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Apr. 5th, 2017

devil duck

[sticky post] migration

I now post at Dreamwidth, cross-posting here when convenient. Not so sure about the new Terms of Service or the Russian legal jurisdiction, so not everything will be cross-posted here.

Apr. 9th, 2017

devil duck

An Obamacare horror story I hadn't heard

I spent the last two days at an academic conference upstate, which is (relatively) Trump Country. And I found myself talking to a security guard who was no big fan of either Hillary or Donald, and didn't say whom he had voted for, but told the following first-person story.

"I work mostly as an EMT; the security guard thing is on the side. And since Obamacare, it's been impossible to get paid. After we go on a call, we bill the patient's insurance company, and they just refuse to pay, because under Obamacare, they don't have to. Before Obamacare, they paid just like that <snap>."

Now, I have a hard time believing insurance companies ever "paid just like that <snap>", at least in recent decades. And I confess to knowing nothing about how EMT and paramedic services are now, or have ever been, funded. But for those of you who do know something about it, does the above make any sense? What aspect of Obamacare could have caused (perhaps indirectly) the above phenomenon?

Mar. 25th, 2017

devil duck

Next steps on health care

Mixed messages from Trump and Ryan. Some indication that Trump never really cared about health care except "repeal Obamacare" as a campaign slogan, and he would be delighted to never hear the words for the rest of his Presidency; also some indication of an interest in "working with Democrats". It's clear that the Republicans don't have enough of a unified vision to pass any health care bill on their own, so any change from here on will need to be bipartisan. What if he/they actually meant it? What improvements could be made that would get a significant number of both Democratic and Republican votes?

I wouldn't shed many tears if health insurance were divorced from employment, and most Americans got their health insurance through an individual market rather than through group deals worked by their employers. (This would make cases such as Hobby Lobby moot: if your employer doesn't pay for your health insurance, your employer doesn't get to choose what your health insurance covers based on their religious views.) This could be accomplished by gradually decreasing the amount of employee health-insurance expenses that an employer can tax-deduct, making it gradually less attractive for them to offer health insurance. The effect would be to move a lot more employed, reasonably-healthy people into individual markets (including, unless changed, the state Obamacare exchanges) and make those markets more stable and sustainable. And it would arguably be a "pro-free-market" move that would attract ideological Republicans.

One of the problems with Obamacare as it stands right now is that in some states most insurers have pulled out of the market. A public option would guarantee that there IS competition in every state, which should bring down premiums... but it's competition by a gummint entity (even though it's not taxpayer-funded), so Republicans won't go for it. Never mind.

Perhaps the biggest possibly-bipartisan improvement would be clarity and fairness in health care pricing. At present, most of the financial benefit of having health insurance isn't the amount of your health care costs the insurance company *pays*, but the amount that the insurance company *negotiates away in a puff of smoke*. Providers have to give deep discounts to big insurers, or they'll be out-of-network and will never get any customers from that insurer.

So here's how we change that. Require health-care providers to publish price lists of their services, and limit the ratio (gradually decreasing over a number of years) between the maximum and the minimum they charge different customers. (Might want to allow large discounts based on personal income, but not based on insurance.) This would make illegal a lot of insurance-company "negotiations" with providers, and mean that uninsured and insured people paid more-nearly the same prices for things. Health care providers would compete with one another on price and quality, rather than merely on which ones are in-network for your insurance company. The whole idea of in-network and out-of-network providers would become less important; consumers would have more choice of doctors, and maximum prices would come down as minimum prices rose. I suspect most doctors would love this, but insurance companies would hate it, so there would need to be some other sweetener to prevent the latter from blocking it. Perhaps the first idea above would please the insurance companies enough to balance this. And it's a free-market reform, so it should get a fair number of Republican votes (although not those who see ANY government regulation as evil, even government regulation to open the markets).

Mar. 18th, 2017

devil duck

How to keep people in the insurance market

Of course, the simplest way to have a large, reasonably healthy pool of people paying for health insurance is to have EVERYBODY paying for health insurance -- universal enrollment. But socialism, totalitarianism, Hitler, dark days of the war, Kenya, end of civilization as we know it. So never mind that.

People do cost/benefit calculations. For any given person, under any given life circumstances, there's a cost C of buying insurance, and a benefit (financial, psychological, etc.) B from having health insurance. It makes sense for you to buy health insurance if B > C.

