automatically, by a computer. Technology to track those points at which customers give up on the application process -- turning away from the Web site rather than completing the application -- will also wait until a later date.” Sarah Kliff in The Washington Post.

What the permanent ‘doc fix’ proposal does. “Congressional Republicans have proposed a permanent “doc fix,” which, in Beltway speak, refers to the annual ritual of suspending the formula and offsetting the added spending elsewhere in the budget. The new proposed fix has three stages. First, it would freeze increases in physician reimbursements for several years. Second, the Medicare physician payment formula would change to include measures of care quality. Third, physicians would be able to switch into “alternative payment models” that make more drastic changes to Medicare’s payment model.” Evan Soltas in Bloomberg.

ORSZAG: Obama makes wise choice to delay employer mandate. “The Barack Obama administration should be commended for delaying implementation of the employer mandate under the Affordable Care Act. The delay won't do much damage — other than perhaps symbolically — to the effort to expand insurance coverage, and it allows the administration to focus on more pressing issues in carrying out the law.” Peter Orszag in Bloomberg.

WELCH: A diagnosis of insufficient outrage. “Recent revelations should lead those of us involved in America's health care system to ask a hard question about our business: At what point does it become a crime?…Medical care is intended to help people, not enrich providers. But the way prices are rising, it's beginning to look less like help than like highway robbery. And the providers -- hospitals, doctors, universities, pharmaceutical companies and device manufactures -- are the ones benefiting.” H. Gilbert Welch in The New York Times.

MARCUS: The real hurdles in Obamacare. “[O]f all the headaches facing Obamacare, the employer mandate isn't close to the most throbbing…At the same time, the precise structure of the federal employer mandate is ungainly -- or, less charitably, dumb. It kicks in for employees working more than 30 hours a week. Employers may be tempted to game the system -- and hurt workers -- simply by reducing hours, converting full-time employees to part-timers.” Ruth Marcus in The Washington Post.

Music recommendations interlude: U2, “4th of July,” 1984.

Top op-eds

KRUGMAN: E pluribus unum. “[T]hat very hypocrisy is, in a way, a good sign. The wealthy may defend their privileges, but given the temper of America, they have to pretend that they're doing no such thing. The block-the-vote people know what they're doing, but they also know that they mustn't say it in so many words. In effect, both groups know that the nation will view them as un-American unless they pay at least lip service to democratic ideals -- and in that fact lies the hope of redemption.” Paul Krugman in The New York Times.

DIONNE: A call for national service. “Last week, the Aspen Institute gathered a politically diverse group of Americans under the banner of the "Franklin Project," named after Ben, to declare a commitment to offering every American between the ages of 18 and 28 a chance to give a year of service to the country. The opportunities would include service in our armed forces but also time spent educating our fellow citizens, bringing them health care and preventive services, working with the least advantaged among us, and conserving our environment. Service would not be compulsory, but it would be an expectation. And it just might become part of who we are.” E.J. Dionne in The Washington Post.

STIGLITZ: The free-trade charade. “Given this recent history, it now seems clear that the negotiations to create a free-trade area between the US and Europe, and another between the US and much of the Pacific (except for China), are not about establishing a true free-trade system. Instead, the goal is a managed trade regime - managed, that is, to serve the special interests that have long dominated trade policy in the West.” Joseph E. Stiglitz in Project Syndicate.

BARTLETT: Zero-based tax reform. “[T]he senators say they will maintain the existing progressivity of the tax code. This puts a severe constraint on their efforts, because tax expenditures are not evenly distributed across income classes, nor is the burden of taxation. What appears fair at first glance may be grossly unfair when thinking the issue through.” Bruce Bartlett in The New York Times.

Happy Fourth interlude: The Founding Fathers, in one chart.

2) It’s nice to have the oil

U.S. crude prices top $100 a barrel. “U.S. crude oil prices jumped over the $100 a a barrel level for the first time since last September on Wednesday, driven higher by a drop in domestic inventories and worries about instability in Egypt…The price for a barrel of WTI crude for delivery in August climbed $1.64, or 1.6 percent, to $101.24 on the New York Mercantile Exchange, the highest closing price since May 3, 2012.” Steven Mufson and Katerina Sokou in The Washington Post.

