Amendment makes bill match proponents' claims
Some political observers are marveling that none of the House Republicans who voted against the Obamacare Medicaid expansion, and none of the Senators who say they will oppose it in the Senate, did not or do not plan to offer one simple amendment that would make the bill actually live up to its proponents' claims: The expansion may not proceed until after the federal Department of Health and Human Services has approved a 'waiver' allowing the reforms specified in the bill.
The bill that passed the House and is pending in the Senate has this exactly backward: First Michigan starts taking and doling out the federal expansion dollars, and sometime later it either does or does not receive a federal waiver allowing the reforms.
Without this provision, the current bill’s "reforms" are primarily a cover story for Republicans who vote for the expansion. That cover story also depends on people believing a completely non-credible provision that the state will rescind the expansion later if the waiver is not granted, or if “cost savings” specified in the bill don’t come to pass.
These “opt out” provisions aren't credible for two reasons. First, an opt-out stands on very shaky legal ground, as explained by The Wall Street Journal in a piece they called “New Medicaid's Roach Motel: The GOP flippers can check in, but it's unlikely they can check out.”
Legalisms aside, here’s the more fundamental explanation for why the federal Medicaid expansion dollars won't stop once they start flowing: Politics. I explained this in a blog post last week:
Everyone in Lansing knows how this game is played: The federal expansion money will be rolling in, and in May 2016, under an entrenched Obamacare, the supposed ‘savings’ this legislation supposedly generates won't (meet specified amounts). Everyone will be shocked — shocked! — and the appropriations committee chairs will ask their colleagues, ‘Are we going to leave nine federal Medicaid dollars on the table for an investment of just one state dollar?’ Of course they won't.”
That applies just as much to the waiver request: If the feds deny it, the Michigan Legislature will simply vote to keep the expansion going anyway, because legislators will have become addicted to the federal money, and because they fear the political price of taking away benefits that many people will already be receiving.
In short, requiring Michigan to have this waiver before the expansion can begin causes the bill to actually live up to the spin that pro-expansion House members are already dishing out, and that Senators are planning to dish. Without this, the bill's supporters are exposed as further entrenching Obamacare not because of some supposedly awesome reforms, but because of pressure exerted by a politically powerful special interest (the state’s hospital establishment, which knows once the expansion dollars start flowing into their coffers the politicians won't pull the plug later).
So if legislators truly believe this bill's reforms are so great, why not hold off on the expansion until they know they can actually be implemented? Why not show the courage of of their convictions by demanding waiver approval first, before the expansion may proceed?
Legislators should avoid spurious arguments to defend votes
In justifying his Medicaid expansion vote in Michigan Capitol Confidential, Rep. Al Pscholka, R-Stevensville, argues that this would prevent Michigan from being a “donor state” — whereby Michigan taxpayers send more money to the federal government than it receives in transfers. However, a study by the RAND Corporation says otherwise.
In analyzing the economic effects of a Medicaid expansion in Arkansas, the study’s authors came to a rather common sense conclusion on the impact of transfers: only very poor states like Mississippi, New Mexico and Arkansas would receive higher net transfers from the federal government under the Medicaid expansion.
The reason is simple: all people earning up to 138 percent of the poverty line would be covered by Medicaid under the expansion. Since the bulk of this is paid by transfers cycled through Washington, only the very poor states win. The federal government has minimal ability to collect revenue from outside the country, so transfers are largely a zero-sum game among the states.
Michigan went through a decade-long recession where the state’s poverty levels surged, but it is not quite at national-leader levels. It’s unclear whether the state’s recent economic recovery is enough to lower poverty rates here.
If the purpose of expanding Medicaid is solely to increase the state’s federal transfers, then the state may have wanted to do nothing. Many of the people covered by the Medicaid expansion would be eligible for federal subsidies to purchase health insurance on the exchange. These subsidies tend to be far more generous than the average costs of Medicaid. And it would give those people access to real health insurance.
There are plenty of reasons to oppose the Medicaid expansion. Legislators should consider those instead of making spurious arguments to support it.
Evidence of a broken education system
There is no clearer image of the failure of Michigan's public education system than that of a school official knocking on doors and asking to see children’s bedrooms to catch families that are simply trying to provide the best education for their children.
