Friday, April 19, 2013

Why The Bipartisan Push For An Online Sales Tax Is The Right Move

The online retail giant Amazon benefits from a large loophole in the federal tax code. Because companies only have to collect sales tax in states where they have a physical presence, Amazon is able to avoid collecting the tax in many states, giving it a way to undermine traditional retailers. But a bipartisan group of 57 members of Congress is trying to change the law to close Amazon’s loophole:

Twenty senators and 37 members of the House from both parties signed on to the Marketplace Fairness Act of 2013 (MFA)—legislation that would allow states to collect taxes on what consumers buy over the Internet.

The measure would finally resolve a decades-old dispute over whether states can collect sales taxes on mail-order and online purchases. Currently, states are barred from requiring out-of-state sellers to collect sales taxes, unless the retailers have a physical presence (or nexus) in their jurisdiction. The MFA would allow states to require sellers to collect these levies no matter where the firms are located.

This loophole gives Amazon (and other online shops) a leg up on its competitors for no real reason. As Michael Mazerov wrote for the Center on Budget and Policy Priorities, there is “no excuse for exempting large companies like Amazon and Overstock that are perfectly capable of collecting tax everywhere — just as their brick and mortar competitors do.”

Applying an online sales tax fairly would also make the tax code slightly more progressive, as “many low-income families would love to shop online to avoid sales tax but can’t because they don’t own a computer or can’t afford high-speed Internet access.” Sales taxes are inherently regressive, and exempting online purchases makes them even more so, as those with the right technology get to skip the tax entirely.

States governed by both Democrats and Republicans have moved to address this issue, but it won’t be truly fixed until Congress takes action.


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HealthSouth climbs on 4Q results and 2013 outlook

NEW YORK -- Shares of HealthSouth Corp. jumped Tuesday after the hospital operator posted strong fourth-quarter results.

THE SPARK: HealthSouth reported its quarterly results Monday, while the market was closed for President's Day. The company said its net income declined, but it saw more patients and received more revenue per patient. HealthSouth said price adjustments by health insurers and Medicare helped its results. It also saw a larger percentage of Medicare patients than it had a year ago, and patients in the most recent quarter had more acute health problems.

The company said its net income slipped 5 percent, to $41.2 million, or 44 cents per share. Revenue grew 7 percent to $552.9 million. Analysts were expecting net income of 32 cents per share and $546 million in revenue, according to FactSet.

HealthSouth said discharges of patients at hospitals open at least a year grew 3 percent. That's an important measurement of hospital performance because it excludes results from facilities that opened or closed within the last year.

THE BIG PICTURE: HealthSouth says it is the largest owner and operator of inpatient rehabilitation facilities in the U.S. The Birmingham, Ala., company runs about 100 inpatient rehabilitation hospitals and more than 20 outpatient facilities in 27 states and Puerto Rico.

HealthSouth said it expects to earn between $1.50 and $1.56 per share in 2103 and said its revenue will be between $2.27 billion and $2.3 billion. The company said the upcoming federal budget sequester would reduce its annual earnings before interest, taxes, depreciation and amortization by about $25 million.

Analysts were forecasting net income of $1.66 per share and $2.24 billion in revenue, on average.

The sequester is a series of $85 billion in automatic budget cuts that is scheduled to go into effect March 1 if federal legislators can't agree on compromise legislation.

HealthSouth said its net income fell 12 percent to $160.3 million, or $1.69 per share, in 2012, and its revenue grew 7 percent to $2.16 billion.

HealthSouth also increased stock repurchase authorization to $350 million from $125 million. Stock repurchases increase companies' profit on a per-share basis because they reduce the number of shares on the market. They can also show that a company's management believes its stock is undervalued.

THE ANALYSIS: Raymond James analyst John Ransom said the results were better than the company suggested they would be in its January guidance. Ransom said HealthSouth did a good job of keeping its costs down and said its growth in 2013 looks good if the effects of the sequester and one-time items are excluded.

"HealthSouth continues to represent an outlier within the services landscape," he wrote.

