Economics
In this current recession, the fiscal pain is spread across the entire country, but some states are doing better than others. Forbes magazine has done a state-by-state analysis and found that states that vote liberal Democrat the most (i.e. “Blue” states)are suffering the worst, while Red states are doing the best.
The top 5 worst states—Illinois, New York, Connecticut, California, and New Jersey—and eight of the top 10 (add in Massachusetts, Ohio, and Wisconsin) are all very blue states. The top 5 best states are Utah, New Hampshire, Nebraska, Texas, and Virginia. While New Hampshire and Virginia are said to lean Democratic, New Hampshire is a very fiscally conservative state, which still doesn’t have an income tax and which doesn’t have a “professional” legislature perpetually in session.
(Solidly one-party means that the party has an advantage of 10 percent or greater in party affiliation over the other; leaning means a 5- to 10-percent advantage.)
Forbes’ metrics for each state included unfunded pension liabilities, changes in tax revenue, credit ratings, debt as a percentage of Gross State Product, debt per capita, growth expectations for employment and the state economy, net migrations and a “moocher ratio” that compares government employees, pension burdens and Medicaid enrollees to private-sector employment.
None of the 10 worst states are solidly Republican and only one, Mississippi, leans slightly Republican, i.e. less than 5-percentage-point advantage in party enrollment.
And why are we doing so much worse?
It comes down to stronger unions and a larger appetite for public programs, according to Kent Redfield, professor emeritus of political studies and public affairs at the University of Illinois’ Center for State Policy and Leadership.
Strong unions, by their endorsement power, create an incentive in Democrat politicians to throw pork in the direction of union members, like big construction projects and more social services. And Democrats generally like Nanny Government that creates a program for every human need, not to mention the rampant nepotism, patronage, and corruption that overwhelming one-party by either party typically brings.
We shouldn’t discount the effect that differtent industries have on the rankings. Many of these bastions of unionism are also big manufacturing centers, which are doing the worst in this recession. Agricultural Nebraska is going to do much better than automaking Michigan, for instance.
[Link via Bluegrass Pundit]
Massachusetts has the highest family health insurance premiums in the country, which some pundits claim is the reason we need national universal health care, aka Obamacare. I say that it’s the result of the state’s universal health care plan on which Obamacare is based in concept. Commonwealth Care, aka CommieCare, they say, was passed first to provide universal access and cost controls would come later.
Great. Government-mandated cost controls always work out so well. How about breaking down the barriers to competition, allowing the thousands of providers who can only now compete within their own states to sell insurance in any state? How about letting companies and their employees figure out what coverage to carry instead of mandating all kinds of fringe and/or objectionable procedures like transgender mutilations, sterilizations, contraception, et al?
Part of the problem is that there hasn’t been a secondary market for medical care, i.e. walk-in clinics. If you get sick, you either try to get an emergency appointment with your primary care physician, always a dicey proposition, or you make an expensive emergency room visit. As I said in a previous post, when we took Sophia to her pediatrician when she had nursemaid’s elbow, we saw the doctor for 2 minutes, we paid $15 for a co-payment, and insurance got billed $165. For 2 minutes. If we’d gone to a clinic, it might have cost considerably less.
Because the consumer is not involved in the cost consideration relationship, there is no incentive to avoid costly procedures or to mitigate costs of any kind. So we end up with insurers looking for ways to deny claims, even valid claims, as a way to control their expenses. This leads to the dysfunctional system we have now.
More government regulation in the form of universal health care doesn’t solve the problem. Less regulation would. When the CVS pharmacy chain proposed opening medical clinics in its stores in Boston, the mayor actually made the claim that it’s wrong to make a profit off of sick people. Really? Because that’s the whole premise of the health-care industry. Do we really want to give these politicians more control over our health care? (Of course, it couldn’t be that all of the very wealthy doctors and hospitals and medical industry that make up a large part of Boston’s economic base—and thus political lobbying power—would be opposed to the competition, could it?)
John Mackey, the founder of Whole Foods has ticked off a bunch of his lefty, granola-crunchy customers with a Wall Street Journal op-ed offering a set of free-market health-care reforms as an alternative to the massive expansion of government being called Obamacare.