The Grosse Pointe Public School System has gone to extreme lengths to make sure that certain students don't attend their schools. To that end, Chris Fenton, a deputy superintendent in the district, has effectively stalked children.
Fenton told Bridge magazine that he has sat in his car outside of suspected nonresident students' homes on dark, early mornings to see whether a student comes out of the front door.
Fenton said that he has even peered through windows and has asked to see children's bedrooms. The fact that this is how Grosse Pointe's second-highest-paid employee spends some of his time is — to put it kindly — disappointing.
Grosse Pointe pays private investigators to investigate families suspected of nonresidency. The district investigated 239 students last year, and booted 41 out. It is deplorable that children are treated like criminals just because they want access to a better education.
Some families have gone to extreme ends to have their children attend Grosse Pointe schools in Wayne County. Fenton said he has seen children driven to a relative's house in the morning, hidden in the trunk of a car, so that they can appear to live in the district.
People who support keeping nonresident students out of high-quality schools say that it wouldn't be "fair" for nonresident students to attend if their families haven't paid property taxes to the district. But this is an outdated argument. Grosse Pointe gets about $9,000 per student from state and federal sources. Local property taxes amount to just $4,000 per student.
Fortunately, Michigan's education system allows some students the opportunity to choose among public school options. Choice is a fact of life for students in the Detroit area, where there are hundreds of charter public schools.
Many students in more rural areas are able to take advantage of open Schools of Choice policies to attend school in districts other than the one in which they live.
However, school districts still are able to block nonresident students from attending. In some cases, such as in the Birmingham Public Schools in Oakland County, officials allow nonresident students to attend, but only if they're able to pay $13,000 in tuition (or if they are one of the six nonresident students allowed to attend the alternative high school). That isn't an open-access system focused on helping students; that's an outdated public education system that effectively bars students below a certain income level from attending certain schools.
It's time to update Michigan's public education system to allow students of all backgrounds to have access to more school options. The best solution would be to allow all funding to follow students to the school of their choice — without limitation and without district ownership of students.
Imagine a high ranking school official who earns more than $200,000 per year staking out a child's home. In a better world, he would spend his time more productively, and parents would have no reason to hide the fact that they are pursuing the best possible education for their child.
Time for government to focus on the basics
Bill Shea of Crain’s Detroit Business has an article titled, “Many dollars, little sense: Projects that seemed like good ideas at the time…,” which looks at high-profile government projects long on promises but short on results.
Unfortunately, because of the incentives for politicians and the coverage from the media, these “bold” government projects are too often the norm. In recent years, this has included film subsidies, MEDC select business deals focusing on “green energy” and the “cool cities” project. It even led one former legislator to say that the MEDC should “stop believing its own press releases.”
If there is one lesson from Detroit and the “lost decade” in Michigan it is that flashy government projects do not make for sound public policy. Legislators should focus on the basics of government service and leave the rest to the private sector.
Imposing "healthy behavior" conditions on Social Security next?
Dr. Megan Edison has raised an interesting point about a “healthy behavior” provision in the Obamacare Medicaid expansion bill just passed by the Michigan House and currently being considered by the Senate. Under the bill, enrollees would pay more unless they “demonstrate improved health outcomes or maintain healthy behaviors as identified in a risk assessment by their primary care practitioner.” Dr. Edison characterizes as “creepy” the requirement that doctors must track and report to the state whether their patients have met the standard.
The provision also shows how Republicans have mistakenly framed the expansion in the same conceptual terms as post-1996 welfare reform. This is erroneous because Obamacare is not intended to be a “welfare” program in the same way as “Temporary Assistance to Needy Families,” to use the current bureaucratic term for what regular people call being “on welfare.” It's an “entitlement,” just like Medicare and Social Security.
In contrast, since 1996 cash welfare benefits are no longer an "entitlement." Instead, they are conditional on recipients jumping through various hoops dictated by the state, including work and job-training requirements, with a four-year cap on how long someone can collect.
The public implicitly understands the conceptual difference between "welfare" and "entitlement." The 1996 welfare reform was all about separating these, and most people have no problem with requiring welfare beneficiaries to jump through those hoops.
