BuckeyeBlog

The state is having severe budget problems. There is the potential for a $7.3 billion shortfall over the next two years. That’s a significant chunk of the state’s budget. With 27% of the state budget being devoted to Medicaid, and with that program growing rapidly, it’s time the state take a serious look at reforming the program.

The Buckeye Institute’s Mike Bond has written a fine study outlining ways to reform Medicaid to both improve outcomes and slow the growth of the program. Instead of constantly expanding eligibility, the favored method of Columbus lawmakers which only increases the cost to the taxpayers, fundamental Medicaid reform is needed. Addressing this huge budget item will go a long way towards reining in Ohio’s potential deficit.

The Heartland Institute sent out an e-mail today on reforming Ohio’s unemployment system. I thought I’d post its fine recommendations here for those who are not on Heartland’s e-mail list:

During a time of economic uncertainty, the prospect of unemployment is on the minds of many workers.

Ohio’s unemployment fund is nearing insolvency due to the growing number of unemployed citizens entering the system. With its unemployment rate reaching 7.2 percent and pay-outs of around $35 million a week depleting the unemployment fund to a projected $28 million by the end of the year, Ohio’s unemployment insurance program is in dire need of reform.

Ohio’s unemployment fund has been greatly strained by the current economic crisis. According to state officials, the state’s minimum safe balance for the unemployment fund is $2.5 billion; the fund is currently operating with a balance of $325 million. In September, there were more than 29,000 new jobless claims. Officials anticipate that number to continue to grow in the upcoming months.

Gov. Ted Strickland is currently seeking aid from the federal government and Labor Department to pull the unemployment fund back into solvency. But tax increases and federal bailouts do little to address the systemic deficiencies in the unemployment system; they merely allow the existing problems to survive and continue to grow. Real reform–reform that fundamentally re-examines the state’s role in providing unemployment benefits–must get underway.

Ohio legislators should keep in mind these three points regarding the needed modernization of their failing unemployment insurance fund:

Resist the urge to raise unemployment taxes
While state officials believe the tax base for unemployment taxes has expanded and could withstand an increase, raising taxes does not guarantee the program will improve. Raising the unemployment tax would do little to improve the system, but such a move may drive businesses out of the state.

Move away from a state-based system and towards privatization
Privatization through individual unemployment accounts (IUA) shifts control of and responsibility for unemployment coverage from the employer and the state government to the employer and the employee. This allows for greater individual choice and flexibility at less cost to the state’s taxpayers.

Do not penalize part-time and temporary workers
Ohio is the only state in the nation where a minimum-wage worker employed 30 hours a week does not qualify for unemployment insurance. These workers frequently receive no unemployment benefits despite their tax contribution to the system, and workers who never need to use the unemployment safety net pay into a system for benefits they will never receive. A private IUA follows a worker and guarantees the benefits are not lost.

As the editors of the Cleveland Plain Dealer point out here, Medicaid’s burden on Ohio’s taxpayers is growing:

Medicaid enrollment by Ohioans has risen by 27,488 people since July 1, with roughly 16 percent of the new patients in the most expensive category (elderly, blind or disabled).

Thus, overall Medicaid spending is up sharply. From July 1 through Oct. 31, Ohio spent $3.97 billion on Medicaid. For the 2007 period, the tab was $3.62 billion. That’s a 9.7 percent increase — and a cold welcome for spenders’ letters to Santa Claus, care of Strickland’s Statehouse workshop.

This shouldn’t come as a surprise to anyone. I predicted as much here:

Expanding Medicaid can lead to large increases in Medicaid spending when states can least afford it – during recessions. Ohio saw this earlier this decade when Medicaid spending increased dramatically during the recent recession. Spending grew at 11 percent annually during 2001 and 2004, squeezing other budget priorities at a time when the state was seeing reduced revenue. Expanding Medicaid now will only repeat this cycle during the next recession.

That “next recession” is now. Of course, the expansion pushed by the governor and approved by the General Assembly last year has been stalled by the federal government. Imagine what Medicaid would be costing if it actually took effect. We may not have to imagine, as Governor Strickland is pushing the feds to approve the expansion. When Senator Obama assumes the Presidency, it’s likely that Strickland will get his wish. That means even higher Medicaid spending next year.

Sometimes the only thing worse than “no” is “yes.”

Congratulations to President-elect Obama.

It’s worth remembering that he has performed a great, great service to the country in ridding us of dominating Clinton influence. Richard Posner has a line about how lies are used, to the effect that the liar whom everyone knows is lying is the most damaging, because it “disparages the very notion of truth.” That was the Clintons all over. The most interesting thing about them was not them, but the willingness of important organs of society to tolerate them.

