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Entries Tagged as 'Medicaid'

Memo to GOP: Don’t Run on What Voters Don’t Want

September 1st, 2011 at 1:08 am 56 Comments

With the national debt skyrocketing, a faction on the right is hoping to turn the 2012 election into a debate on entitlement reform. No doubt, many Democrats are hoping the very same thing.

Democrats would view that development as a chance to gain politically, while some Republicans would see it as a chance to demonstrate their purity.

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WSJ on Debt Crisis: Reject Reality

David Frum July 28th, 2011 at 10:37 am 115 Comments

I used to write editorials for the Wall Street Journal myself, 20 years ago now.

So I’m well aware of the challenge faced by those assigned to compose these documents. The strict demands of the paper’s ideology do not always lie smoothly over the rocky outcroppings of reality. It can take considerable skill to match the two together.

In that regard, this morning’s lead editorial about the debt-ceiling crisis is a true masterpiece.

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States Will Be Slammed by Default

July 27th, 2011 at 4:22 pm 40 Comments

A federal default could cascade through state governments, cialis sale forcing tax increases and budget cuts on local taxpayers. Medicaid budgets could be slashed. Federal money for unemployment benefits could halt. State colleges could lose federal grants.

The Pew Center on the States reports that the municipal market would get swept along in the wreckage, severely constricting state budgets.

Different states would experience different kinds of shock.

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What to Watch in the Debt Negotiations

July 7th, 2011 at 1:06 pm 4 Comments

While we await the news from today’s debt ceiling negotiations between Republicans and Democratic leaders, help news outlets are already leaking and reporting on the possible contours of a deal. But which reporting is actually likely to be part of a deal and how much is smoke and mirrors? What developments would be unexpected if they become part of a final deal?


1. Medicare and Social Security are on the table.

Plausibility: Plausible, salve but what about Medicaid cuts?

Senate Majority Whip Dick Durbin has given reporters a broad outline of a deal: $1 trillion in revenue raising by closing tax loopholes, discount with the Democrats conceding cuts to Social Security and Medicare. This deal certainly looks like it could be a “Grand Bargain”.

But curiously, Durbin did not mention cuts to Medicaid. Earlier reporting had suggested that Medicaid cuts were a large part of the negotiations. Medicaid was always the more vulnerable program because the constituency that depends on it (the poor) carries less clout then the constituency that depends on Medicare (the elderly).

If Medicare cuts, and not just Medicaid cuts, are on the table, then it would be politically courageous for politicians to support them.


2. Republicans will accept revenue increase without tax cuts to offset new revenue.

Plausibility: Needs to happen if Republicans are serious about a deal, unknown how serious they are about a deal.

Several news stories are hinting that Republicans are buckling from their previous opposition to revenue increases that are not offset with tax cuts. This has been a key problem with Grover Norquists anti-tax pledge that many Republicans are committed to: it is hard to reduce government deficits over the long term if every time revenue is raised by removing a subsidy (for example, ethanol subsidies) that the revenue raised is off-set by a new tax cut.

Eric Cantor reportedly wants to “talk” about closing some of these tax loopholes which could increase revenue, but he still claims to want tax cuts to off-set them. Senator Kyl has also made comments about increasing “revenue” but its unclear from where the revenue would come.

Ultimately, if Republicans are serious, some sort of significant revenue increase that is not off-set by tax cuts will need to be part of final deal, both to get Democratic votes and to actually reduce the deficit within a reasonable time frame.

It might be that Republicans have no intention of supporting any sort of revenue increase which is what lead to David Brooks column from this week warning that the Republicans “may no longer be a normal party”.


3. Jim DeMint and Olympia Snowe will get a Balanced Budget Amendment as part of the deal.

Plausibility: No. Snowe is positioning to win reelection.

So far, the most out-of-left-field position is an op-ed by Senators Olympia Snowe and Jim DeMint arguing that any solution to the debt crisis must involve a balanced budget amendment being added to the Constitution.

