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 Louisiana. Show all posts
Showing posts with label Louisiana. Show all posts
Wednesday, November 11, 2009
Sunday, November 1, 2009
Lord Action Was Right
The popular 19th century English nobleman, Lord Acton, is perhaps best remembered for the statement: “Power corrupts; absolute power corrupts absolutely.” History is littered with public figures that are appropriately described by those words. Considering some of the shenanigans going on with the health care legislation in Washington, Senate Majority Leader Harry Reid can certainly be added to the list.
There is no doubt that Reid is in a tough spot. President Obama has stacked up a huge pile of political poker chips, betting on a winning hand on health care reform. He will be harmed politically if he loses, and his fellow Democrats in Congress will feel the collateral damage. But it is not easy to muster the votes necessary to make significant changes to one-sixth of the U.S. economy—as Harry Reid has learned. Adding to Reid’s difficulties is the fact that he has to run for re-election next year, and polling data indicate that he is far from being a shoo-in.
The last thing Reid needs is to be a major factor in passing legislation that will push the crumbling budget of the State of Nevada further into the abyss. One of the central features of the proposed legislation could do just that. It would allow millions of individuals whose income levels currently preclude them from qualifying for Medicaid to meet eligibility requirements for the program. But there is a rub: states must put up a five percent match to help cover the additional costs.
Reid has made no bones about what he plans to do to avoid any political fallout back home. He has stated unequivocally that he will not allow a health care bill to come to the floor if it increases Medicaid costs for Nevada. He seems to be getting his way. The Senate Finance Committee bill would exempt four states—Michigan, Oregon, Rhode Island, and (yes) Nevada—from the requirement to pay the five percent funding match. The alleged justification for making the exception is that those states have been the hardest hit by the recession.
The Senate should rebel against Senator Reid feathering his own nest.
Other states shouldn’t have their budgets savaged by another huge unfunded mandate coming down from Washington while watching Reid and a handful of his cronies grin like bandits counting their loot. If states are going to have to be fiscally penalized to make the numbers work for the health care reform legislation, then all states should have to bear the burden.
The health care reform debate is starting to focus attention on what happens when arrogance meets partisanship. It is almost impossible to pass legislation that will cover all of the uninsured, reduce the overall cost of health insurance, and “not add a dime” to the deficit as President Obama promised. There are going to be winners and losers—and some very big losers—if the legislation passes. The likely losers will be young Americans and healthy policy holders who will have to pay much higher costs to insure or subsidize the elderly, the uninsured, and individuals with health problems or unhealthy life styles.
The main science driving the health care debate at this juncture is political science. After watching the political class making hash out of health care legislation, voters might want to ponder another quote from Lord Acton: “It is easier to find people fit to govern themselves than people to govern others. Every man is the best, the most fit judge of his own advantage.”
Senator Reid is living proof of the wisdom in those words.
There is no doubt that Reid is in a tough spot. President Obama has stacked up a huge pile of political poker chips, betting on a winning hand on health care reform. He will be harmed politically if he loses, and his fellow Democrats in Congress will feel the collateral damage. But it is not easy to muster the votes necessary to make significant changes to one-sixth of the U.S. economy—as Harry Reid has learned. Adding to Reid’s difficulties is the fact that he has to run for re-election next year, and polling data indicate that he is far from being a shoo-in.
The last thing Reid needs is to be a major factor in passing legislation that will push the crumbling budget of the State of Nevada further into the abyss. One of the central features of the proposed legislation could do just that. It would allow millions of individuals whose income levels currently preclude them from qualifying for Medicaid to meet eligibility requirements for the program. But there is a rub: states must put up a five percent match to help cover the additional costs.
Reid has made no bones about what he plans to do to avoid any political fallout back home. He has stated unequivocally that he will not allow a health care bill to come to the floor if it increases Medicaid costs for Nevada. He seems to be getting his way. The Senate Finance Committee bill would exempt four states—Michigan, Oregon, Rhode Island, and (yes) Nevada—from the requirement to pay the five percent funding match. The alleged justification for making the exception is that those states have been the hardest hit by the recession.
