Sequester This: The Impact in Nevada, Cut Women And Children First

Yesterday’s post was theoretical — that which decreases aggregate demand will reduce our national Gross Domestic Product.  Today the White House has released what the impact of the sequestration would be specifically in Nevada, and it’s not pretty.

Education

Nevada’s not been known for its generosity with its K-12 education funding. The information obtained from the 2010 Census shows Nevada spending approximately $8,422 per student, while the national average stands at $10,499.  [Census pdf] [LVSun 2011]  Sequestration makes this situation worse.

“Nevada will lose approximately $9 million in funding for primary and secondary education, putting around 120 teacher and aide jobs at risk. In addition about 14,000  fewer students would be served and approximately 10 fewer schools would receive funding.”  [Nevada pdf] (emphasis added)

In the real world, the average teacher aide in Clark County salary is reported as $20,378.  [salary.com] Average teacher pay is reported as approximately $51,777  annually. [RGJ factchecker]  Of the $9 billion lost to state and local funding for K-12 education in Nevada, if we lose 120 teachers and aides the loss to local economies could range from $2,520,000 (if all the losses were aides) to $6,240,000 (if all the losses were teachers at state average pay.)  If we arbitrarily take the half way point, (half losses of aide jobs plus half losses in teacher jobs) then Nevada stands to lose about $4,380,000 in consumer spending as a result of the sequestration cuts.  Less spent for housing, groceries, clothing, utilities, medical needs, transportation, etc.  What this state doesn’t need as it struggles out of the Housing Bubble/Wall Street Wizard Mess Recession is a significant decrease in disposable income for consumer spending.   And we haven’t even gotten to the part wherein 10 schools would face cuts, and 14,000 fewer students would be provided with federally supported services.  It gets worse:

“In addition, Nevada will lose approximately $3.8 million in funds for about 50 teachers, aides, and staff who help children with disabilities.” [Nevada pdf]

Those would be Special Education funds. There’s no way to say it other than to observe that special education services are labor intensive.  The services are labor intensive by definition, by the terms of Individualized Educational Plans, by the needs of children who are physically or mentally incapable of performing some tasks without personal assistance.  This, perhaps more than any other example, illustrates the problems with across the board cuts without analyzing priorities.  How is it preferable to cut services for the most vulnerable children among us in order to preserve subsidies for oil and energy companies?

“Head Start and Early Head Start services would be eliminated for approximately 300 children in Nevada, reducing access to critical early education.”  [Nevada pdf]

This would be sorry enough were it not for the following unfortunate fact: “13% of Nevada’s eligible children are currently being served, leaving about 87% in need of services.”  [NHStart] That’s right, 13% of Nevada children who are eligible for Head Start  are NOW served — that’s an under-service rate of 87% and the sequestration would cut the number of children served even further.   How could the Obama Administration “over hype” the significance of additional cuts to a program that’s already struggling in Nevada.  To this, the Republicans say that “there will be no more revenue,” i.e. “We will not cut loopholes for corporate jets, corporate subsidies, yachts, and accounting tricks for overseas operations?”

Health

“In Nevada around 1,150 fewer children will receive vaccines for diseases such as measles, mumps, rubella, tetanus, whooping cough, influenza, and Hepatitis B due to reduced funding for vaccinations of about $78,000.” [Nevada pdf]

Here we go again.  We’re already in a hole and the sequestration would simple exacerbate the situation, things had been improving:

“The Nevada Health Division says Nevada ranked 40th in the nation last year for vaccine coverage in children between the ages of 19 months to 35 months. That’s up from 51st in 2010.” [KTNV]  So, in 2011 we’d moved up from 51st in the states and territories ranked in terms of childhood vaccinations to 40th, and in 2013 we can expect to revert to lower climes?  However, it’s not just kids:

Nevada will lose approximately $258,000 in funds to help upgrade its ability to respond to public health threats including infectious diseases, natural disasters, and biological, chemical, nuclear, and radiological events. In addition, Nevada will lose about $690,000 in grants to help prevent and treat substance abuse, resulting in around 500 fewer admissions to substance abuse programs. And the Nevada State Department of Health/Human Services will lose about $123,000 resulting in around 3,100 fewer HIV tests. [Nevada pdf]

What could possibly go wrong?  Hepatitis C infections? Lower substance abuse treatment levels? Fewer HIV tests?

Women

“Nevada could lose up to $57,000 in funds that provide services to victims of domestic violence, resulting in up to 200 fewer victims being served.” [Nevada pdf]

It’s ridiculous enough that the House Republicans have a substitute bill for VAWA which denigrates tribal courts and refuses services to gay and lesbian couples, and ignores abuses perpetrated on immigrant women, but to cut funding for services and shelters to abused spouses and children is beyond the pale.

A complete list of sequestration effects in Nevada can be found here, as a pdf document.

So, Why Are We Doing This?