Mackey lists eight proposed reforms to current laws as well as a diagnosis of why we’re in such dire straits over health-care costs in this country. The eight reforms are:
- Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs).
- Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits.
- Repeal all state laws which prevent insurance companies from competing across state lines.
- Repeal government mandates regarding what insurance companies must cover.
- Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year.
- Make costs transparent so that consumers understand what health-care treatments cost.
- Enact Medicare reform.
- Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren’t covered by Medicare, Medicaid or the State Children’s Health Insurance Program.
See the whole article to read his explanation of each of these points. I especially like the first suggestion, which is what they do at Whole Foods. They pay 100% of the premiums on high-deductible insurance for their full-time employees (30 hours or more) and then up to $1,800 in health-savings accounts (HSAs) which the employees can spend on health-related expenses, including the deductible for the insurance, which is $2,500. Even with that $1,800 the company is saving money over traditional insurance. In addition, the HSA unspent balances rollover from year to year so the HSA balance could quickly reach $2,500 depending on how the employee spends money. Yet even without the rollover, there is only a $700 gap between the HSA and the deductible.
Melanie and I have been discussing this, especially since the claims and explanations of benefits and bills have been coming in for Melanie’s pregnancy, Benedict’s birth, and subsequent care. We’re not ones to rush to the doctor or emergency room at the drop of a hat, but it occurs to us that out-of-pocket expenses would deter more people from getting expensive treatments for routine and minor problems. Insurance would be there only to cover the cost for unusual and expensive ailments.
Meanwhile doctors could afford to charge their patients an out-of-pocket price they can pay. When we took Sophia took her pediatrician for treatment of her nursemaid’s elbow, we saw the doctor for all of about 5 minutes while she popped it back into joint. And yet our health insurer was charged $160! I don’t necessarily blame the doctor. Melanie—who once worked as an office manager for a psychiatric practice—said it’s common for doctors to submit higher prices to the insurers because the insurers are aggressively pre-disposed to rejecting claims or paying only a portion of what was asked. It’s a dysfunctional system. And because it’s so comprehensive and expensive, it encourages people to use it for relatively trivial needs.
If our home insurance worked like our health insurance we’d file a claim every time a light bulb needed changing or when the toilet stopped up or the exterior needed painting. Sounds great until we relize how quickly the home insurance system would collapse under the financial weight of all those claims.
Mackey makes the point as well that while we often hear people speak of the “right” to health care, what we actually have is a right to access. Nowhere in Christian moral principles or in the US Constitution is there a right to free or essentially free health care for everyone regardless of ability to pay. What we have instead is an obligation, you and me, to provide in Christian charity for the poor among us. This is what Catholic hospitals and charities once did so well, but even they have become distracted by the diseased and dysfunctional system we have now that does more to serve the interests of health-care executives, the politicians they fund, and the union bosses pandering to their membership than it does to serve the average American.
I just wish there were more CEOs and influence-wielders like Mackey willing to step up to the plate and offer a chance at real reform.
Barney Frank’s Pollyanna attitude
To add a bit to Mackey’s call for Medicare reform, Massachusetts Democrat Congressman Barney Frank spoke to the Boston Herald about Obamacare town halls the other day and came up with this defense of the proposed medical-industry reforms:
“I have been reading recently about denunciations of government-run health plans and how they will lead to socialized medicine and the end of choice of medical care. They were all comments about Medicare in 1965. We had this debate (about Medicare) 44 years ago and I think it’s proven to be very good.”
Oh really, Barney? How good is Medicare? How well is it faring? Well, the experts are predicting that it’s headed for bankruptcy in 2017 at last check. Oh yeah, Barney, it’s great. Just like when you told us in 2003 that Fannie Mae and Freddie Mac were not in crisis and that, in fact, they should expand their programs to grant mortgages to people who couldn’t afford them. That one worked out wonderfully too.
What kids in high school really need to learn is personal and civic economics. You can’t help but notice how so many people don’t understand even the basics of finance related to bother their personal lives and to the public matters that affect them.
