If you want to know what Obama and the Congressional Democrats could do to aid state and local governments in an equitable fashion, read this. Tom Suozzi proposes that in lieu of other state and local government bailouts the federal government to pick up the full tab for Medicaid (eliminating the state government matching share), allow more people (especially the newly unemployed) to be covered, and require cost reductions, rather than keep the current structure intact and merely add more money temporarily. “For a modest investment of $50 billion, our new President could deliver real and immediate relief to state and local governments, and ultimately our taxpayers. The benefits would be distributed equally to every state, and we would take a big step toward achieving his vision of a comprehensive health care.” Why does it take a Suozzi to state the obvious — that rather than having separate funds of money shifting all over the place in a series of special deal bailouts, federal-state fiscal relations and the government health care finance system should be restructured? Perhaps because his proposal would not benefit those who have lucrative health benefits, who are powerful, and might limit the amount of money the health care industry can receive.
After all, Medicare provides a reasonable cost of living adjustment for health care expenditures in New York, paying out about one-third more than average here in like with average wages, but under Medicaid the Greater New York Hospital Association and Local 1199 can play the New York State Legislature to boost their public funding to the moon even as millions are denied public health care funding. That power is likely to be diluted, at least a little, in Washington. According to Suozzi “Medicaid spending has been out of control, especially in New York. Participating states would have to combat fraud and abuse; develop programs to prevent, detect and manage illness; reform long-term care, and eliminate minority health disparities, among other steps. This would be woven in with the development of a national health care program, which the new administration and Congress will be working together to forge.”
The federal government, he seems to hope, would do what New York State would not — expand coverage and improve basic health while reducing the cost per beneficiary. And although Mr. Suozzi describes a straight Medicaid takeover as "equitable," other states would surely notice that New York woudl get the most benefit because it spends the most. So the debate over whether that spending is reasonable would be nationalized, with New York compared with other places. For an insightful Governing magazine article on how much local pols with their local deals hate this (which is exactly what I do in most of my posts here on Room 8) read this.
In my opinion Suozzi, going farther than anyone else, still doesn’t go far enough. The better solution is to just create that national health care program, with a choice of a more cost effective Medicare-like option and an equal amount of government funding for private plans, right off the bat. Medicaid would thus be scrapped, but there would be other benefits as well.
The virtually unique shift of Medicaid costs to local government in New York is a major focus of local governments here, and Tom Suozzi in particular. Nationally, however, local governments are also likely to be bankrupted (I use the term specifically for those considering investing in municipal bonds) by the soaring cost of health insurance for their early retirees. A comprehensive national system would relieve that cost too, for older companies such as the Big Three automakers as well as governments. A comprehensive system, moreover, would eliminate the health insurance hurdle for those considering starting the new companies that would be required to turn the economy around. And it would ensure that younger generations, now moving from school to unemployment (or zero benefits “self-employment,” would receive public health finance benefits rather than just paying massive taxes for more selfish and powerful people to get them.
But Suozzi wants a “fast” stimulus, and although I believe the Obama Administration and Democratic Congress would have failed if a complete health care finance restructuring doesn’t go into effect with the new federal budget in October 2009, perhaps a Medicaid takeover could take place immediately, back-dated to January 1. Nothing the federal government would do help NYC more. With this burden removed, and its cost reduced, NYC could pay for its own infrastructure, and so could many other places.