March 21, 2011

Obamacare Will Expand State Medicaid Coverage, and Will Further Bankrupt the States, Making Them Totally Dependent on the Feds

Gary Allen, in The Rockefeller File, states that the CFR is behind the many regional government plans, which would abolish city, county, and state lines, leaving us at the mercy of federal bureaucrats. They want "federal control of everything since they intend to control the federal government." The goal of regional or metropolitan government is to eventually merge the U.S. into the "New World Order" (NWO): a one-world totalitarian goverment under the United Nations (UN). The global elite's agenda is nothing less than the complete revolutionizing of the very foundations of not only America but the entire world. Such a plan calls for the total restructuring of planetary civilization into an enlightened one world federation in which national boundaries and sovereignty are secondary and "planetary citizenship" in the "global village" is the order of the day.

Congress Unlikely to Extend Hand to Ailing States

GOP takeover in Congress means states will have to count on less federal help with deficits

The Associated Press
January 6, 2011

Cut spending, raise taxes and fees, and accept billions of dollars from Congress. That's been the formula for states trying to survive the worst economy since the 1930s.

As Republicans prepare to take control of the House and exert more influence in the Senate, it's clear that option No. 3 will soon wither. States will continue to face substantial deficits over the next few years, but they will have to get by with the end of stimulus spending and less financial help from the federal government. In recent interviews, top GOP lawmakers made clear it will be much less.
"We've got to put our fiscal house in order in Washington, D.C.," said Rep. Mike Pence of Indiana. "It's going to be essential that leaders at the state level roll their sleeves up, make the hard choices and put their fiscal health in order, as well."
Rep. Kevin McCarthy of California, the new House majority whip, said GOP lawmakers will try to provide states with relief by cutting their expenses, not by giving them more money. For example, he advocates repeal of the national health care reforms enacted last year.
"More importantly, what the states can really hope for is that we turn the economy around so revenues will pick up," he said. "But Washington is in very bad financial shape itself."
McCarthy said the GOP would be focused on cutting mandates and giving states more flexibility on how they spend federal money.

The $814 billion stimulus program, passed by a Democratic Congress and championed by President Barack Obama, was designed to help states provide essential services and give a boost to the economy. Most of the money will run out this year.

States spent the bulk of their money on public schools, higher education and health care, so those programs likely will take a hit this year. But transportation, prisons and services such as early education programs also will not be spared the budget ax, said Todd Haggerty, a policy analyst with the National Conference of State Legislatures.
"Anything and everything is going to be affected," he said.
As of June 30, 2011, the federal government will have spent about $165 billion on temporary aid to the states to help them weather the recession. The states have used most of that money on education and health care -- keeping teachers in the classroom and reimbursing doctors and hospitals for treating the growing number of people eligible for Medicaid.

States will continue to get some stimulus money for road, energy and high-speed rail projects, but that money helps fund specific projects and wasn't intended to plug holes in a state's operating budget.

California has benefited substantially from federal assistance that will soon run out. It is expected to receive a total of $85 billion from the Recovery Act, with about $51 billion awarded to date, according to the state website monitoring the spending. About half of the amount spent so far is for Medi-Cal payments, unemployment insurance, food stamps and other safety-net programs.

California state Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, said it's disappointing but not surprising that states are not likely to receive more federal help.
"The economy is not going to improve as fast by increasing the unemployment rate. And whether in the public sector or private sector, a job is a job is a job," Steinberg said. "We know that's what the Republicans ran on in part during the national campaign, so we recognize we're going to have do deal with reality, and we will."
A slowly improving economy means many states should see an uptick in tax revenue in the coming year, but it will not be enough to replace the stimulus money. Without federal aid, the majority of legislatures around the country will not have enough money to maintain current services and face another round of budget cutting.

States closed a cumulative budget gap of nearly $84 billion in the last fiscal year. In the coming year, 31 states and Puerto Rico face budget shortfalls totaling $82.1 billion, according to the National Conference of State Legislatures.
"You have the federal money running out, but very deep state budget problems are lingering," said Phil Oliff, a policy analyst at the Center on Budget and Policy Priorities, a liberal think tank based in Washington. "That's why we say the coming fiscal year could actually be the worst budget year states have faced since the start of the recession."
There also is a sense among many governors that seeking more temporary aid would delay tough decisions about what the states can afford in the long-term.

