Debunking the Myth of a Costless Medicaid Expansion

Posted on by Elias Tsapelas

As published in the Columbia Tribune

On August 4, Missouri voters will decide whether the state should become the 38th to expand Medicaid. Proponents of the measure suggest expanding the program would “save” the state money, but a closer analysis suggests the opposite is true: Not only will the program cost the state money, but it will come at the expense of other important budget priorities.

How do proponents create the illusion of savings? Let’s take a look at the numbers.

Today, Missouri’s Medicaid program covers nearly 940,000 people and costs around $11 billion per year. The federal government pays about two dollars for every dollar the state spends, yet the program still consumes nearly 40% of the state’s budget.

If Medicaid were expanded, Missouri’s Department of Social Services projects that more than 285,000 able-bodied adults would enter the program within the first year at a cost of around $2.7 billion. For these new recipients, the federal government’s match would be more generous, at $9 for every dollar Missouri spends instead of the usual $2. But even at that higher match rate, Missouri’s share of the expansion cost would be significant.

To find “savings,” then, expansion advocates rely on several dubious assumptions.

First, federal funding for Medicaid is treated as “free money.” Although Missouri taxpayers are also federal taxpayers, the cost to the federal government is discounted in the “savings” analysis. And with the federal government in a period of historic deficit spending, new Medicaid spending will be debt for our kids and grandkids to pay off.

Second, proponents’ models assume an increase in expansion enrollment that is much lower than what Missouri’s own Medicaid agency expects. We don’t have to look far to see states that have been burned by their pre-expansion estimates of enrollment and associated costs. Illinois, Arkansas, and Louisiana saw initial expansion enrollment dramatically exceed their estimates. If Missouri sees enrollment slightly above the current estimates from the state’s Medicaid agency, the savings vanish even in the pro-expansion models.

Third, advocates forecast the cost for each new enrollee to be less than similar individuals who are already enrolled in the state’s Medicaid program. By underestimating the cost per beneficiary, expansion supporters shave even more costs from their estimates—even though the state knows they’ll cost more.

And fourth, the most dubious of all, expansion advocates assume the number of disabled Missourians on the program will drop by more than 20 percent over the next four years. By enrolling more individuals under the expansion guidelines (where the federal government pays a higher share), supporters assume they can shift some of the state’s existing Medicaid costs to the federal government. The problem is, this type of maneuver is not allowed. Missouri cannot enroll people who are already eligible for Medicaid into the expansion population, so the idea that the number of disabled Missourians in the program could drop by more than 20 percent is simply unrealistic.

We should also keep in mind that when supporters of the proposal say Medicaid Expansion will save Missourians money, they don’t literally mean the program will cost less. The cost of the program grows year after year, even now. What supporters are saying is that they think it will be less expensive to the state than if the state didn’t expand at all.

There are other important unknowns that must be taken into account, including the risk that taking more federal dollars today may put our state in an even worse budgetary bind tomorrow. For instance, if the federal government finally decides to rein in the deficit by reducing its match on the Medicaid expansion population, state taxpayers may be left holding the bag.

Balancing Missouri’s budget around Medicaid is already an incredibly difficult task, especially amidst an economic downturn. Balancing the budget after expansion would be even more painful, because state legislators will have to come up with hundreds of millions of dollars annually to address both traditional Medicaid and the expansion’s costs. These tough decisions are sure to put priorities like education, roads, and public safety funding at serious risk. Suggesting that the state could save money by spending more on Medicaid was always a dubious proposition, but at some point forecasting gimmicks have to give way to common sense.

 

Thinking About Homeschooling in Missouri this Year?

Posted on by Michael Q. McShane

Given the uncertainty surrounding the upcoming school year, tens of thousands of families around the country are considering homeschooling for the upcoming year. EdChoice’s monthly public opinion tracker poll (which surveys a nationally representative sample of Americans) found that 25 percent of school parents are “much more favorable” to homeschooling and 37 percent are “somewhat more favorable” to homeschooling as a result of the coronavirus. In Nebraska, homeschool filings are up 21%.

For Missouri families that might be considering homeschooling, I’d like to share a couple of potentially useful resources.

First, and perhaps most important, is the Homeschool Legal Defense Association (HSLDA). HSLDA offers lots of resources on its website, including a state-by-state guide of laws and regulations related to homeschooling. For families worried about running afoul of the law, they can join HSLDA for $130 a year and get access to legal advice and protection as well as a host of other homeschooling resources.