What are the units of B and C? They're really about personal choices, so they have to be measured in what economists call "utility": one scenario has more utility than another if you would choose the former over the latter. It's tempting to measure them in dollars, but in fact any given number of dollars has more utility (it matters more in decision-making) to a poor person than to a rich person, so anything measured concretely in dollars will have utility that's a decreasing function of income.

Furthermore, poor people tend to be liquidity-constrained: even if they know something would be a good long-term investment, they're less likely to make that investment if it means being unable to pay the rent or buy food this month. In other words, they necessarily discount the future more heavily than rich people do; while everybody values a predictable dollar now or soon over a hypothetical future dollar, this effect is more pronounced for poor people. C is typically stated in concrete, predictable dollars/year, while B is partly hypothetical dollars and partly psychological; for both of these reasons, C is effectively a decreasing function of income. (At the very-rich level, B decreases with income too: if you could just write a check for a course of chemotherapy, you don't need health insurance. Let's leave the very-rich -- perhaps the top 1% of the income distribution -- out of this analysis.)

B is also an increasing function of health risk: the older and/or sicker you are, the more valuable health insurance is to you.

In the U.S., it's always been possible to buy insurance at different levels, ranging from cheap, bare-bones plans (B and C both small) to expensive, comprehensive plans (B and C both large). In other words, B and C are increasing functions of coverage; one assumes a given customer will choose a coverage level (possibly zero) to maximize B relative to C. If even the cheapest plan available costs more than it's worth to you, you'll choose no coverage at all.

So, to sum this up: regardless of the legal environment, B will be an increasing function of age, coverage, and sickness, while C is increasing in coverage and decreasing in income. Which means in general, health insurance makes more sense for old, sick, and rich people.

Laws about health care are intended to tweak the shapes of these curves. For example, a system of pure universal coverage removes the "no coverage at all" option, and indeed removes the notion of coverage level entirely, as everybody gets the same coverage (which is more valuable to you the older and sicker you are). In a pure laissez-faire system, C tends to be not only increasing in coverage and decreasing in income but increasing in age and sickness, essentially infinite for people with pre-existing conditions whom nobody wants to insure at all. Medicare was put in place to limit how high C can go at the high-age end, so old people (or moderately-old with long-term health problems) were more likely to have health insurance; their higher actuarial costs were shared by taxpayers so the insurance market didn't buckle under their weight. Medicaid was put in place to limit how high C (measured in utility) can go at the low-income end, so really-poor people were more likely to have health insurance.

Obamacare made several changes to this. It expanded Medicaid to apply to somewhat higher income levels as well as the poorest, making moderately-poor people more likely to have health insurance. It provided subsidies for people just above that level, making middle-income people more likely to have health insurance. It required insurers to cover already-sick people, at a cost not enormously higher than the cost for healthy people, getting rid of that vertical asymptote. And it removed the most "bare-bones" plans from the system entirely -- if your coverage doesn't meet certain minimum standards, your coverage is zero -- so below a certain level of coverage, B is zero, while C is the nonzero penalty P for being uninsured. The penalty is still less than the cost of buying insurance, so some liquidity-constrained people will still "choose" to be uninsured, but again the effect should be to make poor people more likely to have health insurance.

In particular, if you currently have health insurance and are contemplating dropping it, you know that you'll lose all your benefits B, but will save only C - P on costs, which makes you less likely to drop it. If you're currently uninsured and are contemplating entering the market, the reverse applies: you'll get benefits B, at a cost of only C - P. The larger P is, the more likely people are to stay insured, or become insured if they're not. Which is why one of the Republicans' first tactics in pushing Obamacare off a cliff was to reduce P.

