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Comments on Alice Rivlin’s Entitlement Reform Testimony
The Brookings Institution’s Senior Fellow Alice Rivlin prepared testimony for the House Committee on the Budget -- one of the centers for entitlement reform and debate. She presented ways to reform Social Security, Medicare, and Medicaid while reducing the federal deficit. The views and options she expressed were the recommendations of the Bipartisan Policy Center’s Task Force on Debt Reduction (Domenici-Rivlin). Below, I highlight a few points that particularly struck me.
Medicare: As a member of the President’s Debt Commission, she worked with Congressman Paul Ryan (WI-1) to produce the Rivlin-Ryan Plan. Touted by panelists at NTUF’s Moving Forward on Entitlements event, Medicare would be remade into a voucher program. After 2020, new enrollees would receive fixed health care-related contributions at a growth rate of GDP plus one percent. Much like Congressman Ryan’s Roadmap, the plan would greatly increase Medicare’s longevity.
“The Affordable Care Act includes important provisions aimed at improving health outcomes and reducing cost growth: authorizing Medicare to contract with accountable care organizations on the basis of shared savings and value-based payments to providers; pilot projects to try out other payment reforms; ... . However, the impact and timing of these efforts is still uncertain.”
The Patient Protection and Affordable Care Act (PPACA), otherwise known as Obamacare, greatly increased the bureaucratic weight on the health care system. To help offset some of the pressure, accountable care organizations -- “a provider organization that takes on responsibility for meeting the health needs of a defined population” a.k.a. HMOs under government control -- are said to save money while increasing health care efficiency. However, this is a very optimistic outlook. To assume a new level of control of care, charged with ensuring quality and lower cost curves, is to institutionalize quality. Ask Medicaid how that turned out.
Pilot programs under PPACA may not have the results many proponents of Obamacare would hope. In improving quality and prices through such programs, many of the factors leading to success are oft times difficult, if not impossible, to replicate in other cities, states, or regions. NCPA’s John Goodman has explored pilot programs and their seemingly random success rates. I am not branding pilot programs as useless but they ought to be used in targeted instances with realistic measures of success. The general provisions used in PPACA open a door for pilot programs to become legacy government efforts, not to improve health care.
I agree with many of the reforms Rivlin proposed for Medicaid. Many of the problems occur because the give and take of “dual eligibilities” -- low-income earners receiving both Medicare and Medicaid -- and the shared financing system between state and federal governments. Many states are given larger shares per capita than others because they have learned to game the system. Rivlin goes on to say, “states could be given more leeway to design their own programs, either through block grants… or through waivers under the existing program.” By cutting out the federal bureaucracy, states would get medical care funds to those who need it more quickly.
Rivlin’s stance on Social Security reform is a mixed bag. She calls for a “change in the calculation of annual cost-of-living adjustments for benefits to more accurately reflect inflation” and to “slightly reduce the growth in benefits… for approximately the top 25 percent of beneficiaries” (otherwise known as means testing). Both measures would bring more accurate cost controls, while maintaining benefits for which the program was originally intended.
However, her last point concerned me the most: “The Task Force plan would cover newly hired state and local government workers under the Social Security system, beginning in 2020, to increase the universality of the program.” Certain government employees can opt out of the system in favor of their own group pension plans, which often are more successful than Social Security. By bringing more people into the system, a short-term cash infusion would result but, if no systemic reform occurs, they would end up in precarious situations similar to current beneficiaries.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Harvard economist Jeff Miron presented his realistic goals for truly fixing what Obamacare has failed to do: reducing health care costs while providing more Americans with quality health insurance. In the video below, presented by the Institute for Humane Studies Learn Liberty initiative, Miron delves into the complex issues facing taxpayers across the country, using commonsense solutions we can all understand.
Throw away the notion that health care is a right: By branding health care as a right, we are led to believe in giving any health care to anyone who wants it without the need to pay for it. Much like our entitlement system today, everyone on the system would demand all they health care they can get because there is no accountability of personal cost. More demand leads to evermore spending and still more taxing of American workers.
Repeal Obamacare: Many of the proposed initial savings of the Patient Protection and Affordable Care Act are largely derived from cuts in current government medical programs, like Medicare. This kind of budget fixing was reported by the Congressional Budget Office as a net decrease in spending outlays but does not take into account the increased demand resulting from the free-ridership in point one (not to mention the decreased tax revenue, as CBO assumes it will increase over time). Miron says it perfectly, “thinking that expanding coverage reduces the deficit is just completely insane.”
Phase out Medicare: As one form of entitlement reform (see NTU Foundation’s panel discussion on fixing Social Security, Medicare, Medicaid, and pensions), people on Medicare don’t have an incentive to be selective with the care they receive because they pay so little for the care. The program creates price and resource distortions in the market, making costs higher for those on regular plans and ratcheting up the mandatory spending of the government. Miron says taking care of the people most in need (people in poverty with no employment and no medical coverage at all) is not out of the question. It is taking care of people who can afford health plans that doesn’t make sense. Getting rid of the Medicare system would help the quality and cost of health care, the tax burden of American taxpayers, and the recovering economy.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Health Care Freedom in Texas
If you live in Texas and you're concerned about ObamaCare (especially its burdensome hidden tax hikes), there is some good news for you to report from the Texas State Legislature.
