RECENT EVENTS
Things are changing rapidly at the state level. In an effort to keep you up to date, this page is devoted exclusively to timely news regarding what is occurring right now in Pennsylvania. You will want to return to this page often as it will change on, at a minimum, on a weekly basis. And now on to this weeks news.
October 15, 2010
I and my campain manager, Jim Fryman, met with Rich Jackson who is the new Managing Editor of the Oil City Derrick and Franklin News Hearld. Among other things we discussed we were assured of press coverage of the debate on October 21 in Emlenton.
October 4, 2010
THE REVOLT
(With our thanks to the Commonwealth Foundation from which most of the following information was culled.)
There’s a revolt going on in our country. I see it every day when I listen to talk radio, chat with my neighbors, and think of all the rallies we’ve seen.
It’s a revolt against massive overspending by our politicians; spending that is mortgaging our country’s future and stealing from our kids and grandkids. This revolt is long overdue, and it’s going to have real consequences in just a few weeks, on Election Day.
Just last week, the Pennsylvania House of Representatives (of which Scott Hutchinson is a member) passed the nation’s highest tax on one of the few industries in our state that’s creating jobs, other than Governor Rendell’s government. That industry is natural gas, anchored by the huge Marcellus Shale in the northern part of Pennsylvania. And despite the rhetoric of those who want to spend your money for you, this tax isn’t really intended to help local communities fix roads impacted by drillers’ trucks. No, the vast majority of the revenues from this incredibly high tax will be sent back to Harrisburg for the General Fund. It’s basically a beer and pizza fund for Harrisburg politicians. And it strikes at the heart of a growing industry that has the potential to do great things for our state.
Here’s another example. Thanks (again) to overspending on pensions for government employees in Harrisburg, you and I are facing tax hikes of nearly $1,400 in just a few years. Earlier this year, the House passed a union-backed so-called “reform” that would actually increase our pension liability by $27 billion. Our kids and grandkids would have to cough this up.
After the numbers were crunched and it was documented how awful this idea was, the bill seemed dead in the Senate. But now, senators are talking about “improving” the bill. Are you kidding me?
There’s an election coming, and it’s going to spell trouble for the big spenders, but here in Harrisburg they’re doing as much damage as they can right now. That’s why we need to send a message to Washington and Harrisburg: Stop Wasting Our Money! If families and small businesses have to respond to this recession by cutting their budgets and tightening their belts, so should government!
Please join me in telling our leaders, and those who hope to be our leaders: Enough already! We’re not footing the bills for any more porky boondoggles. Remind them that they work for us. Remind them that the citizenry is not an ATM to be tapped at will to pay for pet projects for special interests.
This is a crucial moment for our state and our nation. Call you legislators – do it now!
October 2, 2010
From Newsmax.com
Iraq Racks Up Budget Surpluses While U.S. Debt Grows
Iraq has run annual budget surpluses each year since the United States invaded and ousted Saddam Hussein in 2003 — while the U.S. pumped more than half a trillion dollars into Iraq and ran deficits in every one of those years.
In the 6-year period from 2004 through 2009, the Iraqi government amassed a surplus of $52.1 billion, with up to 92.1 percent of its revenues coming from oil exports, according to an audit by the U.S. Government Accountability Office.
During that same period, deficits in six consecutive years boosted the overall U.S. national debt from $6.9 trillion to $12.3 trillion.
Part of that increased debt can be attributed to the $624 billion the U.S. has spent fighting the war to overthrow the Iraqi regime and help the Iraqis set up a democratic government, the GAO observed.
Despite Iraq’s surpluses, on July 29 the U.S. Congress approved $1 billion in “emergency” aid to the Iraqi government, and President Barack Obama is seeking another $2 billion in his fiscal 2011 budget, CNSNews reported.
The GAO also disclosed that the Iraqi government held as much as $32.2 billion in cash on deposit at banks and financial institutions.
