Friday already?! Here’s what we’re watching as we prepare for lawmakers to return to Washington next week.
Biden Moves to Limit 'Junk Insurance'
President Joe Biden on Friday proposed a set of initiatives intended to reduce health care costs, including new restrictions on short-term insurance plans that critics refer to as “junk insurance” because they can leave patients with limited coverage and hefty unpaid medical bills.
Access to short-term insurance plans, which typically cost less than the plans available through the Affordable Care Act but also fail to provide comprehensive coverage – many do not, for example, cover pre-existing conditions – was expanded by the Trump administration, which portrayed them as a cheaper alternative to Obamacare. Democratic policymakers argue that the plans are risky for consumers and siphon off healthier customers who are needed to make the federal health care exchanges work properly.
Under the new regulations, short-term plans would be limited to three months, with a potential extension of one additional month. Under Trump, short-term plans were available for up to three years.
“New proposed rules would close loopholes that the previous administration took advantage of that allow companies to offer misleading insurance products that can discriminate based on pre-existing conditions and trick consumers into buying products that provide little or no coverage when they need it most,” the White House said in a statement. “If finalized, the rule would limit so-called ‘short-term’ plans to truly short time periods, close loopholes made worse by the previous administration, and establish a clear disclosure for consumers of the limits of these plans.”
Speaking at a White House event, Biden said the new policies were part of his “Bidenomics” program designed to help ordinary citizens. "It's not necessarily about healthcare, it’s about being played for a sucker," he said. "That's a scam and it has to end."
Other initiatives announced today include new restrictions on surprise medical billing and tighter regulation of credit cards that are issued to pay for medical debt. The White House also noted that a new analysis by the Department of Health and Human Services shows that 18.7 million people enrolled in Medicare Part D will save an estimated $400 a year in drug costs once provisions of the Inflation Reduction Act take effect in 2025, for overall savings totaling $7.4 billion.
Quote of the Day
“It was a bad deal. A cautionary tale is you can’t give governors too much power to get on the phone with egotistical billionaires.”
— New York state Sen. Sean Ryan talking to The Wall Street Journal about a $1 billion facility his state built for Tesla in Buffalo to house what was supposed to be the largest solar-panel factory in the Western Hemisphere. The 1.2 million square foot site, rented to Tesla for $1 a year, employs far fewer people than originally projected. An analysis by the New York comptroller found 54 cents of economic benefit for every dollar spent to build the facility, and state officials have already written off about 90% of the original investment.
The project highlights the risks that politicians take when deploying publicly-funded investment capital for the benefit of private companies. E.J. McMahon of the Empire Center for Public Policy, a conservative think tank, told the Journal that the Buffalo plant investment is one of the worst on record. “In terms of sheer direct cost to taxpayers, this may rank as the single biggest economic development boondoggle in American history,” McMahon said.
Job Growth Slows in June, but Only Slightly
The labor market expanded again in June as employers hired 209,000 people, the Bureau of Labor Statistics announced Friday.
The numbers were something of a disappointment, coming in below expectations and well below the revised 309,000 jobs added in May. But the results point to a surprisingly robust economy nevertheless, even if hiring is softening. Average hourly earnings rose 4.4% on an annual basis, while the unemployment rate fell a tenth of a point to 3.6%, near a 50-year low.
“It's a good solid straight down the middle, this little engine just keeps on chugging along payrolls report,” said University of Michigan economist Justin Wolfers.
Acting Secretary of Labor Julie Su said that the report marks “the longest stretch of sub-4 percent unemployment since the 1960s.” Su also noted that the labor force participation for prime-age women (ages 25 to 54) hit a new high of 77.8% in June. And the overall employment-to-population ratio for prime-age Americans rose to 80.9%, the highest reading since April 2001 and not far off the record high of 81.9% recorded in April 2000.
As Neil Irwin of Axios wrote, “This expansion is putting Americans to work at rates previously unseen in this century.”
Most analysts concluded that the report likely boosts the odds that the Federal Reserve will resume its anti-inflationary campaign of interest rate increases later this month. “The latest jobs and wage data add to evidence that economic activity hasn’t slowed as much as Fed officials expected, and leaves them likely to lift interest rates to a 22-year high at their July 25-26 meeting,” The Wall Street Journal’s Sarah Chaney Cambon wrote. “Inflation has eased from its recent peak a year ago, but remains roughly double the Fed’s 2% target.”
Number of the Day: 8%
Just 8% of respondents in a Gallup poll released this week said they have faith in Congress, one of the lowest readings ever in the annual survey that records attitudes toward major U.S. institutions.
Overall, faith in American institutions has hit a record low, with just 26% of respondents saying they have a great deal or quite a lot of confidence in the nine institutions (church/organized religion, the military, the Supreme Court, banks, public schools, newspapers, Congress, organized labor and big business) Gallup has consistently asked about since 1979.
“Most of the institutions rated this year are within three points of their all-time-low confidence score, including four that are at or tied with their record low,” Gallup said. The only institutions that have a positive rating from a majority of respondents are small businesses (65%) and the military (60%).
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Fiscal News Roundup
- Biden Wants to Roll Back Trump's Temporary Health Plans, Calling Them 'Junk' Insurance – USA Today
- Biden Launches a New Push to Limit Health Care Costs Hoping to Show He Can Save Money for Families – Associated Press
- Medical Credit Cards Targeted by US for Piling Debt on Patients – Bloomberg
- Cooler Hiring in June Could Help the Fed Achieve an Elusive ‘Soft Landing’ for US Economy – Associated Press
- Black Workers in the US Account for 90% of Recent Rise in Unemployment – Bloomberg
- The Supreme Court Could Kill Student Debt Relief Again — Right After the Election – Semafor
- Automatic Spending Cuts Would Threaten Infrastructure Funding – Roll Call
- New York State Built Elon Musk a $1 Billion Factory. ‘It Was a Bad Deal’ – Wall Street Journal
- McCarthy Declines to Endorse Trump — Looking to Avoid a GOP Civil War – Politico
- Trump Special Prosecutor Probe Spent Over $9 Million So Far – Politico
Views and Analysis
- Job Market Is Giving the Fed What It Wants — Just Slowly – Jonathan Levin, Bloomberg
- Death of an Economic Theory – David Dayen, American Prospect
- Bidenomics Won’t Cure Inequality. It May Prolong It – Alison Schrager, Bloomberg
- Public Subsidies to Sports Stadiums Aren’t Going Away – Elizabeth Meisenzahl, American Prospect
- America’s Two-Tier Labor System Is a Glaring Outlier Among Wealthy Nations – Mikhiela Sherrod, The Hill