Like A Kansas Tornado

Storm system Brownback continues to ravage the state of Kansas unabated, and the next casualty involves some good old fashioned school austerity bombing.

Kansas Gov. Sam Brownback’s proposed budget cuts about $127.4 million from state support to local school districts, according to a report released Tuesday by the state Department of Education.

Some Senate Republican leaders dispute that the cut is that deep, saying the Education Department figure doesn’t account for spending on bonds and interest for school construction or payments to the state retirement fund.

The governor’s plan, released Friday, is to roll four major categories of spending into block grants to school districts. The block grants will include the money now spent in general state aid, supplemental state aid, capital outlay aid and the school district finance fund.

This year’s budget for those categories is almost $3.14 billion. The block grants proposed by the governor would total slightly more than $3 billion.

Block grants for schools that are already badly underfunded to the point where the state supreme court ordered Brownback to spend more, huh.  This should go over well.  Oh, but here’s the best part.

More broadly, Kansas state workers’ pension funds are also being used to patch Brownback’s fiscal gap. He is proposing to cut state payments to pension funds by $446 million over three fiscal years including the current one while also refinancing some of the funds’ debts. But the executive director of the Kansas Public Employees Retirement System says Brownback’s proposed tweaks will ultimately cost the state more than 8 times what they save in the short term.

The near-term cuts would raise long-term costs by $3.7 billion — nearly a quarter of the current size of the pension system. Reneging on pension obligations in the short term and creating larger retirement system problems in the long term helps create political pressure to cut workers’ retirement benefits down the road, according to critics of similar maneuvers in states like New Jersey.

Another big-ticket Brownback cut strips roughly $300 million in transportation department funding over the next couple years — a move that shares the penny-wise, pound-foolish DNA of Brownback’s schools and pensions cuts. The road repair cuts will save a little bit of money now, but “all you’re going to do is create bigger problems for yourself later,” the head of a trade group for heavy construction firms in Kansas City told the Star.

And that’s on top of his plan to raise cigarette and liquor taxes so he can keep cutting the state’s income taxes, which caused all this mess in the first place.

If you want to see what a Republican budget will do to the country should they get control of the whole playing field in 2016, look no further than the tornado ripping through Kansas right now.

PPACA and the Continuing Resolution

The continuing resolution that needs to be passed sometime soon to keep the government open will deal with PPACA.  There are currently two big things not included in the resolution.  One may prompt a veto threat (I assess that at 10% probability) and the other has been baked into the cake for over a year now.

The big new thing that is not in the continuing resolution at this time is an appropriation to fund the risk corridors.  The Hill explains:

The language, buried deep in the 1,603-page bill, is a victory for conservative opponents of the healthcare law. It would prevent new government funds from flowing to ObamaCare’s so-called risk corridors, a three-year program established to subsidize insurer losses in order to keep premiums stable.

A commonly used tool in public policy, risk corridors have become a political football since Sen. Marco Rubio (R-Fla.) highlighted the ObamaCare provision as a “bailout” in November of last year. Since then, activists with Heritage Action and other groups have repeatedly sought to kill the payments in major fiscal negotiations.

The “cromnibus” spending bill would allow the government to continue collecting payments from insurers that post better-than-expected results under ObamaCare and passing them to companies that do worse. But it would not permit the Centers for Medicare and Medicaid Services to make additional funds available for insurers that are struggling.

Risk corridors are used to create incentives for insurers to participate in fuzzily defined markets.  Insurers that price in a way that attracts only healthy populations send money to insurers who have to cover the sicker parts of the population.  Medicare Part D has permanant two-way risk corridors.  PPACA had temporary three year risk corridors authorized but the money was not appropriated to pay for them past the FY2014.  The Congressional Research Service issued an opinion that the PPACA language  was too fuzzy and did not explicitly appropriate  money to go back out.

What are the work-arounds?

Read more

Shocking news — people able to pay, pay

More shocking news.  Obamacare is gutting another quintessential American industry that is a world leader without peer — medical debt collection.

Via Bloomberg:

HCA Holdings Inc. (HCA), the largest for-profit hospital chain, yesterday raised its forecast and reported a 6.6 percent drop in uninsured patients at its 165 hospitals, a reduction that grows to 48 percent in four states that expanded Medicaid, a top initiative of the Patient Protection and Affordable Care Act….