Is it because the terrible horrible deficit demonstrates a nation at risk of bankruptcy? Is it because our “out of control” spending is taking an increasing portion of our GDP?   The truth of the matter in one chart:

To see the President’s proposal, including his last offer to House Speaker John Boehner, click here

President Obama’s Deficit Plan from White House

Sunday Stroll: Ladies Day

Elections have consequences.  There could be significant consequences for the Medicaid program in Nevada depending on the outcome of the 2012 election.  Here are two, improved graphics from yesterday’s post illustrating who is served by the Nevada Medicaid program — and who will be impacted by proposals from the GOP (Ryan Budget) to transform Medicaid into a block grant program, and to cut funding by approximately one-third.

The question becomes — where will we cut? From the 58% of the program which serves children?  If we cut all funding from adults, that would save only 19% and we should remember that 150,200 of the people served are adult females, some of whom are pregnant receiving pre-natal care.

Speaking of women:  Planned Parenthood Federation of America informs us there were 133,246 uninsured women in Nevada as of 2008-2009.  Thanks to the Affordable Care Act (Obamacare) 66,623 are likely to qualify for Medicaid in 2014, and  55,963 are likely to qualify for premium credits in the health insurance exchanges.

Laying aside the Republican hyperbolic hysterical generalities about Socialism, Non-existent Death Panels, and Killing Grannies — the Affordable Care Act has some definite benefits for women, which ought to be considered before voting in favor of a candidate who wants to repeal it:

#1. Preventative and wellness visits to a physician — coverage must include screenings for breast and cervical cancer.  #2. Coverage for gestational diabetes screening. #3. HPV-DNA testing for high-risk human papillomavirus (HPV) DNA testing every three years, regardless of Pap smear results. Early screening, detection and treatment have been shown to help reduce the prevalence of cervical cancer. #4. STI counseling and HIV testing.  #5. Contraceptive and contraceptive counseling — and no the government isn’t paying for this, and employers aren’t paying for this — the insurance has to cover it.  #6. Breast feeding support, supplies, and education.  #7. Domestic violence screening and counseling services.  [Time]  And, by the way — health insurance corporations may no longer charge women more for an insurance policy just because they are — you know — female.

Women on the Reservation:  While the Republican controlled House of Representatives stews about expanding efforts to extend protection for Native American women under the provisions of the Violence Against Women Act, [The Hill] there’s still a major domestic violence problem on Reservations.   If one applied the GOP logic to the situation: “Suppose your sister was with you in Washington, DC, and her husband beat her up,” Moore says, “but because he was from Virginia, Washington couldn’t do anything about it.” [MJM]

There’s a little bit of help on the horizon from the Obama Administration’s Department of Justice.  Help for at least four tribes.

“Through this special initiative, OVW will support salary, travel and training costs of four tribal SAUSAs, who will work in collaboration with the U.S. Attorneys Offices in the Districts of Nebraska, New Mexico, Montana, North Dakota and South Dakota.  Specifically, OVW will award cooperative agreements to four federally recognized tribes to select qualified applicants in cooperation with the U.S. Attorney Offices to serve as cross-designated prosecutors.  These prosecutors will maintain an active violence against women crimes caseload, in tribal and/or federal court, while also helping to promote higher quality investigations, improved training and better inter-governmental communication.”

The ladies on the following Reservations will be a bit safer — Pueblo of Laguna in New Mexico,  Fort Belknap Tribe in Montana, Winnebago Tribe in Nebraska, Standing Rock Sioux Tribe, in North Dakota and South Dakota. Or, the House Republican leadership could stop hiding behind technicalities and vacation days and pass the re-authorization of the Violence Against Women Act.

Twenty Three Cents Worth:   Lily Ledbetter (video) spoke to the disparity of pay in too many American workplaces, 23 cents worth on average.  Let’s play with the calculator — the median expected salary for an entry level accountant in this country is $44,456 dollars per year.   [Salary.com] If a husband and wife were both entry level accountants, and the pay was equal, their combined earnings would be $88,912.   However, if her salary is only 77% of her husband’s she earns about $34,231.  Their combined earnings are reduced to $78,687.12.   Wonder what they could have done with $9,000?  Wonder what the local economy could have done if family earnings were what they should be?  Do the arithmetic.

Republican YOYO Home Economics: Medicaid Slashed, Other Support Burned

Former President Clinton advised the delegates to the 2012 Democratic Convention to listen carefully to what the Republicans were offering in regard to Medicaid, and those of us in Nevada should be “listening with both ears.”  Here’s the description of the Medicaid program as stated by the Nevada Department of Health and Human Services, the program:

“Provides health care coverage for many people including low income families with children whose family income is at or below 133% percent of poverty, Supplemental Security Income (SSI) recipients, certain Medicare beneficiaries, and recipients of adoption assistance, foster care and some children aging out of foster care. The DHCFP also operates five Home or Community-Based Services waivers offered to certain persons throughout the state. The Division of Welfare and Supportive Services (DWSS) determines eligibility for the Medicaid program.”

