Saturday, March 1, 2014

Helping Delaware (and Joe Miro) solve the Medicaid conundrum

Two months ago, in a post covering the Delaware government's immense surprise at rising Medicaid costs, I quoted this from the WNJ:
Officials in Markell’s administration say they were surprised this fall when the federal government signaled it would shift some Medicaid costs back to the state. The move was triggered by a technical change in the way federal economists calculate personal income, and could cost the state an unexpected $25 million.
And I said this:
I'm not sure who really believed that (A) adding 20,000-30,000 people to the 215,000 people in Delaware already on Medicaid wasn't going to cost more; or that (B) the cash-strapped Feds weren't going to look for a way to shift more of the expense downward.  Nobody's repealed the law of gravity recently. 
Last week the WNJ reported that the General Assembly's budget committee and the 22nd State Representative District's own incumbent Joe Miro are now getting around to grappling with this issue:  
Lawmakers on the General Assembly's budget committee wrestled Wednesday with the rising costs of Medicaid, the state-federal health program for the poor that will cost state taxpayers an additional $25.6 million next year.
The program is now projected to consume about $700 million of Gov. Jack Markell's proposed $3.8 billion operating budget proposal under consideration in the General Assembly.
"We cannot sustain the expenditures that we have with the income that we're generating," said Rep. Joe Miro, R-Pike Creek Valley. "Everybody on this committee realizes we need to do something." 
It is important to understand, no matter how you feel about Medicaid, that this is not something that our legislators can walk away from:  with the new Medicaid expansion one of every four Delaware citizens will be receiving his or her health insurance from the program.

Why is it that our legislators believe that the $3.8 BILLION dollars of tax revenue Delaware collects each year is inadequate to perform the essential tasks of government?

This is only a complex question to answer because our current crop of lawmakers starts with certain assumptions about what they need to do with our tax money, assumptions that are apparently driven more by who donated to their campaigns than by any sense of fiduciary responsibility.

You see, Medicaid (state subsidized health insurance for primarily the working poor) is something we can't afford to spend $700 million on (at least not without raising taxes, they tell us), but . . . .

According to multiple external reports [this and this] here are the things we can afford to devote not just millions to supporting, but tens of millions:
Delaware City Refinery  $32,000,000 in grants/low cost loans in 2010-2011
Fisker Automotive $21,500,000 in grants/low cost loans in 2010-2011
Bloom Energy $16,500,000 in grants/low cost loans in 2011
University of Delaware $12,000,000 in grants/low cost loans in 2009-2011
Amazon $7,500,00 in grants/low cost loans in 2011
Discover Bank $7,387,000 in grants/low cost loans in 2011
Sallie Mae $5,105,000 in grants/low cost loans in 2011
Citigroup $3,339,000 in grants/low cost loans in 2011
CIGNA $2,475,839 in grants/low cost loans in 2011
Johnson Controls $2,455,000 in grants/low cost loans in 2011
Perdue Farms $2,160,000 in free services/grants/low cost loans in 2000-2010
DuPont $2,010,000 in free services/grants/low cost loans in 2001-2011
Mountaire Farms $1,750,000 in free services/grants/low cost loans 1999-2010
Service Telecom Activaire $1,380,000 in grants/low cost loans 2011
Modular Carpet Recycling $1,210,000 in grants/low cost loans 2009-2010
Testing Machines $1,110,000 in grants/low cost loans 2009-2010
Barclays Bank $1,100,000 in free services/grants/low cost loans 2009-2010
You should note that this is only the tip of the iceberg--I've limited myself to covering private entities that received over $1,000,000, but there are literally dozens more companies in the $500,000-700,000 range.  According to Good Jobs, the total of all subsidies they could find amounts to more than $146,000,000, primarily between 2009-2011.  According to the New York Times, Delaware allocates an average of $43,100,000/year to corporate subsidies, including $20,500,000 in corporate income tax credits, reductions, or rebates.  

You should also note that easily available stats only currently go through 2011; you can be sure we've spent plenty more since then.

The argument, of course, is that we have to invest money to attract/sustain these industries to Delaware so that they can help us "grow" jobs.  Looking past the obvious, easy hits, like Fisker or Bloom, let's ask ourselves exactly how giving $17,000,000 in state subsidies to four financials is really incentivizing them.  Consider that Citigroup had $68.7 BILLION in revenue in 2013, Discover had $7.5 BILLION; Sallie Mae had $1.3 BILLION; and Barclays Bank had $41.6 BILLION.

So, between them, these four financials took in $119.1 BILLION as compared to Delaware's income of $3.8 BILLION (or, roughly 30 TIMES what Delaware takes in) and we've felt it necessary to provide them subsidies (to keep them here to provide jobs) of $17,000,000.  Let's put that in perspective:  our $17,000,000 subsidy to those four financials amounts to ONE ONE-HUNDREDTH of ONE PERCENT of their combined revenues for the year.

