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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Thursday, September 15, 2011

Numbers game

The Tea Party Newsletter is offering us what they promise is a "blockbuster" study showing the "Romneycare" is jobs killer. Color me skeptical.

The Beacon Hill Institute, known for its ideologically driven work, including its stalwart defense of supply side economics, offers a basic conclusion, according to research director Paul Bachman:

“Mandating health insurance coverage and expanding the demand for health services without increasing supply drove up costs. Economics 101 tells us that.”

I'm no student of the dismal science and I will allow trained economists to delve into the details. But something struck me as off-kilter from my layman's perspective.

The institute analyzed trends in health-care costs before and after the state law was passed. Researchers compared the Bay State’s numbers to national health-care cost trends. They found that instead of reducing health-care expenses as advocates had promised, Romneycare actually increased costs by $4.3 billion. Using computer modeling to determine the effect of those increased costs on businesses and Bay State residents, the institute concluded that the law has cost Massachusetts an average of 18,313 jobs.

Why a computer model to analyze the number of jobs? The law has been in effect long enough to be able to count actual jobs. And how does the model take into account the effect of the recession, the massive job loss here and he subsequent recovery that appears go have Massachusetts creating jobs faster than the national average?

The numbers may well be replicated if done by another researcher, the gold standard in analyzing academic researchers. In the meantime, I'm reminded of words famously attributed to Benjamin Disraeli:
"There are three kinds of lies: lies, damned lies, and statistics."
This report is going to make a lot of noise on the presidential campaign trail. I'll be looking forward to a deeper analysis. Professor Krugman?

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Anonymous Anonymous said...

"how does the model take into account the effect of the recession"

This is exactly right.

BC/BS raised premiums 29% becuase it's reserves were heavily invested in the shit pile (mortgaged-backed securities that had been returning 15% and now were worth .30 on the dollar.)

They were quite public about this reason.

They said their reason for jacking their premiums was because of the losses they incurred due to market conditions.

September 15, 2011 9:37 AM  

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