Listing those categories focuses on the aims of the program — it is to serve (1) low income families with children; (2) elderly Nevadans; (3) low income Nevadans over 65 years of age; (4) families receiving assistance for adopted children; (5) children in foster care.  Who was enrolled in Nevada’s Medicaid program as of fiscal year 2009:

What services were provided to those enrolled in Nevada’s Medicaid program?

During fiscal year 2010, 68.1% of the spending from the Medicaid program went for acute care, 25.6% was allocated for long term care, and 6.3% was used for “disproportionate care – hospital payments.”

The spending for long term care breaks down as illustrated in the following chart:

11.1% of the long term care funding was allocated to facilities for the intellectually disabled, 2.9% went to services for the mentally ill — and notice – 86% was used to provide home health & personal care, and nursing facility care.  In other words, 86% of Nevada’s Medicaid expenses for long term care went toward serving those least able to care for themselves.  The other 14% was used to provide intermediate and long term care for those unable to care for themselves because of intellectual limits or mental illness.

Here is exactly why President Clinton told his audience to “listen up:”

My view is get the federal government out of Medicaid, get it out of health care. Return it to the states.” – Romney, South Carolina GOP Primary Debate, Jan. 20, 2012.

In case anyone is remotely confused about what that statement from the former Massachusetts Governor means, he’s speaking about transforming the Medicaid program into Block Grants.

More specifically, the former Governor is adopting the block grant proposal for Medicaid set forth in his running mate’s “Path to Prosperity” budget plan:

“The plan also would repeal health system reform law provisions that will expand Medicaid coverage starting in 2014. Instead, states would receive block grants, which would free states “to tailor their Medicaid programs to the unique needs of their own populations,” the budget says.”  [AMA]

The tailoring is to be done with less cloth:

The Ryan budget would cut $2.4 trillion from Medicaid and other health programs. Reduced spending would increase the number of uninsured dramatically, Park* said. “Those who retain coverage will have benefits scaled back and have higher cost-sharing.” [AMA] (emphasis added)

We can drill down further into what Governor Romney and Representative Ryan have in mind for the Medicaid program by looking at the Congressional Budget Office’s analysis of the Ryan position:  Medicaid and the Children’s Health Insurance Program (CHIP)—from 2 percent of GDP in 2011 to 1¼ percent in 2030 and 1 percent in 2050.

Now is the moment to recall that 58% of those who receive Medicaid assistance for their health care needs in Nevada are children, and the AAP isn’t thrilled at cuts to that constituency:

“American Academy of Pediatrics President Robert W. Block, MD, said the proposal would undo investments in health programs for children. More than half of Medicaid recipients are children, but their care accounts for up to only one-quarter of the program’s costs.

“Whether considering fiscal year 2013 federal spending bills or reviewing long-term budget proposals, Congress must seize this opportunity to invest in the future of our country by protecting children’s health,” Dr. Block said.” [AMA]

Dr. Block has reason to be concerned, if we return to the Congressional Budget Office’s analysis we can see why.  In two paragraphs from their analysis of the Ryan “Path” the non-partisan office explains why the proposal would make deep cuts, and place greater burdens on the states:

“The specified path (Ryan Plan) would cause federal spending on Medicaid and CHIP to decline relative to GDP in coming decades, rather than to rise sharply as in the other policy scenarios that CBO has analyzed, and would include no exchange subsidies (see Figure 3). As a result, by 2050, such spending would be 76 percent below what would occur for Medicaid, CHIP, and exchange subsidies under the baseline scenario and 78 percent below what would occur under the alternative fiscal scenario. Because spending on CHIP and exchange subsidies represents a relatively small share of the amounts in the baseline and alternative fiscal scenarios, most of the reduction would have to come from the Medicaid program.” [CBO] (emphasis added)

The Republicans do, indeed seem serious about eliminating Medicaid as a federal program and shifting the expenses for health care access to low income elderly, the disabled, the intellectually disabled, elders in nursing facilities, and children in poverty to the states.  The CBO explains the nature of this shift:

The responses of the states would be of particular importance. If states were given additional flexibility to allocate federal funds for Medicaid and CHIP according to their own priorities, they might be able to improve the efficiency of those programs in delivering health care to low-income populations. Nevertheless, even with significant efficiency gains, the magnitude of the reduction in spending relative to such spending in the other scenarios means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both. Cutbacks might involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost-sharing by beneficiaries—all of which would reduce access to care. (emphasis added)

Translation: Even if the states were able to achieve all the vaunted efficiencies a “flexible” plan might provide — the cuts proposed are so deep and so drastic that citizens in the United States who are lower income elderly or the disabled in nursing homes, and those who are low income and living in foster care, or families in poverty — would have reduced access to care. Period.

These aren’t generic numbers and pie in the sky statistics we’re talking about, we’re speaking of 25,841 elderly Nevadans, 40,898 disabled Nevadans, 55,626 adult Nevadans – mostly women, and 168,070 Nevada children.

