Stimulus spending (split from cap& trade thread)

[mheslep]

Some excerpts rom the paper Taylor et al on why the multiplier estimates from Romer are likely wrong:

I. The Problem with an Interest Rate Peg
Romer and Bernstein assume that the Federal Reserve pegs the interest rate—the federal funds rate—at the current level of zero for as long as their simulations run. Given their assumption that the spending increase is permanent, this means forever. In fact, such a pureinterest rate peg is prohibited in new Keynesian models with forward-looking households and firms because it produces calamitous economic consequences.

And at the last Fed meeting the Fed gave strong indications it is putting a raise of interest rates on the horizon. As they say above, Romer held it at ~zero for the entire stimulus period.

more coming ...

 

[Chalnoth]

I've found the common problem with these blogosphere derived discussion on fiscal policy is they forget or ignore:

GDP = Consumption + Investment + Govt spending + trade.​

Yes everyone always remember C and G, as it seems easy to control those. The problem is Investment, which is all about the private economy looking into the future and forming an expectation of the value, not of buying a car (that's C), but of starting a new company, of opening another factory in Podunk, and which BTW creates the vast majority of jobs. The investors are not fooled by road projects and large transfer payments to the states, which must be paid off either by large tax increases or currency inflation, pick one. Investment is required to raise the multiplier, and investment sucks right now.

Why? Why is investment required to raise the multiplier?

Because right now we can call trade basically a wash (everybody's in the same boat, so we shouldn't expect trade to change much). Investment is basically suppressed by the liquidity trap scenario, where the prime rate near zero ensures that people just want to hold cash (or equivalent) as much as possible. So we're left with C and G that can be meaningfully changed. And under the conditions of a liquidity trap, when you increase G by, say, 1%, then C automatically increases by around 0.5% just because you have more people making a living wage.

If the government really wants to raise investment, what they need to do is credibly raise the expectation of future inflation. If they can do that, then people will want to get away from holding cash and its equivalents into holding, well, investments. And raising the prime interest rate wouldn't do that, because it would just make us more likely to enter into deflation, which would make holding cash even more appealing, which would bring us deeper into the liquidity trap.

Let me also point out, by the way, that a sufficient fiscal stimulus is a pretty good way to credibly raise the expectation future inflation, because it puts more money into general circulation, and it adds to the national debt which the government is likely to want to inflate away (not too fast, mind you).

 

[mheslep]

Why? Why is investment required to raise the multiplier?[...]

The multiplier = dY/dG
Y = output (GDP), Y is a function of investment: C+G+I
G = Government spending.

Edit: oh, and Consumption is also dependent on Investment.

 

[Nebula815]

Uh, this is at the foundation of the entire argument for a fiscal stimulus. The argument goes like this:

1. Under conditions of a liquidity trap, everybody wants to save, and the supply of money is essentially "free": money is hoarded instead of being let out into the general population. In this situation, monetary policy is ineffective, and cannot stimulate demand.
2. Because demand is suppressed, the economy can be stimulated by a large injection of demand, i.e. a fiscal stimulus.

It really is that simple. The lack of demand also means that a fiscal stimulus doesn't offset private spending, so you are guaranteed a multiplier greater than one.

Fiscal stimulus will not necessary be an increase in demand in the economy simply due to the complexities and politics of how the money gets spent, and also the fact that the government is too slow to spend it. Unless the government can do the equivalent of literally replace consumers in their purchasing of products and services, it is very tricky. Money can go to worthless projects that do nothing, or to entitlements politicians want to fund, and so forth.

The larger the spending, the more difficult it is to keep track of how the money is spent, which makes more room for corruption. It is virtually impossible to literally "flood" the economy with the demand needed.

 

[Chalnoth]

The multiplier = dY/dG
Y = output (GDP), Y is a function of investment: C+G+I
G = Government spending.

Edit: oh, and Consumption is also dependent on Investment.

