Becoming the Medicaid State

August 20, 2014/by Justin Katz

Yesterday, I noted that enrollment in health insurance plans through the state-government-operated HealthSource RI had dipped by August 2. In contrast, Medicaid enrollments have continued to grow, by an average of 3,430 per month, or a five percent growth of the total Medicaid rolls from the end of March to the end of August, now up to 257,884. That’s now more than one-quarter of the entire state population.

If we assume that all new Medicaid enrollments were through the exchange, it’s an increase of 21% since March.

Here’s a not-so-fun fact: The number of new Medicaid enrollments in Rhode Island from March to August was more than five times greater than the number of seasonally adjusted new jobs based in Rhode Island. If you want a barometer of the direction in which the state is headed, that’s a pretty good one.

Illegal Alien Juveniles: And Rhode Island’s Total Rises to 148

August 16, 2014/by Monique Chartier

Breitbart’s Tony Lee has obtained updated numbers from the United States’ Office of Refugee Resettlement as to the number of illegal alien juveniles released by the federal government for the period of July 7 to July 31 – July 7 being the last date for which we had those figures. The state by state breakdown indicates that Rhode Island’s total has risen from 129 to 148.

Our elected officials – those who support illegal immigration – have been acting as though this has been a completely unforeseen, one time wave of children, such as might be due to an earthquake, flood or other natural disaster.

Nothing could be further from the truth.

These children are being drawn here – are being sent here, more accurately – by the willful actions and inaction of our national leaders: 1.) more generally, the United States has substantially reduced its enforcement of the immigration laws currently on the books and 2.) more specifically, the action of the President of the United States, who has effectively turned on a beacon by making it clear that his administration is extremely reluctant to deport any illegal children who come here. (You don’t suppose word will get out about the data that backs this up, do you? Naw!)

It probably doesn’t hurt that the federal government has rolled out the red carpet for at least some of the illegal alien juveniles.

Accordingly, as things stand, there is no reason for this stream of illegal arrivals, nor the strain on public budgets nor the erosion of our sovereignty, to end.

The question now, closer to home, is, what is Governor Chafee doing to stem the tide of illegal aliens into Rhode Island and the corresponding stream of money out of state and local tax coffers? Has he offered objection to the federal government to the arrival in Rhode Island of these and any additional illegal alien juveniles, an action that would also help to address the larger problem by discouraging illegal immigration? If not, has Governor Chafee identified what he would like to see cut from budgets, both local and state, none of which have much leeway in the expenditure column, to pay for the expenses – minimally, education and Medicaid – associated with these arrivals?

Philosophy on a Folding Chair: Theft of Good Feeling

August 14, 2014/by Justin Katz

State Taxes and Economic Health

July 17, 2014/by Justin Katz

The effect of taxes on a state’s economic health is one of those repeated questions that is never resolved. The obvious reason (I’d propose) is that it’s one of those areas that depends hugely on specific circumstances, but the ideological intentions of those having the discussion tend to promote specific findings as broad conclusions.

The last sentence of the most recent academic contribution to the debate, by Pavel Yakovlev of the Mercatus Center, probably captures about the broadest statement that can be made:

… not all tax variables exhibit a significant correlation with the selected measures of economic activity, but when they do, the relationship is usually negative.

Yakovlev concludes his summary in a way that’s probably more comprehensible to the average person:

Not all types of tax increases can be expected to significantly harm economic outcomes, but higher taxes are generally correlated with lower standards of living.

In the phrasing of a popular meme: I don’t always affect the economy when I increase taxes, but when I do, it usually hurts.

Another important variable that Yakovlev mentions in the course of presenting his findings is the quality of public services provided. It is assumed that in some circumstances (or at least to some people) the trade-off of higher taxes for quality government services favors the latter. Presumably, it is less common for people to want to have high taxes in order to finance poor government services.

