Dec. 2, 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.

HealthCare.gov is clearly working better. But is it actually working? It depends on how you read the data.

A report released by the Obama administration this weekend shows the consumer experience is clearly improved. More than 400 of the 600 fixes on the administration's "punchcard" of repairs have been made. System response time has fallen from eight seconds to less than one second. The administration believes HealthCare.gov can now handle 50,000 concurrent users. The site, which was down 55 percent of the time in early November, is now functional more than 90 percent of the time.

Of course, that means the site still suffers a disastrous outage rate judged by the standards of major retail Web sites -- and that's not counting the time it spends down for scheduled maintenance. We have no idea whether the 200 fixes left on the list are the really important ones, or the really difficult ones. We don't know what percentage of people who begin an application suffer some failure before completion. The administration hasn't released information on the error rate in the eligibility determinations or the transmissions to insurers, so it's impossible to judge whether the site's critical back-end functions are reliable. And there are important pieces of the site, like the payment mechanisms, that have yet to be built.

So there remain reason for concern. But here's what's indisputable: HealthCare.gov is improving, and fast. Or, to put it differently, HealthCare.gov will be fixed. In fact, for most people, it is probably fixed now, or will be fixed quite soon.

The repair job is likely proceeding quickly enough to protect Obamacare from the most severe threat to its launch: Democrat-backed legislation unwinding the individual mandate or other crucial portions of the law. So long as people can actually purchase insurance through the federal exchanges, congressional Democrats are likely to support the basic architecture of the legislation they passed in 2010.

Republicans realize the Web site is quickly improving, and are planning a multi-phase attack on the law's other disruptions. There are the insurance cancellations, of course, but there also going to be people who happily buy new insurance only to find their doctor isn't covered, and there will be people who end up paying higher premiums in the new market, and there will be employers who raise deductibles to keep from paying the 2018 tax on high-value insurance plans, and so on.

Unlike HealthCare.gov's technical problems, most of these issues will be part of the law working as it's supposed to work rather than the law failing to work as it's supposed to work. Tighter care networks, for instance, are part of how insurers will cut costs and increase quality in a more competitive market. As Dan Diamond writes, "insurers say that limiting the size of the network allows them to steer patients to high-quality facilities and doctors; participating providers, meanwhile, may agree to price cuts in exchange for new volumes." It's exactly what Republicans hoped would happen in health-insurance exchanges -- an idea they thought of, and still support for Medicare.

Change hurts, particularly in health-care insurance, and it may well hurt Democrats in 2014. But Obamacare is now moving from unexpected problems that threaten the law to predictable disruptions that are, in many cases, intended by the law. And the Obama administration will have three full years to create millions, and perhaps tens of millions, of winners who are getting insurance or protection through the law. As in 2010, they may well lose on the politics in the midterm election even as they win on the policy in the long term.

Wonkbook's Number of the Day: 90 percent. That's the share of the day, not counting scheduled maintenance, that Healthcare.gov is now functioning, according to a new report. It's up from 43 percent in the first week of November.

Wonkbook's Graph of the Day: Healthcare.gov performance figures from the Centers for Medicare and Medicaid Services.

Wonkbook's Top 5 Stories: (1) the state of Healthcare.gov; (2) raising the minimum wage; (3) financial regulators are doing their jobs; (4) Big Law dying, top court crying; and (5) Today in bad bets: counting on Congress.

1. Top story: A health checkup for Healthcare.gov

Healthcare.gov meets deadline for fixes, Obama administration says. "The Obama administration said Sunday that it had met its goal of improving the online health-insurance marketplace so that it works well for the vast majority of users but acknowledged it still has extensive work to do to buttress a troubled Web site that has marred the rollout of President Obama's signature health-care initiative. After a series of technical fixes and capacity upgrades, many of which were made over the past week, HealthCare.gov is now working more than 90 percent of the time -- a big improvement over October, when the site was operating only about 43 percent of the time and frequently crashed, said Jeffrey Zients, the administration official overseeing the improvements." Sandhya Somashekhar and Lena H. Sun in The Washington Post.

