Author: Larry Littlefield

The Medicaid by State data cube, published by the Center for Medicare and Medicaid, is only finished when the last state gets the required information in. Based on past experience I have learned to not bother looking for the data from two years ago until December, but in this case when I looked all 50 states had been in since early October. I have belatedly downloaded a couple of crosstabulations – one by type of service and state (attached), and one by age of beneficiary and state (next post). The patterns remain consistent with past years. New York State continues to spend a large amount overall, despite low spending in some cases. New York State accounted for 6.5% of the people in the United States, 7.3% of the poor people (2006 data) and 9.3% of poor Americans over age 65. The large share of older Americans in poverty is related to our large share of older Americans overall, an outgrowth of slow population growth that we share with the rest of the Northeast. New York State accounted for 8.6% of all U.S. Medicaid beneficiaries, somewhat above its share of the poor. Adjacent Northeastern states (New Jersey, Connecticut, Pennsylvania, Massachusetts and Vermont), on the other hand, collectively accounted for 10.7% of Americans, 8.9% of poor Americans, 10.3% of poor Americans over age 65 – and 8.3% of Medicaid beneficiaries, somewhat less than their share of poor Americans.

The New York Sun reports "a state-regulated insurance pool for high-risk physicians, the Medical Malpractice Insurance Plan, is currently $500 million in debt…The deficit has to go somewhere eventually, unless we turn lead into gold or print money." The article is here http://www.nysun.com/article/68523?page_no=1. The likely result is soaring malpractice insurance fees, therefore higher health care costs, higher deductables, higher copayments and out of pocket expenses, and more uninsured. This is yet another $500 million that someone else (depending on one's ideology) either should have paid or should not have received in the past. Regardless of ideology, those demanding good deals for themselves in the past have caused $500 million in additional harm to us going forward. The only question is who was to blame. I see a bipartisan arrangement that passes 212 to 0 every year.

Everywhere one looks, one finds the same thing. How many more $500 millions are there? And how is it that I and my children and their children are responsible for them? How is that those in the legislature who made the decisions are considered heroes for handing out benefits in the past, and will have guaranteed health care and tax-free pensions even after they stop "working" in the future? Is evil too strong a word for the unspoken values behind what has gone on?  The more I think about it, the more it seems reneging on debt and pension obligations is the only way out.  Because we don't have real elections for legislative office, and because the constitutional provision that debts passed on to the future must pass by referendum is a joke, it is the only defense we have.  Eventually they'll be nothing left to lose.  Any reasonable estimate of the future has to assume an ongoing degredation of public services and benefits with high and rising taxes. 

What do I want Eliot Spitzer to do in this state budget? First of all, I want him to tell the truth. In the past, whenever the budget was tight, the City and State of New York have cut spending in categories and places where it is not high, to continue increasing spending in categories and places where it is high. I want the Governor to publicly identify the winners, and freeze or reduce their funding, and publicly identify the losers, letting them know they have been sacrificed. Let the over-funded sacrifice this time. In the past, tax rates have been increased to raise revenues. I want the Governor to keep his pledge on taxes with regard to rates and only raise revenues, if required, by cutting back exemptions, deductions and preferences. And I want him to tell those paying more who is paying less. In the past, the State and City of New York have always sacrificed the future when confronted with difficult choices in the present. I want the Governor to tell people exactly what those decisions, on debts and pensions, has cost them, and to avoid additional debts and one shots, no matter how difficult that will make the next year or two.

Every time a bull stock market puffs up the pension funds, the State of New York passes more sweeteners for those cashing in and moving out, but every time a bear market causes pension cost to soar, state-appointed arbitrators and control boards cut pay and benefits for hires while leaving those with seniority untouched. Because the sweeteners and the lower pay for new hires occur at different times, no one says the policy is to enrich one generation of workers at the expense of another. But that is what the policy is. Whenever the economy is flush, money is borrowed to allow more of it to flow to politically powerful priorities on which New York City and State spending is already above average. And when “uncontrollable” spending such as interest on debts subsequently soars, other public services such as parks, libraries, and the Administration of Children’s services are first in line for the axe. Because the spending increases and cuts occur at different times, no one says New York City and New York State policy is to spend more where we already spend more and less where we already spend less. But it is. Similarly, every time a hot economy swells New York City and New York State tax revenues, our elected officials curry favor with politically active discrete groups by handing out tax breaks.

And when the economy cools and tax revenues drop, tax rates are increased, nailing those who didn’t benefit from the breaks, or benefited less than others. Again, because the tax breaks and rate increases occur a few years apart, no one says New York’s policy is to impose higher and higher tax rates on a narrower and narrower tax base. But it is.

There is no more hypocritical whine than older New York State residents complaining that their children find it necessary to move away to find a decent life for themselves. It is hypocritical because while providing the nation’s richest Medicaid services for senior citizens, and excluding retirement income from state (and in New York City local) income taxes, New York has made decision after decision for nearly 20 years to favor those cashing in and moving out at the expense of the state’s future, which is now the present. In general, Republicans sell out the future with debts, caused by tax breaks and rich government contracts for business. Democrats do it with pension enhancements for those with seniority and already retired, passed every time a stock market boom swells pension fund coffers, followed by lower wages and benefits for new hires, agreed to by the Democrats’ union allies every time high pension costs leave the government broke. Now that the bills are starting to come due, there is a bit of unease in Albany, as our “leaders” look around for someone to blame. But with every deal passing the state legislature 212 to 0 they are all to blame. So are the older generations that have gratefully accepted this largesse without questioning who would pay how much. It is those deals that should be undone, and those generations who should pay first, if a recession and fiscal crisis requires sacrifice. To do otherwise would mean that Spitzer and Francis are merely continuing the practices of the now-despised Pataki to pump up the current Governor’s short-term popularity. In the end, Spitzer would be despised as well.

Newsday has reported that Governor Eliot Spitzer and budget director Paul Francis are “engaging the public as we determine our priorities for how to best use the state's limited financial resources, while minimizing the burden on taxpayers and keeping our business climate competitive.” If by “the public” they mean those with the greatest sense of entitlement and the most hooks into the state legislature, then all they have to do is choose the same victims to pay more or get less as in the early to mid-1990s and early 2000s. That is the “humble” thing to do, since it is the path of least resistance in the state legislature, and the path least likely to generate reputation-tainting opposition advertisements. If that is the path they choose, however, the Spitzer Administration will have failed the people of this state to an unimaginable extent. My suggestion, if they wish to “engage” with it, is to do the opposite. Reduce spending in categories and places where it is high, not where it is low. Raise revenues by eliminating tax breaks, even popular ones, rather than raising rates. And stop destroying the common future in order to curry favor with those with the greatest sense of entitlement in the present. For health care and aid to local governments, the details are below. And they assume a much more difficult fiscal environment than has been admitted thus far.