Virginia Gains if Obamacare is Replaced

The Obamacare health replacement debate has re-entered the public arena with the dramatic new effort by center-right Senators Lindsay Graham and Bill Cassidy. Their idea is to send block grants to the states to spend on state designed and managed health care systems.

A recent study on this bill by the health care industry consulting firm, Avalere, says that Virginia will gain $3 billion between now and 2026 (see study here)! So those wringing their hands here in Virginia over this new reform effort should not be so quick to ridicule it.

Health Care is the major issue that has defined the differences in political philosophies. The Liberal/Progressive end of the spectrum wants a path toward a single-payer, one-size-fits all, federal government mandated health care system and Obamacare is a significant step in that direction. The Conservative/Libertarian side of the political spectrum wants health care to be designed and executed by our state governments, where there is more input from the citizens than at the federal level. And that will produce broader support than we see today when insurance prices are skyrocketing and more than half of the counties in our 50 states have no insurance coverage or only one option — not what was promised under Obamacare.

It makes sense that our states, if given the opportunity, will be able to design a health care system that better fits the needs of their citizens.

The knee jerk opposition by those who are totally committed to Obamacare, especially those here in Virginia, need to take a look at this Avalere study mentioned above. Virginia will gain $3 billion. That’s quite an increase in federal health care dollars coming into our state over the next ten years.

The biggest change this new legislation will require is that health care monies, including those for Medicaid, will be sent to the states in block grants, something that many center-right politicians and intellectual leaders have advocated for years. If that happens, then our nation will have the chance to create a health care system that will vary from state to state and will provide different and innovative approaches including a better system for those who qualify for Medicaid. These folks need a truly creative, market-oriented, modern health care system and our states will be able to craft.

Each state will likely approach their new health care responsibilities a little differently. What works in one state may not in another. And when some new approach does work, other states can decide whether it makes sense to pick up that idea, re-mold it to fit their own state’s circumstances and provide what should be better health care services than the Obamacare does today. These state systems will provide more innovations in delivery ideas at a lower cost than does the current federal government approach to health care.

The center-right leadership in our country has been advocating for years that Medicaid and other health care responsibilities be sent to the states. States would now be given the freedom to create a health care system that will hopefully deliver better care for a less expensive price tag.

Indeed, simply by reducing the federal government bureaucracy should bring substantially more money to the states. If this new system is efficiently and effectively designed, then significantly fewer federal employees will be needed to execute this program. By reducing the “overhead” in Washington DC will provide more money to the states.

The Graham-Cassidy approach puts those who have been advocating for more state control of the health care dollars in a position they have dreamed about for years – to control at the state level how health care money is spent. This opportunity is exciting and will force these advocates of local control to actually put their idea into practice. What a wonderful challenge and incredible opportunity!

If this dramatic change in health care policy actually becomes law, then our next Governor will have a huge new responsibility to create a modern, better managed health care delivery system than we have today. That is quite a legacy that will be waiting for who we elect in a few short weeks.

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The End is Near (sort of)

Ten years ago, the main concern for the Social Security Trust Fund was that dedicated tax revenues would fall below program costs starting in 2017. That has come to pass. According to the Trustees of Social Security and Medicare, Social Security will run an annual non-interest deficit of approximately $51 billion between 2017 and 20201 after which it will steeply rise.

According to current projections, the Social Security Trust Funds will be exhausted completely in 2034, which is seven years earlier than the Social Security Trustees thought just ten years ago in 2007. What this means for current and future beneficiaries is when the Trust Fund balance reaches “zero” there will be an across the board cut to benefits to match the amount of dedicated Social Security taxes being paid. That cut to current beneficiaries will be as much as twenty-five percent of what they are receiving. The social consequences of such a substantial cut would be disastrous for the millions of seniors dependent on Social Security for their survival.

