It is appropriate that the Democratic leadership of the U.S. House of Representatives unveiled their latest attempt at health care reform shortly before Halloween. It has the countenance of a rather sinister looking phantom as it slowly begins to emerge from the mists of back door Congressional deals between special interests, Speaker Pelosi, and the Obama White House.
Even before the fog totally lifts to expose the full form of the legislation, it is obvious that some features that really would work to reign in costs of a new health care system are totally missing. Most obvious—and unsurprising—is the lack of any tort reform measures that would reduce the expensive practice of defensive medicine currently being practiced by medical service providers to reduce their exposure to expensive lawsuits.
The nation’s trial lawyers didn’t even have to work up a sweat to prevent any medical malpractice reform language from entering the House bill. The majority party that relies heavily on contributions from well-heeled plaintiffs attorneys successfully carried out its role as lap dog of the plaintiff’s bar and kept any vestige of tort reform out of the legislation.
Allowing health insurance to be purchased across state lines also failed to be included in the House version of the health care reform legislation. The Pelosi team has continually harped on the need to make sure that there is enough competition in the health insurance marketplace to keep the insurance companies honest.
Unfortunately, they don’t want that competition to be unleashed into the private sector. They prefer to create a public insurance option instead—one that will be directly or indirectly backed by the full faith and credit of the U.S. government and will have undeniable competitive advantages over the private sector.
What is very clear as the beast emerges from the mists is that Congress’s penchant for playing the taxpayers as fools is alive and well on the Potomac.
Pelosi and Company gleefully proclaimed that the cost for their legislation comes in slightly under $900 million and doesn’t add to the deficit. The validity of that claim was questioned immediately by those who pointed out that the House bill removes the $250 billion doctor and hospital “fix” that would prevent them from being exposed to the drastic Medicare cuts in reimbursement that the current law calls for.
In order to prevent an avalanche of opposition from those providers, the House leadership—in a testimony to cynicism—plans to introduce a separate bill to do the “fix.” The official scorer of the fiscal impact of legislation, the Congressional Budget Office, was not authorized to include the cost of the “fix” in the health care reform legislation since it is not in the health care reform bill. But it will happen and when it does it will result in a further expansion of the huge federal deficit.
Perhaps the most serious flaw—and there are many—in the House bill is the relatively small penalty individuals will have to pay if they do not purchase health insurance. If younger individuals only have to pay a relatively small penalty for not having health insurance, they will take the easy way out and simply pay the penalty. If they get seriously ill, they will then opt in. If the final legislation allows this option, higher premiums for the vast majority of the privately insured are inevitable.
The House bill is ill-conceived and scary. It is a witches’ brew of partisan politics and special interest favoritism. It needs to re-enter the mist and come back in a more fair and affordable form.
Showing posts with label Budget Deficit. Show all posts
Showing posts with label Budget Deficit. Show all posts
Wednesday, November 11, 2009
Saturday, October 3, 2009
Yesterday, Today and Tomorrow from a State Budget Standpoint
The biggest issue facing Governor Jindal and the Legislature in 2010 will be the state budget. No other issue will come remotely close to capturing the same amount of attention and scrutiny in the run-up to the legislative session next March. Considering the fact that the governor must submit an executive budget outline in February, the countdown is on.
The budgeting process is going to be anything but fun in 2010. Soaring revenues fueled by incredibly high oil and gas prices and billions of dollars of hurricane recovery money are a thing of the past. Slower revenue growth is likely to meet a huge loss of federal Medicaid money in the budgeting process next year, and the result will not be pleasant.
To better understand the future direction of the state budget, a look at the two most recent budgets helps to put things in perspective.
In 2008 when the governor and the Legislature fashioned the 2008-2009 budget, state government was still rolling in high cotton. Money was pouring into the treasury so fast it was hard to spend it all—but Lord knows we tried. The total state budget increased by $1 billion and the state general fund portion of it (the part funded only by state generated revenue) went up by a whopping $1.24 billion. That budget also contained an increase of 1,000 state job positions. This significant expansion of the state budget came after a similar sizeable increase in the 2007-2008 budget fashioned in the last year of the Blanco administration. But what goes up must come down—and our governor and Legislature began to learn that lesson last spring when they wrote the 2009-2010 budget.
The budget debate last spring and early summer contained a lot of wailing and gnashing of teeth. The House members wanted to bring spending back in line with existing revenues. A majority of the Senate wanted to increase taxes and lessen the amount of cuts.
Governor Jindal did not support tax increases, so the House version of the budget became the basic blueprint. The result was that the total state budget decreased by $1.5 billion from the previous year and the state general fund portion dropped by $1.21 billion.