Ransom rates HealthSouth stock at "Strong Buy."

SHARE ACTION: Shares of HealthSouth rose $2.03, or 9 percent, to $24.50 in afternoon trading. The stock has traded between $18.44 and $24.99 in the last year.


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James Hansen Slams Joe Nocera For Failure To ‘Understand Basic Economics’ And Selective Quotation

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You might think an A-list business reporter for the NY Times would know basic economics. But not in the case of Joe Nocera.

His umpteenth confused post on the Keystone XL pipeline suggests that when he talks to people like, say, James Hansen, he doesn’t really listen:

On Monday, I finally spoke to Hansen. His knowledge and sincerity are easy to admire, even if his tactics are not. He told me he would like to see oil companies pay a fee, which would rise annually, based on carbon emissions. He said that such a tax could reduce emissions by 30 percent within 10 years. Well, maybe. But it would also likely make the expensive tar sands oil more viable. If you really want to eliminate expensive new fossil fuel sources, the best way is to lower the price of oil, which would render them uneconomical. But, of course, that wouldn’t exactly lower demand either.

#FAIL. Just how admirable is it to interview a world-class expert, mis-state his position, get the economics of his plan exactly backwards, and then disparage his tactics in the pages of the NY Times?

Hansen, as I would assume everyone knows, wants all fossil fuel providers to pay a fee, not just oil companies. Further, Hansen has published what he emailed Nocera:

An economic analysis indicates that a tax beginning at $15/tCO2 and rising $10/tCO2each year would reduce emissions in the U.S. by 30% within 10 years. Such a reduction is more than 10 times as great as the carbon content of tar sands oil carried by the proposed Keystone XL pipeline (830,000 barrels/day). Reduced oil demand would be nearly six times the pipeline capacity, thus rendering it superfluous.

How precisely would a high and rising CO2 tax make the dirty tar sands more viable? In an epic blunder of basic economics, Nocera has apparently confused a higher market price for oil — which would make the tar sands more viable — with what Hansen has actually proposed, a higher price to the consumer and businesses for using carbon-based fuels (but no direct change in the market price).

Ironically, Nocera’s economics are so backwards that he fails to realize that his final lines of snark are also utterly dead wrong. The carbon tax Hansen proposes would clearly lower demand for oil overall, and thus lower the price of oil, which would also undermine the tar sands viability.

And as Brad Plumer notes in his debunking, “No, a carbon tax wouldn’t be good for Canada’s tar sands,” tar sands oil “would be at an even greater disadvantage” since it “is more carbon-intensive than other types of crude, creating 14 percent to 17 percent more greenhouse-gas emissions over its lifespan.”

It is a sad commentary on the state of (lack of?) basic editing at the NY Times that it ran this error-riddled piece.

Finally, if you were seduced by Nocera’s “maybe” into wondering whether a CO2 price rising to $115/tCO2 in 2023 would cut U.S. CO2 emissions by 30%? Well, the Energy Information Administration says that a mere $25/tCO2 would cut CO2 emissions 20% in 10 years. So I think it is rather obvious that another $90/tCO2 on top of that would easily cut emissions 30% (especially since Hansen doesn’t want to stop the CO2 price rise after just 10 years).

As Hansen writes:

Joe Nocera was polite, but he does not understand basic economics.  If a rising price is placed on carbon, the tar sands will be left in the ground where they belong.

Hansen explains why he posted his email to Nocera: “Joe Nocera quoted a private comment from a note explaining that I could not promise I would be back in New York to meet him.  But he did not mention the contents of the e-mail that I sent him with information about the subject we were to discuss.  The entire e-mail is copied below.” In a cover email, Hansen explains, “Apologies to Bill McKibben for the comment that could be misconstrued — I do not question the efforts to wake up the public to the situation at hand, and pressure elected officials to serve the public interest, not special interests.”

Last year, Nocera took exception to my saying he joined “the climate ignorati,” asserting that I was casting him as a “global warming denier.” But as I noted at the time, the ignorati are, as Google reveals, “Elites who, despite their power, wealth, or influence, are prone to making serious errors when discussing science and other technical matters.” The shoe fits.

