The Trouble With MedPAC

A federal advisory board tries to undermine Medicare Advantage.

WSJ editorial. Excerpts:

"MedPAC last month estimated the government will spend $76 billion more this year for seniors on Medicare Advantage than if the same seniors were covered by traditional Medicare fee-for-service. It estimated excess payments to Medicare Advantage plans at $84 billion in 2025 and $88 billion in 2024. That’s a lot of money, but its estimates are based on faulty assumptions."

"MedPAC claims that seniors in Medicare Advantage are healthier than those in fee-for-service because they incur less spending. Ergo, insurers must be coding them as being sicker than they are. Maybe, but that’s hard to square with the fact that Medicare Advantage enrollees are also more likely to be low-income and have poor self-reported health status.

A more likely explanation is that plans do a better job of ensuring conditions are diagnosed and treated, thereby reducing unnecessary spending and hospitalizations. In a new study published in Health Affairs Scholar, Centers for Medicare and Medicaid Services officials found excess risk-adjusted payments on the magnitude of 1.5% to 2%, about $5 billion to $6.6 billion a year—far less than MedPAC’s estimates."

Texas’ Self-Defeating H-1B Pause

The MD Anderson Cancer Center is one of the institutions that will feel the pain

By Collin Levy of The WSJ. Excerpts:

"the claim that work visas take jobs from American citizens doesn’t hold up. The Texas unemployment rate was 4.3% as of December, and in Austin—where high-tech jobs cluster—it was just over 3%. Foreign workers in the U.S. typically fill gaps in the labor market that aren’t met by American citizens. A 2020 study by the National Foundation for American Policy found that an increase in H-1B visas within a profession was associated with a decrease in the unemployment rate in the profession."

"Mr. Abbott’s visa ban directs the heads of state agencies and public universities to inform the Texas Workforce Commission how many H-1B petitions they submitted in 2025—as well as “documentation” that Texas candidates had a “reasonable opportunity to apply for each position.” It also asks for the “countries of origin of all H-1B visa holders the entity currently sponsors.” When I asked the governor’s office why it is asking for countries of origin and if there are particular countries of concern, I was directed back to his press release and letter, which don’t address the questions." 

DEI Is a Threat to Americans’ Health

By Stanley Goldfarb. Excerpts:

"They changed [medical schools] their curricula to teach economic and social lessons that ladder up to the false claim that America is systemically racist. The LCME [Liaison Committee on Medical Education] has tacitly approved this shift by issuing vague standards that give medical schools far too much leeway. The resulting lack of rigor allows unprepared students to slide through undemanding courses while undercutting the preparation needed to become excellent doctors."

"The traditional two years of pre-clinical education required to become a doctor has been significantly reduced at more than a third of medical schools. This gives short shrift to the foundational curriculum in genetics, biochemistry, biostatistics and epidemiology."

"At 80% of M.D.-granting schools, the foundational courses in basic science and clinical skills are now graded pass/fail"

"The first part of the national licensure exam that determined residency placement has also been changed to pass/fail"

"a growing number of medical students lack a strong grasp of basic medical knowledge."

"At UCLA’s David Geffen School of Medicine . . . more than 50% of students failed basic tests on family medicine, pediatrics and emergency medicine. Nationwide, the percentage of medical students who pass the first part of the licensure exam has fallen every year since 2020, dropping from 97% to 89%"

"Even liberal medical journals have begun to question the state of medical education. A 2025 New England Journal of Medicine article on the use of pass/fail in medical school asked, “Is ‘Good Enough’ Good Enough?”" 

Two Confusions About the California Wealth Tax

Unrealized capital gains aren’t classified as taxable income in the U.S. for good reason

Letter to The WSJ. 

"At least two confusions discredit Mayra Castañeda’s attempted defense of California’s proposed wealth tax in her letter “Billionaire Tax Would Save Calif. Healthcare” (Feb. 4). She claims that “billionaires pay less in taxes on their overall wealth than working families do.” She gets away with this because the research that she cites, although it postures as measuring the taxation of incomes, in fact measures the taxation of paper wealth by classifying unrealized capital gains as taxable income.

But unrealized capital gains aren’t classified as taxable income in the U.S. for good reason. Were these gains treated as such, taxpayers—including many middle-class families—would have to liquidate assets whenever tax season rolled around to pay their bills. One result, in addition to this annual hardship, would be a shrinkage of America’s capital stock which, in turn, would slow wage growth as workers, having less capital to work with, would be less productive than otherwise.

