Are Work Requirements and Premiums On the Horizon for Medicaid’s Able-Bodied?

Posted on by Patrick Ishmael

Two years ago, I wrote about a variety of ways Missouri could reform its Medicaid program. From health savings accounts to regulatory reform, the paper presents a wide-ranging and integrated proposal for delivering better care to Missouri’s neediest patients at a better price for taxpayers. Could other reforms poke through too? Absolutely, and two of the more prominent alternatives right now have to do with work requirements and premiums.

The question of the cost of Medicaid in the years ahead is perhaps the biggest problem that work requirements and premiums address. The Department of Health and Human Services (HHS) forecasted in 2013 that the cost of Medicaid will continue to exceed the rate of inflation for at least the next decade because both the cost of services and the number of beneficiaries are rising. On that trajectory, the total cost of the program is set to nearly double to approximately $900 billion in spending annually by 2022, from about $450 billion in 2013.

Access for our most vulnerable is already being squeezed by today’s program, and this upward trend in spending—in contradiction, of course, to the “cost curve bending” claims about Obamacare by its supporters—does not bode well for the sustainability of the Medicaid status quo in the years ahead. Something will have to change to mitigate these spending pressures.

In this context, it’s very possible that work requirements and premiums for at least some able-bodied Medicaid beneficiaries could become the norm in some states. On the one hand, a work requirement for the able-bodied would ensure that a beneficiary would have a stream of income to help support themselves and supplement their welfare benefits; on the other hand, a modest premium would not only give beneficiaries a stake in their care, but also a reduced benefit cliff as their economic prospects improve. Different proposals have set different thresholds for work and premiums, but the underlying idea is pretty simple—if you can help pay for your care, you should, and because you are, you’re also helping to ensure that care for the most vulnerable is more available and more fully funded.

Unfortunately, state Medicaid plans that include robust work and premium requirements have a tendency of being rejected or gutted by the HHS right now. Whether the HHS continues to do so is an open question; the department may view these reforms as unnecessary right now, but as Medicaid spending spikes in the years ahead, robust work and premium changes at the state level may look better and better as a way of ensuring the poorest have access to care. They’re certainly ideas worth considering—and considering sooner rather than later.

White House Report Is the Same Tired Medicaid Message, but Newly Packaged

Posted on by Patrick Ishmael

Last week the White House released a report titled, “Missed Opportunities: The Consequences of State Decisions Not to Expand Medicaid.” As you might expect with a political document, the White House’s paper was released to coincide with contemporary political events—specifically, a legislative debate over Medicaid expansion in Florida, whose circumstances I’ve discussed on this blog before. Florida’s House ultimately rejected the expansion proposal. That was the right decision.

Unfortunately, there isn’t much new in the report. As expected, the authors conflate Medicaid “coverage” and medical care, when the concepts are very different things, and they gloss over the fact that throwing more beneficiaries into the Medicaid program will actually make care delivery to the most vulnerable even more difficult.

Show-Me Daily readers may not be surprised, then, that my reaction, printed in the St. Louis Post-Dispatch, was not exactly high on the report’s contents.

But opponents say such studies and data miss the mark when evaluating whether states should expand Medicaid eligibility. Patrick Ishmael, a researcher at the conservative Show-Me Institute, said the current program is “deeply broken” and that adding more people to it would be irresponsible and immoral.

Medicaid beneficiaries and Missouri taxpayers deserve a better program, not these tired talking points, and there are many reforms out there that deserve to be debated.

But that debate is not helped along by reports like this from the White House. Expansion is not reform; coverage is not care. Until the White House and Obamacare supporters in general take those facts to heart, fixing Medicaid in any sort of meaningful way will continue to be very, very difficult in the near term.

Is Democracy Too Messy for the Post-Dispatch Editorial Board?

Posted on by James V. Shuls

Government IconYesterday, the St. Louis Post-Dispatch released an editorial titled, “Republicans continue to peddle the Common Core lie.” A more appropriate title for the piece might have been, “Democracy is too messy for our refined tastes.” Rather than tackle any of the substantive arguments about the Common Core—Are they rigorous? Do they promote constructivist teaching practices? Was the federal government overly involved in adoption? etc.—the editorial team focused on denouncing legislative attacks on Common Core because they don’t actually remove Common Core. Of course, given their support for the standards, the editorial board likely would have been just as derisive had the legislature been 100 percent effective in removing the standards.

