Professor of Economics

State and local governments imposed social distancing measures in March and April of 2020 to contain the spread of novel coronavirus disease 2019 (COVID-19). These included large event bans, school closures, closures of entertainment venues, gyms, bars, and restaurant dining areas, and shelter-in-place orders (SIPOs). We evaluated the impact of these measures on the growth rate of confirmed COVID-19 cases across US counties between March 1, 2020 and April 27, 2020. An event-study design allowed each policy's impact on COVID-19 case growth to evolve over time. Adoption of government-imposed social distancing measures reduced the daily growth rate by 5.4 percentage points after 1–5 days, 6.8 after 6–10 days, 8.2 after 11–15 days, and 9.1 after 16–20 days. Holding the amount of voluntary social distancing constant, these results imply 10 times greater spread by April 27 without SIPOs (10 million cases) and more than 35 times greater spread without any of the four measures (35 million). Our paper illustrates the potential danger of exponential spread in the absence of interventions, providing relevant information to strategies for restarting economic activity.

View the national social distancing study and the supplemental appendix.

State and local governments imposed social distancing measures in March and April of 2020 to contain the spread of novel coronavirus disease 2019 (COVID-19). These included large event bans, school closures, closures of entertainment venues, gyms, bars, and restaurant dining areas, and shelter-in-place orders (SIPOs). We evaluated the impact of these measures on the growth rate of confirmed COVID-19 cases across US counties between March 1, 2020 and April 27, 2020. An event-study design allowed each policy's impact on COVID-19 case growth to evolve over time. Adoption of government-imposed social distancing measures reduced the daily growth rate by 5.4 percentage points after 1–5 days, 6.8 after 6–10 days, 8.2 after 11–15 days, and 9.1 after 16–20 days. Holding the amount of voluntary social distancing constant, these results imply 10 times greater spread by April 27 without SIPOs (10 million cases) and more than 35 times greater spread without any of the four measures (35 million). Our paper illustrates the potential danger of exponential spread in the absence of interventions, providing relevant information to strategies for restarting economic activity.

View the national social distancing study.

Host Renee Shaw and guests discuss restarting Kentucky's economy. Guests: Jason Bailey, exec. dir. of Kentucky Center for Economic Policy; Aaron Yelowitz, economics professor at the University of Kentucky; Bill Londrigan, pres. of the Kentucky AFL-CIO; Josh Crawford, exec. dir. of the Pegasus Institute; and Dr. Michael Saag, infectious disease specialist at University of Alabama Birmingham.

View the Kentucky social distancing study.

View the Kentucky social distancing study.

View the Kentucky social distancing study.

View the Kentucky social distancing study.

View the WSJ Op-Ed.

Paid Sick Leave Is a Failed Cure

Washington state already has a mandate. Contrary to Sen. Murray, it hasn't helped arrest coronavirus.

By Aaron Yelowitz and Michael Saltsman

March 11, 2020 6:54 pm ET

Democrats in Congress have a cure for the coronavirus crisis: a nationwide paid sick-leave mandate. Sen. Patty Murray of Washington says this new benefit would allow people to "focus on staying healthy and preventing the spread of this disease." Her House sponsor, Rep. Rosa DeLauro of Connecticut, said the lack of such a mandate could "make coronavirus harder to contain."

Ms. Murray and Ms. DeLauro began advocating such a policy in 2004 and have clearly internalized Rahm Emanuel's immortal political advice that "you never want a serious crisis to go to waste." But the policy is poorly suited to the current crisis.

San Francisco was the first locality to require paid sick leave, starting in 2007. The law brought modest benefits and significant costs. A 2011 study by the Institute for Women's Policy Research found nearly 30% of the lowest-wage earners reported layoffs or reduced hours, with employers unable to offset the cost through price hikes alone. Connecticut's sick-leave policy was the focus of a 2016 study (of which Mr. Yelowitz was a co-author), which found a "sizeable decrease in labor demand" as a consequence of the mandate.

View the WSJ Op-Ed.

Medicaid Expansion Costs Hit New York - And Other States Are Watching

January 24, 20204:19 PM ET

Heard on All Things Considered

BRIAN MANN

Medicaid expansion is making people healthier. It's also costing states more than expected. New York Governor Andrew Cuomo is scrambling to close a $6 billion deficit tied to Medicaid expansion.

AILSA CHANG, HOST:

All but 14 states have expanded Medicaid under the Affordable Care Act. That has enabled millions more Americans to get coverage and regular health care. And now, New York state is struggling to cut billions of dollars from its Medicaid program. Governor Andrew Cuomo warned this week that it could become unsustainable. As North Country Public Radio's Brian Mann, reports other states are watching closely.

BRIAN MANN, BYLINE: Here's the good news. Rachel Nuzum, a Medicaid expert with the Commonwealth Fund, a think tank that supports public health care options, says Medicaid expansion under the Affordable Care Act is making Americans a lot healthier.

RACHEL NUZUM: Significant improvements, both in access to primary care, necessary medications, their ability to get preventative visits, screening tests and even their self-reported health status.

MANN: New York is one of the success stories, according to Governor Andrew Cuomo. Expanding Medicaid eligibility cut the number of uninsured sharply.

(SOUNDBITE OF ARCHIVED RECORDING)

ANDREW CUOMO: We're not 100%, but boy, we are close. Six million people on Medicaid, one out of every three. And this is something to be proud of.

MANN: He means a third of people with health insurance in New York now get it from Medicaid. But speaking this week in his annual budget address, Cuomo, a Democrat, laid down a warning.

(SOUNDBITE OF ARCHIVED RECORDING)

CUOMO: If it is not financially sustainable, then we accomplish nothing.

MANN: Cuomo says projected deficits next year alone top $2 billion.

(SOUNDBITE OF ARCHIVED RECORDING)

CUOMO: The cost of Medicaid is rising much higher than anyone projected. They started rising dramatically.

MANN: Medicaid is an incredibly complex network of state-run programs that now cover more than 70 million people nationwide. New York's version is more expensive, second only to California, in part because it offers a wider range of services, including mental health and drug treatment programs. So it's something of an outlier. But some conservative economists say New York's Medicaid budget woes are typical in one respect.

AARON YELOWITZ: Actual enrollments have far exceeded the projected enrollments.

MANN: Aaron Yelowitz is a professor of economics at the University of Kentucky and a senior fellow at the Cato Institute. His research suggests some people who should be diverted into private health care programs are winding up on Medicaid instead.

YELOWITZ: Something like half a million improperly enrolled individuals in nine expansions.

MANN: There's a lot of disagreement about this over-enrollment question. And new sign-ups for Medicaid have slowed as the economy improved. What's clear, though, is that other states are watching New York to see how they fix this shortfall. Again, Rachel Nuzum with the Commonwealth Fund.

NUZUM: You know, this need to be constantly balancing the dollars you are investing in Medicaid while also making sure you're delivering high-quality care, that is not a phenomenon that's unique to New York. And so I, you know, I think there's a lot of interest in how they approached this.

MANN: Most of the cost of Medicaid expansion under the ACA is being paid by the federal government, but the share borne by states is rising. Governor Cuomo created a new commission to find efficiencies in New York's program. That could mean stricter enrollment standards or cuts to reimbursements to health care providers. Assembly Speaker Carl Heastie, a Democrat who represents the Bronx, says tax hikes for the wealthy should also be on the table.

(SOUNDBITE OF ARCHIVED RECORDING)

CARL HEASTIE: We would always rather raise revenue than cut. We would always like to call on them to do more in that regard instead of cutting health care or denying health care.

MANN: One other controversial idea being considered in New York would make local governments pay more to help sustain Medicaid if costs keep rising fast. If approved by the state legislature, that would force people in New York City to pay hundreds of millions of dollars more in taxes each year.

Brian Mann, NPR News.

Download the Mercatus study and NPR Transcript.

Nebraska could pave the way forward for Medicaid work requirements

MICHAEL BRADY

Nebraska's two-tiered approach to Medicaid expansion has spawned interest among health wonks because its work requirement could stand up to legal scrutiny.

The Trump administration has been pushing states to adopt a Medicaid work requirement, claiming that such policies can improve people's health outcomes by getting them to work more. Many red states were eager to pursue a work requirement because it aligns with the ideological commitments of conservative policymakers, but the courts have ruled against them so far.

But Nebraska is tacking a new approach that circumvents one of the courts' most pressing concerns with work requirements: Medicaid enrollment.

In November 2018, Nebraskans voted in favor of a ballot initiative that extended Medicaid coverage to most able-bodied adults ages 19 to 64 that earn up to 138% of the federal poverty level. Rather than pursue a conventional Medicaid expansion, Nebraska opted to request a Medicaid 1115 or "state innovation" waiver from the CMS last month that would allow it to create two tiers of Medicaid benefits for the newly eligible population.

Comments on Nebraska's proposal are due January 17.

The "Prime" tier will allow expansion enrollees to receive the same Medicaid benefits as Nebraska's traditional Medicaid population if they fulfill community engagement, personal responsibility and wellness activities. The "Basic" package would cover basic health services and prescription drugs, but drop coverage for dental, vision and over-the-counter drugs. Medicaid expansion enrollees would receive basic benefits even if they don't fulfill any of the activities required for prime benefits. Under the plan, the state would check every six months to determine whether a beneficiary was eligible for basic or prime benefits. Beneficiaries could be locked out of prime benefits for one year if they don't fulfill all of the reporting requirements.

The state's community engagement requirement could be fulfilled through work, searching for a job, education, volunteering or other qualifying activities.

Nebraska's Department of Health & Human Services claims the approach would improve the health of the expansion population, increase patient engagement, deliver a better experience for patients and providers, and slash healthcare spending. But many healthcare experts are skeptical of those claims.

Federal courts have shut down work requirements in Arkansas, Kentucky and New Hampshire because their policies could lower enrollment by denying coverage to

otherwise eligible people if they failed to meet reporting requirements. Some states paused implementation of their work requirements until the courts settle the matter.

Does this comport with the objectives of the Medicaid program, which is to provide health coverage to vulnerable people? said Joan Alker, executive director and a co-founder of the Center for Children and Families and a research professor at the Georgetown University McCourt School of Public Policy.

It's a question the courts will eventually decide, according to Tiffany Friesen Milone, policy director for the OpenSky Policy Institute, a left-of-center Nebraska think tank.

I don't see how we (the state of Nebraska) don't get sued, she said.

Integrity concerns behind work requirement support

Conservative policymakers and researchers have increasingly supported additional Medicaid work and reporting requirements in recent years due to concerns about Medicaid's integrity. They're worried that states are enrolling ineligible people, said Aaron Yelowitz, a professor in the Department of Economics at the University of Kentucky and a senior fellow with the libertarian Cato Institute.

Citing his academic research and recent reports from HHS and its Ofice of the Inspector General, Yelowitz said that "states are gaming the system by misqualifying people to get higher federal match rates" rather than steering them into programs they're eligible for, like non-expansion Medicaid enrollment.

There are people eligible under some pathway, but that pathway is one where the state bears some more expense and (the state is) ripping off the federal government, he said.

But many Medicaid experts think that Yelowitz's concerns about the program's integrity are vastly overblown. They argue that he and other like-minded researchers and policymakers misunderstand or "grossly misrepresent" the data on Medicaid improper payments using faulty logic and research methods.

Still, both sides agree that program integrity is a legitimate goal for states and the federal government.

If people think the Medicaid program isn't run well, it could "undermine support for the program," Yelowitz added.

During last month's Medicaid and CHIP Payment and Access Commission meeting, the commissioners requested that MACPAC's staff look into what's behind Medicaid's improper payment rates.

Most of the commissioners were more concerned about misnomers being spread about Medicaid's program integrity than there being significant integrity problems.

Better data could go a long way toward informing experts and the public about how concerned they ought to be about it. But most experts aren't worried about it for now.

No evidence that work requirements work

Red states have been enamored with Medicaid work requirements for the past couple of years because conservative policymakers think that they could boost workforce participation and trim state Medicaid expenditures by moving more people onto commercial insurance plans.

But a 2018 study in the New England Journal of Medicine found that 18,000 people in Arkansas lost coverage when the state implemented its work requirement, and there was no significant bump in beneficiary employment. The state's employment rate went up during the demonstration period, which the state ended early.

Correlation has been confused with causality, Akler said. "Healthier people are more likely to work because they're healthier."

Nebraska's waiver, if approved, would be a valuable opportunity to find out what works and what doesn't. Medicaid 1115 waivers were created for the purpose of researching and demonstrating new policy approaches.

But the state didn't include an evaluation plan in its waiver proposal, saying that it would "work with an independent entity to develop a robust evaluation plan and methodology" to test its hypotheses. It's unclear how Nebraska or the CMS would learn anything from the demonstration because the state hasn't explained how it would know if the experiment was working or not.

Critics of the proposal say that the lack of an evaluation plan suggests the underlying policy aim is to cut spending by denying people benefits rather than to experiment with new ideas to change how people behave.

Diving deeper into Nebraska's plan

Nebraska's proposal asks that the CMS waive Medicaid's 90-day retroactive eligibility

requirement, which covers three months of medical services for Medicaid-eligible people that aren't enrolled. The state says that waiving the requirement would incentivize people to fulfill reporting requirements, maintain coverage and improve the continuity of care. It would also allow the state to avoid paying for medical expenses incurred during that period.

The state's application carves out specific populations from the retroactive eligibility waiver, such as pregnant women, who would likely benefit from better care continuity and continuous coverage. Nebraska's proposal didn't detail why it doesn't want to include those populations in the demonstration.

Many low-income individuals may not know that they are eligible for Medicaid and may not seek care for a condition until the condition becomes unmanageable, the Nebraska Section of the American College of Obstetricians and Gynecologists said in a letter. "Ending retroactive eligibility may further encourage such self-imposed rationing of care as patients will likely try to avoid incurring medical bills they cannot pay."

The reporting complexity of the proposal would likely interrupt enrollment, rather than improve maintenance of coverage, experts say.

Nebraska would need to conduct an expensive, resource-intensive outreach campaign to ensure that Medicaid beneficiaries and providers understand the differences in benefits and eligibility and reporting requirements. That's especially difficult in a rural state like Nebraska.

The intent should not be to trip people up. It should not be to create a system that is so impossible that you need to have a Ph.D. to figure out what's going on, Yelowitz said.

A "robust system" would make it easy for eligible people to enroll and maintain coverage and ensure program integrity by preventing ineligible people from receiving benefits, according to Yelowitz.

Automated reporting could reduce the administrative burden on beneficiaries, making it is easier for them to maintain eligibility while achieving the goals of state policymakers. For example, if a Medicaid enrollee is working, information about their wages could be automatically collected and reported using existing unemployment insurance data.

But there's a fundamental conflict between making sure that eligible people can enroll in and maintain Medicaid coverage, and preventing ineligible people from receiving benefits, Yelowitz said.

Additional reporting requirements will likely lead to more eligible people losing some coverage, at least temporarily. And the evidence isn't clear that it's worth the tradeoff.

The additional reporting would probably increase uncompensated care, said Andy Hale, vice president of advocacy for the Nebraska Hospital Association. That would hurt providers, especially in rural areas that are already struggling.

The state would likely spend a huge sum of time and money administering the much more complex Medicaid expansion, which might not be worth the cost, Friesen Milone said.

Kentucky's Medicaid administrative costs went up more than 40% when it implemented its waiver because the federal government doesn't provide matching funds for many implementation expenses.

Download the Mercatus study and Modern Healthcare article.

Cuomo must start explaining how he'll close New York's $4B Medicaid gap

By Post Editorial Board

A bombshell Post report on lax Medicaid oversight and massive fraud suggests one way to start plugging New York's $4 billion budget hole. Yet Comptroller Tom DiNapoli's right: Gov. Andrew Cuomo needs to spell out his own fixes ASAP.

Brian Blase in Sunday's Post gave the lowdown from his recent Mercatus Center study with Aaron Yelowitz: up to 433,000 New York "residents with income above the allowed limit" are enrolled in Medicaid. And the number of New Yorkers getting benefits despite earning too much to qualify rose "by more than 80 percent" from 2012 to 2017.

Improper payments tripled nationwide from 2013 to 2018, hitting a whopping $75 billion a year. The federal Health and Human Services Department found that 15 percent of New York applicants were improperly enrolled, costing the state $500 million over just six months. In The Bronx, 40 percent of all adults with over-the-limit incomes nonetheless got a green light in 2017.

What's fueling the fraud surge? Partly, ObamaCare's Medicaid expansion and the feds' willingness to pay more of its costs. That led states like New York to stop "assessing whether applicants are eligible."

Blase says illegal enrollees are "one of the main reasons" for the state's $4 billion Medicaid gap - which means that better screening can help close it.

Meanwhile, the Empire Center's Bill Hammond notes that spending per recipient has spiked since 2016, yet Cuomo's only notable response was to push costs to the next year. The gov even boosted provider repayments (after a hospitals group donated nicely to the state Democratic Party).

A state budget spokesman says Team Cuomo is now hammering out Medicaid cuts, with details due next month. Yet DiNapoli is on target in pushing for more info, faster.

Hospitals and other care providers certainly need to plan for smaller reimbursements. And if Cuomo can't fully close the Medicaid gap, more cuts will have to come from the rest of the budget - which has a $2 billion shortfall on top of the Medicaid hole.

Cuomo's failure to act sooner is part of why he now finds himself in such a jam. The more he delays, the worse it will get.

Download the study and NY Post Editorial. View the research summary.

New York City is a hot spot for illegal Medicaid enrollment

By Brian Blase

New York state is grappling with a Medicaid shortfall in the billions of dollars. And one of the main reasons is improper enrollment.

Using annual information from the Census Bureau to assess the demographic make-up of Medicaid enrollees over time, researcher Aaron Yelowitz and I estimated that 2.3 million to 3.3 million Medicaid enrollees nationally make an income in excess of what is allowed.

This is of increasing importance given that ObamaCare massively expanded what was historically a welfare program for vulnerable populations like the disabled and low-income children and pregnant women - and tens of billions of taxpayer dollars are at stake.

Excluding traditional pathways onto Medicaid (such as through disability or pregnancy), Yelowitz and I concluded that the number of working-age New York state residents on Medicaid who have incomes above the eligibility threshold rose by more than 80 percent between 2012 and 2017. We estimated that between 337,000 and 433,000 working-age New York state residents with income above the allowed limit are improperly enrolled in Medicaid.

And nearly half of this improper enrollment is in New York City, with 30 percent in The Bronx and Queens, where a few neighborhoods have among the highest percentage of improper enrollees of anywhere in the country.

In The Bronx, particularly the Concourse, Highbridge and Mount Eden regions, we found that roughly 40 percent of all working-age adults with incomes exceeding income eligibility thresholds were enrolled in Medicaid in 2017. The next-worst area is in Queens - the Elmhurst/South Corona, Jackson Heights/North Corona and Sunnyside/Woodside regions. In those areas, there are likely tens of thousands of ineligible Medicaid enrollees.

ObamaCare deserves much of the blame for the surge in improper enrollment. It created a new category of Medicaid recipients - lower-income, able-bodied, working-age adults - with the federal government paying a much larger share of their expenses than for traditional enrollees.

In order to get a handle on its budget crisis, New York should conduct targeted eligibility reviews in The Bronx and Queens.

In order to get a handle on its budget crisis, New York should conduct targeted eligibility reviews in The Bronx and Queens.Getty Images

From 2013 - the year before ObamaCare's Medicaid expansion took effect - to 2018, there has been a surge of Medicaid payments out of compliance with legal criteria. In fact, improper Medicaid payments more than tripled.

While states bear some of the burden for improper spending, most of the bill is picked up by the federal government. We estimated that improper payments now exceed 20 percent of federal Medicaid expenditures, an amount above $75 billion each year.

As a result of ObamaCare's more generous Medicaid funding, many states - including New York - have stopped properly assessing whether applicants are eligible before they enroll.

While the health-care industry, particularly insurance companies, has benefitted from ObamaCare's windfall of federal cash and improper Medicaid enrollment, traditional enrollees face a harder time obtaining care - and taxpayers are stuck with an enormous tab.

'We estimated that improper payments now exceed 20 percent of federal Medicaid expenditures, an amount above $75 billion each year'

The inspector general at the federal Department of Health and Human Services found substantial problems with New York state's process for reviewing Medicaid eligibility. The state made large numbers of errors and did not always maintain documentation. An audit of the entire state's program found 15 percent of applicants improperly enrolled. The size of the error was staggering, with the inspector general estimating that New York state improperly claimed more than $1.8 billion in a six-month period on behalf of more than 900,000 ineligible enrollees or people who were enrolled without having submitted all the proper documentation.

In order to get a handle on its budget crisis, New York should conduct targeted eligibility reviews in The Bronx and Queens. If the state doesn't act, the federal government must step in and require eligibility reviews in these hot spots and others around the country. Some level of government owes it to taxpayers and to those who are truly eligible to get enrollment right.

Brian Blase, a special assistant to President Trump at the National Economic Council from 2017-19, is president of Blase Policy Strategies. Aaron Yelowitz is an economics professor at the University of Kentucky and a senior fellow at the Cato Institute. They are co-authors of the new Mercatus Center study, "The ACA's Medicaid Expansion: A Review of Ineligible Enrollees and Improper Payments."

Download the study and NY Post Op-Ed. View the research summary.

Before passage of the Affordable Care Act (ACA), Medicaid covered individuals with disabilities, lower-income seniors, pregnant women, and lower-income children along with their adult caretakers. The ACA opened program eligibility to working-age, able-bodied adults with incomes up to 138 percent of the federal poverty level. It also set much higher federal reimbursement rates for state expenditures on the new enrollees so that the federal government covers nearly the entire cost.

In their new study, "The ACA's Medicaid Expansion: A Review of Ineligible Enrollees and Improper Payments," Brian C. Blase and Aaron Yelowitz find evidence that enrollment has been much higher than expected in states that adopted the expansion, that significant errors and problems permeate state eligibility determinations for Medicaid, and that many program enrollees are ineligible. States are responsible for monitoring who enrolls in Medicaid, but the federal government foots most of the bill. Given the structure of the ACA Medicaid expansion, states have little, if any, incentive to spend wisely or to strictly follow enrollment guidelines.

The financing structure for the Medicaid expansion presents states with incentives to classify individuals - both those already eligible for Medicaid under previous criteria and those formerly ineligible for Medicaid - as newly eligible. Additionally, healthcare interest groups in the states, such as hospitals and insurers offering Medicaid managed care, generally benefit from maximizing Medicaid enrollment, particularly at the elevated rate. As these groups have significant political power in state capitols and most of the money is flowing from the federal government, the lack of program integrity from states is not surprising. The problematic incentives facing states necessitate competent and vigorous federal oversight of the program, which unfortunately has not occurred to date because the Obama administration actually canceled Medicaid eligibility reviews from fiscal years 2014 through 2017 and the Trump administration has pursued other priorities in the program.

The Medicaid Financial Structure is Broken

Evidence suggests there has been significant dysfunction and problems with Medicaid enrollment after the ACA:

* Audits by the Department of Health and Human Services and several states have found a broken process, with eligibility rules routinely ignored and many ineligible and potentially ineligible individuals enrolled in Medicaid. In particular, audits in California, Colorado, Kentucky, and New York have shown large numbers of both ineligible and potentially ineligible Medicaid enrollees.