…But rising U.S. output gives energy policymakers more options. “Crude prices have remained remarkably stable over the past year in the face of a long list of supply disruptions, from Nigerian oil theft and Syrian civil war to an export standoff between Sudan and South Sudan. The reason in large part is a thick new blanket of North American oil cushioning the markets. This has “moderated” the market effect of recent outages, said Adam Sieminski, administrator of the U.S. Energy Information Administration. The new supply isn’t yet pushing prices lower, and analysts differ over whether it will. But it is acting as a shock absorber in a global supply chain that pumps 88 million barrels of oil to consumers each day…And in a less-noticed effect, it provides new geopolitical leverage to the U.S.” Chip Cummins and Russell Gold in The Wall Street Journal.

Big news in monetary policy: ECB, Bank of England join in on ‘forward guidance.’ “In policy meetings Thursday, European Central Bank and the Bank of England both took a decisive step toward telling markets what they expect to do in the future: Namely, "forward guidance" that they intend to keep near-zero interest rate policies in place for quite a while to come. It is an effort to change expectations, to push back against the idea that those central banks will get into interest-rate-hiking mode the minute their economies start to improve.” Neil Irwin in The Washington Post.

It’s steady as she goes in the labor market. “Two gauges of the labor market showed steady, if unspectacular, strength Wednesday, ahead of a payroll report Friday that could signal the immediate future of one of the Federal Reserve’s easy-money policies. Private-sector jobs in the U.S. increased by 188,000 in June, according to a national employment report calculated by payroll processor Automatic Data Processing Inc. and forecasting firm Moody’s Analytics. Economists surveyed by Dow Jones Newswires expected ADP to report a June increase of 160,000 private jobs.” Kathleen Madigan, Jeffrey Sparshott and Sarah Portlock in The Wall Street Journal.

…And, in some areas, it looks pretty rosy. “Wednesday, a weekly government tally of the number of people claiming unemployment benefits for the first time inched down to 343,000. Four years ago, that number was more than 600,000…Analysts expect that the government's report on Friday will show the economy added 160,000 jobs and the unemployment rate dipped to 7.5 percent. That pace would be in line with previous months and indicate continued, but slow, economic expansion.” Ylan Q. Mui in The Washington Post.

But exports aren’t doing so hot. “U.S. imports jumped in May, reflecting an emerging rebound in American demand for foreign products other than oil. At the same time, a continued softening in U.S. exports highlighted the global troubles weighing on American firms trying to sell their goods abroad while demand from key trading partners falters. The weakness in American exports represents a mounting headwind for the U.S. economy, primarily due to a prolonged recession in Europe and China’s slowdown from its previous breakneck growth rate. Exports, which helped power the early stages of the economic recovery, had supported U.S. growth until a year ago.” Jonathan House and Eric Morath in The Wall Street Journal.

Beautiful interlude: Don’t walk into the light. Play with the light.

3) BOLO, YOLO, and other acronyms

What does ‘BOLO’ stand for? “Democrats are now questioning the Treasury inspector general's audit in light of the new IRS documents, which show that terms such as "progressive," "health care legislation" and "medical marijuana" appeared on a multipart "Be on the Lookout" list, or BOLO, that helped agents determine which groups deserved additional screening.” Josh Hicks in The Washington Post.

IRS scrutiny went beyond political. “Organizations approached by The New York Times based on specific "lookout list" warnings, like advocates for people in "occupied territories" and "open source software developers," told similar stories of long waits, intrusive inquiries and bureaucratic hassles that pointed to no particular bias but rather to a process that became too rigid and too broad. The lists often did point to legitimate issues: partisan political campaign organizations seeking tax-exempt status, or commercial businesses hoping to cloak themselves as nonprofit groups. But even I.R.S. officials say lookout list warnings were often pursued in a ham-handed or overly rigid way.” Jonathan Weisman in The New York Times.

Inspiring interlude: Who’s the chess master now?