“GAO believes that Congress should consider Iraq’s available financial resources when it reviews the administration’s fiscal 2011 budget request and other potential future budget requests for additional funds to train and equip Iraqi security forces,” the GAO stated in its audit report.
According to the Congressional Budget Office, America’s budget deficit exceeded $1.3 trillion for fiscal 2010, which ended Sept. 30 — the second greatest deficit as a percentage of GDP since World War II.
The greatest? The previous year’s $1.4 trillion deficit.
September 17, 2010
Bailouts, Bailouts and More Bailouts
Governor Rendell journeyed to City Hall in Harrisburg to give them the "GOOD" news. The state government was going to bailout the city government to the tune of 4.1 million dollars. One spendthrift government bailing out another spendthrift government - How much more obscene can it get? The city took over the parking garages in the city and, as alway happens when government interferes with what SHOULD be private business, it promptly began to lose money. The city also owns a minor league basebell team. That too is losing money. I could go on and on but you get the idea.
When you elect me State Representative politicians will be afraid to pull such shenanagans because they will very quickly learn that there is suddenly and informed public flooding there offices with mail in an amount that almost assures them that they will NOT BE RE-ELECTED. The thing a politician fears most is losing his job to an angry electorate.
A vote me, Vance Mays, is a vote that tells the government it's no longer businesss as usual.
And now here's even more on the subject from the Phillynow web site:
You know what you missed this weekend while you were busy being the man? Harrisburg almost defaulting. Yep. Harrisburg was helped by the broke state of Pennsylvania yesterday. It was meant to be quiet, but by late afternoon, Governor Ed Rendell was shooing reporters, and even said: “This is not a bailout,” according to Reuters.
On Sunday, Ed Rendell, the governor of Pennsylvania, announced a $4.3m cash transfer and said missing the bond payment was “not an option”. “Harrisburg’s financial future is still very cloudy, and difficult decisions still need to be made to return this city to financial stability,” he said in a statement. “Allowing a missed bond payment, however, would not be a good decision.”
Harrisburg has already defaulted on an incinerator project “the city partially guaranteed,” according to the Times. The project was meant to be a waste-to-energy facility but so far, um, hasn’t quite worked out.
Yesterday’s help of $4.3 million is for a $3.3 million payment due on September 15 and that’s actually just an interest payment on the city’s general obligation bond – which was sold 13 years ago. The state is helping Harrisburg because their plan had been to ask the bond insurer for the money. Rendell was scared that the bond insurer may then turn around the loan and sue the city back to get their payment back.
Of that city “going green” with its incinerator project:
Harrisburg is the primary guarantor of $288 million in debt taken on by the incinerator. The waste-to-energy facility has undergone expensive retrofits but still does not generate enough revenue to meet its obligations.
So what’s all that mean for you? Nothing good. Rest assured.
July 24, 2010
Consider the following excerpt from the "Bonusgate Grand Jury" report.
A "mad as hell" grand jury that investigated the Bonusgate scandal issued a list of recommendations improving a state Legislature they condemned as "broken," but was skeptical that any of the proposals would ever occur in a system so rife with corruption.
"The current operational structure and ingrained procedures of the Pennsylvania House Democratic and Republican caucuses are irretrievably broken and in desperate need of systemic change," the grand jurors wrote.
The self-serving culture of the Legislature's caucus system and patronage is so entrenched, the grand jury wrote, that the only way any change might take place is through a constitutional convention.
"The grand jury has determined beyond any doubt that the General Assembly, if left to its own devices, is utterly incapable of reforming itself," the report said.