* A new Centers for Medicare and Medicaid Services (CMS) audit shows significant errors in how states are reviewing and determining eligibility, with an improper payment rate likely in excess of 20 percent.

* State audits in Louisiana and Oregon have shown a broken eligibility process, with large numbers of ineligible or potentially ineligible enrollees.

* Substantially more working-age adults with incomes above 138 percent of the federal poverty line, particularly those who do not otherwise meet Medicaid eligibility criteria, are enrolled in Medicaid.

States are Not Properly Screening for Medicaid Eligibility

Audits by the Office of the Inspector General (OIG) at the Department of Health and Human Services found many shortcomings with states' Medicaid eligibility processes, including the following:

* Failing to maintain proper documentation

* Not properly verifying income eligibility

* Misclassifying individuals into the newly eligible category

* Failing to properly verify citizenship

Correcting these problems would protect federal taxpayers and ensure that states are contributing their lawful required amount for Medicaid enrollees. For example, the OIG estimates that New York made federal Medicaid payments of more than $520 million on behalf of almost 400,000 ineligible beneficiaries during its six-month audit period. Fixing these problems would also ensure that resources are being used to provide services and care for the people that Medicaid was originally intended to serve.

Addressing these shortcomings would also create fairness between the states. The nine states with the largest percentage point change in Medicaid enrollment of adults with income above 138 percent of the federal poverty level (New Mexico, California, Kentucky, Rhode Island, West Virginia, Oregon, Washington, Arkansas, and Colorado) all experienced a more than doubling of the percentage of this group enrolled in Medicaid. There are some areas, such as New York City and Los Angeles, where the problem is so egregious that it may be a sign of purposeful abuse of the program rules and potentially of fraud.

A few Medicaid expansion states, such as Delaware, Hawaii, Indiana, Iowa, and New Hampshire, appeared to do a reasonable job of avoiding improper Medicaid enrollment.

Four Key Recommendations

1) Congress should reform Medicaid financing so that states have better incentives to obtain value from program expenditures, by making fixed payments to states rather than open-ended reimbursements and by equalizing the reimbursement rate between traditional Medicaid populations and the expansion group.

2) CMS (on behalf of federal taxpayers) should recover costs that have been improperly claimed.

3) CMS should target states and regions with particularly egregious abuses of the system for immediate eligibility redeterminations.

4) The Congressional Budget Office should evaluate why initial cost estimates were so inaccurate and work to more accurately model the Medicaid expansion going forward.

Download the study. View the research summary.

Improper Enrollment In Medicaid Soars

Grace-Marie Turner

Conversations about serious issues like health reform have been taking a back seat to impeachment hearings that dominated Washington's attention this week. Health care didn't even take top billing in the Democratic presidential debate on Wednesday.

Does this mean that the left is regrouping after being hammered by critics both inside and outside the party over the various Medicare for All designs?

Perhaps.

Elizabeth Warren backpedaled this week, now saying she is going to start out with a "robust public option" and then, after "the American people will have experienced the full benefits of a true Medicare for all option," push for full government control of the health sector in year three of her presidency "when public support will be stronger."

Sigh.

We don't have space here to go into all the reasons why this is so completely unrealistic. But it does show that the American people may be catching on to the reality of the scheme.

Today In: Business

A new government report came out this week showing how wasteful and expensive government programs are.

Galen's Brian Blase, now a regular contributor to The Wall Street Journal, teamed up with Cato's Aaron Yelowitz to analyze a Centers for Medicare and Medicaid Services report about improper spending in Medicaid.

Turns out the share of recipients who are enrolled in Medicaid but who do not meet eligibility criteria has grown sharply since Medicaid expansion began in 2014 - when the Obama administration stopped auditing enrollment eligibility.

The CMS report shows "high levels of observed eligibility errors."

Improper spending in the Medicaid program more than tripled in 2019, pointing to misuse of the program since it was dramatically expanded under Obamacare, Blase and Yelowitz find.

Because of the perverse incentive in the ACA's, states see Medicaid expansion as a cash cow and have generally failed to conduct their own eligibility reviews. One HHS audit found that more than half of sampled enrollees in California's Medicaid program were either improperly enrolled or potentially improperly enrolled.

Nonetheless, Democratic leaders are undeterred in their opposition to private health insurance choices. They held a news conference this week decrying short-term, limited-duration health plans and calling them "junk plans," something I heard in my multiple congressional testimonies earlier this year. They want to shut down one of the only affordable options for health coverage available to people who simply can't pay the outrageous premiums for Obamacare policies.

The Trump Administration, under Brian's leadership, produced a rule allowing these policies to be renewable for up to three years, and they can be a lifeline for struggling families. One single dad with two sons told me that he no longer could afford premiums for the ACA-qualified plan he once had. He dropped the coverage but wanted to make sure his boys were covered so he bought a short-term plan.

Some time later, one of his sons contracted leukemia, and the plan has paid hundreds of thousands of dollars for his care. He says he doesn't know where he would be without the short-term plan and can't understand why anyone would call this coverage "junk."

Nonetheless, too many states are limiting the plans to only three months - as the Obama administration had done, denying their citizens this coverage option.

Download the Forbes article. View the WSJ Op-Ed.

Medicaid expansion was a key component of ObamaCare. In 2014 when the expansion started, the feds stopped doing audits of states' Medicaid eligibility determinations. The Obama administration's goal was to build public support for the new law by signing up as many people as possible. Now, after a four-year hiatus, the Centers for Medicare and Medicaid Services have begun auditing program eligibility again. According to a report released Monday, the audits found "high levels of observed eligibility errors," meaning a significant number of people are enrolled in Medicaid who shouldn't be.

Our analysis of the CMS report suggests that the expansion appears to have more than tripled the amount of improper spending in the program. Twenty percent or more of Medicaid spending in 2019 - an amount likely to exceed $75 billion - is improper. Before ObamaCare, the Medicaid improper-payment rate was 6%.

Medicaid is a welfare program that finances health and long-term-care expenses of eligible recipients. America is a generous country, and it should have a public safety net to help individuals who confront extreme difficulties. Since welfare programs are expensive, it's important that only eligible recipients receive benefits. Historically, the Medicaid program largely met that standard, covering lower-income children, pregnant women, adult caretakers, seniors and the disabled.

Download the CMS report. View the WSJ Op-Ed and subsequent reaction.

Improper Medicaid Enrollment Following ACA Expansion

Aaron Yelowitz

NOVEMBER 15, 201910.1377/hblog20191115.353837

In a hearing before the House Energy and Commerce Committee on October 23, 2019, Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, testified that new data show significant problems with Medicaid eligibility. This is not surprising; in a National Bureau of Economic Research (NBER) working paper issued in August, my academic colleagues and I used microdata from the Census Bureau's American Community Survey (ACS) from 2012 to 2017 to examine eligibility of the Affordable Care Act's (ACA) expansion of Medicaid. We found evidence of substantial improper Medicaid enrollment following the expansion.

Recent postings by Tricia Brooks and by Judith Solomon and Matt Broaddus have criticized both these findings and a recent Wall Street Journal op-ed I co-authored with Brian Blase, who until recently served the White House National Economic Council. As I explain below, much of the criticism is incorrect and was preemptively addressed in the paper. Moreover, numerous other pieces of evidence indicate there is a serious problem of ineligible enrollment in the ACA's Medicaid expansion programs.

NBER Working Paper Findings

In the aforementioned article, my colleagues and I compared nine states that had not expanded Medicaid coverage to the childless, working-age population at all prior to 2014 and that adopted the expansion in 2014, to 12 non-expansion states. We found that nine expansion states had significantly higher Medicaid coverage rates after implementation compared to 12 non-expansion states. Most noteworthy, we found significant increases in enrollment among those whose incomes potentially render them ineligible.

The income cutoff for the Medicaid expansion is 138 percent of the federal poverty level, roughly $36,000 for a family of four in 2019. There are some reasons why adults with incomes above this threshold could qualify for Medicaid (see explanation below), but people with incomes above 138 percent of poverty are generally not included.

We found that when states expanded Medicaid, enrollment by working-age adults with incomes above 138 percent of poverty rose 3.0 percentage points (from 2.7 percent to 5.7 percent, an increase of 111 percent of the base rate). We view this as potentially improper enrollment. Potentially improper enrollment increased over time, to more than twice as much in 2017 (3.7 percentage points) as in 2014 (1.5 percentage points).

Given that approximately 17.4 million working-age adults had incomes exceeding the Medicaid threshold in these states, even seemingly modest numbers such as these could translate into many improperly enrolled individuals. For example, if 3 percent of all people with income above 138 percent of poverty improperly enrolled in Medicaid, that translates into more than 500,000 people in just those nine expansion states.

This analysis has limitations, which we acknowledged and addressed. Several critics mischaracterized the analysis and results in an apparent attempt to downplay the potential problem of improper enrollment. I address those here and cite numerous government audits on improper Medicaid expansion enrollment. My coauthors and I also conducted additional robustness checks in response to the criticism, and the conclusion is the same - there are sizable numbers of ineligible Medicaid expansion enrollees.

Income Volatility

One reason that someone who appears income ineligible might be Medicaid eligible is income volatility. Someone with low income in the month they apply would likely have been properly enrolled at application if it turns out his or her annual income exceeds 138 percent of poverty.

To address this, we also conducted the analysis for individuals with annual incomes exceeding 250 percent of poverty (approximately $65,000 for a family of four). Far fewer people who have income above 250 percent of poverty for the year will have income in any month that would lead them to qualify for Medicaid.

Our substantive conclusions scarcely changed in response to this analysis. In expansion states, Medicaid coverage increased among this group from 1.4 percent to 3.1 percent - by 1.7 percentage points or 121 percent of the base rate. Potentially improper enrollment is much higher in 2017 than 2014. This increase in Medicaid coverage well above the eligibility thresholds suggests serious eligibility problems.

For ACS respondents with incomes at or above 250 percent of poverty, there was sizeable growth in Medicaid enrollment in expansion states relative to non-expansion states (Exhibit 1).

Exhibit 1: Average annual Medicaid enrollment among adults ages 19-64 with incomes above 250 percent of federal poverty level

Source: Courtemanche J, Marton J, and Yelowitz A. Medicaid coverage across the income distribution under the Affordable Care Act. Cambridge (MA): National Bureau of Economic Research; 2019 Aug.

Yet, the critics ignore this evidence. In their argument, they cite a Health Affairs study on income volatility that restricted its sample to individuals below 200 percent of poverty and states: "Most people with incomes of 200-400 percent of poverty receive insurance through their employers and are unlikely to participate in Medicaid or exchange plans in large numbers; therefore, they were not included in the sample."

Since this paper acknowledges that people above 200 percent of poverty would likely not be participating in Medicaid at any time during the year, we used a more conservative robustness check by examining individuals with incomes exceeding 250 percent of poverty.

After the criticism, however, we conducted further checks. We created a subsample of respondents with income above 250 percent of poverty who report working both full year (50 or more weeks) and full time (40 or more hours per week). Income volatility should be less important for full-time, full-year workers, who are also more affluent than the full sample of respondents with incomes above 250 percent of poverty. Prior to the expansion, Medicaid coverage was 0.4 percent for full-time, full-year workers (compared with 1.4 percent for respondents above 250 percent of poverty), and the percentage with employer-sponsored health insurance was 77.6 percent (compared to 69.9 percent for respondents above 250 percent of poverty). The impact of the Medicaid expansion on coverage remains highly significant. The expansion raised Medicaid coverage for full-time, full-year workers with income above 250 percent of poverty by 0.8 percentage points (200 percent above the base rate). The results once again show much larger increases in potentially improper Medicaid enrollment in 2017 (1.0 percentage points) relative to 2014 (0.4 percentage points).

American Community Survey Data Issues

The critics raise some other issues with ACS data quality and our empirical judgements. Brooks notes that Medicaid coverage is not "based on actual administrative enrollment data" and is relying on "unadjusted self-reported survey data as a proxy for actual Medicaid income eligibility and enrollment." Solomon and Broaddus note "a meaningful share of respondents appear to misreport their source of insurance coverage, as significant differences between survey-based estimates and administrative data show." These comments are correct, but they ignore that public health insurance coverage tends to be underreported in such surveys.

The Department of Treasury's Office of Tax Analysis compared health insurance sources from the Internal Revenue Service tax form 1095 to measures from various surveys. For individuals younger than age 65, administrative tax data revealed 75.6 million covered life years from all public insurance sources, while the point of interview measure in the ACS revealed 66.6 million individuals. Another study in Health Services Research found that "starting in 2014, there was a large undercount in expansion states that was absent in non-expansion states," leading to "downwardly biased estimates of expansion on means-tested coverage in the ACS relative to administrative records." The undercount exceeded 10 percent in expansion states for every year between 2014 and 2016, with ACS data missing approximately 3.9 million Medicaid enrollees. In contrast, non-expansion states had Medicaid enrollment counts far closer to administrative sources. Taken together, these findings almost certainly mean our results understate the magnitude of improper enrollment in expansion states.

Another issue raised by the critics is the complexity of household size for calculating Medicaid eligibility. Brooks notes: "The ACS household requests information for everyone in the household, including non-married partners, in-laws, roommates, and other individuals who should not be counted in determining the household size or income for Medicaid." In response, we examined the results by restricting the sample to nuclear families, in which all individuals in the household are a household head or couple and their children. Once again, we found significant effects of the expansion on potentially improper enrollment. Overall, the expansions lead to a 2.2-percentage-point increase in Medicaid coverage for nuclear families with incomes at or above 138 percent of poverty (from a baseline rate of 1.8 percent), and 1.2-percentage-point increase for those at or above 250 percent of poverty (from a baseline rate of 0.8 percent).

Other Pathways To Medicaid

Our principal findings do not change when we exclude working-age adults who may have alternative pathways to qualify for Medicaid. In particular, we exclude survey respondents with the other lawful pathways to qualify for Medicaid - those who reported having a baby in the previous year; reported disability; or reported income from public assistance, Supplemental Security Income, or Social Security. The impact of the ACA's Medicaid expansions on improper enrollment scarcely changes. Medicaid enrollment among this group increases by 2.7 percentage points after implementation of the expansion, compared to 3.0 percentage points for the overall population. In fact, as a percentage of the base rate (now 1.4 percent rather than 2.7 percent), the effect is now considerably larger (193 percent compared to 111 percent).

Brooks mischaracterizes this finding, asserting that "while the sensitivity analysis appears to substantially change their results, the authors still focus on the unadjusted numbers." On the contrary, the results from the sensitivity analysis that exclude adults who may have alternative pathways support rather than undercut the main findings.

Audit Studies

Our critics argue ineligible enrollment is not a significant issue because states have procedures for verifying eligibility. Brooks states, "All income must be verified through trusted electronic sources when possible, or through documentation provided by the enrollees." Solomon and Broaddus write, "Medicaid Programs Have Stringent Verification Procedures." Of course, such assertions are merely statements of what government is supposed to be doing. Second, several government audits corroborate our findings, showing that existing verification procedures are inadequate and that there are sizeable numbers of ineligible expansion enrollees.

As of September 2019, the Office of Inspector General (OIG) at the Department of Health and Human Services has published results from a series of audits covering part of the 2014-15 period in four states (California, Colorado, Kentucky, and New York) for beneficiaries enrolled in the expansion. The OIG has also released reports on similar determinations for non-newly eligible adults in California, Kentucky, and New York. All the reports show that there are serious problems with eligibility-verification systems, and policy experts are naive to take it on faith that they are working.

Consistent errors include neglecting to verify income eligibility properly, misclassifying individuals into incorrect category classifications, failing to properly verify citizenship, and other issues. Some of these enrollment errors lead to incorrect and often higher federal reimbursement for individuals who would qualify for Medicaid under a category other than "new adults," while others lead to complete ineligibility for Medicaid. As examples:

California's "eligibility determination systems lacked functionality or eligibility caseworkers made errors...the State agency did not properly input application information and verify income or lawful presence." The OIG estimated more than 366,000 ineligible and 79,000 potentially ineligible beneficiaries.

In Colorado, "contrary to the provisions of its own verification plan, [the state] relied on self-attestations rather than income verifications." In addition, "lags in both the eligibility system and the State agency's reasonable compatibility process...delayed disenrollment." The OIG estimated more than 85,000 ineligible and 13,000 potentially ineligible beneficiaries.

In New York, the OIG estimated more than 47,000 ineligible beneficiaries. The OIG points to an example in which one beneficiary was enrolled after attesting to an income of approximately $35,000 with a household size of one, despite the income threshold being $16,105 for a household size of one.

Kentucky "did not always meet Federal and State requirements when making eligibility determinations because of human and system errors." The OIG estimated nearly 35,000 potentially ineligible beneficiaries.

A state-level audit in Louisiana noted serious deficiencies in the eligibility process as well. Unfortunately, imprecise language in the Louisiana audit led many media outlets to report that the state had performed a random sample of 100 Medicaid expansion enrollees and found 82 of them were ineligible. It was actually a targeted audit. Regrettably, the imprecise language was reflected in the Wall Street Journal op-ed.

Conclusion

The critics of our NBER working paper and Wall Street Journal op-ed did not raise any substantive issues that we did not already acknowledge and address in the paper. The evidence - whether broad survey data from the Census Bureau's ACS or highly detailed audits from the OIG - suggests serious problems with program integrity related to the ACA's Medicaid expansion. Based on Verma's recent testimony, it appears we will soon have more information about the extent of the issue.

Download the NBER working paper and Health Affairs blog post.

How to Think About Health Coverage

New Census data show the poverty rate fell for the fourth year in a row.

The number of Americans without health insurance rose last year, the Census Bureau reported Tuesday, and Democrats say this justifies more government control. Yet the reality is more complicated - in particular, note that having a Medicaid card is no guarantee of great medical care.

The good Census news is that real median earnings of men and women who work full time and year round "increased by 3.4% and 3.3%, respectively, between 2017 and 2018." Some 2.3 million more Americans are working full time. The poverty rate fell 0.5 percentage points from 2017, to 11.8%, the fourth annual decline in a row.

Yet 8.5% of Americans lacked health insurance in 2018, up from 7.9% in 2017, the first increase since the recession, and this figure is getting all the media attention. Much of the decline comes from a dip in Medicaid coverage, and as a general rule you'd expect fewer folks to qualify for Medicaid as the economy improves and poverty declines.

Download the NBER working paper and some discussion points for reporters.

Often those who are unable to re-establish themselves in society due to the collateral consequences of conviction find themselves drifting back into crime. In that regard, recidivism caused by these collateral consequences also imposes significant costs on our society as a whole. See Aaron Yelowitz & Christopher Bollinger, Prison-To-Work: The Benefits of Intensive Job-Search Assistance for Former Inmates, CENTER FOR STATE AND LOCAL LEADERSHIP CIVIC REPORT i (2015) (finding that as many as two-thirds of the 650,000 inmates released from prison in 2015 will be re-arrested within three years, and that the average cost of re-incarceration for each nonviolent offender is $231,000).

Download the report or the Supreme Court filing.

SEPTEMBER 10, 2019 | GLENN DAIGON

SOCIAL INSECURITY: WHEN RETIREMENT MEANS HARDSHIP, STATES MOVE TO FILL THE VOID

When signing the Social Security Act into law in 1935, President Franklin D. Roosevelt said that it is impossible to ensure the entire population against all hazards, but that the new program would "give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."

Roosevelt recognized Social Security as one leg of the "three-legged stool" supporting the retirement security of seniors. The other two "stool legs" were defined pension plans and personal savings.

In recent decades, the legs of the stool have become increasingly wobbly.

It is estimated that only about half of private sector workers are covered by an employer-sponsored retirement savings plan. With pension plans fast disappearing, more and more workers are forced to rely solely on Social Security benefits to get by in their later years.

And a disproportionately high percentage of these workers are employed by small businesses, make less than $20,000 a year, and are people of color.

Federal efforts to address the retirement income gap have so far failed to come to fruition. Prospects look brighter at the state level.

Because state governments fear that seniors with inadequate retirement income will mean a strain on social services, some are taking action by offering state-sponsored retirement plans. And one of the most popular of those plans is the "auto-IRA" (Investment Retirement Account).

An Ounce of Prevention?

State auto-IRA programs require employers to automatically enroll their employees in an investment retirement account. (Employees have the right to opt out if they do not want to participate.) Unlike 401(k) plans, the auto-IRAs do not provide an option for employers to match contributions.

The benefit under auto-IRA programs, advocates say, is that the state takes the burden of setting up these programs off employers.

Under the present private system, employers must take the time to research the right plan for their employees, plus pay a fee to participate in a private retirement plan. Under auto-lRAs, employers are not charged fees and the state does all the administrative work, researching and then setting up employers with the best retirement plans for their workforce.

For example, Oregon's auto-IRA program, OregonSaves, has set salary default levels for employees who choose to remain in it. The default deferral rate - 5 percent of pay that automatically increases by 1 percent a year until reaching 10 percent - would ensure that a 25-year-old uncovered earner could retire at age 67 at close to 80 percent of his/her working take-home pay.

The momentum this policy has enjoyed is in large part due to frustration with the private sector's retirement options.

There's been a persistent problem of small firms not offering retirement plans ... lt is a real hassle for small employers, Anek Belbase, research fellow at the Center for Retirement Research, told WhoWhatWhy.

Workers are 15 times more likely to save for retirement if they are offered a retirement plan at their workplace, according to the American Association of Retired Persons (AARP). The main reason: contributions are automatically deducted from their paychecks.

Because auto-IRAs are a mandate on private employers, so far they have been a non-starter in red states. They have become law only in the blue states of Oregon, California, Illinois, New Jersey, and Maryland.

Blue-leaning Colorado is seen as the next likely state to pass this measure.

Some of the criticism of auto-IRAs has come from political quarters that are unhappy with burdening business with another government mandate. They fault auto-IRAs for a one-size-fits-all approach to the problem.

Individual firms that understand their workers' needs are certainly better suited to find solutions, Aaron Yelowitz, professor of economics at the University of Kentucky and senior fellow at the Cato Institute, told WhoWhatWhy. "Such solutions could include many of the same ideas; many companies have voluntarily adopted auto-enrollment 401(k)'s."

Critics also cite statistics showing that a third of the workers who would be directed into auto-IRA programs hold credit-card debt exceeding $5,000, and that 15 percent have difficulties meeting basic needs. Steering payroll into IRAs would make them worse off, these critics contend.

Paying 18 percent interest on credit card balances while earning perhaps 5 percent in an IRA is a losing proposition, Yelowitz said.

Not surprisingly, advocates disagree with both of these assertions.

They argue that the critics do not factor in the multiplier effects of starting to save for retirement while young, with the impact of compounded returns. Supporters say the discussion should not be about limiting opportunities to save but about making sure all workers can comfortably save for retirement.

Others opposed to auto-IRAs say the same goals can be realized through less intrusive government programs. Some favor setting up a more transparent marketplace so employers can more easily find a good provider for a 401(k) plan. Washington state has that program in place.

Vermont's law, the Multiple Employer Plan (MEP), allows small employers to pool resources so as to lower the research and administrative costs of finding the right private retirement plans.

According to the US Chamber of Commerce, the time and energy used in advancing auto-IRAs could instead be used more profitably to advance MEPs.

MEPs would greatly reduce both the regulatory compliance costs and the overall expense in offering a plan, declared the Chamber in a 2017 statement.

These latter two plans are voluntary and do not involve employer mandates.

