Physicians push for fewer tests
A surprising campaign called Choosing Wisely launched this week. Nine of the nation’s top medical societies joined together to put their support behind the effort to cut the number of unnecessary medical tests. The campaign marks a turning point for the practice of medicine in an economy that devotes 17 percent of its resources to curing illness, the highest level in the world. Previously, efforts to rein in medical spending have been led by health management organizations (HMOs) and other groups responsible for the payment of healthcare. It is a big shift for healthcare providers to take the lead in reining in costs.
States are increasingly burdened by their responsibility to provide healthcare through the Medicaid program, which serves over 58 million people. The new direction that Choosing Wisely advocates has the potential to lessen the strain on state budgets, as CBS News reports:
Doctors from nine of the top medical societies in the country are warning patients and fellow doctors to choose wisely when it comes to 45 common medical tests.
Some doctors may be used to prescribing these seemingly “routine tests,” but the “Choosing Wisely” initiative from the American Board of Internal Medicine Foundation says these procedures are often unnecessary and besides driving up the country’s skyrocketing health care costs, can put patients at risk.
According to The New York Times, up to one-third of the $2 trillion of annual U.S. health care costs is spent on unnecessary hospitalizations and tests, ineffective new drugs and medical devices, unproven treatments, and unnecessary end of life care.
It’s unlikely that the American underclass that relies on Medicaid is getting gold-plated treatments, but generally states do not mandate or prohibit care. One recent exception to this rule of thumb occurred in Washington state, when the Medicaid agency moved to block payments for 500 medical treatments provided in hospital emergency rooms.
A recent Government Accountability Office report highlighted the strain for municipal governments:
In the long term, the decline in the sector’s operating balance is primarily driven by the rising health-related costs of state and local expenditures on Medicaid and the cost of health care compensation for state and local government employees and retirees.
Planning a 21st century power system
Planning a 21st century power system
One of the biggest issues for America’s infrastructure is improving the national grid that moves electricity around the nation. From Wikipedia:
Historically, local governments have exercised authority over the grid and have significant disincentives to take action that would benefit states other than their own. Localities with cheap electricity have a disincentive to making interstate commerce in electricity trading easier, since other regions will be able to compete for local energy and drive up rates. Some regulators in Maine for example do not wish to address congestion problems because the congestion serves to keep Maine rates low.
In the US, generation is growing 4 times faster than transmission, but big transmission upgrades require the coordination of multiple states, a multitude of interlocking permits, and cooperation between a significant portion of the 500 companies that own the grid.
To address the conflicting interests and lack of local coordination the Council of State Governments will be convening a national advisory panel to consider the possibility of developing a Transmission Line Siting Compact. It’s a good step forward and generally an area of economic development that needs much more attention.
The fight is about control
Sarah Kliff, writing in Ezra Klein’s blog at the Washington Post, says that the recent initiative by the Republican governors to reduce the federal role in the administration of Medicaid is about “process.” I think she is halfway there, but the fight is really about “control” of how Medicaid is administered. I believe this fight will be a central one in the Congressional supercommittee. From the Washington Post (emphasis mine):
Republican governors want control of Medicaid
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:
“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.
The great milk cow in the sky dropped dead
The new paradigm for state and local governments is austerity.
Hard economic conditions and efforts at the federal level to achieve a balanced budget mean that funding for municipal governments will continue to contract. How will the reductions at the federal level spill over? Blunt-talking former Senator Alan Simpson, who co-chaired the National Commission on Fiscal Responsibility and Reform, was quoted recently as saying:
“(State officials) need to know the great milk cow in the sky dropped dead and that it’s over,” Simpson said in an interview for the March/April Capitol Ideas. “If they’re waiting for the next injection of some kind of funding from the feds to get the states propped up, … they probably saw the last one go by with the last compromise, which added almost $1 trillion bucks to the deficit without any reduction in spending.”
I’m sure that former Senator Simpson echoes the beliefs of many conservatives in Congress. Money is tight at the federal level, and much of the funding to states is targeted at very low income areas. It’s hard to predict how broad-based the defense of programs such as tenet-based rental assistance and child-nutrition programs will be. But the word is that the big federal program to states, Medicaid, has escaped cuts. So this potentially leaves the other programs very vulnerable. Let’s take a look at where federal dollars flow through to the states:
Data source: Government Printing Office (GPO)
The biggest block of federal funds flows to the Medicaid program for the poor and the elderly in nursing homes. In the first 20 seconds of this Bloomberg video, Paul Keckley, the executive director of Deloitte’s Center for Health Solutions, talks about how Medicaid has been exempted from cuts in the first round of the deficit-reduction deal.