From the Commonwealth foundation: (Emphasis mine)
Michael J. Nerozzi & Nathan A. Benefield
07.22.10
Following indictments and convictions of lawmakers and staff, a recent grand jury report recommended a series of legislative reforms. In response, Sen. Dominic Pileggi told the Tribune-Review that most legislatures operate like Pennsylvania's, a fact refuted in the same story. Sen. Daylin Leach called the proposals "ill-conceived" and wrote "a part-time Legislature is a terrible idea," which begs for explanation as to how 41 states manage it. And spokesmen for both House Democrats and Republicans cited new chamber rules - which were suspended to pass the state budget - as rationale that calls for reform are unmerited. It is clear our government will not reform itself. Article I, Section 2 of the Pennsylvania Constitution recognizes the right of the citizens to "alter, reform or abolish their government in such manner as they may think proper." It is past time to exercise this right, but the General Assembly and Governor have not provided the means to do so.
Pennsylvanians need the power of initiative and referendum (I&R). It is the only reliable mechanism for implementing reforms such as a part-time legislature, term limits, state spending caps, and abolishing gerrymandering.
I&R breathes life into Article 1, Section 2 by allowing the citizens - via majority vote at the ballot box - to enact laws and repeal bad ones. This process was an integral component of representative democracy at its founding in ancient Athens and Greece. It also formed an important part of civic life in Colonial America. Since our country's genesis, 24 states have adopted I&R. Pennsylvanians, however, only have I&R at the local level through what is known as a "home rule charter."
The structure of statewide I&R is simple. Initiative comes in two forms - direct and indirect. Direct initiative allows citizens to petition to place a measure on the ballot, for voters to approve or reject by majority vote. Indirect initiative allows the same petition process to compel the legislature to vote on a specified measure.
A referendum allows the electorate to reject or affirm laws passed by the legislature. There are four types of referenda: popular, legislative, compulsory and advisory. Popular referenda allow the citizens of a state to reject legislation passed by the legislature before it takes effect. Legislative referenda allow legislators to submit proposed laws to the public for a popular vote. Compulsory referenda bind the legislature to obtain voter approval before a proposal is enacted. Finally, advisory referenda are non-binding votes to gauge public opinion.
I&R has its critics. Some question whether the people are capable of gathering the signatures and expending the resources needed to get an issue on the ballot. Others contend the public is ill-informed to make rational judgments on civic affairs. But given the success other states and communities in Pennsylvania have had in using I&R, the benefits are too great to ignore.
Citizens in Charge, a Washington, D.C.-based I&R advocacy group, recently released a study comparing the fiscal climate in states with I&R compared to those without the process. The study found that, on average, states with I&R have lower taxes. In addition to lower per-capita taxes, initiative states were significantly more likely to have tax-and-expenditure limits, which generally limit state spending growth to inflation plus population growth (or a similar index). The study also found that spending limits enacted through the citizenry were more likely to remain permanent.
When one considers the fiscal and political climate of Pennsylvania, our inherent right of self-governance, and the many success stories with initiative and referendum, it becomes apparent that reform in Pennsylvania will have to start with the people exercising their constitutional sovereignty. Initiative and referendum is the only process capable of penetrating fortified special interests and giving this state the reforms our citizens deserve.
Michael J. Nerozzi served as a research associate and Nathan A. Benefield is the Director of Policy Research with the Commonwealth Foundation.
The following letter appeared on the Commonwealth Foundation website on 07/19/10:
Dear CF Friends:
Following the Commonwealth Foundation's exposé of PennFuture's lobbying, Jan Jarrett (CEO of the enviro-lobbyist organization) went on a tirade, saying CF Senior Fellow Paul Chesser is a right-wing hit man, theCommonwealth Foundation is a secretive and paranoid organization, and that "being called unethical by [the Commonwealth Foundation] is like being called ugly by a toad."
Following this playground name-calling, PennFuture had the gall to ask CF to retract its statements about PennFuture's lobbying. You can view our response here -- noting that every statement is correct, as PennFuture kept its lobbying secret by not reporting it to the IRS, and that both taxpayer funding and foundation grants went to PennFuture's operating budget, which includes lobbying for special interests.