Primary source: The White House declares victory in new progress report on Obamacare. Sarah Kliff in The Washington Post.

The White House says it met its Obamacare goal. There's still more work ahead. "The metrics the Obama administration released Sunday focused on the front end of the system, the wait times and outages that consumers experience. There were no details yet on the back end of the system, the part that sends out enrollment data to insurance plans when someone signs up for their products. When HealthCare.gov launched, insurance plans say that they were getting inaccurate "834 transmissions," the files that tell them who signed up. Bataille said that fixes implemented Saturday night were aimed at improving the accuracy of the 834 transmissions. But the administration has not given an error rate or other, specific metric to measure how quickly those are improving." Sarah Kliff in The Washington Post.

Key longread: Inside the race to rescue Healthcare.gov. "As a small coterie of grim-faced advisers shuffled into the Oval Office on the evening of Oct. 15, President Obama's chief domestic accomplishment was falling apart 24 miles away, at a bustling high-tech data center in suburban Virginia...For 90 excruciating minutes, a furious and frustrated president peppered his team with questions, drilling into the arcane minutiae of web design as he struggled to understand the scope of a crisis that suddenly threatened his presidency...Out of that tense Oval Office meeting grew a frantic effort aimed at rescuing not only the insurance portal and Mr. Obama's credibility, but also the Democratic philosophy that an activist government can solve big, complex social problems." Sheryl Gay Stolberg and Michael D. Shear in The New York Times.

David Plouffe says Obamacare will work really well by 2017. ""This program was designed to be implemented by the states. And in most of the states that are running their exchanges it's going quite well," Plouffe told ABC's George Stephanopoulos. "You talked about Medicaid expansion. I think it's just a fact, and it may take until 2017 when this president leaves office, you're going to see almost every state in this country running their own exchanges eventually and expanding Medicaid. And I think it'll work really well then."" Imtiyaz Delawala in ABC News.

@MikeGrunwald: It's [past] December 1, so if every American doesn't have perfect insurance that covers everything cheap, we scrap Obamacare immediately.

The biggest news in the Healthcare.gov report was how bad the site was. "According to the Healthcare.gov Progress and Performance Report, the site was offline more than it was online in at the start of November...People trying to use the site in October had an "unacceptable user experience marked by very slow response times, inexplicable error messages, and system outages," he said. In addition to the increase in uptime since then, load time and error rates have been markedly decreased." Garance Franke-Ruta in The Atlantic.

Democrats optimistic about HealthCare.gov fixes, Republicans skeptical. ""This is the equivalent of having a great item that you want to buy in the store but not being able to get though the front door," Sen. Robert Menendez (D-N.J.) said on CBS's "Face The Nation." "It sounds like the front door has been opened successfully now." Sen. Bob Corker (R-Tenn.) said on the same program that he hopes "the efficacy of this is much better today and will improve." But he added that he thinks Americans will encounter "a lot of negative surprises" as they enroll in plans offered on the new health-care exchanges." Sean Sullivan in The Washington Post.

Insurers are still pushing for the ability to bypass Healthcare.gov. "The U.S. has begun a pilot program with insurers in three big states--Florida, Ohio and Texas--to identify problems in the current system, in which insurance companies still have to send would-be customers briefly to the HealthCare.gov site to verify their eligibility for financial assistance, where many have become stuck. The government describes the direct-signup effort as a way to give consumers more choice in gaining coverage. The Centers for Medicare and Medicaid Services also is trying to develop a formula that could be used by the administration's call centers and other enrollment workers to calculate the value of tax credits for some people with straightforward circumstances, to relieve pressure on the website, said people familiar with the effort." Louise Radnofsky, Amy Schatz, and Spencer E. Ante in The Wall Street Journal.

@davidfrum: Now that the Obamacare website is fixed, I can quickly and conveniently pay 33% more for my health insurance!