And if you increase both C and G without much impacting I, then total GDP rises.

 

[Chalnoth]

Fiscal stimulus will not necessary be an increase in demand in the economy simply due to the complexities and politics of how the money gets spent, and also the fact that the government is too slow to spend it.

Nope, that's pretty much irrelevant. The most important factor in determining the multiplier for fiscal stimulus is the overall status of the economy, not where the money is spent. Basically, as long as you're in a situation where demand is suppressed (i.e. a liquidity trap), then fiscal stimulus doesn't crows out private spending and you end up with a large multiplier.

It doesn't really matter what the stimulus is spent on, because the net effect is just to put people at work who wouldn't be at work otherwise, which means that more people are making a living wage, which means that more people are able to buy things and/or not pull out their investments. The stimulus is net beneficial (i.e. multiplier greater than 1) until you reach full employment (that is, the employment in a healthy economy, usually thought to be around 5% or so).

Now, as I've mentioned before, you don't want to be completely lax in spending: you do want to at least put some effort into spending for projects that will have later returns so as to pay off the debt incurred. But since the multiplier is greater than 1, you don't actually have to even pay that much back. For example, at a multiplier of around 1.5, and an average tax rate of 33%, fully half of the money put into the stimulus spending ends up being paid back as taxes.

In the end, what all this means is that as long as the government isn't really stupidly horrible at allocating funds, and invests in projects that are likely to get at least somewhat close to a 1:1 economic return, there is a net positive economic benefit from going for the stimulus. And since the stimulus is beneficial until full employment is reached, there is no sense in doing anything but going full-bore. And if it turns out that the stimulus package is a bit too big, then the Fed can always raise interest rates to bring inflation under control.

So no, inefficiency isn't a problem at all, because you don't need much efficiency at all to have a net positive economic impact. And even if you don't have a net positive economic impact, bear in mind that some of that debt will get inflated away in the coming years, and we have the added benefit of preventing a lot of children from growing up in poverty (due to their parents being out of work for an extended period of time: without stimulus, we're looking at around a decade of severe unemployment).

 

[Al68]

Uh, this is at the foundation of the entire argument for a fiscal stimulus. The argument goes like this:

1. Under conditions of a liquidity trap, everybody wants to save, and the supply of money is essentially "free": money is hoarded instead of being let out into the general population.

What does "let out into the general population mean? What money is being hoarded by who, if not the general population? What is a "free" supply of money?

That sounds like a pretty twisted misconception of this: http://en.wikipedia.org/wiki/Liquidity_trap

 

[Chalnoth]

What does "let out into the general population mean? What money is being hoarded by who, if not the general population? What is a "free" supply of money?

The point is that the money is not being used to buy and sell goods. This is the essence of the liquidity trap: the most lucrative investment available seems to be simply money (or its equivalents), and so people invest in money: it's the equivalent of taking your savings and putting it in a box in the ground.

And when it appears that money is the most sanguine investment people can have, then the government can put out as much money into the economy as it pleases, but it won't matter, because people, effectively, just put it in boxes and bury it in the ground. It isn't used to buy and sell goods. This is why monetary policy is almost completely useless during a liquidity trap.

That sounds like a pretty twisted misconception of this: http://en.wikipedia.org/wiki/Liquidity_trap

You can read a perhaps better description of the liquidity trap here:
http://en.wikipedia.org/wiki/Keynesian_economics#Excessive_saving

 

[Al68]

What does "let out into the general population mean? What money is being hoarded by who, if not the general population? What is a "free" supply of money?

The point is that the money is not being used to buy and sell goods.

Yeah, I get that point. The way you worded it implied that "the money" in question was the government's money, or being hoarded by government, instead of by the general population.

 

[mheslep]

And if you increase both C and G without much impacting I, then total GDP rises.

Yep, that's the magic trick. Easy to write down, hard to do.