Ryan/Trumpcare takes a different approach. There's no penalty for being uninsured, but there's a penalty of 30% of your first year's premiums for rejoining the market after being uninsured. So if you currently have health insurance and are contemplating dropping it, you know that you'll lose all your benefits B, while saving C immediately; if you rejoin the market later, you'll pay 0.3C for one year, but that's farther in the future so liquidity-constrained people will discount it more. In other words, poor people are more likely to drop out of the insurance market if they're in it, unless they're old enough or sick enough that B is still greater than C. If you're currently uninsured and are contemplating entering the market, you know that you'll gain B, while paying 1.3C immediately and C in the long run. The longer you go uncovered, the more money you save before paying that one-time 0.3C for a year to re-enter the market. In other words, those who re-enter the insurance market after a lapse will be those old enough and sick enough right now that B > 1.3C, and sufficiently liquid that they can handle the one-time penalty. So at both ends of a lapse, Ryan/Trumpcare encourages younger, healthier, and poorer people to go uncovered, leaving an older, sicker, richer pool of people in the system and inevitably higher average premiums. Pushing Obamacare off a cliff wasn't enough; they're pushing their own system off the cliff even harder.

At the same time, Ryan/Trumpcare decreases government cost-sharing and subsidies, making poor people less likely to participate in the system unless they're really sick. It makes those subsidies age-based rather than income-based; this brings a small advantage in reduced paperwork, but tends to encourage younger people to go uninsured unless they're really sick. At the same time, it increases what insurers can charge old people, thus encouraging old people to go uninsured unless they're really sick. (If you're sufficiently old, you can discount the one-time penalty to re-enter the market because you'll probably die before paying it.) And it largely dismantles the minimum standards of Obamacare -- the "bronze", "silver", "gold", and "platinum" levels -- effective 2019, thus encouraging people to buy cheaper coverage than is currently possible without a penalty, until and unless they get really sick. All in all, it gives us an insurance system for middle-aged people (probably near their earning peaks), fairly-rich people, and really sick people of all ages -- a recipe for skyrocketing premiums.

Mar. 17th, 2017


Another Attempt to Understand Donald Trump's Mind

He ran against politics and politicians. What's wrong with politicians? As anybody who's read a U.S. newspaper in the past 150 years knows, they promise the stars, and as soon as they're in office, they break all their campaign promises.

So he's not going to be like that: he's going to keep his campaign promises if it kills him us.

Problem is, most of his campaign promises weren't carefully thought out; they were just whatever got the most applause at rallies. Who knew he was going to win the election? Still, he's going to keep them, or find somebody else to blame when he can't.

He promised he would build a big, beautiful border wall, and make the Mexicans pay for it. There's been a delay in getting the Mexicans to pay for it, but at least he can keep the "build a wall" promise, and get around to making the Mexicans pay for it later. We'll spend at least 20 billion U.S. taxpayer dollars on a wall that won't keep anybody out, or make America safer, but it will demonstrate that Donald Trump keeps his promises. About the "making the Mexicans pay for it" part... he would totally do that if there weren't a bunch of politically-motivated international-law do-gooders who won't let him use his superb bullying negotiating skills.

He promised he would block all Moslems from entering the country "until our people can figure out what the hell is going on." He's tried twice so far, and he would totally do that if there weren't a bunch of politically-motivated Constitutional-do-gooder judges refusing to carry out his orders. For some reason the namby-pamby liberals have a problem with recognizing Moslems as the enemy. Weren't all of the 9/11 hijackers Moslem? Come on, people, use some common sense!

He promised he would institute "extreme vetting" for refugees. He didn't know exactly what was wrong with the existing system, but there would be time to figure that out later; at any rate, his was going to be much tougher and more extreme. He's tried twice so far, and again there are a bunch of politically-motivated Constitutional-do-gooder judges refusing to carry out his orders. And who knew he couldn't fire them for insubordination?

He promised he would scrap most of our existing deals with other countries and make much better ones. So far he's scrapped a couple of existing deals with other countries, and indicated his intention not to abide by others. About the "making much better ones" part, he would totally do that if there weren't a bunch of international-law do-gooders who want America to fail and won't let him use his superb bullying negotiating skills.

He promised he would repeal Obamacare and replace it with something much better and much cheaper. So far he's supporting the sort of wibbly-wobbly repealy-wheely stuff that Congress has come up with; he would totally come up with a much-better-and-much-cheaper replacement if there weren't a bunch of politically-motivated obstructionist Democrats in Congress who won't do what he says. And for some reason he can't fire them for insubordination either. And who knew health insurance was so complicated?

He promised he would "drain the swamp" of corrupt Washington insiders and bureaucrats. So far he's appointed non-Washington-insider people (indeed, people with no government experience at all) to run most of the government. As for getting rid of the rest of the Washington-insider bureaucrats, who knew the President can't just fire anybody he wishes? I mean, he's the President, isn't he?