You may recall that Bruce Bartlett referred to the balanced budget amendment as “quite possibly the stupidest constitutional amendment I think I have ever seen. It looks like it was drafted by a couple of interns on the back of a napkin.”

So is this meant to be a serious part of a debt deal? Probably not. What’s more plausible is that Snowe faces reelection next year and her support for the amendment coupled with an op-ed co-authored with DeMint seems designed to try and get her to run to the right of any potential primary challengers.

GOP Cost-Cutting Takes Aim at Medicaid

May 10th, 2011 at 7:00 am 54 Comments

According to reports, the House GOP is considering plans to reduce spending on Medicaid rather than the more politically intractable Medicare or Social Security. While the GOP has taken a lot of heat for the Ryan plan’s Medicare proposals, switching their focus to Medicaid isn’t the right response.

The Hill notes that:

The leaders of two leading advocacy organizations [said] that they expect the House Energy and Commerce Committee to move quickly on a bill that would let states set new Medicaid eligibility rules. The bill, introduced last week, would repeal ‘maintenance of effort’ requirements (MOE) in the healthcare reform law, which block states from cutting their Medicaid rolls ahead of the program’s expansion in 2014.

Medicaid is shared between the states and the federal government with the latter paying about two-thirds of the cost of the program. The federal government sets criteria for Medicaid eligibility. Governors would like a block grant program which would allow them the greatest flexibility for program implementation.

Medicaid is the insurer of last resort. To cut the rolls could put too much pressure on the social safety net. It’s well known that Medicaid is the insurer of the very poor but it’s also a key insurer for children, the disabled, and even the elderly poor who also are eligible for Medicare. Furthermore, it’s the only public insurance that pays for long-term care.

Furthermore, is there the same potential for savings as with Medicare reform?  Can Medicaid be made amenable to substantial cuts from the federal government? True, there’s some room for such cuts: Since the formula for Medicaid spending by the federal government is based on the level of state spending, it is attractive for many states to spend as much as possible to attract the highest contribution from the federal level.

On the other hand, most of the tumult seen in Wisconsin, Ohio, and other states is as much the result of Medicaid’s effect on state budgets as any other issue. Governors have had strong incentives to control Medicaid spending: Medicaid payments to physicians and hospitals are typically substantially below the costs of the services provided, somewhere less than 85% of cost. Beside underpayments, over 70% of individuals in Medicaid are in managed care plans, another major cost saving effort.

But let’s grant that there’s an opportunity to approach Medicaid in an innovative method that puts responsibility on recipients to be more responsible and accountable and that focuses on preventive care. Let’s even throw in a form of health savings account so that individual patients have “skin in the game”. Wouldn’t such approaches save real money and allow lower federal payments for Medicaid? Well no.

All of these components have been incorporated into a plan called HIP or the Healthy Indiana Plan and while it is successful in accomplishing its goal of patient responsibility and incentives for patients to be concerned about the cost of care, it has not led to reductions in costs at the state or federal level.

It’s a very fine Medicaid program with 99% patient satisfaction ratings but it’s also been a very expensive plan, requiring a cigarette tax to help defray its costs. Gov. Mitch Daniels has taken heat from conservatives over the costs of the program, to the delight of some commentators.

Medicaid pays 15% less than the cost of care, highly utilizes managed care, and even when utilizing innovative approaches still requires at least current payment levels. Cutting Medicaid further is unlikely to be feasible. Cut the rolls now and this goes beyond cutting fat from the system, it gets into muscle and bone.  In the end: Improving the economy and reducing poverty is the best approach to reducing Medicaid.

Contrast all this with Medicare: Minimal managed care, supporting affluent, middle class, and poor, predominantly fee for service, lacking health savings accounts, and (while only paying at a rate equal to the costs of care) still substantially higher than the Medicaid payment schedule.

Medicare is where savings can be found — particularly with a prospective payment methodology – and should be the initial target for reformers, not Medicaid. The Ryan plan has been demagogued in an astonishing fashion, even leading to an extraordinarily ignorant statement from Secretary Sibelius that patients would “die sooner.” But for the GOP to redirect their efforts from Medicare reform to further chopping at Medicaid isn’t the right response.