The Senate should rebel against Senator Reid feathering his own nest.
Other states shouldn’t have their budgets savaged by another huge unfunded mandate coming down from Washington while watching Reid and a handful of his cronies grin like bandits counting their loot. If states are going to have to be fiscally penalized to make the numbers work for the health care reform legislation, then all states should have to bear the burden.
The health care reform debate is starting to focus attention on what happens when arrogance meets partisanship. It is almost impossible to pass legislation that will cover all of the uninsured, reduce the overall cost of health insurance, and “not add a dime” to the deficit as President Obama promised. There are going to be winners and losers—and some very big losers—if the legislation passes. The likely losers will be young Americans and healthy policy holders who will have to pay much higher costs to insure or subsidize the elderly, the uninsured, and individuals with health problems or unhealthy life styles.
The main science driving the health care debate at this juncture is political science. After watching the political class making hash out of health care legislation, voters might want to ponder another quote from Lord Acton: “It is easier to find people fit to govern themselves than people to govern others. Every man is the best, the most fit judge of his own advantage.”
Senator Reid is living proof of the wisdom in those words.
Tuesday, August 25, 2009
Keeping Manufacturing Alive
Some of the highest paying jobs in America are created by companies that make things. Manufacturing has been a mainstay in the U.S. economy since the beginning of the industrial revolution. Some say that manufacturing is passé, that technology is the future, and that it doesn’t matter if manufacturing dries up and blows away.
The flaw in those arguments (actually there are numerous flaws) is that one of the biggest users of technology today is manufacturers.
Modern manufacturing operations are the showcase for innovative technology. Gone are the days, for instance, when hundreds of laborers engaged in the back-breaking activity of wrestling with logs in a forest products plant. A typical worker in those facilities today is more of a technician than a log wrestler.
State-of-the-art machinery moves the logs, determines the best possible value that can be extracted from them, and turns them into profitable products. The same is true of many industries, such as steel, durable goods, petroleum refining, and chemical manufacturing. Technology is the driving force that has increased productivity in American manufacturing, which has kept us a global leader in manufacturing output.
As noted above, advancements in technology have led directly to a diminution of manufacturing employment in the U.S. Many Americans believe that most of the manufacturing job losses—and there have been millions in the last few decades—are due to plants closing in the U.S. and moving to less-developed countries.
Certainly there has been some of that phenomenon occurring, particularly with low-technology industries. But, until this point, the majority of manufacturing job losses has been due more to productivity advances through technology than out-sourcing manufacturing jobs to foreign countries.
That may change soon. Government policies can have a major impact on any industry, and manufacturing is no exception.
Several issues pending in Congress could accelerate the departure of manufacturing industries and jobs from the U.S. Enactment of “cap and trade” legislation tops the list.
If energy costs rise exponentially for manufacturers in the U.S., companies will undoubtedly look more favorably at countries that do not artificially raise their cost of doing business by raising their energy costs.
Another federal issue that will impact the future of American manufacturing is the “card check” legislation pending in Congress. Some manufacturers work with a union agreement. Others do not. Manufacturers are not generally concerned about the wages involved with a collective bargaining agreement. They already have some of the highest wage scales in the private sector.
What troubles them are the voluminous work rules that come with a union contract. These contract requirements inhibit the productivity advancements necessary for manufacturing to survive in the modern world.
The current health care debate also has the full attention of U.S. manufacturers. The vast majority of our domestic manufacturers provide quality health insurance coverage for their workers. Proposals in Congress would mandate that coverage and possibly tax manufacturers for providing it.
The manufacturing community is very wary of government-imposed mandates from past experience involving many issues. Limiting their ability to design quality, affordable insurance plans for their workers—and possibly making them pay taxes to provide it—will not make them more likely to keep or expand their operations in the U.S.