Social Security will not go bankrupt as some in the chattering class say. The law does not permit the program to pay out more than it takes in through the Old Age and Survivors and Disability Insurance taxes withheld from everyone’s pay. That is why there will be such a dramatic cut in benefits. Congress could choose to make up the shortfall by taking money from general revenues but that is not a sustainable proposition given that Social Security, Medicare, Medicaid, Obamacare, and interest on the debt already consume more than two-thirds of all federal spending.

The problem is exacerbated by the huge wave of Baby Boomers retiring, which has begun and will continue over the next fifteen years. This retirement wave is increasing the cost of Social Security payments just at the time when there are fewer workers coming into the workforce and paying into system. According to the Social Security Administration, there are now fewer than three workers supporting each beneficiary and that number will drop further in the coming decade. Longer life expectancy and lower fertility rates undermine the program even further.

The problem facing Social Security is inherent in its design. The system was created in 1935 as an innovative form of “social insurance” rather than a welfare program and it was based on the premise that there always would be substantially more workers paying into the system than retirees receiving benefits. It also set the retirement age at 65, which, at that time, was the average life expectancy. The theory was that most people would not collect too long or too much and the program designers never anticipated large numbers of beneficiaries collecting payments for twenty years or more.

At the time that Social Security was being designed, a contributory program in which workers provided for their future retirement security by making payments into a system that used the funds to pay current benefits made sense compared to the many radical plans floated during the depths of the Great Depression. The flaw in the design would only become apparent many years later as the number of workers per beneficiary began to decline. In 1940, the first year in which Social Security benefits were paid, there were 159 workers for each beneficiary. By 1950, that ratio had declined to 16.5 workers per beneficiary. By 1960 the ratio had fallen to 4:1, and today there are 2.8 workers for each recipient and that is projected to further decline to only two workers per beneficiary by the year 2030.

In the mid-1990s, Congress passed legislation gradually increasing the retirement age from 65 to 67. While that was a step in the right direction, Congress must act to avert a real crisis which would have devastating effects on not just the beneficiaries of Social Security but all of us.

Clearly, the sooner Congress acts to address these long-range problems the better for the beneficiaries and the taxpayers alike. A combination of further increasing the retirement age, increases in OASDI-dedicated taxes, means testing, and private sector solutions are on the table. As the Trustees say in their report, the projected trust fund deficits should be addressed in a timely way to allow for a gradual phasing in of the necessary changes and to provide advance notice to workers. Making adjustments sooner will allow people to plan properly and avoid personal and financial crises.

The Trustees of Social Security and Medicare are Secretary of the Treasury Steven Mnuchin, Secretary of Health and Human Services Dr. Tom Price, Secretary of Labor Alex Acosta, and Social Security Commissioner Nancy Berryhill. There is a vacancy in each of the two Public Trustee positions. Regardless of which party has controlled the White House, the reports of the trustees have been unanimous, bi-partisan, and consistent over time. Congress would do well to heed their advice.

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I Love Mankind, It’s Just People I Can’t Stand

 

On Sept. 9, 12-year-old Bethany Harper and her nine-year-old friend Solai Coleman were sitting on the front porch of their house on Fifth Avenue in Richmond. Bethany heard the crackling pop of gunfire, and a random bullet struck Solai in the hip.

“We had nothing to do with the transaction [that led to the shooting] Saturday, but they shot at our children” Bethany’s father Thomas told the Richmond Times-Dispatch. “We have a new rule in this house: ‘You’re not allowed to go beyond this line,’ he said, planting his foot on the front of the family’s wooden porch.

The number of killings in Richmond has surged this year, reaching 59 so far compared with 45 at the same point last year, which itself was the worst in a decade. Many victims are innocent bystanders. So far, the 2016-17 school year has seen 25 students in Richmond city schools shot, along with a one-year-old child of two students. Fourteen others were victims of aggravated assault or malicious wounding.

No one will hold a vigil for Solai Coleman. No one will protest the injustice of criminal actions that confine Bethany Harper to the inside of her home. There will be no marches, no placards, and no made-for-TV media spectacles. Apparently, black lives don’t matter when the killers are black. Black lives matter only when the shooter is white or a police officer. Or when when the sight of Civil War statues offend the sensibilities of those who view the world through the filter of white oppression.