Meanwhile in health policy: Sandy Hook spurs states' mental health push. "At least 37 states have increased spending on mental health in the year since Adam Lanza shot dead 20 children, six school employees and his mother in Newtown, Conn. It's not just about money, either. States are experimenting with new -- and sometimes controversial -- ways to raise awareness about psychological distress, to make treatment more accessible for children and adults and to keep firearms away from those struggling with mental illness. Nevada, for instance, is launching a pilot program to screen children in secondary schools for mental health concerns. Texas not only boosted mental health funding by a record $300 million over two years, but required public school teachers and students to be trained in recognizing mental illness. Utah will require school districts to offer parents an annual seminar on mental health, including depression and suicide. Colorado established a 24-hour crisis hotline." Stephanie Simon in Politico.

...More: Unions target hospitals. "The nation's largest health-care union is threatening to mount ballot initiatives in California and Oregon. Proposed measures in both states would cap executive pay and limit how much hospitals can charge consumers. Both sides say they are prepared to spend millions on opposing campaigns if the measures get on the ballots in November 2014...But before it gets to that point, the Service Employees International Union said it could back off if the industry agrees to work with the union." Kris Maher in The Wall Street Journal.

PHILIP KLEIN: No, Obamacare isn't fixed. "[I]t's hard for outside observers to declare this a success based on this blitz of numbers, because at the start of the repair process, HHS never provided the public with specific goalposts against which the site's progress should be judged. HHS never said, for instance, "In the next month, our goal is to complete these 400 software fixes" or "the site should only be down x percent of the time." What information HHS did provide its new report isn't very impressive if the comparison is with a typical commercial website rather than against the basket case that was healthcare.gov in October." Philip A. Klein in The Washington Examiner.

SUDERMAN: Problems further down the pipe? "There are plenty more opportunities for technical troubles down the line, particularly because when administration officials say the website is working better, they mean the portion of the website that's actually been built. Yet by the reckoning of a senior Obamacare tech official, some 30 to 40 percent of the exchange functionality has yet to been constructed, including some of the crucial insurer payment systems." Peter Suderman in Reason.

Music recommendations interlude: The Morning Benders, "Wet Cement."

Top opinion

DUBE: The minimum we can do. "Moderate increases in the minimum wage, in other words, can reduce vacancies and turnover instead of killing jobs. In a follow-up study using our bordering areas methodology, we provide empirical evidence for this argument: while overall employment in low-wage sectors does not change much following a minimum-wage increase, worker turnover falls sharply as workers stay with their jobs longer." Arindajit Dube in The New York Times.

KRUGMAN: Better pay now. "Who gets paid this low minimum? By and large, it's the man or woman behind the cash register: almost 60 percent of U.S. minimum-wage workers are in either food service or sales. This means, by the way, that one argument often invoked against any attempt to raise wages -- the threat of foreign competition -- won't wash here: Americans won't drive to China to pick up their burgers and fries." Paul Krugman in The New York Times.

COLL: A higher calling. "In 2005, Alaska Airlines fired nearly five hundred union baggage handlers in Seattle and replaced them with contractors. The old workers earned about thirteen dollars an hour; the new ones made around nine. The restructuring was a common episode in America's recent experience of inequality. In the decade after 2000, Seattle's median household income rose by a third, lifted by the stock-vested, Tumi-toting travellers of its tech economy. But at the bottom of the wage scale earnings flattened." Steve Coll in The New Yorker.

KLEIN: Racism isn't over. But policymakers from both parties like to pretend it is. "The belief that racism is over has a clear policy implication: Policy can go directly from being extremely racist to being completely colorblind. There doesn't need to be an ongoing period in which policy compensates or otherwise helps the group that was previously being held back by policy...It's easy to say that racism isn't over. It's harder to face up to the policy implications of that. The question for the RNC -- and, for that matter, for the DNC -- is if the fight against racism is ongoing, how should policy reflect that? When it gets down to that tangible level, this isn't a conversation the Democratic Party is much more comfortable with than the Republican Party." Ezra Klein in The Washington Post.