If America is to remain a world leader in making things, government officials should step lightly when considering policies that could make more of our best jobs leave our shores.
Improving the quality of education, encouraging more research and development, and maintaining job-friendly tax policies will help keep manufacturing jobs in America. Passing some of the proposals pending in Congress will definitely have the opposite effect.
The flaw in those arguments (actually there are numerous flaws) is that one of the biggest users of technology today is manufacturers.
Modern manufacturing operations are the showcase for innovative technology. Gone are the days, for instance, when hundreds of laborers engaged in the back-breaking activity of wrestling with logs in a forest products plant. A typical worker in those facilities today is more of a technician than a log wrestler.
State-of-the-art machinery moves the logs, determines the best possible value that can be extracted from them, and turns them into profitable products. The same is true of many industries, such as steel, durable goods, petroleum refining, and chemical manufacturing. Technology is the driving force that has increased productivity in American manufacturing, which has kept us a global leader in manufacturing output.
As noted above, advancements in technology have led directly to a diminution of manufacturing employment in the U.S. Many Americans believe that most of the manufacturing job losses—and there have been millions in the last few decades—are due to plants closing in the U.S. and moving to less-developed countries.
Certainly there has been some of that phenomenon occurring, particularly with low-technology industries. But, until this point, the majority of manufacturing job losses has been due more to productivity advances through technology than out-sourcing manufacturing jobs to foreign countries.
That may change soon. Government policies can have a major impact on any industry, and manufacturing is no exception.
Several issues pending in Congress could accelerate the departure of manufacturing industries and jobs from the U.S. Enactment of “cap and trade” legislation tops the list.
If energy costs rise exponentially for manufacturers in the U.S., companies will undoubtedly look more favorably at countries that do not artificially raise their cost of doing business by raising their energy costs.
Another federal issue that will impact the future of American manufacturing is the “card check” legislation pending in Congress. Some manufacturers work with a union agreement. Others do not. Manufacturers are not generally concerned about the wages involved with a collective bargaining agreement. They already have some of the highest wage scales in the private sector.
What troubles them are the voluminous work rules that come with a union contract. These contract requirements inhibit the productivity advancements necessary for manufacturing to survive in the modern world.
The current health care debate also has the full attention of U.S. manufacturers. The vast majority of our domestic manufacturers provide quality health insurance coverage for their workers. Proposals in Congress would mandate that coverage and possibly tax manufacturers for providing it.
The manufacturing community is very wary of government-imposed mandates from past experience involving many issues. Limiting their ability to design quality, affordable insurance plans for their workers—and possibly making them pay taxes to provide it—will not make them more likely to keep or expand their operations in the U.S.
If America is to remain a world leader in making things, government officials should step lightly when considering policies that could make more of our best jobs leave our shores.
Improving the quality of education, encouraging more research and development, and maintaining job-friendly tax policies will help keep manufacturing jobs in America. Passing some of the proposals pending in Congress will definitely have the opposite effect.
Tuesday, July 21, 2009
Where Do We Go From Here?
The Legislature has adjourned, but the dust from this session probably will not settle before next year's session begins. Louisiana, like many other states, is at a critical crossroads. Two governors and two different Legislatures significantly overspent volatile oil and gas revenues in the two years prior to the current one. That was the major cause of the budget crisis state government faced this year. The problem is easy to identify. Simply go back to the decision made under the Blanco administration to fully fund the Rainy Day Trust Fund and allow skyrocketing oil and gas revenues to flow into the state general fund where they could be spent on recurring expenditures. That is exactly what the Legislature did in Governor Blanco's last year and again in Governor Jindal's first year in office. This year, the chickens came home to roost. Unfortunately, even more chickens will be looking for roosting space in the next few years.
Last Thursday, the head of the Congressional Budget Office told Congress that the federal budget is unsustainable going forward with current spending levels-much less the increases being proposed. Some well-credentialed fiscal guru needs to give our governor and Legislature the same message.