 

[Nebula815]

Nope, that's pretty much irrelevant. The most important factor in determining the multiplier for fiscal stimulus is the overall status of the economy, not where the money is spent. Basically, as long as you're in a situation where demand is suppressed (i.e. a liquidity trap), then fiscal stimulus doesn't crows out private spending and you end up with a large multiplier.

Where the money is spent most certainly will count in determining the multiplier. If the money is spent in very wasteful ways where it does not reach the people it should, then there will be problems.

Also I'm a bit confused here, but if demand is suppressed, then private spending will be lower. The idea of fiscal stimulus is to take the place of that private spending until it returns to its normal level, but in order to do this, the stimulus must be spent properly.

It doesn't really matter what the stimulus is spent on, because the net effect is just to put people at work who wouldn't be at work otherwise, which means that more people are making a living wage, which means that more people are able to buy things and/or not pull out their investments.

But who's to say the stimulus money will put anyone to work? It could be wasted on other things, or it could go into projects where few people are put to work. That is the problem, as no one can keep track of it. If you spend $20 million in stimulus, that doesn't mean it is going to replace $20 million worth of demand in the private economy.

If you just mail the stimulus out to the population in the form of checks, that could work because it means the government temporarily takes the role of employer for people who are unemployed, and the government temporarily runs up debt. But even then, people will likely just hoarde the money, unless the checks will be regular until the economy repairs itself.

Of course then, many people won't look for work (why work when the government is giving free checks?) and thus the economy doesn't recover (it's like welfare trying to fix poverty: you pay people not to work and they won't).

Tax cuts are longer-term and allow people to reap the fruits of their labor, but that's the key word, labor, they have to go out and work.

So if the stimulus is spent on projects, there's a good chance much of the money will be wasted and won't just put people to work

If the money, to avoid the above problem, is directly mailed to the people, they will just hoarde it. If the government decides to provide regular checks until the economy recovers, it will disincentivize working completely.

So I do not see how a high multiplier comes out of this. In fact, the stimulus spending can elongate the recession by crowding out private-sector investment and/or disincentivizing job growth.

The stimulus is net beneficial (i.e. multiplier greater than 1) until you reach full employment (that is, the employment in a healthy economy, usually thought to be around 5% or so).

Now, as I've mentioned before, you don't want to be completely lax in spending: you do want to at least put some effort into spending for projects that will have later returns so as to pay off the debt incurred. But since the multiplier is greater than 1, you don't actually have to even pay that much back. For example, at a multiplier of around 1.5, and an average tax rate of 33%, fully half of the money put into the stimulus spending ends up being paid back as taxes.

It will depend on the projects. Building a road is not going to create any tax revenue, and a lot of the money could be wasted on various issues, for example.

In the end, what all this means is that as long as the government isn't really stupidly horrible at allocating funds,

Yeah, but usually they are. In fact, the government is notoriously inefficient and bad at spending money. The larger the stimulus, the less accountability as well, as no one can keep track of where all the money is going.

and invests in projects that are likely to get at least somewhat close to a 1:1 economic return,

That requires detailed analysis of the project which takes time.

there is a net positive economic benefit from going for the stimulus. And since the stimulus is beneficial until full employment is reached, there is no sense in doing anything but going full-bore. And if it turns out that the stimulus package is a bit too big, then the Fed can always raise interest rates to bring inflation under control.

But then you would completely negate the purpose of the stimulus package in the first place, because raising interest rates will hamstring the economy and drag it back into recession.

I think you are making two mistakes on the stimulus idea:

1) Historically it has never worked, and tends to either elongate a recession (like Japan) or create inflation, which then negated it in the first place because interest rates must then go up, which create another recession. That is the experience the Europeans have had, where it doesn't stimulate, but has resulted in inflation of the economy.

2) The economy is not a machine. "Demand" for example is not a solid thing that just can go up or down and in response one can increase government spending to this or that degree.

So no, inefficiency isn't a problem at all, because you don't need much efficiency at all to have a net positive economic impact.