The Rubber Meets the Road

There has been much back and forth between advocates and critics about how many workers covered by auto-IRAs would participate and how many would opt out.

Supporters cited a recent Pew survey showing that, after receiving information on how auto IRAs work, only 13 percent of currently uncovered workers would opt out of the program. The automatic enrollment part of the program received 73 percent support and the automatic escalation of contributions received 68 percent support. The automatic-escalation feature raises the percentage of the employee contribution each year until it reaches a certain level.

More tangible evidence of the policy impact of auto-IRAs has recently become available. The first phase of OregonSaves was implemented in July 2017, and some early returns have come in.

According to a study by the Center for Retirement Research, 62 percent of affected workers were opting in, while 33 percent were opting out. The remaining 5 percent were non-contributing participants, i.e., they made some initial contributions to the program but had since set their contributions to zero. And, as of November 2018, 93 percent had not changed their automatic payroll contribution rate of 5 percent.

Of the remaining 7 percent who had made a change, 5 percent had decreased their IRA contribution rate and 2 percent had increased their rate - usually to 10 percent.

In about three years, said Belbase, "Oregon will have rolled out its program to all eligible employees," giving the public and policymakers more of a concrete idea of how successful the program will be. .

Others are less than impressed with these preliminary results.

Without mandating Oregon employers to enroll their workers, OregonSaves would struggle to compete in a vibrant marketplace with many inexpensive alternatives for retirement contributions, Yelowitz said.

With CalSavers (California's version of a state-sponsored retirement program) slated for a phased rollout over the next few years, even more evidence will soon be available on the effectiveness of auto-IRAs - especially since CalSavers could give as many as 7.5 million currently uncovered workers access to a retirement savings program.

But even with this momentum at the state level, the road ahead for auto-IRAs will not be smooth. An April 2018 article in Mother Jones magazine details how the National Association of Insurance and Financial Advisors (NAIFA) and the Chamber of Commerce have flexed their considerable political muscle to successfully block other states from passing auto-IRA programs.

They [NAIFA] don't want the state to demonstrate how easy and cheap and effective it can be to put together a retirement plan for these folks, said Iowa state treasurer Michael Fitzgerald, referring to successful industry efforts in Iowa to block auto-IRA legislation.

Whether grassroots supporters can overcome powerful industry opposition may well determine if auto-IRA programs expand to other regions - or will remain a novelty, limited to only a few blue states.

Download the article.

Ineligible adults could get Montana Medicaid

Medicaid was established for low-income children, pregnant women, the disabled, and seniors. In 2016 Montana's Medicaid program added adults without children, costing taxpayers another $800 million a year. But are recipients really low-income?

There's a huge problem in some of the states that "expanded" Medicaid, as Montana did. Many individuals "appeared to gain Medicaid coverage for which they were seemingly income-ineligible." Writing in the Wall Street Journal, Brian Blase and Aaron Yelowitz say, "there's evidence of massive improper enrollment. According to 2018 reports by the Inspector General's Office at the Department of Health and Human Services, 25% of Medicaid expansion enrollees were likely ineligible in both California and New York. A state audit in Louisiana found 82% of expansion enrollees were ineligible at some point during the year they were enrolled. People who entered no income while exploring their options via the federal exchange website were automatically enrolled in Medicaid."

A legislative audit here in Montana found the Department of Health and Human Services "does not verify income prior to enrollment ... and does not verify income information from FFM (federal website) applications," and individuals do not have to, "report changes in income or resources." One-fourth of flagged cases received no follow-up.

The audit states: "When ineligible people are enrolled in Medicaid and obtain Medicaid services, federal and state taxpayer dollars cover Medicaid services for people for whom they were not intended. This potentially leaves fewer resources for those actually eligible for benefits."

DPHHS needs to tighten its income verification procedures to make sure taxpayer dollars are available to assist those with low incomes.

Download the NBER working paper, some discussion points for reporters, and the Billings Gazette article.

Renee Shaw and guests discuss public assistance and government welfare programs, including Medicaid and food stamps. Scheduled guests: Secretary Adam Meier, Kentucky Cabinet for Health and Family Services; Ashley Spalding, Ph.D., senior policy analyst at the Kentucky Center for Economic Policy; Anne-Tyler Morgan, member of the McBrayer law firm and senior fellow with the Pegasus Institute; and James Ziliak, Ph.D., an economist and founding director of the University of Kentucky Center for Poverty Research.

Medicaid expansion argument continues, with both sides in General Assembly citing reports to bolster their positions

By Richard Craver Winston-Salem Journal Aug 19, 2019

Day 53 of the state budget stalemate came and went Monday without any attempt to break the logjam on the House floor.

Meanwhile, both sides relied on recent Medicaid expansion reports as dueling proxies for their reasoning for and against supporting House Bill 655.

Republicans need at least seven Democratic House members and at least one Democratic senator to vote for a veto override for it to pass. The next opportunity for a vote would be 2 p.m. today. All 120 members were present at Monday's floor session.

As the two sides remain entrenched, analysts say it could take weeks, if not months, for a compromise to be reached.

Democratic Gov. Roy Cooper has cited the lack of Medicaid expansion as a primary reason for his June 28 veto. He also said there's not enough money in the Republican state budget dedicated to public education spending, infrastructure and environmental issues.

Cooper's compromise proposal, sent to the legislature July 9, included an average 8.5% raise for public-school teachers. The Republican budget offers a 3.8% raise.

Several studies, including by the Kate B. Reynolds Charitable Trust and the Cone Health Foundation, have shown that between an additional 450,000 and 650,000 North Carolinians could be covered by Medicaid if expansion were approved by the state legislature and federal health regulators.

"Let me be clear about something - I am not vetoing this budget just because it fails to expand Medicaid," Cooper said June 28 in a statement resubmitted by his office Monday.

"I am vetoing this budget because it fails in many ways. This budget is an astonishing failure of common sense and common decency."

Joseph Kyzer, a spokesman for House speaker Tim Moore, said Aug. 12 that "the speaker will hold the veto override when the votes are secured, and we are steadfastly committed to passing the $24 billion state budget separately from any consideration of Medicaid expansion."

On Monday, after Rep. Marvin Lucas, D-Cumberland, praised several 120-0 votes on non-controversial bills, Moore suggested that "there is another bill the House could pass 120-0 if you'd like."

The comment drew wide laughter shortly before the session was adjourned for the evening.

Against Medicaid expansion

The office of Senate leader Phil Berger, R-Rockingham, touted Monday a report from the National Bureau of Economic Research that addressed the socioeconomic status of Medicaid expansion participants.

The report examined 12 non-expansion states, including North Carolina, and nine blue, red and purple expansion states. A purple state is one without a strong partisan identity.

The Affordable Care Act makes Medicaid available to households with incomes below 138% of the poverty line, or nearly $36,000 for a family of four.

The NBER report found a significant number of individuals receiving Medicaid-subsidized health coverage in the nine expansion states whose household income made them ineligible for expansion coverage.

They were, however, eligible for coverage through paying premiums in the federal health marketplace exchange.

Researchers determined that "the fact that healthcare.gov is designed to be a one-stop-shop for insurance coverage that routes applicants to either Marketplace or Medicaid coverage as appropriate could lead to some confusion in terms of the applicant's final source of coverage."

Researchers said many applicants in the nine expansion states may have under-reported their household income to become eligible, or did so because they anticipate lower household income by the time they would be eligible.

"The fact that multiple private insurance companies sell both Marketplace and Medicaid managed care plans may also contribute to this confusion," the researchers said. "Both of these explanations may be just as likely to lead to individuals under-reporting Medicaid coverage as over-reporting it."

Berger's office pointed to a Wall Street Journal op-ed piece on the report by two right-leaning economists, one who has served in the Trump administration.

Their op-ed referred to the Affordable Care Act as a "Medicaid deception" and "a giant welfare program ... with millions of working- and middle-class Americans improperly receiving Medicaid."

Favoring Medicaid expansion

Meanwhile, state Democratic legislators, including Forsyth County's Sen. Paul Lowe and Rep. Evelyn Terry, touted a June 26 Cone Health and Kate B. Reynolds report in a recent community town hall on Medicaid expansion.

According to the report, if Medicaid were expanded as early as November 2019, 464,000 North Carolinians would gain coverage by the end of 2020; by the end of 2022, that number would increase to 634,000.

Medicaid already serves 2.14 million North Carolinians, representing about 21% of the state population. Another 1.6 million will be enrolled in Medicaid through a new managed-care program that is projected to be rolled out in the state between November and February.

That rollout, however, is dependent on $218 million in start-up funding in the 2019-20 state budget.

The report determined that expanding Medicaid would create more than 37,000 jobs, including 20,600 in the health-care sector, by the end of 2022, as well as bring in an additional $11.7 billion in federal Medicaid funding from 2020 to 2022.

An earlier report, done in 2014 by the same group, projected 8,962 jobs created and 93,471 more individuals insured by 2020.

"Every community stands to benefit from Medicaid expansion," said Dr. Laura Gerald, the president of Kate B. Reynolds Charitable Trust. "The evidence shows that closing the Medicaid gap will improve population health, support vulnerable North Carolina families and boost the economy across the major sectors."

Stalemate cost

It's estimated that it costs $42,000 a day for the N.C. General Assembly to operate.

It has cost $1,050,000 in taxpayer money, as of Monday, after Democratic Gov. Roy Cooper's June 28 veto of the Republican state budget plan passed by both chambers.

The clock on the additional expenses began when Republican House leadership first put a veto-override vote on the calendar for the July 8 session without taking a vote.

Since then there have been 24 House sessions held, the vast majority without the veto override being heard.

The bipartisan Medicaid expansion legislation House Bill 655 was put on the agenda for the first time July 10. It has not been addressed for 22 consecutive sessions.

Download the NBER working paper, some discussion points for reporters, and the Winston Salem Journal article.

The Medicaid Expansion's Fraud Problem

By ROBERT VERBRUGGEN

August 16, 2019 11:22 AM

Under Obamacare, states have the option of expanding their Medicaid programs to cover residents who earn up to 138 percent of the federal poverty level, overwhelmingly at federal expense: For every $100 a state spends on its expansion, taxpayers nationwide chip in at least $90. Unsurprisingly, states seem less than enthusiastic about restricting the expansion to people who actually qualify for it, as Brian Blase and Aaron Yelowitz lay out in a Wall Street Journal piece.

The latest research on this issue, released earlier this week, is a paper that Yelowitz co-authored. It finds that much of the increase in Medicaid enrollment, as measured by the American Community Survey, seems to be among people above 138 percent of poverty:

We examine 21 states where alternative routes for higher-income, abled-bodied, working-age adults to qualify for Medicaid were essentially non-existent prior to the implementation of the ACA in 2014. Of these 21 states, 9 of them implemented full Medicaid expansions to 138% of the FPL in 2014, while 12 of them never implemented expansions (as of 2019). . . .

We find that the 2014 Medicaid expansions led to a 3.0 percentage point increase in Medicaid enrollment among working-age adults with incomes at or above 138% of the FPL, a sizable effect from a baseline rate of 2.7%. This translates into approximately 522,000 seemingly income-ineligible enrollees across the 9 states, and 47% of the entire gain in insurance coverage for these relatively higher income adults [who are supposed to enroll on the exchanges, not through Medicaid]. . . .

While we cannot say with certainty why these individuals were able to participate in Medicaid, we offer several potential explanations that should be explored further in future work. One possible reason - echoed in longstanding literature on effective tax rates in welfare programs (Ziliak 2007) - is that the way ACA rules are enforced in states or localities differ from formal federal policy. In practice, issues of prospectively forecasting income for the next calendar year along with anticipating possible deductions in order to compute modified adjusted gross income (MAGI) could lead to income-ineligible individuals receiving Medicaid instead of Marketplace coverage. It is also possible that these findings are attributable to measurement error in either insurance coverage or income in the ACS.

In the study's Medicaid-expanding states, working-age Medicaid enrollment grew by 1.6 million between 2012 and 2017. If 522,000 enrollments are incorrect, that's a big problem.

It's worth stressing, as the authors do, that the data here come from surveys of individuals - who might misreport their earnings or benefit receipt. But if the estimate is even in the right ballpark, federal taxpayers are doling out a lot of money to fund benefits for people who don't qualify for them, and this problem should be addressed.

I will take issue with the WSJ piece on one particular, however: the claim that in a Louisiana audit, "82% of expansion enrollees were ineligible at some point during the year they were enrolled." As I laid out on Twitter earlier this year when I first became aware of this claim, it appears to be based on a misreading of a very confusingly written government report. The auditors did a quick search of the data to find people who seemed ineligible, and upon further investigation found that about 82 percent of those pre-selected people indeed were.

Download the NBER working paper, some discussion points for reporters, and the National Review article.

EDITORIAL: Study: Medicaid expansion leads to increase in fraud

Las Vegas Review-Journal

August 15, 2019 - 9:00 pm

In 2013, then-Gov. Brian Sandoval lunged for the federal carrot and opted to expand Nevada's Medicaid program under Obamacare. Since then, enrollment in the government-run health plan for the poor has exploded. As of May, more than 632,000 Nevadans - about 20 percent of the state's population - were on Medicaid, up more than 90 percent from before the expansion.

Supporters argue the move has been a tremendous success, leaving fewer Nevadans, particularly children, without health insurance. The number of uninsured Nevada children has dropped by more than half in recent years, to under 7 percent, according to state statistics.

None of this has been free, however. Enrollment increases in Medicaid far exceed the state's population growth and - as expected - the generous contributions dangled by the federal government to entice states to expand their programs have been scaled back. As a result, Nevada's share of Medicaid spending is set to jump almost 15 percent over the next biennium to $1.77 billion and now nears 30 percent of the state budget, up from 18 percent in 2010. It remains a ticking financial time bomb.

In addition, opening up a program to able-bodied adults that was established to help the "deserving poor" has apparently led to significant fraud, according to a new study by the National Bureau of Economic Research. The study looked at Census Bureau data from nine states - including Nevada - and found a significant number of new enrollees were improperly using Medicaid to avoid paying premiums for private insurance.

Nevada's Medicaid expansion entailed relaxing eligibility standards. Depending on individual circumstances, wage earners making as much as 160 percent of the poverty line in Nevada may now apply for public assistance. "In practice, Obamacare has turned Medicaid into an entitlement program for the middle class," write economists Brian Blase and Aaron Yelowitz in a Thursday op-ed for The Wall Street Journal.

The study determined that in the nine states examined, "around 800,000 individuals ... appeared to gain Medicaid coverage for which they were seemingly ineligible." Mr. Blase and Mr. Yelowitz note that other recent federal and state audits have found evidence of "massive improper enrollment" in the wake of Medicaid expansion.

Medicaid fraud isn't new, of course, but Obamacare's ballooning of the rolls has exacerbated the problem. Governing magazine reported in 2013 that states which take the issue seriously by looking for patterns that might indicate fraud or waste save millions of dollars. The value of fraud prevention "is extraordinary," a Florida Medicaid official told the publication.

Given the rapid rise in Nevada's Medicaid rolls - and the skyrocketing costs - state officials should assign this issue a high priority.

Download the NBER working paper, some discussion points for reporters, and the Las Vegas Review-Journal article.

ObamaCare wasn't supposed to give free health insurance to everybody. The Affordable Care Act's authors expected the poor would enroll in Medicaid, while those with higher incomes would buy coverage through the new insurance exchanges, with subsidies that decrease as income rises.

It isn't working. A study published this week by the National Bureau of Economic Research finds that in several Medicaid-expansion states most people who gained coverage have enrolled in Medicaid regardless of their income. In practice, ObamaCare has turned Medicaid into an entitlement program for the middle class.

Using data from U.S. Census Bureau's American Community Survey, the authors assessed coverage changes from 2012-17 in nine states that expanded Medicaid vs. 12 states that didn't. They uncovered a huge problem. In 2017 alone, in those nine states, "around 800,000 individuals ... appeared to gain Medicaid coverage for which they were seemingly income-ineligible."

Download the NBER working paper and some discussion points for reporters.

Here's the slightly longer version (with links):

Pennsylvania's Auto-IRA proposal can do real harm

In a recent editorial, this newspaper correctly highlights the impending insolvency of Social Security and the lack of retirement preparation among many workers as major policy issues.

However, endorsement of state-run auto-IRAs for Pennsylvania workers is the wrong way to go and is based on two important misperceptions. The first misperception is that 2.1 million Pennsylvania workers do not have access to retirement accounts simply because their employers do not offer them a 401k plan. Both traditional and Roth IRAs allow workers to save for retirement with similar tax benefits and can be set up with minimal expense. The issue is not lack of access, but rather that workers must take active steps to set-up an account, and choose both investment options and contribution amounts.

The innovation with state-run auto-IRAs is reliance on passivity. The editorial endorses an automatic contribution of up to 4% of salary where the employee can opt-out. The second misperception is that "few would miss (the automatic contribution) during their working years." My colleagues and I have recently examined how state-run auto-IRAs will affect workers. One-third of potentially affected workers hold high-interest credit card debt with a balance exceeding $5,000. Approximately 15% of workers have difficulty meeting basic needs like paying rent or utility bills. For many workers, state-run auto-IRAs would worsen their financial situation instead of improving it.

Finally, state policymakers exhibit a shocking amount of lack of responsibility in offering retirement options through auto-IRAs. The bloated administrative expenses in OregonSaves are 100 basis points, twenty times as high as if a worker set up a Roth IRA that tracked the S&P 500.

Download the letter.

Download the blog post.

Con - Aaron Yelowitz - Professor of Economics, University of Kentucky; Senior Fellow, Cato Institute.

Written for CQ Researcher, February 2019

Obesity is on the rise in the United States. In 1999, 30.5 percent of American adults were considered obese, a term that refers to a 5-foot-10-inch male weighing over 210 pounds or a 5-foot-4-inch female weighing over 175 pounds. By 2015, that had jumped to an alarming 39.6 percent. Although the economic costs of obesity vary widely, some argue that they justify government intervention. Before heeding their advice, lawmakers should take a good look at the results of past efforts.

One form of government intervention is the requirement that restaurants and other eating establishments publish calorie information on their menus to inform patrons about nutrition in order to prompt them to make healthier choices. The Affordable Care Act, better known as Obamacare, included this requirement, which took effect in 2018.

In a recent study for the Cato Institute, I explored whether such mandates actually reduce obesity. My work drew upon well-respected, public-domain surveys between 2003 and 2012 involving nearly 300,000 adult respondents in 30 large cities. The results are clear: Menu mandates have very little impact on body weight, obesity or other health-related outcomes. Based on the data, for example, the average menu mandate helps a 5-foot-10-inch, 190-pound adult male reduce his weight by only half a pound.

For virtually all groups, the long-term impact of menu mandates is essentially zero. When menu mandates do affect people's weight, it is generally only in the short term, through a "novelty effect" that wears off quickly. Even groups thought to experience the largest gains in knowledge from the mandates exhibit no significant changes in weight.

New York City highlights this futility. During his tenure, former Mayor Michael Bloomberg spearheaded multiple efforts at improving public health, including a menu mandate that took effect in 2008. Despite these efforts, New Yorkers' body weights and obesity increased.

None of this is surprising. Advocates for menu mandates wrongly assume that consumers make dining choices in extreme ignorance of how choosing a cheeseburger over a salad will affect their health. For many years, virtually all major restaurant chains have offered downloadable apps that allow health-motivated consumers to obtain detailed nutrition information.

Consumers weigh many factors besides nutrition - such as the taste of food or its pricing - in making their choices, and the evidence reveals that they do not act much differently when calories are displayed on the menu.

Download the pro/con article and Cato study.

CalSavers works on paper, but saddles workers with debt

By TIMOTHY HARRIS, KENNETH TROSKE and AARON YELOWITZ

California is one of five states that has implemented automatic, state-run individual retirement accounts, known as "auto-IRAs," in recent years. California's workers - many of whom aren't adequately preparing for retirement - should absolutely be saving more, and on paper, auto-IRAs move in that direction. But that doesn't mean all of those workers are coming out ahead.

Here's how it works: The CalSavers program automatically contributes a portion of a worker's salary into a tax-preferred retirement plan when her company does not offer a retirement plan like a 401k. Although the worker has the freedom to opt-out of the IRA, the evidence shows that few take the active step to disenroll.

In a similar fashion, virtually all workers without employer retirement plans could easily contribute to an IRA without state involvement, but few take the active step to enroll. A Federal Reserve study shows that 40 percent of households have given little or no thought to retirement, and less than 30 percent have an IRA or Roth IRA.

The significant proportion of households without any retirement cushion besides Social Security is a serious long-run issue, but are state-run auto-IRAs like CalSavers the correct approach?

We explore this in a new study published in The Journal of Retirement. Although default enrollment does succeed at increasing retirement savings in tax-preferred plans, there can be unintended, and damaging, consequences for California workers.

Primarily, workers with high-interest debt are nudged into contributing part of their paychecks to an IRA where it isn't used to reduce debt. If the interest on this debt - from credit cards, student loans, or auto loans, for example - exceeds the return of an IRA, than the auto-IRA results in a negative rate of return for the worker.

Think of it this way: In 2017, the typical interest rate on credit card plans was 13 percent while the risk-free investment return in an IRA was less than 2 percent. The guaranteed return from paying down high-interest debt first is certainly a smarter financial move.

If programs like CalSavers were implemented on a national scale, about 18 million individuals would contribute. One-third of those workers would have credit card debt with an average balance of nearly $5,500. Approximately one-fifth would have student loans or auto loans. And many experience difficulty paying bills such as rent or utilities, or affording balanced meals. Overall, millions of workers who struggle to make ends meet would have part of their paychecks redirected to state-run programs, which would put them in a more precarious financial position.

State-run auto-IRA programs blindly assume all workers without retirement plans would benefit from enrollment and exposure to the investment market. That may be true for some, but not for the millions who carry significant high-interest debt.

Some of the best policy alternatives involve "smart defaults" for consumers or workers who face complex financial decisions like choosing health insurance plans. In the world of health insurance, a smart default design analyzes health utilization patterns and auto-enrolls the person in the plan which yields the greatest expected financial benefit. Consumers have the freedom to switch to any health insurance plan they want, but - much like with retirement savings - very few end up doing so.

In the context of retirement saving, a smart default design could benefit millions of workers and their families. Those who carry substantial high-interest debt, face imminent financial distress from bankruptcy, eviction or foreclosure, or are behind on essential obligations like child support could be automatically opted-out of IRA participation. Workers could then more easily meet those immediate, pressing obligations. Our research shows this would drastically reduce the scope of the auto-IRA program and target only those most likely to benefit from its use.

Retirement saving is an important issue, but a one-size-fits-all policy harms nearly as many California workers as it benefits.

Timothy Harris, Kenneth Troske and Aaron Yelowitz are economics professors at Illinois State University and University of Kentucky, and coauthors of the new study "How Will State-Run Auto-IRAs Affect Workers?"

Download the article. Link to study.

Some of the key points to convey about Medicaid work requirements.

First, with standard preferences, work requirements change the budget constraint to increase participation in the workforce and hours of work (up to the threshold).

Second, Medicaid participation will fall for two reasons.

The first reason is that some individuals will be unable to find work and will not satisfy the hours requirement. With national unemployment currently hovering under 4%, and the unemployment rate in the 75 Arkansas counties varying between 2.4% and 5.9% in November 2018, the availability of jobs would not appear to be a prohibitive reason for disqualification. A robust labor market allows able-bodied adults to satisfy the hours requirement.