BERNSTEIN: Paths to full employment. "It's widely agreed that the Federal Reserve is the lender of last resort and that having such a function is essential in modern economies. Well, here's what should be equally essential: the government as employer of last resort. That is, just as the Fed's powers must be invoked when credit markets fail, so must the government's when labor markets fail to create the quantity of jobs necessary to employ American labor resources." Jared Bernstein in The New York Times.

PONNURU: A war on contraception? No, an attack on religion. "What's actually new here is the Obama administration's 2012 regulation requiring almost all employers to cover contraception, sterilization and drugs that may cause abortion. It issued that regulation under authority given in the Obamacare legislation. The regulation runs afoul of the Religious Freedom Restoration Act, a Clinton-era law. That act says that the government may impose a substantial burden on the exercise of religious belief only if it's the least restrictive way to advance a compelling governmental interest. The act further says that no later law should be read to trump this protection unless it explicitly says it's doing that. The Affordable Care Act has no such language." Ramesh Ponnuru in Bloomberg.

O'HOLLERAN: Gun control can win elections. "[P]ublic polling showed widespread support for sensible gun-safety laws, as did our own polling. Hence, more than a year out from Election Day, dealing with gun violence was a fundamental messaging point for Herring...The painful and numbing record of senseless gun violence -- from Columbine High School in Colorado to Virginia Tech to Newtown, Conn., and, during the heart of the fall campaign, the Navy Yard shooting -- was the real determinant of voters' sentiments. Our campaign pointed out the contrast." Kevin O'Holleran in The Washington Post.

KONCZAL: Colleges are teaching economics backwards. "What if macroeconomics came first, before the study of individual markets? If were to reverse the typical curriculum, the first thing undergraduates would encounter wouldn't be abstract theories about people optimizing, but instead the idea of involuntary unemployment and the idea that the economy could operate below its potential. They'd study the economy in the short-run before going to issues of long-term growth, with professors having to explain the theories on how the two are linked, bringing in crucial concepts like hysteresis. Then, in the second class, they would get to microeconomics. But that too would be taught backwards. They'd start with institutions, understanding what enables a market economy to exist. Then they'd move on to the issue of firms with market power and externalities. Then, only at the very end, they'd get to the purest abstraction of perfect markets." Mike Konczal in The Washington Post.

MUKASEY: The strange bedfellows for a press-shield law. "Like its predecessors, the current Free Flow of Information legislation is unnecessary. In the 41 years since the Supreme Court held in Branzburg v. Hayes that reporters have no common-law privilege to avoid a grand-jury subpoena, the flow of information to the public from numerous sources, including government sources, has increased dramatically...The bill is also fraught with near-meaningless ambiguity, and it transfers from the executive to the judiciary the power to determine what is necessary to protect the security of the nation." Michael B. Mukasey in The Wall Street Journal.

Events interlude: We're debating a universal guaranteed income. You should come!

2. Minimum-wage campaign heats up

Patchwork of local wage laws turns attention to federal inaction. "While there have long been differences between national and some state minimum-wage standards, what is different in this cycle is that more cities and counties are also pushing for increases...The phenomenon plays into both sides of the argument in Washington, with advocates for an increase saying the rest of the country is trying to send a message to Washington and those opposed saying Congress shouldn't set a standard that might be higher than local market conditions would allow." Damian Paletta and Eric Morath in The Wall Street Journal.

Wage strikes planned across country. "Seeking to increase pressure on McDonald's, Wendy's and other fast-food restaurants, organizers of a movement demanding a $15-an-hour wage for fast-food workers say they will sponsor one-day strikes in 100 cities on Thursday and protest activities in 100 additional cities. As the movement struggles to find pressure points in its quest for substantially higher wages for workers, organizers said strikes were planned for the first time in cities like Charleston, S.C.; Providence, R.I.; and Pittsburgh." Steven Greenhouse in The New York Times.

