BuckeyeBlog

The headline in the Columbus Dispatch trumpets Governor Strickland’s talking points that more people will gain health coverage because of a variety of new regulations in the state budget. A more accurate headline would have indicated that these changes will actually raise health insurance rates in Ohio, leading to more Ohioans going without insurance.

By imposing government price caps on how much insurance can charge those who have pre-existing conditions, legislators and the governor have mandated that everyone pay more for insurance. People with pre-existing conditions are guaranteed to cost insurance companies a lot of money, almost certainly more money that these individuals pay in premiums. Insurance companies must pay for that coverage by raising the rates for everyone else.

The Dispatch story goes on to discuss how rates for health insurance premiums are increasing dramatically. The regulations being celebrated in this article are a huge part of why premiums are going up. It’s unfortunate that the reporter didn’t make this elementary connection.

As the article also points out, many of the uninsured are young adults. Let’s consider why a young adult wouldn’t want to buy insurance. For one, young adults are a pretty healthy group. They don’t go to doctors or use health care as much as older people. So they have less need for insurance than others. Two, with insurance rates going up, it costs a lot to pay for that insurance. So healthy people don’t want to pay a lot for something they have little chance of using? Makes sense to me (and it did when I was a twenty-year-old and I decided I wasn’t going to purchase health insurance. As a result, I went without for two years). The only way to tempt these people into paying for insurance is to keep its cost down. Too bad the governor and General Assembly didn’t do that.

Looks like Governor Strickland is supporting Medicaid cuts and re-thinking his Medicaid expansion because the state isn’t receiving enough tax revenue.  Two years ago, when policymakers in the General Assembly almost unanimously (there was only one dissenting vote) expanded Medicaid at the request of the governor, I wrote this:

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.

Oh, so now Governor Strickland gets it, huh? I guess I was just two years too early.

I’m not a prophet, folks, I’m just someone who actually remembers the events of 2001 through 2004. State policymakers who are grappling with the state’s current deficit chose to ignore the lessons of the recession earlier this decade and expanded spending in a variety of areas, not just Medicaid. Now they are reaping the consequences of their bad decisions. I’ll wager (based on past experience) that soon Ohio’s taxpayers will be reaping the consequences of these bad decisions when these same policymakers raise taxes.

It must be nice to have allies in the General Assembly. As the Ohio Contractors Association found out, getting a provision tucked into the budget bill which will reduce comptition for state construction jobs (and, in turn, drive up the cost of those jobs) was pretty easy:

House Democrats slipped a provision into the state budget last month banning some uses of a new style of competitive bidding over the Internet that has netted big savings in Portage County.

Inserted at the request of the Ohio Contractors Association, the provision added during the early hours of April 28 bans Internet reverse auctions for supplies and services related to construction projects.

Vernon Sykes, an Akron Democrat, was behind this language. As Portage County’s experience with these auctions shows, they can produce substantial savings:

Jeff Lonzrick, an engineering manager for Portage County’s water resources department, said the online bidding on the water project was done April 20 by a half-dozen companies prequalified to do the work. It resulted in a low bid of $188,500, while the engineer’s estimated cost had been $253,000, he said. The project was a routine replacement of 1,126 feet of a 16-inch water main in Aurora.

The contractors claim that these auctions don’t produce this kind of savings regularly. Fine. As Portage County Commissioner Chuck Keiper says, then their supporters should have this debate in the full House and not stick the ban in a budget bill.

Making businesses compete for government contracts is good. The more transparent the competition, the better. Trying to reduce this transparency at the behest of a politically-connected interest group is a shameful. Perhaps that’s why Rep. Sykes tried to slip this into the budget bill unnoticed. Kudos to the Plain Dealer’s Aaron Marshall for exposing this anti-taxpayer move on the part of Rep. Skyes and the Ohio Contractors Association.

A mandate that insurance companies must cover services for autistic children was part of the budget passed by the Ohio House. What do autistic services have to do with the state budget? I’m not sure and it seems the Sen. John Carey isn’t sure, either. He wants to remove the mandate so that it can get a more thorough review. That sounds reasonable — the mandate will raise the cost of insurance and shouldn’t be snuck through as part of the state’s budget.