Tomorrow, Thursday, March 17, at 10:30am local time or upon adjournment of the Texas House of Representatves, the State Sovereignty Committee will be in room E2.010 for a hearing about House Joint Resolution 24, the Health Freedom Act. Sponsored by Rep. Ken Paxton (R-McKinney), this constitutional amendment keeps individuals in control of their own health care instead of allowing the government to make or influence choices for us.
This is an important measure and attending the hearing will be well worth your time. You can show your support by signing a witness affirmation card in favor of the bill at the hearing. Take a few minutes out of your day to stop by the Texas State House to show your support for health care freedom!
NTU Foundation’s weekly newsletter brings you a variety of bills this week with an environmental management plan bill for the Chesapeake Bay region, an act to establish a commission to study the nation’s justice system, a measure to create a domestic supply of medical isotopes, and a proposal to expand anti-hunger activities throughout the United States.
The bill to increase funding for community food initiatives and to expand some of the federal-to-state food stamp reimbursements is this week’s Most Expensive Bill of the Week. At $200 million in new federal spending for each of the next five years, HR 350 would direct tax dollars to nonprofit hunger groups within 20 designated geographic areas. The groups would present their plans and goals to receive operational grants and/or technical assistance grants. @NTUF will keep taxpayers informed about the different aspects of this bill, as well as the other three bills we detailed in Issue 7 of the Tab. Not much of a twitterer? No problem! Subscribing to the Tab is the best way to stay informed about all the exciting research coming out of NTU Foundation.
Newly scored bills highlighted in the latest Taxpayer’s Tab include:
Do you or anyone you know live in Congressmen Jose Serrano (NY-16) or Rob Wittman (VA-1), or Senators Jeff Bingaman (NM), Lisa Murkowski (AK), or Jim Webb’s (VA) states? Each of these legislators were mentioned in this week’s Tab. Check it out and keep a tab on your representatives!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Showdown in Wisconsin
Picture this: protestors storming the capitol. State workers declaring that their pay and benefits are sacrosanct. University students banging drums and wearing red shirts. Schools shut down. Soldiers on standby ready to assume control of vital government services. Am I talking about Paris, France? Or Athens, Greece? Nope, I just described the scene right now in good ole Madison, Wisconsin.
The brouhaha in Wisconsin is in response to Governor Scott Walker’s proposal to end the ability of most government employees to collectively bargain for benefits such as health care and pensions. Although workers could still bargain for wages, increases would be capped at the CPI or another rate through a voter referendum. Walker also wants to require state workers to contribute 5.8% of their salary towards pensions and pay 12.6% of their health insurance premiums. By contrast, private workers contribute 7.5% towards retirement and pay 20% of health insurance premiums, on average.
Walker says he is doing this because he is facing a budget crisis. Wisconsin will run a budget deficit of $137 million this year and a $3.6 billion deficit in the next budget. The governor, a former chief executive of Milwaukee County, estimates that if he does not have the ability to demand more concessions from public sector unions, he will be forced to layoff 5,500 employees or roll back major government programs, like Medicaid.
The public sector unions and their allies have responded strongly in opposition to the proposal. Thousands have turned out to the state capitol, filling the hallways, blocking access to the General Assembly’s chambers, and banging on windows. Public schools in Madison actually closed on Thursday because 40% of the teachers called in “sick.”
But the twists and turns continue. Although the Senate scheduled a vote on the Governor’s proposal for Thursday, the vote did not happen; the entire Democrat caucus was nowhere to be found. Republicans control the General Assembly and reportedly have the votes to pass the Governor’s proposal, but they are one vote short of a quorum to conduct business. With the Democrats gone, there are not enough Senators in the chamber to hold a vote. According to some reports, the caucus decamped to a Best Western hotel in Rockford, Illinois, which is outside the jurisdiction of the Wisconsin State Patrol. More rallies, for and against the governor’s proposal, are planned for the weekend. It’s anyone’s guess as to what happens next.
The unions are targeting this reform because collective bargaining is the source of their power. By reforming collective bargaining, governors and legislators would have a stronger hand in contract negotiations to demand concessions to balance budgets and save taxpayers money. Some argue that reforming collective bargaining and labor laws could be a more realistic alternative to dealing with health care and pension costs than state bankruptcy. The stakes are high for both sides. Whatever happens in Wisconsin over the next several days will have ramifications for the rest of the nation.
This entry also appears at State Budget Solutions.
This entry also appears at State Budget Solutions.
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Reflections on CPAC
Today is the third and final day of the 2011 Conservative Political Action Conference (CPAC), the largest annual gathering of conservatives and libertarians in the nation. After three days of staffing a well-visited booth, meeting with dedicated activists, and listening to dynamic speakers, I’m looking forward to some rest and relaxation, but also to what the future holds for the conservative movement.