So, here’s a question for Governor Romney and Representative Ryan — If no matter how much efficiency the state of Nevada squeezes from your block grants for Medicaid, Nevada and the other states will still have to either appropriate significantly more revenue, or drastically reduce services — how is your plan anything other than a proposal to shift the burden of health care costs, for the least able among us, from the federal treasury to the state treasuries and the pockets of low income Americans?

Where, Governor Romney and Representative Ryan, does the Nevada Legislature start cutting? From the acute care services for adopted or foster children? From the acute care for pregnant women? From acute care for children in poverty who have asthma, autism, broken arms, or sprained ligaments?  From the long term care for the elderly who need home health care services and personal care to avoid institutional living?  From the long term care for the indigent mentally ill?  From elderly residents of nursing facilities?  From disabled children who need home health care? Where?

Perhaps cuts aren’t the only option. Must the Nevada government raise the eligibility standards such that only those living at “25%” of the official federal poverty level can receive assistance?  Here are the 2012 guidelines from the Department of Health and Human Services –

How much more should a family of four living on $1,920.83 per month  have to pay for basic health care?  How much more should a young man and his pregnant wife living on $1,260.83 per month have to pay for pre-natal care, and expenses associated with the birth of their first child?  For a political party which lauds its “Pro-Life” stance — asking low income families to dig deeper to pay for health care to make up for federal and state budget issues (while proposing more tax cuts for the top 1% of American income earners), makes it sound as though the GOP is the Pro-Birth, not Pro-Life party.

How much more should a young family have to pay for health care before the cost of health care begins to impinge on the capacity to put a roof over their heads?

Or their ability to put food on the table?  It’s likely going to cost our young family with two children under the ages of 19 approximately $366.40 to $578.40 per month to keep everyone fed. [USDA] Our hypothetical family might be lucky to have $764.43 per month remaining after housing and food for utilities, clothing, transportation costs (auto payments or bus fare) — that $764.43 translates to about $25.48 per day to cover ALL the basic family needs listed previously… including Health Care.  But wait, the Romney/Ryan budget cuts nutrition assistance too, drawing fire from the U.S. Conference of Catholic Bishops:

“Cuts to nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP) will hurt hungry children, poor families, vulnerable seniors and workers who cannot find employment. These cuts are unjustified and wrong.” [The Hill]

And what other program do the Republicans fantasize about turning into a Block Grant Program and then cutting?  Housing subsidies. [TO.org]  There was some discussion of the Ryan proposal on this topic at the March 21, 2012 House Budget Committee hearing:

“Rep. David Price (D-NC) asked Donovan what the implication of the Ryan budget cuts would be on HUD programs such as public housing, Choice Neighborhoods, HOME and others.  Donovan responded that, under the proposed Ryan budget, approximately one million households could lose their housing.  Of the one million households at risk under the Ryan budget, Donovan estimated that 585 thousand would come from the Housing Choice Voucher Program, 425 thousand from the Project-Based Voucher Program, and 110-180 thousand from homeless assistance programs.  He also mentioned that an estimated 17 thousand jobs would be lost from CDBG, and cuts to the HOME program would mean tens of thousands of new affordable housing units would not be built.”  [CLPHA] (emphasis added)

So, no help for financially fragile families for health care, or housing, or food — or anything, but tax payers in the top 1% of all our income brackets will get more, yet more generous, tax breaks.  Little wonder the Bishops were annoyed.  Less wonder Sister Simone Campbell from Nuns on the Bus received a standing ovation at the Democratic National Convention.

A person doesn’t have to be Roman Catholic to find the Republican proposals supported by Governor Romney and created by Representative Ryan astonishing in their parsimony and appalling in their avarice.

Perhaps one has to be incited by the fact that a family in Las Vegas might have an air-conditioner, or a DVD player, or a functional motor vehicle — “Look,” cry the miserly, “They have nice stuff, and they got it by doing nothing.” Not. So. Fast.   As of 2010 not that many Nevadans were receiving public  assistance. [Census] In fact, about 3% of Nevadans were receiving public assistance. [Census pdf]

Thus much for the Miserly Myth that “They’re all sitting around collecting welfare, and learning to be dependent on Guv’mint.”  Perhaps we should add the usual follow up, “and they’re doing it on my hard earned tax dollars.”  The latter portion is correct, we do pay taxes which support assistance programs for fragile families.  However, the Grinches among us appear to believe they are the only ones chipping in.

S’cuse me Mr. Grinch, but I really don’t mind paying a fractional portion of my income to insure NO child goes to bed hungry, NO elderly person with dementia is left alone, NO foster child is left with an untreated case of pneumonia, NO pregnant woman is without pre-natal care, NO family is homeless, NO mentally ill person is abandoned, NO disabled child is without care.

This is what Democrats mean when we say, “Just Say No.”

