Thursday, March 26, 2015

Thursday, March 26, 2015

Holes in the health care budget; Sentencing reform could save money; How Poor are the Poor?; State income tax cuts not yielding benefits and; Medical facilities in danger if states refuse Medicaid expansion

Holes in the health care budget

Melinda Deslatte of the AP reports that Gov. Bobby Jindal’s $9.5 billion proposed health care budget relies on $407 million that will likely only materialize if the administration’s plan to shrink state spending on tax breaks makes it through the Legislature. Should the gap in DHH’s budget for the next fiscal year not be filled, the public-private partnerships that replaced the charity hospital system in the state are at risk.


Most of that uncertain money, $332 million, is plugged into payments for Jindal’s contracts that turned over the LSU-run hospitals and clinics to private managers. If those dollars don’t show up, hospital payments would be cut from more than $1.1 billion to $815 million under the governor’s budget.

… Already, the private operators of the state-owned hospitals and clinics say they need $142 million more than Jindal’s budget provides — even with the money from the tax break scale-backs. And if all the money assumed in Jindal’s budget is available, House budget analysts told lawmakers that the governor’s proposal still has an unaddressed shortfall of up to $200 million in Louisiana’s Medicaid program.


Sentencing reform could save money

Louisiana policymakers looking to save money in next year’s budget should reform the criminal justice system that incarcerates more people, in a per-capita basis, than any other political jurisdiction in the world. So says ACLU Director Marjorie Esman in a guest commentary for The Advocate.


The Department of Corrections’ budget has hovered between $600 million and $700 million annually for the last few years. That’s roughly $150 million more than the entire LSU System. That doesn’t include spending on local and parish jails, policing, courts, district attorneys, public defenders and other ancillary costs of a bloated system. We arrest people who could receive a summons or some other means to keep them in their communities. We must look hard at what we’re doing and how we can fix it because time’s running out.


How Poor are the Poor?

Tom Edsall of the New York Times takes a lengthy look at the different ways we measure poverty in the United States and the ways public assistance affects those numbers. The column was prompted by a recent essay from Harvard sociologist Christopher Jencks.


Jencks argues that the actual poverty rate has dropped over the past five decades – far below the official government level — if poverty estimates are adjusted for food and housing benefits, refundable tax credits and a better method of determining inflation rates. In Jencks’s view, the war on poverty worked. The Jencks article and the response among those I contacted reveals how politically explosive and ideologically charged the seemingly arcane debate over the determination of the poverty rate is.


But others, including Kathryn Edin of Johns Hopkins University and Luke Schaefer of the University of Michigan, note that anti-poverty programs have changed dramatically in recent decades, with a greater emphasis on programs such as the Earned Income Tax Credit that benefit the working poor.


Expanded tax credits lifted about 3.2 million children out of poverty in 2013. So far, so good.The second group, though, has really suffered. These are the very poor who are without work, part of a population that is struggling desperately. Edin and Schaefer write that among the losers are an estimated 3.4 million “children who over the course of a year live for at least three months under a $2 per person per day threshold.” While Edin and Schaefer address the growing advantage the working poor have over nonworkers, Lawrence Mishel, president of the liberal Economic Policy Institute, raises a different set of issues. He agrees with the general finding that “government programs — transfers and tax subsidies — have helped lift low incomes, and poverty, correctly measured, has fallen.” But focusing on these findings, Mishel argues, diverts attention from the more serious problem of “the failure of the labor market to adequately reward low-wage workers.”


State income tax cuts not yielding benefits
A new fact sheet from the Center on Budget and Policy Priorities shows that the five states that drastically reduced their income tax have not seen the economic boost that supporters promised. Maine, Kansas, Ohio and Wisconsin have seen slower private-sector job growth than the rest of the country, while growth in North Carolina has been modest. Meanwhile, all the states except Ohio are among the 10 states with the deepest cuts in K-12 funding since the start of the recession. The fact sheet gives three reasons why deep income tax cuts does not stimulate economic growth:


First, states have to balance their budgets so must pay for income tax cuts by raising other taxes or cutting funding for schools and other services. These actions can slow the economy. Second, for the fastest-growing firms, the quality of local workers matters far more than taxes. Cutting taxes at the expense of schools and colleges can make a state less attractive to these firms. And (third), the vast majority of people who get a tax cut are in no position to create a job. Fewer than 3 percent of income taxpayers nationally own a business that hires other people.


Medical facilities in danger if states refuse Medicaid expansion

Next week’s closure of the only emergency room serving the heart of Louisiana’s capital city continues to make national headlines. Bloomberg’s Margaret Newkirk says the closure could be a sign of things to come for states that refuse Medicaid expansion.


Nationwide, charity hospitals are set to lose money from a Medicaid fund that partially offsets the cost of treating those who can’t pay. Initially scheduled to kick in last year, Congress delayed the cuts until late 2016. The funding will decline by $35 billion during the following eight years, according to a 2014 analysis by researchers at Georgia State University in Atlanta and Tulane University in New Orleans.Baton Rouge General’s Mid City hospital is a harbinger of the effect those reductions will have in states that didn’t expand Medicaid. Mid City wasn’t the area’s safety-net hospital. It became one accidentally in 2013, when Jindal closed the nearby Earl K. Long Medical Center, which was part of a network of state teaching hospitals charged with caring for the poor.


Number of the Day
$332 million: Money earmarked for public-private charity hospital partnerships next year that relies on uncertain funding sources (Source: Associated Press)