Governors are facing an era of slow economic growth combined with growing pension liabilities, said Ray Sheppach, executive director of the National Governors Association. Most know they must get spending down to a sustainable level, he said.

Illinois' spending is so out of whack that Democratic Gov. Pat Quinn wants to borrow at least $3.7 billion to cover this year's payment for the state's public pension systems, and state contractors are being forced to wait six months or more to get paid. Its $15 billion deficit for the coming fiscal year is 58 percent of the state's entire general fund.

Federal stimulus money provided a big boost to the state -- some $13 billion total, with more than 40 percent of that going to unemployment insurance and more than $3 billion to education.

Quinn's budget spokeswoman, Kelly Kraft, said the state has received 92 percent of what it's owed in stimulus money and that it's too early to say whether it will receive more in the coming fiscal year.
"There's an unspoken hope among a lot of people that the federal government will come in and help out the states again," said Rep. John Bradley, a Democratic Illinois state lawmaker who chairs a finance committee. "I'm not part of that group."
Bradley said he is not convinced that Congress would ease any requirements to lessen the states' burden for mandated programs, and said economic recovery programs already had relieved states of many traditional mandates.
"We don't have the tax base we once had. The loss of American manufacturing has caught up to us," he said. "We have to cut back on services or tax the reduced base at a higher rate."

GOP Governors and Obama at Impasse over Medicaid

The Associated Press
March 2, 2011

Strained state budgets and a new crew of Republican governors have combined to reopen the debate over Medicaid, the health care program for the poorest and sickest Americans.

GOP governors want control of the purse strings and leeway to rewrite coverage and payment rules. So far President Barack Obama has turned them down, but he may be forced to give some ground if negotiations to reduce federal debt get serious later this year.

Here are some of the major issues looming over the nation's largest health care program, a federal-state partnership that now covers about 60 million people, including many nursing home residents, people with AIDS and low-income mothers and children:

Q: What do Republican governors want?

A: Ideally, they would like Washington to cut them a big check for Medicaid and let each state decide how best to spend the money. It's called a block grant in government jargon, and though some strings would be attached, it would give states a lot more flexibility than they have now. Republican governors would probably put most Medicaid recipients in some kind of private insurance.

Although the share varies from state to state, Washington pays just under 60 percent of the program's cost on average. For this year, federal taxpayers' share of Medicaid is expected to surpass $275 billion.

Mississippi Gov. Haley Barbour is so confident that he could do better at stretching health care dollars that he's offering the feds what amounts to a rebate. If they give him a block grant, he'd let Washington keep half of any annual adjustments for inflation. Nationally, that would save $10 billion a year in federal spending.

"We shouldn't have to come up here and kowtow and kiss the ring," Barbour told Congress on Tuesday. "Give us a block grant."

They're not likely to get that.

Q: So do they have a fallback?

A: Yes. GOP governors would like Obama and Congress to waive requirements in the new health care law and other legislation that keep them from restricting Medicaid eligibility. Enrollment is one of the main forces driving up Medicaid spending, and it usually jumps in a soft economy.

Altogether, states are facing estimated deficits of $175 billion over the next two years, and Medicaid generally is one of the top three items in their budgets. Their predicament is worse because additional Medicaid funds that Congress had pumped in due to the recession will end later this year.

Q: How does the Obama administration respond to that?

A: As a former Democratic governor of Kansas, Health and Human Services Secretary Kathleen Sebelius says that she feels the states' pain — but they should look elsewhere for cuts.

Democrats point out that most program spending is for the needs of a relatively small share of beneficiaries — those who are sickest, many of them disabled and elderly. Finding more efficient ways to provide care for these patients could save money while helping the beneficiaries themselves lead healthier lives.

Cutting back eligibility for low-income children and parents isn't the answer, said Rep. Henry Waxman, D-Calif.

"Those populations are not where the money is."

Sebelius says there are no end of tweaks that states can make to save money, from imposing modest copayments to reworking pharmacy benefits. She has been dispatching special teams of Medicaid bean counters to help states identify potential savings. But her Republican predecessor, Mike Leavitt, says it's just a "charm offensive" by the administration to convince states that Obama is open to their requests.

Q: What will Obama's new health care law do to state Medicaid costs?

A: It will raise them, since Medicaid is expected to cover about half of the more than 30 million people who would gain health insurance under the law starting in 2014.