References and Resources:  * Edwin Park, CBPP.  Congressional Budget Office, Ryan’s Specified Paths, March 2012. (pdf) “House Republican Budget Seeks to Slow Medicare, Slash Medicaid,” American Medical Association, April 2, 2012.   Kaiser Family Foundation, State Health Facts, Database.  “Public Assistance Relief,” Census, Department of Commerce, pdf.  “HUD Secretary Defends FY13 Budget Before House Appropriators,” CLHPA.   “Four Ways Romney and Ryan Would Roll Back the 20th Century ,” Jake Blumgart, AlterNet, September 5, 2012.  “What Paul Ryan’s Budget Actually Cuts,” Brad Plumer, Washington Post, August 12, 2012.  USDA, Cost of Food Plans, Center for Nutrition Policy and Promotion, May 2011 (pdf).  ASPE, Department of Health and Human Services, HHS Poverty Guidelines 2012. Congressional Budget Office, “The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan,” March 2012, pdf.   Kaiser Family Foundation, link to interactive database for state health care statistics.

What Would The Romney-Ryan Medicare Plan Mean For Nevada’s 2nd Congressional District?

This analysis shows the immediate and long-term impacts of these changes in the 2nd Congressional District in Nevada.

The Republican proposal would have adverse impacts on seniors and disabled individuals in the district who are currently enrolled in Medicare. It would:

• Increase prescription drug costs for 8,600 Medicare beneficiaries in the district who enter the Part D donut hole, forcing them to pay an extra $85 million for drugs over the next decade.

• Eliminate new preventive care benefits for 123,000 Medicare beneficiaries in the district.

The Republican proposal would have even greater impacts on individuals in the district age 54 and younger who are not currently enrolled in Medicare. It would:

• Deny 610,000 individuals age 54 and younger in the district access to Medicare’s guaranteed benefits.

• Increase the out-of-pocket costs of health coverage by over $6,000 per year in 2022 and by almost $12,000 per year in 2032 for the 130,000 individuals in the district who are between the ages of 44 and 54.

• Require the 130,000 individuals in the district between the ages of 44 and 54 to save an additional $30.4 billion for their retirement – an average of $182,000 to $287,000 per individual – to pay for the increased cost of health coverage over their lifetimes. Younger residents of the district will have to save even higher amounts to cover their additional medical costs.

• Raise the Medicare eligibility age by at least one year to age 66 or more for 69,000 individuals in the district who are age 44 to 49 and by two years to age 67 for 480,000 individuals in the district who are age 43 or younger.

[Energy/Commerce House]

Perhaps Congressman Amodei would like to address these figures at some point before the election in November?

Dean Heller The Insurance Corporation’s BFF

Some down-ticket candidates may be running away from the Romney/Ryan budget, but Senator By Appointment Only™  Dean Heller (R-NV) isn’t one of them.

“The Fix surveyed Senate candidates in some top races — a few of which we highlighted Monday as states where Ryan’s V.P. nomination and his proposal to turn Medicare into a voucher program could matter. A couple of candidates in blue-leaning states have balked at tying themselves to Ryan, while Sen. Dean Heller (R-Nev.), Rep. Denny Rehberg (R-Mont.), and Rep. Rick Berg (R-N.D.) said they would welcome Ryan to the trail.”  [WaPo]

Heller’s opponent, Rep. Shelley Berkley (D-NV1) has, as expected, a very different take:

“While Senator Dean Heller may be ‘proud’ to have voted twice to end Medicare by turning it over to private insurance companies, nothing  makes me prouder than standing up for the Nevada seniors depending on their Social Security and Medicare to be there when they retire,” said U.S. Senate candidate Shelley Berkley.  ”Unfortunately, with Mitt Romney and Paul Ryan on the presidential ticket — and one of their biggest supporters, Dean Heller, seeking a US Senate seat, — Medicare is facing its biggest threat since its creation in 1965.   The Heller-Ryan-Romney plan would dismantle Medicare by putting private insurance company bureaucrats in between patients and their doctors while increasing premiums by $6,000 a year.  These are the wrong priorities for Nevada’s middle-class and seniors.”

There appears to be a bifurcated GOP assault on the popular Medicare program, one line of argument proposes that Medicare is “going broke” and it must be “reformed” to sustain it, and the other asserts that the Obama Administration has “cut” some $7 billion from the program and the Romney/Ryan Plan will “save” it.  There are several words in quote marks in this paragraph because the Republican talking points are massaged to the point of obfuscation.

The Broken Back Argument: First, one of the heaviest fiscal  pressures on the Medicare program is the prescription drug segment, or Part D.   The Medicare Modernization Act of 2003 established Part D, but with a significant provision favorable to the pharmaceutical industry:  The Department of Health and Human Services was forbidden to negotiate with the drug manufacturers for lower prices.  Former Nevada Representative Jim Gibbons (R-NV2) voted in favor of H.R. 1 (June 27, 2003) at 2:33 in the morning. [roll call 332]  The controversial bill passed in questionable procedural circumstances, and didn’t clear all the legislative hurdles until November 2003.