Throughout the study, Yakovlev looks at two competing ways of calculating the correlation of variables that can sometimes serve to support different ideological preferences. On the government-spending side of the ledger, the results find a positive correlation between taxpayer migration and education spending, but negative correlation of migration with infrastructure spending, public health spending, and public welfare spending.

Especially on the infrastructure count, that finding might be counter-intuitive, because we tend to think of better roads and bridges as a contributor to economic health. One plausible explanation for the results is that the amount of spending on infrastructure doesn’t translate well into results. In other words, over a basic minimum of spending on roads and bridges, additional dollars are wasted.

Of course, an objective viewer of Rhode Island would have to conclude that this level of discussion is mostly moot in the Ocean State, as the latest competitiveness report card from the RI Center for Freedom & Prosperity illustrates.

All of our taxes are high. Most of our services are poor. People are generally leaving; opportunity remains difficult to find. And the hope of substantive change is limited.

Rhode Island Fix a Philosophical Shift; Contra Renn, Part 5 of 6

July 13, 2014/by Justin Katz

Part 5 of a response to Aaron Renn: What kills the entrepreneurial spirit in Rhode Island?

Rhode Island Fix a Philosophical Shift; Contra Renn, Part 4 of 6

July 12, 2014/by Justin Katz

Aaron Renn’s prescriptions for RI. Part 4: Who is the “you” who puts us to use?

Supporters of HealthSoviet RI

June 19, 2014/by Justin Katz

Rhode Islanders shouldn’t buy what supporters of an initiative to pass every healthcare dollar in Rhode Island through HealthSource RI are selling.

Rhode Island on Cutting Edge of Common Sense with ObamaCare

May 22, 2014/by Justin Katz

Josh Archambault has a great article on Forbes.com pointing out that bipartisan, bicameral legislation currently submitted in the Rhode Island General Assembly could put the Ocean State on the cutting edge of common sense when it comes to the Affordable Care Act (ACA). If H7817 and S2740 pass, Rhode Island would be the first state to hand its health benefits exchange (HealthSource RI) over to the federal government not because it was an abject failure, but because its limited success proves that the concept just doesn’t make sense:

For context, Rhode Island, a state with a population of 1.05 million, is looking to spend at least $23 million a year, while Massachusetts, a neighboring state with a population six times as large, has run an exchange with an annual budget of around $40 million. Yet putting that comparison aside for a moment, it should be noted that many have questioned the return on investment of the Massachusetts exchange.

Archambault quotes a Providence Journal op-ed by Gary Alexander, Rhode Island’s former secretary of Health and Human Services and director of Human Services, with whom the RI Center for Freedom & Prosperity worked on a report that’s also out today. This is from the report:

As the Center predicted in a 2012 report discouraging creation of the exchange, the cost to Rhode Island of operating it is set to become a budgetary problem. Although data may be some time coming, it remains likely that, as the Center predicted in a 2013 report detailing the incentives surrounding the exchange, HealthSource RI will not meet its goal of providing coverage to most uninsured Ocean Staters.

The combination of high costs with low enrollment levels creates an extreme challenge of identifying funding sources for the state’s exchange.

The report makes a variety of additional arguments for handing HealthSource RI back to the federal government that mandated its existence and has paid for it so far.

I note, by the by, that HealthSource has called a press conference for later this morning to offer the other side. That brings to mind something Rep. Jared Nunes (D, Coventry, West Warwick) said to Archambault for his Forbes article: “HealthSource RI has been spending money like drunken sailors.” As Monique Chartier has pointed out on the Current-Anchor, a significant amount of that spending has gone to the media entities that are likely to be in attendance.

There’s a Reason the Socialism-of-Fools is Also Known as Socialism

April 6, 2014/by Carroll Andrew Morse

From Jim Wyss, of the Miami Herald…

Call it fingerprints for food. In the latest effort to keep shelves stocked in Venezuela, the government on Tuesday will begin registering the biometric information of customers who use state-run grocery stores.