Sen. Carey and other legislators may also want to consider the fact that there is a lack of evidence that many services for autistic children actually produce results:

Medications, new styles of teaching, classical psychological conditioning, physical manipulation, vitamins, diets, special eyeglasses—many kinds of treatments have been proposed and tried, but few have been tested in a rigorous way. Fewer still—some behavioral conditioning methods, a few anti-psychotic medications—have demonstrated some degree of efficacy. Some autistic patients exhibit very difficult patterns of behavior, ranging from simple stubbornness to compulsiveness to screaming to destructiveness to explosive violence. The behavioral changes produced by the few effective treatments make life in social settings (including the home) possible, but we have no idea whether they have any effect on the underlying cause (or causes) of autism or whether they even make severely affected patients feel better. The people who work with autistic clients often come to depend on their own sensitivity and empathy to judge whether a treatment has had a positive or negative impact.

So the House passed legislation that everyone agrees will raise health insurance rates (and likely lead to some people dropping insurance coverage) to pay for services that likely won’t do much good.  That’s pretty poor public policy if you ask me.

First, the good news: Although it’s not ideal that legislators have advanced a bill to impose a foreclosure mortorium, they did remove the egregious (and unconstitutional) “cramdown” provision that would allow judges to modify home loan contracts. As the Buckeye Institute’s Maurice Thompson said in his testimony about this bill: “House Bill 3, as currently written, would clearly raise interest rates for prospective homeowners, thus harming more Ohioans than it would help, and enhancing the likelihood of increased delinquencies.” The removal of the “cramdown” provision lessens the harm to Ohioans but does not eliminate it.

Now, the bad: Get ready for your taxes to go up. As the Toledo Blade reports, “Gov. Ted Strickland yesterday said he won’t take the possibility of a tax increase off the table as he negotiates with legislative leaders over how to deal with the state’s budget woes.” It does go on to say that the governor doesn’t think such a hike is a good idea. At least he’s paying lip service to keeping taxes in line, but the amount of spending he supports makes it a virtual necessity, unfortunately. As I pointed out a couple months ago:

When there were rumbles in the air of an impending recession in 2007, the governor and legislators could have done the prudent thing: limit spending growth, refrain from creating new programs, and planned for the future. Instead, with only one dissenting vote, the Republican General Assembly sent a big-spending budget to the Democratic governor that, among other things, created a new middle class entitlement to government health care.

Now taxes will need to be raised to pay for this fiscal recklessness. In the past the governor has denied the need to do this and, in an attempt to avoid making the hard decisions, got the federal government to pony up billions of “stimlus” dollars to cover the state deficit. Now it appears he can no longer avoid the issue. Too bad it’s the taxpayers who will, literally, be paying for the bad decisions in Columbus.

The Ohio Senate passed up a major opportunity to stand up for fiscal responsibility when it approved the state transportation bill yesterday. Instead of stripping out the governor’s plan to fund a passenger rail system in the state, the GOP-controlled body merely made it slightly more difficult for that plan to be implemented. For a party that talks about being good stewards of the taxpayer money and which has condemned the governor for his irresponsible spending proposals, the Republican members of the Senate  failed to back up their talk with any action.

Passenger rail is slated to cost taxpayers $250 million to establish it and then $10 million a year in subsidies. Given the unpopularity of passenger rail in most areas of the nation and the high costs imposed on taxpayers by other systems, I’d be willing to bet the actual cost of the rail system will far exceed these figures. Passenger rail may be great in theory but when people actually have to make a choice to put down spend their money to ride it, people generally choose to drive. This is an unneeded project for Ohio and will be a burden on taxpayers for years to come.

The Senate does deserve some credit by changing the way this passenger rail system would be created. The governor wanted its final approval to be made by the Controlling Board (an unelected body with a Democratic majority). The Senate’s bill says that the General Assembly must approve its creation instead. That’s a small step in the right direction.

Although the Republican Senators failed miserably to protect the taxpayer on this bill, they deserve some credit for stopping the governor’s plans to infringe upon your liberty. They removed a provisions backed by the governor and House that would have allowed speed cameras in construction zones and that would have given police authority to stop motorists who are not wearing their seatbelts. Both those moves should be applauded by Ohioans who value their freedom.