In January 2007 Nevada Representative Dean Heller had the opportunity to improve the MMA when a bill came to the floor of the House to allow the Department of Health and Human Services to negotiate with the pharmaceutical manufacturing corporations for lower prescription drug prices.  Representative Heller voted NO on H.R. 4, January 12, 2007 on roll call vote 23.

It really doesn’t quite do to argue that Medicare must be restructured as a voucher program to “save” it when measures which were intended to reduced the costs, such as allowing negotiated drug prices, were rejected by the Republicans, including Representative Heller,  in the 110th Congress.

Cuts and Savings: The popular flaming pants theme du jour is that Medicare must be ‘saved’ and the Romney/Ryan voucher program is the way to accomplish this end.   The issues here are both substantive and semantic.

The Republican National Committee issued its talking point guidelines for down-ticket candidates:  “Do not say: ‘entitlement reform,’ ‘privatization,’ ‘every option is on the table,’” the National Republican Congressional Committee said in an email memo. “Do say: ‘strengthen,’ ‘secure,’ ‘save,’ ‘preserve, ‘protect.’” [Politico]

One talking point alleges that Medicare must be ‘saved’ because the Affordable Care Act supposedly cut $500 billion*  from Medicare.  The RNC may not wish to have the public analyze this contention too carefully.  A little scrutiny demonstrates that the $500 billion reduction in the ACA comes from reducing taxpayer subsidies to health insurance corporations as a inducement to offer highly profitable Medicare Advantage insurance policies.   Other savings are gained by reducing waste, fraud, and abuse of the Medicare program.  It is very important to know that the $700 billion in savings DO NOT AFFECT ANY MEDICARE COVERAGE FOR THE ELDERLY.

On the other hand, the Romney/Ryan budget maintains the same numbers, “The Ryan budget assumes that very same $500 billion cut. Well, “cut” isn’t the right word; “savings” is more accurate. The reality is that in real dollars, Medicare spending will keep rising — just not by as much.” [NPR] The difference is that in the Affordable Care Act the savings are returned to the Medicare program, in the Romney/Ryan Budget plan the savings are used to protect lower tax rates for the 1%.

He Got The Memo

We should notice that Senator Heller got the RNC memo, note the “strengthens Medicare” language below:

“Dean believes the current health care law should be replaced with a plan that expands access and lowers costs for businesses, allows for purchasing of insurance across state lines, strengthens Medicare, protects individuals with pre-existing conditions and high medical costs, and preserves the doctor-patient relationship.”  [Heller]

There is a bit of code to be translated in this campaign rhetoric.   One way to lower costs for businesses is to simply require that all health insurance be procured by individuals, or to put it another way — no incentives should be offered businesses to provide health insurance benefits.  The ACA includes tax breaks for small businesses to encourage and assist in the inclusion of health care benefits for their employees.  Repealing the ACA would remove these tax credits.

The insurance corporations have long wanted the across state lines provisions because if enacted this would allow the corporations to offer policies based on the least restrictive regulatory environment.   If State X did NOT include basic coverage for immunizations, pre-natal care, cancer screenings, mental health care, or autism screening and coverage, then States Y and Z would have to drop their requirements that these elements be covered in their states.

Here comes the memo language: strengthens Medicare.   The Romney/Ryan proposal would ‘strengthen’ Medicare only so far as it transforms it from the current system into one in which senior citizens are supposed to shop for individual insurance plans and the health insurance corporations would be subsidized by taxpayers in the from of vouchers.  A reality check from the Berkley camp:

“In April 2011, Heller voted for the House Republican budget blueprint drafted by Paul Ryan, H Con Res 34, that the Wall Street Journal said “would essentially end Medicare.” According to the Associated Press, “The GOP proposal passed 235-193, with every Democrat voting “no.” The nonbinding plan lays out a fiscal vision cutting $6.2 trillion over 10 years from the budget submitted by President Barack Obama. It calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans.” [Berkley]

In short, the Romney/Ryan plan so enthusiastically endorsed by Senator Heller is a reversion to the pre-Medicare system in which individuals 65 and over would be required to shop for insurance plans on their own, only this time there’s a bonus voucher for the health insurance corporations.  There are a couple of problems with all this “individual choice.”

Having personal choices makes for a lovely campaign sound bite, but in the real world elderly Americans would face some of the same practical problems consistently faced by anyone trying to buy health insurance policies.  (1) There may be no real competition between or among health insurance companies in specific geographical regions.  (2) Insurance corporations would be allowed to sell junk policies with artificial lifetime limits on coverage.  (3) Insurance corporations would be free to restrict patient access to medical service providers outside their group.

Not to put too fine a point to it, but the insurance corporations would be the ones inserted between a patient and his or her physician — unlike the current Medicare (ACA) system in which the patient is free to choose among any health care provider accepting patients.