4) Immigration reform watch

Meet Rep. Blake Farenthold. “Mr. Farenthold embodies the challenge for advocates of major immigration changes as they press the issue in the House. Even though he represents a district with a significant population of Hispanics, he has strong reservations about providing a path to full citizenship for unauthorized immigrants, a provision that backers of the Senate measure consider a condition of their support. Mr. Farenthold instead favors what he calls "earned legalization" -- a process in which immigrants would have to meet a series of conditions for remaining in the United States. Immigration advocates say that approach would create a second class of people who could never become citizens.” Ashley Parker in The New York Times.

Tech lobby refocuses immigration effort. “ fumbled badly. Its stated goal was to overhaul immigration law. But its first steps included financing flashy, campaign-style television ads for conservative lawmakers, whose votes were seen as crucial to passing an immigration bill in the Senate. The ads promoted their pet conservative causes, including the Keystone XL pipeline. immediately lost many of its existing and would-be supporters in the valley. Now the group is trying to turn around its image as it gears up for the fight for immigration overhaul in the House.” Somini Sengupta in The New York Times.

This is bizzare interlude: Rare parrot sexually assaults nature photographer on BBC television.

5) The world is full of spies

An economic primer for espionage. “Most such espionage is a complete waste of time - and a good way to undermine relationships between countries. To help spies - and everyone else listening in on our phone calls - prioritize their use of scarce resources and do something constructive with their time, we offer this brief primer on where the intelligence services should focus their attention in the economic realm.” Francis Boone and Simon Johnson in The New York Times.

France spies too. “Days after President Francois Hollande sternly told the United States to stop spying on its allies, the newspaper Le Monde disclosed on Thursday that France has its own large program of data collection, which sweeps up nearly all the data transmissions, including telephone calls, e-mails and social media activity, that come in and out of France. Le Monde reported that the General Directorate for External Security does the same kind of data collection as the American National Security Agency and the British GCHQ, but does so without clear legal authority.” Steven Erlanger in The New York Times.

Snowden is being denied by country after country for asylum. “Italy and France joined a growing list of countries that won’t grant asylum to Edward Snowden, as the former National Security Agency contractor searches for a new home after leaking classified U.S. intelligence…Mr. Snowden has asked more than 20 countries to grant him protection from the U.S. government’s efforts to bring him in to face charges of handing classified information to journalists in order to expose secret surveillance programs.” Dion Nissenbaum in The Wall Street Journal.

Attack of the drones? “As Congress considers a new immigration law that would expand the fleet of unmanned drones along the border, the agency in charge of border protection is increasingly offering the military-grade drones it already owns to domestic law enforcement agencies and has considered equipping them with "nonlethal weapons," according to documents recently made public. The documents, which include flight logs over the last three years, were unearthed by the Electronic Frontier Foundation through a Freedom of Information lawsuit.” Somini Sengupta in The New York Times.

Snowden, the hacker. “Mr. Snowden's resume, which has not been made public and was described by people who have seen it, provides a new picture of how his skills and responsibilities expanded while he worked as an intelligence contractor. Although federal officials offered only a vague description of him as a "systems administrator," the resume suggests that he had transformed himself into the kind of cybersecurity expert the N.S.A. is desperate to recruit, making his decision to release the documents even more embarrassing to the agency.” Christopher Drew and Scott Shane in The New York Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

In Connecticut, a struggle to launch Obamacare. Sarah Kliff.

Boom! The ECB and Bank of England join the 'forward guidance' party. Neil Irwin.

The Founding Fathers, in one chart. Brad Plumer.

Happy Fourth! Good luck paying for that parade. Lydia DePIllis.

Et Cetera

Concealed-carry gun permit applications are shooting through the roof. Jack Nicas and Ashby Jones in The Wall Street Journal.

Meet Warren Mosler, a deficit lover with a following. Annie Lowrey in The New York Times.

Lawmakers remain divided on same-sex marriage. Curtis Tate in The Washington Post.

Student loans caught in Capitol crossfire. Josh Mitchell in The Wall Street Journal.

Got tips, additions, or comments? E-mail me.

Wonkbook is produced with help from Michelle Williams.