This guy is ill informed. He speaks of the last 2 months of life or some nonsense like that, implying that the government can turn down the funding for those expensive months and achieve meaningful savings. I want to shout: WE CANNOT TELL WHEN THOSE LAST TWO MONTHS BEGIN ! You can either set some criteria for withdrawing treatment or not, but do not begin to know that you can predict when the patient is facing his/her last two months of life.
The federal government’s largess
The states rely on the federal government for 1 out of every 3 dollars they spend. States are rightly worried that the new “super committee” established by the debt ceiling deal in Congress will be looking at these monies to reduce spending. I thought it would be useful to look at the federal budget and get a sense of the size and composition of these expenditures.
I got a large table of data from the Government Printing Office (GPO) that shows the Congressionally authorized grants to the states. About half these monies are administered by states and flow through their budgets (see especially Medicaid and education funding) and the balance are distributed as federal programs. Here are the main programs administered by the states in this pie chart. Federal unemployment assistance is not included in this area of the budget.
Medicaid has always been the biggest cash transfer program to the states. It requires matching funds from state and county governments. Although it escaped mandatory reductions in the first phase of deficit reduction it’s the area that has governors and legislators most concerned. Medicaid is the poor cousin to other health insurance programs and it generally pays the lowest reimbursement rates. Some creative thinking is needed for this widely used health insurance program.
The other interesting observation I had looking at these numbers was the comparison of spending on special education to career and vocational training. Spending on special ed was over five times higher than spending on job training. I’m not advocating reducing special education but we must commit more resources to training unemployed Americans for higher skilled jobs.
Dig into the data a little. Where we spend our treasure is a big factor in America’s future. There will be less federal largess. Let’s spend it wisely.
(Federal budget via GPO. Data in $ millions)
United We Stand…… Divided We Fall……. Anyone remember that?
Extreme Partisan Politics are running and ruining this country, and has been for a long time, and far too long at that.
Maybe the American People should Unite and stand up for what is Right and Just, and get these Career Politicians and Lobbyist/ PAC Thugs out of Washington, and see how they like it on “Welfare”
Current Politics = Legalized Mafia.
The government is not For the People, and by the People anymore.
It is not a Democracy as it was meant to be.
It is for the Super Wealthy, The Poorest or Laziest of the Poor, Big Business, and Big Banks.
Debt deal for states: whither Medicaid?
Debt deal for states
As we reach the end game in Washington, states still have no idea how a reduction in federal spending will trickle down to their budgets. Stateline.org drills down to the number one concern of governors and state legislators — Medicaid (emphasis mine):
Among the biggest concerns for states was — and remains — the fate of Medicaid, the joint state-federal health insurance program serving more than 60 million poor Americans. That’s because Medicaid is generally the biggest item in state budgets. In the short term, the debt deal appears to spare Medicaid from immediate cuts in federal support. What’s more, Medicaid was specifically exempted from a “trigger” mechanism that would reduce spending automatically if the special congressional committee does not achieve its deficit-reduction goals.
Further:
NYT: States and Cities Brace for Far Less Money From Washington
Reuters: Three reasons conservatives should oppose a balanced budget amendment
Medicaid is the beast
It’s not short-term federal budget issues and credit rating changes that should worry muniland; these issues will require adjustments and creative solutions, but they are transitory. The real issue for states is how their budgets will sustain the increasing load of Medicaid, the federal government’s healthcare program for the poor and those who require nursing home care. This is the real elephant in the room.
Today, multiple media outlets ran stories about the oncoming terror for states from a potential downgrade of the credit rating of the United States. For example, the New York Times ran an article with the headline “Debt Ceiling Uncertainty Puts States at Risk” on their homepage. The story details a litany of possible scenarios ranging from the minor, such as Maryland having to delay a scheduled bond sale for a few days, to the more substantial worries, such as the federal government stopping payments like Social Security and state and local tax revenues being reduced.
These are transitory problems, which, like the problems that happened when the state government of Minnesota shut down for three weeks, will cause inconveniences. Ultimately, the system will find work-arounds.
Regarding the larger problem, take a look at the chart above, which was compiled by the National Association of State Budget Officers (NASBO). Thankfully, the work of NASBO is free of the hyperbole we often hear from politicians. State budget officers and treasurers focus on making sure that there are enough funds to cover commitments and that they end the year with balanced books. These are tough jobs, especially in times of declining resources.