Tea Partiers: Selfish or Just Scared?

David Frum April 19th, 2011 at 3:24 pm 79 Comments

Bruce Bartlett draws attention to a Marist poll: 70% of people who identify with the Tea Party oppose cutting Medicare or Medicaid to reduce the deficit.

Some of what is going on here is simple ignorance: unawareness of how the great portion of federal money is spent.

Some is self-interest, of a kind to which none of us are immune: older people wanting the budget to be cut at anybody else’s expense rather than their own.

But might there not be also a more charitable explanation? Tea Party Americans, like all other Americans, are struggling with a sudden collapse of personal and national wealth. They want a comforting explanation of what happened. They want a promise that the loss can be reversed. And they want to shift as much as possible of the pain away from themselves. Are they any different from anybody else?

I recently received an angry email from a Tea Party supporter that included the following comment:

I am 80 and find my planned income has been reduced by 55% over the past two years ….  In order to maintain my past standard of living would you recommend that I borrow and borrow and borrow on the strength of my diminishing assets ?  …  My reasoning tells me that I have to tighten my belt and forego a lot of the luxuries and necessities that I enjoyed in the past.

My correspondent sees the Tea Party as a movement to protect him and people like him against further attacks on their standard of living: against the tax increases on his dwindling income that will follow the Obama spending stimulus; against healthcare reforms that squeeze his Medicare in order to insure the uninsured (more than a quarter of them foreign-born); against any whiff of inflation that might reduce his remaining purchasing power.

And if we find (as our own FrumForum survey did find) that Tea Party voters know very little about the reality of the federal budget, is that truly because they are so very ignorant? Or is it that they prefer not to believe unwelcome news that will snatch from them their already faint hope of an economic future that imposes no further loss on them.

Maybe it’s irrational. Maybe it’s selfish. But it’s very human.


Ryan’s Budget Gives Obama What He Wants

David Frum April 13th, 2011 at 4:27 pm 97 Comments

“Whatever you do, don’t serve to his backhand.”

“Don’t be nervous. I have the new Ryan serve. It’s bold!”

“Trust me on this. Don’t serve to his backhand.”

Thomp. Wham.

Here’s a basic fact of American politics. The American people like Medicare. They are not so enthusiastic about tax cuts for the rich.

Those of us on the political right have different preferences. We believe that low rates for high earners accelerate economic growth. We believe that the cost of Medicare must be restrained. And I think we have a lot of good arguments on our side.

But we must never deceive ourselves: We are arguing for policies with a lot of political negatives attached to them. Which means we have to take some basic political precautions.

In the current Republican mood, however, precautions are for girlie-men. Republicans have succumbed to a strange mood of simultaneous euphoria and paranoia. Republicans have convinced themselves both that: (1) American freedom stands in imminent danger of disappearing into totalitarian night; and (2) that the vast majority of the great and good American people are yearning for a mighty rollback of big government, even at considerable personal sacrifice.

And so Republicans have united around Rep. Paul Ryan’s (R-Wis.) proposal that for the first time in modern conservative history explicitly joins a big tax cut for the rich to big cuts in health care spending for virtually everybody else. If this were a tennis game, the Republicans would be placing the ball in exactly the spot on the court where it must never, ever go.

Take a look at Wednesday’s USA Today/Gallup poll.

Medicare remains hugely popular. By 2-to-1 margins, Americans reject changes to Medicare. Even among self-identified Republicans, one-third reject changes to Medicare.

So how do Americans want to balance the budget? By raising taxes on the rich! Fifty-nine percent favor raising taxes on those who earn more than $250,000.

Let me repeat and stipulate: I agree that raising marginal income taxes would be a big mistake. I agree with those conservative Republicans who wish that marginal taxes could be reduced further and soon.

But if we are to get to lower tax rates, we must get there via tax reform — eliminating deductions, and substituting new taxes on energy and consumption.