It appears that the GOP has given up trying to attack the Democratic argument that pre-existing conditions were abused by the insurance industry to arbitrarily rescind policies for vacuous, but profitable, reasons.

Translation

Senator Heller’s espousal of the Romney/Ryan budget and his statement quoted above essentially mean:

Small businesses should be offered no incentives to offer health care plans for their employees and should be free to eliminate such coverage, thus requiring that each individual purchase a his or her own insurance policy.

Insurance corporations should not have to follow guidelines for basic coverage which provides for any medical condition or treatment not offered in the state having the least requirements.

Health insurance corporations should be free to devise plans which have artificial limits on lifetime coverage, which restrict patient choice to health care providers associated with the health insurance corporation, and which have no limits on policy premiums for senior citizens.

* In some stump speeches the number increases to $700 billion.

Wall Street Fine, Main Street Not So Much, States Caught in the Middle

The situation in Nevada is beginning to demonstrate the universal application of the great literary phrase: “It was the best of times, it was the worst of times.”  Consider the following information from a Las Vegas Sun article about therapeutic services for disabled children back in March:

“In 76 percent of the cases reviewed, the state did not provide all of the services called for in plans agreed to by state caseworkers and families. This was “due to a lack of available personnel resources” and reduced hours the state had to contract with therapists.”

In 52 percent of cases, the state did not initiate services within 30 days, as required by the federal government. This was “attributable to the lack of personnel resources as a result of the reduction in the amount of funds available for contract services.”

There are 2,477 children receiving these services, such as they are, and another 250 ranging in age from newborn to 3 years of age on a waiting list.   So youngsters with autism, physical disabilities, developmental issues, and other serious medical challenges are in the cross hairs of a support system in which “fewer children could have more services, or more children could have fewer services.”  This is what an austerity budget means.   For everyone. If there are no increases in revenues, then all public services will be caught in the same bind as the kids — fewer may have more, or more can receive fewer.

However, in a political climate still clutching the remnants of the failed Voodoo economics of the Trickle Down Artists, and the ephemeral mythology that lower taxes magically transforms spreadsheet pixel dust into increased revenues,  any attempt to raise revenue is the antithesis of good politics.  ["Sandoval, not in favor of business tax initiative", LVSun]

The often and well debunked MYTH [EconoFact]  that lower rates of taxation will generate the revenues necessary to provide essential government services simply doesn’t work in the real world in which there are pot holes in asphalt, 30 kids in a kindergarten class, not enough health inspectors to cover the number of restaurants in a single year, not enough deputies to keep trucks from speeding through small towns, aging fire fighting equipment, and what might generously be called “antique” drinking water delivery systems.

For small businesses in Nevada this isn’t the best of times either.  Nevada’s experiencing job growth of about 1.1% YOY, a tick behind the national YOY job growth of 1.4%.  [DETR] Of special note is that the capital region — Carson City — has lost 4.2% of its job growth.  In fact, the capital city MSA is the only one in the state which is having declining job growth.

When the “business” of a MSA is primarily government then the private sector is affected when government declines.  We can craft a little home-made chart showing what happened to Carson City in terms of the percentage change YOY in its taxable sales as reported to the Department Of Taxation, as the state shed jobs and shaved the budget.  (pdf reports)

It’s no wonder small businesses and local retailers feel the bind when there’s been only one YOY increase since 2007 — and they started digging and backfilling out of the prior four year hole.  This is what an “austerity” budget looks like to local businesses trying to function in an area in which government payrolls help support the local economy.

So, why all the demand for “austerity,” if it doesn’t help provide public services and it doesn’t help local businesses? 

Federal and state deficits are a problem when interest rates are high.  Here’s one of the simplest explanations I’ve found so far:

“When long-term interest rates are high, a federal deficit competes against and “crowds out” private borrowing and investment. When long-term interest rates are low, the federal deficit is not taking away from borrowing by the private sector. On the contrary, the federal deficit is acting as a needed boost to aggregate demand in the economy, an action also known as “fiscal policy.” When the economy is slack, every dollar of reduction in federal spending takes three or four dollars off of our gross national product.”  [Grayson](emphasis added)

Got that?   The “crowding out private borrowing and investment” happens when interest rates are HIGH.”   So, what are the long term interest rates now?  The Treasury 20 year CMT is 2.13%. [Treasury] What does this look like in a historical context?  This:

The overall trend line doesn’t seem to indicate “high interest rates” does it?  Notice that the top of the line for the interest rates shown on the chart doesn’t go above 5.5%  Now, let’s compare that to the 30 yr. CMT for a previous era, say 1980 to 1990:

Since the old 30yr column has gone the way of the DoDo, and really long term Treasuries are spoken of as 25+’s, perhaps a better comparison would be the current 20 year rates:

