Medicaid Expansion Failure A Win For PA

Medicaid Expansion Failure A Win For PA
By Matthew J. Brouillette

Editor’s note: A version of this commentary previously appeared on Forbes.com

When is the most humane decision the one that seems just the opposite? In refusing to expand the state’s Medicaid program, Gov. Corbett and the General Assembly have been vilified as cold and uncaring. But despite the critics, both the economic and moral arguments are on the side of those seeking to reform Medicaid, not those pushing the expansion of a broken program.

President Obama’s government health insurance overhaul, the Affordable Care Act, calls for states to expand their Medicaid programs to those up to 133 percent of the poverty line—about $15,000 for an individual or $31,000 for a family of four. But even without expansion, Pennsylvania’s program already consumes 30 percent of the state budget and is one of the most generous in the nation.

Expanding Medicaid would add close to a million new beneficiaries, resulting in fully one-quarter of the state’s population being eligible for coverage. The cost to Pennsylvania’s taxpayers through 2022 could reach $5 billion. That’s enough to give any governor or state legislature pause. It’s no surprise, then, that Pennsylvania isn’t alone in its opposition to Medicaid expansion.

So far, 20 other states agree that expansion is not a good solution for their most vulnerable citizens, despite the federal government’s offer to pay all associated costs for the first two years. What makes turning down “free” federal money so popular? Look no further than the strings attached: the results of the Medicaid program themselves.

Decades of academic research show the program has consistently failed the working poor. From greater chances of cancer recurrence, to higher in-hospital mortality rates for strokes, heart attacks, and pneumonia, to limited options for many medical procedures, Medicaid has proven unable to provide patients the care that they desperately need and deserve.

One in three doctors won’t even accept new Medicaid patients at all—that’s the difference between what Medicaid does provide, a health insurance card, and what it doesn’t, quality health care.

Unfortunately, such a harsh indictment of Medicaid hasn’t stopped politicians on both sides of the aisle from pushing for expansion instead of pursuing reforms that will better serve the working and non-working poor. What’s luring them is that promise of “free” federal money.

This same promise has broken the wills of politicians in other states who at one time opposed either Medicaid expansion or the Affordable Care Act as a whole. This list includes Florida’s Governor Rick Scott as well as Ohio’s John Kasich, who have both gone to great lengths to push expansion in their states. But once state lawmakers saw the plan’s costs and failures, as they have in Pennsylvania, they strongly resisted the push to expand the broken program.

Accepting this bribery is a short-sighted move, at best. States should have learned from experience that Washington doesn’t exactly set its promises in stone. President Obama has already proposed cutting the federal reimbursement of state Medicaid costs—twice. That was the very promise that enticed several states to jump on the expansion bandwagon in the first place.

If reimbursement rates are cut, state taxpayers will be footing the bill. Compounded with the ACA’s $500 billion price tag–a cost equal to $6,300 per family–the funding shortfall would hit every Pennsylvanian’s wallet.

But by refusing to expand Medicaid, states like Pennsylvania have helped reduce the federal deficit by an estimated $459 billion. To some, the promise of free federal funding may seem too good to pass up, but the suffering that people will endure from an expansion of Medicaid should not be so easily forgotten.

Thankfully, Pennsylvania lawmakers’ steadfast refusal to trade our neediest citizens and taxpayers for temporary political gain and uncertain federal cash is a sign that other difficult reforms may yet be on the horizon.

Matthew J. Brouillette is president and CEO of the Commonwealth Foundation.

Medicaid Expansion Failure A Win For PA

Big Government Party Blocks Reforms

Big Government Party Blocks Reforms
By Matthew J. Brouillette

Why haven’t liquor privatization and pension reform passed yet here in Pennsylvania? Not why you think.

Most answers to this question begin with the fact that one party controls all branches of government in the Keystone State—the Republicans. Many people then posit that free-market ideas such as these should therefore be slam dunks. But this analysis is far too simplistic.

The reason Gov. Tom Corbett hasn’t signed either of those measures is that the true divide in the General Assembly is not between the Republicans and Democrats, but between the Big Government Party and the Taxpayer Party.