The second reason is that some individuals will not comply with the reporting requirements -- e.g., "red tape" -- that go along with receiving public health insurance. If time, effort, and documentation from complying is modest, this suggests the costs of enrolling in the program exceed the benefits of Medicaid coverage. A likely interpretation for those that do not comply is that recipients place a low valuation on the public coverage they receive.

Placing a low valuation on Medicaid coverage would be consistent with the modest impact of Medicaid on access and health from ACA studies such as Courtemanche et al. (SEJ, 2018) and Courtemanche et al. (EEJ, 2019).

Download the article.

Bitcoin buyers see cryptocurrency in their financial future

By Andrea Rumbaugh | December 15, 2017

Sheldon Weisfeld spent the afternoon servicing Bitcoin ATMs, moving dollars fed into the machine for purchasing Bitcoin to the side that spits out cash when customers sell some of the suddenly popular currency.

He's been doing a lot more of that the last six months as the so-called "digital gold" jumped in value by roughly $15,000 and the number of new customers at his three machines here tripled. For many, it's a tangible way to dabble in an ethereal financial system.

"They realize this is not Monopoly money," said Weisfeld, CEO of Houston-based CoinVault ATM. "This is real, hard U.S. dollars. This is a game changer."

Early adopters of the electronic currency, created in 2009, were mostly computer masterminds or Libertarian-leaning idealists seeking a decentralized banking system. Bitcoin slowly gained steam, until this year's spike and media buzz made it a household name. By Friday afternoon, the value had surpassed $17,000.

A giant financial stamp of approval came earlier this week when Cboe Global Markets launched Bitcoin futures trading. CME Group is expected to follow suit next week, either paving the way for a technology-based, peer-to-peer transaction system or fueling a speculative bubble poised to burst.

"It's quite conceivable, and in my view quite likely, that the price is dramatically inflated," said Craig Pirrong, professor of finance at the University of Houston's C.T. Bauer College of Business.

The future of Bitcoin and its practicality related to other cryptocurrencies remains a topic of debate. Pirrong believes there is a future for digital money, but Bitcoin might not be the major player. He questions its usefulness on the two main purposes of currency: facilitating transactions and storing value.

Bitcoin isn't the best for buying coffee, for instance, as its behind-the-scenes technology can take 10 minutes to approve a transaction. But it could be a more affordable option for companies needing to send millions of dollars to overseas vendors.

On the value front, consumers expect $100 worth of Bitcoin will buy roughly $100 worth of goods and services in a week. The recent upward movement could mean that $100 is worth more, though it could also swing the other direction. Pirrong said such volatility is not desirable for saving money or building assets.

Yet economist Camden Dore said it "functions very well" as a store of value because the algorithm dictates that only 21 million Bitcoins will ever be created. These are infinitely divisible, but he said the limited supply will prompt people to hold Bitcoin as a financial asset, creating scarcity and buoying prices.

That's not to say the market isn't experiencing a bubble. Many people are buying Bitcoin because of the steep price hikes and may sell if there's a rapid drop, said Dore, a senior associate at Sutton Stone, a local business accelerator that also helps companies embrace cryptocurrencies.

"What you're seeing now is a very young currency," Dore said.

Some local companies are already integrating Bitcoin into their businesses. Weisfeld, who is also in real estate, will soon allow renters to pay in Bitcoin.

Weisfeld installed his first ATM at George R. Brown Convention Center in 2014. This year, CoinVault ATMs were installed at the Meineke Car Care Center across from Katy Mills and at Smartphone Repair in southwest Houston. He plans to add two more locally, plus 13 ATMs outside the area, in the first quarter of 2018.

"We know that mainstream adoption is coming," he said.

To use one of the ATMs, which convert cash to Bitcoin and vice versa, people need a smartphone, ID and cash. The ATM scans their ID and prompts new customers to create an online account. They put in cash, which is converted into Bitcoin, and they get a printed receipt detailing how much Bitcoin they own. There is no physical coin or bill.

Customers also can go to coincafe.com to manage their newly created accounts.

Troy Fearnow, who founded Cryptoart.com, a business to store digital currency in artwork, in The Woodlands in 2014, said Bitcoin's sudden ascent in value has been validating. But he admits he would prefer slower, consistent growth. He reports the company, now based in Austin, has doubled sales each year.

"I've been telling my friends about (Bitcoin) for years," he said. "It's funny, my phone has been blowing up the past couple of months."

Jim Joseph, a 40-year-old Sienna Plantation resident of Libertarian-leaning political views, says he was drawn to Bitcoin's decentralized aspect four years ago. He, too, finds affirmation in the rate increase.

"The more the price goes up, the more it validates our original belief that Bitcoin and blockchains are going to replace the old financial system and the old middle-man system," he said.

The Houston native used publicly available code to help develop a variation of Bitcoin, called Bitcoin Scrypt. Today, he's a senior associate at Sutton Stone and helps clients tackle the technical and legal aspects of incorporating blockchain, the technology behind cryptocurrency, into their business.

He also sees cryptocurrencies as a way of encouraging younger generations to embrace Libertarian ideals - even though he suspects the true motivation of the recent Bitcoin adopters.

"I personally believe it's more speculators than Libertarians," he said. "But again, the market is validating these Libertarian ideals."

Economist Aaron Yelowitz of the University of Kentucky agrees political beliefs are not what motivates people to use Bitcoin. His 2015 study, based on analysis of Google search data, found one driver was Bitcoin's suitability to black markets because skilled users can make it difficult to trace the currency back to the purchaser.

"It serves a purpose for covering your tracks," he said, "and there's always going to be a need for that."

Bitcoin long was associated with a former online black market called the Silk Road, but today's enthusiasts are trying to distance the cryptocurrency from illegal uses.

Dore argues the dollar is far more anonymous than Bitcoin, and the majority of crimes involve cash. Further, he said, cryptocurrencies have a public ledger and require in-depth understanding of the technology to truly be anonymous.

"I think a lot of mainstream people will try to point to nefarious uses of Bitcoin as a way of discrediting it," he said.

Either way, Yelowitz recommends treating Bitcoin like the lottery. People shouldn't invest more than they can afford to lose.

That was Jed Goldberg's perspective when he invested in Bitcoin three or four months ago as it became more mainstream.

"I think it's great technology," he said. "I think there's a chance for future appreciation."

But like many others, he's not sure which digital currency will emerge as the winner. Bitcoin has its drawbacks, and other up-and-coming cryptocurrencies may prove more practical. So Goldberg, 31, of Houston also invested in Litecoin and Ethereum.

UH professor Pirrong said this is just part of the trading game, noting that when people think gold or silver is worth too much relative to the other they sell one and buy the other.

"People are doing the same kind of trading with cryptocurrencies that they've done with wheat and oil," Pirrong said.

Dore, of Sutton Stone, said people who missed the rise in Bitcoin are purchasing other cryptocurrencies hoping they, too, will see their value rise.

Kevin Sykes, 31, of Cypress invested earlier this year in one called Ripple. He thinks it will succeed because it works with banks and governments.

Sykes also invested in Bitcoin and said he feels the rise has helped bring up the value of Ripple. He believes technology ultimately will move people toward a cashless society.

"It's going to take a while," he said, "but I definitely think that's the way society is going to go."

Download the Houston Chronicle article or the Yelowitz & Wilson study.

An important question aside from outright discrimination is whether poor underlying race relations in an area might create a chilling effect on homeownership for minorities. From 2012 onward, there were a series of high-profile events in the U.S. related to police brutality which highlighted racial tension. Using Google Trends, we characterize a locality's underlying racial climate based on search interest in these charged events. We use data from the American Community Survey prior to any of these flare-ups and show that the ownership decision for blacks is responsive to the racial climate; black homeownership in localities with the most charged racial climates is 5.6 percentage points lower than in the least charged racial climates based on a sample of movers.

Download the study.

In 2012, Kentucky implemented Medicaid managed care statewide, auto-assigned enrollees to three plans, and allowed switching. Using administrative data, we find that the state's auto-assignment algorithm most heavily weighted cost-minimization and plan balancing, and placed little weight on the quality of the enrollee-plan match. Immobility - apparently driven by health plan inertia - contributed to the success of the cost-minimization strategy, as more than half of enrollees auto-assigned to even the lowest quality plans did not opt-out. High-cost enrollees were more likely to opt-out of their auto-assigned plan, creating adverse selection. The plan with arguably the highest quality incurred the largest initial profit margin reduction due to adverse selection prior to risk adjustment, as it attracted a disproportionate share of high-cost enrollees. The presence of such selection, caused by differential degrees of mobility, raises concerns about the long run viability of the Medicaid managed care market without such risk adjustment.

Download the study.

UK economics institute supports serious debate. By Aaron Yelowitz

The series of statements in Tom Eblen's recent column on tax policy could lead an unsuspecting reader to believe that the September panel discussion hosted by the John H. Schnatter Institute for the Study of Free Enterprise at the University of Kentucky, headlined by economist Arthur Laffer, was a politically motivated celebration of supply-side economics.

This interpretation could not be further from the truth. And since Eblen did not attend the event, he is in no position to accurately characterize it through statements made entirely out of context.

I write to offer an accurate characterization of the event, which was not at all politically motivated but designed to foster a respectful, intellectual discussion of all sides of fiscal and tax policy.

The 90-minute forum, attended by 380 people, featured an intellectually diverse panel of four experts on tax and budgeting matters. In addition to Laffer, we were delighted to have Jason Bailey of the Kentucky Center for Economic Policy, and two of my colleagues from the economics department, Chris Bollinger and William Hoyt.

The four panelists engaged in serious and civil discussion. On some tax policy issues - such as broadening the tax base - there was common ground, while on other issues - such as the impact of cutting taxes on economic growth - there was clear disagreement. The panelists also responded to audience questions.

The Schnatter Institute's mission is to enhance public understanding of the connections among free enterprise, markets and individual freedom through rigorous research and open dialogue. We are committed to engaging with the campus-wide and larger community, and we achieved this goal for the tax policy event by going beyond sound bites and one-liners and diving into serious discussion of a policy issue that matters for all Kentuckians.

Just as there is vigorous competition in markets for many goods and services, there is also a market for ideas and policy solutions. In the market for ideas, the Schnatter Institute's approach is to facilitate intellectual competition by bringing some of the brightest minds together. We aim to provide transparency and dissemination of our activities.

For all who are interested, the entire tax policy event is freely available online. The video speaks for itself. I would encourage everyone - including Eblen - to view the actual event.

Aaron Yelowitz is an associate professor of economics at the University of Kentucky and the associate director of the Schnatter Institute for the Study of Free Enterprise. His website is www.Yelowitz.com .

Download the article.

How will State-Run Auto-IRAs Impact Workers?

Using the 2014 SIPP, we find that auto-IRAs would impact over 24 million workers if enacted on a national scale. One-third of impacted workers hold credit card debt with an average balance exceeding $5,000. Roughly 15% of impacted workers had difficulty meeting basic needs.

Download the working paper.

Scan bipartisanship not enough to end political war over Obamacare

Senators Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., introduced a bipartisan bill that will finance cost-sharing subsidy payments to health insurance companies for the next 2 years.

"This agreement provides certainty on out-of-pocket reduction payments for the next 2 years [and] will address attempts by this administration to keep people from getting enrolled in care they need," Murray said during a speech on the Senate floor.

A bipartisan bill is "a significant development," particularly for Republicans, who are "at a crossroads" after repeated, unsuccessful attempts to repeal and replace the Affordable Care Act (ACA), according to Jonathan Oberlander, PhD, professor and chair, department of social medicine, and professor in the department of health policy and management at the University of North Carolina-Chapel Hill.

"When it comes to the ACA, there has been scant bipartisanship," Oberlander told Healio.com. "I imagine there will be strong Democratic support to maintain funding for cost-sharing reductions, but will Republicans go along with this effort? Is there enough in the deal to satisfy conservatives who want to end the ACA?"

The bill, which must still be approved by Congress and signed by President Donald J. Trump, was introduced 4 days after attorneys general from 18 states and Washington, D.C., sued the Trump administration in response to the announcement that the administration would end cost-sharing subsidy payments to health insurers. California Attorney General Xavier Becerra led the states in filing the lawsuit.

The administration is "... refusing to comply with federal law in a way that will hike the cost of care for millions of Americans by withholding critical subsidies that make care more affordable," Becerra said in a statement. "Taking these legally required subsidies away from working families' health plans and forcing them to choose between paying rent or their medical bills is completely reckless."

In the complaint, the plaintiffs stated that stopping the payments "directly subverts the ACA and will injure the plaintiff states, their residents and the entire health care system." The complaint also contends that this action is part of the administration's efforts to 'explode' the ACA.

The decision to end the payments was rooted in a legal opinion from Attorney General Jeff Sessions, according to a statement from the White House.

"After a thorough legal review, ... we believe that the last administration overstepped the legal boundaries drawn by our constitution," the statement said. "Congress has not appropriated money for cost-sharing reductions payments and we will discontinue these payments immediately."

Chasing a 'self-fulfilling prophecy'

Cost-sharing reductions increase the incentives for purchasing insurance through better actuarial value, according to Aaron Yelowitz, PhD, associate professor in the department of economics and director of the John H. Schnatter Institute for the Study of Free Enterprise at the University of Kentucky, said in an interview with Healio.com. This is particularly relevant for consumers who choose a silver plan, which has an actuarial value of 70%. Under this plan, 70% of an individual's health care expenses would be paid by insurance; the remaining 30% of expenses would be paid by the individual through deductibles, copays and co-insurance.

"Eliminating cost-sharing reductions makes it less appealing to purchase a silver plan vs. moving to a bronze plan or one of the new types of plans, like association health plans," Yelowitz said.

Ending the cost-sharing reductions payments does have the potential to reduce the number of people who enroll in ACA insurance plans, but the decrease may not be as drastic as anticipated. Individuals are eligible for insurance plans subsidized through cost-sharing reductions, the number of people who enroll in these plans increases in line with the percentage of health care expenses that are covered, according to a study in the Journal of Health Economics. The researchers found "no evidence that cost-sharing reductions influence the extensive margin - that is, the decision to purchase health insurance through the ACA marketplaces."

In addition, it appears that eliminating these subsidies will raise the federal deficit and could increase, rather than decrease, the cost to the government. An analysis from the Congressional Budget Office and the Joint Committee on Taxation estimated that the federal deficit would experience a net increase of $194 billion between 2017 and 2026 if subsidies are eliminated. The same analysis found that the elimination of subsidy payments would be countered by an expanding number of tax credits given to people to purchase insurance outside of the marketplace.

"The Trump administration is pursuing a self-fulfilling prophecy in declaring that the ACA insurance marketplaces are collapsing and then taking actions that could collapse them," Oberlander told Healio.com. "Ending cost-sharing payments to insurers is part of the administration's multipronged strategy to do what Congress couldn't: unravel the ACA. This decision will raise costs for consumers, create turmoil in insurance markets and jeopardize access to health insurance. But, the Trump administration is fine with all of that because, after taking steps to set the ACA marketplaces up for failure, they will turn around and say it is failing."

Groundwork for cost, coverage reduction

The cost-sharing subsidies' events are the latest in a series of health care-related developments from the Trump administration in recent weeks. First was the reversal of an Obama-era policy that required health insurance companies to cover birth control without a copay - any employer may now refuse to provide such coverage on religious or moral grounds. Second was an executive order designed to "expand choices and alternatives" to insurance plans offered through the ACA. Trump signed this order the day before the subsidy announcement.

The executive order allows the secretary of labor to increase access to association health plans on a national scale, in part by expanding the Employee Retirement Income Security Act. It also provides two directives for the Department of Labor, the Department of the Treasury and HHS. The first encourages these departments to increase coverage through short-term, limited duration insurance, which is not affected by mandates and rules outlined in the ACA. The second recommends that these departments explore altering health reimbursement arrangements, which are "employer-funded accounts that reimburse employees for health care expenses, including deductibles and copayments," according to a statement issued by the White House.

The provision of the executive order that allows for greater use of short-term insurance would have an explicit impact on the ACA, as such plans do not have to abide by "costly Obamacare mandates and rules," according to the statement from the White House. In addition, access to association health plans on a national scale could allow insurance companies to operate across state lines, Oberlander told Healio.com. This could further increase the number of plans that are not subject to ACA regulations.

"If association health plans could be created and offered as Employee Retirement Income Security Act group plans, they, too, could potentially circumvent state regulations, which might allow them to operate across state lines," he said. "Moreover, while the ACA closely regulates the individual and small group insurance markets, larger employers are exempt from some of its key regulations. If associations of small businesses are treated like a large business, they, too, would be exempt and could offer plans that don't have to abide by ACA regulations."

These plans are likely to create an imbalance in the insurance marketplace, according to Yelowitz.

"To the extent that these plans achieve their intent - which is, in some ways, to offer pared-down, cheaper coverage - it would be appealing to healthy individuals," Yelowitz said. "What that does, in turn, is exacerbate what economists call an adverse selection death spiral, something that I believe is already happening. Premiums will fall for healthier individuals because they can purchase less comprehensive coverage with lower expected costs and because the mix of people in the pared-down plans is healthier. That leaves sicker individuals in plans available through the health insurance marketplace."

Medical societies voice concern

Multiple medical organizations responded to the actions taken by the Trump administration, including the Endocrine Society, the American College of Cardiology, the American College of Physicians and the HIV Medicine Association.

"The combined effect of these policies adds further uncertainty to the health insurance market, where insurers and individuals are preparing for the start of open enrollment on November 1," the Endocrine Society said in a statement. "These actions also add new pressure for Congress to pass bipartisan legislation to stabilize health insurance markets."

However, disagreement "about whether and how these policies can be implemented via regulation" makes the actual impact of these regulations uncertain, according to the statement.

The American College of Cardiology noted that "the full extent of the effects will not be immediately clear, as the order largely does not make changes itself," and cited concerns about different analyses that suggest that "the proposed changes could destabilize the insurance market, causing certain premiums to spike." The College "remains steadfast in urging all policy makers to prioritize access to affordable coverage and preventative care in the development of all health reform efforts," according to its statement

The HIV Medicine Association expressed concern that the executive order "could begin to unravel health reforms that leveled the playing field for individuals with HIV" and other patients with pre-existing conditions. In addition, the executive order may increase pressure on "safety net health systems" like public hospitals, which would negatively impact "our attempts to control and eliminate our domestic HIV epidemic, especially in the South."

The American College of Physicians (ACP) said the executive order "puts in motion changes through the regulatory process that would lift many of the ACA's insurance rules." In addition, the executive order enables small employers to purchase insurance plans that do not abide by the ACA prerequisite to offer essential health benefits.

The executive order from President Trump does not abide by "the clear intent" of the ACA to provide all Americans with an insurance plan "that covers needed care, does not impose annual or lifetime limits, or exclude or charge more to those with preexisting conditions," according to the statement from the ACP.

"The executive order must not stand," the ACP concluded. "ACP will consider all avenues to prevent these changes from taking place."

At the time of publication, no further actions had been announced regarding the Alexander-Murray bill. In that regard, Oberlander encouraged patience - and caution.

"Keep in mind that this a narrow, short-term deal that fixes a problem the Trump administration created by ending the cost-sharing reductions payments," he told Healio.com. "It doesn't indicate broader bipartisanship. The political war over Obamacare will continue, even if there is a deal on this one front." - by Julia Ernst, MS

References:

American College of Cardiology. President signs executive order reshaping health care system. Available at: http://www.acc.org/latest-in-cardiology/articles/2017/10/12/16/45/president-signs-executive-order-reshaping-health-care-system. Accessed Oct. 18, 2017.

American College of Physicians. ACP: Executive order may result in significant harm to patients by allowing plans to circumvent health insurance market rules. Available at: https://www.acponline.org/acp-newsroom/acp-executive-order-may-result-in-significant-harm-to-patients-by-allowing-plans-to-circumvent. Accessed Oct. 12, 2017.

Congressional Budget Office. The effects of terminating payments for cost-sharing reductions. Available at: https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53009-costsharingreductions.pdf. Accessed Oct. 17, 2017.

DeLeire T, et al. J Health Econ. 2017; doi: 10.1016/j.jhealeco.2017.09.008.

Endocrine Society. Endocrine Society issues statement on health insurance policy announcements. Available at: http://www.endocrine.org/news-room/current-press-releases/endocrine-society-issues-statement-on-health-insurance-policy-announcements. Accessed Oct. 18, 2017.

HIV Medicine Association. President Trump's executive order on health insurance. Available at: http://www.hivma.org/President_Trump_u2019s_Executive_Order_on_Health_Insurance.aspx. Accessed Oct. 19, 2017.

Kaiser Family Foundation. What the actuarial values in the Affordable Care Act mean. Available at: https://kaiserfamilyfoundation.files.wordpress.com/2013/01/8177.pdf. Accessed Oct. 17, 2017.

Planned Parenthood. Trump administration takes direct aim at birth control coverage for 62 million women. Available at: https://www.plannedparenthood.org/about-us/newsroom/press-releases/trump-administration-takes-direct-aim-at-birth-control-coverage-for-62-million-women-2. Accessed Oct. 16, 2017.

State of California Department of Justice - Office of the Attorney General. Attorney General Becerra defends healthcare against Trump sabotage. Available at: https://oag.ca.gov/system/files/attachments/press_releases/FACT%20SHEET%20ACA%20SUBSIDIES_2.pdf. Accessed Oct. 17, 2017.

State of California Department of Justice - Office of the Attorney General. Attorney General Becerra to file lawsuit today to defend Americans' health care against Trump's sabotage. Available at: https://oag.ca.gov/news/press-releases/attorney-general-becerra-file-lawsuit-today-defend-americans-health-care-against. Accessed Oct. 17, 2017.

State of California Department of Justice - Office of the Attorney General. Complaint for declaratory and injunctive relief. Available at: https://oag.ca.gov/system/files/attachments/press_releases/Complaint_6.pdf. Accessed Oct. 17, 2017.

United States Senator Patty Murphy. VIDEO: Senator Murphy announces bipartisan deal to protect families from rising health care costs. Available at: https://www.murray.senate.gov/public/index.cfm/newsreleases?ContentRecord_id=6A60F63E-C1C4-4D7E-A57B-325AA0FA641E. Accessed Oct. 18, 2017.

WhiteHouse.gov. President Donald J. Trump is taking action to improve access, increase choices, and lower costs for health care. Available at: https://www.whitehouse.gov/the-press-office/2017/10/12/president-donald-j-trump-taking-action-improve-access-increase-choices. Accessed Oct. 12, 2017.

Disclosures: Oberlander and Yelowitz report no relevant financial disclosures.

Download the article.

Abstract: The goal of the Affordable Care Act (ACA) was to achieve nearly universal health insurance coverage through a combination of mandates, subsidies, marketplaces, and Medicaid expansions, most of which took effect in 2014. We use data from the Behavioral Risk Factor Surveillance System to examine the impacts of the ACA on health care access, risky health behaviors, and self-assessed health after two years. We estimate difference-in-difference-in-differences models that exploit variation in treatment intensity from state participation in the Medicaid expansion and pre-ACA uninsured rates. Results suggest that the ACA led to sizeable improvements in access to health care in both Medicaid expansion and nonexpansion states, with the gains being larger in expansion states along some dimensions. However, we do not find clear effects on risky behaviors or self-assessed health.

