Category Archives: Public Policy and Governance

Dollars and Sense

We hear a lot of talk from the Governor and legislators about the hard decisions being forced by tough fiscal times, and on this one, I’m sympathetic. When there isn’t enough money to do the things we need to do, finding the least painful cuts can be an incredibly difficult task.

Of course, it is made infinitely more difficult when you begin with a decision to keep your tax rates lower than those in all of the surrounding states.

So, where does HB 1000–our budget bill–aim Mitch the “Blade’s” knife? At education and social services funding. A few examples:

  • The Family and Children’s Fund is being cut by 219 million dollars (with no explanation or justification offered).
  • The 2011 appropriation for Healthy Families, Indiana’s much-touted health insurance program for poor Hoosiers (we don’t need no stinking federal healthcare reform!!) is being cut by 86%, despite the fact that there is a waiting list and the program is turning people away.
  • Health coverage under the CHIP program is also cut. Approximately 7000 eligible children will not be covered–despite the fact that over 75% of the costs of that coverage would be paid by the federal government, and the rest is supposed to be paid out of the proceeds of the tobacco lawsuit settlement.
  • Similarly, hospital care for the indigent is being cut by approximately ten million dollars–but the State will lose twice that amount in Federal Medicaid Leverage dollars.

I could go on and on, but you see the pattern. Mental health drugs are being restricted, making it more likely we’ll pay more through the criminal justice system. Public mass transit–the lack of which is already a huge drag on efforts at job creation–is cut by 15 million. Numerous cuts to K-12 and transfers to Charter schools belie all the rhetoric about improving education–while it is true that simply “throwing money at the problems” won’t solve them, it is equally true that starving public education will only make those problems worse.

I don’t want to minimize the difficulty of funding state government in tough times. But I am struck by three themes that run through these budgetary decisions: the cuts made hurt those who have the least “voice” in our political system (i.e., those who have no lobbyists at the statehouse, and whose displeasure is least likely to be felt at the polls); many of these cuts will actually cost us more in the not-so-long run, making their fiscal prudence highly questionable; and our adamant refusal to look at both the costs and income sides of the ledger not only makes this job much harder than it needs to be, it also benefits the well-to-do at the expense of our poorest citizens.

That doesn’t make either economic or moral sense.

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The Center Will Not Hold

I attended a conference on Media Reform last weekend, and came back pretty depressed. Although there were several thousand people in attendance who were determined to save journalism–not necessarily newspapers, or broadcast news, but the essential watchdog function that led our Founders to give Constitutional status to the press–it’s abundantly clear that right now, no one has a clue how to provide the public with the news democratic societies require.

In place of widely-read, credible news media serving the general public, we have “niche news” tailored to our personal prejudices and politics. Thanks to consolidation and corporate ownership focused on the bottom line to the exclusion of journalism’s social mission, we have more “human interest” and “self-help” stories and less real news; more “opinion” and less fact-checking. That we have ever-more dysfunctional government is not a coincidence.

In fact, America seems to be actively dismantling the institutions that create unum from our pluribus: those places in our society that knit individuals into a public.

I’ve written here often about our diminished constitutional literacy, and the likely consequences of that in a diverse country that depends for its very identity upon a common understanding of our form of government.

Add to that constitutional illiteracy the utterly ferocious attacks on public education we are experiencing. Whatever the defects in our public schools, they are and have been the institution that–as Benjamin Barber eloquently put it–is constitutive of a public. When we privatize education, we treat it as if it is a consumer good–skills we are “buying” so that our children can compete economically. But public education should be more than that; it should respect our diverse private identities while providing a common social umbrella.

When we no longer know our common history or political structure, when we no longer meet each other in public schools, when each of us gets our news from different sources operating out of different political and social realities, what will Americans have in common? What will make us a public?

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Who Do They Work For?

Theoretically, members of Congress work for us–for “we the people.”

Whatever the theory, it’s clear that many of them think they work for those whose campaign contributions put them in office. To take just one recent example, ask yourself who would benefit from Paul Ryan’s much ballyhooed new budget proposal to replace Medicare with subsidies allowing the elderly to purchase insurance in the private marketplace? It doesn’t take a genius to answer that one: the beneficiaries of those subsidies would be the insurance industry.

I’m sure it is simply coincidental that insurers are among the most generous of campaign contributors.

As the Congressional Budget Office analysis pointed out,

A private health insurance plan covering the standardized benefit would be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare. Those higher costs would be offset partly but not fully by savings from lower utilization stemming from two sources. First, private health insurers would probably impose greater utilization management than occurs in Medicare. Second, private plans might restrict enrollees’ ability to purchase supplemental insurance plans; enrollees would thus face higher out-of-pocket costs than they do in Medicare, and that increased cost sharing would encourage lower utilization. On net, for a typical 65-year-old in 2011, CBO estimates that average spending in traditional Medicare will be 89 percent of (that is, 11 percent less than) the spending that would occur if that same package of benefits was purchased from a private insurer.

In other words, this plan would cost the government more money. To the extent there would be any “savings,” they would come from shifting costs to the individuals covered.  Protecting the disabled and elderly from those costs, of course, was the original purpose of Medicare. Essentially, this program would screw over the recipients and give a windfall to the insurance companies.