In the public mind, Medicaid falls somewhere between. As a practical matter it’s more like an entitlement, because in the end Americans will not accept a system that requires them to step over the ailing bodies of individuals who could be cured if only they could afford treatment. Still, the public has generally been willing to impose some conditions on Medicaid beneficiaries.
Here’s how this is relevant to Obamacare-driven expansion of the program by the Michigan Legislature: Because Medicaid is now a critical component of a new entitlement, the conceptual framework for it has changed, especially for the above-poverty population covered by the expansion. Medicaid has been transformed into the “lower rungs” of the Obamacare entitlement ladder.
To grasp the significance, imagine the uproar if Republicans in the Michigan Legislature tried to impose “healthy behavior” conditions on middle class Social Security and Medicare recipients.
If Obamacare survives, then all the above has huge (and corrupting) implications for Americans’ relationship with their own government. In the short term, it means this: Efforts by Michigan legislators to extract federal permission for substantive Medicaid “reforms” as a condition for accepting Obamacare’s expansion of the program are based on an obsolete conceptual framework. As such, they are likely to go nowhere in Washington.
Spending cuts can provide more than enough
The Michigan House Transportation and Infrastructure Committee is considering legislation to raise taxes on vehicle owners as a way to get more money for roads. Roads may need the extra attention but there is no need to increase taxes on net balance.
The current "tax-and-pave" approach is an implicit claim by politicians that nowhere in Michigan's $49.5 billion budget can they find a single line-item worth trimming.
Of course there are countless items in the budget this state could do without. In March I identified $344 million worth of savings. Coupled with other reforms the state could, at a minimum, avoid increasing automobile registration taxes or do so and offset those hikes with tax cuts elsewhere.
In the past decade, Mackinac Center analysts have recommended hundreds of other ideas for saving billions of dollars without touching Medicaid or the School Aid Fund. Some of these have been adopted, but there still are lots of spending-cut opportunities on the table.
Of course for every such decrease there is a special interest prepared to use all the tools of political manipulation to defend their turf. I won't pretend this is easy, but it is worth noting the politicians now proposing big road tax increases have not themselves suggested any big spending cut alternatives.
Incidentally, this tax increase debate should also be placed in some context. Michigan endured a $1.4 billion tax hike just six years ago. We did so under the promise that the income tax increase portion would be rolled back. That promised tax cut was stopped after a tiny one-tenth of 1 percentage point cut.
So how much of our money is enough? At what point will legislators collectively say, "Thanks taxpayers. Take a break. We've got all we need"?
Are they driving accountability?
Mackinac Center President Joseph G. Lehman writes in the current edition of The Ripon Forum about the “performance dashboards” utilized by Gov. Rick Snyder, noting both their positive and negative aspects and suggesting improvements.
Read the full article here.
Education Policy Analyst Audrey Spalding writes in an Op-Ed in the Midland Daily News that socioeconomic factors and their impact on student performance have to be taken into account when considering school performance.
Grand Rapids might help group circumvent state law
On the morning of Tuesday, June 18, the Grand Rapids City Commission will consider transferring 163 or more properties to the Kent County Land Bank. These properties will not go to tax auction, where private individuals could bid on them.
If city commissioners approve this resolution, they will be helping the Kent County Land Bank circumvent state law, which forbids land banks from acquiring property prior to tax auction. Moreover, the land bank will have the ability to choose who can or cannot purchase these properties.
This move will cost taxpayers. If the properties were to go to tax auction, private bidders would bid up the price, assuring Kent County more sales revenue than the price the land bank will pay.
Though the resolution calls for the land bank to complete redevelopment, repurpose, or resale within 18 months of acquiring the new properties, there are no assurances. By acquiring these properties, the land bank is placing Kent County taxpayers at risk: Plans fall through, and development costs money.
It is likely that the land bank will not be able to sell all 163 properties in just 18 months. In contrast, the vast majority of these properties would likely sell at tax auction, with private developers and individuals bearing the costs and risks of development.
The text of the resolution the Grand Rapids City Commission will consider and the full list of properties the land bank may acquire is available here.