That budget also called for a reduction of 1,200 authorized (but probably not filled) job positions in state government. In essence, the governor and the Legislature simply reverted back to 2007-2008 spending levels when they crafted the current budget. But remember, those spending levels were a huge increase in and of themselves due to higher oil and gas prices and hurricane recovery money.
Now the road gets bumpier for the governor and the Legislature. Unless the federal government changes the formula for determining the state match for Medicaid funding (or carves out a temporary exemption for Louisiana), there will be $1 billion less revenue to use to come up with the same spending levels as exists in the current budget.
Several cost savings panels are meeting to come up with recommendations for reducing expenditures and identifying efficiencies in state government operations. Unfortunately, most of the potentially low hanging fruit in the cost savings arena has already been harvested.
To come up with a billion dollars of spending reductions, some sacred cows are going to have to be sacrificed—things like the multiplicity of institutions in post-secondary education and the large amount of state funding provided for local government services and construction projects.
How the governor and Legislature handle the budget next spring will impact the fiscal future of Louisiana for years to come. Let’s hope they do better than Congress.
The budgeting process is going to be anything but fun in 2010. Soaring revenues fueled by incredibly high oil and gas prices and billions of dollars of hurricane recovery money are a thing of the past. Slower revenue growth is likely to meet a huge loss of federal Medicaid money in the budgeting process next year, and the result will not be pleasant.
To better understand the future direction of the state budget, a look at the two most recent budgets helps to put things in perspective.
In 2008 when the governor and the Legislature fashioned the 2008-2009 budget, state government was still rolling in high cotton. Money was pouring into the treasury so fast it was hard to spend it all—but Lord knows we tried. The total state budget increased by $1 billion and the state general fund portion of it (the part funded only by state generated revenue) went up by a whopping $1.24 billion. That budget also contained an increase of 1,000 state job positions. This significant expansion of the state budget came after a similar sizeable increase in the 2007-2008 budget fashioned in the last year of the Blanco administration. But what goes up must come down—and our governor and Legislature began to learn that lesson last spring when they wrote the 2009-2010 budget.
The budget debate last spring and early summer contained a lot of wailing and gnashing of teeth. The House members wanted to bring spending back in line with existing revenues. A majority of the Senate wanted to increase taxes and lessen the amount of cuts.
Governor Jindal did not support tax increases, so the House version of the budget became the basic blueprint. The result was that the total state budget decreased by $1.5 billion from the previous year and the state general fund portion dropped by $1.21 billion.
That budget also called for a reduction of 1,200 authorized (but probably not filled) job positions in state government. In essence, the governor and the Legislature simply reverted back to 2007-2008 spending levels when they crafted the current budget. But remember, those spending levels were a huge increase in and of themselves due to higher oil and gas prices and hurricane recovery money.
Now the road gets bumpier for the governor and the Legislature. Unless the federal government changes the formula for determining the state match for Medicaid funding (or carves out a temporary exemption for Louisiana), there will be $1 billion less revenue to use to come up with the same spending levels as exists in the current budget.
Several cost savings panels are meeting to come up with recommendations for reducing expenditures and identifying efficiencies in state government operations. Unfortunately, most of the potentially low hanging fruit in the cost savings arena has already been harvested.
To come up with a billion dollars of spending reductions, some sacred cows are going to have to be sacrificed—things like the multiplicity of institutions in post-secondary education and the large amount of state funding provided for local government services and construction projects.
How the governor and Legislature handle the budget next spring will impact the fiscal future of Louisiana for years to come. Let’s hope they do better than Congress.
Thursday, July 9, 2009
Action Picks Up In Washington
By Dan Juneau
Major committees in Congress are moving quickly—some would say too quickly—on legislation that will have a great impact on our health and our pocketbooks. The bills that are advancing are quite momentous. If they were being shaped by sound, well-researched analysis, perhaps the proposals wouldn’t be as scary. Unfortunately, much of the health care and energy legislation is being developed more by deal-cutting than by what works in the real world.
The health care legislation is a prime example. The cost estimates for the bills being shaped in various committees range from $1 trillion to $3.5 trillion over a 10-year period. With the budget deficit for next year already slated to be almost $2 trillion, even the spend-happy Congress is under pressure to pay for whatever is proposed and not simply add the cost to the ever-increasing federal deficit.
One of the major taxes being discussed to pay for the health care bills is a tax on employer-provided health insurance. Such a tax could raise almost $500 billion to offset the cost of covering more of the uninsured and underinsured. The problem is it could blow a hole in the foundation of our health care system that is based on coverage paid for all or in part by employers.