This year’s CPAC had the highest number of attendees (11,000) in the history of the conference. CPAC speakers ranged from Rep. Paul Ryan of Wisconsin, the House Budget Committee Chair, to Governor Mitch Daniels of Indiana, a potential presidential candidate who gave, in my view, an outstanding keynote address, which you can read here. Also, CPAC 2011 featured a number of new participating organizations that focus on both activism and policy related to social, economic, and political issues at the federal, state, and local levels.
While attending CPAC, I had the opportunity to participate in a number of discussions about important tax and fiscal policy issues facing the United States. NTUF hosted a discussion about entitlement reform that featured experts such as Rep. Devin Nunes, Maya MacGuineas, Douglas Holtz-Eakin, Steven Moore, and Dan Mitchell. The bottom line of their presentation was that we need to start tackling the problem of runaway entitlement spending before it’s too late.
But budget reform should not be restricted to social programs. CPAC also featured a panel on how the nation can reduce defense spending to a more manageable level without jeopardizing readiness. As a former military aide to a fiscally conservative Member of Congress, I was pleased to hear all of the views presented and the many ideas for maintaining an affordable defense posture. The passion the attendees displayed at the panels, and in conversations with me at the NTU table, was striking. It bodes well for conservatives if these activists carry their views home and remain outspoken and active in the political process.
For the last several weeks, there has been a lot of talk in the media about differences in the conservative movement over certain policies and suggestions that these differences spell certain doom the conservative movement. After three days of observing conservatives of all stripes from across the country, I can unequivocally say that reports of destructive differences among conservatives are greatly exaggerated. In fact, I would argue that the conservative movement has never been stronger and ready to bring real solutions to the many serious problems facing the nation.3 Comments | Post a Comment | Sign up for NTU Action Alerts
The States Can't Afford ObamaCare
Today’s Wall Street Journal (subscription required) features an interesting op-ed by George Melloan, a former columnist and deputy editor of the editorial page. In it, Melloan argues that one of the economic realities behind the lawsuit by 26 states against the Obama administration’s health care “reform” law is that the states simply cannot afford it.
Melloan explains: “Thanks to the recession and their own spending excesses, nearly all states are suffering budget shortfalls, some to the point where there is no clear idea where the money will come from to meet pension and bond obligations, let alone operating expenses. The prospect of adding a further huge burden down the line, even with Washington kicking in over half the cost, is appalling.”
“The 26 states party to the Florida suit were saying, in essence: enough! Washington can borrow from the Chinese or call on the Federal Reserve to buy its bonds. But states' only recourse in a budgetary bind is further painful cuts in services.”
For his part, Judge Vinson, the Florida judge who ruled Obamacare is an unconstitutional exercise of Congress’ power, did not agree with the economic argument that costs should be a consideration. Instead, Vinson sided with the government lawyers who argued that since states are free to withdraw from Medicaid if they so choose, nobody is forcing them to do anything.
But as Melloan points out, “Judge Vinson's ruling [notwithstanding], there is considerable practical merit in the states' position. For one thing, federal taxes levied on the incomes of citizens in states that withdrew would simply go to support Medicaid elsewhere. These citizens would not only get nothing in return for their taxes—they would also be stuck with the cost of alternative ways to provide health care for the poor.”
Given the states’ fiscal positions in the year ahead and the dire choices they face, the argument that Obamacare – and other federal mandates – cost too much could take more precedence in the months ahead. Moreover, more states could also challenge other onerous federal mandates as more costly examples of federal overreach. 2 Comments | Post a Comment | Sign up for NTU Action Alerts
Panel on Entitlement Reform, SOTU Analysis Covered in Latest Tab
The National Taxpayers Union Foundation released the latest information on the President’s State of the Union speech this morning. Covered on CNBC, US News & World Report, and Investors Business Daily, the study authored by Senior Policy Analyst Demian Brady also appeared at the top of the Drudge Report. A part of the Foundation’s SOTU coverage, Brady examined the speech line-by-line to give taxpayers a cost of the President’s proposed agenda. Here are a few highlights:
NTUF also announced the panelists who will speak at the Conservative Political Action Conference next week in Washington DC:
The Taxpayer’s Tab included four newly scored bills in the 112th Congress:
Florida Judge Rejects Obamacare
Good news! A federal judge in Florida has ruled that Obamacare is unconstitutional. More specifically, he declared the individual mandate to be unconstitutional, but voiding that particular penalty would consequently void the entire law.
Here is an excerpt from Judge Roger Vinson’s ruling, courtesy of Reuters:
"Because the individual mandate is unconstitutional and not severable, the entire act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.
Regardless of how laudable its attempts may have been to accomplish these goals in passing the Act, Congress must operate within the bounds established by the Constitution."
Judge Vinson’s ruling is even broader than the Virginia ruling last month because it declares the entire law invalid, not merely the individual mandate.
This is a huge victory and we look forward to watching the law go all the way to the Supreme Court, where it will almost certainly be brought for final consideration. In the meantime, rest assured we will do all we can to address the issue within the legislative branch. As you may recall, the House of Representatives voted to repeal Obamacare two weeks ago. We hear additional repeal efforts in the Senate are in the works as well.0 Comments | Post a Comment | Sign up for NTU Action Alerts