The law contributed as much as $13 million to LifePoint’s earnings in the second quarter, about 40 percent more than the company had expected, he said. People paying bills themselves, a proxy for the uninsured, represented just 4.8 percent of admissions, down from 7.1 percent a year earlier….

Shocking how making sure people have the ability to pay for medical care leads to them paying for medical care on time and close to the contracted rate.  The old system of haphazard payments stretched out over years leading to medical debt stress had to be superior because it created jobs for credit collection agencies to hound people for ridiculous fees, for hospital financial analysts to figure out how to smooth cash flow from good months to bad months, and for social workers to be busy as a medical emergency led to their clients entering a life emergency as every other thing that depended on decent health and pre-committed cash flows just got blown up.  Predictibability is a bad thing for all of these jobs.  We can’t have that as the extra couple of points of GDP spent on waste and passing the buck in healthcare means JOBS (TM) that will never be replaced by higher and better uses of people’s times.

Healthy PA or nothing until 2016

Atrios raises an interesting question concerning Healthy PA.  Healthy PA is the proposal by Gov. Corbett (R-PA) to expand Medicaid by using a combination of the Arkansas private option and the Michigan style health incentive/HSA program plus some gratuitous poor shaming.


I’m not sure if it’s better to just pay it and get people enrolled, or gamble on the reasonable possibility that after November a new governor will have a better plan.

I’m not a Pennsylvania political junkie, but from my understanding of Pennsylvania politics, it is extremely likely that Corbett loses this fall to any of the fairly generic/standard issue Democrats running but the Republicans are extremely likely to continue to hold one if not both chambers of the state legislature.

The biggest downside to this political gamble that the Democrats could get something better is timing.  Right now, the Corbett administration has put out a request for interest/application to Pennsylvania insurance companies.  If the goal is to have Healthy Pennsylvania running on January 1st, the health insurance companies have six months to do the prep work.  Speaking as a plumber, six months to build a brand new product with a whole lot of strange and odd business rules is an extremely aggressive timeline.  It is achievable if the Pennsylvania companies are able to keep most of their plumbers on a single task.

Now, as I understand it, the Pennsylvania governor’s term starts in mid-January.  Getting anything better than Healthy PA past at least one Republican controlled chamber will take several weeks/months.  At that point, the plumbing for expansion is several more months.  Realistically, if anything better than Healthy PA can get passed, it probably could not be implemented until at least September 2015, more likely the start date would be January, 2016.

There is a non-zero probability that a failed Healthy PA (shot down by Dems holding most of their votes away) leading to a failed straight up Medicaid expansion.

The trade-off is Healthy PA effective January 1, 2015 OR the probability of something better on either September 1, 2015 or January 1, 2016 plus the probability  of nothing.  If Healthy PA is implemented, it can be tweaked, modified and improved.  My moral sense says it is better to get a significant improvement in wellbeing for the most disadvantaged in society than to hold out for the possibility of something better but later with the chance of nothing. I’m mini-maxing here.

Hoist with His Own Teaturd

I’m not sure tribble-topped presidential aspirant Rand Paul recovers from this:

In a variety of campaign appearances that were captured on video, Paul repeatedly compared Reagan unfavorably to Carter on one of Paul’s top policy priorities: government spending. When Paul was a surrogate speaker for his father, then-Rep. Ron Paul (R-Texas), during the elder Paul’s 2008 presidential quest, his sales pitch included dumping on Reagan for failing to rein in federal budget deficits. Standing on the back of a truck and addressing the crowd at the Coalition of New Hampshire Taxpayers picnic in July 2007, Rand Paul complained about Reagan and praised his father for having opposed Reagan’s budget…”

David Corn’s Mother Jones article linked above includes six video clips of Baby Doc slagging on Reagan as a spendthrift as the younger Paul campaigned for his daddy. What Paul says about Reagan exploding the debt is all true, of course.

And it’s not wise to underestimate the Republican base’s capacity to ignore facts and focus on shiny objects: That’s how they came to deify the folksy, addled, debt-exploding Z-grade actor as an exemplar of fiscal rectitude in the first place.

But imagine the field day Paul’s primary opponents will have parading this heresy before the cameras at every debate. The message that Reagan actually was a profligate spendthrift won’t sink in, but the fact that Paul unfavorably compared Baby Jeebus Reagan to Satan’s Valet Carter sure will.