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Justifying Cuts: A Well-Used But Misleading Medicaid Statistic

“Cash-strapped states are also feeling the burden of the Medicaid
entitlement. The program consumes nearly 22 percent of states’ budgets today, and things are about to get a whole lot worse.”

— Sen. Orrin Hatch (R-Utah), June 23, 2011, at a hearing of the Senate Finance Committee

“Medicaid is the lion’s share of that spending burden as it now consumes about 22 percent of state budgets now and will consume $4.6 trillion of Washington’s budget over the next ten years.”

— Former Kentucky governor Ernest Lee Fletcher (R), June 23, 2011, at the same hearing

“Across the country, governors are concerned about the burgeoning cost of Medicaid, which in fiscal 2010 consumed nearly 22 percent of state budgets, according the National Association of State Budget Officers. That’s larger than what states spent on K-12 public schools.”

Washington Post front page article, June 14, 2011

When a statistic is universally tossed around as a certified fact, it’s time to get suspicious.

Such is the case with this oft-cited statistic that 22 percent of state budgets is being gobbled up by Medicaid, the state-federal program that provides health coverage for the poor and the disabled. Medicaid supposedly is even dwarfing what is spent on educating children and teenagers.

But note the phrase “state-federal.” There’s billions of dollars in federal money involved, and the “22-percent” statistic obscures that fact. Let’s dig a little deeper into the numbers.

The Facts

Medicaid was a central part of President Lyndon Johnson’s “Great Society” initiative in the mid-1960s. Each state administers its own Medicaid program, but with federal oversight, federal requirements—and plenty of federal dollars. On average, the federal government provides 57 percent of Medicaid funds.

Initially, Medicaid was focused low-income Americans, but elderly nursing home care has also become a big part of it. The new health care law would also greatly expand eligibility to people up to 133 percent of the official poverty line.

There’s no question that the recession has put pressure on Medicaid spending, as more people lost jobs or income and so became eligible for coverage. The new requirements of the health care law also will boost Medicaid spending.

The assertion that Medicaid is 22 percent of state spending, and thus now exceeds education spending, comes from an annual survey of the National Association of State Budget Officers (NASBO). But if you dig into the report — if you just go to page
one — you will see that this number includes the federal contribution, in what
is known as “total funds.”

If you want to see what states themselves are spending on Medicaid —“general funds” — you have to use another set of statistics.

As NASBO says on page one, “For estimated fiscal 2010, components of general fund spending are elementary and secondary education, 35.7 percent; Medicaid, 15.4 percent; higher education, 12.1 percent; corrections, 7.2 percent; public assistance, 1.9 percent; transportation, 0.8 percent; and all other expenditures, 27.0 percent.”

In other words, without the federal dollars included, Medicaid falls to second place, far behind education. It turns out that on average, states spend 15.4 percent of their funds on Medicaid — not 22 percent.

Brian Sigritz, NASBO’s director of state fiscal studies, said, “You are correct that there are several different ways of looking at Medicaid spending that you can use. If you consider just general funds, K-12 easily remains the largest component of general fund spending, as it historically has been.”

Indeed, when you look at NASBO’s historical data (table three of this report), it becomes clear that Medicaid spending, as a proportion of general funds, has remained relatively consistent since 1995 — about 15 percent — in contrast to the popular image of being a drain on state budgets.

Sigritz said that the two figures provide a different picture of state spending. “General funds gives you a sense of spending deriving from state revenue, while total funds gives you a sense of total state expenditures,” he said.  “Typically when you discuss overall state budgets you examine the various funding sources that go into them including general funds, other state funds, bonds, and federal funds.”

The Office of the Actuary for Medicare and Medicaid makes this distinction. The 2010 Actuarial Report for Medicaid notes the broad figure, but then takes pains to add: “This amount, however, includes all Federal contributions to State Medicaid spending, as well as spending from State general revenue funds and other State funds (which for Medicaid consists of provider taxes, fees, donations, assessments, and local funds).” The report concludes: “When only State general revenues are considered, however, Medicaid spending constitutes an estimated 16.2 percent of expenditures in 2009, placing it well behind education.”

Antonia Ferrier, a spokeswoman for Hatch, defended the 22-percent figure, noting its wide use. “It is part of their budgets, and there are many different streams of funding that fund those state budgets (including federal funding, taxes, etc.) that fund their many programs,” she said.

But Colleen Chapman, a spokeswoman for the Georgetown University Center for
Children and Families
, a policy and research center, said, “In the current budget debate, the data are being misused to argue that the Medicaid program in states is out of control and needs to be cut dramatically, when in fact, Medicaid is still much less of state spending than education and has not grown, as a portion of state budgets, in any way close to the mammoth way that others argue it has.”

The Pinocchio Test

We will label this with one of our rarely used categories: TRUE BUT FALSE.
(We still need to get an appropriate icon for this one — suggestions are welcome.)