Thus far, the legislature has passed a bill which created workgroups tasked with developing new standards. I happen to be serving on the K-5 math standards group. The purpose of these groups is to come up with standards that have been created with the input of a wide swath of Missourians from varying backgrounds. If standards consist of the things we are going to teach our kids, everyone should have input. Now, this might mean that we have contradictory opinions and impassioned debate, but that is a good thing. That means the process has been inclusive and a wide range of views are being represented.

Sure, the Common Core sailed through the state department of education with little commotion, but that is not a good thing! They were not developed through an open, public process, but behind closed doors. This better, more inclusive process is going to take time. That is OK.

The legislature’s decision to remove funding for Common Core-aligned tests particularly drew the editorial board’s ire. The Post-Dispatch’seditorial board looks at these developments and says, “This is how we do education policy in the U.S. One step forward, two steps back.”

Regardless of whether the steps have been forward or back, the editorial board is right. This is how education policy works in the U.S. Our system of government is designed with checks and balances on purpose. These are not quirks, but features of the system designed to limit any one group’s ability, such as Common Core supporters, to railroad the entire population. These are exactly the features that were subverted through the development and adoption of the Common Core standards.

Our Democratic system can be messy at times, and it can frustrate well-intentioned central planners who wish to impose their will on us all, but this is an example of it working appropriately.

Back in the USSR

Posted on by Patrick Tuohey

The Kansas City Star published a piece this weekend that examined the impact on caterers of the proposed convention deal. Specifically, they examined the plan to give the Hyatt exclusive catering rights to the convention center that would cost existing local caterers millions in lost business.

According to some, ending competition for convention catering business would increase quality:

An exclusive food provider, according to O’Neal, would help the convention center ensure quality control because “with one vendor, the building can control quality better, and that’s what people remember about a building.”

City Manager Troy Schulte agrees. Even if the city weren’t negotiating with Hyatt, Schulte said, he was thinking about moving toward a single caterer. He said the city has received some complaints about catering, which he declined to specify. Schulte said a single provider would make quality control better.

You read that right. Some Kansas City leaders apparently think that reducing choice increases quality. (By the way, Aramark has an exclusive catering agreement at Kauffman Stadium, and they haven’t been doing so well regarding quality.)

This flawed thinking isn’t limited to the catering contract, according to the Memorandum of Understanding. Neither the initial award of catering nor the award of the construction contract for the hotel are to be competitively bid. The city apparently just plans to give those contracts to Hyatt and J.E. Dunn respectively without making sure their bids are the best or the cheapest.

Is it any wonder that city finances are such a mess when even the most basic economic principles of choice and competition are disregarded?

Moscow on the Missouri
Moscow on the Missouri

It’s Groundhog Day for the KC Convention Center

Posted on by Patrick Tuohey

Kansas Citians are being told that if we don’t hurry up and subsidize the construction of a new 800-room convention hotel, we will lose out on millions of dollars of convention business. For voters who lived here in 2002, it must seem like the movie Groundhog Day.

2001-Bartle-Hall-expansion-flyer2In 2002, residents of Kansas City were told that if they did not approve a measure to build a 130,000-square-foot addition to Bartle Hall the city would lose millions in convention business. The campaign featured statements from convention managers who said they may have to leave Kansas City. One mailer, available here, included two such statements:

“Ace Hardware will no longer be able to host conventions in Kansas City until the Convention Center is expanded . . .” —Ace Hardware Conventions Manager

Taxpayers did vote to expand Bartle Hall, but Ace Hardware’s convention never returned to Kansas City. A second quote in the mailer makes the same point:

“We understand that a 40,000 sq. foot ballroom is being considered—the city needs to solidify its plans and begin construction as soon as possible to continue meeting our needs. Our continued commitment to Kansas City depends on the City’s plans for expansion . . .” —Associate Executive Director, Vocational Industrial Clubs of America (VICA)

A representative for VICA, also known as SkillsUSA, recently told Amy Hawley at KSHB that it left Kansas City last year because of insufficient “hotel space and convention space.” Building a convention hotel now will not meet its needs; the company won’t be back regardless of what the city does with a hotel.

In fact, the 2002 mailer starts off with a statement that is almost identical to the argument being made today:

Current bookings for future conventions is the best indicator of convention and tourism business in Kansas City five to ten years from now. Our future bookings are down dramatically and the reason is clear—without a new ballroom/general assembly meeting room, companies and organizations will continue to pass over Kansas City.

Replace “ballroom/general assembly meeting room” with “convention hotel” and nothing has changed in 13 years. The Bartle Hall expansion failed to be the boon that was hoped for. There is no real reason to expect that a new hotel will increase convention business in Kansas City, especially when it likely will make us one of the most expensive convention cities in the country.