In addition to Louisiana's declining revenue problem, the federal government has informed us that, due to a temporary upward blip in personal income, we will be paid $1 billion less in Medicaid money next year. Our state leaders are on their knees begging for mercy from that decision, but there is a strong likelihood that their pleas will go unanswered. Compounding the problem is the fact that in two years, hundreds of millions in "stimulus" dollars will no longer be coming from Washington. The time to plan for that is now, not two years from now.
Another ominous sign on the horizon is the very negative attitude the Obama administration and the majority in Congress is showing toward the oil and gas industry. The industry is facing a drastic increase in taxes and more restrictions on domestic exploration and production. If domestic oil and gas activity is curtailed by new federal laws and regulations, our state revenue picture will become even bleaker.
Governor Jindal is first up at bat in addressing these problems since he must submit an executive budget proposal to the Legislature early next year. What the governor submits in his annual executive budget usually provides the basic blueprint for what comes out of the process. Certainly, the governor can't expect any increase in revenues coming from natural growth in the foreseeable future. That being the case, he will supply the early vision as to how state government must be reconfigured to match appropriate spending levels with real-world revenue projections. His executive budget should also clearly indicate what his spending priorities will be.
The executive and legislative branches should not wait for next year to begin reshaping the delivery of state services to match new revenue realities. Close scrutiny should be given to state funding of local government services, consolidation of functions in post-secondary education, civil service reforms that would enhance state government's ability to consolidate its workforce, and other spending reforms that would reduce the expense side of the state fiscal ledger.
It was fun to be governor or a legislator in the revenue-boom years after the hurricanes when recovery money was flowing and oil and gas prices were setting records. The party is now over. It is time to clean up the excesses and make government work as best as possible with the revenues that are available. That is what families are doing all across Louisiana. Their elected leaders should follow suit.
Last Thursday, the head of the Congressional Budget Office told Congress that the federal budget is unsustainable going forward with current spending levels-much less the increases being proposed. Some well-credentialed fiscal guru needs to give our governor and Legislature the same message.
In addition to Louisiana's declining revenue problem, the federal government has informed us that, due to a temporary upward blip in personal income, we will be paid $1 billion less in Medicaid money next year. Our state leaders are on their knees begging for mercy from that decision, but there is a strong likelihood that their pleas will go unanswered. Compounding the problem is the fact that in two years, hundreds of millions in "stimulus" dollars will no longer be coming from Washington. The time to plan for that is now, not two years from now.
Another ominous sign on the horizon is the very negative attitude the Obama administration and the majority in Congress is showing toward the oil and gas industry. The industry is facing a drastic increase in taxes and more restrictions on domestic exploration and production. If domestic oil and gas activity is curtailed by new federal laws and regulations, our state revenue picture will become even bleaker.
Governor Jindal is first up at bat in addressing these problems since he must submit an executive budget proposal to the Legislature early next year. What the governor submits in his annual executive budget usually provides the basic blueprint for what comes out of the process. Certainly, the governor can't expect any increase in revenues coming from natural growth in the foreseeable future. That being the case, he will supply the early vision as to how state government must be reconfigured to match appropriate spending levels with real-world revenue projections. His executive budget should also clearly indicate what his spending priorities will be.
The executive and legislative branches should not wait for next year to begin reshaping the delivery of state services to match new revenue realities. Close scrutiny should be given to state funding of local government services, consolidation of functions in post-secondary education, civil service reforms that would enhance state government's ability to consolidate its workforce, and other spending reforms that would reduce the expense side of the state fiscal ledger.
It was fun to be governor or a legislator in the revenue-boom years after the hurricanes when recovery money was flowing and oil and gas prices were setting records. The party is now over. It is time to clean up the excesses and make government work as best as possible with the revenues that are available. That is what families are doing all across Louisiana. Their elected leaders should follow suit.
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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