He promised he would lock Hillary up. Who knew you can't do that without finding evidence that she committed a crime? What's the point of being the most powerful person on Earth if you can't lock people up?

He promised he would create lots of good American jobs in steel, coal, and heavy manufacturing. So far he's made a couple of phone calls, and several corporate CEO's have said they're going to create gazillions of U.S. jobs as a result. (OK, they actually announced those jobs before he was elected, and the last few times they said something similar, it fizzled.) But if the steel and coal companies don't have the gumption to hire hundreds of thousands of red-blooded American men the way they did fifty years ago, that's their problem; he can't do it himself.

He promised he would avoid conflicts of interest between his job as President and his job as boss of the Trump Organization. Of course, he could perfectly well run both at once, because he's a very smart guy, but just to keep people happy, he'll keep them separate. From his years running a corporation, he knows you're not supposed to trade on inside information, so he's removed himself from day-to-day operations of the Trump Organization to make sure he's not making company decisions based on secret President information. Problem solved; what other kind of "conflict of interest" could there possibly be?

He promised he would make America great again. How do you know a country is great? Because it wins all its wars. How do you win all your wars? By having a really big, powerful military. He's not quite sure what's wrong with the existing military, or what kinds of things the military needs to do, but his is going to be bigger and more powerful.

Mar. 16th, 2017

devil duck

Should I worry about this?

Tags: ,

Mar. 14th, 2017

devil duck

So about this health care bill...

The CBO says it'll put 14 million people into "uninsured" status almost immediately (i.e. 2018), and "24 million over the course of ten years." I'm not sure how to read that latter statement, but let's assume conservatively that the average number of people uninsured because of this bill in any given year is halfway in between those numbers, 19 million.

The bill also saves the Federal government $337 billion over ten years. That's $1774 per year per uninsured person. So the obvious question is, how much more will those 19 million people's health care cost as a result of their uninsuredness? This is tricky. One would like to know how much a typical person's health care costs in a year, how much a typical person spends on premiums and deductibles under ACA, how much a typical person gets in subsidies under ACA... but are these 19 million people at all "typical"?

One could argue (and I imagine Paul Ryan will) that most of these are young and healthy people who will choose not to carry health insurance because they feel they don't need it. But if you look at how the bill will affect various kinds of people, the ones most adversely affected are poor and/or old and/or sick, so one would expect a substantial number of the uninsured to be poor and/or old and/or sick people who feel they can no longer afford health insurance. Others will indeed be "young invincibles" who, in many cases, wouldn't have cost much in health care anyway. I'm going to assume, lacking evidence one way or the other, that the 19 million new uninsured are neither healthier nor sicker than the general population. I'm confident that they are poorer than the general population.

According to the NY Times, the majority of the newly-uninsured people -- 14 million of 24 million -- will become uninsured because of cuts and restrictions to Medicaid. Another 7 million will become uninsured because their employers no longer offer health insurance. (Far more people than this are expected to lose employer-sponsored insurance, but the CBO assumes reasonably that most of them will be able to buy insurance on the individual market; the 7 million are the ones who can't or won't.) The remaining 3 million, I assume, are currently on the individual market but will no longer buy insurance because either they don't think they need it or they can no longer afford it. I haven't read the CBO report itself yet.


As for deductibles, the right-wing Daily Signal and Freedom Partners say "an average medical deductible in 2016 for gold plans is $1,247, for silver plans $3,064 (up from $2,556), and $5,765 for bronze plans (up from $5,328)". The Freedom Partners numbers are quoted, mostly accurately, from a Kaiser study (Kaiser is fairly reputable), but I think they don't consider the "cost-sharing reductions" for people with incomes between 100-250% of the poverty level, which effectively turn a Silver plan into a Gold or Platinum plan with a much lower deductible; the Kaiser study discusses these cost-sharing reductions but doesn't quantify their impact. (I don't know where they got the $1,247 figure for gold plans; the Kaiser report doesn't give a specific number for gold or platinum plans.)