Download the working paper.

Download the podcast.

Dear Colleagues:

I write to announce that I have named Aaron Yelowitz from the Department of Economics to be Director of the Schnatter Institute for the Study of Free Enterprise, subject to approval from the Provost and the Board of Trustees. Since the inception of the Schnatter Institute, Aaron has ably served as Associate Director. His new role is effective July 1, 2017. In selecting Aaron for this important role, I consulted with a committee consisting of current Schnatter Institute affiliates, sitting center directors, the Chair of the Department of Economics, and the Associate Dean for Graduate Programs and Outreach. This committee was very supportive of the appointment. Aaron shares my vision and that of John Garen, founding Director of the Schnatter Institute, that the Institute become preeminent among similar institutes and centers nationwide. We want the Institute to address broad social, policy, and economic issues in a framework of rigorous positive economics through the lens of market-based approaches. We expect the research supported by the Institute to appear in the leading peer-reviewed journals of the relevant disciplines or sub-disciplines, building on the strength of a long-standing, rigorous research culture in the Gatton College. This approach to the study of free enterprise will lead to great impact and visibility. Please join me in congratulating Aaron and in supporting him as he approaches this important leadership role.

I also take this opportunity to sincerely thank John Garen, who stepped down from the role of Director effective June 30. John will continue as a highly involved and supportive affiliate of the Schnatter Institute. He will also continue to administer the BB&T Program for the Study of Capitalism and will collaborate in that role with the Schnatter Institute. The founding of the Schnatter Institute has been a vision of John's for well over 10 years. His ceaseless work on various initiatives to promote rigorous study of capitalism and free enterprise led to the $15 million gift to establish the Schnatter Institute and to name the John H. Schnatter Atrium. His work leaves quite an impressive legacy that will benefit the entire Gatton College for generations to come. Please join me in applauding John for these stellar accomplishments and for his continuing support of these initiatives.

Download the announcement.

What happens to birth control if the Affordable Care Act is repealed?

By Kevin Lewis

JUNE 30, 2017

Romneycare family values

If Republicans "repeal and replace" Obamacare with something less generous, there may be unintended consequences. A study found that Massachusetts health reform (which was a model for Obamacare) increased the birth rate among married women ages 20 to 34 in Massachusetts by around 1 percent, as births became more affordable. Meanwhile, the birth rate among unmarried women of the same age group decreased by around 8 percent, as contraception became more affordable. In other words, relatively more babies were born in wedlock than out of it.

Apostolova-Mihaylova, M. & Yelowitz, A., "Health Insurance, Fertility, and the Wantedness of Pregnancies: Evidence from Massachusetts," Contemporary Economic Policy (forthcoming).

Download the Boston Globe story or the CEP study.

Is it fair that some states are more dependent on the Federal Government than others?

As an economist, I tend to focus on "positive statements" about the way the world actually is, rather than on "normative statements" about the way the world should be. The ability to make sweeping conclusions about dependence on the federal government is more complicated than most people think. We can think about welfare programs with large federal outlays -- for example, the Supplemental Nutritional Assistance Program (SNAP) is fully funded by the federal government -- and the percentage of households participating at the state level. In 2015, 11.3% of households in the U.S. participated in SNAP, with three states -- Oregon, Mississippi, and New Mexico -- having participation rates above 15%, while seven states -- Wyoming, New Hampshire, North Dakota, Utah, Kansas, Colorado, and Montana -- has participation rates below 7.5%. Thus, federal funding tends to flow away from states with low participation and flow to states with high participation.

Generally speaking, this is typically related to a state's income level; for example, Mississippi has high participation in SNAP and is one of the poorest states, while New Hampshire has low participation and is one of the richest states. However, economists also focus on tax expenditures in addition to direct outlays. Tax expenditure is essentially government spending through the tax code; put differently, taxes that are not paid to the federal government because of the way the tax code is organized. For example, some of the largest tax expenditures are for employer provided health insurance and home ownership. Unlike the SNAP example, such tax expenditures tend to favor more affluent states.

What tips do you have for a person that wishes to increase his/her financial independence? What are some first steps?

For all the gimmicks about financial independence and getting rich, it's the unspectacular story that matters the most. You shouldn't buy into "get rich quick." Rather, "get rich slow." What I mean by this is that small steps -- like paying down high interest debt such as credit cards and contributing money to tax-preferred accounts like 401(k)s -- allows you to harness the power of compound interest. If a 25-year-old made a one-time contribution of $5,500 to a Roth IRA in 2017 and the returns in the stock market averaged 7% per year, that contribution would swell to more than $82,000 by the time she retired. The first steps on financial independence that I discuss with my undergraduate students are always about paying down debt and saving money in tax-preferred accounts.

What tips do you have for a person that wishes to reduce his/her job dependency? Should they try to join the "gig" economy?

The biggest hedge against job dependency is to be mobile. To me, this really means two things. First, our economy is extremely dynamic and it's hard to know what jobs will be "good jobs" in the future. Ten years ago, for example, who would have envisioned the disruption to the taxi industry from Uber and Lyft? Although nothing is certain, a credible literature in economics has demonstrated that the return to additional years of education is quite high -- on the order of 7-10% per additional year.

Having more "human capital" is a good hedge against an uncertain labor market, and allows you to more easily transition across jobs and tasks. Second, you should be prepared to literally get up and go. Some of the most prominent economists in the profession have carefully documented that improving your fortunes depends critically on where you live. Some parts of the country -- for example the Appalachian region of the U.S. -- has extremely low mobility, and the people who live there are extremely dependent on a small set of employers in shrinking industries. There are very few barriers to entry for workers to enter the "gig" economy, which would likely put downward pressure on wages or wage growth.

Download the commentary.

Such consequences would be a step back for New York City: An analysis of Census Bureau data, conducted last year by Aaron Yelowitz, an economist at University of Kentucky, found that only 10% of part-time fast-food employees in the city are working that schedule involuntarily. Most seem to prefer flexible part-time work instead of the rigit scheduling that these bills would create.

Download the commentary.

Ransomware attack reveals bitcoin as an accessory to cybercrime: Don Pittis

Cryptocurrency has become the new hidden suitcase full of unmarked bills

By Don Pittis, CBC News Posted: May 16, 2017 5:00 AM ET Last Updated: May 16, 2017 5:00 AM ET

Many good things can be turned to evil uses.

While the anonymous electronic currency bitcoin may have found its first support in the broad community of digital libertarians, the digital payment system has revealed itself as a dangerous tool of criminal oppression.

That has not been good for the cryptocurrency's value.

In a world where big government and giant corporations seem to have an unshakable grip on our lives, the libertarian sentiment that favours anonymity has attracted a justifiably wide following, especially among the high-tech crowd.

But the latest attack by the ransomware program WannaCry, which freezes the victim's computer and threatens to wipe out the data it contains, has been a high-profile demonstration that bitcoin has a dark side.

That is because the substantial ransom demanded by the malware must be paid to the cybercriminals in bitcoins.

No counterculture cheers

Bitcoin has suddenly overtaken the ignominious role in public perception formerly held by a suitcase full of unmarked currency in small denominations left in a secret location.

Perhaps if the attack had been on The Man - on some sort of oppressive corporation or secretive government body - WannaCry would have attracted the counterculture cheers that WikiLeaks has garnered for revealing tax cheats and political hypocrites.

Cyberduffers using old software were a soft target. Targeting them was the work not of Robin Hood but of cyberbullies.

The most oppressive corporations and government departments are the well funded ones best equipped to deal with cyberattacks. In fact, the National Security Agency, a traditional hate object of cyber-libertarians, appears to have invented key parts of the system used in the ransomware attack.

Victimizing the poor and sick

Some of the victims have been larger corporations. But to date the most prominent casualty is Britain's strapped National Health Service, and the majority of people who have been hurt are by no means rich oppressors.

So far there are no reports of deaths specifically attributed to the attack, but certainly the people who will suffer the most from damage in the attack on the NHS are the poorer and sicker, not the rich, who in the British system can use money to bypass public health wait times.

Bitcoin uses something called blockchain technology to create two sets of data, one secret and one public. The public information provides a record of the encrypted data that proves each unit of the currency is real and valuable, but owners of those encrypted currency units can remain anonymous.

That makes studying who is using the cryptocurrency difficult. But techniques discussed in a book released last week called Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are offer a partial route around that anonymity.

Using methods he says are similar to those described in the book, University of Kentucky economist Aaron Yelowitz discovered some revealing information about the thinking of people with an interest in bitcoin.

Criminals, not libertarians

Mining Google search data, he tested the thesis that people were using bitcoin on political principle. To oversimplify, he looked for data that showed bitcoin information was being searched because the searchers were libertarians.

We found that did not matter at all, says Yelowitz.

Instead, he found one other very strong correlation - with illegal activity.

Google will spit out how much interest there is state-by-state and [we] related that to interest in bitcoin, and what we found was that interest in this illegal activity absolutely did explain quite a bit of the interest in bitcoin, says Yelowitz.

Enabling crime

Effectively, Yelowitz says, bitcoin has become an enabler of illegal activity such as the ransomware attack.

If you didn't have bitcoin all you could do is ruin people's files, he says. "What's interesting about this ransomware is that unless you had something like bitcoin - a way to profit from it without it being traced - this ransomware stuff would be hard to do."

Cash continues to dribble into the bitcoin accounts associated with the malware, but yesterday White House security adviser Tom Bossert said there is little evidence that people who paid the ransom have had their computers restored.

Bitcoin has been an amazing invention, creating reliable value-in-exchange from bits and bytes. Last week its value soared to record highs, putting the value of bitcoins in circulation at about $25 billion US.

But since the ransomware attack, the cryptocurrency has seen a sharp fall.

Yelowitz says that even if the world's governments wanted to get rid of the currency, it would not be easy. Some would like to try.

The latest ransomware attack will only arm bitcoin's critics.

Then of course if the huge publicity over the attacks means the cryptocurrency becomes indelibly associated with criminals and suffering, the sign "Bitcoin Accepted Here" could well lose its trendy commercial appeal.

Download the Bitcoin study or CBCnews article.

The CSS report also lacks any context on the preferences of the few restaurant employees who were surveyed. An analysis of Census Bureau data by Dr. Aaron Yelowitz of the University of Kentucky estimates that 90 percent of part-time fast food employees in New York City are working that schedule voluntarily. In other words, most of the employees in question appear to value the part-time hours and schedule flexibility that the job provides.

Download the commentary.

Abstract: The goal of the Affordable Care Act (ACA) was to achieve nearly universal health insurance coverage through a combination of mandates, subsidies, marketplaces, and Medicaid expansions, most of which took effect in 2014. We use data from the Behavioral Risk Factor Surveillance System to examine the impacts of the ACA on health care access, risky health behaviors, and self-assessed health after two years. We estimate difference-in-difference-in-differences models that exploit variation in treatment intensity from state participation in the Medicaid expansion and pre-ACA uninsured rates. Results suggest that the ACA led to sizeable improvements in access to health care in both Medicaid expansion and non-expansion states, with the gains being larger in expansion states along some dimensions. No statistically significant effects on risky behaviors or self-assessed health emerge for the full sample. However, we find some evidence that the ACA improved self-assessed health among older non-elderly adults, particularly in expansion states.

Download the NBER working paper or The NBER Digest.

Racial disparities in life insurance coverage

We evaluate the extent to which there are racial disparities in life insurance coverage using multiple years of the Survey of Income and Program Participation between 2001 and 2010. We find that African Americans hold significantly more life insurance - especially whole life insurance - after controlling for other factors. We demonstrate that our findings diverge from prior work because we examine all households instead of focusing exclusively on married and cohabitating households. Although earning shocks due to mortality likely contribute to racial disparities in wealth, the influence is mitigated by the racial composition of life insurance holdings.

Download the article.

Kentucky health insurance market in death spiral. By Aaron Yelowitz

Although on the chopping block during President Donald Trump's first 100 days in office, very little of the Affordable Care Act will change.

Despite ACA remaining intact, Kentucky's insurance market is getting weaker and will likely see dramatic premium hikes and fewer insurance options for Kentuckians in the future.

Welcome to the Kentucky death spiral. It is not a new rollercoaster but a reaction to individual incentives set up by ACA.

For example, you expect $3,000 in medical expenses and want full coverage. But the comprehensive plan that covers all of your expenses also attracts people with medical expenses of $10,000 or even $100,000.

To break even on the comprehensive plan, insurance companies set higher premiums, which are based on the insurance needs of the entire group - not just you. This means the comprehensive plan, the gold plan, costs too much relative to your anticipated expenses. So, you chose a plan with lower premiums and less coverage even though you'd prefer comprehensive coverage.

When you leave the comprehensive plan, the average medical expenses of that group increase. This free movement makes it difficult for insurers to accurately price premiums and causes private insurance companies to take losses. And losses force businesses to close up shop and leave the market or to ratchet up premiums. And when they do ratchet up premiums, even more people change plans - the death spiral.

Two primary features of ACA encourage the death spiral. First, all plans are available to applicants regardless of their health status. So, people who gamble and sign up for the bronze plan and then end up with a serious medical condition and large medical expenses can move up to the gold plan during the next open enrollment and pay the same premiums as others in that gold plan.

Second, most people purchasing insurance from the Marketplace get taxpayer subsidies. People pay the difference between the premium on the plan they choose and the fixed "voucher" amount the government provides toward health insurance.

If for example, the government provides a $2,500 voucher and the premiums on less comprehensive to more comprehensive plans varied from $2,000 to $3,000 to $5,500, the out-of-pocket costs would be $0, $500 and $3,000, respectively.

Such glaring differences would induce healthy individuals to choose the less comprehensive plans with higher deductibles and co-payments.

Despite these features, local policy advocate, the Kentucky Center for Economic Policy, has recently expressed skepticism on whether Kentucky faces a death spiral. KCEP's own statistics demonstrate that this spiral is well underway. Since 2014 half of the companies participating in the Kentucky exchange have dropped out leaving an astonishing 68 percent of Kentuckians with only one or two insurers to choose from.

Additionally, Kentuckians overwhelmingly chose less comprehensive plans, bronze or silver - only 6 percent signed up for the more comprehensive gold plan. KCEP argues, "But since the vast majority of people choose lower 'metal' plans this means either they didn't feel like they could afford plans with greater coverage, or they were healthy enough not to need them." The statement about "not needing them" doesn't hold water. Individuals would still purchase comprehensive insurance if the premiums reflected their expected use of the insurance.

The key reason that 93 percent of Kentuckians chose silver or bronze plans is that they didn't want to pay premiums that cover severely sick individuals - the core ingredient for a death spiral. The current design of the ACA encourages individuals to move among the plans leading to negative revenue and either premium hikes or insurers leaving the market. Expect higher premiums and less choice in the future.

Aaron Yelowitz is an associate professor of economics at the University of Kentucky and the associate director of the Schnatter Institute for the Study of Free Enterprise. His website is www.Yelowitz.com .

Download the article.

Louisville Home Values Go Up As Inventory Falls, But Is It A Bubble? By Jacob Ryan

The supply of available homes in Jefferson County isn't keeping up with demand.

The sparse inventory is keeping home values here on the rise. The latest batch of home assessments from the Jefferson County Property Valuation Administration is evidence of the trend.

Property assessments of some 70,000 residential homes across the county are set to rise, according to Tony Lindauer, head of the Jefferson County Property Valuation Administration.

Lindauer held a news conference Friday morning at the PVA headquarters on Market Street in downtown Louisville to brief reporters on the latest assessments.

"We are one of the hottest markets in the country," he said. "That's basically what's driving the prices up."

Lindauer's office conducted assessments for residential and commercial properties in central Jefferson County and the outer, eastern portions of county, beyond the Gene Snyder Expressway.

Assessments are done in accordance with state law, Lindauer said. The law requires the PVA to assess all property at 100 percent fair cash value. The assessments stem largely from the sale price of nearby properties, as PVA personnel don't physically inspect each property being assessed.

A Sign of an Improving Economy

The surge in home prices in Louisville is a sign of an improving economy, said John Garen, director of the John H. Schnatter Institute for the Study of Free Enterprise at the University of Kentucky.

One way to combat higher prices, he said, is to increase the supply. But that depends on the ability of builders to construct new homes and the speed at which those homes are built, he added.

And there isn't much concern of a housing bubble, as was the case in 2008, when such a bubble precipitated a major economic recession, since "the heavy inducements to issue high-risk mortgages has abated," Garen said.

Other economic experts seem to agree on that, as well.

Aaron Yelowitz, an associate professor of economics at the University of Kentucky, said although the appreciation of home prices in Louisville since 2014 - more than 11 percent - seems impressive, the annual nominal return of just under 4 percent paints a different picture.

He said the 3.7 percent nominal return is "certainly a positive development," but pales in comparison to the "real bubble markets" of the mid-2000s in Las Vegas and Florida, which were yielding returns of up to 25 percent.

"This isn't the case in Louisville," he said.

And John Nelson, an economics professor at the University of Louisville, said he's more concerned about the longevity of market conditions and job creation than threats of a housing market bubble, despite rising home prices.

"That's the least of my concern," he said of a new bubble.

Nelson said banks have more sustainable lending practices than they did a decade ago, and they're requiring safer down payment models that allow people to maintain their investment regardless of minor adjustments in home assessment valuations.

Assessments Coming Soon

Lindauer said homeowners can expect to see their adjusted assessments as soon as Friday afternoon.

The PVA expects some 7,000 people to contest their assessment adjustments. And Lindauer said he encourages people to do so, if they feel so inclined.

A series of public meetings is set at libraries across the city to give property owners a chance to meet with PVA staff to discuss their assessments. And residents can schedule conferences to discuss their assessments through May 15.

More information on scheduling an assessment conference can be found on the PVA website.

Download the article.

Abstract: The goal of the Affordable Care Act (ACA) was to achieve nearly universal health insurance coverage through a combination of mandates, subsidies, marketplaces, and Medicaid expansions, most of which took effect in 2014. We use data from the Behavioral Risk Factor Surveillance System to examine the impacts of the ACA on health care access, risky health behaviors, and self-assessed health after two years. We estimate difference-in-difference-in-differences models that exploit variation in treatment intensity from state participation in the Medicaid expansion and pre-ACA uninsured rates. Results suggest that the ACA led to sizeable improvements in access to health care in both Medicaid expansion and non-expansion states, with the gains being larger in expansion states along some dimensions. No statistically significant effects on risky behaviors or self-assessed health emerge for the full sample. However, we find some evidence that the ACA improved self-assessed health among older non-elderly adults, particularly in expansion states.

Download the NBER working paper or NYT Article.

Abstract: The goal of the Affordable Care Act (ACA) was to achieve nearly universal health insurance coverage through a combination of mandates, subsidies, marketplaces, and Medicaid expansions, most of which took effect in 2014. We use data from the Behavioral Risk Factor Surveillance System to examine the impacts of the ACA on health care access, risky health behaviors, and self-assessed health after two years. We estimate difference-in-difference-in-differences models that exploit variation in treatment intensity from state participation in the Medicaid expansion and pre-ACA uninsured rates. Results suggest that the ACA led to sizeable improvements in access to health care in both Medicaid expansion and non-expansion states, with the gains being larger in expansion states along some dimensions. No statistically significant effects on risky behaviors or self-assessed health emerge for the full sample. However, we find some evidence that the ACA improved self-assessed health among older non-elderly adults, particularly in expansion states.

Download the NBER working paper.

Public Finance Review is a professional forum devoted to economic research, theory, and policy applications, focusing on a variety of allocation, distribution, and stabilization functions within the public sector economy. Economists, policy makers, political scientists, and researchers all rely on Public Finance Review, to bring them the most up-to-date information on the ever-changing issues in public economics, and to help them put policies and research into action.

Public Finance Review presents rigorous empirical and theoretical papers on public economic polices, as well as examining and critiquing their impact and consequences. The journal analyzes the nature and function of evolving governmental fiscal policies at the national, state, and local levels. Each peer-reviewed issue explores a variety of subject areas, bringing you comprehensive coverage of the public sector economy today.

Issues recently examined include social security financing, tax neutrality and social welfare, politics and deficit finance, tax credits for job creation, public education subsidies, mixed outputs of non-profit organizations, government loan guarantees, and distributional effects of social security.

The 'Fight for $15': Coming to a City Hall Near You

The Trump administration should show local officials the research proving that minimum wages cost jobs.

By MICHAEL SALTSMAN

Call it a New Year's Day massacre for the entry-level job market: As 2017 dawned, the minimum wage went up in 19 states and more than 20 cities or counties. In California alone, 12 cities raised their starting pay requirement, some to as high as $13 an hour, compared with $7.25 for the federal minimum.

These local measures - the product of labor-backed advocacy campaigns such as the "Fight for $15" - are still a relatively new phenomenon. "Living wage" requirements for city contractors or recipients of local tax breaks have existed since at least 1994. But the first broadly applicable city minimum wage wasn't enacted until 2003, when Santa Fe, N.M., passed a law setting the starting hourly wage at $8.50, a 65% increase over the then-prevailing $5.15. Later that year, voters in San Francisco followed suit, approving a minimum wage of $8.50 for their town.

Today, more than 30 cities and municipalities - including Chicago, much of Los Angeles County, and both Maryland counties adjacent to Washington, D.C. - have their own separate minimum-wage requirements. This creates a difficult patchwork of laws for businesses that operate in multiple jurisdictions, a problem that will likely worsen over the next four years. Labor groups, frustrated by the Republican Congress, will no doubt intensify their push for city and county minimum wages instead.

But the quality of local debate, at least on this matter, isn't always what it should be. When left-leaning city or county councils choose to study the expected result of raising the minimum wage, the answer is often a foregone conclusion in service of a political goal.

Take Los Angeles, where a measure signed in 2015 by Mayor Eric Garcetti will take the city's minimum wage to $15 by 2020. Two years ago when the mayor began pushing his original proposal of $13.25, one of his deputies sent an email to Ken Jacobs, a sympathetic researcher at the University of California-Berkeley. "We need to demonstrate clearly how this will help labor and the economy in general," the mayor's office wrote. (My organization, the Employment Policies Institute, obtained these emails via a public-records request.) The Berkeley team responded by writing a favorable report predicting that price increases would be "negligible" and effects on employment were "not likely to be significant."

Yet there is much evidence to the contrary. Start with the first two cities to implement minimum wages, which were studied by Aaron Yelowitz of the University of Kentucky, with research support from my organization. In a 2005 paper, Mr. Yelowitz wrote that after the Santa Fe wage bump, the likelihood of unemployment among less-educated workers jumped by more than eight percentage points. A 2012 study by Mr. Yelowitz of San Francisco showed that each $1 increase in the city's compensation floor increased the likelihood of unemployment among younger workers by 4.5 percentage points. In other words, the increased minimum wage had precisely the result that Econ 101 would predict.

The Trump administration should take steps to educate other cities that are considering their own wage mandates on the true consequences. The current Labor Department under Secretary Tom Perez has been an enthusiastic booster of local minimum-wage campaigns. Mr. Trump's nominee to lead the department, restaurant CEO Andy Puzder, is rightly more skeptical.

Having run a food-service company, Mr. Puzder understands, better than most, the effect of a mandated labor cost. In an interview with Hugh Hewitt this past April, he pointed to a summary, published by the Federal Reserve Bank of San Francisco, of the best minimum-wage research. That report showed clear negative effects on employment: for instance, a drop of 1%-2% among workers ages 16 to 19 for each 10% rise in the minimum wage.

