Well, you could try the hidden ball trick. Indiana’s Trine University softball team played this old ruse to perfection in advancing to the 2019 Women’s College World Series.

In a surprise pick-off move, Trine pitcher Kate Saupe turned and fired a bullet to second base. But the ball got away from the infielder and rolled into the outfield. So it seemed. Actually, the ball never left the pitcher’s glove. When the runner tried to advance, Saupe tagged her for the game-winning out.

In promoting the idea of a cost-free expansion of Missouri’s Medicaid program, the Missouri Budget Project, the Missouri Hospital Association, and others are using a similar (and equally spectacular) misdirection play to gain public support for a policy initiative that would be neither cheap nor free.

At $10.9 billion, Medicaid already accounts for 39.6 percent of Missouri’s 2019 budget. That’s more than education, prisons, public safety, or roads. It’s the most for any service funded in part or total by Missouri taxpayers.

So how can Missouri boost the number of Medicaid participants from 850,000 to more than a million people—and save money? It can’t. If we increase Medicaid enrollment more than quarter, there has to be a similar increase in costs—something on the order of $2 billion a year.

The hidden ball here is to treat the federal contribution in this joint state-federal program as “free money” —a manna-from-the-heavens gift from Uncle Sam to the Show-Me State. But the money is not free. Like the residents of other states, Missourians are on the hook for federal Medicaid obligations, no less than state Medicaid obligations. They pay the final bill either way—through state and federal taxes.

Under the Affordable Care Act, the federal government set out to expand Medicaid to include people earning up to 138 percent of federally defined poverty level.

As originally written, this legislation would have required states to comply with the planned expansion of Medicaid or face the loss of all federal matching funds, split roughly on a $3-to-$2 basis between the federal government and the states. The Supreme Court struck down that part of the law in 2012. The Obama administration then agreed to a $9-to-$1 split in favor of the states if they opted to participate in the expansion. What had been a “gun to the head” (as Chief Justice John Roberts wrote) suddenly became a mouth-watering carrot.

Kansas recently became the 37th state to opt into Medicaid expansion. If Missouri were to follow suit, it would still need to put up 10 percent of the cost. Citing a Washington University study, Medicaid expansionists think they have found a way to make even that cost disappear. But this is just one more example of cost-shifting as opposed to cost reduction.

According to the study, Missouri could re-enroll existing recipients currently classified as permanently and total disabled (PTD) based on income, rather than disability. That would trigger the new $9-to-$1 federal match—meaning more federal funds for the same people.

But there is a problem: This maneuver appears to be against the law. So the federal Office of Inspector General said in a recent audit of New York State when it tried to do same thing.

Over the last two decades, Medicaid has been a rapidly rising cost at both the state and national levels. But it remains a deeply troubled program that is not succeeding in its basic mission of providing ready access to high-quality healthcare for low-income families and individuals.

When it comes to promoting needed change in healthcare, using feel-good, sleight-of-hand accounting to promote a false idea of something-for-nothing benefits is a step backward, not forward.

The post The Myth of “Free” Medicaid Expansion appeared first on Show-Me Institute.

The USDA’s cost-benefit analysis found that shifting these two agencies to Kansas City would reduce costs by 11.3 percent, saving taxpayers roughly $300 million (in nominal terms) over the next 15 years. These savings stem primarily from the fact that Kansas City has dramatically cheaper real estate than D.C., as well as marginally lower cost of living. The USDA’s report noted that the median sale price of a home (a major factor in determining cost of living for employees) in Kansas City is $205,400, compared to $420,000 in D.C.

This isn’t a surprise to me; I moved to Kansas City from Washington, D.C. in 2005. Nor should it surprise anyone who read our paper on the competitive advantages of the Kansas City region, as the paper mentions low cost of living as a major advantage for Kansas City.