And while the Republicans may have a numerical majority, the Big Government Party—the coalition of interests that profit from higher taxes, more spending, cumbersome regulations, state contracts, and special privileges—has a functional majority. It just wielded it.

That’s how liquor privatization fell apart, in spite of bipartisan voter majorities favoring it. Special interests—both those profiting off the state monopoly and those seeking to keep out competition—worked to obstruct and water down privatization proposals.

Government unions representing the state store workers spent big bucks advertising against privatization and countless hours lobbying. Moreover, the union representing liquor store managers worked to hold transportation funding hostage if Senate leadership didn’t kill liquor privatization.

Not only that, the opposition to a longtime Republican priority was aided and abetted by a former Republican Senate leader and a team of former Senate Republican political operatives-turned-lobbyists. This is a case in point: The Big Government Party has adherents among both Republicans and Democrats.

Despite historic progress on liquor privatization in the House, the Senate struggled to get enough votes to join the other 48 states that don’t run complete government wine and spirits monopolies. And once transportation tax and fee increases fell through in the House, it became clear the Senate would make us wait longer.

Similar attacks thwarted pension reform.

The school employees’ union leadership launched a massive campaign to thwart any pension reform plan. They had both current teachers and retirees calling lawmakers saying, “Don’t take away my pension”—even though proposals wouldn’t touch retirees’ benefits or affect benefits already earned by current employees.

They used misguided analyses to argue that changing plans for new hires would cost more, but analysts from Pew Trust and the Public Employees Retirement Commission pointed out their flaws.

The most egregious myth perpetuated by opponents of reform is that pension investments will earn 7.5 percent every year, and that lawmakers will keep making full payments. These assumptions have proven wrong for years, creating our $47 billion and growing pension debt.

Indeed, if switching from a defined-benefit plan to a defined-contribution plan costs an employer more, not less, then why hasn’t the private sector reversed its decades-long move to 401(k) retirement plans?

While both the House and Senate advanced pension reform bills in June, special interests that benefit from the costly status quo created enough confusion to keep any bill from passing either body.

With a state legislature paralyzed by special interests—both internal and external—Pennsylvanians will see the bill for government services climbing without any sign their government is actually working for them.

They’ll simply continue to see rutted roads, endure an extra stop (or two) to buy wine and beer, and watch their property taxes rise to pay for escalating pension costs.

Voters want to see meaningful reform that uses their hard-earned taxpayer dollars wisely, and they don’t want to wait forever. The good news is, they won’t have to. Yes, the Big Government Party has a majority—but it’s a slim one, and more and more people are seeing how the game really works.

The Commonwealth Foundation was far from the only voice in these battles, but in our efforts alone, thousands of citizens wrote to their lawmakers urging that they side with the Taxpayer Party.

Make no mistake: Those people have had it, and they aren’t going away.

Matthew J. Brouillette is president and CEO of the Commonwealth Foundation

 

Big Government Party Blocks Reforms

Case For Corbett’s Tax Reform

By Nathan A. Benefield

Pennsylvania’s small business owners face a daunting challenge: How can you invest and expand your business while paying the second highest corporate tax rate in the country?  If you can believe it, combined with the federal tax rate, Pennsylvania businesses pay the second highest tax on their profits in the entire industrialized world.

And the sluggish economy isn’t making things any easier.  The good news is that Governor Corbett has proposed tax reform to alleviate some of this burden and make Pennsylvania more competitive. This reform plan will boost the economy—growing jobs and raising personal income across the state.

A new analysis sponsored by the Commonwealth Foundation and conducted by economists at the Beacon Hill Institute demonstrates exactly how the Governor’s tax reform plan will put Pennsylvania on the path to prosperity. Specifically, the plan examines the Governor’s call for reducing the state’s corporate income tax.

The report finds that if these reforms pass this year, the state would see over one billion dollars in additional business investment by 2018.  More investment means more jobs.  The analysis concludes that more than 1,200 additional private sector jobs would be created in five years as a direct result of these tax reforms.  And as investment grows in future years, job growth would accelerate.

Increased employment and investment also lead to wider benefits for families.  Based on our projections, Pennsylvania’s real disposable income would grow by $460 million as a direct result of business tax reform.

This is a real stimulus.  Businesses would be able to invest more and expand their operations, in turn creating additional tax revenue and more jobs and income for the working Pennsylvanians who have suffered in recent years.