If all worked perfectly perhaps, but there are other factors that prevent this, as I have listed.

And even if you don't have a net positive economic impact, bear in mind that some of that debt will get inflated away in the coming years, and we have the added benefit of preventing a lot of children from growing up in poverty (due to their parents being out of work for an extended period of time:

They will remain in poverty because likely either the money will not be spent to put a lot of people to work or if sent directly to them, if one check, then they hoarde it, if multiple checks, it kills job growth and lengthens the recession.

without stimulus, we're looking at around a decade of severe unemployment).

Says who though? The economy was in a severe recession back in the early 80s and made a very swift turnaround. We could do absolutely no stimulus, freeze federal spending, leave the economy alone, and it will turn itself around.

Or, we could stimulate it via permanent tax cuts (taxes are high enough to do this), which would incentivize job creation and economic growth.

 

[mheslep]

Or, we could stimulate it via permanent tax cuts (taxes are high enough to do this), which would incentivize job creation and economic growth.

Go tax cuts. Bring on the tax cuts.

 

[Nebula815]

The point is that the money is not being used to buy and sell goods. This is the essence of the liquidity trap: the most lucrative investment available seems to be simply money (or its equivalents), and so people invest in money: it's the equivalent of taking your savings and putting it in a box in the ground.

And when it appears that money is the most sanguine investment people can have, then the government can put out as much money into the economy as it pleases, but it won't matter, because people, effectively, just put it in boxes and bury it in the ground. It isn't used to buy and sell goods. This is why monetary policy is almost completely useless during a liquidity trap.

Confused again here, but what does monetary policy have to do with this? Monetary policy is the control of the money supply in the economy. The Fed has gunned up the money supply to counter the deflation occurring.

The stimulus where the people get put to work or get checks or whatnot is fiscal stimulus, which is what is being attempted.

But provided you could manage to put people to work and they get checks, if they are just going to hide the money in boxes, it won't work. Or if the money is directly sent to them via checks they may do the same, it won't work.

So it means that fiscal stimulus is completely useless in a liquidity trap by your argument.

 

[Chalnoth]

Confused again here, but what does monetary policy have to do with this? Monetary policy is the control of the money supply in the economy. The Fed has gunned up the money supply to counter the deflation occurring.

And you may have noticed that they have pumped out many trillions of dollars, and yet we're still facing the specter of deflation. That's the point of the liquidity trap: the Fed can pump out all the money it likes, but it isn't going to do much good.

The stimulus where the people get put to work or get checks or whatnot is fiscal stimulus, which is what is being attempted.

But provided you could manage to put people to work and they get checks, if they are just going to hide the money in boxes, it won't work. Or if the money is directly sent to them via checks they may do the same, it won't work.

The difference is that you're putting people to work who wouldn't be at work otherwise. Yes, given the status of the economy, they're likely to save as much as possible. But they're still also going to spend more than they would if they had no job at all.

The primary difference here is the vehicle through which the money goes from the government. For monetary policy, the money goes through the banking system. And in a liquidity trap, it just stops there, not making it out to the rest of the economy. With a fiscal stimulus, it goes directly into general circulation, either from wages paid, or from materials purchased (e.g. concrete for a bridge), and thus actually helps to combat deflation. Obviously some of that gets "buried in boxes", but much of it is actually spent.

 

[Nebula815]

The difference is that you're putting people to work who wouldn't be at work otherwise. Yes, given the status of the economy, they're likely to save as much as possible. But they're still also going to spend more than they would if they had no job at all.

Well true, but that's assuming the stimulus is spent efficiently to create jobs (as government is very inefficient at spending it). The jobs must also provide multiple payments, because if the people only get one payment, they will hoarde it.

 

[Chalnoth]

Well true, but that's assuming the stimulus is spent efficiently to create jobs (as government is very inefficient at spending it). The jobs must also provide multiple payments, because if the people only get one payment, they will hoarde it.