Meanwhile, health care spending must be treated as a separate problem, with the focus on reforms to control costs — including squeezing payments to health care providers like insurance companies, pharmaceutical companies, hospitals, and doctors.

That’s not what happened. The Republican insistence on joining two negatives in hopes of producing one positive opened the way to President Obama’s speech Wednesday.

That speech was not so especially eloquent. It was, however, very effective. It frames the debate in a way that is maximally useful for Democrats. This framing was made possible by the efforts of Republicans themselves, blinded by their own hopes, misdirected by their own messaging.

It’s exactly like what happened on health care reform, where Republicans persuaded themselves they had Obama on the ropes even as he succeeded in enacting the most important new entitlement since 1965. We went for all the marbles, and ended with none. Now I fear we are doing it again.

Originally published in The Week.


What the Ryan Budget Gets Right

David Frum April 7th, 2011 at 10:31 am 39 Comments

I wrote yesterday about what is baffling in the Ryan budget plan.

What is positive?

1) The Ryan plan accepts that tax cuts must be “paid for” with offsets elsewhere in the budget. That’s a welcome departure from the tax cut + borrow approach of the past.

2) The Ryan plan redirects Republicans away from the illusion that budgets can be balanced with cuts to NPR, foreign aid, etc. The money is in healthcare – and Ryan has started an important Republican discussion about healthcare.

3) The premium support plan for Medicare is an important modern advance over the 1965-vintage single-payer Medicare system. The Ryan plan points the way to a better American health care future: a future in which everyone is enrolled in competitive private insurance – and in which support goes to those who need it, not just those who happen to be over 65.

4) The Ryan plan wishes to unleash cost-saving on the health care sector. At 17% of GDP – 4 points higher than runner-up Switzerland – there is plenty of bloat in that system. It bids farewell to the idea that attempts to find efficiency = “death panels.”

5) The Ryan plan joins medium term deficit reduction with a search for short-term job creation. I have my doubts that a drop in the top marginal tax rate will do the job. I’d prefer to see payroll tax holidays plus infrastructure spending, along with continuing Federal Reserve ease. That said: a cut in the top marginal tax rate is better than nothing. And * nothing * unfortunately has been the main GOP anti-recession policy to date.

6) Ryan ends the dual payer system for Medicaid, which he correctly assesses as an invitation to waste and irrationality. Block grants to states are a reasonable way to do the job for sure, and I’ve supported them in the past. Question though: given that premium support for employed people is now the law under Obamacare; given that the Ryan plan moves Medicare to a premium support model for under-55s; why not just fold Medicaid into that system instead?

7) The cuts to farm spending are welcome. The GOP did important farm reforms in the 1990s, relapsed with the 2002 farm bill. Ryan returns the GOP to its reforming traditions on farming.

8 ) The Ryan plan accepts that balancing the US budget is a decade-long project, and that most of the spending cuts should await economic recovery. The Ryan plan actually moves to balance slower than President Obama’s (fanciful) budget proposals: that’s a feature, not a bug.


A Budget That Can’t Budge

David Frum April 6th, 2011 at 11:07 am 111 Comments

What is the much-discussed Paul Ryan plan?

You probably know the plan’s main elements: A huge cut in Medicaid, a big cut in the value of future Medicare coverage for those under age 55, substantial cuts in discretionary domestic spending, plus a big tax cut aimed primarily at upper-income taxpayers.

Theoretically, this plan constitutes the first step toward the 2012 federal budget. But only very theoretically. The Senate will not pass it, and the president will not sign anything like the Ryan plan. If anything, the Ryan plan pushes us toward a future in which the federal government is funded for the next two years by stopgap continuing resolutions, postponing big decisions until after the 2012 elections.

So is the plan an electioneering document — the first draft of the Republican campaign message for 2012? Again, probably not. The campaign message will be determined by the presidential nominee, not by the chairman of the House Budget Committee. Review the probable nominees, and it’s hard to imagine Mitt Romney or Tim Pawlenty or Haley Barbour or Chris Christie running for president on the basis of a platform much more radical than that offered by Ronald Reagan in 1980.

