Macro Roundup

This is driven by the rise of intangibles assets, “…investors sought out companies trading for less than their book value—the assets on its balance sheet minus debt and other liabilities. Today, most value comes from intangible assets that typically don’t appear in book value: intellectual property such as patents and software, brands, and user networks. Between 1995 and 2018, intangible assets rose from 68% to 84% of the enterprise value (which includes equity and debt) of companies in Standard & Poor’s 500 stock index, Mr. Thomas estimates….”

This is Heritage’s health care proposal you asked about. It’s not a comprehensive plan but offers a series of potential, in many cases current innovations based on the current system (some of these, like telemedicine, likely have been accelerated by the pandemic)

Steve

1. Provide opportunity for individuals to delink health care from employment. “…In an ideal world, most people would own their own health insurance and take it with them as they traveled from job to job and in and out of the labor market. Some employers may have better insurance than is available on the open market. But others might prefer to make a cash contribution to help employees pay their own premiums rather than provide insurance directly. Some employers were actually doing that before Obamacare. They used an account called aHealth Reimbursement Arrangement (HRA), providing tax-free funds employees could use to buy their own health insurance. But with Obamacare came regulations and threats of steep employer fines that effectively deep-sixed this option. Thankfully, the Trump administration is reversing course. Beginning next January, employers will be able to use HRAs to help employees obtain their own coverage with the administration’s blessing…”
2. Make Medicare more open to “direct primary care.”“….Under the arrangement, Medicare would pay a fixed monthly fee to a physician or physician group instead of the traditional fee-for-service payments. In return, the physicians would provide virtually all primary care. The fees would range from $90 to $120 a month, depending on the patient’s age and medical complexity….”
3. Expanded use of telemedicine“…Medicare doesn’t pay for any of this. And since private insurers and employers tend to pay the way Medicare pays, the entire country is missing out on incredible advances in telemedical technology….Federal law (the Social Security Act) allows Medicare to pay for telemedicine only under strictly limited circumstances… The CMS is acting aggressively to change this. As of January 1 of this year, doctors in Medicare Advantage plans and accountable-care organizations can now bill Medicare if they use phone, email, Skype, and other technologies to consult with patients remotely to determine if they need an in-office visit. Patients can be anywhere, including their own homes. Doctors can also bill Medicare to review and analyze medical images patients send them. And they can bill for telemedical consultations with other doctors. But these are still baby steps. Congress needs to liberate telemedicine once and for all….”
4. Allow specialized healthcare plans“….The most successful Obamacare insurers are Medicaid contractors. The plans that have survived in the exchanges look like Medicaid managed care with a high deductible. The networks include only those doctors who will accept Medicaid fees coupled with all the hassle of managed-care bureaucracy….Before Obamacare, most states had risk pools for the small number of people who entered the individual market with an expensive preexisting condition and were denied access to ordinary insurance coverage. The risk-pool plans looked like garden-variety Blue Cross plans, with access to almost all doctors and hospitals. While some risk pools had problems — such as being over-subscribed and unable to take new customers — those problems were discrete and addressable…..Health Care Choices Proposal, developed by the Health Policy Consensus Group and supported by more than 100 conservative leaders across the country. This proposal would block-grant Obamacare funds to the states and give them wide discretion to reform their individual health-insurance markets. The Center for Health and the Economy estimates that this proposal would lower health-care premiums by as much as a third, would insure about the same number of people as Obamacare, and would better protect people with preexisting conditions and high health costs….”
5. Expand use of Health Savings Accounts, “…To take advantage of the full potential of HSAs, we need three policy changes: (1) People should be able to use completely flexible HSAs, wrapping them around any health-insurance plan and using them to pay for any medical costs the plan does cover; (2) they should be able to use their HSAs to pay premiums as well as out-of-pocket expenses; and (3) health plans should be allowed to have “shared savings programs,” where enrollees who choose better and cheaper care get to keep their share of their savings in their HSA…”
   Marie Fishpaw and John Goodman, "A Health Plan For President Trump," Heritage Foundation, August 2, 2019, https://www.heritage.org/health-care-reform/commentary/health-plan-president-trump

Research from Federal Reserve argues that the r* has been persistently negative since late 2009. Great chart.

They start with the 10-year yield“…We estimate the natural rate of interest (r∗ ) using a semi-structural model of the U.S. economy that jointly characterizes the trend and cyclical factors of key macroeconomic variables such as output, the unemployment rate, inflation, and short- and long-term interest rates. We specify a monetary policy rule and an equation that characterizes the 10-year Treasury yield to exploit the information provided by both interest rates to infer r∗.However, the use of a monetary policy rule with a sample that spans the Great Recession and its aftermath poses a challenge because of the effective lower bound. We devise a Bayesian estimation technique that incorporates a Tobit-like specification to deal with the censoring problem. We compare and validate our model specifications using pseudo out-of-sample forecasting exercises and Bayes factors. Our results show that the smoothed value of r∗declined sharply around the Great Recession, eventually falling below zero, and has remained negative since then. Our results also indicate that obviating the censoring would imply higher estimates of r∗than otherwise….”

They find, “…We estimate our model with a sample that covers 1962:Q1 to 2020:Q1. Our estimate of r∗gradually declines starting in the mid-1980s and enters negative territory in mid 2009, although the real-time estimate only does so in mid-2011; r∗is estimated to have hovered around -1% since 2016, in line with simple estimates of the short-term real interest rate, before gradually edging down to -1.7% over the last year of our sample. We find that the shadow federal funds rate would have reached -6.7% at the trough of the Great Recession. Regarding the natural unemployment rate, we find that it has been steadily declining since 2010, when it reached 5.7%, to a level of 4.6% in 2020:Q1. Our measure of the (time-varying) trend output growth rate has declined over time and has been around 1.7% per year since 2012. Finally, our estimate of the output gap is similar to those from the CBO and the staff of the Federal Reserve Board. It peaked at slightly above 2% in 2019 and has declined to about 1% since then…”

Manuel Gonz´alez-Astudillo Jean-Philippe Laforte, “Estimates of r* Consistent with a Supply-Side Structure and a Monetary Policy Rule for the U.S. Economy,“ Federal Reserve Board, October 2020, https://www.federalreserve.gov/econres/feds/files/2020085pap.pdf