The New York Times had an interesting article about a month ago. The newspaper reported that for the first time since the Great Depression, senior citizens over age 75 are relocating from the South, from places like Florida, to the North, to places like New York “after losing spouses or becoming less mobile.” The migration means that seniors can avoid paying high New York taxes when they are healthy and wealthy, and then come back and claim New York’s more ample senior benefits, when they grow wise enough to see the value of extensive public services.
As one demographer put it “the South, and Florida especially, has been a magnet for yuppie elderly: younger seniors with spouse present and in good health. These are a catch for communities that receive them, because they have ample disposable incomes and make few demands on public services.” On the other hand, “the older senior population, especially after 80, are more likely to be widowed, less well off and more in need of social and economic support.” By not providing that support, states like Florida and Arizona take the money and dump the costs back to New York and the Midwest, where the federal share of Medicaid is low. “Many northern states seem to have better senior services than Florida,” that demographer told the Times.
This issue is part of a broader issue that has been swept under the rug because no one in power has an interest in bringing it up. States that are generous to those in need, out of a desire to help their own citizens, face the risk that those from less generous states with expensive problems will be left on their doorstep at their expense. As their taxes rise, those with fewer needs, more resources, and less interest in helping others, will move in the other direction. In 1990, according to a Public Use Microdata same someone ran for me once, only 33% of New York City heads of households with public assistance income had been born in New York State. A total of 18.4% had been born in what have since become the booming, low tax states along the South Atlantic coast between Maryland and Florida.
It is for that reason that more generous northern states insisted, as part of the Welfare Reform Act of 1996, that those migrating from less generous states be limited to the benefits they would have received in their state of origin. They feared facing a choice between a “race to the bottom” — denying benefits to their own citizens — and being inundated by those from less generous states. In one of the most significant yet least discussed Supreme Court decisions, that portion of the legislation was struck down in a case that originated in California.
This also sets a precedent for more expensive benefits such as Medicaid. A recent report from the United Hospital Fund posted here http://www.uhfnyc.org/usr_doc/Hospital_Watch_March_07.pdf showed that 13% of those coming to New York for intensive health care were either on Medicaid or uninsured (in many of the latter cases the hospitals try to get Medicaid reimbursement after the fact. And if the State of New York wants to offer generous senior benefits for those seniors who stay and pay taxes (well not exactly, since as I showed in this http://www.r8ny.com/blog/larry_littlefield/taxes_generational_equity_part_one.html post seniors don’t pay taxes here either), then it must also provide benefits for those who seek a better deal elsewhere and return while in need.
This Supreme Court decision just doesn’t fit anyone’s political narrative. Conservatives and Republicans don’t like to talk about it because they like to pretend that Red States have low taxes because they are efficient, not because they dump people with problems on those who care. Democrats and liberals are reluctant to criticize, since their base of public support isn’t those who receive benefits; it is those who make their living providing benefits, and are perfectly content to have those benefits received in New York to drum up business, even if this means New York taxpayers get a big share of the cost. Despite the importance of this Supreme Court decision, I haven’t heard it mentioned or written about since the day it came down.
With this in mind, and now that all states have reported Medicaid data for 2004, it might be interesting to see how much New York State spends on people in different age groups, compared with the United States and, say, Florida. (See attached spreadsheet)
In 2004, New York State accounted for 6.6% of U.S. Medicaid beneficiaries age 18 or under, but 8.9% of beneficiaries age 65 or older. New York spent 39.3% more than the U.S. average per beneficiary 18 or younger, but 89.4% more than average for those 65 or older. New York’s share of total U.S. Medicaid spending with a federal component: 9.2% for those 18 and younger, but 16.8% for those 65 and older. Of course, New York State also spends far more than the national average per student on schools — but only, once the cost of living is adjusted for, outside New York City.
And Florida? That state, whose population is closing on New York’s, had 5.5% of all U.S. beneficiaries age 18 or younger, and 6.1% of all beneficiaries age 65 or older. Remember, this is a state where the percent of total people age 65 and over is far higher than the national average. Florida spent 8.1% less than the national average per beneficiary 18 or younger, but 13.9% less than average for those 65 and older. It’s spending per working age adult beneficiary was slightly above average. Its total spending was 5.0% of the U.S total for those 18 and younger, and a similar 5.3% of the national total for those 65 and over. By the way, Florida has no state income tax. It does have sales taxes, which seniors pay on their purchases, and a “welcome stranger” property tax system that hits newcomers and snowbirds hard. With the collapse of the housing bubble, which is hitting that state sooner and harder than anywhere else, that system is in crisis.
What, if anything, can be done about all this? In a practical sense nothing, given the Supreme Court’s decision. In a political sense, however, the issue should be discussed and confronted. In particular, when people show up in New York to receive expensive care, having previously chosen to live elsewhere, this should be tabulated, added up, and presented for all to see. Both the beneficiaries themselves, and the states where they came from, should be confronted with the burden their arrival here places on local taxpayers and other service recipients. That means having a benefits application process that isn’t run by service providers who see those arriving for care as a welcome source of revenue to be attracted and accommodated for gain.
If there was a national health care finance system, New York would face no such burden. Indeed, people choosing to come here for care would be an economic asset, with everyone sharing the burden and New York getting the jobs. But under no such system would New York State, with average to below average wages Upstate and wages one-third higher than the national average Downstate get 89% more in health care funding for elderly recipients than the national average. That isn’t what happens under Medicare, which has a quite fair formula to adjust for the higher cost of living here. Our health care industry thus might be against a national system, but the rest of us should be for it, if we are going to end up shouldering national responsibilities in any event.
One thing for sure — I'm glad the state legislature never passed Pataki's COSTAR program. STAR is bad enough. STAR has enhanced school tax relief for seniors, on the grounds that they shouldn't have to pay for schools. COSTAR would have offset county property taxes (but probably not local income taxes sticking it to NYC once again), on the grounds that seniors should not have to pay the taxes required by the local share of Medicaid either, much of which is for seniors. For those with a vast sense of entitlement, and those who pander to them, it never ends.