But again, here's the thing: it doesn't need to be that efficient. The point is that almost no matter what the government does, paying to get stuff done increases the level of demand. And it's that increased level of demand which increases the number of jobs. That is, it's not just the people that are employed by the stimulus that increase the number of jobs, but also the people that are needed to supply the workers with their goods to get their work done, and the people needed to supply the workers with their purchases at home, etc.

Obviously, some expenses will be better than others. But it seems that it actually isn't very hard at all to get a decent multiplier out of stimulus spending.

 

[WhoWee]

But again, here's the thing: it doesn't need to be that efficient. The point is that almost no matter what the government does, paying to get stuff done increases the level of demand. And it's that increased level of demand which increases the number of jobs. That is, it's not just the people that are employed by the stimulus that increase the number of jobs, but also the people that are needed to supply the workers with their goods to get their work done, and the people needed to supply the workers with their purchases at home, etc.

Obviously, some expenses will be better than others. But it seems that it actually isn't very hard at all to get a decent multiplier out of stimulus spending.

A "stimulus" spent on State Gov't job subsidies and the hundreds of pork projects and extended unemployment and COBRA benefits is not "stimulative" - IT'S POLITICAL!

Further, making (500,000 ?) Federal buildings "green" (adding insulation) does very little for long term economic growth.

The problem with this discussion is that "stimulus" is separated from the rest of the Obama/Pelosi/Reid Political Agenda including but not limited to: Cap and Trade, Card Check, Media Regulation, and of course government control of health care leading to a massive expansion of Medicaid (increased State taxes).

But, let's not be too critical - at least Congresspersons are willing to admit they don't even read the Bills, they just do what THEIR (political) leaders tell them to do.

 

[Nebula815]

But again, here's the thing: it doesn't need to be that efficient. The point is that almost no matter what the government does, paying to get stuff done increases the level of demand. And it's that increased level of demand which increases the number of jobs. That is, it's not just the people that are employed by the stimulus that increase the number of jobs, but also the people that are needed to supply the workers with their goods to get their work done, and the people needed to supply the workers with their purchases at home, etc.

Obviously, some expenses will be better than others. But it seems that it actually isn't very hard at all to get a decent multiplier out of stimulus spending.

Again though, the problem is that no one knows if stuff will be bought or not. Money can go to people's pockets that it otherwise should not, and it also can go to funding various entitlements that it should not, neither of which will mean goods are bought, thus increasing demand.

 

[Chalnoth]

Again though, the problem is that no one knows if stuff will be bought or not.

Well, it can definitely be estimated on a population level. You can't honestly be suggesting that people who are employed will buy no more than they would if unemployed. But regardless, a fair amount must be bought, just to supply the particular projects being funded.

Money can go to people's pockets that it otherwise should not, and it also can go to funding various entitlements that it should not, neither of which will mean goods are bought, thus increasing demand.

This is typically a small percentage of such spending.

 

[mheslep]

...This is typically a small percentage of such spending.

The phrasing of that statement implies you've thoroughly reviewed 'such spending'. This is easy to lookup. A large chunk of the current stimulus went to support state Medicaid programs, which were going bust.

 

[Chalnoth]

The phrasing of that statement implies you've thoroughly reviewed 'such spending'. This is easy to lookup. A large chunk of the current stimulus went to support state Medicaid programs, which were going bust.

And this is a problem because?

I thought we were talking about money that went to lining peoples' pockets, not money that went to legitimate stimulus interests, such as medical care.

 

[mheslep]

And this is a problem because?

I thought we were talking about money that went to lining peoples' pockets, not money that went to legitimate stimulus interests, such as medical care.

I was talking about the validity of a statement in this thread. The statement that the funding of entitlements is a small portion of the US stimulus spending is invalid. We can't have useful follow on discussions about the justification of a policy if it is based on quicksand.