It looks like Ohio will, in one form or another, give tax credits to film companies which do business in the state. The general principle is good — lower taxes to spur economic growth — but the method is flawed. Tax breaks for special industries isn’t the best tax policy to help the state’s economy grow. Cutting taxes on businesses and marginal tax rates for individuals is a much idea.

It’s probably true that lower taxes on film companies will draw them to Ohio. Why should they be singled out for this benefit, though? Why not lower taxes on restaurants, factories, car dealerships, book stores, movie theaters, and every other business in the state? Don’t legislators want these businesses to expand in Ohio, too? And what about the state’s citizens? With so many of them losing jobs and struggling under high federal, state, and local taxes, I think it’s a bit strange to be rewarding Hollywood companies without so much as a debate over cutting Ohioans’ income tax rates.

Good tax policy means low rates on taxes that are broad-based. No breaks for favored industries. It’s unfortunate that the General Assembly is debating a special interest tax break instead of considering overall tax reform. If they want to get started, the Buckeye Institute has published a proposal to phase out Ohio’s income tax and has written about the five steps lawmakers should take to institute a pro-growth tax policy.

Republicans in the General Assembly have a plan that is a good beginning on a much-needed overhaul of state government:

Ohio legislative Republicans yesterday urged Gov. Ted Strickland to embrace a massive downsizing of state government that they said could go a long way toward solving the budgetary crisis.

The plan calls for consolidating 24 cabinet-level departments into 10 or 11 and eliminating 11,448 state jobs, nearly a fifth of the state work force, through attrition, for a projected saving of about $1 billion a year.

Consolidation is good; elimination is better. While they are at it, they can also work on repealing the state income tax. Cutting government and letting Ohioans keep more of the money they earn — the best stimulus plan the state could have.

Gongwer News Service($) reports that Senate President Bill Harris is cautioning Governor Strickland not to count on federal aid when putting together his budget proposal. As Senator Harris puts it, the budget should be based on the “realities of the state economic situation” not on hypothetical federal aid. Imagine that — basing a budget on economic reality. It’s sad that this type of thinking makes the news. The idea that the blueprint for state funding should be based in reality should be the norm, not something that is noteworthy.

Given that Governor Strickland is one of the most vocal cheerleaders for federal “emergency” aid to the states, it would make perfect sense if his budget tried to take that into account. But the size of that aid is unknown. The conditions put on that aid are unknown, as Senator Harris points out. Heck, we don’t even know if the aid will be passed by Congress. It looks likely that the feds will bail out the states, but maybe fiscal sanity will prevail in Washington and Congress will shoot it down.

Senator Harris should be commended for sounding the trumpet of caution on this issue. I hope that when the state Senate begins considering the budget that Senator Harris will continue to be fiscally prudent. As we saw last year, when recessions hit revenues decline. The projected $7 billion deficit will likely deepen. It’s time for Ohio to start looking at the variety of wasteful spending contained in the budget and begin cutting out the fat.

My post from a couple days ago on efforts to change Ohio’s booster seat laws has engendered some comments that I want to address. One, from “Tim” dismisses respected economist Steven Levitt by essentially saying his work is fiction. A more useful pair of comments come from “Lisa” which a few articles to refute Levitt’s work (which I recommended) that says booster seats for older kids aren’t all that useful.

Unfortunately, I can’t find an ungated version of the study recommended by “Lisa,” so I’m unable to evaluate its claims. I will freely admit that there are studies which support the idea that older kids need to use booster seats. There is evidence that these seats do very little, too. While some blithely dismiss the work of Steven Levitt, he’s a respected economist who actually looks at the data underlying these studies. And his partner, Stephen Dubner, posts here about other failings of car seats.

This really isn’t the place to get into a thorough analysis of the validity of car seat studies. It is the place to note that the evidence is far from overwhelming and, in my reading, pretty inconclusive. I’ll admit I could be wrong about the facts here, though. It doesn’t really matter if I am wrong, however. I’m not passing laws that affect the lives of every Ohioan. The place to have this full discussion and sort out who is wrong and who is right is in the General Assembly, specifically the Senate Highways & Transportation Committee, which is considering the legislation to tighten Ohio’s booster seat regulations. From the coverage I read, this type of discussion is not happening. Everyone, even those skeptical of this bill, seems to be operating under the assumption that these booster seats are effective for older kids. The General Assembly should probe this question a lot more thoroughly before it imposes any new mandates.