Given these benefits, tax reform is a no-brainer.  That’s why Pennsylvania isn’t alone in pursuing this path.  This year, Louisiana, Nebraska, Kansas, and North Carolina have all considered comprehensive tax reform, with each state taking a slightly different approach.  Moreover, in recent years, other states of varying political persuasion—ranging from Washington to Texas to Ohio—have also taken proactive steps to improve their economies by reducing or eliminating onerous corporate income taxes.

The timing couldn’t be better.  Pennsylvania consistently lags the nation in job and income growth.  Contrary to its nickname, the Keystone State ranks among the 10 worst states for businesses, according to a survey of business leaders by CEO Magazine, and 39th in state competitiveness, according to the Beacon Hill Institute.

Unfortunately, some fail to see the benefits of tax reform and suggest we hold off on cutting tax rates. Due to lower than expected tax revenue collections for the state this year, some lawmakers are calling for higher taxes to “invest” in their own spending priorities.  Others suggest we need to increase tax credit programs—that benefit some businesses, but not all—to make it easier for businesses to compete in Pennsylvania.

If creating jobs is our top priority, these ideas need to be scrapped in favor of broad tax relief.  Tax increases impede economic growth, while tax relief unleashes it.  Ending targeted tax breaks and corporate welfare programs would allow Pennsylvania to lower its tax rate for everyone.  To realize these economic benefits even more quickly, lawmakers in Harrisburg should look to accelerate the Governor’s tax reductions.

At a time of heightened partisan bickering, sensible reforms like this are worth pursuing, especially when the benefits are so clear.  Tax reform will give Pennsylvania a competitive edge over its neighbors while encouraging business investment and job growth.

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Nathan A. Benefield is director of policy analysis with the Commonwealth Foundation (CommonwealthFoundation.org).

Liquor Privatization Done Right

Liquor Privatization Done Right
By Nathan A. Benefield

Picture this: You’re on your way home from visiting family in Delaware and decide to stop at a wine store near the Pennsylvania border. As you walk through the parking lot, something seems off.  For every Delaware license plate you see, there are three Pennsylvania plates. An aberration?  Hardly.

As a recent investigative video shows, liquor stores in New Jersey and Delaware are filled with Pennsylvania shoppers every day.  The video, produced by the state chapter of the National Federation of Independent Businesses, should shock no one.

We already know consumers shop with their feet—even the Pennsylvania Liquor Control Board acknowledges it.  Their survey of Philadelphia region residents found nearly half shop in other states, costing the commonwealth hundreds of millions annually in sales due to “border bleed.”

Consumers want greater convenience, selection, and lower prices.  They want beer, wine, and liquor to be sold in local grocery stores.  They don’t want to drive as far, or make multiple stops.  And they want the ability to buy alcohol in whatever quantity they choose.  That’s why a Delaware shop had three times as many Pennsylvanians as Delaware shoppers.  But we can bring them back.

Lawmakers, customers, and activists celebrated the historic vote in the Pennsylvania House to end the government liquor store monopoly. Indeed, lawmakers accomplished what many pundits doubted was possible—and what several governors had tried and failed to do—by even holding a vote on a liquor store privatization bill.

But consumers and taxpayers have nothing to toast—not until the Senate and House agree to legislation that will earn Gov. Corbett’s signature. The challenge for lawmakers is balancing the free market consumers want with the demands of those already vested in the current system.

The state Senate has begun hearings on privatization and it is a near certainty they will do something, but what that something will be is far from certain.  Sen. Chuck McIlhinney, who chairs the committee taking up the House-passed bill, says he supports privatization, but what does privatization really mean?

Here are two key things that must happen in any bill to deliver for consumers and taxpayers:

First, lawmakers must increase retail competition.  This means licensing more stores to sell wine and spirits so consumers don’t need to cross state lines, allowing beer distributors and grocery stores to carry wine and liquor for greater convenience, and creating meaningful competition even if they don’t shut down the state-run stores immediately.

No Pennsylvanian wants to see a government monopoly replaced with a private one.  And providing a mechanism to close down state stores once private competition has ramped up, as the House-passed legislation did, will finally get government out of the booze business and allow the PLCB to focus on its regulatory mission.