Obama hasn’t really lied to any greater degree than any politician does. Of course he played himself as much more moderate than he is, but that’s pretty standard. Indeed, it’s even good news for conservatives. We’ll certainly get our full dose of socialism, but it would have been much worse if he were running outright as a socialist. On the big issue, free market economics, the vocabulary and the ideas, which are the most important things, are still ours. The question is whether this is a dying ember or one that will reignite. Certainly it won’t burn again without serious work by serious people.

Congratulations to state Sen. Steve Stivers, who won the Pryce seat and will go to Congress. He’s a good person, an unusually good one, and it’s nice to see such a one go to such an institution.

Bad news for Ohio school choice. The Ohio House of Representatives is gone Democrat. Will the state senate be able to protect our children? I’d have to rate it as doubtful. Political action, parents and interest groups, might save those children, but the prospects are not good.

Tremendously good news that state Rep. Josh Mandell was returned. There are some free market, free individual elected officials left. He joins John Adams. Maybe the now minority Republicans will elect a principled conservative as their leader in Bill Batchelder. The cynical political strategists will be delighted or appalled by that possibility, depending on who is signing their checks, as they all believe principles are a sure route to failure. Never mind that they’ve been free riding on Ronald Reagan’s political capital for more than a quarter century.

We are about to see what socialism can bring us, with the only restraint being the socialists’ own fears of the weakness of their ideas and their views about how to lie to people-plus, one hopes, Americans’ belief in the individual. Astonishingly, McCain was tanked by a market collapse brought on by government, when he really should have been tanked by half a dozen other things. Just as astonishingly, though not surprisingly, government wasn’t blamed, but free choice was. We’re going to see a similar attack on health care, which is also largely socialized, but is discussed as if it is a free market. Government messes things up, and the fix is more government. Good luck on that spiral.

Well, back to the 1970’s it is. Reagan and Friedman are dead, but like Marx and Roosevelt, they’ll be back.

UPDATE: Of course it’s being reported now that the Ohio 15th race has not been decided, so congratulations to Sen. Stivers is premature.

Mike Maurer uses below the “F” word - fascism - in describing comments of the incoming superintendent of public education, Deborah Delisle.

For some of you this may come as a shocking and/or irrelevant epithet.  How could such outrageously liberal and statist views be described in far-right terms, you might ask.

I would have thought so as well, except for having recently attended a lecture  by Jonah Goldberg and reviewing a new book by him.

In his “Liberal Fascism: The Secret History of the American Left, from Mussolini to the Politics of Meaning” Goldberg shows how the ideology of fascism and the American Left have so much more in common than conventional wisdom or the usual sources on US history from 1910 through 1941 would lead us to believe.

Spend some time with “Liberal Fascism”, and take another look at incidental accounts of the era (see here, for example, on how Woodrow Wilson would have hid the fact of 1918-1919 Influenza epidemic from the American people, if not for the overflowing morgues).

After that, I think you’ll agree that the F word applies to Ms. Delisle’s way of thinking after all.

Michael Cannon at the Cato Institute has a great article in National Review Online about why the universal coverage supported by many liberals may have some very bad consequences for your health:

Federal bureaucrats have announced that, as of this month, the Medicare program will no longer provide financial rewards to doctors and hospitals who harm patients.

That is not a typo. For more than 40 years, Medicare has provided financial rewards to providers when a patient requires follow-up care following a medical error.

Medicare is America’s experiment with universal coverage. Operated by the federal government, it provides health insurance to more than 40 million elderly and disabled Americans.

When Congress created Medicare in 1965, physicians feared the new program would reduce their incomes and autonomy. To reduce physician opposition, Congress adopted the dominant way of paying physicians at the time, known as “fee-for-service” payment. As the name suggests, when a physician provides a service, he collects a fee. Provide another service, collect another fee — ad nauseam. Physicians like fee-for-service payment, and have lobbied to preserve it. …

When a patient requires follow-up care to repair the damage done by a medical error, how does Medicare respond? It pays providers for the “care” that injured the patient, and then pays them again to repair the damage. Imagine paying your contractor more because he knocked down the wrong wall. …

(more…)

A lot of people got their tighty-whities in a bunch simply over the thought that Ohio Workers Comp funds were being put into a rare coin fund. (We won’t get into the issues of access-buying and the rest, but the scandal started over outrage over the investment choice…)

Now the Wall Street Journal ($) reports that with stocks tanking many investors are ”seeking refuge in unusual alternatives — parking spaces, for instance, and condos in Peru. Sales of exotic livestock are up. The U.S. Mint has seen a gold-coin rush.” [My italics.]