Advocates for the poor say states still get a bargain. Washington will cover about 95 percent of the cost for those who would be newly entitled to Medicaid: childless adults with incomes just over the poverty line. States will save money because those people won't turn up in emergency rooms without the means to pay. Over time, the federal share would drop to 90 percent.

Q: The governors say there's just too much federal micromanagement driving up costs. Are they wrong?

A: Even Obama seems to agree that the governors have a point here.

Utah Gov. Gary Herbert says he had to go all the way to the president to get approval for an idea that would save about $6 million a year in his state.

Herbert told lawmakers Tuesday that state officials wanted to switch from paper letters to e-mail to communicate with beneficiaries for less money. If all states followed suit, it could save $600 million. But Medicaid bureaucrats in Washington raised obstacle after obstacle. Finally, they turned Utah down — via e-mail.

"We couldn't understand why we were getting a denial," said Herbert.

A frustrated Herbert pitched Obama directly when the governors met the president Monday at the White House. Within a few hours, Utah got the go-ahead.

Medicaid: Not Just for the Poor Anymore
March 7, 2011

In 1965, Medicaid was conceived as a program to provide acute care for people who had no other resources. As the graph shows, it has been expanded far beyond its original scope. Reformers in the 1990s who wanted to expand it to cover everyone under 65 were successful in passing one expansion after another. As a result, the program is no longer limited to providing acute care to people in poverty.

If you think state Medicaid costs are bad now, wait till Obamacare fully kicks-in during 2014. Some significant provisions to the $2.5 trillion government-run healthcare system took effect upon enactment and a number of benefits are slated to go into effect this year, including tax provisions. Some of the biggest changes are put off until 2014, such as enrollment for government insurance subsidies and the expanded Medicaid program. The Medicaid coverage provisions under Obamacare will result in an enormous expansion of state Medicaid rolls to cover the uninsured population. Starting in 2014, Obamacare mandates states expand Medicaid eligibility to all non-elderly individuals with family incomes below 133 percent of the federal poverty level.

According to the Heritage Foundation, "Governors and state legislators need to start planning their responses and start drafting any applicable legislation for consideration in their next legislative sessions—now. Failure to do so means surrendering control over a large share of their states’ current budgets to federal officials and becoming passive bystanders as—faced with an onslaught of new federal regulation—private insurers scramble to position themselves for an Obamacare market by taking steps that will likely result in less insurer competition, fewer plan choices, and higher coverage costs, all beginning next year."

Obamacare to Bankrupt States Through Increased Medicaid Spending:

The financial burden placed on states by Obamcare is massive; it's enough for a few of them to enter bankruptcy or require a bailout from the taxpayers, courtesy of the federal government. California, Illinois and New York are in serious trouble, and the decline in tax revenue exposes financial irresponsibility and the ridiculous public sector benefit packages thanks to the radical labor unions. New Jersey Governor Chris Christie pointed this out during his recent 60 Minutes interview.

The larger issue with the states is the cost of Medicaid, which is their second largest expense behind education at roughly 21% of their budget. The Centers for Medicare and Medicaid Services (CMS), which is headed by Donald Berwick, a man who has wet dreams about Britain's government-run health care system, reports that expansion of medical coverage under Obamacare is achieved by putting Americans on Medicaid. CMS projects state and local spending on Medicaid will increase to 41% between 2010 and 2011. States on the brink of financial collapse, well, this will be their tipping point.

ObamaCare: Handing the Bill to the States:
While the constitutionality of the individual mandate has drawn the bulk of the media attention surrounding the states' opposition to ObamaCare, several new cost-analysis studies reveal that the states have additional reasons to oppose the new law. Each of these studies concludes that the provisions of ObamaCare that expand Medicaid eligibility will bankrupt the states. ObamaCare requires states to expand Medicaid eligibility up to 138% of the Federal Poverty Level (FPL), which will cause states' Medicaid programs to swell, as millions of new enrollees sign up for benefits nationwide.
ObamaCare Will Bankrupt the States and Then Some:
Senator Coburn (R-OK) and Senator Barrasso (R-WY) have released a report, Grim Diagnosis, analyzing the effects of new federal health care law. It is chock full of important information but one section should be especially worrisome to state governments: Washington mandates will send state costs skyrocketing. Of eight states profiled, the 10-year cost of expanding Medicaid amounts to $41.7 billion dollars. The report also notes a byproduct of Medicaid expansion is increased wait times and overcrowding in the Emergency Room (ER). Doug Holtz-Eakin, former director of the Congressional Budget Office, estimates that Medicaid patients will use the ER 68 million times costing an additional $36 billion through 2019 due to the new health care law.
ObamaCare will bankrupt the states:
This wouldn’t be the first time we’ve posted about this subject, but this is a point that is getting lost amidst the hoopla surrounding the decision of Federal Judge Roger Vinson and the struggle in Congress over ObamaCare: Even if ObamaCare were to be implemented without complaint, the states simply cannot afford it.