What is amazing to me is how utterly bald-faced this proposal is. Have we really convinced the American people that giving more and more to the “haves” at the expense of the most vulnerable is in the national interest? I was never a fan of the Robin Hood theory of government–robbing the rich to give to the poor–but I am appalled by the current “reverse Robin Hood” ideology, where we rob the poor to benefit the rich.

Well, we certainly know who Ryan works for. And it isn’t us.

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Balancing the Books

When most of us talk about “balancing the books,” we have a mental image of a bookkeeping ledger (for those of you too young to recall keeping financial records on paper, those ledgers were books filled with graph-like paper, on which one recorded assets and liabilities). The point was to balance revenues with expenditures.

Somehow, our discussions of the federal budget has operated on a different premise. Even David Stockman, Reagan’s first budget director, has noticed the change, and I think it is fair to say he isn’t especially impressed with the House Republican budget plan, which deals with only the “debit” side of the ledger.

“It doesn’t address in any serious or courageous way the issue of the near and medium-term deficit,” Stockman told Brian Beutler. “I think the biggest problem is revenues. It is simply unrealistic to say that raising revenue isn’t part of the solution. It’s a measure of how far off the deep end Republicans have gone with this religious catechism about taxes.”

I’m old enough to remember when David Stockman was considered impossibly conservative. But I am also old enough to remember that the real Ronald Reagan–whether you agreed with all his positions or not–looked very little like the icon that contemporary Republicans worship.

About that Social Safety Net…

Congressional Republicans are now proposing that, starting in 2022, new Medicare recipients be allowed to choose from a list of guaranteed coverage options, and “be given the ability to choose a plan that works best for them.”  According to Paul Ryan, the plan’s author, “This is not a voucher program, but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.  The premium-support model would operate similar to the way the Medicare prescription-drug benefit program works today. The Medicare premium-support payment would be adjusted so that wealthier beneficiaries would receive a lower subsidy, the sick would receive a higher payment if their conditions worsened, and lower-income seniors would receive additional assistance to cover out-of-pocket costs.”

According to Ryan, this budget proposal “gives seniors the freedom to choose a plan that works best for them and guarantees health security throughout their retirement years.” The plan and its details can be accessed at  http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf

Physicians for National Health Care has analyzed this proposal. The physicians’ diagnosis?

“Under Republican control, the House Budget Committee proposes phasing out the traditional Medicare program and replacing it with an insurance exchange offering a variety of private plans with the government’s role limited to offering a premium support (same mechanism as a voucher) to apply toward the purchase of a plan. This converts Medicare from a defined benefit (specified benefits are covered) to a defined contribution (the premium support being a specified dollar amount contributed toward the purchase of a private plan).

This proposal treats the budget as the patient, curing the budget problems with the trade off of further burdening the Medicare beneficiaries who are already paying too much out of pocket. It shifts future increases in health care costs from the government to the beneficiaries. It is much easier for Congress to control federal spending by limiting the value of the premium support rather than trying to reduce the benefit package.

The proposal would adjust the premium support for those with greater health care needs, but that is very difficult to do in a timely manner in that an adjustment next year doesn’t help to relieve this year’s increased costs. Also risk adjusting is very difficult in that it requires having a precise assessment of each individual’s health status and anticipated needs. It is a profound change from the current Medicare program in which equitable funding through the tax system is divorced from the uniform benefit package which everyone shares.

The proposal also would reduce premium support for wealthier Medicare beneficiaries, requiring them to pay more for exchange plans. Actually this principle of progressive financing already exists. Although the current standard premium for Medicare Part B is $96.40 for most individuals ($115.40 for new beneficiaries), it is indexed to income. Those with an income of $214,000 pay $438.20 (including an added Part D premium only for higher-income individuals).

Although progressive financing is an equitable concept, it belongs over on the tax revenue side for funding of the entire Medicare risk pool. By having it as a progressive premium on the benefit side, it fractures solidarity by creating a desire for the wealthy to obtain their own coverage and care independently of Medicare, since they are paying higher premiums anyway. Once they are on their own, they would look upon Medicare as a welfare program, not unlike Medicaid except with much fewer benefits, and chronic underfunding would be inevitable.

The debate that we should be having is over an improved Medicare for everyone. The sad state of politics today is certainly exemplified by the fact that those supporting the transfer of wealth from the masses to our plutocracy have been able to reframe the debate as a need to save our federal budget by cutting back on our social programs, especially Medicare and Medicaid (while reducing the tax rate on the wealthy from 35% down to 25%). What ever happened to common decency?”

What, indeed. In the same budget proposal, the GOP advocates drastic cuts in Medicaid, which provides (limited) medical assistance to the poor and disabled–and added tax cuts for businesses and wealthy individuals. I can’t help being reminded of the question posed to  infamous Senator Joseph McCarthy: “Until this moment, Senator, I think I never really gauged your cruelty or your recklessness.You have done enough. Have you no sense of decency?”

Stripping basic rights from workers and women, launching attacks on immigrants and gays, taking benefits from the poor and elderly to pay for tax breaks for the rich…I guess we know the answer to that question.