Republican governors want control of Medicaid

August 31, 2011

Thirty-one Republican governors have petitioned the Congressional supercommittee to devolve control of Medicaid to the states and away from Washington where it is currently supervised.  Medicaid is the government health insurance program which covers low-income earners and the elderly committed to nursing homes. Unlike other federal social entitlements, states pay a portion of the costs of the Medicaid program. The Republican governors claim that the federal government constrains their ability to develop more flexible and effective coverage. In essence Republican governors are asking that the program be transformed into a block grant rather than a proscribed benefit program. From Bloomberg:

Medicaid, the U.S. health program for the poor, should be overhauled to limit spending and let states design programs without federal interference, Republican governors said.

“The United States literally cannot afford to have the status quo on Medicaid,” said Mississippi Governor Haley Barbour, a Republican who has called for overhauling the program by ending federal oversight. “We should not have to come to Washington on bended knee and kowtow for waivers to do these kinds of things.”

“Each state Medicaid program should be accountable for measured improvement in the health status of their Medicaid populations based on quality and outcome metrics, rather than compliance with bureaucratic processes that, in too many cases, have no impact on improving the lives of the most vulnerable Americans,” according to the report.

The report outlines 31 proposals, including letting states do away with federal benefit and eligibility requirements in favor of setting goals for health outcomes and spending. Under the outcomes-based system, the federal government would only step in when states deviated from the program goals they decided jointly with the federal government.

Barbour rejected the idea that strong federal oversight of Medicaid was necessary. “The idea that Washington loves our constituents more than we do is offensive and false,” he said.

Meanwhile the federal government is trumpeting claims of increased fraud persecutions for the Medicare and Medicaid programs. Unfortunately they are finding and recovering only a tiny amount of fraud — given that total U.S. expenditures are $793 billion, the $4 billion of fraud they have uncovered is about one half a percent of the programs costs. From USA Today:

In 2010, the government recovered a record $4 billion from health fraud cases after the federal health care law created one agency and expanded another. The actuary for Medicare predicted provisions of the law would ultimately net $4.9 billion in fraud and abuse savings over the next 10 years, which will be rolled back into Medicare.

1.1% job loss in state and local governments

Yesterday Reuters reported that thousands of public employees are being laid off in 2010.  From Reuters:

Local and state governments axed more than 200,000 jobs in 2010, according to U.S. Census data released on Tuesday that showed the growing threat of public employee layoffs to the economic recovery.

The job losses have continued this year. John Lonski, chief economist for Moody’s Capital Markets Research told Reuters this month that “we are looking at the worst contraction of state and local government employment since 1981.”

Analysts polled by Reuters expect a report on Friday to show governments dropped another 30,000 jobs in August, marking the ninth consecutive month of contraction.

State and local governments employ approximately 17 million people so these job losses represent about 1.1% of the labor force. It’s horrific for those who lost their jobs but it’s hard to justify taxpayers paying more taxes to maintain a steady size of government when the rest of the economy is shrinking. State and local governments must balance their budgets every year so they either raise taxes, reduce expenses or borrow to cover deficits. Since governments are loathe to raise taxes I predict we will see many more government layoffs. The remaining employees will have to be more efficient and governments will decrease the services they offer. Muniland is shrinking.

What we measure affects what we do

There has been an increasingly vocal chorus pointing out the inherent weaknesses in how national economic activity is measured. For example gross national product (GDP) as currently constructed does not ascribe any value to care provided to family members in the home, even though if the same family member is in a nursing home the dollar costs of that activity are counted. It also takes no account of environmental costs that are incurred in development. There are many shortcomings in how we measure our output.

Please take a few minutes and read this Reuters essay on the topic by David Callahan, a Senior Fellow at Demos. Here is a clip:

Robert F. Kennedy famously criticized GDP for measuring everything “except that which makes life worthwhile.” This goes too far, since much of the economic activity that GDP counts has positive effects on people’s lives. But Kennedy was among the first to note how GDP doesn’t measure myriad aspects of society’s well-being – like health or education – even as it rises every time a redwood tree is chopped down or another prison is built.

The obsession with GDP reflects America’s worst side – a society that embraces such an extreme form of capitalism that making a buck is more important than how it gets made. Worse, the GDP’s dominance reinforces this trait. As the Nobel-winning economist Joseph Stiglitz has noted “What we measure affects what we do.”

@Twitter Talk

David Wessel @davidmwessel David Wessel
Challenger, Gray: In August, govts announced plans to cut 18,426 jobs, nearly double the 9,389 job cuts announced in July
Ted Nesi @tednesi Ted Nesi
Rhode Island led the nation in government layoffs last year, Census says; state, towns cut most jobs in US:
Chad Pergram @ChadPergram Chad Pergram
Barbour and RGA releases 31 pt Medicaid reform plan. There have been discussions about RGA plan with Upton staff. Upton on supercmte.
Barrett and Greene @GreeneBarrett Barrett and Greene
only 27% of Michigan’s local governments have employee labor unions (but nearly all large govts do)
OK Policy Institute @OKPolicy OK Policy Institute
Welcome to out new follower @govhenry ‘former Governor of Oklahoma, trying to stay relevant’
CSMonitor Politics @CSMnational CSMonitor Politics
Hurricane Irene by the numbers: state by state damage reports
Patrick McGee @PatrickMcGee_BB Patrick McGee
The benchmark 10-year Treasury yield fluctuated from 3.20% to 1.97% this month. Now steady at 2.18%

+ Good Links +

Open Congress: Dem Leader Endorses Extending Bush Tax Cuts, Again

WSJ: Bank of Political Works

Washington Post: Health reform implementation in one map

Bloomberg: Illinois Leads Underfunded U.S. Pensions

Sacramento Bee: State, local governments employ more than two million

LA Times: Analyst casts doubt on economic benefit of downtown L.A. stadium

Bond Buyer: Debt Delivers Yields With a Kick

Lord Abbott: Despite Apocalyptic Warnings, Massive Muni Defaults Fail to Materialize

Old Dominion Watchdog: Out-of-State Fraud Could Drive Up Va. Pension Costs

One comment

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“Unfortunately they are finding and recovering only a tiny amount of fraud — given that total U.S. expenditures are $793 billion, the $4 billion of fraud they have uncovered is about one half a percent of the programs costs.”

There is nothing “unfortunate” about that if the level of fraud is comparable. Haven’t exactly heard anything about the states who “[love their] constituents” doing any better at finding fraud.

Posted by klhoughton | Report as abusive