A good percentage of the structural increase in the deficit is because last year’s “stimulus” was not stimulus in the traditional sense. Rather than a one-time injection of spending to replace a cyclical reduction in private demand, the vast majority of the stimulus has been a permanent increase in the base level of government spending — including spending on federal jobs.
Bloomberg News reported that from the last peak businesses have let go 8.5 million people, or 7.4 percent of the work force, while local governments have cut only 141,000 workers, or less than 1 percent.
The Robert Wood Johnson Foundation has issued a report titled “The Impact of the Economy on Health Care.” It finds that the economy actually is affecting health care in the following ways [link]:
Because of decreased demand for non-urgent or elective care, increases in health expenditures have likely slowed.
Because fewer patients are seeking elective services, there is lower utilization.
Providers are compensating for lost revenue from lower demand and more unpaid patient bills by expanding their working hours. They are compensating for lost investment assets by postponing retirement. This increases the health care workforce.
Community hospitals have cut staff, cut administrative expenses, reduced services, and put upgrades in clinical services and information technology systems on hold. This reduces waste.
The shortage of nurses has eased. This lowers costs.
Utilization down, cost curve bent, waste eliminated. What will capitalism think of next?
A new study by Canopy Financial finds HSA balances continued to grow during the fourth quarter of 2008, despite the woes in the rest of the financial sector. Individual HSA balances grew 33% and family balances grew 12% in 2008. Most of this is from individual, not employer, contributions.
This is from Sarah Rubenstein, writing in the Wall Street Journal:
COBRA: The bill provides for subsidies for 65% of laid-off workers’ premiums for COBRA for up to nine months, at an estimated cost of $24.7 billion. Gone from the bill is a House proposal that would have lengthened the Cobra coverage for laid off workers who are 55 and older or had worked for their employer for 10 years or more. Under that proposal, those workers would have been able to stay on Cobra until they qualified for Medicare or got coverage through another employer’s plan.
Medicaid: Another casualty is the House’s proposal to allow unemployed workers to qualify for Medicaid regardless of their income or assets – an idea that Republicans had criticized. But the bill still has $87 billion in funding to help the states pay for their Medicaid programs.
Health care is toward the end of the document. The Kaiser Family Foundation also offers a summary of health provisions.
The National Coordinator of Health Information Technology will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and "guide" your doctor's decisions (442, 446). These provisions in the stimulus bill are virtually identical to what Daschle prescribed in his 2008 book, Critical: What We Can Do About the Health-Care Crisis.
Over the past two years, our economy expanded rapidly as consumer spending grew. Millions of buyers drove the prices of homes ever higher, while others borrowed against home equity or used consumer credit to go on a spending spree. The current recession is like a next-morning hangover, as cash-strapped consumers reduce consumption, pay down debt or replenish their savings.
This roller coaster journey might reflect a mental disorder – a collective bout of shopaholism, according to a New York Timesarticle. Although the current edition of the Diagnostic and Statistical Manual of Mental Disorders does not include compulsive shopping as a psychological malady, the German psychiatric community considers it to be a subset of obsessive-compulsive disorder.
CBO sent a letter to Senator Gregg saying that the stimulus will help in the short term – but will shrink the GDP in the long term. CBO says the stimulus will result in so much debt that it will eventually start to crowd out private investment, shrinking the GDP more than if Congress hadn’t passed the stimulus in the first place.
This is Tyler Cowen writing in the New York Times:
Sure, it's stressful to miss a paycheck, but eliminating the stresses of a job may have some beneficial effects. Perhaps more important, people may take fewer car trips, thus lowering the risk of accidents, and spend less on alcohol and tobacco. They also have more time for exercise and sleep, and tend to choose home cooking over fast food.
In a 2003 paper, "Healthy Living in Hard Times," Christopher J. Ruhm, an economist at the University of North Carolina at Greensboro, found that the death rate falls as unemployment rises. In the United States, he found, a 1 percent increase in the unemployment rate, on average, decreases the death rate by 0.5 percent.
In an attempt to increase home ownership, particularly by minorities and the less affluent, virtually every branch of the government undertook an attack on underwriting standards starting in the early 1990s.
Monetary policy alone is a sufficiently powerful and flexible tool to end recessions…. Discretionary fiscal policy, in contrast, does not appear to have had an important role in generating recoveries.