While we don’t know exactly were in the region the USDA will locate, it was disheartening to read in The Kansas City Star that $26 million in “unspecified” incentives were part of the deal. The authors reported:

Greg LeRoy, executive director of the watchdog group Good Jobs First, accused the USDA of engaging in an Amazon-style selection process that made states compete for the jobs with incentives.

“It’s outrageous that the USDA would run an auction. This is the extreme version of privatized behavior by the federal government. Uncle Sam has no business running auctions, dangling jobs on state and local taxpayers,” he said.

LeRoy said the final competition the USDA is setting up between Kansas and Missouri is reminiscent of how corporations set municipalities against each other after a region has been selected.

“This is classic site location consultant chicanery…This is an ugly, extreme version of Uncle Sam imitating Jeff Bezos. Yuck. If I were a Missouri or Kansas taxpayer, I would never stand for this. And as a federal taxpayer I’m cross-eyed.”

It’s a shame that the USDA encourages such behavior. It’s a shame that the Kansas City region plays ball, and it’s a shame that we’ll now fight among ourselves for the specific USDA location.

I discussed this topic with Pete Mundo this morning on KCMO Talk Radio. Click here to listen to the segment.

The post USDA Moves to Kansas City, Gets Incentives appeared first on Show-Me Institute.

Witness an incredible turn of events:

We now hear the proudly progressive governors of California and New York howling in outrage at the removal of a substantial tax break for those at the highest level of income – the top 10 percent, and, especially, the top one percent.

Under the Tax Cut and Jobs Act that went into effect on Jan. 1, taxpayers may no longer count all of their state and local income tax payments, plus property taxes, as deductible expenses on their federal returns. The new law caps the deductibility of these state and local taxes (the so-called SALT deduction) at $10,000 per taxpayer. What follows is a rough calculation of how the cap will impact people at several different levels of income (focusing only on California, where local income taxes are not as important a factor as they are in New York, and disregarding property taxes).

Based on California income tax tables, a couple earning $150,000 in 2018 will owe $8,797 to the state of California – with the consolation of knowing that every cent will be deductible. The couple will save about $2,000 on their federal return.

A tipping point occurs at $164,000 in adjusted gross income. Exceeding that, a California couple filing jointly runs out of cap room and gets no further benefit from the SALT deduction.

The top one percent in California starts at about $500,000, according to the latest available data from the Internal Revenue Service. With that income, an entry-level couple in the one percent club will owe $41,347 to the state. Since all but $10,000 of the state tax is nondeductible under the new law, it has the effect of bumping up the adjusted gross income on their federal return by $31,347. Applying the top federal rate of 37 percent to that sum, the couple will owe an additional $11,598 to Uncle Sam.

The average income for families in the top one percent in California is $1.6 million, or more than three times the starting income. So how does the “average” ultra-rich family fare under the new tax regime? In 2018 it will owe $165,072 to the state – with a whopping $155,072 no longer counting as a deductible expense. Consequently, the family will take a hit of a little more than $57,000 in what it owes to Uncle Sam.

In a nutshell, the top one percent of filers in California are about to lose a huge tax break. No longer will they be able to reap one dollar in federal tax savings for every three or four dollars going to the state government.

No wonder the governors of the two states are worried. At 13.3 percent, California has the highest marginal income tax rate of all the states. New York State’s top rate is 8.82 percent, and that jumps to 12.7 percent in New York City. Each state garners nearly 50 percent of its total income tax revenues from the top one percent of earners.

Who has compensated for the outsized deductions that the highly paid denizens of Hollywood, Silicon Valley, and Wall Street have been able to claim on their federal returns due to exceptionally high state and local taxes?

Taxpayers in low-tax states and less affluent regions have done so. In the process, they have helped to subsidize the growth in public spending that has occurred in Sacramento, Albany, and New York City.

The situation will soon change. In early 2019, when people file their local, state, and federal tax returns for the 2018 tax year, the cross-subsidies, of a reverse Robin Hood nature, will largely disappear.