But before even waiting for our response, PennFuture went on the attack again! In an email, Jarrett promised anyone who gives information about our donors will receive free PennFuture junk, "personally delivered by PennFuture President and CEO Jan Jarrett." CF will continue to respect the privacy of our donors, and our readers can feel free to let Jan Jarrett know of your contribution, or just your thoughts, at secrets@pennfuture.org.
Fighting for Your Freedom,
Matthew J. Brouillette
President & CEO
Once again from the Commonwealth Foundation
The Real Problem with the Specter Library
Nathan A. Benefield
07.13.10
As part of the state budget deal, Gov. Rendell secured $600 million in new borrowing for pork-barrel projects, including $10 million for the "Arlen Specter Library" at Philadelphia University and another $10 million for the "John P. Murtha Center for Public Policy." These monuments to politicians have sparked outrage, but represent only the tip of the iceberg in Pennsylvania's debt-fueled pork spending.
The Redevelopment Assistance Capital Program (abbreviated RACP, but pronounced R-Cap) was created in 1993 with a debt limit of $700 million. This debt ceiling has been increased regularly, mostly under Gov. Rendell's watch, with the latest $600 million hike increasing the limit to over $4 billion.
RACP is effectively state borrowing for "corporate welfare". In addition to the Specter and Murtha projects, the other projects funded this year include a new facility for Highmark, a hotel in St. Marys, and a number of grants to unnamed businesses. RACP has often been used for sports stadiums, convention centers, and even to pay Harley-Davidson to stay in Pennsylvania a little longer. Borrowing on the backs of taxpayers for these types of handouts is not a proper role for state government. For starters, RACP grants (though part of the state "capital budget") are not true capital expenditures. Like a family borrowing to buy a home, or going into debt to expand a business, government can appropriately issue bonds to build new facilities, schools, and roads. But handouts to politically selected companies and special interests are an improper use of taxpayer-backed debt.
Furthermore, the use of state debt under Gov. Rendell represents an oversized credit card with an ever-increasing spending limit. It is one thing for a state to borrow for infrastructure projects and then pay off that debt over the life of the project, but Pennsylvania continues to borrow and spend more each year while only making the minimum payment due.
Few have adequately acknowledged the growing burden of debt in Pennsylvania. Gov. Rendell answered some critics of these new projects by claiming he could not use debt to finance ongoing operations (like libraries). What he fails to mention is that the fastest growing department under his watch is not Education or Public Welfare, but the Treasury - representing increases for interest payments on debt. Indeed, General Fund debt service has nearly tripled under Gov. Rendell, from $350 million to $975 million in the current budget. And this total under-represents the true debt burden because most state debt is buried in off-budget state agencies and authorities.
Finally, RACP has failed to produce the promised economic renaissance. Increasing RACP borrowing was part of the Rendell stimulus package of 2004 - along with other debt-financed programs like the Commonwealth Financing Authority - but no stimulus came. Pennsylvania falls among the bottom of the states in rankings of our business climate. The state remains an "outbound" state, with more residents leaving for other states than coming in. And while the Commonwealth has not suffered as much as others in the current recession, the state still lags the nation in economic growth.
Indeed, had RACP worked as promised, there would be little need to keep it going. Rather, despite the proven failure of debt-backed economic development spending, lawmakers are growing the program and throwing more money around for their pet projects. As the Specter Library and Murtha Center indicate, RACP is much more about "political development" than economic development.
The monuments to the late Congressman Jack Murtha and soon-to-be-former Senator Arlen Specter represent some of the most egregious examples of pork-barrel politics. But hopefully, they can also be a wake-up call to voters and lawmakers alike about the out-of-control debt spending that plagues Harrisburg and holds back Pennsylvania's economy.
PREVIOUS WEEKS REPORTS
06/29/2010
Not a lot to report this week but did you know that Pennsylvania offers $750 millionper year in grants, loans, and tax breaks to attract or retain businesses-ranking the Commonwealth as the 2nd highest state in the amount of economic development incentives?In my opinion a better policy would be to repeal corporate welfare and lower the tax burden on all job creators.