Some of the loudest critics of this tax proposal are the labor unions that have negotiated labor contracts with Cadillac benefits largely paid for by their employers. The staunch opposition of the unions is leaving its mark. One of the major Senate proposals now calls for creating an exemption from this tax for—you guessed it!—labor unions. If such a plan passes, non-union workers could be subject to having their employer-provided health insurance premium payments taxed as ordinary income.
That means that, in addition to the regular income tax rate they are subject to applying to this benefit, they would have to pay Medicare and Medicaid taxes on the amount as well. Their employers would also have to pay their share of the Medicare and Medicaid taxes. Non-union employers and employees would have to pay the tax while their union counterparts would escape the burden.
Substituting politics for sound policy decisions is very much at play with the energy legislation under consideration in Congress as well. Speaker of the House Nancy Pelosi is determined to have “cap and trade” legislation—that would limit carbon dioxide emissions and drive up energy costs—enacted by the end of summer.
But Pelosi and Company ran into a wall of opposition from many members of their own Democratic Caucus who are concerned about the economic impact of the legislation on their constituents. Particularly upset are farm state Democrats who believe the legislation could jeopardize their re-elections. The Waxman-Markey bill cannot pass without those key votes. So what happened? Deals were cut to placate the concerns of some but left the constituents of other congressmen (many in “Red States”) on the hook for paying potentially huge increases in energy costs.
This is no way to run a railroad. If a complete revamp of the nation’s health care system is a necessity, then everyone—union members included—should have to pick up the huge cost of paying for it. If significantly increased energy costs are the price that must be paid for reducing carbon dioxide emissions, then everyone in every region of the nation should have to bear those costs. There are sound reasons for opposing both the “cap and trade” legislation and the health care bills. Playing politics with who gets the bill for them only adds fuel to the fire.
Major committees in Congress are moving quickly—some would say too quickly—on legislation that will have a great impact on our health and our pocketbooks. The bills that are advancing are quite momentous. If they were being shaped by sound, well-researched analysis, perhaps the proposals wouldn’t be as scary. Unfortunately, much of the health care and energy legislation is being developed more by deal-cutting than by what works in the real world.
The health care legislation is a prime example. The cost estimates for the bills being shaped in various committees range from $1 trillion to $3.5 trillion over a 10-year period. With the budget deficit for next year already slated to be almost $2 trillion, even the spend-happy Congress is under pressure to pay for whatever is proposed and not simply add the cost to the ever-increasing federal deficit.
One of the major taxes being discussed to pay for the health care bills is a tax on employer-provided health insurance. Such a tax could raise almost $500 billion to offset the cost of covering more of the uninsured and underinsured. The problem is it could blow a hole in the foundation of our health care system that is based on coverage paid for all or in part by employers.
Some of the loudest critics of this tax proposal are the labor unions that have negotiated labor contracts with Cadillac benefits largely paid for by their employers. The staunch opposition of the unions is leaving its mark. One of the major Senate proposals now calls for creating an exemption from this tax for—you guessed it!—labor unions. If such a plan passes, non-union workers could be subject to having their employer-provided health insurance premium payments taxed as ordinary income.
That means that, in addition to the regular income tax rate they are subject to applying to this benefit, they would have to pay Medicare and Medicaid taxes on the amount as well. Their employers would also have to pay their share of the Medicare and Medicaid taxes. Non-union employers and employees would have to pay the tax while their union counterparts would escape the burden.
Substituting politics for sound policy decisions is very much at play with the energy legislation under consideration in Congress as well. Speaker of the House Nancy Pelosi is determined to have “cap and trade” legislation—that would limit carbon dioxide emissions and drive up energy costs—enacted by the end of summer.
But Pelosi and Company ran into a wall of opposition from many members of their own Democratic Caucus who are concerned about the economic impact of the legislation on their constituents. Particularly upset are farm state Democrats who believe the legislation could jeopardize their re-elections. The Waxman-Markey bill cannot pass without those key votes. So what happened? Deals were cut to placate the concerns of some but left the constituents of other congressmen (many in “Red States”) on the hook for paying potentially huge increases in energy costs.
This is no way to run a railroad. If a complete revamp of the nation’s health care system is a necessity, then everyone—union members included—should have to pick up the huge cost of paying for it. If significantly increased energy costs are the price that must be paid for reducing carbon dioxide emissions, then everyone in every region of the nation should have to bear those costs. There are sound reasons for opposing both the “cap and trade” legislation and the health care bills. Playing politics with who gets the bill for them only adds fuel to the fire.
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