 

[Chalnoth]

I was talking about the validity of a statement in this thread. The statement that the funding of entitlements is a small portion of the US stimulus spending is invalid. We can't have useful follow on discussions about the justification of a policy if it is based on quicksand.

Well, I didn't say that. I was reacting to a different part of your statement, that it was going to lining peoples pockets that it should not.

And the statement that the stimulus shouldn't go out to fund state programs to keep people employed seems patently ludicrous to me. Such spending has been estimated as having about the largest multiplier of all of the various proposals in the stimulus package, so I really don't know why you'd pick on that one.

Unless you just think it's disgusting that poor people should get medical care.

 

[WhoWee]

And this is a problem because?

I thought we were talking about money that went to lining peoples' pockets, not money that went to legitimate stimulus interests, such as medical care.

It's a problem because it doesn't "stimulate". All it does is offer a short term cash flow "fix" for the state. Also, how is medical care a "legitimate stimulus" interest?

A legitimate stimulus interest is a guarantee of an asset based private sector business loan that creates permanent jobs.

 

[Chalnoth]

It's a problem because it doesn't "stimulate". All it does is offer a short term cash flow "fix" for the state. Also, how is medical care a "legitimate stimulus" interest?

Why, pray tell, do you think that this sort of spending doesn't stimulate the economy? It keeps people working who would have to be laid off otherwise!

A legitimate stimulus interest is a guarantee of an asset based private sector business loan that creates permanent jobs.

If it's permanent jobs you want, then this sort of spending certainly qualifies, because we're talking about spending to prevent layoffs in a sector where during normal economic times, the states have enough money to pay for the services. In fact, the aid to the states should have been vastly higher.

Do you have some strange idea that medical care doesn't require anybody to put in any work?

 

[WhoWee]

Why, pray tell, do you think that this sort of spending doesn't stimulate the economy? It keeps people working who would have to be laid off otherwise!


If it's permanent jobs you want, then this sort of spending certainly qualifies, because we're talking about spending to prevent layoffs in a sector where during normal economic times, the states have enough money to pay for the services. In fact, the aid to the states should have been vastly higher.

Do you have some strange idea that medical care doesn't require anybody to put in any work?

First, the states had very little discretion over use of funds.
Second, perhaps some of the state jobs should be eliminated - and that should be decided on a state by state basis (it's a sustained tax issue).
Last, government jobs do not make a net contribution to the tax base - they are an expense of tax dollars.
Are YOU willing to pay a state income tax in excess of 10 to 15 percent? The shell game of "tax the rich and spend on the poor" works politically on the national stage - but is ultimately paid by everyone on a local basis. If in doubt, do a little reading on the subject of state responsibility regarding low income Medicare beneficiaries and the planned expansion of Medicaid.
Once a low income person joins Medicare and Medicaid, they are designated Dual Eligible and qualify for Special Needs Plans.
DE-SNP beneficiaries pay for NOTHING except $1 to $6 for prescriptions. Medicaid (mostly a state responsibility) assumes the expense.

 

[Chalnoth]

The jobs that subsidizing programs like Medicaid saves are not, primarily, government jobs. The administrative overhead of government-run health insurance is a very very small, much smaller than private health insurance. The vast majority of that money goes directly towards paying health care professionals, who are the ones whose jobs are primarily saved by such spending.

But regardless of this point of fact, I find your opposition to poor people getting medical care revolting.

 

[mheslep]

The administrative overhead of government-run health insurance is a very very small, much smaller than private health insurance.

Source?

 

[WhoWee]

The jobs that subsidizing programs like Medicaid saves are not, primarily, government jobs. The administrative overhead of government-run health insurance is a very very small, much smaller than private health insurance. The vast majority of that money goes directly towards paying health care professionals, who are the ones whose jobs are primarily saved by such spending.

But regardless of this point of fact, I find your opposition to poor people getting medical care revolting.