At the same time, taxpayers outside the top ten percent of filers will appreciate the positive impact of a near doubling in the standard deduction – to $12,000 for individuals and to $24,000 for couples. According to the nonpartisan Tax Foundation in Washington, D.C., a married couple with two children and a combined adjusted income of $85,000 will reap a $2,254 tax savings in 2018 as a result of provisions in the new law.

So, what about the vociferous complaints coming from progressives, who say that the new law only serves to make the rich richer and does nothing to help working people?

But the tax tables tell an entirely different story.

The post Tax Reform and Tax Hypocrisy appeared first on Show-Me Institute.

Education Week has a detailed cheat sheet on the ins and outs of the bill, but the Associated Press’s summary cuts to the core of the issue, “The bill would return to the states the authority to decide how to use students' test performance in assessing teachers and schools, and it would end federal efforts to encourage academic standards such as Common Core.”

I want to underscore just how important this is. In education, as in most policy areas, federal involvement is a one-way ratchet. Federal influence in education has been on the rise since the days of Sputnik, accelerated by President Johnson as part of the War on Poverty, and brought to its apex by No Child Left Behind. This looks to be the first time that trend has been reversed.

The tide is turning because people across the country and across the political spectrum have realized that the federal government is in a terrible place to try and dictate education policy. We have 100,000 schools in 14,000 school districts spread all across our vast and diverse nation. Trying to centrally determine how to hold schools accountable is simply too great a challenge. Those decisions are much better made by individuals closer to children and the communities where they live.

The bill still has to pass the Senate and be signed by the President, but all indicators point to that happening relatively soon. If and when it does, Missouri will have much more control over its educational future, and the hard work of creating a world-class education system without Uncle Sam breathing down our neck can begin.

The post No Child Left Behind Has One Foot in the Grave appeared first on Show-Me Institute.

Unfortunately, the governor is selling the idea that Missouri and other states should take all the help they can get from Uncle Sam. Nixon treats the offer of billions of dollars from the U.S. Treasury as “free money” — even though it is one more instance of expanding an entitlement today out of debt imposed upon our children and grandchildren tomorrow.

In his Jan. 28 State of the State address, Nixon spoke to the fear that Missouri would lose $5.7 billion in federal grants over the next three years if it does not step forward to claim the prize.

But that is hardly the worst thing that could happen — given widespread dissatisfaction with the rapid growth in spending that has already occurred in this program. We do not have to expand Medicaid. This would not put existing benefits at risk.

The far greater danger is that Missouri (and other states) will fail to stop their spendthrift uncle in Washington, D.C., from bankrupting the nation — and slamming the door on job and wealth creation for years to come.

It is time to reform Medicaid — not to expand it.

Even more than that, this is a time for the states to come to the aid of their country — in saying “no” to an overreaching federal government that is seemingly determined to spend not just to the absolute limit of its taxing power, but also to the absolute limit of its borrowing power.
Over the past four years, the federal debt has increased from $10.6 trillion to more than $16 trillion. Federal indebtedness now amounts to more than $50,000 for every man, woman, and child.
Anyone who does not think Medicaid is part of the problem should look at the numbers.

For more than a decade, Medicaid has been the fastest-growing part of state budgets across the nation. In Missouri, Medicaid expenditures increased from $3.4 billion in fiscal year 2000 to $8.2 billion in fiscal year 2012. Despite the increased outlays, which now amount to more than a third of the state’s total expenditures, it is increasingly difficult for patients to find doctors. And doctors say they have little incentive to stay in the program because of reduced reimbursement rates and administrative headaches.

Medicaid showcases the many problems that grow out of greater and greater reliance on government-mandated and government-controlled health care — in limiting competition and freedom of choice and undermining the bond between patient and doctor.

In his address to the legislature, Nixon glossed over such problems, suggesting that the Medicaid expansion (as a critical part of the Affordable Care Act) is a done deal — passed by Congress, signed by the president, and upheld by the Supreme Court.