Bad Data In, Bad Policy Out

Posted on by Rik W. Hafer

The Public Policy Research Center at the University of Missouri-St. Louis recently released the report, “An Equity Assessment of the St. Louis Region.” The report concludes that reducing trends in inequality will “build a strong, competitive economy in the decades to come.” This goal is laudable; the narrow approach advocated by the center’s report, however, is suspect. There are numerous aspects of the report’s use of data that are questionable. I will address only a few in this limited space. “Racial and economic inclusion,” states the report, “are the drivers of robust economic growth.” Actually, the preponderance of evidence from years of research shows that education drives economic growth. Education, especially educational attainment and not just years in school, is the single most important empirical factor explaining differences in economic growth across states and countries. In a recent Show-Me Institute essay, I show that Missouri ranks in the lower echelon of states when it comes to educating its children, and it is one of the slowest growing states in the union. If the report were to argue that better education leads to racial and economic inclusion, then I would totally agree. But a policy to reduce inequality by simply imposing greater inclusion is very different than one aimed at increasing educational attainment to achieve the same end. The report asserts that erasing racial income inequality in the Saint Louis region would improve economic output and raise incomes. They estimate that in 2012 the economy would have been over $13 billion larger if there were no racial inequality. But this is tautological. If I earn $20 and you earn $10, doubling your income by definition increases our joint income. The gnarly problem is how to increase your income, and mine as well. If higher income for you is mandated by the government regardless of your skills, this will only redistribute the current economic pie and not improve economic growth in the region. The movement to raise the minimum wage is based on such sophistry. Proponents of raising entry-level wages see only those lucky individuals whose incomes increase while they ignore the workers left behind because their skills are not worth the higher cost to employers. Mandating reduced wage inequality without concern for such harmful distributional outcomes is bad policy. The report measures income inequality using the Gini coefficient, a popular statistical measure of inequality. A Gini of one indicates complete inequality; zero indicates complete equality. The Gini for the Saint Louis region, 0.45, is slightly below the national average, and in the middle when ranked among other metropolitan areas. So, according to this measure, income inequality isn’t that bad in the region. The problem is that the Gini coefficient is well-known to have many flaws. Based on what is reported, the center’s report apparently relies on a Gini coefficient that does not account for the “income” generated by social assistance programs. By not properly accounting for programs that raise the income of lower-income groups, the Gini coefficient is misleading. Moreover, Gini coefficients can change dramatically depending on whether pre- or post-tax income is used in the calculation. Using Gini coefficients that account for these concerns would likely show that income inequality is less pronounced in the Saint Louis region than that indicated in the report. Everyone agrees that economic inequality is an important issue. Before we embark on a series of policy decisions to deal with inequality, however, better analysis than that provided in the UMSL report is needed.

Golden Parachutes for Bureaucrats

Posted on by Brittany Wagner

NAS PensacolaJoplin Superintendent C. J. Huff announced his retirement last month despite his contract expiring in 2018. A sunshine request from the Joplin Globe revealed the details of the separation agreement.

Superintendent Huff has been credited with helping rebuild the Joplin community after 2011’s devastating tornado. He was the 2013 Missouri Superintendent of the Year and a finalist for National Superintendent of the Year.

That said, the agreement still has some big numbers. Huff will continue to earn his regular paycheck until he retires on June 30. From July 1, 2015, to December 31, 2016, Joplin will pay Huff a total of $262,912.50 in additional compensation. According to the Kansas City Star, “the agreement requires Huff and the district not to criticize each other, and bars Huff from suing the district.” Huff will also receive $50,000 to “assist the new superintendent,” starting in June 2016.

According to the salary schedule for the Joplin Public Schools, a teacher would have to earn a master’s degree and make it to the 26th pay step in order to make $50,000 a year. That is some expensive advice.

This revelation raises a lot of questions. The first, of course, asks, Is this the best use of district funds? Clearly Superintendent Huff was a talented leader, but those 312,000-plus dollars could hire nine new teachers at the starting point on the district’s salary scale.

More than anything, this signals a need for public school finance transparency. A sunshine request from an intrepid reporter shouldn’t be necessary to get these facts into the open. How can taxpayers hold school boards accountable when they don’t even know how their tax dollars are being spent? Watch this video to hear how one legislator feels about public school spending and transparency.