Explaining this research is clearly within the mandate of the Labor Department, whose mission statement includes a pledge to "advance opportunities for profitable employment." An appropriate framework already exists. In 2014 the Congressional Budget Office reviewed 60 studies and developed a methodology to estimate the effects of a higher minimum wage.

Mr. Puzder's department could use that exact approach when a city or county is considering a new mandate. The Labor Department's experts could testify at local hearings to explain the policy's probable effect on labor markets, employment, poverty rates and wages.

Critics may complain that these reports have their own biases, but the methodology used by the Congressional Budget Office was hardly one-sided. Although its economists estimated that raising the federal minimum to $10.10 would cost about a half-million jobs, they also said such a move would lift nearly one million people out of poverty.

If local politicians consider that sort of trade-off a worthy one for their own city or county, they could consider the Labor Department's testimony and duly pass a higher minimum wage. At least they would be doing so with eyes wide open to the unintended consequences.

Mr. Saltsman is research director at the Employment Policies Institute, which receives support from restaurants, foundations and individuals.

Download the commentary.

Mr. Galewitz's article gives an in-depth accounting of Clay County, KY, which saw a large increase in insurance coverage as a result of the ACA.

Download the NPR write-up.

What was the genesis/history of the idea for your research? We had just completed a study (published in Health Economics in 2016) that documented changes in insurance coverage by state in 2014, the first year of full ACA implementation. However, we realized that, given the non-random nature of states' Medicaid expansion decisions and natural year-to-year fluctuations in insurance coverage, these results likely did not reflect causal effects of the ACA. So we wanted to develop an econometric framework that could identify the causal effects.

What is the main conclusion that becomes evident from your research? (Or, what is our main takeaway?) At the average pre-treatment uninsured rate, the full ACA increased the proportion of residents with insurance by 5.9 percentage points compared to 2.8 percentage points in states that did not expand Medicaid. Private insurance expansions from the ACA were due to increases in both employer-provided and non-group coverage. The coverage gains from the full ACA were largest for those without a college degree, non-whites, young adults, unmarried individuals, and those without children in the home. We find no evidence that the Medicaid expansion crowded out private coverage.

What are some of the more interesting or surprising findings/conclusions, you discovered during this process? One surprising result was that simple pre-post comparisons (like in our Health Economics paper mentioned above) seem to understate the coverage gains from the Medicaid expansion. Another is that the gains in private insurance coverage were not just due to privately purchased coverage via the new health insurance exchanges; we also saw an increase in employer-provided coverage. While we cannot say exactly why this is the case, one possibility is greater uptake of available employer-sponsored plans due to the individual mandate to have health insurance coverage.

Download the Courtemanche, et al. 2016 study or the APPAM feature.

Last month, Seattle became the second major U.S. city after San Francisco to pass a scheduling mandate on service-industry employers. These regulations, which wouldn't look out of place in a collective bargaining agreement, force affected businesses to compensate employees for schedule changes and offer additional hours to existing employees before hiring new ones, among other provisions.

Activists are trying to expand these mandates throughout California, as well as in New York City and Washington. "With such commonsense labor standards," argued representatives of the labor union-funded Center for Popular Democracy and Working Washington in these pages recently, "we can begin to restore balance and flexibility to our lives."

Now the bad news: The early evidence suggests these mandates reduce workplace flexibility rather than promote it. A survey of affected San Francisco businesses, conducted by Lloyd Corder of CorCom Inc, indicates that the workplace flexibility desired by employees was reduced after the law was passed. Specifically, Corder found that more than a third of respondents now offered employees less flexibility to make their own scheduling changes.

Similarly, an analysis of the San Francisco law by the Hatamiya Group, a California consultancy, also indicated reduced flexibility. It found employees were "frustrated with not being able to change their schedules when needed," and questioned "the need" for the mandate.

Reduced flexibility is an ironic consequence of scheduling laws because most employees affected by them seemingly select their jobs because of the flexibility. An analysis of Census Bureau data by Dr. Aaron Yelowitz of the University of Kentucky finds that only one in seven part-time employees in San Francisco is working that schedule involuntarily. (In Seattle, this figure is one in six.)

The demographics of the affected employees help explain their desire for part-time work: For instance, 28 percent of the affected employees in San Francisco are students who need a job that fits with their school schedule, compared to 6.7 percent of the entire city workforce.

Scheduling laws not only reduce flexibility but also the number of part-time jobs. Corder's survey found that one in five affected businesses had cut back on their number of part time hires, and a similar number were now scheduling fewer employees per shift because of the mandate. Similarly, the Washington Post reported that employees were not pleased to discover "the law discourages employers from offering extra shifts on short notice, because they would have to pay the last-minute schedule change penalty," even if the employee was voluntarily interested in working additional hours.

Similarly, an analysis of the San Francisco law by the Hatamiya Group, a California consultancy, also indicated reduced flexibility. It found employees were "frustrated with not being able to change their schedules when needed," and questioned "the need" for the mandate.

Reduced flexibility is an ironic consequence of scheduling laws because most employees affected by them seemingly select their jobs because of the flexibility. An analysis of Census Bureau data by Dr. Aaron Yelowitz of the University of Kentucky finds that only one in seven part-time employees in San Francisco is working that schedule involuntarily. (In Seattle, this figure is one in six.)

The demographics of the affected employees help explain their desire for part-time work: For instance, 28 percent of the affected employees in San Francisco are students who need a job that fits with their school schedule, compared to 6.7 percent of the entire city workforce.

Scheduling laws not only reduce flexibility but also the number of part-time jobs. Corder's survey found that one in five affected businesses had cut back on their number of part time hires, and a similar number were now scheduling fewer employees per shift because of the mandate. Similarly, the Washington Post reported that employees were not pleased to discover "the law discourages employers from offering extra shifts on short notice, because they would have to pay the last-minute schedule change penalty," even if the employee was voluntarily interested in working additional hours.

Download the article.

Abstract: Premature death of a breadwinner can have devastating financial consequences on surviving dependents. This study investigates the role of life insurance in mitigating the long-run financial consequences of spousal mortality. Using the Health and Retirement Study, we examine individuals whose spouses died during or soon after his or her peak earnings years. After controlling for socioeconomic status, we find that sizable lump-sum life insurance payouts do not significantly influence spousal well-being.

Download the paper.

Download the podcast.

Topics included current labor market conditions, TPP trade agreement, impact of health care on the economy, lack of labor force participation in Eastern Kentucky and role for subsidies in college.

An extended summary by John Gregory of the topics appears on KET or here.

In 2012, Connecticut became the first state to enact paid sick leave legislation. Using a difference-in-differences framework, we find the law had modest but negative effects on the labor market, particularly on the likelihood of working in the past week.

Download the Connecticut study or the Orange County Register commentary.

The Affordable Care Act (ACA) aimed to achieve nearly universal health insurance coverage in the United States through a combination of insurance market reforms, mandates, subsidies, health insurance exchanges, and Medicaid expansions, most of which took effect in 2014. This paper estimates the causal effects of the ACA on health insurance coverage using data from the American Community Survey. We utilize difference-in-difference-in-differences models that exploit cross-sectional variation in the intensity of treatment arising from state participation in the Medicaid expansion and local area pre-ACA uninsured rates. This strategy allows us to identify the effects of the ACA in both Medicaid expansion and non-expansion states. Our preferred specification suggests that, at the average pre-treatment uninsured rate, the full ACA increased the proportion of residents with insurance by 5.9 percentage points compared to 3.0 percentage points in states that did not expand Medicaid. Private insurance expansions from the ACA were due to increases in both employer-provided and non-group coverage. The coverage gains from the full ACA were largest for those with incomes below the Medicaid eligibility threshold, non-whites, young adults, and unmarried individuals. We find some evidence that the Medicaid expansion partially crowded out private coverage among low-income individuals.

Download the Courtemanche, et al. 2016 study.

A quick aside: If your eye is set on a rock, you often can find pretty good deals just this side of the half-carat and full carat diamonds that fetch a price premium.

"The key lesson for consumers is: There is a big discount - up to 20% - to purchasing loose diamonds that are slightly under 1 carat or 0.5 carats, even though the diamonds are otherwise the same quality. The visual difference is imperceptible," says University of Kentucky economist Aaron Yelowitz, co-author of the paper, "Pricing Anomalies in the Market for Diamonds: Evidence of Conformist Behavior. "However," Yelowitz adds, "some couples may feel that it sends a bad signal between each other if the groom is cheap or prudent, even if no one else knows the diamond is slightly smaller. Couples pay a substantial premium for 'boasting rights'."

Download the Marketwatch article.

Download the Scott & Yelowitz, 2010 study.

In recent years, San Francisco has led the charge for additional workplace mandates. These include a higher minimum wage, paid sick leave, and the availability of a "fair" schedule.

The city was the first to enact legislation on this latter point, passing the Formula Retail Employee Rights Ordinance in late 2014. San Francisco's law requires most "chain" stores, as well as their contractors, to provide schedules to employees two weeks in advance, establishes a series of financial penalties for schedule changes that occur less than a week before the scheduled work day, and requires additional work to be offered to part-time staffers before additional employees are hired. To better understand the initial impact of this ordinance, this study provides two key pieces of data: A profile of the affected part-time workforce in San Francisco, California, and direct feedback from 52 "formula retail" establishments that have been affected by the law. Dr. Aaron Yelowitz of the University of Kentucky used data from the Census Bureau's American Community Survey, the Current Population Survey and the Survey of Income and Program Participation to examine the part time workforce in the specific industries impacted by San Francisco's law. He finds the following:

Just one in seven (13.9 percent) of part-time workers in San Francisco are estimated to be working that schedule involuntarily;

Formula retail establishments have a higher proportion of students as part-time workers

Also important for policymakers to understand is how San Francisco businesses have reacted to the scheduling mandate. Dr. Lloyd Cordor and his research team at CorCom designed a survey of 52 formula retail businesses operating within San Francisco that were affected by this law.

To respond to these new requirements formula retailers are now less flexible with employees schedule changes (35 percent), offering fewer part-time positions (21 percent), scheduling fewer employees per shift (19 percent) and offering fewer jobs across the board (17 percent).

The law's proponents may be satisfied with the unintended consequences of the formula retail law - fewer part-time position, and less flexibility for those that remain - but they appear to be at odds with the preferences of the employees.

Download the study.

Download Op Ed in San Francisco Chronicle.

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Download the CoinDesk article or our Bitcoin Study.

The most significant pieces of the Affordable Care Act (exchanges, subsidies, Medicaid expansion, and individual mandate), implemented in 2014, were associated with sizable gains in coverage nationally that were divided equally between gains in Medicaid and private coverage. These national trends mask heterogeneity in gains by state Medicaid expansion status, age, income level, and source of coverage.

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One provision of the Patient Protection and Affordable Care Act (ACA) that has been delayed until 2017 is a federal mandate for standard menu items in restaurants and some other venues to contain nutrition labeling. The motivation for so-called "menu mandates" is a concern about rising obesity levels driven largely by Americans' eating habits. Menu mandates have been implemented at the state and local level within the past decade, allowing for a direct examination of the short-run and long-run effects on outcomes such as body mass index (BMI) and obesity. Drawing on nearly 300,000 respondents from the Behavioral Risk Factor Surveillance System (BRFSS) from 30 large cities between 2003 and 2012, we explore the effects of menu mandates. We find that the impact of such labeling requirements on BMI, obesity, and other health-related outcomes is trivial, and, to the extent it exists, it fades out rapidly. For example, menu mandates would reduce the weight of a 5'10" male adult from 190 pounds to 189.5 pounds. For virtually all groups explored, the long-run impact on body weight is essentially zero. Analysis of subgroups suggests that to the extent that menu mandates affect short-run outcomes, they do so through a "novelty effect" that wears off quickly. Subgroups that were thought likely to experience the largest gains in knowledge from such mandates exhibit no short-run or long-run changes in weight.

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Labor unions in California won't be taking a break after their victory Monday, when legislators and Gov. Jerry Brown announced a tentative deal to raise the state's minimum wage to $15 an hour by 2022. Another economically destructive campaign is already under way: Unions want lawmakers to dictate how businesses schedule employees' work.

The idea first gained traction in San Francisco when a coalition of labor unions and union-backed organizations joined together to advocate for a "Retail Workers Bill of Rights" ordinance early in 2014. The ordinance passed later that year and took effect in July 2015.

The entitlements include: a requirement that employers provide work schedules two weeks in advance, with a penalty of up to four hours of pay for subsequent changes; a requirement to provide up to four hours of penalty pay for scheduled on-call shifts when the employee is told not to report; and a requirement to offer more work to certain part-timers before hiring additional staff. The challenges these provisions present should not be surprising to anyone familiar with the inefficiencies of a unionized workplace.

For instance, imagine an ice-cream shop faced with an all-day rainstorm during peak summer season. A work schedule created two weeks earlier could not have anticipated the storm and the resulting lull in customers. No matter: The late schedule change means that the shop must pay workers whose help is no longer needed. For a business with small profit margins, a few such scheduling problems could mean the difference between a profitable and unprofitable summer.

Six months after the San Francisco ordinance took effect, a survey team led by Lloyd Corder, president of CorCom Inc., a market research firm, spoke with 52 businesses affected by the law. (The Employment Policies Institute, where I work, provided support for his research.) His forthcoming study reports that one in five responding businesses had already cut back on the number of part-time positions, and a similar number were now scheduling fewer employees per shift. More than one-third of responding businesses offered employees less flexibility to make changes to their schedule once it was set.

This is cruelly ironic, as most of the employees affected by the changes were specifically looking for flexible part-time work. Using Census Bureau data, University of Kentucky economist Aaron Yelowitz estimated that 86% of the affected part-time employees in San Francisco were working part-time voluntarily. (For example, nearly 30% were enrolled in school, and 16% were women with children.) Legislators elsewhere should take note. In Washington, D.C., where the city council is considering a similar ordinance, Mr. Yelowitz finds that only one in seven of the affected part-timers are working part-time involuntarily.

Labor unions that advocate these work-schedule changes claim to have the best interests of part-time workers at heart. In reality, a workplace forced to have more full-time employees might be easier to organize. Forcing nonunion firms to comply with arduous scheduling rules also levels the playing field for unionized businesses, which likely face these mandates already in a collective-bargaining agreement. It is no help to students and others who would prefer a flexible schedule to someone else's arbitrary definition of a "fair" one.

Download the commentary.

Abstract: Premature death of a breadwinner can have devastating financial consequences on surviving dependents. This study investigates the role of life insurance in mitigating the long-run financial consequences of spousal mortality. Using the Health and Retirement Study, we examine individuals whose spouses died during or soon after his or her peak earnings years. Using an instrumental variables approach, we find that lump-sum life insurance payouts do not significantly influence spousal well-being.

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A flexible work schedule of less than 40 hours a week used to be considered part-time. Today, worker advocates in the District have another word for it: Unfair.

Legislation under consideration by the D.C. Council would require employers to provide schedules three weeks in advance and penalize them for changes that happen after that. It's designed to reduce scheduling variability in the retail and restaurant industries, but our new analysis of the proposal, based on government data and interviews with 100 affected businesses, suggests caution is necessary before proceeding.

The proposed legislation for the District is based on a similar ordinance enacted last year in San Francisco. The District's law would cover restaurants that are part of a chain with 20 or more locations nationwide and retail businesses with five more or locations across the country. In addition to the penalties for schedule changes, the bill would require these employers to offer additional work to part-timers before hiring more staff.

To determine the legislation's impact, we first used two different Census Bureau data sets - the American Community Survey and the Current Population Survey - to create a profile of the affected part-time employees at the District's restaurant and retail businesses. A few conclusions emerge: While nearly 70 percent of the District's workforce has a four-year college degree or more, just one in five of these 11,500 part-timers has the same. Nearly 40 percent have a high school degree or less, and many of them (27 percent) are active students.

Given these characteristics, it's perhaps unsurprising that just one in seven (14 percent) of these part-timers is estimated to be working that schedule involuntarily. (In our survey of D.C. employers, we found a similar result: 70 percent of surveyed employers indicated that the vast majority of their part-time staff was only seeking part-time work.) These are important insights: If the workers in question are mostly working a part-time schedule because it fits their lifestyle needs, then legislation that adversely affects this flexibility would hurt the people it's supposed to help.

Unfortunately, that's exactly what our survey of affected businesses suggests will happen.

Businesses were most concerned about the provision that requires four hours of pay for any schedule change made with less than 24 hours notice. More than 70 percent of businesses indicated that it would be difficult to comply with this law; for full-service restaurants, that number reached 95 percent. Majorities of employers were also concerned about a requirement to provide schedules three weeks in advance and to provide an hour of pay for shift changes made after that.

To adapt to the new costs and regulatory burdens imposed by the law, D.C. retailers and restaurants anticipated taking a few steps. Nearly three of four respondents said they'd offer less flexibility to make schedule changes. Half of surveyed employers indicated they would offer fewer part-time positions and change the hiring composition of full-time vs. part-time employees. These consequences may be intended by the law's proponents, but it seems likely that employees who are voluntarily working part-time won't appreciate them.

Perhaps because of the nature of the affected businesses, this bill promises to create unique hardships, even compared with other hotly debated policy proposals. We asked employers about the difficulty of complying with a series of the District's employment current or proposed requirements, including an $11.50 minimum wage, a 16-week paid leave plan and paid sick leave. Thirty percent of employers indicated that this scheduling ordinance would be the most difficult to comply with - a greater percentage than any other proposal.

D.C. Council members should bear this in mind: In an attempt to create fairer schedules, they may create consequences that are deeply unfair for the city's part-time workforce.

Download the Op-Ed.

The debate over whether to raise the minimum wage has expanded in recent years to encompass demands for additional workplace benefits. These include health care, paid sick leave, and most recently the availability of a "fair" schedule. The City of San Francisco was the first to enact legislation on this latter point, enacting the Formula Retail Employee Rights Ordinance on July 3, 2015. San Francisco's law requires most "chain" stores, as well as their contractors, to provide schedules to employees two weeks in advance, establishes a series of financial penalties for schedule changes that occur less than a week before the scheduled work day, and requires additional work to be offered to part-time staffers before additional employees are hired. Washington, DC, is now considering similar legislation that applies to retailers and chain restaurants in the District. Labor advocates argue that the law is necessary to "[promote] full-time work" at these businesses; in a report supporting their campaign, they argue that these employees "struggle with low wages, too few hours, and fluctuating hours." Thus far, the research they've provided to document this problem comes mostly from data that labor organizers collected themselves. To better understand the impact of the proposed ordinance, this study provides two key pieces of data: A profile of the affected part-time workforce in Washington, DC, and direct feedback from 100 businesses that would be affected by the law.

Dr. Aaron Yelowitz of the University of Kentucky used data from the Census Bureau's American Community Survey and the Current Population Survey to examine part-time workers in the specific industries that would be impacted by DC's law.

He finds the following:

Just one-in-seven (14 percent) of the affected employees are estimated to be working parttime involuntarily

27 percent are currently enrolled in school, compared to nine percent of the entire workforce

38 percent have a high school diploma or less, and

80 percent have less than a four-year college degree.

These data cast doubt on the notion that part-time employees at DC's retailers and restaurants are being forced to work that schedule; rather, most are voluntarily working part-time.

Also important for policymakers to understand is how DC businesses will react to new scheduling mandates. Dr. Lloyd Corder and his survey research team at CorCom designed a survey of 100 restaurant and retail businesses in Washington, DC, that would likely be affected by this law.

A majority of businesses say it will be difficult to post employees schedules 21 days in advance of the work week (55%), as the law would require. Even more think the financial penalties will be onerous: For instance, most (71%) say the law's provision that requires four hours of pay for each change that happens less than 24 hours before the scheduled shift would be extremely difficult to comply with. A majority (59%) agreed that providing employees one hour of pay for each change that happens fewer than 21 days before the scheduled work week would also be extremely difficult to manage and comply with.

If the ordinance passes, businesses are likely to reduce their part-time workforce and implement other restrictions, such as offering employees less flexibility to make schedule changes (73%), offering fewer part-time positions (52%), changing the hiring composition of full versus part-time employees (50%), offering fewer jobs across the board (50%) and scheduling fewer employees per shift (50%).

These consequences - of fewer part-time positions, and of less flexibility in the positions that remain - may be the goal of the law's proponents, but they appear to be at odds with the preferences of the employees who are voluntarily working those jobs.

Download the study.

The Journal of Labor Research provides an outlet for original research on all aspects of behavior affecting labor market outcomes. The Journal provides a forum for both empirical and theoretical research on labor economics. The journal welcomes submissions issues relating to labor markets and employment relations, including labor demand and supply, personnel economics, unions and collective bargaining, employee participation, dispute resolution, labor market policies, types of employment relationships, the interplay between labor market variables and policy issues in labor economics are published by the Journal. The Journal of Labor Research also publishes book reviews relating to these topics.

Abstract: Using a balanced sample of workers from the NHIS, we estimate of the impact of paid sick leave (PSL) insurance on absenteeism in the United States. PSL increases absenteeism by 1.2 days per year, a large effect given the typical benefit duration. Consistent with moral hazard, the effects are concentrated in moderate sick days, not severe ones. In addition, we merge the NHIS with Google Flu Trends. Severe influenza outbreaks lead workers to exhaust sick days, consequently leading to a replacement rate of zero for additional absences. Consistent with a lower replacement rate, worker absenteeism is reduced on the margin.

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Abstract: The Supplemental Poverty Measure (SPM) - which serves as an indicator of economic well-being in addition to the official poverty rate - was introduced in 2010 and explicitly adjusts for geographic differences in the cost of housing. By embedding housing costs, the SPM diverges from official measures in some instances, offering a conflicting view on family well-being. However, there is limited direct evidence of the impact of housing affordability on household well-being, and virtually of all it focuses on food insecurity. This study examines the impact of local housing affordability on household well-being using the "basic needs" data from the Survey of Income and Program Participation (SIPP). Across a wide variety of specifications, no evidence is found that housing costs impact well-being. In contrast, local labor market conditions do impact the well-being measures in many specifications. The findings call into question one of the key motivations for the SPM - that geographic cost differences are a major factor for household well-being.

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Download the early view version of the open access paper or see Shafrin's discussion.

Objective: To estimate the impact of different forms of Medicaid managed care (MMC) delivery on racial and ethnic disparities in utilization.

Data Source: Longitudinal, administrative data on 101,649 children in Kentucky continuously enrolled in Medicaid between January 1997 and June 1999. Outcomes considered are monthly professional, outpatient, and inpatient utilization.

Study Design: We apply an intent-to-treat, instrumental variables analysis using the staggered geographic implementation of MMC to create treatment and control groupsof children.

Principal Findings: The implementation of MMC reduced monthly professional visits by a smaller degree for non-whites than whites (3.8 percentage points vs. 6.2 percentage points), thereby helping to equalize the initial racial/ethnic disparity inutilization. The Passport MMC program in the Louisville-centered region statisticallysigni?cantly reduced disparities for professional visits (closing the gap by 8.0 percentage points), while the Kentucky Health Select MMC program in the Lexington-centered region did not. No substantive impact on disparities was found for either outpatient or inpatient utilization in either program.

Conclusions: We ?nd evidence that MMC has the possibility to reduce racial/ethnic disparities in professional utilization. More work is needed to determine which managed care program characteristics drive this result.