For example, there’s a local story about the governor wanting to replace off-duty detail cops with civilian flaggers, partly because of the cost of the detail cops compared to civilians. One of the arguments in favor of keeping the cops is that the cost doesn’t come from taxpayer funds but from the utilities using them. Well, who do you think ends up paying the utilities? Those costs get passed along to the consumer. Or when legislators respond to the economic crisis and declining tax revenues by raising taxes, like meal taxes and sales taxes! All that will do is keep people out of stores and restaurants, decreasing revenues even further. When my costs increase and recession hits, most people don’t have the luxury of demanding a raise from their boss even as the company struggles. Yet, I hardly see anyone raising a stink over these inanities. Even more, I see my fellow voters putting the same economically clueless jokers back into power every election.
But even in personal matters, many people seem to not understand basic economics. I can’t count how many times I’ve seen one of those lifehacking, productivity blogs tout a tutorial on keeping a checking book or on building a nest egg as if they were imparting secret knowledge. But the sad reality is that many people, young and old, don’t know the basics.
This is why I think every senior in high school should be required to take two courses: personal economics and civic economics. While home economics has come to be known for teaching you how to bake a cake and sew throw pillows, a personal economics course would teach some important life skills: maintaining a checkbook, saving for retirement, getting and keeping credit including credit cards, buying a car, finding a house, choosing a mortgage (and making sure you understand the paperwork), and so on. These are skills that almost everyone will need and so few people have, unless they learn through hard-earned experience. Or they have particularly prescient and conscientious parents.
I certainly wish I’d been more discerning with credit card debt and student loans in my early twenties. Those two areas alone have set me up for a lifetime of financial ostacles to overcome.
Then there’s what I call civic economics. It’s not just about public policy and government, but more about finances that go beyond me and my family. How does the stock market work? What is the banking system? What is the consumer’s place in the grand scheme of things between industry and government? Where does money come from? How do taxes affect the economy? Of course, it’s readily apparent that this course wold be greatly affected by the instructor’s political bent, liberal or conservative. But maybe here, some good textbooks would be able to offset some of that.
In any case, I think schools would do well to offer some practical education in areas that will affect every single student for the rest of his life. You can’t say that for trigonometry.
Photo credit: Flickr.com user Betsssssy. Used under a Creative Commons license.
If there’s a silver lining to the current economic crisis, it’s that there’s no money in the budget for the usual pork-barrel spending and apparently little interest in new taxes to pay for them. At least the liberal leadership in Massachusetts’ Legislature doesn’t have the appetite for it, although the rank-and-file are still seem hungry for it.
DeLeo’s bare-bones budget has had one predictable outcome, whetting the appetites of rank-and-file lawmakers for a broad-based tax hike. State Rep. Brian Wallace (D-South Boston) said there is a growing acceptance of some kind of tax increase in the Legislature, because it’s the only way to restore their pet projects.
Said Wallace: “We’re going to have to do something with taxes, I think. It’s not a question of if, it’s a question of when.”
Or you could, you know, do without. When times are tough and there’s not enough money for everything we want, a normal family cuts not only luxuries but even necessities that can be deferred. But not the Massachusetts Legislature. they couldn’t possibly do without, say, the Quinn bill, a boondoggle that gives raises to cops for going back to school, yet the programs are essentially diploma mills—no real school work required—and results in law enforcement officers getting lifetime raises of 10, 20, or 25 percent. Raises that also inflate their eventual pensions.
Or, for example, studying the winter moth caterpillar. I could be convinced to see the value of studying this pest so we can prevent infestations… when we can afford it. But right now even $150,000 is too much to pay.
How about something potentially even more devastating, like $850,000 for homosexuality indoctrination programs in public schools? On Friday, MassResistance reported that funding for these programs had been cut from the budget, but then later updated the report to say that amendments have been filed—at the urging of the homosexual lobby—to restore the funding. I won’t lie to you: Even in the best of times this is a bad use of money, but now, there is no excuse for it. Morally, we can’t afford it ever. Financially, we certainly can’t afford it now.
But the tax-and-spend crowd have forgotten what it means to do without. They have become gluttons at the taxpayers’ expense and blindly propose new taxes that will force us ever deeper into an economic depression to satisfy the lobbyists’ and pressure groups’ desires to re-engineer our society at any cost and to keep the money spigot flowing to their political friends and campaign funders.
It’s time to say No. But has the Massachusetts taxpayer had enough? Can anything wake them from their slumber before it’s too late?