“The question before us is a narrow one,” Nixon claimed. “Will we bring the tax dollars that Missourians send to Washington back home to strengthen our Medicaid system here in Missouri? Or will we let the tax dollars Missourians send to Washington be spent in other states instead?”
There are two substantial problems with this line of reasoning.

First, the Supreme Court did not endorse the law in its entirety. As originally written, the law would have required each of the states to support the planned expansion of Medicaid . . . or face the loss of all federal matching funds. The Supreme Court struck down that part of the law — calling it “a gun to the head.” The Court ruled that the states must be free to opt out of the Medicaid expansion program if they wish.

Second, the real issue is not tax dollars that are (in Nixon’s word) being sent to Washington from Missouri and other states. It is the use of borrowed money (much of it coming from China, Saudi Arabia, and other such countries) that will pass the bill for today’s higher (and heedlessly wasteful) levels of government spending to our children and grandchildren.

Even without holding a “gun to the head” of each of the states, the federal government continues to dangle a large carrot in front of their noses — offering to pay more than 90 percent of new Medicaid costs through 2022. That compares with the usual split between the federal government and the states of about 60-to-40 in Medicaid funding.

It will take real courage for lawmakers in Missouri and other states to turn aside the poisoned chalice. But that is exactly what they must do.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute, which promotes free-market solutions for Missouri public policy issues.

The post Jay Nixon Makes The Wrong Call On Medicaid appeared first on Show-Me Institute.

A. take the money and run,
B. say thanks, but no thanks, or
C. call the police.

Confronted with the question of whether to accept a multi-billion dollar offer of “free money” from Uncle Sam to expand the state’s Medicaid program, Missouri Gov. Jay Nixon, a Democrat, has advocated the take-the-money-and-run approach. He called it “the smart thing to do,” and “the right thing to do.”

According to Nixon, it would be “dumb” for Missouri, or any other state, to turn down a use-it-or-lose-it infusion of federal cash, and it would be “wrong” for state officials to wave aside money for extending health insurance to the uninsured. On the first point, the Obama administration has agreed to pay a very high share (90-plus percent) of new Medicaid costs in all states. And on the second, it acts as if cost were no object.

This is an unsound argument — and bad public policy. Let’s hope that most states reject it — as Missouri, with large Republican majorities in both houses of the state legislature, almost certainly will.

It is astounding that the administration is contemplating a major expansion in a troubled entitlement program when the nation faces the threat (with the so-called fiscal cliff) of a financial panic and another deep recession.

According to a new study from the Kaiser Commission on Medicaid and the Uninsured, the loosened eligibility for Medicaid under the Affordable Care Act (a.k.a. ObamaCare) will cost in the neighborhood of $1 trillion over the next decade.

For the past several years, the federal government has been borrowing about 40 cents out of every dollar it spends. That is like adding $400 of credit card debt for every $1,000 you spend. So where is the new money coming from to expand Medicaid coverage to a projected 17 million people?

Like a spendthrift who refuses to mend his ways, the Obama administration wants to go on spending money it does not have: If necessary, taking out new credit cards to pay off the old. This is the same tactic that has brought Greece and several other European nations to the brink of bankruptcy.

Instead of acting as enablers of fiscal profligacy, Missouri and other states should say “no” to the Medicaid expansion. They should also say “no” to the creation of state health insurance exchanges to implement ObamaCare. These exchanges would require the states to accept costly mandates and complicated rules restricting competition and choice in health care.

Finally, Medicaid should be reformed, not expanded.

Medicaid costs have been the fastest-growing part of state budgets for more than a decade. In Missouri, Medicaid expenditures jumped from $3.4 billion, or 22 percent, of the state’s total expenditures in fiscal 2000, to 36 percent, or $8.2 billion, in fiscal 2012. Despite the increased outlays, complaints are growing on the part of patients and doctors. Poor patients often have a hard time finding doctors. And doctors say they have little incentive to stay in the program because of reduced reimbursement rates and administrative headaches.