Download the early view version of the open access paper.

Using administrative data from a large public university, we analyze a policy designed to increase employer-sponsored life insurance. The University always had a supplemental life insurance plan available for its workers. In 2008, it increased its provision of basic coverage from a $10,000 to 1x salary. Workers initially paying for supplemental life insurance were in a position to completely undo the increase in basic coverage by scaling back supplemental elections, yet their default choice in 2008 was to continue at their existing level from 2007. The increased provision of basic coverage therefore represents a nudge for employees to increase life insurance. The nudge increased life insurance holdings one-for-one, both in the short and long-run, even for workers who actively made changes to other fringe benefits. New hires, who had to make an active choice, elected less supplemental coverage after 2008 relative to earlier cohorts of new hires, providing additional evidence of a signicant degree of inertia among existing workers. Additionally, we find evidence of inertia for high earners constrained by the maximum. Data from a national sample of job changers show minimal crowd-out of individual market coverage from increased employer-sponsored life insurance. Further, we discuss the desirability of the nudge and find that the increase in basic coverage decreased life insurance disparities for two-thirds of employees.

Download the working paper.

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We evaluate the extent to which there are racial disparities in life insurance coverage using multiple years of the Survey of Income and Program Participation between 2001 and 2010. We find that African-Americans hold significantly more life insurance after controlling for other factors, especially employer-sponsored and whole life insurance. We demonstrate that our findings diverge from prior work because we examine all households instead of focusing exclusively on married and cohabitating households. The findings on life insurance coverage and composition imply that earnings shocks due to mortality are not a contributing factor to racial disparities in wealth.

Download the working paper or the Black Enterprise article.

Download the commentary or the full report.

Download the full report.

Download the Cato blog post or Grier's discussion.

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I have a short-run rental in the Chinatown area near the Verizon Center. It's a short 15 minute walk to the Cato building. If you happen to be in Washington D.C., drop me a line. I'll generally be around Monday morning through Friday afternoons until the end of July.

Abstract: Using administrative data from a large public university in the southeast, we examine life insurance elections of employees. The university always had a supplemental life insurance plan for workers, and increased its mandatory plan from a small death benefit to 1x salary in 2008. For a subset of workers initially choosing supplemental life insurance coverage, the increase from the mandatory plan could be completely undone by scaling back supplemental elections and therefore represents a nudge to increase life insurance coverage. The nudge increased life insurance holdings one-for-one, both in the short-run and long-run, even for employees who actively made changes to other fringe benefits. New hires after 2008 scaled back supplemental holdings relative to earlier cohorts of new hires, indicating a significant degree of inertia among existing workers. Data from the SIPP show that purchases in the individual life insurance market fall when the generosity of employer sponsored life insurance rises. Implications for worker well-being are discussed.

Download the presentation.

Good evening everyone. My name is Aaron Yelowitz, and I'm an associate professor in the Economics Department at University of Kentucky. I received my PhD in economics from MIT in 1994, and for my 20 year career have worked on a variety of public policy issues, often related to low income or vulnerable groups.

I want to start off my remarks by expressing my gratitude to Howard Husock of Manhattan Institute, whom I have known for the last 5 years. I've worked on a variety of projects in collaboration with Howard (and Manhattan Institute), and through repeated interactions, am probably known to them as both an economist and data geek.

Several years ago, Howard approached me on an intriguing but stalled project that Manhattan Institute had with a former contractor, and initially my role was to see if the project could be salvaged. The project - on rapid attachment back to the workforce for ex-offenders - was exciting because the study relied on a randomized controlled trial to evaluate its effectiveness. Essentially the intervention was between intensive job search assistance in a concentrated period of time versus more-or-less self-directed search. It was administered by a private, for-profit staffing agency, America Works. For those involved in economics like myself, it is rare to obtain data on a randomized intervention that can so be used so convincingly to learn about the efficacy of a program.

At the same time, I had serious reservations because the number of participants was pretty small - around 250 - and because the former contractor had not collected data on follow-up outcomes after the randomized intervention.

After further investigation, I suggested that in conjunction with my colleague, Chris Bollinger and the Center for Business and Economic Research at University of Kentucky, I could do the follow-up data analysis, but given the small samples, I tried to recalibrate expectations on finding significant results.

Ideally, I would have liked to examine the impact on intensive job search assistance on employment, welfare use, and criminal recidivism. Due to data and budgetary limitations, we were only able to examine recidivism. Nonetheless, from the self-interested taxpayer's point of view, it matters to know whether spending more money up front for job search reduces crime down the road.

Although I tried to recalibrate expectations, I was surprised when we analyzed the data. What we found was that intensive job assistance matters, but only for certain kinds of ex-offenders. Those with a non-violent arrest history before enrollment in America Works and especially those with fewer charges were the ones who benefited most from the program. At the same time, we did not find any effect of intensive assistance on recidivism for violent ex-offenders.

Only 31% of nonviolent ex-offenders who received enhanced training were arrested during the 3 years in which they were tracked, compared with 50% of similar participants who received standard training. In contrast, former inmates with histories of violence were rearrested at virtually the same pace, whether they received enhanced training or not, at a clip of around 43%.

There is also a large literature measuring the social cost of crime. Unsurprising, violent offenses impose extremely large costs on society, but even fairly common non-violent crimes add up too. For ex-offenders with non-violent arrest histories, we find that the reduction in subsequent crime far outweighs the costs of about $5,000 for each former inmate.

In many ways, our data speaks to a logical economic story: for an ex-offender who had been locked up on drug charges or parole violations, intensive assistance to help him explain in a job interview why he has a checkered history can help him land a job and then stay out of trouble, but for an ex-offender who had assaulted someone in the past, the barriers are simply too high for even this kind of concentrated job assistance.

Our work provides informative answers for the criminal justice system that we have now - what economists call "internal validity". However, our work, doesn't answer more fundamental questions, such as the sensibility of current criminal sentences, or given the news events over the past year, what would be appropriate reforms in policing. Even within our narrow framework, questions about integrating ex-offenders with violent histories remain.

Finally, I want to Senator Booker for his insights and Peter Cove for his efforts, as well as everyone here for taking time from their busy schedules to hear about the results from this data analysis. I'm of course delighted to answer any questions that I can tonight or afterwards, and I'll also be a visiting scholar at Cato Institute here in DC during June and July, and am hope to see you again after tonight.

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We evaluate the extent to which there are racial disparities in life insurance coverage using multiple years of the Survey of Income and Program Participation between 2001 and 2010. We find that African-Americans hold significantly more life insurance after controlling for other factors, especially employer-sponsored and whole life insurance. We demonstrate that our findings diverge from prior work because we examine all households instead of focusing exclusively on married and cohabitating households. The findings on life insurance coverage and composition imply that earnings shocks due to mortality are not a contributing factor to racial disparities in wealth.

Download the working paper.

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Download the editorial.

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Of the 650,000 inmates released from prisons and jails in the United States each year, as many as two-thirds will be arrested for a new offense within three years. This study evaluates the impact of enhanced job-readiness training and job-search assistance on reducing recidivism rates among ex-offenders.

Programs offering enhanced job assistance are far from the norm. The program used in this study - developed by an employment agency that assists ex-offenders, welfare recipients, and other "hard-to-serve" clients - differs from other job services in scope and focus.

The program, America Works, is condensed into an intense one- or two-week period. It uses a tough-love approach, stressing interpersonal communication and such "soft" skills as time and anger management. It places special attention on teaching practical skills that many former inmates never acquired, such as resume preparation, search strategies, and interview techniques. And it uses a network of employers, who are open to hiring ex-offenders and with whom it has long-term relationships, to place clients. Its goal is not only to help former inmates find jobs but also to keep jobs, and it provides follow-up services for six months. In 2005, the program provided job-readiness classes to 1,000 ex-offenders, placing 700 in jobs.

America Works receives referrals from agencies in New York City, including the city government's Human Resources Administration (HRA), work-release centers, and the city's Rikers Island Correctional Facility. By contrast, typical services offered to ex-offenders provide far less job-readiness training over a less concentrated period. Instead of providing placement services, such programs generally limit assistance to self-directed job searches.

This paper's key finding is that training designed to quickly place former inmates in jobs significantly decreases the likelihood that ex-offenders with nonviolent histories will be rearrested. Only 31.1 percent of nonviolent ex-offenders who received enhanced training were arrested during the 18 to 36 months in which they were tracked, compared with 50 percent of similar participants who received standard training. In contrast, former inmates with histories of violence were rearrested at virtually the same pace, whether they received enhanced training or not: 44.6 percent versus 42.6 percent, respectively. Findings for criminal convictions show similar patterns for arrests. These results suggest that extra help in looking for work upon release from jail or prison can pay off in a big way but not for all types of former offenders. Enhanced assistance is most effective for those without a history of violence and with few prior charges - while the additional help is far less effective for those with a more difficult history, including violence or many prior charges.

Very little research has been conducted on this topic. The results of this study have important implications for government policymakers, public and private social welfare agencies, and, of course, employers. Indeed, at a time of ever-tightening federal and state budgets and ever-rising costs of incarceration, the Obama administration and many state governments are seeking ways to reduce swollen prison populations, particularly the number of nonviolent criminals, partly by using new guidelines for early release. Likewise, many states are scrambling to find programs to sharply cut the number of repeat offenders.

Inmates nevertheless face formidable hurdles in securing employment following release back into society. Often lacking skills to find a job, they typically receive little help, increasing the odds, especially in a still-weak economy, that they will come up empty - and revert to a life of crime and return, eventually, to prison.

By linking enhanced training to a targeted group of ex-offenders, this study points toward a breakthrough in reducing not only the rate of recidivism but also the cost to society. The program used by America Works, which has offices in New York and six other states and the District of Columbia, costs about $5,000 for each former inmate. While the benefits to society from averted crimes are very hard to calculate in dollar terms, the study estimated average savings of about $231,000 for each nonviolent ex-offender who received extra help, based on the lower crime record posted by the group as a whole, following training. This figure represents a 46-fold return on the cost of the training, not counting impossible-to-quantify benefits to individuals involved, their families, and communities.

The intervention of enhanced services was conducted from June 2009 to December 2010, with a randomized trial involving 259 ex-offenders in New York. Participants, all men, had been released from a prison, jail, or youth correctional facility within six months of acceptance into the program. Approximately half of the participants received enhanced employment services from America Works while the other half received typical services, also provided by America Works. Criminal recidivism for 219 ex-offenders was measured from administrative records in July 2012, tracking arrests and convictions of participants in six-month intervals from the point they joined the study for up to 36 months.

Enhanced services had no significant impact on recidivism for the group as a whole. Yet that result masked significant differences among varied segments that formed the group. As previously noted, former inmates with histories of violence were little affected by the extra help while those with nonviolent histories benefited substantially. Even within the latter group, however, significant differences appeared, offering additional clues about where to focus job-training dollars.

Further exploration revealed that enhanced services had the largest impact among nonviolent criminals with the fewest prior charges. Differences were also found among the three subsets of nonviolent offenders: those who had committed offenses involving property, those who had committed crimes involving the sale or possession of drugs, and those who had been involved in minor offenses. Ex-offenders with property crimes and those with minor offenses were found to be most responsible for positive recidivism results. The subset with a history of drug crimes appeared to have no significant impact on recidivism results. Given the small samples, however, caution must be used when interpreting such results.

Collectively, these results suggest that enhanced job-search assistance is most effective for the easiest of the hard-to-serve population - and that focusing future efforts on this group is the most cost-effective approach.

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In 2012, Connecticut became the first state to enact paid sick leave legislation. Using a difference-in-differences framework, we find the law had modest but negative effects on the labor market, particularly on the likelihood of working in the past week.

Download the working paper.

Health insurance reform in Massachusetts lowered the financial cost of both pregnancy (by increased coverage of pregnancy-related medical events) and pregnancy prevention (by increasing access to reliable contraception and family planning). We examine fertility responses for women of childbearing age in Massachusetts and, on net, find no effect from increasing health insurance coverage. This finding, however, masks substantial heterogeneity. For married women aged 20 to 34 - who have high latent fertility and for whom pregnancies are typically wanted - fertility increased by approximately 1 percent. For unmarried women in the same age range - for whom pregnancies are typically unwanted - fertility declined by 9 percent. Fertility rates changed very little for other groups, in part because of low latent fertility or minimal gains in insurance coverage. Pregnancy wantedness increased in the aggregate through a combination of increasing wanted births and decreasing unwanted births.

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Health insurance reform in Massachusetts lowered the financial cost of both pregnancy (by increased coverage of pregnancy-related medical events) and pregnancy prevention (by increasing access to reliable contraception and family planning). We examine fertility responses for women of childbearing age in Massachusetts and, on net, find no effect from increasing health insurance coverage. This finding, however, masks substantial heterogeneity. For married women aged 20 to 34 - who have high latent fertility and for whom pregnancies are typically wanted - fertility increased by approximately 1 percent. For unmarried women in the same age range - for whom pregnancies are typically unwanted - fertility declined by 9 percent. Fertility rates changed very little for other groups, in part because of low latent fertility or minimal gains in insurance coverage. Pregnancy wantedness increased in the aggregate through a combination of increasing wanted births and decreasing unwanted births.

Download the working paper.

Official's error upsets 10-year-old

I am disgusted with the call Monday night, Dec. 10, against the Pittsburgh Steelers, who had the momentum going for them for the first time in the game (a 20-17 loss to Houston). The official who called the play should be fired. He knew it would be an onside kick, and was right on top of the play.

OK, the Steelers might not have scored and tied or won the game. But that was the worst call I've ever seen. I'm glad it was on national TV because you'll get a lot more letters complaining.

Aaron Yelowitz, 10, Sunnyvale

Download the original Op-Ed and see the boxscore.

According to associate economics professor Aaron Yelowitz, a minimum wage hike isn't necessarily the most effective way to boost a city's economy.

The economist recently spoke before the Louisville Metro Council's labor and economic development committee and explained why a proposed citywide minimum wage increase to $10.10 per hour would do more harm than good to the economy.

According to Louisville Business First, the next committee meeting concerning the minimum wage increase is scheduled for Monday.

Greater Louisville Inc. and about 20 more businesses have opposed the measure, according to Business First. Yelowitz said that citywide minimum wage increases cause both employers and customers to pursue cheaper business across city and even state lines. This problem is particularly true for Louisville, since it rests on the border of Indiana.

"Citywide minimum wages are fundamentally different from federal or statewide minimum wages because of the ability of business to move across city borders," said Yelowitz. "Business movement, which is something you likely wouldn't see all that much of with a statewide or obviously federal minimum wage, becomes a far bigger deal in a place like Louisville."

Yelowitz added that a city with a relatively low cost of living, like Louisville or Lexington, would not receive the same benefits of a minimum wage increase as a larger city.

For example, a city like San Francisco with a $10.74 minimum wage makes more sense because the cost of living there is already high.

According to Yelowitz, who has performed extensive research on the economic effects of citywide minimum wage increases, unemployment and job loss increase when minimum wage increases. He studied these effects in Santa Fe, N.M., where a citywide minimum wage increase led to a 3.2 percent increase in unemployment, according to his research.

With regard to Lexington, Yelowitz said that there are certain differences in the economic structures of the two cities that should be taken into consideration - namely, the potential for Indiana's economics to affect Louisville.

University of Massachusetts Amherst economics professor Jeannette Wicks-Lim testified to the council via Skype video. She spoke in support of a minimum wage increase and countered some of Yelowitz's research findings.

"The situation in Santa Fe is quite different than the situation in Louisville," Wicks-Lim said to the council. "If you look at the size of Santa Fe relative to Louisville, Santa Fe is one-tenth the size of Louisville when you're talking about area. So you're actually talking about a small city embedded within a larger economy."

Wicks-Lim added that Santa Fe's minimum wage increase did lead to a shortage in hours for employees, but said employees still ultimately made more money due to the higher wage. She also said that the proposed increase to $10.10 per hour in Louisville was reasonable and that a gross negative impact on the city's economy is not likely.

According to an earlier report from the Business First, a vote to increase the Louisville minimum wage had been temporarily postponed as councilman Ken Fleming pushed for an audit of the increase's financial impact on the city.

Download the Kentucky Kernel article.

Dr. Aaron Yelowitz's study titled "How did the $8.50 Citywide Minimum Wage Affect the Santa Fe Labor Market?" found the minimum wage increase led to an 8.3 percent increase in unemployment for low-skilled workers. The Santa Fe minimum wage increase only applied to companies of 25 employees or more. The Louisville minimum wage ordinance does not contain this exemption, and would translate into an even bigger percentage of job losses in Louisville since it applies to small locally owned business with any number of workers as well.

Download the Courier-Journal article.

LEXINGTON, Ky. (Dec. 3, 2014) - A University of Kentucky economist has told the Louisville Metro Government that a proposed citywide minimum wage actually could have a negative impact on employment.

Aaron Yelowitz, associate professor and director of graduate studies in economics in UK's Gatton College of Business and Economics, citing economic research he has done on citywide minimum wages in Santa Fe, New Mexico and San Francisco, California, said, "There is consistent and compelling evidence that raising the citywide minimum wage increases unemployment and harms the labor market."

Yelowitz, testifying recently before a Louisville Metro Council committee studying the issue, added, "The concerns about businesses relocating and unemployment rising are amplified in Louisville. And if your goal is to improve the lives of working families, a citywide minimum wage doesn't solve that problem."

The committee is scheduled to meet Thursday, Dec. 4, to decide whether to recommend bringing the proposed ordinance before the full council on Dec. 11 for a vote.

Citywide minimum wage ordinances are uncommon across the U.S., and Yelowitz said there is a good reason for that.

"The answer is that some businesses can escape the minimum wage by moving outside of city lines," said Yelowitz. "Even if businesses don't relocate, customers do, by shopping elsewhere. If people can do their shopping outside of city lines, it restricts the ability of businesses to pass along the higher labor costs of the minimum wage through higher consumer prices. In turn, that means businesses adjust in other ways -- such as cutting hours, laying off workers, or not hiring when someone leaves -- in order to maintain their bottom line."

According to Yelowitz, if Louisville raised its minimum wage from the current $7.25 to ultimately $10.10 per hour, a 39 percent increase, the main avenue of adjustment by businesses would be through the labor market rather than through consumer prices. Another factor is the relatively low cost of living in Louisville as compared with many other cities. Hiking the minimum wage in San Francisco to $10.74 per hour is not that dramatic because the cost of living is so high. Raising it to $10.10 per hour in Louisville has a real effect on a businesses' operating costs. In addition, areas surrounding Louisville, including southern Indiana and the rest of Kentucky, have the federal minimum wage of $7.25 per hour.

"The final issue to consider is whether minimum wages improve the lives of working families," said Yelowitz. "The answer is 'no.' In an analysis of Kentucky, I found two important things that relate to the discussion in Louisville. First, just 12 percent of low earners are single earners with children. The largest group, 28 percent, lives with parents or relatives. Poverty among the working poor is about hours of work, not wages.

"Full-time, full-year work leads to greater reductions in poverty than raising the minimum wage, said Yelowitz. "It is about hours, not about wages."

Yelowitz concluded his testimony on the Louisville minimum wage issue by saying, "Based on all of the evidence, enacting a minimum wage in Louisville would do more harm than good."

A video of Yelowitz' testimony before the Louisville Metro Council can be accessed here http://www.cato.org/multimedia/media-highlights-tv/aaron-yelowitz-testifies-proposed-minimum-wage-ordinance-louisville.

More on Yelowitz' analysis can be found here http://www.economics21.org/commentary/citywide-minimum-wage-hikes-do-more-harm-good.

Congressman John Yarmuth (D-Louisville) disagrees with Yelowitz on the issue as evidenced by this recent Louisville Courier-Journal article http://www.courier-journal.com/story/news/politics/metro-government/2014/10/30/john-yarmuth-encourages-metro-council-increase-minimum-wage-locally/18205179/.

Download the UK Now article or the Screenshot.

Download the Mediapost article or our Bitcoin Study.

Health insurance reform in Massachusetts lowered the cost of pregnancy and the cost of preventing pregnancy (through increased access to reliable contraception). We examine fertility responses for women of childbearing age, and on net, find no effect of increasing health insurance coverage. This masks substantial heterogeneity, however. For married women aged 20-34 - who have high latent fertility and for whom pregnancies are typically wanted - fertility increased by approximately 1 percent. For unmarried women in the same age range - for whom pregnancies are typically unwanted - fertility declined by 9 percent. For other age/marital status groups, there was very little fertility response, in part because of low latent fertility or minimal gains in insurance coverage. Pregnancy wantedness increased in the aggregate through a combination of increasing wanted births and decreasing unwanted births

Download the study or the seminar announcement.

Dr. Aaron Yelowitz, an associate Professor and Director of Graduate Studies in the Department of Economics at the University of Kentucky, has released a paper analyzing Bitcoin and its users with search trends using Google Trends.

As Kristoufek demonstrated in his paper, there is a strong, positive correlation between Bitcoin searches and exchange prices. Yelowitz and Mathew Wilson takes things a step further and finds correlations between users and interest in Bitcoin. Based on "anecdotal evidence" in regards to Bitcoin users, Yelowitz constructed proxies for four possible users: computer programmers, speculative investors, Libertarians and criminals.

Yelowitz admits that some of these correlations are inherently difficult to measure, due to the sensitivity of the activity. Their findings show computer programming and illegal activity search terms are positively correlated with Bitcoin interest, while Libertarian and investment terms are not.

How It Was Done

Google Trends allows users to extract data on both precise search terms and general topics. For instance, the topic "Bitcoin (currency)" includes the terms "Bitcoin", "Bitcoins", "Bitcoin Mining", "Bit Coin", "Bitcoin exchange", "Bitcoin price" and "Bitcoin value". Using this information and following Stephens-Davidowitz work, the new study came up with a formula after normalized each search rate to its z-score.

Using their formula they found that computer science and Silk Road are both positively associated with interest in Bitcoin. As unemployment rates went up there was no change in interest amount the computer programmers and those performing in illegal activity, but there was evidence to support Libertarian activity that drove interest to Bitcoin. Higher unemployment rates were negatively associated with Bitcoin interest.

Conclusion

Dr. Yelowitz paper concludes that computer programming enthusiast and illegal activity drive interest in Bitcoin while there is little to no support for political and investment motives. What do you think your Google search terms say about you as a Bitcoiner? Comment below!

Download the CryptoCoinsNews article or our Bitcoin Study.

In our study, we find that searches on the term 'Silk Road' is positively correlated with Bitcoin interest. As we outline in our study (and in the CoinDesk article), there are many caveats, but that's what we find.

Download the CoinDesk article or our Bitcoin Study.

Download My correspondence to Chairman Tandy.

The anonymity of Bitcoin prevents analysis of its users. We collect Google Trends data to examine determinants of interest in Bitcoin. Based on anecdotal evidence regarding Bitcoin users, we construct proxies for four possible clientele: computer programming enthusiasts, speculative investors, Libertarians, and criminals. Computer programming and illegal activity search terms are positively correlated with Bitcoin interest, while Libertarian and investment terms are not.

Download the study.

Economics professor Aaron Yelowitz of the University of Kentucky, who has studied the minimum wage for 10 years, said he studied Santa Fe and San Francisco and a local minimum wage can increase unemployment and hurt the local market.

"Enacting a minimum wage in Louisville will do more harm than good," Yelowitz said.

Download the news article.

