Sunday, November 13, 2016

Money for Rural Communities

Corn Harvest

One thing I’ve read about the recent election is that some part of the result was a result of “resentment” of urban dwellers for all the money that gets spent on them.  But one thing you rarely hear is now much money rural communities receive by way of farm subsidies.  Approximately 60% of Wisconsin farmers received some form of subsidy in the past 20 years for their businesses.

The Environmental Working Group (EWG) has compiled a database of farm subsidies from 1995 - 2014 based on data from the USDA.  Wisconsin ranks 16th in its receipt of farming subsidies totaling $7.66 billion from 1995 - 2014.  The bulk of that money was spent on corn subsidies and dairy program subsidies.

Wisconin Farm Subsidies

Looking at just the corn subsidies, the average value-per-recipient was on the order of nearly $50,000 over the course of the program.  That’s about $2,500/year on average.  Plus, many farms draw on multiple programs.

I just think its interesting that the rural communities seem to think that only urban dwellers are the recipients of government largesse.  And I rarely hear urban dwellers complaining about these massive subsidies to agriculture.

Saturday, November 12, 2016

Whither Guantanamo?

President Obama’s failure to fulfill his campaign promise to close the Guantanamo detention facility is looking like a real problem now.  Of all the campaign promises he made, his inability to act on this one is the most disappointing.

Repeal & Replace? I think not...

Lest we forget, Mr. Trump has promised to repeal and replace the Affordable Care Act as one of his first tasks.  But I think he’ll find that the health insurance industry is not a calm sea to navigate.  It’s full of rocky shoals, hidden reefs and circling sharks.  Stephen Pearlstein over at the WaPo Wonkblog has the details:

Let’s say that in the beautiful new world of “repeal and replace,” insurers are required to sell you insurance despite the fact that your kid has a brain tumor.  Insurance companies know what to do with that. Their actuaries can calculate that kids with brain tumors typically require (I’m making this number up) about $200,000 a year in medical care. So they’ll offer to sell you a policy at an annual premium of $240,000.


At this point your response will probably be that such an outcome not fair. When the law says insurance companies can’t discriminate on the basis for pre-existing conditions, surely what it means is that they have to charge roughly the same price for health insurance, irrespective of your pre-existing condition. In the language of insurance, that’s called “guaranteed issue at community rates.”


Unfortunately, in the states that have tried guaranteed issues at community rates, the insurance markets have collapsed. That’s because if you guarantee everyone the right to buy health insurance at community rates, then some consumers will game the system. The young and healthy ones won’t buy any health insurance at all—they’ll go without until they are diagnosed with diabetes or a brain tumor or get hit by a truck crossing the street.  And when that happens, they will immediately call up Aetna or Anthem and exercise their right to buy health insurance at the low community rate, irrespective of their medical condition. It won’t be long before insurance companies begin losing a ton of money and are forced either to raise premiums through the roof or stop writing policies altogether.


So how do you prevent that kind of gaming of the system by consumers?  Well, that’s easy.  You require that everyone buy at least some minimal level of insurance at the beginning of every year, so they can’t buy insurance only after they get sick. Let’s call that an” individual mandate.”  But because you can’t expect poor people to pay $1,000 a month, they will require subsidies to keep their out-of-pocket costs to something like 10 percent of income.  To pay for the subsidies, a new tax will be required.


So let’s review what just happened. To guarantee that people with pre-existing conditions can get affordable health insurance, you need to have rules requiring guaranteed issue and community rating.  To keep insurance companies in business because of guaranteed issue and community rating, you need to have an individual mandate.  And because poor people can’t afford health insurance, you need subsidies. Combine all three, and what you have, in a nutshell, is ... Obamacare.

Amazing, no?

Friday, November 11, 2016

Time to begin again

The election of Donald Drumpf is reason enough to return to my blog.