Third option, then: Is the plan a negotiating ploy, a first offer to get serious bipartisan talks started with Democrats on entitlement reforms? Possibly. But the plan seems as likely to provoke the Democrats into fighting rather than negotiating. From a Democratic point of view, the Ryan plan looks like a Republican demand for all the marbles: Spending cuts for Democratic constituencies to fund tax cuts for Republican constituencies. More relevantly, from a Democratic point of view, the Ryan plan looks like a lethally unpopular demand for all the marbles — exactly the same demand that Democrats turned so decisively against Republicans in 1995. For Democrats, the Ryan plan is not a good faith opening gambit. It’s a temptingly vulnerable political target.

If the plan is not a real-world budget proposal, not an electioneering document, not a negotiating position — then what is it?

Answer: The Ryan plan is a Republican “memo to me” — an attempt by a party emerging from a troubled history to answer the question, “Who are we?” The answer is not aimed at the general public, but at Republicans themselves.

It goes like this: “Perhaps we used to be the people who introduced Medicare Part D. No longer. We have rediscovered our identity as the people who shrink government, not the people who expand it. Here is the proof.”

This “speaking to ourselves” mission explains many things about the plan that are otherwise puzzling.

  • Why are there no revenue enhancements of any kind — not even fees or excise taxes that have no negative impact on incentives or savings?
  • Why is Medicare protected in its existing form for a decade while the changes to Medicaid go into effect immediately?
  • Why is Social Security exempted entirely?
  • Why is agriculture treated so lightly — $30 billion in savings over 10 years, all of them (interestingly) to be decided by the Agriculture Committee, a unique concession by a Budget Committee otherwise determined to centralize decision-making?

Pose these questions and the answers become obvious:

These days, Americans over 55 vote heavily Republican. Under-55s lean Democratic, under-30s overwhelmingly so. (That’s the reverse, by the way, of the situation that prevailed as recently as the 1980s). Farmers vote Republican. Medicaid recipients do not. The deficit grows because the deficit reduction plan includes a big additional tax cut to upper-income taxpayers. And so on.

Well, that’s politics. The president’s health care and stimulus plans were larded with much grosser payoffs to Democratic constituencies.

But notice what Ryan’s plan does not do.

It does not credibly address the number one concern of Americans: jobs. The job numbers attached to the plan have become instant targets of ridicule. Not even the actual authors of the numbers believe them. See Noah Kristula Green’s article at FrumForum.com:

The Ryan budget touts analysis from the Heritage Foundation which argues that the unemployment rate will reach 2.8% by 2021. (For comparison, ‘natural’ unemployment is estimated to be around 5%.) FrumForum contacted the Heritage Foundation’s Center for Data Analysis to ask about this figure. Heritage responded that they came to this conclusion using a CBO baseline as they were requested to do, and that they view the baseline they were asked to use as one which was too optimistic to begin with.

More surprising still, the debt reduction plan actually increases the debt over the medium term — by even more President Obama’s budget would. Ryan’s plan tries to minimize this awkward fact by inserting it within a chart on page 57 that portrays the deficit from 1960 to 2080, a long enough timeframe wherein the worsening of the deficit situation over the period from 2012 to 2021 seems to shrink into historic insignificance.

The real message of the Ryan plan is: Upper-income tax cuts now; spending cuts for the poor now; more deficits now; spending cuts for middle-income people much later; spending cuts for today’s elderly, never.

Jobs first, deficit later is actually the right timing of priorities. But the upper-income tax cuts of 2001 and 2003 markedly failed to translate into higher incomes for ordinary Americans. The Ryan plan offers no reason to hope that another round of the same medicine will deliver better results.