President Nicolás Maduro says the measure will prevent hoarding and help keep price-controlled food from being resold for a profit on the black market.

Progressive Policy and Acceptable Suffering

February 19, 2014/by Justin Katz

Josh Barro’s willingness to break a few eggs for the minimum wage omelet raises questions about the Congressional Budget Office’s economic assumptions.

Minimum Wage Talk, the Worst Sort of Pandering

January 27, 2014/by Justin Katz

GoLocalProv’s Kate Nagle cites RI Center for Freedom & Prosperity CEO Mike Stenhouse in her article, today, on talk of raising the minimum wage. As the Center’s report from last spring suggests, a minimum wage of $10.10 would destroy an estimated 3,466 Rhode Island jobs, and it wouldn’t affect the demographic that the politicians promote:

… 24,846 Rhode Islanders currently have jobs that pay them at a rate of $8.25 per hour or less. The “typical” profile … is of a white non-Hispanic high-school graduate, 21-years-old or younger and with no college experience, who lives with his or her parents and works 20-34 hours per week.

The Providence Journal’s PolitiFact crew contacted us a couple of months ago to fact-check that claim, but we haven’t heard anything since. (It doesn’t take much cynicism to think they’ve found other topics more interesting that didn’t require them to give the Center a “True.”)

But the economics aren’t really the key concern of most politicians. Rather, they want to say to a large group of people, “I will give you stuff.” Or, more accurately, “I will make other people give you their stuff.”

The part about 3,466 people losing their jobs kind of disrupts the narrative.

Politicians have internalized as a moral given that this redistribution is allowed and appropriate. We’ve permitted them to conclude that they have a right to take our stuff away, or force us to give it away.

The only question, then, is whether you’re in the disfavored group that ends up giving more than you get back. One suspects that individual answers to that question help explain who’s leaving our state and region for other states and who’s coming here from other countries.

For the people making the top-down decisions — politicians and bureaucrats — the most relevant question isn’t whether this flow is good for the economy, but rather, whether it transforms the population into one that will vote for them and their massive budgets.

How the Minimum Wage and Welfare Help the Rich: Competition

January 25, 2014/by Justin Katz

So — hypothetically — we’ve got the entire grocery store industry fully automated, and the question is to where the extra profits will flow. With a large displaced workforce supported by unemployment and welfare, the government has alleviated some of the demand-side pressure on prices by handing out the money to keep paying current prices on food.

But pressure on prices can come from the other direction: competition.

A grocery store that simply divvies up its greater profits among a few executives and stakeholders will be at a competitive disadvantage to one that passes much of the savings on to consumers. That displaced workforce still has only limited income, so a store that can save the average family $50 a week will draw shoppers far and wide.

If that doesn’t happen, then something in the system is preventing it. In an industry like health care, it’s easy to see that regulations and mandates make entry and innovation difficult. In an industry like heavy construction, unionization keeps the largest area of cost (labor) fixed. In other areas, licensing and other hoops create the blockage and minimum wages and benefits keep up the cost of labor without unions.

The great bulk of these complications begin with or are exacerbated by government. That makes sense, too.

Established businesses, labor unions, and other special interests are already organized and powerful. Therefore, they are better able to influence the democratic and not-so-democratic processes of government.

Government, which progressives like to see as a counterbalance to private power, simply comes into line with it and amplifies its reach. A managed economy — with both direct decisions of government and public-private efforts to move the economy toward the upper crust’s vision of the future — inevitably favors the powerful and influential.

They limit competition and also ensure that there are mechanisms (including loopholes) that keep them from bearing an equal share of the burden of the income redistribution that keeps their prices up.

(more later)

How Minimum Wage and Welfare Help the Rich: Where’s the Profit Go?

January 23, 2014/by Justin Katz

Following up on yesterday’s post on the “potential” and “kinetic” energy of economic activity: We’ve got a business, as part of a larger industry that has made a radical shift to automation; let’s say it’s a grocery store that no longer has people doing most of its work.