What it's like to work in fast food until your hair is gray. "The classic image of the high-school student flipping Big Macs after class is sorely out of date. Because of lingering unemployment and a relative abundance of fast-food jobs, older workers are increasingly entering the industry. These days, according to the National Employment Law Project, the average age of fast-food workers is 29. Forty percent are 25 or older; 31 percent have at least attempted college; more than 26 percent are parents raising children. Union organizers say that one-third to one-half of them have more than one job -- like Mr. Shoy, who is 58 and supports a wife and children. The fast-food industry says that what is going on here is a structural anomaly: that its wages were not intended to sustain a permanent work force -- especially adults supporting families -- and that it is happening because of larger economic forces." Alan Feuer in The New York Times.

Scanning the economic landscape, and seeing nothing on the horizon. "[T]he bulk of the new jobs are low-wage jobs in sectors like retail, restaurants and home health care, many without benefits or opportunities for advancement, a study by the Fiscal Policy Institute, a research organization, shows. The pathways that once carried people into the middle class and beyond -- and the strategies that sustained them there -- seem increasingly unreliable and uncertain." Rachel L. Swarns in The New York Times.

Watch: NPR's stunning video on the economic origins of a simple t-shirt. NPR.

Puerto Rico, with at least $70 billion in debt, confronts a rising economic misery. "The economy here has been in recession for nearly eight years, crimping tax revenue and pushing the jobless rate to nearly 15 percent. Meanwhile, the government is burdened by staggering debt, spawning comparisons to bankrupt Detroit and forcing lawmakers to severely slash pensions, cut government jobs and raise taxes in a furious effort to avert default...Puerto Rico lost 54,000 residents -- 1.5 percent of its population -- between 2010 and 2012 alone. Since recession struck in 2006, the population has shrunk by more than 138,000 to 3.7 million, with the vast majority of the outflow headed to the mainland." Michael A. Fletcher in The Washington Post.

Where factory apprenticeship is the latest German import. "Inspired by a partnership between schools and industry that is seen as a key to Germany's advanced industrial capability and relatively low unemployment rate, projects like the one at Tognum are practically unheard-of in the United States. But experts in government and academia, along with those inside companies like BMW, which has its only American factory in South Carolina, say apprenticeships are a desperately needed option for younger workers who want decent-paying jobs, or increasingly, any job at all. And without more programs like the one at Tognum, they maintain, the nascent recovery in American manufacturing will run out of steam for lack of qualified workers." Nelson D. Schwartz in The New York Times.

OPEC is having some coordination issues as it loses market power. "Tensions are emerging within the Organization of the Petroleum Exporting Countries over which member countries should trim oil production to make room for a resurgence in Iraqi exports and the possible return of more Iranian crude to world markets if sanctions are eased. There is no expectation of a decision to cut back at the OPEC cartel's meeting in Vienna on Wednesday. The group of 12 of the world's largest producers, though long riven by squabbling, has kept its overall production ceiling at 30 million barrels a day since December 2011. OPEC expects overall demand for its crude to drop by about 300,000 barrels a day next year and some members are pushing to trim output, according to people familiar with the debate." Benoit Faucon, Summer Said, and Sarah Kent in The Wall Street Journal.

Gloomy numbers for holiday shopping's big weekend. "Over the course of the weekend, consumers spent about $1.7 billion less on holiday shopping than they did the year before, according to the National Retail Federation, a retail trade organization...More than 141 million people shopped online or in stores between Thursday and Sunday, according to a survey released Sunday afternoon by the retail federation, an increase of about 1 percent over last year. And the average amount each consumer spent, or planned to spend by the end of Sunday, went down, dropping to $407.02 from $423.55. Total spending for the weekend this year was expected to be $57.4 billion, a decrease of nearly 3 percent from last year's $59.1 billion." Elizabeth A. Harris in The New York Times.

And you thought you had seen it all interlude: Amazon Prime Air, or 30-minute package delivery by drone.