Feldstein's point is related to the idea of "conditional coverage" - an individual might implicitly have health insurance coverage protection even if he or she doesn't take the steps to purchase it before a bad health event, because the barriers to enrollment are low. This is true after the implementation of the PPACA, and has been true for Medicaid for a long time. In a pathbreaking article in Quarterly Journal of Economics in 1996, Dr. David Cutler and Dr. Jonathan Gruber call this "conditional coverage".

In a forthcoming paper with Dr. Jim Marton, we examine this issue in the context of Kentucky's Medicaid managed care program. Our abstract follows.

This paper estimates the impact of the introduction of Medicaid managed care (MMC) on the formal Medicaid participation of children. We employ a quasi-experimental approach exploiting the location-specific timing of MMC implementation in Kentucky. Using data from the March Current Population Survey from 1995-2003, our findings suggest that the introduction of MMC increases the likelihood of being uninsured and decreases formal Medicaid participation. This finding is consistent with an increase in "conditional coverage" - waiting until medical care is needed to sign up or re-enroll in Medicaid. These effects are concentrated among low-income children and absent for high-income children. We find no evidence of "crowd-in" - substituting private coverage for Medicaid. These results are robust to multiple placebo tests and imply the potential for less formal participation (i.e. more conditional coverage) among the ACA Medicaid expansion population (which is likely to be primarily covered under MMC) than is typically predicted.

As a brief overview, students in our Ph.D. program study with faculty who are experts in their fields, interact with other bright and capable students and obtain a vast amount of knowledge of their fields of interest. Our Ph.D. program is designed so the motivated student can make steady progress toward the Ph.D. degree. The first year focuses on core theory: microeconomic theory, macroeconomic theory, mathematical methods and econometrics. Students demonstrate their proficiency in micro and macro economics through comprehensive exams taken during the beginning of summer after their first year. Second year coursework completes core theory and begins advanced seminar courses in specific field areas: Macroeconomics, Industrial Organization, Public, Labor, International or Health/Environmental. At this time students begin exploring dissertation topics through classroom assignments. Students demonstrate their mastery of field areas by completing a comprehensive examination in a chosen field. Third year coursework completes classes in additional topic areas and begins independent study toward a dissertation. Students complete a research proposal, and defend the proposal through an oral examination. During the fourth and fifth years students complete their dissertation research.

We take great pride in mentoring our students through the job search process as they are completing our Ph.D. program, and have had success in placing students in rewarding careers. Recent graduates from our program have been placed in academic positions in both the US and abroad, and at a variety of positions in the public and private sector. Academic placements include: American University, Armstrong Atlantic University, Bloomsburg University, Brigham Young University, Bryant University, CSU Fresno, Canisius College, East Tennessee State University, Middle Tennessee State University, Nicholls State University, North Carolina A&T, Roanoke College, Saginaw Valley State University, Southwestern University of Finance and Economics (China), University of Mary Washington, University of Northern Florida, University of Southern Indiana, University of Texas, San Antonio, and Valdosta State. Non-academic placements include: Bureau of Economic Analysis, Economic Analysis Group, ERS Group, Institute for Defense Analyses, Kentucky LRC, PricewaterhouseCoopers and U.S. Census Bureau. A more extensive list is available at: Recent Placements

A longer description of our program can be found here: Economics PhD Program Overview

You can also learn about our admission requirements, and our PhD Degree Programs

You can also learn the answers to frequently asked questions about graduate programs in economics

Finally, when you are ready, go ahead and apply to the Ph.D. program.

Download the overview of UK's program.

In work with my colleague, Ken Troske, we have simulated the effects of raising the minimum wage in Kentucky. From our abstract:

Many policymakers in Kentucky have suggested raising the state's minimum wage as a way to help poor families. In this report, we examine which Kentucky workers would be helped and hurt by a $7 minimum wage in Kentucky. The results indicate that both the poor families, which the minimum wage increase is intended to help, and the state as a whole would be, if anything, less well off if the wage was raised. We investigate the earned income tax credit as an alternate method of assisting poor families and find it to be less disruptive and more likely to assist the targeted recipients.

Download the full study.

Op-Ed: Free Lunch In Calif. Will Relegate Many to the Bread Lines

Published in the Investor's Business Daily, October 27, 2004

A ticking time bomb threatens to devastate the state of California. Powerful special interests watch impatiently as their plan nears fruition, while most everyone else goes about their business, unaware of the impending meltdown.

This isn't a Hollywood B-movie script. Proposition 72 is poised to blast a hole through California's economy.

If it passes on election day, Proposition 72 will force every California business with 20 or more employees to pay their employees' health insurance bill.

While this "free lunch" may sound attractive to many employees, my own recently published study of U.S. Census data indicates that Proposition 72 will cost employers more than $12 billion a year and destroy up to 150,000 jobs. For comparison, the 1994 earthquake that shook California's economy resulted in less than half that number of lost jobs.

The layoffs will be concentrated among the people who need their jobs the most: the poor and unskilled. High school dropouts comprise 17% of the California workforce, but my study shows that they will account for up to 40% of the jobs lost because of Proposition 72.

Minorities will also take a disproportionate hit. While Hispanics make up 30% of the workforce, they will bear 53% of the job losses.

In Los Angeles County, the mayor's office recently announced that nearly a third of working-age adults can't locate an intersection on a street map. Nearly half can't use a bus schedule. That's more than 3.8 million people in Los Angeles alone who desperately need training, including on-the-job training. But many businesses simply cannot afford ever-higher healthcare and labor costs for people who do not know how to read or make change.

Losing Coverage

No academic study can tell you exactly which 150,000 Californians will begin receiving unemployment checks in place of paychecks. It could be you. It could be a family member or neighbor. Proposition 72 is almost like a reverse lottery for the unlucky.

What economic research can tell you is that this referendum, intended to provide Californians with health insurance, will actually cost 32,000 people their existing coverage. They should have plenty of time to consider Proposition 72's bitter irony: Employer-provided health insurance is a hollow promise if you no longer have an employer.

As people lose jobs and payrolls shrink, the shockwaves from Proposition 72 will ripple through the entire economy. Meanwhile, the initiative won't even address the real problem.

Its backers concede that nearly 70% of the uninsured will remain without coverage. It turns out that only one third of the $12 billion price tag for Proposition 72 goes toward providing health insurance to those who don't have it. Nearly half the expense is for people who are already covered by employer-provided insurance.

Because the referendum requires employers to pay 80% of premiums, the thousands of businesses currently paying lower percentages will experience increased costs.

Under Proposition 72, poor Californians can receive a subsidy for their 20% share of health insurance premiums. That sounds like a good idea, until you realize that eligibility is based on employee wages rather than family income.

Distorted Data

Tens of thousands of people with family incomes over $100,000 will receive a subsidy intended for the poor.

Proposition 72 advocates failed to include the poverty subsidy in their cost projections. In fact, they have systematically and intentionally hidden its real price tag. Their estimates range from 10% to 22% of the actual $12 billion figure.

To arrive at these drastically understated numbers, advocates have engaged in statistical gamesmanship. For example, their number crunchers slashed the final cost tally by 40%, figuring that employers deduct healthcare expenses from their corporate taxes. This conveniently ignores the many employers who don't pay corporate income taxes, such as schools and non-profits.

In another statistical slight of hand, Proposition 72 supporters didn't count the cost to businesses of covering employees currently enrolled in Medicaid. But this didn't stop them from brazenly counting the cost shift as a pure "savings." To be sure, Medicaid is expensive. But it's important to remember that the federal government picks up half the bill for this Great Society program. In contrast, Californians will be responsible for the entire cost of coverage under Proposition 72.

Already on board against 72 is Governor Schwarzenegger. "Well-intentioned as it may be," he cautioned, "Proposition 72 will only reverse California's recovery and trigger an exodus of jobs from the state."

As this economic time-bomb ticks closer to disaster, every California voter has a rare opportunity to play hero.

Dr. Aaron Yelowitz, formerly an assistant professor at UCLA, is an associate professor at the University of Kentucky specializing in labor and health economics.

Download the Op-Ed and/or the full study.

"Using the Census Bureau's current population survey, University of Kentucky economist Aaron Yelowitz and Michael Cannon of the Cato Institute studied RomneyCare between 2005 and 2008 - that is, two years on either side of its passage. The share of uninsured residents did fall to 5.4% in 2008 from 9.8% in 2005 (though the authors argue this reduction is overstated).

But Messrs. Yelowitz and Cannon show that most of the new coverage was concentrated among people earning under 300% of the federal poverty level, or about $66,000 for a family of four. Those happen to be the same people who qualify for subsidies in the heavily regulated insurance 'connector,' the prototype for the 'exchanges' that Democrats were contemplating before Mr. Brown so rudely interrupted.

Coverage for adults in this group increased by 14.2 percentage points - which merely proves that 'universal' coverage isn't much of a problem if health care is cheap for consumers. But another way of thinking about it is that the subsidies amount to a taxpayer-funded insurance discount. The same increase in coverage might be achievable if health care were less expensive. But rather than deregulate and reform the private market to lower costs, Mr. Romney and Democrats defaulted to the same public transfer payments that define ObamaCare.

The program's costs have since exploded and compounded the Bay State's budget burdens, even though the feds pay a large share of RomneyCare's costs via Medicaid. One reason for this spending boom, say Messrs. Yelowitz and Cannon, is that subsidized coverage has tended to crowd out private insurance: Among adults eligible for subsidies, unsubsidized coverage fell by 6.2 percentage points even as overall coverage increased statewide and in neighboring New England. The authors also point out that the true costs are, conservatively, 57% higher than what the government spends if unfunded private sector mandates are included - or about $1 billion total in 2008."

Download the news article and/or the study.

The safety net is a bit tangled, however. Back in 1996, Aaron Yellowitz, an economist at the University of Kentucky, drew up a table assessing the total government benefits a poor single mother with one child could receive - including cash, food, housing and medical care. He then tracked the decline in benefits as her income rose.

Despite numerous changes to the system, Yellowitz said, the gist of his table holds true today: as work income goes up, government benefits sharply drop. Because benefits are cut as earnings rise, real net income remains stagnant between $10,000 and $20,000 annual earnings. Net income then actually drops when earned income climbs between $20,000 and $25,000. Jacobs calls it a steep implicit tax on the poor.

Setting aside the implicit tax problem, Yellowitz still sees the living wage as poorly targeted to help those most in need. 'We're taking from employers and giving to workers under the guise of the struggling single parent,' he said. 'That's part of the story but nowhere close to 100 percent of it.' Estimates vary, but most agree that roughly 35 percent of minimum-wage workers are teenagers.

'If the object is to improve the lives of the poor, increasing the EITC is a much more effective tool than living-wage laws,' Yellowitz said. 'Most economists agree that minimum wage is a blunt way of trying to achieve this goal,' Yellowitz said.

Download the news article and/or the implicit tax study and/or the famous table illustrating high tax rates including the Medicaid notch and the public housing notch.

But that overstates the newly insured by at least 45%, according to Michael Cannon, director of health policy studies at the libertarian Cato Institute.

'The official estimates overstate the health coverage gains in Massachusetts in part because residents are concealing their coverage status,' said Cannon, who co-authored a study with Aaron Yelowitz, an economics professor at the University of Kentucky.

'We find evidence that these imputations rose in Massachusetts, not just after the law passed but relative to other New England states,' said Cannon. 'Using those other states as controls, it shows that nonresponse to the health insurance question is growing in Massachusetts for some reason that is unique to the Bay State.'

Cannon and Yelowitz find that the uninsured rate could be closer to 5.1% vs. the official 3.8%.

Download the news article and/or the study.

"The proportion of 18- to 34-year-olds living with their parents has risen by an estimated five percentage points since 1980, to roughly 34%, says Aaron Yelowitz, an associate professor of economics at the University of Kentucky and a contributor to the collection of studies 'The Price of Independence,' published by the Russell Sage Foundation."

Download the news article and/or the study.

"Another portion of the economic conference dealt with how the federal Affordable Care Act's employer mandate will impact Kentucky businesses.

Effective January 1, 2014 the act requires large businesses (50 or more employees) to either provide affordable health insurance to full-time employees, but not their dependents, or pay a $2,000 per employee tax penalty. It's also known as 'Pay or Play'

'More than 283,000 Kentucky workers are likely to be affected by the mandate. Put differently, around 22 percent of workers at large firms would be impacted,' estimated Dr. Aaron Yelowitz, another UK Gatton College of Business and Economics professor.

In Central Kentucky, about 11.9 percent of full-time workers will be affected by the mandate.

Relative to the now well-known individual health care mandate, Yelowitz says there's been much less discussion about the Act's impact on larger businesses. Politically, opponents call it 'a job and wage killer.' The White House defends it, saying it is a 'shared responsibility fee' and that taxpayers are 'supporting the cost of health insurance for workers through premium tax credits for middle to low income families.'

Industries with large firms and many full-time workers who lack health insurance will be most impacted. The industries expected to be most affected in Kentucky are administrative and support, waste management and remediation services, followed by various types of manufacturing firms and then mining.

Large employers can provide health care insurance themselves or put employees into insurance exchanges (subsidized insurance). It might modify employment. Employers may decide to reduce the number of full-time workers to less than 50 to skirt the rules or may cut an employee's hours to less than 30 in a week.

Yelowitz says there could be some job losses if the new health care rules cause a company's profits to shrink. 'It may raise the cost of doing business to some extent in some industries and in all Kentucky regions,' noted Yelowitz, who added that employers in southeastern Kentucky, where there are fewer large companies, may feel the impact the most."

Download the news article and/or the study.

Aaron Yelowitz, an associate professor of economics at the University of Kentucky, said several variables could affect how many Kentuckians wind up in the exchange. That could make the state's projected numbers even higher, including employers who offer health insurance but plan to shift to the exchange, employers who never offered health insurance and will be going into the exchange, and individuals who are picking up new coverage.

Using a rough estimate, Yelowitz said that if 20 percent of Kentucky's population of about 4 million people lacked health insurance, there are 800,000 prospective clients for the exchange pool.

The health of those coming into the exchange also will bear study, he said, because those coming into the exchange might have more health problems than those who have employer-sponsored insurance.

'It will be hard to know how big of a deal this really is until some time has passed,' Yelowitz said. 'If some companies are gearing up to change their behavior, we may see that change early on.'

Download the news article.

The consequences of this new law are presented in a report on its impact by Dr. Aaron Yelowitz, a nationally respected labor and health economist formerly at UCLA and now at the University of Kentucky and the National Bureau of Economic Research.

Taking The Hit

This research shows the "how" and "why" employees will suffer from this law as employers adjust to this new costly mandate by lowering wages, cutting benefits and laying off workers.

Yelowitz's research confirms what scores of other studies have found: Government-mandated increases in wages and benefits often trigger the law of unintended consequences.

According to professor Yelowitz, hardest hit will be the over half-million employees who earn the state minimum wage or just above it.

These vulnerable employees risk losing their jobs either through labor force cuts as employers downsize to cut costs, or through competition as employers hire more experienced employees to justify increased hourly wages.

Despite these significant economic and human costs, nearly 4.5 million people - two-thirds of the uninsured - will remain without coverage under this new mandate.

Yelowitz estimates the cost of this new mandate to be significantly higher than its supporters admit.

Download the news article and/or the study.

A University of Kentucky economist, Aaron Yelowitz, studied the impact these new requirements would have for younger adults versus their elders in a new paper for the Cato Institute.

He concluded that the three provisions 'would drive [health insurance] premiums down for 55-year-olds but would drive them up for 25-year-olds - who are then implicitly subsidizing older adults.'

The culprit is the community rating, an aspect of Democrats' plans that doesn't get nearly as much attention as the mandate or guaranteed issue.

Yelowitz looked at premiums in New York, which already has community rating, versus California, which doesn't. On the Web site eHealthInsurance.com, he found that 25-year-olds in Bell Gardens, Calif., can choose from 107 health plans. The premiums they pay are one-fourth to one-third of what 55-year-olds in the Los Angeles suburb can expect.

Download the news article and/or the study.

"When it comes to numbers, however, it's Aaron Yelowitz, the hotshot 36-year-old economist with MIT credentials and a University of Kentucky assistant professorship under his belt, who is the Chamber's most important ally.

Yelowitz met former Chamber president Jerry Easley in Washington, DC at a US Chamber of Commerce convention in 2004. At Easley's request, Yelowitz traveled to testify on behalf of New Mexicans for Free Enterprise when the living wage first went to court later that year.

Yelowitz' latest study says the living wage in Santa Fe isn't working. Funded by the Economic Policy Institute, a Washington, DC think tank, and released in September, Yelowitz' report concludes the living wage has significantly increased unemployment in Santa Fe between June of 2004 and 2005 by approximately 3.2 percent. The increase, Yelowitz says, unduly affected locals with fewer than 12 years of education.

Living wage defenders scoff that Yelowitz' data is skewed and the timing of the study suspicious, given its release just prior to Albuquerque's failed attempt at a living wage on Oct. 4 (both are claims denied by Yelowitz).

Download the news article and/or the study.

"Aaron Yelowitz, associate professor of economics in the Gatton College of Business at the University of Kentucky, said the Supreme Court's decision will certainly be felt throughout the bluegrass state.

'Basically, today's ruling shores up the financial solvency of that arrangement, where people can purchase health insurance whether or not they're sick, but it comes at a real cost,' he said. 'There are provisions that weren't talked about today, like employer mandates, which essentially say that if you're a firm with 50 or more employees you have to provide health insurance to your employees, which will almost certainly raise labor costs. I've actually done some back-of-the-envelope calculations on how many workers will be affected by those sorts of permissions in the healthcare reform law, and the answer is around a quarter of a million Kentuckians.'

Yelowitz described the individual mandate, the part of the law requiring most Americans to buy health insurance, as a 'hidden tax.' Most people who choose to forgo buying health insurance tend to be young and healthy, he said. According to the Associated Press, approximately 640,000 Kentuckians are currently uninsured. Under the Affordable Care Act, those individuals must purchase healthcare or face a penalty.

'The mathematics behind it then would be that you have young people purchasing plans that are actually priced above their risk,' Yelowitz said. That extra cost will go toward lowering premiums for people with pre-existing conditions.

'So the big winners out of a policy like that tend to be people that are sick,' Yelowitz said. 'Remember that a key feature of healthcare reform was, regardless of whether your sick or not, you'll still be able to purchase healthcare at affordable prices. But the way which it is done, essentially, is on the backs of people who aren't sick and before were not purchasing health insurance, and that's where the individual mandate comes in.'"

Download the news article.

"The average low-wage worker, in fact, lives in a household with an income of $57,000 a year. The study, written by economists Kenneth Troske and Aaron Yelowitz of the University of Kentucky, points out that poverty is a problem of too few hours worked, not low wages. The average poor worker earns $9.58 an hour, but works 40 percent fewer hours than a typical adult.

Raising the minimum wage would cause employers to cut hours even more. That's the law of demand, the most basic of economic principles: If you raise the price of something (labor in this case), people buy less of it.

Troske and Yelowitz aren't just naysayers. If Missouri is serious about fighting poverty, they propose, it should adopt a state version of the earned income tax credit. Illinois and 13 other states already piggyback on a federal credit given to families who earn less than $36,348 annually.

By raising take-home pay, the credit increases the incentive to work. And, Troske and Yelowitz write, 'instead of providing a wage subsidy for relatively wealthy teen-agers, the EITC is directly targeted at workers in poor households.'

Download the news article and/or the study.

Download the Op Ed and/or the Cato study.

"Aaron Yelowitz, an associate professor of economics at the University of Kentucky, said that if Kentucky continues to get fatter at the same rate as other states with which it is competing, that doesn't necessarily handicap the state competitively. All other states, even those that had until recently prided themselves on a thin population, are gaining weight, he said."

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"Getting a handle on the size of this under-the-radar community is tough. One rough estimate by University of Kentucky economist Aaron Yelowitz, who crunched numbers from the U.S. Census 2011 American Community Survey, was that of the 3,513,358 people working in the Bay Area, 12 percent -- or 421,602 -- are paid $8 or less an hour, which is legal for certain exempted employees."

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Approximately 20 percent of female headed households with children receive government-subsidized housing. For those who receive housing subsidies, the subsidies are often worth more than all other welfare benefits combined. Despite its value and prevalence, there is comparatively little empirical evidence on how public housing in the United States affects economic behavior.

This study uses data from the SIPP and CPS to explore how public housing rules affect the work behavior of female headed households. The public housing rules create a great deal of variation in the program generosity, through three different dimensions. First, the program generosity varies by metropolitan area. Second, it varies over time, through year-to-year changes in the subsidy and income eligibility limit. Third, unlike other welfare programs, the benefits vary based on the sex composition of the children. For example, a family with one boy and one girl gets a three-bedroom apartment or voucher, while a family with two boys or two girls gets a two-bedroom apartment or voucher. By combining these different sources of variation, this study is better able to control for fixed geographic differences (such as the degree of rationing by the public housing authority), a limitation in several previous studies.

The results indicate that the public housing rules induce labor supply distortions in both data sets, though the evidence on other outcomes such as AFDC participation is less conclusive in the annual CPS data than in the monthly SIPP data. Among female headed households, a one-standard deviation increase in the subsidy reduces labor force participation by 3.6-4.2 percentage points from a baseline participation rate of 70-75 percent.

JEL Classification: H53, I38, J22, R21

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"But California's 2003 pay-or-play law was probably not the way to go, according to the report's author, Aaron Yelowitz, an associate professor of economics at the University of Kentucky.

'Because private coverage plays such an important role in overall insurance rates, you can understand the logic behind the pay-or-play concept,' says Mr. Yelowitz. 'States just need to make sure that mandates are structured to avoid unintended and damaging pitfalls.'"

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"But a Washington, D.C., economic think tank funded by a restaurant and beverage industry lobbyist is pointing to a more recent University of Kentucky study showing that minimum wage laws like San Francisco's contribute to a lack of jobs for young workers.

The study by economist Aaron Yelowitz concludes that earlier studies failed to recognize groups who are losing out on work opportunities because of the higher labor cost - specifically teenagers. Yelowitz also incorporates The City's mandatory sick leave and health care policies, which contribute to an actual 'compensation floor' of nearly $13 per hour in San Francisco.

The study concluded that for each $1 increase in floor compensation, the unemployment rate among younger workers increases by 4.5 percent.

'The results present a cautionary tale for cities that are considering intervening in the labor market: although well-intentioned, forcing firms to pay higher wages and other compensation harms precisely those workers that the laws are intended to help,' Yelowitz wrote."

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"Aaron Yelowitz, an economics professor in the business college, told attendees that another concern for Kentucky is the effect of the Affordable Care Act in 2014. The federal law will require businesses with 50 or more employees to provide "affordable" insurance to full-time workers or pay a tax penalty of $2,000 for each employee.

Using a detailed econometric model, Yelowitz estimated that 283,549 of 2.4 million Kentucky workers could be affected. Analyzing by industry, Yelowitz estimated that workers in the administrative, waste management, manufacturing, mining and transportation sectors might be most affected.

The region most likely to be affected is in southeastern Kentucky, although all areas of the state would have a number of businesses that will need to respond to the health care mandate."

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I'll post links on news stories that I've been asked to comment on. Also, I'll provide access to my unpublished working papers and data from my published studies. Finally, I'll provide some content from my graduate and undergraduate courses and perspective on Ph.D. programs through the lens of DGS.