Yes, the 22-percent figure is a valid number. But it is being used in an inappropriate way, and therefore is misleading. Hatch and Fletcher are only the latest in a long line of public figures — and news outlets — who have seized onto this number without apparently realizing that it is the wrong statistic to use. If people want to understand the impact the Medicaid is having on state budgets, politicians should begin to use the 15-percent figure — or at the least offer a caveat to the 22-percent number. Otherwise, there might be some Pinocchios in their future.

 

By: Glenn Kessler, The Fact Checker, The Washington Post, July 5, 2011

July 5, 2011 Posted by | Conservatives, Deficits, Economy, Education, GOP, Health Care, Ideologues, Ideology, Lawmakers, Medicaid, Middle Class, Politics, Republicans, State Legislatures, States | , , , , , , , , , , , , | Leave a comment

“You Talkin’ To Me?”: Obama Calls The GOP’s Bluff

Here’s how to negotiate, GOP-style: Begin by making outrageous demands. Bully your opponents into giving you almost all of what you want. Rather than accept the deal, add a host of radical new demands. Observe casually that you wouldn’t want anything bad to happen to the hostage you’ve taken — the nation’s well-being. To the extent possible, look and sound like Jack Nicholson in “The Shining.”

This strategy has worked so well for Republicans that it’s no surprise they’re using it again, this time in the unnecessary fight over what should be a routine increase in the debt ceiling. This time, however, something different is happening: President Obama seems to be channeling Robert De Niro in “Taxi Driver.” At a news conference last Wednesday, Obama’s response to the GOP was, essentially, “You talkin’ to me?”

Obama’s in-your-face attitude seems to have thrown Republicans off their stride. They thought all they had to do was convince everyone they were crazy enough to force an unthinkable default on the nation’s financial obligations. Now they have to wonder if Obama is crazy enough to let them.

He probably isn’t. But the White House has kept up the pressure, asserting that the real deadline for action by Congress to avoid a default isn’t Aug. 2, as the Treasury Department said, but July 22; it takes time to write the needed legislation, officials explained. Tick, tick, tick . . .

“Malia and Sasha generally finish their homework a day ahead of time,” Obama said, gratuitously — but effectively — comparing his daughters’ industry with congressional sloth. “It is impressive. They don’t wait until the night before. They’re not pulling all-nighters. They’re 13 and 10. Congress can do the same thing. If you know you’ve got to do something, just do it.”

Obama’s pushing and poking are aimed at Republicans who control the House, and what he wants them to “just do” is abandon the uncompromising position that any debt-ceiling deal has to include big, painful budget cuts but not a single cent of new tax revenue.

The president demands that Congress also eliminate “tax breaks for millionaires and billionaires . . . oil companies and hedge fund managers and corporate jet owners.” Without these modest increases in revenue, he says, the government will have to cut funding for medical research, food inspection and the National Weather Service. Also, presumably, whatever federal support goes to puppies and apple pie.

In truth, some non-millionaires who never fly on corporate jets would also lose tax breaks under the president’s proposal. And it’s hard to believe that the first thing the government would do, if Congress provides no new revenue, is stop testing ground beef for bacteria. But Obama is right that the cuts would be draconian — and he’s right to insist that House Republicans face reality.

My view, for what it’s worth, is that now is the wrong time for spending cuts or tax increases — that it’s ridiculous to do anything that might slow the lumbering economic recovery, even marginally. But if there have to be cuts, then Republicans must be forced to move off the no-new-revenue line they have drawn in the sand.

Even if they move just an inch, the nation’s prospects become much brighter. This fight is that important.

Every independent, bipartisan, blue-ribbon panel that has looked at the deficit problem has reached the same conclusion: The gap between spending and revenue is much too big to be closed by budget cuts alone. With fervent conviction but zero evidence, Tea Party Republicans believe otherwise — and Establishment Republicans, who know better, are afraid to contradict them.

The difficult work of putting the federal government on sound fiscal footing can’t begin as long as a majority in the House rejects simple arithmetic on ideological grounds.

“I’ve met with the leaders multiple times,” Obama said, referring to House Speaker John Boehner and Senate Minority Leader Mitch McConnell. “At a certain point, they need to do their job.” The job he means is welcoming fantasy-loving Republicans to the real world, and it has to be done.

The stakes are perilously high, but Obama does have a doomsday option: If all else fails, he can assert that a section of the 14th Amendment — “The validity of the public debt of the United States, authorized by law . . . shall not be questioned” — makes the debt limit unconstitutional and instructs him to take any measures necessary to avoid default.

Maybe that’s why, in this stare-down, the president doesn’t seem inclined to blink.

 

By: Eugene Robinson, Opinion Writer, The Washington Post, July 4, 2011

July 5, 2011 Posted by | Class Warfare, Congress, Conservatives, Constitution, Corporations, Debt Ceiling, Debt Crisis, Democracy, Democrats, Economic Recovery, Economy, Federal Budget, GOP, Government, Government Shut Down, Ideologues, Ideology, Lawmakers, Middle East, Politics, President Obama, Public, Republicans, Right Wing, Tax Evasion, Tax Increases, Tax Loopholes, Taxes, Tea Party, Voters, Wealthy | , , , , , , , , , , , | Leave a comment

   

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