The business is now saving by not having to pay a large workforce minimum wage or better, plus government-required benefits like payroll taxes and (soon) healthcare. Instead, it pays a handful of technicians (probably capable of covering multiple stores in the chain) a better salary to keep the machines functioning smoothly.

The day of the change, people are still willing to pay the same prices for the food on the shelves. In other words, the margin between the price that can be charged and the cost to provide the service has expanded dramatically. The question is: Where does the money go?

Myriad factors will determine that direction. One big one, though, is the public’s willingness to continue paying the same price for food. In this regard, obsessing over dollar-amount handouts as a social safety net means that the system is geared toward keeping prices at their current level, which ultimately benefits businesses that could lower their prices.

As people are displaced from their jobs by automation, the government redistributes money to them. If they’re at least mildly prudent, the majority will spend that money on essentials, like food, first. That keeps the price of food up. If the subsidy weren’t there, economic and social pressures would push the price of food down, because making a smaller profit as a grocery store owner is better than going out of business because nobody can afford your product. (Note that I’m writing broadly to convey a point; starving people to adjust prices would not be good public policy.)

(Next up: competition)

10 News Conference Wingmen, Episode 16 (Chafee & Tea Party)

January 18, 2014/by Justin Katz

Justin and Bob Plain talk Chafee’s State of the State and the influence of the Tea Party in Rhode Island.

The Story of the Budget

January 16, 2014/by Justin Katz

The flow of money through the State of Rhode Island’s budget illustrates the perpetual scam that is government budgeting and should inspire Rhode Islanders to realize that they are allowed to make the machine run the other way.

Imbalance in the Health Benefits Exchange

January 15, 2014/by Justin Katz

The enrollment picture for HealthSource RI brightened a little as the deadline for January coverage approached, but if anything, the long-term picture for the health care reform darkened.

Speaking of Evil Schemes in the Service of Government

January 13, 2014/by Justin Katz

No sooner had I written about an anecdote from RI General Treasurer and gubernatorial candidate Gina Raimondo that made me think in terms of battles of Good versus Evil than Ted Nesi tweeted:

One of @GinaForRI’s big policy ideas today is using “social impact bonds” in RI.

Ted linked to a Harvard Magazine article that provides a helpful chart of how the concept works. Basically, the government earmarks some money for a social cause and hires an intermediary to find investors and contractors to do the work. When another layer, the “evaluator,” determines that the social good has been accomplished, the government releases the funds, with interest.

Naturally, my mind turned to Herman Melville’s The Confidence Man. As I described last April, the idea is that a conman (implied to be the Devil) takes a trip on a steamboat to ply his trade among the passengers. To a philanthropist, he speaks of a “world’s charity,” with one feature being that:

In brief, the conversion of the heathen, so far, at least, as depending on human effort, would, by the world’s charity, be let out on contract. So much by bid for converting India, so much for Borneo, so much for Africa. Competition allowed, stimulus would be given. There would be no lethargy of monopoly. … But the main point is the Archimedean money-power that would be brought to bear.

I guess there really is no progressive idea that a Nineteenth Century satirist couldn’t have imagined decades or centuries before.

The lesson of the “world’s charity” scheme was that the conman nominated himself as the “provisional treasurer.” I’m not sure whether the villains’ preferred role in the “social impact bond” plan would be the government, the intermediary, or the evaluator or if, perhaps, its true innovation is to create three times the “provisional treasurers.”