 

Missouri Stadium Funding Plan Is Bad Policy, Possibly Illegal

Posted on by Joseph Miller

Screen shot 2015-05-18 at 1.11.50 PM

In a quest to build a new riverfront stadium to keep the Rams in Saint Louis, some state and local leaders are trying their very hardest to make sure that virtually no one has a vote on the matter. At the state level, the governor plans to issue new debt without any legislative approval. At the local level, the St. Louis Regional Convention and Sports Complex Authority (RSA), which owns the dome, wants to extend city bonds without a public vote. They have sued to overturn an ordinance requiring such a vote.

We’ve already discussed the RSA’s unconvincing arguments against the ordinance requiring a public vote in the city. Summing up the matter:

The lawsuit’s proponents argue that the city’s ordinance is broad and vague, prevents the city from participating in planning and site preparation, and contradicts state statutes. In fact, the ordinance is doing precisely what it is designed to do: prevent the city from using every trick in the book to fund a new stadium without a vote.

At the state level, a group of legislators have sued to prevent the governor from unilaterally extending bonds. They essentially argue that the bonds in question were passed with the express purpose of funding the Edward Jones Dome, not a riverfront stadium. Whatever the courts decide on the issue, a reading of the original statutes certainly makes it seem like they have a case.

Stadium proponents argue that the failure of the state legislature to pass a clarifying law in the last session means this suit is without merit. That argument makes little sense; existing laws do not lose effect when more specific guidelines fail to pass. But stadium proponents go further, impugning the motives of the legislators who filed the suit, essentially claiming they did not care about Saint Louis. Gov. Nixon publicly joked that they hatched the plan at a Chiefs game. And of course, the stadium backers continue to argue what a boon a new stadium will be to Saint Louis. In doing so, they contradict nearly every economist who has ever studied stadium subsidies.

Whatever position one takes on the plan, spending $400 million of public money on an NFL stadium is certainly controversial. It seems only right that Saint Louisans should get to vote on the spending of  the money, as they were promised. It seems only right that the legislature should have to approve more state spending. As to those who are willing to circumvent any democratic roadblock to keep the Rams, perhaps one senator put it best when he said:

What I’m amazed at is that people’s passion for football exceeds their passion for our constitutional form of government and the rule of law. And how they would place their desire to root for their football team above their desire to have government function properly.

The Future of I-70: “Not a Plan, But a Big Idea”

Posted on by Joseph Miller

This week in Kansas City, Missouri’s transportation leaders held a meeting concerning the future of I-70. As we’ve discussed many times before, the Missouri Department of Transportation (MoDOT) claims that I-70 will have to rebuild from the ground up, a multibillion-dollar project. Far from having the necessary funds for such an undertaking, MoDOT is in fact facing a funding crisis that might see it cut back on basic highway maintenance.

i-701However, instead of delivering a concrete plan or slate of options for what might be done to improve I-70, Missouri State Highway Commissioner Stephen Miller outlined a grand vision for making I-70 the state’s first smart highway. He expressed a desire to coordinate with the private sector, so as to take advantage of innovative approaches to constructing and funding a new I-70.

Getting private companies and fresh thinking into the MoDOT planning and financing is an excellent idea. The commissioner correctly pointed out that MoDOT’s past experience with planning reform, such as the introduction of design-build contracts, has seen impressive projects come in under budget. And there are many exciting opportunities for adding value to a new I-70 and making efficiencies in its construction. Improved information technology and perhaps even designing a highway with self-driving vehicles in mind might propel I-70 to the forefront of highway design.

However, when it comes to funding highways, Missouri, far from reaching for the future, has been and continues to be a laggard. Open road tolling allows significant value capture from highways, creating a revenue stream for public private partnerships (PPPs) to not only design and build, but also to finance, operate, and maintain modern freeways. These types of toll roads already exist in many states (15 states are already part of one integrated system), including Missouri’s neighbors, but not in Missouri. In fact, Missouri does not even have the enabling legislation for PPPs to rebuild highways. High-occupancy toll (HOT) lanes create revenue streams for the expansion of highways in other states, but not Missouri. Mileage based user fees (MBUFs), another innovative revenue source, is rolling out in Oregon; Missouri has yet to study the possibility.

In redesigning I-70, MoDOT is right to think the private sector can help build a better highway more efficiently. However, Missouri should not lose sight of the fact that modern funding mechanisms already exist in other states and around the world. While having a “smart highway,” whatever that turns out to be, may be great for Missouri, the state does not need to wait on futuristic solutions to fund a much-improved I-70. It really just needs to get with the times.

Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging