A lifetime of happiness!
No man alive could bear it,
it would be hell on earth.
George Bernard Shaw
Massachusetts, RomneyCare,
The Politics of Convenience
and the Medicaid Kerfuffle
I was looking at some of the recent rhetoric particularly that Massachusetts had been free riding at the expense of all the other states. Michael Cannon (below embedded) states that Massachusetts was free-riding off the other 49 states on its use of federal Medicaid fund by playing a shell game with state matching funds. I find this phrasing to be somewhat polemical and misleading. Jonathan Gruber, an economist whom played a major role in RomneyCare and ObamaCare, explains:
Second [of 3 reasons why Massachusetts was ready for universal health reform], a large amount of federal funding was at stake. As part of a Medicaid Section 1115 waiver—usually given in order to promote experimental or pilot health care programs—the state had since 1997 been receiving a large Intergovernmental Transfer (IGT) of the type used by many states to expand health care spending. The state was in essence using phantom state dollars to generate a federal match: it transferred the matched dollars to certain health care providers that then returned them to the state. Under the current waiver, renewed in 2002, the federal match amounted to $385 million by 2005. This money was directed toward the state’s main safety net providers, Boston and Cambridge City Medical Centers, to run the state’s largest Medicaid managed care plans. The rates paid these safety net providers were exceedingly generous, such that the federal government was essentially supplementing the expansion of these inner city hospitals.
Thus, the issue at stake had more to do with the federal government's concern that its dollars were being used to subsidize the costs of non-Medicaid patients also treated by these safety net providers, not the method of accounting for Medicaid 1115 waivers. This is why Romney has been talking about free riders, i.e., patients above the Medicaid income eligibility ceiling whom are receiving subsidized or even free care.
Gruber goes on to explain that the state responded to the Bush Administration's threat to cut off funding by matching up relevant state-only medical expenditures against the federal funds; further, instead of federal funds being used to reimburse the providers directly, the Medicaid funds (and some funds for low-income uncompensated care) would be used to fund means-tested subsidies in a mandatory insurance system.
Going back to the discussion of 49 states subsidizing Massachusetts's Medicaid dollars, unless I'm misunderstanding a Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier chart published by statehealthfacts.org, Massachusetts has consistently placed among the LOWEST percentage/multipliers among the states since at least FY2004. I also want to point out elsewhere Kaiser also tracks other state Medicaid 1115 waiver activities, including California, Illinois, Delaware, New Mexico, Utah, Oregon, New Mexico, Maine and Colorado.
Now let's talk about the politics of convenience. Here is Newt Gingrich, before he announced his bid for President, in November 2010 talking about "Massachusetts liberal Mitt Romney"'s RomneyCare on Brody File:
Newt Gingrich: Governor Romney's made very clear that he favors absolute repeal of Obamacare and that he believes it's not accurate and not fair to try and compare the two. And I think you have to start with that. and I also think, in all fairness to Governor Romney, that he vetoed many provisions that the liberal Democrats in the Massachusetts state legislature added to the bill. and they overrode his veto. So I think if you're going to go back and look at the original Romney bill you'd have a much better bill and a much more practical bill than what the liberal Democrats did to the legislation because they literally overrode his veto on a whole series of items.
As for Rick Santorum, he had this to say in endorsing Romney for President in Feb. 2008:
In a few short days, Republicans from across this country will decide more than their party's nominee. They will decide the very future of our party and the conservative coalition that Ronald Reagan built. Conservatives can no longer afford to stand on the sidelines in this election, and Governor Romney is the candidate who will stand up for the conservative principles that we hold dear.Other Republicans who endorsed RomneyCare before Obama and the 111th Congress are listed here.
There are significant differences between RomneyCare and ObamaCare, especially in ObamaCare's approaches to locus of control, the nature and extent of subsidies, entitlement criteria, enforcement mechanisms, and funding (beyond the typical comparison and contrast). And here is a good overview of the development of RomneyCare including elements that the Democratic legislature changed over Romney's vetoes.
Where do I stand? Tom Miller wrote an excellent paper for CATO which criticizes Nickles-Stearns (a 1994 GOP alternative to HillaryCare), including the mandatory option, and for the most part, he is spot on across the board. I think the health insurance situation has morphed into a monster. Consumers have almost no incentive to engage in cost containment. Guaranteed issue as Cannon and others point out, is basically a means of socializing one's own expensive health care costs, which is perverse policy.
I have one basic consideration for universal coverage: catastrophic conditions/injuries, e.g., spinal cord injuries and serious diseases (cancer, Lou Gehrig's, etc.) When medical bills mount to the point of personal bankruptcy. (In a certain sense, these bills are eventually covered anyway, but I would like to see a situation where you don't have to liquidate a lifetime of investing for retirement, etc., before the state steps in to help.) But people aren't going bankrupt over the payment of birth control pills and certain prescription drugs. There's a big difference between emergency surgery and ordinary medical costs which can and should be handled out of pocket.
I think Adler is spot on when he says this: "I recall that many conservatives and libertarians believed those who had embraced the Heritage approach were engaging in preemptive compromise, proposing bad ideas in an effort to forestall worse ones. " (Heritage, a conservative organization, was willing to accept a mandate as part of individual responsibility.) I think Romney did a great job trying to stick with a private sector approach to the problem. Do I like the solution? Of course not. But I saw it as an imperfect solution which was creative and bold and managed to stave out an even worse "solution".
Michael F. Cannon/CATO,"RomneyCare Free Riding and Fact Checking"
Jobs, Compensation and IT
There are a couple of minor IT related compensation items I wanted to comment on. The first is a FINS post by Joseph Walker on Why $100K Engineers Are Underpaid. He argues that high tech Goliath's like Google have seen profits outpace compensation, even with notorious perks. [In Silicon Valley, many employers feed their clients meals; my first employer usually just brought in some gooey breakfast pastries on Friday. I remember one of my clients in San Jose brought in dozens of Krispy Kreme doughnuts; I was working on an installation alone late at night and couldn't leave for dinner--I don't think I had a swipe card to get back into the building--so I ate a lot of leftover doughnuts. Another client I had in Sunnyvale invited me to their Friday after-hours beer keg social. But I never got pampered with free gourmet meals, various concierge services, etc. I still remember that first employer; originally I was a subcontractor for over 3 months, and my new boss told me the company brought in pizzas for their employee meeting. (He was broadly hinting he wanted to hire me full-time; I was commuting from Chicago on weekends.) So he invited me to go to the cafeteria and have some leftover pizza. (The company was reimbursing my food expenses, so it wasn't a big deal.) But there was a tiny Philippine accounting manager from hell whom hated me with a passion because I had replaced her friend. As soon as she saw me enter the cafeteria, she quickly boxed up the leftover pizzas and told me in no uncertain terms that the pizzas were for employees, not contractors. I went back upstairs (without pizza, of course), and my manager wanted to know where my pizza was. He wasn't happy: he prided himself on those little touches. I mean, when he finally recruited me, he actually used 25-cent Cokes in the vending machine as a recruitment incentive....)
Anyway, one of the gripes that Walker had in his article was how cheap $100K was when you work near Stanford, where homes probably start at $1M.
On an unrelated note (but related to high costs in economically booming areas), MJ Perry in Carpe Diem listed some notes from a radio station in Fargo, ND about the booming oil-rich western part of the state... Let me quote a few items:
3. Rents in Williston currently range from $2,000 for a one-bedroom apartment to $3,400 for a three-bedroom apartment.The second item involves a Senate bill (by a NC Democrat, Kay Hagan, of all people!) seeking to broaden the scope of salaried IT workers ineligible for overtime. I think the concern is that without flexibility, these jobs might be outsourced overseas.
4. Williams County allows three campers per farmstead, the farmers almost all have three campers on their property and are charging $800 per camper per month for rent.
7. The Williston McDonalds just announced that they will pay new workers $15 an hour, a $500 immediate signing bonus and full medical benefits.
9. The local Motel 6 in Williston now rents rooms for $130 per night.
10. Trinity Hospital in Minot has just hired 115 nurses from the Philippines, because they cannot get enough local nurses to apply.
I almost laughed when I saw that law; let me be clear: I don't think the government has any business in interfering with my negotiations with a potential client or employer. Even when I had to book hours for the client, almost all the agreements capped the hours I could be paid for to 8. It was a joke. I've written a few times about a Milwaukee suburb I worked in 2001. The female county DBA's were in charge of backups on the test server overnight, but I was told I had to be on the client site at 7:30AM in the morning to make sure the databases and application processes were up and available. (Sometimes processes wouldn't start up because of file ownership issues.) But if I needed to do patches, I couldn't start them until after 7PM.) Here's the worst part: when I negotiated my salary, the company president argued a lower base salary since I would be eligible for a bonus. After I finished the project, and no bonus was paid, I was told by HR that I was on a flat-bid contract, and the employee handbook said no bonuses on flat-bid contract. But the company president knew that when he negotiated my salary.
Sometimes you work for dishonest people. But looking back over the years, 60 hours or more a week, doing database maintenance over holidays, etc., were the norm, not the exception. I've had bonuses on a handful of occasions but no overtime. In fact, I've worked for management consulting companies related to accounting firms. Not only did I have to scan my investments with the firm's accounting client list, but most of them had service (e.g., interview prospective consultants) and continuing education requirements.
Musical Interlude: My Favorite Groups
The Guess Who, "American Woman"