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The Coming Failure of 'Accountable Care'

Spurred by the Affordable Care Act, hundreds of pilot programs called Accountable Care Organizations have been launched over the past year, affecting tens of millions on Medicare and many who have commercial health insurance.

The ACOs are in effect latter-day health-maintenance organizations—doctors, hospitals and other health-care providers grouped together to provide coordinated care. The ACOs assume financial responsibility for the cost and quality of the care they deliver, making them accountable to patients. With President Obama's re-election making it certain that the Affordable Care Act will begin taking full effect next year, the number of ACOs will continue to increase.

We believe that many of them will not succeed. The ACO concept is based on assumptions about personal and economic behavior—by doctors, patients and others—that aren't realistic. Health-care providers are spending hundreds of millions of dollars to build the technology and infrastructure necessary to establish ACOs. But the country isn't likely to get the improvements in cost, quality and access that it so desperately needs.

The first untenable assumption is that ACOs can be successful without major changes in doctors' behavior. Many proponents of ACOs believe that doctors automatically will begin to provide care different from what they have offered in the past. Doctors are expected to adopt new behavior that reduces the cost of care while retaining the ability to do what's medically appropriate. But the behavior of doctors today has been shaped by decades of complicated interdependencies with other medical practices, hospitals and insurance plans. Such a profound behavior shift would likely require re-education and training, and even then the result would be uncertain.

To give one example, if ACOs are to achieve their cost-saving goals and improve medical care, most doctors will need to change some of their approaches to treating patients. They'll need to employ evidence-based protocols more often to determine optimal treatment—for instance, in prescribing medication or deciding whether certain kinds of surgery are necessary. Doctors will also have to find ways to move some care to lower-cost sites of service, such as more surgery in ambulatory clinics instead of a hospital. ACOs aren't designed or equipped to transform physician behaviors on the scale that will be needed.

Associated Press President Obama signs the Affordable Care Act at the White House, March 2010.

The second mistaken assumption is that ACOs can succeed without changing patient behavior. In reality, quality-of-care improvements are possible only with increased patient engagement. Managed care, as formulated in the 1990s by the HMO model, left consumers with a bad taste because the HMOs acted as visible gatekeepers to patient access to care. ACOs, seemingly wary of stirring a similar backlash, allow Medicare patients to obtain care anywhere they choose, but there is no preferential pricing, discounting or other way for ACOs to steer patients to the most effective providers.

The Everett Clinic in Washington state has taken steps to plug this hole by deciding not to become a full-fledged ACO. Last year, the clinic told patients that to remain with Everett, they must shift to Medicare Advantage—which encourages preventive care and supports disease-management programs. Those who want to remain on regular Medicare were required to obtain their care elsewhere.

Accountable Care Organizations are also on the hook for patients who don't comply with recommended treatment or lifestyle changes. Patients can even decide not to share their claims data or medical history with the ACO. If a woman from, say, Massachusetts, spends half the year in Florida and receives care there, the Massachusetts ACO is still responsible for managing the patient's medical costs, though it in no way was able to manage the Florida care. The seems to be unfair both to the responsible ACO provider and to the patient, who will likely not receive optimal care in these transitions.

In other words, ACOs hold caregivers accountable without requiring patient accountability. How can this work?

The third and final flawed assumption of the Affordable Care Act is that ACOs will save money. Even if the pilot Medicare Pioneer ACOs—as the 32 most advanced Medicare ACOs are called—achieve their full desired impact, the Congressional Budget Office estimates that the savings would total $1.1 billion over the next five years. This is insignificant in a total annual Medicare budget of $468 billion. As for the commercial and Medicare ACOs that are operating outside these pilot programs, even the most optimistic assumptions come up with relatively small reductions to annual health-care spending nationally.

The architects of the ACO initiative somehow assume that making the existing system more efficient will make health-care affordable. But slowing the rise of health-care costs can't address the challenge of adding 50 million uninsured to the system while keeping expenditures the same or even somewhat lower than the unsustainable percentage of national wealth that they already represent. No dent in costs is possible until the structure of health care is fundamentally changed.

How can that level of change be achieved? We beseech policy makers in Washington to study a range of reform approaches that aren't burdened by as many untenable assumptions as Accountable Care Organizations, and go well beyond them in their aspirations.

• Consider opportunities to shift more care to less-expensive venues, including, for example, "Minute Clinics" where nurse practitioners can deliver excellent care and do limited prescribing. New technology has made sophisticated care possible at various sites other than acute-care, high-overhead hospitals.

• Consider regulatory and payment changes that will enable doctors and all medical providers to do everything that their license allows them to do, rather than passing on patients to more highly trained and expensive specialists.

• Going beyond current licensing, consider changing many anticompetitive regulations and licensure statutes that practitioners have used to protect their guilds. An example can be found in states like California that have revised statutes to enable highly trained nurses to substitute for anesthesiologists to administer anesthesia for some types of procedures.

• Make fuller use of technology to enable more scalable and customized ways to manage patient populations. These include home care with patient self-monitoring of blood pressure and other indexes, and far more widespread use of "telehealth," where, for example, photos of a skin condition could be uploaded to a physician. Some leading U.S. hospitals have created such outreach tools that let them deliver care to Europe. Yet they can't offer this same benefit in adjacent states because of U.S. regulation.

These and other innovative approaches have potentially large payoffs in how health care is delivered and what it will cost. By contrast, Accountable Care Organizations over the long haul may ease the path to slightly lower reimbursements or redistribute physician compensation among specialties. But what ACOs most assuredly will not do is deliver the disruptive innovation that the U.S. health-care system urgently needs.

Mr. Christensen is a professor of business administration at Harvard Business School and co-founder of Innosight Institute, a think tank focusing on disruptive innovation. Dr. Flier is dean of the faculty of medicine at Harvard University and professor of medicine at Harvard Medical School. Ms. Vijayaraghavan is a senior research fellow at Innosight Institute.

A version of this article appeared February 19, 2013, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: The Coming Failure of 'Accountable Care'.


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Big Tobacco-Backed Lawmakers Take Down Oklahoma’s Anti-Smoking Bill

An Oklahoma state Senate committee rejected a measure that “would have repealed a 1987 law that prevents cities and towns from enacting tobacco use restrictions stricter than that of the state” by a 2-6 vote on Monday — drawing sharp rebukes from public health advocates who see the legislation’s failure as a political concession to Big Tobacco, and even drawing the ire of the state’s GOP Gov. Mary Fallin, who has called on lawmakers to pass legislation aimed at curbing Oklahoma’s smoking-related public health care costs.

“This is a victory for tobacco lobbyists and the tobacco industry,” said Alex Weintz, Fallin’s communications director. “It’s a defeat for the state of Oklahoma and anyone who cares about improving our health.”

As OKNews reports, the debate over SB 36 revealed a clear correlation between the state senators’ votes and the amount of money they received from the tobacco lobby:

The debate on the measure turned into a showdown between Sen. Frank Simpson, R-Ardmore, the only senator to sign a pledge to refuse all contributions, meals and gifts from the tobacco industry, and Sen. Rob Johnson, who is listed as the No. 1 recipient on a website that tracks legislators receiving money from tobacco lobbyists.

Johnson, R-Yukon, received about $11,295 in campaign contributions and gifts from those who were identified as tobacco lobbyists since 2006, according to the website tobaccomoney.com, which was started last year by Doug Matheny, the former director of tobacco prevention at the state Health Department. [...]

“From the tobacco companies themselves, I don’t think I’ve received that much comparatively to other interests,” he said. “It has absolutely nothing to do with it. I’ve taken max contributions from somebody and completely have been opposed to an idea they’ve had.”

Johnson and his fellow reform opponents implied that SB 36 would be a burden on businesses, since it would discourage Oklahoma residents from patronizing establishments that don’t allow smoking. But that logic completely ignores the very real — and very significant — costs of the state’s smoking epidemic. National smoking-related medical costs amount to $200 billion in preventable spending every year, and studies have confirmed that states making small investments in smoking cessation policies see massive economic returns. In Oklahoma specifically, where about 5,800 people die each year from smoking, every household pays an estimated $556 annually in state and federal taxes to cover smoking-caused medical costs.

Ultimately, the measure’s defeat is a reminder of the outsized influence that Big Tobacco continues to enjoy. Fallin has vowed to continue her fight to encourage anti-smoking efforts in Oklahoma, and will potentially call for a popular referendum on SB 36 — but if she does, the people of Oklahoma can expect a titanic statewide lobbying campaign by the tobacco industry.


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Congressman Considers Gabby Giffords A ‘Prop’ For Gun Regulations

Congressman Joe Heck (R-NV) on Tuesday agreed that he considers former Rep. Gabby Giffords (D-AZ), who was a victim of an assassination attempt two years ago, a “prop” in the debate over gun regulations.

Jon Ralston of Ralston Reports, uncovered the audio of Heck, speaking with conservative radio talk show host Alan Stock, agreed that Giffords was nothing more than a “prop” at the State of the Union:

STOCK: At the end of the president’s State of the Union when he said have a vote for Gabby Giffords, have a vote for this and that. I found that to be nauseating and you know what else is nauseating too is putting Gabby Giffords up there, who can’t even clap her hands, as a figure of somebody being — having shot her. I think it’s a shameful act putting her up there as a prop. I’m sorry. I really do.

HECK: Yeah, no I agree. I think again in the cloud of emotion surrounding Connecticut those who are anti-gun want to use that to limit their Second Amendment rights.

Listen to it:

Giffords has made a remarkable recovery since she was shot through the head at a town hall in a parking lot in Tucson, AZ, two years ago. In fact, the experience has prompted Giffords, along with her husband Mark Kelly, to found an organization called Americans For Responsible Solutions, devoted to combating gun violence.

Heck’s office release this statement on the incident:

My statement was in reference to the idea of gun control grab coming out of Washington DC. Of course there is no way that I think that Gabby Giffords is a prop… Should I have come to her defense? You know, in a fast-moving interview, in retrospect, I should have said something but I didn’t. I was just looking to get past that and talk about gun control in general.


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POLLS: DOMA Is Discrimination, Equality Is Inevitable

Two new polls released today show that the national momentum for supporting marriage equality continues.

The first poll, from the Respect for Marriage Coalition, found that American voters strongly support marriage equality, with 75 percent responding that the freedom to marry the person you love is a constitutional right. It seems clear that respondents appreciate the value of marriage equality, with 65 percent agreeing that it reflects offering “equal human dignity” to all people. And while 62 percent believe changing the law will have no impact on them, 83 percent believe that change will happen within the next decade. In sum, marriage equality is the right thing to do, poses no threat to society, and is coming soon.

The second poll, from the Center for American Progress and Gay & Lesbian Advocates and Defenders (GLAD), further clarifies that voters see the Defense of Marriage Act (DOMA) as discriminatory. The poll focused on Section 3 of DOMA, which prohibits the federal government from recognizing same-sex marriages, even when they’re legal in certain states. When the Supreme Court weighs the constitutionality of that law, the Justices might keep in mind that 59 percent oppose that law, with 62 percent agreeing that it is “discrimination. Though overall support for marriage equality hovers around 52 percent, much stronger majorities (69 – 78 percent) believe same-sex couples deserve the same benefits other married couples receive.

The infographic below features results from the DOMA poll:


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Drugmaker Actavis' 4Q earnings sink 70 percent

PARSIPPANY, N.J. -- Actavis Inc., formerly named Watson Pharmaceuticals, said Tuesday that its fourth-quarter earnings fell 70 percent from a year-ago period that got a big boost from the debut of its generic version of the cholesterol fighter Lipitor. Still, results topped expectations and the company backed its outlook for 2013.

Watson recently changed its name to Actavis after completing its $5.6 billion purchase of Swiss drugmaker Actavis Group, which created the third-largest generic drug company in the world.

The newly combined company said Tuesday that it earned $28 million, or 21 cents per share, in the three months that ended Dec. 31. That compares with Watson's profit of $94.8 million, or 75 cents per share, in the final quarter of 2011. Adjusted earnings for the latest fourth quarter fell 10 percent to $1.59 per share.

In 2011, Watson launched an authorized generic version of Lipitor, the world's best-selling drug, under an agreement with Lipitor maker Pfizer Inc. Sales of a generic Lipitor contributed 64 cents to Actavis' earnings in the 2011 quarter compared with just 3 cents in last year's fourth quarter. Several other drugmakers have started selling generic Lipitor since Watson's version debuted. Actavis also said operating costs climbed 26 percent in the latest period to $1.73 billion, due in part to acquisition and integration charges.

The Parsippany, N.J., company's revenue climbed 13 percent to $1.75 billion from $1.54 billion a year earlier, helped by new products in key markets including generic versions of deep vein thrombosis treatment Lovenox, asthma medication Xopenex and ADHD drug Adderall XR in the U.S.

The performance topped Wall Street expectations. Analysts surveyed by FactSet expected, on average, earnings of $1.53 per share on $1.74 billion in revenue.

For the full year, the company earned $97.3 million, or 76 cents per share, as revenue rose 29 percent to $5.91 billion. For 2013, the company reaffirmed a forecast it made last month for adjusted earnings of between $7.70 and $8.10 per share on about $8.1 billion in revenue.

Analysts, on average, expect earnings of $8.03 per share on about $8.1 billion in revenue.

Actavis shares fell 39 cents to $84.85 on Tuesday, while broader trading indexes rose less than 1 percent. The stock is down slightly since closing 2012 at $86.


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Nobody cares about Tiger, and nobody (except defeated Republicans) cares about Benghazi

My answer to Cheri Jacobus is that a) mistakes were made and admitted; b) Hillary emerged from Benghazi with popularity huge enough to win her a presidential landslide.

So c) give it up, Republicans. You lost the election, deal with it; d) nobody cares about Obama golfing with Tiger Woods except bored (and boring) Republicans with nothing better to say, and e) if Republicans want to bang Benghazi forever, Democrats could revisit Bush 43 mocking the CIA warning him about planes flying into buildings before 9/11 or Dick Cheney's role in leaking CIA identities.

But f) that would be a bad idea because it would make Democrats look as ridiculous as Republicans do now trying to exploit the deaths of Americans at Benghazi, though g) we could entertain a discussion about conservative Republicans who voted to cut diplomatic security programs before Benghazi. View Comments

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Biden to deliver gun violence remarks in town neighboring Newtown

Vice President Biden will deliver remarks Thursday at a conference on gun violence just 20 minutes from the site of the Newtown, Conn., elementary school massacre that inspired the Obama administration's push for new gun regulations.

In addition to the vice president, Sens. Richard Blumenthal (D-Ct.) and Christ Murphy (D-Ct.) will be in attendance, as will Rep. Elizabeth Etsy (D-Ct.). Biden will follow a panel discussion on ways to reduce gun violence featuring national and local political and law enforcement leaders, along with mental-health experts, sportsmen and survivors of gun violence, the White House said Tuesday.

The conference at Western Connecticut State University is just 13 miles from the seen of the Dec. 14 shooting at Sandy Hook Elementary School in Newtown. There, a 20-year-old gunman killed six educators and 20 first grade students before committing suicide.

The trip to Connecticut is the latest in a campaign by the vice president to keep pressure on Congress to consider the series of gun regulations proposed by the Obama administration. The president has called for a renewed assault weapon ban, limits on the capacity of magazine clips and universal background checks on all gun purchases.

Biden will participate Tuesday in a Facebook "town hall" event hosted by Parents magazine, where he is expected to field questions in a live video chat. That follows round-table events in Philadelphia and Richmond, Va., with law enforcement personnel.

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