The left-wing Mother Jones says "The [enrollment-weighted median] deductible decreased from $900 to $850 in 2016.... it looks like nearly two-thirds of all enrollees had deductibles under $1,000. Only about a fifth had the horror-story $6,000+ deductibles that we hear so much about." These figures are quoted accurately from a Centers for Medicare and Medicaid Services study which says

"In 2016, among all consumers purchasing HealthCare.gov Marketplace coverage, the median individual deductible is $850. This is lower than the $900 median deductible for 2015....
These facts may seem surprising given anecdotes about Marketplace policies with very high cost sharing. However, those reports, which often focus on the highest-deductible plans in a market, ignore two important factors.

Financial assistance. The figures in this analysis account for the fact that about 60 percent of 2016 HealthCare.gov Marketplace consumers qualify for financial assistance that reduces their deductibles, out-of-pocket maximums, and other cost-sharing obligations....

Consumer choice. Rather than choosing bronze plans, which generally offer the lowest premiums, Marketplace consumers are overwhelmingly choosing silver plans, which generally have higher premiums, but lower cost sharing....

The net result of these factors is that about a third of HealthCare.gov Marketplace enrollees have deductibles less than or equal to $250, and over half have deductibles below $1000 in 2016."

This is going to take more work than I want to put into it right now :-)

Mar. 10th, 2017


health insurance, continued

Conservative Republicans on Capitol Hill, Breitbart, the Kochs, etc. are outraged by Ryancare because it doesn't completely repeal Obamacare and it provides Federal subsidies (albeit age-based rather than income-based) to help people pay for health insurance.

What would they prefer? What's the ideologically-pure, conservative answer?

No Federal mandates about what needs to be in a health insurance plan, about who needs to buy health insurance, about who needs to offer health insurance, about who needs to be offered health insurance. Health insurance is strictly a matter between consumers and insurance companies, in a free and competitive market. (With some State regulation -- for some mysterious reason, many conservatives are willing to accept regulation at the State level that they wouldn't accept at the Federal or local level.)

Are insurance companies required to insure anybody who comes along? Certainly not at the Federal level; some states might enact such a requirement, but many won't, which means people with pre-existing, expensive medical conditions in red states simply won't be able to get insurance. They have several choices: (a) get all their care from emergency rooms without paying for it; (b) get lots of money from friends and family to pay for health care; (c) go bankrupt paying for health care; (d) die without health care. Competition won't solve this, because insurers don't want the business of people with pre-existing, expensive medical conditions; if anything, they'll compete for who can lock those people out the fastest.

So, young and healthy people can buy cheap, high-deductible insurance, or no insurance at all. Rich people can self-insure with HSA's, buying cheap, high-deductible insurance or no insurance at all. Old and sick people can buy no insurance at all. Since anybody who actually wants health insurance is unable to get it, the result is dismantling the health insurance industry.

What if conservatives compromised on the popular "pre-existing conditions" clause, but not the rest? Without an individual mandate and without government subsidies, young, healthy, and/or poor people won't buy insurance, leaving only old, sick people in the pool, so their premiums will go through the roof, so they won't be able to buy insurance either, again dismantling the health insurance industry.

Which is ironic, because "dismantling the health insurance industry" is also the result of the ideologically-pure liberal solutions (either single-payer or socialized medicine). The difference is that in the liberal solutions, everybody gets preventive care, rich and poor get the same health care, and nobody dies for inability to pay, while in the conservative solutions, poor people don't get preventive care and end up either in inefficient, expensive emergency rooms, or dying for inability to afford health care. Oh, and taxes are higher under the liberal solutions, but total spending on health care is higher under the conservative solutions.

health insurance

Paul Ryan actually said this yesterday (link with video):

The fatal conceit of Obamacare is that we’re just gonna make everybody buy our health insurance at the Federal government level. Young and healthy people are gonna pay for older, sicker people. So the young, healthy person is gonna be made to buy health care, and they’re gonna pay for the person, you know, who gets breast cancer in her forties, or gets heart disease in his fifties.

So take a look at this chart. The red slice here are what I would call “people with pre-existing conditions” — people who have real health care problems. The blue is the rest of the people in the individual market — that’s the market where people don’t get health insurance with their jobs, or they buy it themselves. The whole idea of Obamacare is the people in the blue side pay for the people in the red side. The people who are healthy pay for the people who are sick. It’s not working and that’s why it’s in a death spiral.