06/23/2010
A Taxpayers Budget from the Commonwealth Foundation
"Before lawmakers impose higher taxes on Pennsylvania residents and businesses, they must justify the $66 billion they are already spending and cut waste," said Matthew J. Brouillette, president and CEO of the Commonwealth Foundation. "Pennsylvanians should be aware of how state government is misspending their hard-earned tax dollars. The good news is that we can reduce state spending while still maintaining a safety net for our most vulnerable citizens."
The report breaks down recommendations for reducing the size of state government into three categories: corporate welfare, "Yellow Pages government" and self-service government. Some examples highlighted include:
- $36 million for M. Knight Shyamalan's movie The Last Airbender from the Film Tax Credit;
- $225 million in new debt for pork projects from the RACP program, including $15 million for Harley Davidson;
- A potential $2 billion windfall from privatizing state-run liquor stores;
- Nearly $50 million in state-produced advertisements and commercials.
In addition, A Taxpayer's Budget offers recommendations for improving core services and the budget process. These include public pension reform, state spending transparency, repealing prevailing wage laws, and Medicaid reform.
"Lawmakers need to look beyond simply balancing this year's budget and make some of the changes needed for long-term fiscal stability," said Brouillette.
06/14/2010
The Commonwealth Foundation (CF) report on the budget follows:
We're down to 16 days left in the fiscal year for Harrisburg to enact a state budget on time.
The House Appropriations Committee on Wednesday amended its previous tax-hike proposal by increasing the levy they want to impose on Marcellus Shale extraction, while reducing their proposed tax increase on cigarettes. But Lieutenant Governor/Senate President Pro Tempore Joseph Scarnati (R-Jefferson) said he does not expect a severance tax to be approved as part of the budget.
Meanwhile, Speaker of the House Keith McCall (D-Carbon), who is in his final term, expressed anger at his political ally Ed Rendell for shutting down PennDOT unit that does nothing but help lawmakers provide services to their constituents faster than for those who go straight to PennDOT.
Speculation is circulating among the halls of power that Republicans and Democrats in the General Assembly will seek to circumvent the Governor and cobble together a proposal that can garner the two-thirds support requisite to override his veto. The governor has not previously had one of his vetoes overridden.
06/07/2010
Thanks once again to the Comwealth Foundation for the following report:
Pennsylvania's fiscal picture continues to grow grimmer. State Rep. Samuel Rohrer (R-Berks), minority chairman of the House Finance Committee, summed up matters thusly: "If Pennsylvania were a private company, it would be staring bankruptcy in the face. The truth is that we now have debts that exceed our ability to pay - the definition of insolvency."
To cover last year's budget deficit, among other shell games, the Governor and General Assembly exhausted the MCare Fund. The Commonwealth Court, however, ruled this year that financial move was illicit, and that the state must pay back $800 million. Add this to a $1.2 budget shortfall, and PA faces a $2 billion hole. To make matters worse, if Congress does not extend the Federal Medical Assistance Percentages (FMAP), which Gov. Rendell counted in his proposed budget, Harrisburg will be short another $850 million.
This past week, CF hosted Maurice McTigue, Vice President at the Mercatus Center at George Mason University, and a former member of the New Zealand Parliament, to speak to lawmakers and citizens about both lessons from New Zealand - including how the country eliminated all agriculture subsidies and all "economic development" subsidies (i.e. corporate welfare), and the economy flourished - and from other states and across the globe. McTigue also co-authored a recent policy paper outlining seven ideas for state policymakers dealing with fiscal crises.
From an Investigative News Report
The Marcellus Shale formation is believed to be the largest unconventional natural gas reservoir in America, and its exploration has been coined a modern-day gold rush. More than a mile underground, this once unreachable gas is now recoverable thanks to advancements in horizontal drilling and hydraulic fracturing technology.
