Understanding ‘wage theft’: Evasion and avoidance responses to minimum wage increases – AEI

A holistic assessment of the labor market effects of minimum wage regulation requires understanding employer compliance. The economics literature has paid little attention to this issue. We investigate how minimum wage increases and the strength of enforcement regimes affect the prevalence of subminimum wage payments. We find strong evidence that higher minimum wages lead to a greater prevalence of subminimum wage payments. We consistently estimate that increases in measured underpayment following minimum wage increases average between 10 and 25 percent of realized wage gains. We interpret this as evidence that minimum wage evasion and avoidance are an important reality in the low-wage labor market. Finally, we find that enforcement regimes play an important role in shaping both baseline compliance rates and the response of compliance to increases in minimum wages.

via Understanding ‘wage theft’: Evasion and avoidance responses to minimum wage increases – AEI

Exploring the Taxation of New York’s New Paid Family Medical Leave Benefit by Richard Barnes :: SSRN

This article examines the taxation of benefits received under New York’s new Paid Family Leave Act. The article argues that New York’s Paid Family Leave Act is unique when compared to similar provisions enacted in other states to date and that benefits paid under the tax are excluded from federal gross income by operation of Internal Revenue Code Sections 104 and 105. Additionally, the article contends that New York’s Department of Taxation and Finance’s Notice N-17-12 errs in concluding that amounts paid under the Act are includible in federal gross income. The article contends that insurance policies issued in compliance with the Act are “health insurance” and that income replacement benefits paid under the Act are paid for “sickness” as described in Code Sections 104 and 105.

via Exploring the Taxation of New York’s New Paid Family Medical Leave Benefit by Richard Barnes :: SSRN

Mapping COVID-19 – Dartmouth Atlas of Health Care

Overview | Maps | Methods | Limitations Overview The Dartmouth Atlas Project has long based its analyses on the natural markets where residents of the United States receive their care. The 306 Hospital Referral Regions (HRR) have become a widely used standard for health care policy and research because they correspond to local travel patterns, … Continue reading “Mapping COVID-19”

Source: Mapping COVID-19 – Dartmouth Atlas of Health Care

Is the FDA Too Conservative or Too Aggressive? – Marginal REVOLUTION

In an excellent new paper (SSRN also here) Vahid Montazerhodjat and Andrew Lo use a Bayesian analysis to model the optimal tradeoff in clinical trials between sample size, Type I and Type II error. Failing to approve a good drug is more costly, for example, the more severe the disease. Thus, for a very serious disease, we might be willing to accept a greater Type I error in return for a lower Type II error. The number of people with the disease also matters. Holding severity constant, for example, the more people with the disease the more you want to increase sample size to reduce Type I error. All of these variables interact.In an innovation the authors use the U.S. Burden of Disease Study to find the number of deaths and the disability severity caused by each major disease. Using this data they estimate the costs of failing to approve a good drug. Similarly, using data on the costs of adverse medical treatment they estimate the cost of approving a bad drug.Putting all this together the authors find that the FDA is often dramatically too conservative:

Source: Is the FDA Too Conservative or Too Aggressive? – Marginal REVOLUTION

Socioeconomic Decline and Death: Midlife Impacts of Graduating in a Recession

This paper uses several large cross-sectional data sources and a new approach to estimate midlife effects of entering the labor market in a recession on mortality by cause and various measures of socioeconomic status. We find that cohorts coming of age during the deep recession of the early 1980s suffer increases in mortality that appear in their late 30s and further strengthen through age 50. We show these mortality impacts are driven by disease-related causes such as heart disease, lung cancer, and liver disease, as well as drug overdoses. At the same time, unlucky middle-aged labor market entrants earn less and work more while receiving less welfare support. They are also less likely to be married, more likely to be divorced, and experience higher rates of childlessness. Our findings demonstrate that tempo- rary disadvantages in the labor market during young adulthood can have substantial impacts on lifetime outcomes, can affect life and death in middle age, and go beyond the transitory initial career effects typically studied.