As politics, the message is even worse than the economics. Cut Medicaid and Medicare to fund tax cuts? Isn’t that the issue that returned Bill Clinton to the White House in 1996? Don’t all the polls show that Medicare and even Medicaid are popular, and that more tax cuts for the wealthiest Americans are not? Isn’t this a formula for a GOP bloodbath in 2012? And if the plan did somehow become law, is it not a formula for an economy in the 2010s that will underperform for most people in the same way that the economy of the 2000s underperformed for most people?

Those are the questions that will worry economists and swing voters alike. But the plan is not written for economists and swing voters. It is written for the GOP core. Yet one has to wonder: What happens to a party that invests so much energy talking to itself? I am reminded again of the best anecdote in Karen Hughes’ memoir, “Ten Minutes From Normal.”

Walking on the beach one day, the former Bush communications director noticed a small plane trawling a huge advertising banner. The banner read something like: “Jill come back. I am miserable without you. Jack.” Hughes thought: “Bad message, Jack. Too much about you, not enough about her.”

That’s advice Republicans should ponder as they absorb Paul Ryan’s inward-focused budget ideas.

Originally published in The Week.


Will Congress Buy Ryan’s No Nonsense Budget?

April 5th, 2011 at 5:43 pm 42 Comments

Paul Ryan, viagra House Budget Committee Chairman and realist, seek has taken the great leap.  He has publicly proposed a budget resolution for Fiscal Year 2012 that directly takes on Medicare and Medicaid, the two great drivers of the impending American debt crisis.

Ryan’s become the first elected federal official with any position of responsibility who’s decided to break the cone of silence surrounding the ugly and simple truth—you cannot put the United States back on a sound fiscal track unless you admit that the government has made promises that it cannot keep.

Some have already criticized the Ryan Plan: it doesn’t address tax increases; it hits the elderly; it breaks promises we have made to those who pay the payroll tax; it’s unrealistic.

Shortly after Ryan released his budget plan, the President and Republican leaders met at the White House.  Ostensibly the meeting was about the seventh Continuing Resolution for FY11 appropriations.  The meeting though really foreshadows the larger questions that will surround the FY12 budget and the upcoming attempt by Congress to raise the federal debt limit.

And, no deal emerged from that meeting.  Indeed, only snide remarks and political posturing made news.  But, sorrowfully, no one expected much more.

We have talked before about the difficult challenge House Speaker Boehner has before him—trying to get Republicans of “form” to agree with Republicans of substance.  So far, the Michelle Bachmanns of the world have garnered most of the momentum—that is, from the Republicans for political advantage and “form.”  Now Ryan has spoken for Republicans of substance—that is, Republicans for serious fiscal reform.

So far, Ryan is a courageous but lonely figure.  No one knows if he has the votes to pass his plan out of his own committee.  No one knows what will happen to the plan on the House floor — if it gets there.  And certainly the Senate would reject the initiative if forced to vote on it anytime soon.

Will anybody else leap in with Ryan?  That question must occupy the thinking of Speaker Boehner as he tries to thread his way through the theologists and ideologues of his party.  He knows that he will get no help from the Nancy Pelosi wing of the Democratic Party.  Indeed, Pelosi and the political people in the White House must be delighted tonight as they begin to devise their 30-second commercials to use against Ryan and his supporters.

Only when the far left and far right are defeated on an important vote will the center of Congressional politics emerge and rule.

So, Boehner still faces fundamental challenge.  Will he side entirely with his ideological purists in the House GOP caucus, or will he begin real discussions with moderate and conservative Democrats in the House in order to get fundamental fiscal restraint?  Time remains for the Speaker to make his decision.  But, as the debt limit battle nears, Boehner has much difficult work to do.

Meanwhile, deficit projections worsen and warnings about debt increase.

Soon the United States will join some other notables in the world with deficits at 10% of gross domestic product and a debt limit that approximates 100% of GDP.  Those other notables?  Ireland, Greece, Portugal, Spain, among developed nations.

In a whimsical comment, someone asked me recently if I spoke Greek.  I said no.  He said I ought to learn soon since we are following the fiscal path Greece has forged.

We better hope that it remains a whimsical notion.