Here’s how we propose to tackle this problem. We want to have a system where we encourage states, with Federal funding, to set up risk pools and reinsurance mechanisms. For example, in Wisconsin, we had a great risk pool that actually worked, so that people with real high health costs and diseases, and pre-existing conditions, could still get affordable health care. Well, Obamacare repealed that. They had a great risk pool reinsurance system in Utah, a good one in Washington State… all those are gone under Obamacare.

Here’s how they work, and here’s how our system would work. We would directly support the people with pre-existing conditions. [Red slice removed from pie graph] Let me give you a sense of this. 1% of the people in these insurance markets drive 23% of the costs. 1% of the people in the individual insurance market drive 23% of the costs. So a reinsurance program is to cover more than just the 1%, to cover the people who have high health care costs. So by having state innovation funds to go to the states to set up these reinsurance programs, we would directly subsidize the people who have pre-existing conditions. Direct support for the people with pre-existing conditions so that everybody else has cheaper health insurance.

What you do when you do this is, the individual market, the people who don’t have pre-existing conditions, they have much more stable prices.

Oh. My. Gawd. As lots of people on Twitter have pointed out, "the people who are healthy pay for the people who are sick" is literally the definition of health insurance. More generally, "the people who are lucky pay for the people who are unlucky" is the definition of insurance -- fire, flood, burglary, health, life, etc. We've been discussing Obamacare and alternatives for eight years now, and the Republican Party's anointed policy wonk doesn't pretends not to know how insurance works.

Anyway, let's consider his alternative. We'll take the high-risk people out of the pool, leaving the low-risk majority of people buying their own cheaper health insurance -- and that's probably true. So what do we do with the rest? The Federal government gives the states money to set up "high-risk pools" and "reinsurance programs" that subsidize insurance companies to get them to cover those high-risk people without astronomical premiums. In other words, the money to cover the high-risk people, which was coming from low-risk people in the market, will now come from... Federal taxpayers! The leader of the anti-Federal-government, anti-tax Republicans in the House of Representatives is proposing that instead of paying for something through the free market, we pay for it with Federal taxes.

Mind you, nobody expects Ryan to raise Federal taxes to pay for this added expense -- indeed, the bill in the House cuts Federal taxes. Which leaves several alternatives:

(a) the Federal budget deficit goes through the roof (which is OK when Republicans do it), or

(b) high-risk people will get much less health care, die, and decrease the surplus population, or

(c) total costs will magically drop sharply because the money goes from Federal government to State governments to insurance companies to providers, rather than from Federal government to individuals to insurance companies to providers, or

(d) the Federal government will provide less money than it does now, and State governments will be expected to make up the difference by substantially raising their own taxes. Which California, New York, and Massachusetts might be willing and able to do, while high-risk people in Kansas and Utah (and pretty much any state that voted for Trump) are back to option (b).

I'm betting on (a) and (d).

Feb. 21st, 2017


An attempt to understand Donald Trump's mind

1) The world is divided into winners and losers. It's more fun to be a winner. In order for you to be a winner, somebody else has to be a loser. The more other people are losers, the more of a winner you are.

2) The appearance of being a winner or loser is self-fulfilling: calling yourself a winner and acting like a winner makes you a winner, and calling other people losers makes them losers.

3) Winners have the power to make what they say go. Whatever a winner says is (in practice) right.

4) Winner and loser status are not guaranteed to last: today's winner can be tomorrow's loser, and vice versa.

5) As a corollary, truth, morality, and justice are transient conditions: what's true or right today may be false or wrong tomorrow, when somebody different is on top.

6) Some people object loudly to that notion. This can be for two reasons: either they're making a hypocritical show of "objecting on principle" because they lost and you won, or they're so naive they don't understand how the real world works.

7) Since "rules" and "principles" are just whatever the guy currently on top says, they obviously don't apply to the guy on top. In choosing people to help you, it would be silly to choose them by their past adherence to somebody else's rules, because you can change those rules anyway; if you're on top, the most important criterion is their personal loyalty to you.

Some of this isn't specific to Donald Trump, but applies more broadly to Republicans (and neoconservative Democrats) in general: the notion that "it's a tough, dog-eat-dog world out there, and it calls for a tough man, not hobbled by rules and principles that nobody really believes in anyway."

See the recent Times op-ed, In Praise of Hypocrisy.

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