Dozens of drilling companies are investing in Pennsylvania and boosting the economy by creating high-paying and permanent jobs. A Penn State University study estimated Marcellus Shale activity generated more than 44,000 jobs in 2009. Those who need jobs the most are being put to work, as much of the drilling activity is occurring in rural, economically depressed areas of Pennsylvania.
Unfortunately, all of these positive developments could be eroded if proposals to impose additional taxes and regulations are imposed by Harrisburg. Those who would hinder the Marcellus Shale development are misinforming legislators and the public about the drilling process and the state's environmental safeguards. Regulations in Pennsylvania are among the strictest in the nation. Within the last year, the Pennsylvania Department of Environmental Protection (DEP) has raised permitting fees to pay for greater oversight and enacted a host of new water regulations. Yet there has been little to no evidence to suggest that Pennsylvania's natural resources are seriously threatened by drilling.
A short-sighted proposal to garner more state revenue through a severance tax on natural gas would negatively impact the industry's development and stunt Pennsylvania's economic recovery and growth.
EVEN MORE
Governor Rendell wants to change the sales tax structure. Here’s an analysis of the facts as compiled by the Commonwealth Foundation. Based on the Pennsylvania State Tax Analysis Modeling Program (PA-STAMP), the increased collections will result in 10,000 fewer private sector jobs in 2011 and a loss of 15,000 jobs by 2012.
The following is posted with our thanks to Elizabeth Stelle, a research associate with the Commonwealth Foundation for Public Policy Alternatives
Since Governor Rendell took office in 2003, General Fund spending on public welfare has ballooned. In his FY 2010-11 budget, public welfare is set to receive an increase of $482 million. That would bring the increase in public welfare spending since 2003 to 68.2% (41.3% in inflation-adjusted spending).
This dramatic increase in expenditures is especially worrisome given that the Department of Public Welfare is the focus of constant audits and investigations revealing evidence of widespread abuse and waste. Recently, Auditor General Jack Wagner uncovered fraud in several state Department of Public Welfare (DPW) programs that could represent $1 billion or more in misspent money.
The Cost of Fraud
Since Governor Rendell took office in 2003, General Fund spending on public welfare has ballooned. In his FY 2010-11 budget, public welfare is set to receive an increase of $482 million. That would bring the increase in public welfare spending since 2003 to 68.2% (41.3% in inflation-adjusted spending).
This dramatic increase in expenditures is especially worrisome given that the Department of Public Welfare is the focus of constant audits and investigations revealing evidence of widespread abuse and waste. In fact, you may remember findings from a House Republican Policy Committee investigation uncovering numerous cases of welfare fraud.
Recently, Auditor General Jack Wagner uncovered fraud in several state Department of Public Welfare (DPW) programs that could represent $1 billion or more in misspent money. These programs include LIHEAP, the Special Allowance Program, and Medical Assistance (Medicaid).
LIHEAP provides grants to households with incomes of up to 150 percent of the federal poverty line, meaning a family of four earning up to $33,075 can receive benefits. Two audits over three years revealed lax procedures, insufficient supervision, and inadequate oversight. And the second audit resulted in the arrest of 18 people for stealing more than $500,000 of LIHEAP funds and related crimes.
DPW's Special Allowance Program was also labeled as "rife with mismanagement and poor oversight," creating an environment for potential fraud and abuse. This mismanagement has cost taxpayers tens of millions of dollars.
In the case of Medicaid, the Auditor General's office found that DPW failedto make proper eligibility determinations on more than 1,600 randomly selected applications between January 2005 and March 2008-resulting in $3.3 million in payments to a fraction of ineligible recipients. Many of the improper disbursements were due to DPW's failure to verify the recipients' age, disability, and family relationship requirements, and to promptly review recipients' financial and other eligibility information. The total cost of this fraud across the Medical Assistance program would likely be hundreds of millions of dollars.
The bureaucratic nature of DPW exacerbates the problem. The incentive structure is such that the department's primary goal is to add to its clientele, regardless of need. The more clients it has, the more funding it can obtain, creating greater job security for the bureaucrats.