This argument is simple: The states say that the government is forcing them to spend too much money on Medicaid — it is crippling their budgets. The government’s counterargument? If the states don’t want to comply to the new rules, then they don’t have to. Simple enough, right?

Maybe not. Many states can’t just drop Medicaid, as that would then put a massive burden for healthcare squarely on their shoulders, a burden they cannot possibly keep up with. However, despite the fear of ERs overflowing and thousands being denied care, some states are looking into alternatives. Indiana Gov. Mitch Daniels, for example, recently asked other Republican governors if it might be feasible for states to band together to set up their own health-insurance pool for low-income residents.

Whatever comes of the debate over ObamaCare, one can only hope the issue of how states can afford to pay the extra costs will be addressed.

The States’ Debt Crisis is a Federal Debt Crisis Because the States are No Longer Independent Economic Entities

Gary Allen, in The Rockefeller File, states that the CFR is behind the many regional government plans, which would abolish city, county, and state lines, leaving us at the mercy of federal bureaucrats; and that the CFR is behind the push for "land use" controls. They want "federal control of everything since they intend to control the federal government." [Source]

The sales tax had been the No. 1 source of state and local revenue since the mid-1970s. Before that, property taxes were the primary source. That changed in the first three months of 2009. In a historic first, federal aid has supplanted sales, property and income taxes as the biggest source of revenue for state and local governments. [Source]

The Conglomerate
May 23, 2011

On May 13, I attended a conference called When States Go Broke: The Origins, Context, and Solutions for the American States in Crisis (program here: look for a much expanded book version in early 2012):

  • The States in Crisis: Political Dimensions
  • Panel I: The Politics of State Insolvency
  • Panel II: The Pros, Cons, and Mechanics of State Bankruptcy
  • Panel III: Lessons and Implications from Public Default: Local, State, National
  • Panel IV: The Economics and Finance of State Default

The breadth of the conference discussion made for a fascinating day. David Skeel, co-organizer of the conference, kicked it off with a thoughtful, nuanced defense of his proposal to modify the Bankruptcy Code to allow states to file for a court-supervised, voluntary restructuring.

Four panels followed, discussing:

  1. The politics of state debt;
  2. The bankruptcy proposal itself;
  3. A contextualization of state debt crises with experts on international restructuring and municipal default; and
  4. A panel on the economic causes and consequences of state debt crises.

All of the panels were extremely substantive, with experts from a variety of disciplines and backgrounds.

One of the most interesting exchanges was a spirited colloquy between the AFL-CIO’s Damon Silvers and Stanford political scientist Jonathan Rodden. Their basic disagreement was the question on whether the states’ debt crisis—which some at the conference viewed as an inherently dubious label itself—could be anything other than a federal debt crisis.

Silvers said that the entire question of whether the states were actually independent economic entities was resolved in the negative by Abraham Lincoln and his version of the Navy SEALS, the Union Army. Rodden, one of the leading scholars of the politics of federations, disagreed, and thought the idea of an individual state’s default not only fully plausible, but also that the political toxicity of bailouts meant that the federal government, Gerald Ford style, could conceivably tell the states to drop dead in the event they came pleading for federal assistance.

Rodden and Silvers’ back-and-forth—respectful, without question, but also pointed and never dull—set the tone for the rest of the conference, where even on panels as united in their general conclusions as the state bankruptcy panel—all panelists were against Skeel's state bankruptcy proposal, to varying degrees—panelists presented starkly different views of how the world of state debt works.

The conference—and the forthcoming book, with expanded contributions from some of the conference attendees and several others—are important not simply because these issues are pressing, but also because there is so little, ex ante, upon which people agree, both concerning the nature of state debt crises, and consequently the best approach for solving them.

I’m confident that the conversations initiated at the conference and more clearly defined in the book will establish the parameters of the debate that, at the very least, will allow for those who engage in it to recognize what, exactly, they are arguing about.

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