Second, there is Khan Academy. Started as a series of YouTube videos Sal Khan created to tutor his nieces and nephews, Khan Academy has grown into a huge free online repository of lessons and projects for students. It has really stepped up during the coronavirus, creating a fully articulated school schedule for students with all the lessons and supplemental videos and articles necessary to complete it. Again, this is all available for free.

Third, Study Island by Edmentum offers a full self-paced online curriculum for students aligned to state standards. For those families thinking that homeschooling will be temporary and that their children will return to their traditional public school next year, keeping up with state requirements is important. Study Island provides its service for around $180 per student per year (though they do offer a free trial for folks looking to check it out). It is not free like Khan Academy, but is plug-and-play and standards-aligned, two key features that parents under pressure might think are worth the cost.

The fourth resource is Carol Topp, the Homeschool CPA. “Pandemic pods” are cropping up as a popular option for families to link together and share resources as they homeschool for the upcoming year. How can families set one up and potentially hire a teacher or set of tutors without running afoul of non-profit or employment law? This is where a knowledgeable CPA can help. Even for those who are homeschooling independently, tax questions can frequently arise. Her website has lots of free content, and she also offers one-on-one consulting services to help families navigate the homeschool landscape.

If you’re thinking seriously about homeschooling in Missouri this year, you are not alone. There are lots of families in the same boat, and lots of resources out there to help.

If you know of any other resources, particularly Missouri-based ones, please feel free to share them in the comments below.

The Danger of an Equity Only Lens in Education

Posted on by James V. Shuls

There is a danger in looking at life through only an equity lens. Kurt Vonnegut shows this exceptionally well in his grim short story Harrison Bergeron. Set in a dystopian future where everyone must be made equal, poor Harrison Bergeron is exceptional. He is too strong and must wear weights to slow him down. He is too good looking and must wear a mask to cover his appearance. He is too smart and must have a transmitter that interrupts his thought process. In a quest to make everyone equal, the government strips away everything that makes someone exceptional.

Milton Friedman warned us about this kind of thinking: “A society that puts equality before freedom will get neither.” Absurd as it sounds, we are approaching that level of thinking.

Take for instance the rise of “pandemic pods” that parents are creating in an effort to educate their children amid COVID-19 school closures. Pandemic pods are taking all kinds of shapes, but generally consist of a small band of parents organizing themselves (and sometimes even hiring private teachers) to oversee the education of their children. These enterprising parents are doing exactly what we would want any rational, thoughtful person to do. Indeed, they are doing the very thing that Alexis de Tocqueville lauded Americans for in “Democracy in America.” After traveling to the United States in the 1830s, de Tocqueville noted, “Americans of all ages, all stations in life, and all types of disposition, are forever forming associations.” They were taking initiative to solve the problems around them.

From that day to today, we have seen this desire to join together for common cause and address societal ills as a good thing. For some, it seems, that view has now changed. Rather than celebrate parents who are finding innovative ways to make the most of the current situation, some are disparaging them and warning that their actions may cause irreparable harm.

In a Barron’s commentary, for instance, R. L’Heureux Lewis-McCoy suggests “Pandemic pods are a classic example of opportunity hoarding.” He goes on to argue: “like other forms of opportunity hoarding,” pandemic pods “tend to look as if individuals are simply making the best choices for their family, when in fact their actions will quickly concretize and widen inequalities.”

Similarly, in a Washington Post piece J.P.B. Gerald and Mira Debs equate pandemic pods to white flight. They warn, “These personal decisions, however, have a collective consequence.”

It seems Lewis-McCoy, Gerald, Debs, and others are viewing this issue through an equity lens only. On one hand, their analysis is right. When some individuals take an action that is in their own interest, it may very well create inequity. Indeed, that is the very nature of action! Any time one individual or group of individuals undertakes an activity that is designed to improve their life, they are by definition going to create some form of disparity between their station and other people’s station. Greater inequity will arise here if only affluent parents are able to organize better learning opportunities for their children.

It is in the solution, however, that these folks fall short. Lewis-McCoy has suggested we should “dissuade” parents from forming these pods. Gerald and Debs argued that instead of trying to address the problem themselves, parents should “stay and fight” for a better educational system.

Like the government handicappers of Harrison Bergeron, their solution is to stifle the creativity and opportunity of some individuals. This is what happens when you look at things ONLY through an equity lens.