Second, lawmakers must end the government monopoly over wholesale operations.  The wholesale monopoly allows government bureaucrats to determine what is sold in Pennsylvania and what isn’t, to set artificially high prices for every bottle sold, and to limit competition and selection.

The PLCB’s wholesale monopoly is the source of endless frustration for restaurant, winery, and bar owners and has produced a series of boondoggles on the taxpayer’s dime.  One of the biggest PLCB blunders is the branding and marketing of their own wine label, TableLeaf.  This government wine takes prominent shelf space away from Pennsylvania labels, yet the brand state taxpayers own is actually grown and bottled in California and directly competes with wineries right here in the Keystone State.

Thanks also to the PLCB wholesale monopoly, consumers were treated to the infamous wine kiosk program—elaborate vending machines in grocery stores that required a public breathalyzer test, identity verification, and a video sobriety test prior to allowing a sale.

It’s decades past time to get government out of our Prohibition-era liquor system. Pennsylvanians have suffered from the PLCB’s conflicts of interest and taxpayer-funded boondoggles for far too long.  Until lawmakers pass a plan that satisfies both consumers and stakeholders, we will continue to see shoppers stream across state lines for the convenience our government monopoly has failed to deliver.

Nathan A. Benefield is Director of Policy Analysis with the Commonwealth Foundation (CommonwealthFoundation.org).

 

Liquor Privatization Done Right

1 In 3 Need Gov Permission To Work

1 In 3 Need Gov Permission To Work — About 1 in 20 Americans needed government permission to work in the 1950s. Today it’s 1 in 3, according to Commonwealth Foundation. The loss of freedom comes from requirements for training, fees, licenses and other bits of red tape magic aimed at keeping the Dolores Umbridges of the world happily sipping their tea in bureaucratic positions of power.

A Illinois man, as a remembrance to a friend killed by a drunk driver, began offering tipsy bar patrons a free ride home. He was busted for “operating without a transportation service license” in a sting orchestrated by the local taxi drivers and the police.

In Pennsylvania, an ad hoc barter system popped in where residents gave rides in return for services to the Amish who have a religious prohibition against owning or driving a car.

The state’s Public Utilities Commission pushed  police to set up stake-outs to catch these violators of the requirement to have a transportation license.

It’s for our own good, of course.

“We are trying to protect the public interest and public safety,” a PUC spokeswoman said.

An excellent and scary article by  Katrina Currie of Commonwealth Foundation points out that an attempt was made by the Pennsylvania legislature this year to require a license for interior designers. What was the public safety issue? The danger of mauve rugs clashing with orange walls?

Ms. Currie notes that in 2008 the state sued a a mom for $10 million for selling items on eBay without an auctioneers license and that Philadelphia bloggers now must have a $300 business privilege license if they want to sell ads on their site.

A third of Americans need Big Brothers permission to work. Fighting to stop the encroachment is not enough. It’s time to start being a little like Harry Potter and start fighting to roll it back.

1 In 3 Need Gov Permission To Work

Live Free Pa. Is A Week Away

Live Free Pa. Is A Week Away — The Commonwealth Foundation’s celebration of “freedoms we enjoy but are under attack by Harrisburg and Washington” is 8:30 a.m. to 3 p.m., May 8, at the Elstonville Sportsman’s Association in Manheim.

Live Free Pa. comes with breakfast, lunch,beer, shooting activities, cigars and live rock ‘n’ roll by Jump the Gun and features a chance to shoot up a car.

Obviously the beer and cigars are for attendees over 21.

Cost is $65 for shooters and $40 for non-shooters.  The car shoot is extra.

To register email ajg@commonwealthfoundation.org; call 717-671-1901; or go here .

Live Free Pa. Is A Week Away

Fleeing Pennsylvania In 2009

Fleeing Pennsylvania In 2009 The Commonwealth Foundation is noting that Pennsylvania is the third-most fled state on Allied Van Lines 42nd Annual Magnet States Report behind Michigan and Illinois.

Rounding out the top five are California and New Jersey.

The top five with a net in-migration are Texas, Arizona, North Carolina, Colorado and Florida.

Fleeing Pennsylvania In 2009