Echoes of Rhode Island in Appalachia

January 10, 2014/by Justin Katz

Fans of long-form narrative journalism should set aside some time for “The White Ghetto,” by Kevin Williamson, in which he takes a spin through the heart of white poverty in Appalachia. In some regards, it reads like a warning tale for Rhode Island:

A few locals drive two hours… to report for work in the Toyota factory at Georgetown, Ky. … As with the coal miners traveling past Hazard or even farther, eventually many of those Toyota workers decide that the suburbs of Lexington are about as far as they want to go. The employed and upwardly mobile leave, taking their children, their capital, and their habits with them…

… For the smart and enterprising people left behind, life can be very comfortable, with family close, a low cost of living, beautiful scenery, and a very short climb to the top of the social pecking order.

Of course, geography might keep Rhode Island from the worst of Kentucky’s poverty; there’s not so much wilderness through which to drive for work in other states.

On the other hand, culture might make up some of that geographic difference. One tweak that I’d make to Williamson’s account is his concession that socially conservative habits haven’t saved the area from its fate. The abortion rate in that area, he writes, is one-quarter that of Rhode Island, and marriage is more common, with many of the teen births being within wedlock.

The relevant point, it seems to me, is that socially conservative policies aren’t intended to be a cure-all for poverty; they’re meant to help people get the most out of whatever circumstance they’re in. That may be the case in Appalachia, although it’s hard to tell because the incentives of the welfare state undo much of what strong families can accomplish.

Beware Statists in Libertarian Clothing

January 2, 2014/by Justin Katz

Some libertarians have been encouraged to see the liberalization of laws on social issues, but they should go beyond the cliché that politics makes strange bedfellows and wonder why they have the company they do.

Paying Money to Be Able to Give It Away

December 13, 2013/by Justin Katz

Federal grants have already paid large subsidies for applicants using HealthSource RI, but only for a small number of them is that the full taxpayer burden.

HealthSource RI really is the perfect RI government program.

December 10, 2013/by Justin Katz

Christine Ferguson, executive director of HealthSource RI, suggested the state could look to a tax or fee, as some states that run their own exchanges have done.

But it could also use a combination of direct state aid, advertising revenues, grants and “strategic partnerships” with other agencies and nonprofit groups to help offset costs.

Only in government is it possible to plan to figure out how you’re going to pay for a $25-30 million annual operation after having spent several times that to set it up.

And right on cue comes the voice of the leftist labor unions:

Another advisory board member, Patrick Quinn of the Service Employees International Union, which represents nurses and other healthcare workers, suggested Rhode Island could impose a tax on soda, or assess a fee on not-for-profit health-care providers that pay “outrageous” salaries to their executives.

Of course! An expensive new government program is the perfect opportunity to impose nanny-state values and redistribute wealth.

No wonder people are giving up on Rhode Island.

Question for All Gubernatorial Candidates: Would You Release and Implement the Block Waste & Fraud Report?

December 3, 2013/by Monique Chartier

Yesterday on WPRO‘s John Depetro Show, John Loughlin, filling in, interviewed gov candidate Ken Block. A caller asked Block to release the waste and fraud report that his company had prepared for the state earlier this year. Quick background. Governor Chafee did not release the whole report, only what amounted to a tantalizing summary. The […]

10 News Conference Wingmen, Episode 12 (Taxes and Wealth)

November 23, 2013/by Justin Katz

Justin and Bob discuss taxes and wealth on NBC 10 Wingmen, with some afterthoughts from Justin.

10 News Conference Wingmen, Episode 11 (Minimum Wage)

November 15, 2013/by Justin Katz

Justin Katz and Bob Plain discuss the minimum wage and fast food protests.

Investing taxpayer money to give it away.

November 13, 2013/by Justin Katz

Along with the federal government’s roll-out of the bad news surrounding enrollment in the health benefits exchanges of the Affordable Care Act (ACA; aka ObamaCare), HealthSource RI has published a more-complete picture of Rhode Islanders’ use of the site.

Basically, of the 4,405 “processed applications,” 73%, or 3,213, are Medicaid recipients, meaning that they were “shopping” for a welfare program that’s free to them. Of the remaining 1,192 presumably-paying customers (although many will likely be mostly or partially subsidized by federal taxpayers), only 267 have fully enrolled — that is, they’ve made the first payment indicating that they’ve actually purchased the plan.