The NASBO chart shows how states have adjusted spending from fiscal year 2011 (just ended on June 30) to the current fiscal year (2012). It says it all. In addition the new federal healthcare care requires an expansion of Medicaid coverage in 2014. The elephant in the room is growing bigger.
Further:
Reuters: Factbox: Top budgetary threats to state, local governments
JumboAmerica
Are we JumboAmerica? That is to say, has America succumbed to gluttony and sloth?
These questions, though rhetorical, are important since we have impossibly high obesity rates in this country and spend 17% of our GDP on health care. A new national system, Obamacare, will expand access to health care, but it does nothing to address the obesity epidemic among the poor.
Yesterday Phil Izzo of the Wall Street Journal reported on an important study that addressed poverty and obesity (emphasis mine):
Adult obesity rates increased in 16 states in the past year and did not decline in any state, according to F as in Fat: How Obesity Threatens America’s Future 2011, a report from the Trust for America’s Health and the Robert Wood Johnson Foundation. Twelve states now have obesity rates above 30 percent. Four years ago, only one state was above 30 percent.
JumboAmerica is getting fatter, and it’s causing a host of health problems, such as diabetes and high blood pressure. These are expensive diseases to treat when they get out of control. Low-income people are covered under Medicaid, but Medicaid is the number one fiscal concern for state governments. I mean no disrespect to the obese, but it costs a lot to help overweight, poor citizens.
Of course, the discussion has racial and socio-economic dimensions. More from the F as in Fat report:
The American Revolution was a beginning, not a consummation
“The American Revolution was a beginning, not a consummation.” ~Woodrow Wilson
Happy belated Independence Day to all! Step by step, the United States is transforming itself. It’s a good time to remember our founding principles:
Individual liberty Personal responsibility Constitutionally limited government The rule of law
Good links
Wall Street Journal: Food Stamp Use, by State
Greening the city
Many cities took a big step forward for clean air when they adopted buses fueled by natural gas. But there are other important projects that will make getting around easier, quieter and less polluting. New York City is getting ready to take a big step. From American City:
New York City has the potential to take those [bike sharing] concepts and scale them up to a size unseen on this side of the Atlantic. Mayor Michael Bloomberg, a man the transportation community has a complicated relationship with, has been dangling a transformative bike sharing program in front of alternative transportation advocates since 2009 when New York’s city planners issued an “exhaustive proposal” that included a 10,000 strong fleet of safety-equipped, GPS-ready bikes.
Economically, the deal is a victory for innovative financing because it fully absorbs the burden of maintenance, damage, and —as this is a city— theft, vandalism, and “artistic destruction.” New Yorkers would buy their memberships on weekly, monthly, or yearly bases and get an unlimited number of free rides that take less than 30 minutes; ride a little longer, pay a little more. New York has decided that an initial burst of capital will serve their purposes the best not least because of their uniqueness among American cities in terms of density and population.
Take with one hand, then the other
A rich guy makes a gain at the expense of his state’s teachers’ pension fund and then asks for public funding for his stadium project. This is now how things should work — the public should just say “enough,” or at least demand more transparency around this deal that lost the teachers’ money. Bloomberg reports:
Philip Anschutz, who seeks taxpayer support for a $1.4 billion downtown Los Angeles football stadium complex, bought out a partner in his nearby hotel and condo project at a loss to investors including state teachers.
California State Teachers’ Retirement System, the nation’s second-largest pension plan, is an investor in a MacFarlane Partners fund that sold its money-losing interest last month in the Anschutz-led Ritz-Carlton and JW Marriott hotels and attached condominiums at the L.A. Live project, according to Ricardo Duran, a spokesman for the pension fund.
“It was sold at a loss, I don’t know how much,” Duran said in an interview yesterday.
[...]
Anschutz’s firm, AEG Worldwide, has asked the Los Angeles City Council to approve a plan to build a $1.4 billion football stadium and convention-center expansion that involves the city issuing $350 million in municipal bonds for the convention- center portion of the project. Part of the existing center would be torn down.
AEG seeks to attract at least one National Football League team to the city, which lost the Raiders after the 1994 season. Revenue from the stadium and convention center addition, along with assurances from AEG, will be enough to repay the bonds, according to Michael Roth, a spokesman for the company.
NJ Governor Christie’s pension win
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Resident Muniland expert
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