The Times-Dispatch ran the article about Coleman’s shooting atop the front page of its Sunday edition. With no sense of irony, it published underneath an article about a Saturday rally around the Robert E. Lee statue that drew about seven pro-Confederate, heritage-not-hate types and a crowd of counter protesters estimated to be a couple hundred in number.

The counter protesters were incensed by the handful of neo-Confederates (most of whom came from out of state), just as they are incensed by the KKK, Nazis, white supremacists, President Trump, and “haters” generally. But neo-Confederates didn’t shoot Solai Coleman. Nazis didn’t shoot her. The KKK didn’t shoot her. Nor did white hate groups shoot any of the other 59 homicide victims in Richmond this year. Aside from occasional vigils held by victims’ family members and immediate neighbors, however, the social justice warriors have not ginned up much outrage or marched in protest of the black-on-black slaughter in Richmond’s inner city.

If the social justice warriors cared about real people instead of abstractions like “institutional racism,” which serve mainly to validate their sense of moral superiority, they would volunteer to tutor inner-city school children. Or befriend an adolescent through the Big Brother/Big Sister program. Or pound nails with Habit for Humanity to build affordable housing. Or ladle out soup in a community kitchen to serve the hungry. Or help felons build a productive life outside jail. But that takes real effort, sustained effort. And it’s not nearly as rewarding as virtue signalling to your peers how politically correct you are or venting about the evils of KKK/Fascists/Trump.

As an aside, I have to commend Richmond Mayor Levar Stoney and Police Chief Alfred Durham for making sure that the Richmond rally didn’t turn into another Charlottesville. They made it clear from the very beginning that violence would not be tolerated, and they worked to separate the protesters from the counter-protesters. By broadcasting their intent, they snuffed out interest in the rally by right- and left-wing radicals looking to bang heads and make headlines long before the event took place. Job well done.

(This article first ran in Bacon’s Rebellion on September 18, 2017)

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Labor Force Participation Lowest in Decades

As we celebrated the achievement of American workers on this Labor Day, we shouldn’t forget those who are left out of the labor market.

The labor force participation rate, which is the percent of the civilian population 16 years and over who have a job or are looking for one, hasn’t been lower since 1978.

In July 2017, the labor force participation rate was 62.9 percent — down from a peak of 67.3 in March 2000.

The Federal Reserve Bank of Atlanta, which analyzes the changes in labor force at its Center for Human Capital Studies, concluded that the retiring population explains about half of the 3-percentage point decline in the labor force participation rate since 2008.

The Atlanta Fed also consider the reasons that people are not in the labor force, which varies by age, education, race and gender.

Not surprisingly, a higher percentage of people younger than 25 are not in the labor force because they are in school full-time, while many people (mainly women) 25 to 40 years old are taking care of the family. Disability or illness increases as a reason for not being in the labor force for the 45 to 60 age group. After age 60, retirement is the leading reason why individuals are not in the labor force.

One particular group not in the labor force includes those “hard-to-employ” people with barriers to work.

Kevin Corinth wrote an article in July when he was a research fellow at the American Enterprise Institute that digs deeper into why those individuals are not participating in the labor force and estimates the number of people not working because they face barriers.

He estimated that in 2015, 14.5 million adults between 25 and 54 had incomes below 200 percent of the poverty line and at least one of the following barriers to work:

  • Homelessness;
  • Serious mental illness;
  • Substance abuse; or
  • Arrested and booked for breaking the law.

Not all people with barriers would be willing to work if offered a job, so Corinth used information on peers with similar demographic characteristics and education but who do not face barriers to tease out the percentage with barriers who would work.

This method resulted in an estimate of 2 million people who potentially would be willing to work. If those people are successfully integrated into the labor market, they can increase the national labor force participation by 1.2 percentage points.

Corinth points to social enterprises as a solution to help this population, particularly those with recent experiences of homelessness, serious mental illness, and those with multiple barriers, which makes up 1.6 million adults where the gap between the actual and predicted work rate is largest.