If you think they are taking this money for any other reason than because we are dumb enough to hand it over to them as protection money, you're nuts.

Or, let's consider both Perdue and Mountaire poultry corporations, most of whose line employees make just above the minimum wage and therefore qualify for SNAP, Medicaid, and whole lots of other government programs.  We subsidize those companies with nearly $3,000,000, while also paying their employee's food and medical expenses.

We hand out well over $100,000,000 per year in direct support of the University of Delaware, with tens of millions more hidden in various other budget lines.  Please explain to me, then, why we feel it necessary to provide one of the financially healthiest public universities in the nation with an addtional $12,000,000 in subsidized loans?

[By the way, this is particularly true when you consider the exorbitant cost of sending your child to UD.  Did you know that the in-state cost for a full-time undergraduate at our aspiring public ivy is $23,312, while you can send your young scholar to a real public ivy--The College of William and Mary in Virginia--for an out-of-state cost of just $25,778?  Think about that.  The out-of-state cost of William and Mary is only $2,466 more than the in-state cost of UD--and we are subsidizing their speculative business loans?]

The answer is pretty simple, but very foreign to our legislators--especially those raking in the max donations from crony capitalists across the spectrum:  if we ended (or even seriously curtailed) mega-corporate welfare in this State we would have a sufficiency of money to do many, many things.
 Here an extended quote from David Sirota at Salon might be in order:
Along with propping up companies that are supposedly free-market icons, the subsidies are also flowing to financial firms that have become synonymous with never-ending bailouts. Indeed, companies like Goldman Sachs, Bank of America and Citigroup – each of which was given massive taxpayer subsidies during the financial crisis —are the recipients of tens of millions of dollars in additional subsidies.
All of these handouts, of course, would be derided if they were going to poor people. But because they are going to extremely wealthy politically connected conglomerates, they are typically promoted with cheery euphemisms like “incentives” or “economic development.” Those euphemisms persist even though many subsidies do not end up actually creating jobs.
In light of that, the Good Jobs First report is a reality check on all the political rhetoric about dependency. Most of that rhetoric is punitively aimed at the poor. That’s because, unlike the huge corporations receiving all those subsidies, the poor don’t have armies of lobbyists and truckloads of campaign contributions that make sure programs like food stamps are shrouded in the anodyne argot of “incentives” and “development.”
But as the report proves, if we are going to have an honest conversation about dependency and free markets, then the billions of dollars flowing to politically connected companies need to be part of the discussion.
And from a libertarian perspective, let me go back to Kevin Carson at the Center for a Stateless Society:
Things like the minimum wage, food stamps and the Earned Income Tax Credit are secondary forms of state intervention, whose main function is to stabilize or ameliorate the problems resulting from its primary forms of intervention to guarantee rents to the wealthy and concentrate economic power in the hands of giant corporations.
So any agenda of gradually scaling down government should take this context into account. The first things to go should be welfare for the rich and big business, and the last should be welfare for ordinary people. If we start by eliminating all the forms of artificial property, artificial scarcity, subsidies and entry barriers that concentrate wealth in a few hands, and let free competition destroy enormous concentrations of wealth and redistribute it downward, we might not even notice whether welfare, minimum wages or food stamps still exist because they would be used by so few people as to be a moot point.
That's it.  We don't even have to visit millions for casino bail-outs, millions for unnecessary police surveillance, or the tens of millions we lose each year by not legalizing marijuana (although we do need to keep talking about all of those).

What we DO need to talk about is ending the penchant of Delaware lawmakers--both Democrats like Jack Markell and Republicans like Joe Miro--for postulating that we somehow aren't taking in enough money to sustain health care for poor people because we can't afford to address insane subsidies for multi-BILLION-dollar corporations. 


Manoj Kusshwaha said...

nice article impressive blog thanks for sharing such a useful information

Anonymous said...

And with Today's news; Delaware giving 2 grants to Johnson Controls to the tune of $1.6 million!!!
But, "Bernice Whaley, director of the Delaware Economic Development Office, said the state would be able to recover any allocated grant payments if Johnson Controls were to suddenly change its mind.

“A portion of the money is a reimbursement, so they would have to make the investment before they get anything,” she said. “The other grant is tied to hiring and will include a clawback provision in the event they don’t achieve specific benchmarks.”

Are these the same incentive clauses for Fisker and Bloom Energy and who is going to oversee this.

Let's see you post this on Delaware Liberal said...

It's really helpful for me. I am happy to find this post very helpful for me.Looks good, thanks for sharing!I wanted to thank you for your time.As for me, this is a great entry.