Recommendations
Addressing the issues of fraud and waste starts with improving the enforcement of eligibility for DPW programs. However, the Rendell Administration seems content to celebrate increasing numbers of Pennsylvanians served by those programs (or those that become dependent on government), regardless of whether they are the truly needy.
Prior to the Rendell Administration, approximately 47,000 cases of suspected welfare fraud were referred annually to the Inspector General. However, between 2003 and 2004, the Inspector General received about 29,000 referrals-as caseloads continued to increase. In the past four years, the number of referrals has continued to decline, with 25,802 referrals in 2009.
Additionally, improving Pennsylvania's whistleblower protection law can help ensure transparency and accountability.
Eighteen states have whistleblower laws that protect private sector workers who report misuses of government funds. In addition to these states, Georgia protects healthcare workers who report Medicaid false claims, and South Carolina goes a step further to reward whistleblowers with up to $2,000 if their information saves money. The Commonwealth Foundation supports a similar approach to South Carolina's, rewarding whistleblowers, in the public and private sector, who identify those defrauding our welfare system and save taxpayers money.
Another step the legislature should consider is recovery audits legislation. Recovery audits for improper payments can be used to recoup the cost of fraud in state welfare operations. The American Legislative Exchange Council (ALEC) has model legislation implementing recovery audits for improper payments.
Recovery audits allow private contractors to audit fraud in Medicaid and other programs, and collect from those cheating the system. Recovery audits are a nationally recognized best practice for disbursements management and improving operational efficiency. Additionally, recovery audits will not cost the state any resources, as the contractor's costs are deducted from any dollars recovered, making the recovery audits self-funding. Typically, Medicaid is the largest area where overpayments and fraud are uncovered, but audits have been done in other areas as well.
Medicaid Reform
Finally, perhaps the most important step lawmakers can take is to overhaul the state's Medicaid program. Medicaid consumes a large part of our state budget and is growing at an unsustainable rate. If the current rate of growth continues, Medicaid will consume 94% of the state budget by 2075. Enacting Medicaid reform could significantly reduce the fraud and waste.
At the same time, Medicaid is a notoriously low-quality provider of health care. Studies show that those with private health insurance, as well as those without health insurance, have better health outcomes than those on Medicaid. Poor quality care is caused by the limited selection of doctors as Medicaid pays doctors and hospitals less for the same procedures than private insurance companies. The poor quality of Medicaid affects all Pennsylvanians by driving up the cost of private coverage. Allowing Medicaid recipients to have more control over their healthcare by transitioning from fee-for-service to vouchers would go a long way in improving service.
Specifically, each recipient would be awarded risk-adjusted credits to purchase health insurance, instead of direct payments to medical facilities. Florida, South Carolina, and Louisiana, have already adopted this approach. When individuals have more control over their health care dollars they use medical services more discriminately; likewise, providers have more freedom in treating Medicaid enrollees. Policies to enact Medicaid reform include:
- Creating an Insurance & Provider Exchange (IPE) whereby recipients can shop for coverage to replace the fee-for-service structure of Medicaid payments.
- Allowing Medicaid credits to be used for premium assistance, to be combined with individual or employer payments.
Our recommendations would reduce fraud and waste; because the credits would be income-adjusted, determining eligibility would be a regular part of the Medicaid exchange. Further, private insurers serving Medicaid recipients would have an incentive to crack down on improper billings and abuse by recipients and providers.
Welfare advocates justify spending increases by emphasizing that they're necessary to provide for Pennsylvania's vulnerable residents, including children, older adults, and the disabled. However, we must consider the efficiency and the outcomes of such programs. If resources are being squandered on those who don't need them and are defrauding the system, both welfare recipients and taxpayers would benefit from the above welfare reforms.
That's all for now. Check back again next week and while you're here, consider going to any other page on the site and clicking on the Donate Now button to help drive this campaign forward.