These enterprises offer on-the-job training to people that are hard-to-employ with the goal of transitioning them into conventional employment.

When we look at macro-level statistics, it’s easy to lose sight of the human side of those numbers.

This Labor Day might be a good time to think differently about those who are not participating in the labor force as well as the social enterprises that help bring these individuals back into the labor force.

(This article first ran in the Richmond Times Dispatch on September 4, 2017)

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How Environmental Agenda Harms U.S. Economic Growth

George Melloan, former Deputy Editor of the Wall Street Journal editorial page, wrote an insightful column on Thursday, Sept. 7, 2017, in the Journalcharging the Democratic party in the United States has become the Green Party.

Melloan claims “Under Green influence, Democratic lawmakers, when they controlled Congress, designated large tracts of the American West as new “wilderness areas.” They fostered the Endangered Species Act (ESA), which has been an effective barrier to industrial or agricultural development…” He claims the Democratic party and the Greens (environmental groups) “…operate under the flag of environmentalism…”

He further suggests the Democrats and the Greens distrust economic growth.

The Endangered Species Act has been a major tool in slowing or stopping growth in the United States. Melloan writes, “Working people, fed up with the diktats of the Greens who infest their farms and factories, were a major factor in the election of Mr. Trump.” He further alleges in the Journal column that “Greens want to deprive the economy of its basic energy sources, and they have little regard for the consequences…” of their action.

Oregon example: from growth to food stamps

A perfect example of this assertion is the timber industry in the West.  As we know, millions of acres of timber are burning, much of it in areas where the Greens will not allow the restoration of healthy forests. For an example of how much harm the ESA has caused, one needs to look no farther than Josephine County, Oregon. For 91 years, the Rough and Ready Sawmill was a major employer in southern Oregon. In this area, the federal government owns almost 80% of the land. The ESA helped create a flood of lawsuits blocking timber sales supplying Rough and Ready. At one time, the sawmill company had 22 mills in Josephine County. Josephine County, “…once Oregon’s fastest growing [county, has become] its poorest with 30% of its residents using food stamps.” According to one story, 1 of every 5 adults is unemployed in the county.

When a local congressman attempted to increase timber harvest in the county, Oregon’s Democrat-controlled state legislature and environmental groups opposed the restoring of timber harvests.

This is but one of many examples of productive jobs being eliminated by powerful environmental statutes such as ESA.

In May, 2017, National Geographic Magazine published an article defending the ESA. It claims the ESA to be “…one of the most powerful environmental statutes in the U.S. and one of the world’s strongest species protection laws.” The May article claims Republicans have introduced 25 proposals to “…skirt, hamper, defang, or undermine endangered species protection.”

National Geographic  headlines a section of its story and calls Republicans and others who support changes in ESA  “antiscience  ignoramouses”. The National Geographic quotes former Congressman John Dingell (MI) who claims to be the father of the endangered species act. Mr. Dingell claimed “I wrote much of the Endangered Species Act in my head while I was driving to and from work,…” Dingle went on to claim in the article “Today we have a bunch of antiscience  ignoramouses and vicious lying people in Congress.” I suspect that thousands of individuals in Josephine County, Orego,n would disagree with Congressman Dingell, who inherited his congressional seat from his father in Michigan and held it for over 50 years.

The spotted owl, an ESA protected species, is claimed to have shut down more than 2,000 sawmills in the Pacific Northwest, costing 40,000 jobs. Oregon Republican Congressman Greg Walden asserts “You have lost the economy that used to be there, therefore you have lost the revenues for the basic services. It is becoming a lawless county.”

Melloan writes, “The [Democrat] party’s environmental extremism puts it at odds with working people whose aspiration is prosperity.”

As long as Democrats and Green environmentalists want to deprive working people of jobs using statutes such as ESA, they make it clear they have no regard for those working people in the United States. It is clear the underlying philosophy is a distrust of economic growth. A Green agenda for sure.

(This column first ran in Farm Futures on Sept. 17, 2017)-

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