Societal change and improvement are made by encouraging innovation and free association, not by stifling them. Our goal should not be to stop affluent parents from attempting to help their children, but to empower less-affluent families to do the same. We do this by increasing educational options, not by decreasing them.

Don’t get me wrong. Equity is important and we should all care about the health and welfare of the least advantaged in our society. To finish the Friedman quote: “A society that puts freedom before equality will get a high degree of both.”

This Bill Could Hurt Consumers,Workers,and Businesses in St. Louis

Posted on by Corianna Baier

The St. Louis Board of Aldermen just passed a bill that could have serious negative effects on St. Louis City consumers. The bill, which I discussed in a previous blog post, mandates a cap on delivery fees that food delivery services can charge restaurants in the city at 5 percent. Not only is this government overreach, but there will likely be negative consequences for delivery consumers.

The government overreach here is clear: Lawmakers want to change the market and pick the winners (restaurants) and losers (food delivery services) themselves. Businesses and food delivery services have been operating with mutually agreed upon rates for years. Restaurants aren’t being duped here; they’re not forced to work with delivery services, but agree to do so in order to serve more customers. There is really no reason for the government to get involved at all.

How could this bill effect those of us using food delivery services?

If delivery fee caps are implemented, who would make up the monetary difference between the previously agreed upon service rate (which reportedly is often 25 to 50 percent) and the cap of 5 percent? It seems unlikely that food delivery services would continue business as usual after this huge hit. It’s much more likely that delivery services would increase fees for consumers (since they can’t increase fees for businesses) or reduce their now-unprofitable business dealings in St. Louis City.

We could also see less pay and fewer job opportunities for delivery drivers as food delivery services try to make up for lost earnings. This could hurt restaurants as well. If there are fewer delivery options or fees get too high, customers may simply stop ordering delivery from local restaurants.

Though intended to help small businesses, this bill could ultimately hurt consumers, delivery drivers, and restaurants in St. Louis City. I realize that we are living in unprecedented times, but we don’t want to fall into the bad habit of allowing lawmakers to control our markets. Prices should be set in the market by supply and demand and consumer preferences; lawmakers do not belong in business and market decisions.

Kansas City is Falling Behind the Region

Posted on by Patrick Tuohey

The Kansas City region is a rarity in that it straddles two states. Of the fourteen counties and 2.2 million residents in our metropolitan statistical area (MSA), only about 500,000 live in Kansas City, Missouri proper. And while the region is often feted for its relatively strong economic performance among our midwestern peer cities, that strength is chiefly due to the Kansas portion of the metro area. Kansas City, Missouri must come to terms with its failures and stop hiding behind our more successful regional partners.

According to an analysis of Census data conducted by Aaron Renn for the Show-Me Institute, the Missouri portion of the region is falling behind in every measure: per capita income, college degree attainment, population growth, job growth, and well as personal income and GDP growth. Renn points out:

The Missouri portion of the metro area by itself would perform worse and be ranked lower on all the statistics above as compared to the Kansas City metro area as a whole. This is due to the superior performance of the Kansas portion of the region compared to the Missouri portion.

Show-Me Institute researchers have written for years about the many things Kansas City can do to make itself a more attractive place to live, work, and shop. Too often rosy regional stories have lulled local leaders into a false sense of success. Kansas City, Missouri isn’t succeeding. This report should spur leaders and activists to look seriously at our own performance and work to improve it.

Lawmakers Need to Start Budgeting Like Adults, Not Teenagers

Posted on by Corianna Baier

It’s typical teenage behavior to run up a credit card bill and hope that someone else (like a parent or a sibling) will foot the bill. At a certain point, we tell teenagers that they need to grow up and assume responsibility for their own finances. It’s time that we tell our governments the same thing. State and local governments need to stop waiting for their “big brother” (the federal government) to foot the bill and start adjusting expenditures in response to our current economic crisis.

The economic consequences of this pandemic will be substantial, and huge budget and revenue hits will likely have a long-lasting impact. We need to right-size government spending before we put ourselves in a detrimental position.

It’s easy to fall into the habit of asking for more money instead of adapting to new circumstances. However, if a financially responsible adult takes a pay cut, he adjusts his lifestyle to fit his new income. He skips a vacation or cuts back on frivolous spending to make sure he has enough to pay for the important things, like shelter and food. We need our state and local governments to start acting with this kind of financial responsibility; debt and handouts mortgage our future.