3. Now we just need financial-regulator action figures

Fed's next financial-stability policy: restrict use of short-term lending. "In recent decades, such funding has become a sort of oil lubricating Wall Street's gears. Lenders--money-market funds, insurance companies, pension plans and others--provide temporary cash or securities to big banks, hedge funds, asset managers or other market participants that trade stocks and bonds. The borrowers can invest the cash or use securities-on-loan as leverage for other transactions. Relying on that system carries risks. The financial crisis proved that when Wall Street leans too heavily on short-term funding, a sudden hiccup in those loans can hobble financial firms, instigating a crisis that freezes lending for Main Street businesses." Ryan Tracy in The Wall Street Journal.

SEC drops disclosure of corporate political spending from its priority list. "Last year around this time, when the SEC released its 2013 to-do list, it signaled that it might consider formally proposing a rule to require the spending disclosures. But the item slipped off the 2014 agenda released this past week without any formal explanation...The agency's new agenda is geared toward advancing proposals that are mandated by Congress, so it is not surprising that a non-mandatory initiative has dropped off the radar screen for now, he said. The agency is not precluded from acting on a matter, even if it's not on the formal agenda, according to federal statute." Dina ElBoghdady in The Washington Post.

How can the world regulate its currency markets? "The topic was raised at a four-hour meeting in late October at the European Central Bank. Regulators in the U.K., U.S., Switzerland, Hong Kong and elsewhere started looking into possible efforts to manipulate the $5.3 trillion-a-day currencies market earlier this year. Changes to the so-called fix are "top of the list in industry discussions," said one person who attended the meeting. The fixes are snapshots of traded currencies rates gathered at set times of day that are used by companies and investors as benchmark reference points. The most popular is at 4 p.m. in London. Around 1% to 2% of global currencies flows are executed at this fix, which is computed by examining trades in a one-minute window. Lengthening the period to five minutes might help to deter very short-term trading patterns known as "jamming" and to soothe the volatility around fix times, people familiar with the ECB's thoughts on the matter said." Katie Martin and Chiara Albanese in The Wall Street Journal.

This is so great interlude: The making of a t-shirt.

4. Big Law dying, top court crying

Supreme Court busy looking for cases -- but finding fewer than usual. "Instead of the usual 12 cases that the court has been hearing in recent years during its two-week block of oral arguments, the justices have only seven scheduled for what the court calls the February sitting . It's the result of a diminished docket at the court, one with the potential of a historic low. So far, the justices have found fewer cases than usual worthy of receiving full briefing and oral argument. According to Scotusblog, the independent Web site that tracks the court's proceedings, the justices are about 10 cases short of what they normally would have taken at this point of the term." Robert Barnes in The Washington Post.

The Supreme Court confronts the line between free speech and security with protester's case. "The justices on Wednesday will hear the government's plea that national security demands base commanders be able to keep people such as Apel, who have been formally banned from a military installation, from setting foot in any part of their domain -- even the spots designated for protesters...Apel's is the first of several cases the Supreme Court will hear this term that raise important free-speech concerns. They will test the justices -- and the public -- on First Amendment protection for speech that both ends of the ideological spectrum might find objectionable." Robert Barnes in The Washington Post.

Journalism parody interlude: Headline mashups.

5. Today in bad bets: Counting on Congress

113th Congress, going down in history for its inaction, has a critical December to-do list. "From the confirmation of a new Federal Reserve chairman to the expiration of dairy pricing rules, House and Senate leaders head into the final month of 2013 with a checklist that is short but critical. But even a final burst of activity would do little to change the historic arc of this calendar year under the Capitol dome. According to congressional records, there have been fewer than 60 public laws enacted in the first 11 months of this year, so below the previous low in legislative output that officials have already declared this first session of the 113th Congress the least productive ever." Paul Kane in The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Racism isn't over. But policymakers from both parties like to pretend it is. Ezra Klein.

The White House says it met its Obamacare goal. There's still more work ahead. Sarah Kliff.

The White House declares victory in new progress report on Obamacare. Sarah Kliff.

Colleges are teaching economics backwards. Mike Konczal.

Et Cetera

More liberal, populist movement emerging in Democratic Party ahead of 2016 elections. Zachary A. Goldfarb in The Washington Post.

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