As shown on the chart that I’ve posted on the RI Center for Freedom & Prosperity’s site, that works out to $371,268 in U.S. taxpayer-funded grants to get the exchange working per enrollment.

As she might be expected to do, HealthSource director Christine Ferguson puts a positive spin on the results, saying that “the Medicaid piece is a great, smashing success.” Make it easy for people to get something for free, I guess, and you’ll have takers.

My favorite paragraph in Felice Freyer’s Providence Journal article, though, is this one:

Among those buying private insurance, Ferguson said that Rhode Island has exceeded the first-month target of 890, which was set by the federal government but not previously revealed. (Of the 1,192 who are buying insurance, 267 have already paid their premiums, which are due Dec. 15.)

Beware previously unrevealed goals, especially when it’s not clear when the federal government actually defined “enrollee.” One wonders where that goal — which is exactly 75% of the actual number (to the nearest ten) — came from.

In August, Spokesman Ian Lang told me that the exchange “anticipates” enrolling at least 70,000 people by the end of next year. Even if that includes Medicaid recipients (which wasn’t clear), they’re not on track to make it.

The Deed Restriction Is Moot Outside of Affordable Housing Assumptions

October 28, 2013/by Justin Katz

Some elaboration on a point about affordable housing subsidies and the 8% tax on rents (in lieu of property taxes) that makes developments profitable for their owners and investors.

Depriving the People of an Education and Happiness

October 21, 2013/by Justin Katz

Speeches at the 2013 National Summit on Education Reform by Theodore Olson and Arthur Brooks offer a lesson on civil rights and the pursuit of happiness.

Balancing the conversation on affordable housing in Barrington

October 15, 2013/by Justin Katz

I’ve been invited to provide the contrarian view on affordable housing at a workshop hosted by the Barrington Town Council, next Tuesday (October 22) from 7:00 to 9:00 p.m., in the Barrington High School Auditorium.

The organizers are requesting that folks submit questions for us panelists beforehand. They’re due tomorrow (October 16). More information here.

Health Exchanges Prove the Dependency Portal Point

October 3, 2013/by Justin Katz

Back when the idea of government-run health insurance exchanges first entered into Rhode Island state government policy, the RI Center for Freedom & Prosperity warned that they were being set up to become “dependency portals“:

The exchange will become a dependency portal when other forms of public assistance — from food stamps to cash-payment welfare to child-care subsidies — are integrated into the system and promoted to the exchange user based on information that he or she provides while seeking health coverage — perhaps automatically enrolling people with the merest expression of consent.

As James Taranto points out, the evidence wasn’t long in arriving upon the exchanges’ unveiling:

… Brendan Mahoney [is] 30 years old, a third-year law student at the University of Connecticut. He’s actually been insured for the past three years … through “a high-deductible, low-premium plan that cost about $39 a month through a UnitedHealthcare subsidiary.” But he wanted to see what ObamaCare had to offer. … Now, he says, “if I get sick, I’ll definitely go to the doctor.” Even better, if he stays healthy, he won’t need to go to a doctor, and his premiums will support chronically ill policyholders on the wrong side of 40.

So, how much of a premium is strapping young Brendan Mahoney paying to help make ObamaCare work? Oops. The Courant reports that Mahoney “said that by filling out the application online, he discovered he was eligible for Medicaid. So, beginning next year, he won’t pay any premium at all.”

Sure, it’s just one anecdote, but a policy sold on bringing healthcare to the uninsured appears to be structurally indistinguishable from a policy designed to push people who are willing and able to take care of themselves into dependence on government.

10 News Conference Wingmen, Episode 3 (Unionized Child Care Providers)

September 20, 2013/by Justin Katz

Justin Katz and Bob Plain argue about unionizing child care workers whose clients receive state aid.

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