I wanted to see how much of the multi-billion dollar Workers Comp fund was invested in AIG just to put the investment returns on rare coins into a context with one more politically acceptable alternative.

Ah, but of course the voters of Ohio still can’t easily look over the work of their elected officials. I spent 15 minutes on the BWC site, a reasonable amount of time for an ordinary citizen to have to spend in looking up how $22 billion of state assets were kept. I never came close to finding out this information despite the site’s frequent claims of greater transparency brought by the Strickland Administration’s control of this state monopoly.

If anyone more adept at BWC’s data sources has this information, please do share!

Watching coverage of the vice-presidential debate last night and listening to the chortling class discuss the financial crisis, I have been struck by the constant refrain that the current economic situation was caused by the failure of the free market.

The cause of this recent crisis, however, was not primarily a market failure. The seeds of the current crisis - bad mortgages - were planted nearly a decade ago when the federal government attempted to use government sponsored entities to achieve political and social goals. This 1999 New York Times article, which has recently made the rounds again via those of us who want to remind the governing class of their responsibility in creating the current mess, sheds light on the thinking back then. The author, Steven A. Holmes, noted that “Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.” Holmes then explained Fannie Mae’s plan to achieve the Clinton administration’s objectives:

Fannie Mae, the nation’s biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Interestingly, even back then, there were warnings that this approach could backfire. In the same New York Times article, Peter Wallison of the American Enterprise Institute warned that this attempt to extend home loans to people with poor credit resembled the savings and loan crisis of the 1980’s. Wallison told the reporter, “‘If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

I have many issues with John McCain. His so-called campaign finance reform law is one of the most egregious restrictions of political speech in American history and has given rise to the “527 groups” that so many people detest. McCain’s role with the “gang of fourteen” has done little to significantly improve the ugly judicial confirmation mess in the Senate. But on the issue of Fannie Mae and Freddie Mac, McCain warned of the coming crisis more than two years ago when arguing in favor of legislation reforming government sponsored entities. McCain told the nation and his colleagues:

If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”

So the next time you hear Obama, Biden, or some media talking head thundering about the failure of the marketplace, they may just be deflecting from the real issue: the failure of government.

The Akron Beacon Journal has a good editorial today on some of the issues surrounding Issue 6, which would authorize a casino near Wilmington. As they point out, one of the biggest problems is that it would grant a monopoly for one casino to operate in the state. Personally, I have nothing against gambling but I do have something against monopolies. If the state wants to legalize gambling to spur economic growth and create a new stream of revenue for the state and county governments, fine, but doing it by granting a monopoly to one company is a pretty poor way of doing it. As Jeff Hooke, Tom Firey and David Hansen wrote back in 2006:

If, and when, Ohio expands slots, it should pursue a course of responsible financial management. The state should auction slot licenses through a request-for-proposal process, which would stipulate appropriate conditions such as bidders having operational strength, adequate financing and crime-free histories. In this way, most of the economic gain of slots would go to Ohio taxpayers and not to a handful of gambling interests.

That same logic holds today.

The news that the FBI probe into the actions of Cuyahoga County officials Jimmy Dimora and Frank Russo is now expanding with a search of two judges’ chambers is pretty significant and doesn’t really need much commentary. I’d only note that unless you were a faithful reader of the Cleveland Plain Dealer you’d have little idea this probe was even taking place. C’mon, Dispatch, don’t you think that this type of federal investigation is worth covering?

Here is the latest development:

Agents appeared at the courtrooms of Common Pleas judges Bridget McCafferty and Steven Terry between 7 and 8 p.m.

FBI Special Agent Scott Wilson confirmed the searches were linked to the county corruption probe made public in July after FBI and IRS agents raided the homes and offices of county officials Jimmy Dimora, Frank Russo and Kevin Kelley, but he would not say what agents were searching for.

Terry is a political ally of Russo’s. Terry’s former bailiff, Michael Calabrese, 43, is a house mate of Russo’s. The two bought a house together in Mayfield.

A federal grand jury has begun hearing testimony and serving subpoenas to contractors and county officials. Dimora, Russo and Kelley are suspected of trading county contracts for work on their homes.

The investigators are also looking into hiring practices at the county, and whether county employees engaged in political work on public time, according to search warrants and other court documents.