The states should explore better ways of providing catastrophic health insurance for those without coverage. And they should be smart enough to know that the offer of “free money” usually means a one-way ticket to financial ruin.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post It Is Time to Reform Medicaid, Not Expand It appeared first on Show-Me Institute.

This year’s Tax Freedom Day is two weeks earlier than 2007’s date, but the Tax Foundation cautions that we shouldn’t get too excited: Tax Freedom Day does not include the deficit. If Americans were required to pay for all government spending this year, they would be working until May 17 to pay all of their taxes. Unfortunately, someone will have to pay those taxes someday.

In the meantime, though, celebrate the fact that you are done working for Uncle Sam for the year.

The post Time to Celebrate! appeared first on Show-Me Institute.

A few weeks ago, the Show-Me Institute published a study by Arduin, Laffer & Moore Econometrics, “The Prognosis for National Health Insurance: A Missouri Perspective.” It is a thoughtful piece — 44 pages filled with important information. One of its foremost concepts deals with the “health care wedge.” In simple economic terms, the wedge is what separates the health care demander (patient) from the health care supplier (provider). In the past, this wedge was driven by insurance companies, and now the wedge is being driven forward by the government. As a result, neither the product end users (patients), nor the product suppliers (providers), have a good understanding of the costs. It is as though there is a third party present when doctor and patient meet. That third party happens to be the one that pays the bills, and that could be an insurance company or Uncle Sam. For a concise review of this problem’s history, see Milton Friedman’s 2001 summary.

One approach to correcting this has been suggested in the past: the concept of health savings accounts (HSAs). HSAs are a type of consumer-driven health care funding mechanism that allows the patient to be much more involved in making health care decisions. Owners of such accounts must spend their own money, which they have accumulated in a pre-tax account, so their health care spending is characterized by frugal caution.

The problem is that HSAs require their owners to acquire and maintain a high level of health care knowledge and sophistication. Most people with HSAs search the Internet to analyze their problems, and arrive at their doctor’s office with a printout of therapeutic choices. In many cases, the doctor visits are designed to add another level of expert knowledge to that already possessed by the patient. In the modern world of Internet access, everyone ought to try to do that — after all, what can be more important than taking care of your own health? The problem is that many people do not have the time, inclination, or ability to pursue this type of self-informed care.

There is another way, a concept called a health care co-op. These types of cooperatives are health care plans in which the purchasers (the patients) are the owners. The organizations are self-governed, and the members elect the board to oversee the health plan management. In this manner, the co-op reduces the wedge mentioned earlier. Because the participating patients are the co-op owners, they have a better understanding of what is being spent. In such a situation, the co-op itself acts as the insurer for its members. Then, when the doctor and patient meet, there is no third party, because the patient is a co-owner of the insurance company.

Missouri has a long history of successful cooperative enterprises. There are, and have been, multiple rural cooperatives to help farmers market and distribute their produce. At present, the Missouri Electrical Cooperatives are the most well known, because they have earned nationwide respect for their community work. Similar organizations have been an important part of our state’s development, and some of this has been coordinated by the Missouri Institute of Cooperatives.

It may be time for residents of this state to think of utilizing a Missouri Health Care Cooperative. As indicated in the past, more than 245,000 Missourians without health care insurance have incomes greater than 200 percent above the federal poverty level. Rather than asking people to buy health care insurance, maybe those that can afford it should be invited to invest in a Missouri Health Care Cooperative. Then, not only would those purchasers have health care insurance, they would also share in the profit made by their insurer.

The post Could Missouri Be Helped with a Health Care Co-Op? appeared first on Show-Me Institute.

In a world congested with government mandates, this bit of news is a breath of fresh air. Next thing you know, Uncle Sam will be letting us pick our own schools and decide whether or not we want ethanol in our gas tanks. I’m keeping my fingers crossed.

The post The Free Market Is My Copilot appeared first on Show-Me Institute.