Ms. Castañeda also ignores the most prominent argument against the proposed tax—namely, that it will drive billionaires, along with their taxable incomes and wealth, to states that are less greedy to seize the fruits of high-earners’ efforts. This exodus of billionaires would occur even if, contrary to fact, counting unrealized capital gains as taxable income were a sound idea.

Prof. Donald J. Boudreaux

Mercatus Center

George Mason University" 

Declining labor share is sometimes attributed to businesses underpaying workers. In fact, it is more due to a shift in the sorts of businesses that dominate the economy.

See The Big Money in Today’s Economy Is Going to Capital, Not Labor by Greg Ip. Excerpts:

"Declining labor share is sometimes attributed to businesses underpaying workers. In fact, it is more due to a shift in the sorts of businesses that dominate the economy. Today’s fastest-growing “superstar” companies pay well, but don’t have many workers. In the past three years Google parent Alphabet’s revenue has grown 43%, while head count has remained flat. Amazon is a major employer because of its fulfillment centers, but even it is eliminating jobs.

In such companies, the line between capital and labor blurs. Employees who design the technology are a form of human capital, and are compensated in stock to reflect that. Some corporate acquisitions dubbed “acquihires” are aimed primarily at talent, such as when Meta Platforms paid $14 billion for a stake in Scale AI to nab founder Alexandr Wang."

"Households’ stock wealth is now equal to almost 300% of their annual disposable income, compared with 200% in 2019. At such levels, wealth starts to rival wages as the driver of consumption, at least for the affluent households who own most stocks.

Doug Peta, a strategist with BCA Research, estimates that a 10% stock return, including dividends, taxed at the highest marginal rate, boosts spending capacity as much as an 18% rise in income. No wonder tepid job and income growth aren’t holding back the economy."

Trump’s Climate Liberation Act

Removing Obama’s ‘endangerment’ finding makes it harder to ban fossil-fuel energy

WSJ editorial. Excerpts:

"in 2007 a 5-4 majority of the Supreme Court ruled in Massachusetts v. EPA that greenhouse gases qualify as pollutants under the Clean Air Act."

"greenhouse gases aren’t toxic and don’t affect air quality, unlike pollutants that the law expressly directs the EPA to regulate."

"The impact of greenhouse gases on global temperatures is intermediated by such factors as cloud cover and urbanization, and the effect on storms is disputed. In any event, curbing CO2 emissions in the U.S. will have scant impact on climate because emissions are rapidly rising in China, India and developing countries."

"The Great Scalia observed in dissent that “regulating the buildup of CO2 and other greenhouse gases in the upper reaches of the atmosphere . . . is not akin to regulating the concentration of some substance that is polluting the air.”"

"the endangerment finding also violates the Supreme Court’s major questions doctrine."

"express authorization from Congress is required for economically and politically significant executive actions. A 6-3 majority invoked the doctrine in West Virginia v. EPA (2022), which struck down the Obama-era CO2 emissions limits for power plants."

Why Unemployment is Rising Among Young College Grads

Their skills, experience and ability to function are increasingly out of step with employers’ needs

By Allysia Finley. Excerpts:

"last . . . unemployment among college grads age 22 to 27 rose to 5.6% in December, roughly what it was in February 2009 during the financial panic." 

"Artificial intelligence isn’t taking their jobs. Young grads’ struggles started before AI went mainstream. Between 1990 and 2014, unemployment for young college grads was generally 1 to 3 percentage points lower than for all workers. The gap started to tighten around 2014 and reversed in late 2018. Unemployment for young college grads is now about 1.4 points higher than for all workers."

"Government subsidies and public schools have funneled too many young people to credential mills, which churn out grads who lack the skills that employers demand."

"More than half of high-school grads matriculate to college, even though only 35% of 12th graders score proficient in reading and 22% in math on the National Assessment of Educational Progress."

"U.S. colleges awarded 2.2 million bachelor’s degrees last year, about twice as many as in 1990. That’s also double the number of associate’s degrees. Another 860,000 Americans last year received a master’s degree, nearly triple the 1990 figure. Nearly 40% of Americans with a bachelor’s now have an advanced degree."

"Colleges have added graduate programs in fields like urban planning, sustainability and fine arts to rake in more federal dollars."

"market that is saturated with heavily credentialed workers."

"Many skated through college by relying on AI to do their work."

"Some also struggle with executive functioning because of disability accommodations in high school and college that allowed them extra time to complete tests and assignments. More than 20% of undergrads at Harvard and Brown and 38% at Stanford have registered disabilities."

"31% of small-business owners had job openings they couldn’t fill, compared with a historical average of 24%."