Source: Socioeconomic Decline and Death: Midlife Impacts of Graduating in a Recession

The Price and Spending Impacts of Limits on Payments to Hospitals for Out-of-Network Care | RAND

RAND researchers estimated the effects that four proposed out-of-network payment limits for hospital care—125 percent of Medicare payments (a strict limit), 200 percent of Medicare payments (a moderate limit), state average payment by private plans (a moderate limit), and 80 percent of average billed charges (a loose limit)⁠—would have on negotiated in-network prices and total payments for hospital care. These four scenarios reflect the variation in base measure (traditional Medicare, market price, and charges) and payment generosity among existing policy proposals.

Source: The Price and Spending Impacts of Limits on Payments to Hospitals for Out-of-Network Care | RAND

A Hard Pill to Swallow: Appreciating the Mathematical Dynamics of the Affordable Care Act – Axene Health Partners, LLC

The Affordable Care Act (ACA) is recognized for its role in reducing the uninsured rate in the United States. The federal financial commitment has expanded Medicaid eligibility and provided incentives for people to enroll in individual markets for the first time. Underneath the surface, the structural individual market design results in convoluted mathematical dynamics[1] that challenge stakeholders to understand and improve markets. There has been historical reluctance to freely admit these challenges, partially to avoid potentially providing leverage to ACA detractors. To improve ACA markets, we must first be honest about some of its illogical consequences. For many of us, this is a hard pill to swallow.

Source: A Hard Pill to Swallow: Appreciating the Mathematical Dynamics of the Affordable Care Act – Axene Health Partners, LLC

Mandated Sick Pay: Coverage, Utilization, and Welfare Effects

This paper evaluates the labor market effects of sick pay mandates in the United States. Using the National Compensation Survey and difference-in-differences models, we estimate their impact on coverage rates, sick leave use, labor costs, and non-mandated fringe benefits. Sick pay mandates increase coverage significantly by 13 percentage points from a baseline level of 66%. Newly covered employees take two additional sick days per year. We find little evidence that mandating sick pay crowds-out other non-mandated fringe benefits. We then develop a model of optimal sick pay provision along with a welfare analysis. Mandating sick pay likely increases welfare.

Source: Mandated Sick Pay: Coverage, Utilization, and Welfare Effects

Progressive Narrative on Homelessness Has Always Been Wrong

new data from the California Policy Lab show, it’s likely that 50 percent of the homeless and 78 percent of the unsheltered homeless have a serious mental health condition.

Source: Progressive Narrative on Homelessness Has Always Been Wrong

Primary Care: Estimating Democratic Candidates’ Health Plans | Committee for a Responsible Federal Budget

Senator Bernie Sanders released a new set of proposals to offset the cost of his health care plan this week. Based on these new proposals, we have updated our paper – Primary Care: Estimating Democratic Candidates’ Health Plans – which estimates the fiscal impact of plans put forward by candidates Sanders, Biden, Buttigieg, and Warren. Whereas our previous estimates found Senator Sanders’s plan would fall $13.4 trillion short of being paid for, our newest estimates find his plan would fall just under $13 trillion short. The full analysis is available below. We have also updated our Primary Care infographics.

Source: Primary Care: Estimating Democratic Candidates’ Health Plans | Committee for a Responsible Federal Budget

Affordable Hospital Care Through Competition and Price Transparency

One of the greatest challenges to affordable health care is the high cost of American hospitals. The most important driver of higher prices for hospital care, in turn, is the rise of regional hospital monopolies. Hospitals are merging into large hospital systems, and using their market power to demand higher and higher prices from the privately insured and the uninsured.

Source: Affordable Hospital Care Through Competition and Price Transparency

Reducing Administrative Costs in U.S. Health Care | The Hamilton Project

The ProblemAdministrative costs account for one-quarter to one-third of total health-care spending in the United States—far greater than the amount necessary to deliver effective health care. Excessive administrative burden results in higher costs for physicians, insurers, and patients alike.The ProposalCutler proposes several reforms to the U.S. health-care system aimed at reducing administrative costs. Specifically, his proposal would establish a clearinghouse for bill submission, simplify prior authorization, harmonize quality reporting, and enhance data interoperability in the health-care system. Cutler’s proposal to lower administrative costs could save $50 billion annually.

Source: Reducing Administrative Costs in U.S. Health Care | The Hamilton Project