I really don't care about your emotional outburst, but you do need to support your claim that Govt operates with less admin exp than the private sector - and please factor out admin exp mandated upon private companies by Govt.

 

[WhoWee]

The threshold for QMB status in 2009 was $908/month per an individual. This person is eligible for free medical (a $400+/ mos benefit + cost of care), does not pay into Medicare Part B ($96.40), is eligible for food stamps and possibly housing.

These programs start in Washington and are dumped upon the states.

 

[Chalnoth]

Source?

http://institute.ourfuture.org/files/Jacob_Hacker_Public_Plan_Choice.pdf

Here's the meat:

These administrative spending numbers have been challenged on the grounds that they exclude some aspects of Medicare’s administrative costs, such as the expenses of collecting Medicare premiums and payroll taxes, and because Medicare’s larger average claims because of its older enrollees make its administrative costs look smaller relative to private plan costs than they really are.

However, the Congressional Budget Office (CBO) has found that administrative costs under the public Medicare plan are less than 2 percent of expenditures, compared with approximately 11 percent of spending by private plans under Medicare Advantage. This is a near perfect “apples to apples” comparison of administrative costs, because the public Medicare plan and Medicare Advantage plans are operating under similar rules and treating the same population.

(And even these numbers may unduly favor private plans: A recent General Accounting Office report found that in 2006 Medicare Advantage plans spent 83.3 percent of their revenue on medical expenses, with 10.1 percent going to non-medical expenses and 6.6 percent to profits—a 16.7 percent administrative share.)

If you look at the variety of estimates of private insurance administrative costs, you'll note that theirs is among the lower estimates:
http://en.wikipedia.org/wiki/Health_care_in_the_United_States#Administrative_costs

Granted, this is private vs. Medicare, but I have no reason to believe that private vs. Medicaid would be any different.

Finally, even in the obscenely unlikely situation that Medicaid actually happened to be on par with private insurance in terms of administrative overhead, it would still be the case that the vast majority of the funds that go to Medicaid would end up directly paying for patient care. So my statement that the jobs saved by funding Medicaid are health care provider jobs stands.

 

[WhoWee]

http://institute.ourfuture.org/files/Jacob_Hacker_Public_Plan_Choice.pdf

Here's the meat:

If you look at the variety of estimates of private insurance administrative costs, you'll note that theirs is among the lower estimates:
http://en.wikipedia.org/wiki/Health_care_in_the_United_States#Administrative_costs

Granted, this is private vs. Medicare, but I have no reason to believe that private vs. Medicaid would be any different.

Finally, even in the obscenely unlikely situation that Medicaid actually happened to be on par with private insurance in terms of administrative overhead, it would still be the case that the vast majority of the funds that go to Medicaid would end up directly paying for patient care. So my statement that the jobs saved by funding Medicaid are health care provider jobs stands.

Do you have a source that adjusts for govt mandated compliance like HIPPA/MIPPA? Also, let's not forget that govt controls ALL pricing models - even commission structures of insurance agents.

 

[Chalnoth]

Do you have a source that adjusts for govt mandated compliance like HIPPA/MIPPA? Also, let's not forget that govt controls ALL pricing models - even commission structures of insurance agents.

There's no possible way that that could change the outcome here. The profits of the private insurance were larger than the total administrative overhead of Medicare.

 

[mheslep]

http://institute.ourfuture.org/files/Jacob_Hacker_Public_Plan_Choice.pdf

Here's the meat: [...]

Then you assert that the 'meat' is, that this poli sci Prof says that the CBO says public overhead is 2% vs 11% for private?

If you look at the variety of estimates of private insurance administrative costs, you'll note that theirs is among the lower estimates..

Aside from purposes of definition, Wiki links don't aid politically controversial discussions, I find.

 

[mheslep]

There's no possible way that that could change the outcome here. The profits of the private insurance were larger than the total administrative overhead of Medicare.

What private insurance? All US private insurance profits > total Medicare admin? Absolute, or percentage?