Times of crisis present lawmakers with opportunities to reconsider priorities and take action. To be fair, the state has already taken some steps to cut spending, but more will need to be done. Perhaps it’s time to cut the often-wasted spending associated with unfair economic development handouts like tax-increment financing and other tax subsidies. Or perhaps the solution lies with cutting costs in other sectors.

Whatever the answer, the point is that finding opportunities to trim the fat in the budget is an urgent priority right now.

COVID Makes it Clear – We Need Educational Options

Posted on by James V. Shuls

A universal system of public education would be easy if we all agreed on what it should look like. COVID-19 is making it pretty clear, however, that there is a wide range of opinions among Americans about how schools should operate this fall. Accordingly, we have seen some pretty intense conflicts as school boards make decisions that will impact the lives and livelihoods of every family in their school district. The lack of a one-size-fits-all solution to the problems caused by the pandemic should lead us to rethink the role traditional public school districts play in our lives.

In Springfield, Missouri, for example, school officials announced students would not be returning full-time in the fall. Instead, they will be on-campus two days a week and online the other three. Many parents, especially those whose lives and careers have been greatly impacted by the COVID-induced school closures, are unhappy with this arrangement. Thus far, more than 800 people have signed a petition for the school to offer more in-person learning.

During these strange times, it is clearer than ever that a single school bureaucracy simply cannot meet the varied needs of every student and every family. Should a family with health challenges be left with no virtual option because most of their neighbors want to resume in-class schooling? Should a single mother be forced to choose between putting food on the table and educating her child if schools remain closed?  The obvious answer is a resounding No, but we wouldn’t be in this position if our public education system was set up to fund students instead of systems.

If we allowed people more control over where their educational dollars were spent, we could provide educational options to every family.

There are no easy decisions for school boards when making decisions that affect so many lives. Giving people educational options, however, is a no brainer.

A Fundamental Shift is Happening in Education

Posted on by Susan Pendergrass

Listen carefully. Do you hear that? It’s the ground shifting beneath the public education establishment. Families across the country are getting ready for back to school season, and they’ve had it with the inadequate plans being rolled out by their districts. They’re taking matters into their own hands. And I’m not just talking about the elite parents described in a New York Times article.

I was in the produce section of a grocery store in a fairly rural school district yesterday and overheard two grandmothers discussing what they are going to do. These ladies are the primary caregivers for their grandchildren—not uncommon in rural areas—and they were talking about joining a micro-school being set up by a teacher on their street. Or they may join a group of students that are going to meet at their church. These children from a small group of families will either have a Zootor (A Zoom tutor who facilitates virtual education as the in-person guide) or have a teacher provide instruction in person. Like so many in my nonscientific poll, they said that what the district provided last spring was absolutely terrible. Regardless of their resources, they’re going to figure out a solution that isn’t more of that.

Here is the problem: We have an epic disconnect between how education is funded and how it is being delivered this year. We have about 100,000 school buildings across this country that have been largely unused for the past six months and may or may not be used for the next six. Are we keeping the lights on in them? Are we keeping them cool enough for the minimal personnel still using them? Are we keeping the full staff of bus drivers and custodians? And, given that the answer to all of these questions is probably “yes,” are we then asking parents and primary caregivers to go out of pocket to get an education for their children that is supposed to be provided by their district? Are we willing to even discuss making changes to the collection of property taxes and the distribution of state education funds in this new reality?

One thing that I know to be true—when called, parents show up. Of course, there are far too many children stuck in horrific households and we all need to make sure that they have safe places to be. But on the whole, parents will go to great lengths for their children. The grace given to their school districts last spring is beginning to wear very thin. The daily uncertainty driven by overdue and underdefined reopening plans is causing parents to figure it out on their own or with their friends and neighbors.

The money conversation is sure to follow. While the keepers of the pre-pandemic status quo would like to hold their breath, wait for this to pass, and get back to the way things were, there have been too many fundamental changes in the delivery of public education for that to happen without resistance. A significant amount of power has shifted into parents’ hands and, like it or not, it won’t be long before parents start talking about a shift in funding methods.

It’s been clear to me for decades that parents want direct control of at least some public education dollars. But they’ve been facing an impenetrable wall of the public education establishment that dictates how things “must be done.” Parents are starting to get a peek over the wall, and I look forward to seeing how the rest of that story unfolds.

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