The rate for 20 year notes hasn’t crept up over 3.08% during 2012 thus far.  We could sit and look at pretty charts all day, and the message would remain the same — this is NOT a period of HIGH interest rates, therefore the old “government borrowing drives out private capital” maxim doesn’t apply.  What the heck! Let’s look at one more — the U.S. Treasury’s Yield Curve showing the yields (rates) for all the notes available:

And, there it is — a graphic illustration of Low Interest Rates.  So, let’s get this straight.  We have to have an “austerity budget,” meaning that the federal government has to cut back on aid to the states, because when the government has to borrow money it crowds out private investment — EXCEPT when interest rates are low.   No, this doesn’t make sense, and Laura D’Andrea Tyson explains why:

“The “crowding out” argument explains why large and sustained government deficits take a toll on growth; they reduce capital formation. But this argument rests on how government deficits affect interest rates, and the relationship between government deficits and interest rates varies.

When there is considerable excess capacity, an increase in government borrowing to finance an increase in the deficit does not lead to higher interest rates and does not crowd out private investment. Instead, the higher demand resulting from the increase in the deficit bolsters employment and output directly, and the resulting increase in income and economic activity in turn encourages or “crowds in” additional private spending.”  [NYT] (emphasis added)

How do we know when we have excess capacity?  High unemployment is one really good tell.   What have we learned?

(1) Austerity budgets, the result of program funding cuts without any new revenue don’t serve to provide basic services for Nevada citizens, and others throughout the nation.

(2) We know that in regions in which government spending constitutes one of the major supports of the local economy local retailers and other small businesses see their sales decline.

(3)  Deficit reduction is necessary when government borrowing during periods in which we are operating at or close to our economic capacity when interest rates will be affected by the “crowding” to get capital.

(4) Our interest rates, for even very long term treasury notes, are exceedingly  low.

(5) Our economy is not functioning close to its capacity — witness the unemployment rates.

Therefore, the argument that we have to privatize Social Security, turn Medicare into a voucher coupon program, cut women and children off WIC nutrition support, take SNAP benefits from working families, cut spending for infrastructure maintenance and improvement, slash preventative medicine and wellness programs, and leave the national parks to rot…. because We Have To Reduce The Deficit — is ultimately ideology and currently bogus economics.

Nevada: Land of Inopportunity

Ouch! “Nevada Ranks Last in Nation in Job Opportunity.” [LVSun] Given an “Opportunity Index” of 21.3, out of a national average of 58.4 the headline isn’t surprising.  Statistical compilations aren’t necessarily without their own kind of vision; we could put together an index of “Pro-Business” numbers and massage the ranking until the Silver State showed no sign of tarnish.  However, the sources for this specific index ought to give Nevadans an incentive to discuss something other than “No New Taxes” in future public discussions.

The “Jobs” portion of Nevada’s score combines our unemployment rate, the median household income, the percentage of the population living below the poverty line, physical availability of banking and credit institutions, affordable housing, and Internet access.  Jobs are harder to find in areas in which there is already high unemployment and the Las Vegas area’s 13.4% indicates treacherous job hunting territory.  Reno’s 12.1% isn’t much better.  [DETR]  The official word from Carson City can be interpreted as “Gee, at least the situation didn’t get any worse.”  [DETR pdf]

There is a tiny glint of hope from the gaming industry, which “may” continue to grow, but as of last June the analysis from Carson City wasn’t all that optimistic:

“The accommodation and food services sector contracted considerably during the recession, marked by a number of casino closures and layoffs. This year however, the industry has shown improvement and should continue to add employment. About half of all employment growth in Nevada in recent months has come from the accommodation and food service industry. Prospects look promising given an improving national labor market situation and rising consumer confidence. International visitation will increase so long as the value of the dollar remains weak, making popular destinations like Las Vegas, Lake Tahoe, and Reno more affordable for foreign travelers. Employment in the accommodation and food service industry will increase by 1.4% in 2011, 1.6% in 2012, and 1.7% in 2013. This will be a total of 13,700 new jobs for the forecast period.”

That doesn’t quite cover the current 176,400 Nevadans now looking for work.   Neither will the expected employment projections in retail trade:

“Retail trade has improved over the last year. Consumers are moving into a better position given falling unemployment and improved job prospects. Pent up demand will start to drive sales higher. Money that consumers were putting towards savings or paying down debt during the downturn should slowly work its way back into the economy. Retail sales in Nevada have been growing as seen by taxable sales reports. Collections are up 5.0 percent through the first 8 months of the fiscal year. Employment in this industry will continue to grow, increasing by 0.8% in 2011, 0.7% in 2012, and 0.7% in 2013. This will be a total increase of 2,800 jobs for the forecast period.”

Notice that the analysis for both gaming and retail trade is gently phrased.  IF there is rising consumer confidence (i.e. willingness to gamble with family resources) and IF the dollar is weaker, and IF there is some “pent up demand,” then we might see some slow improvement in our job market. Some sectors are improving, but we need to look at whether Nevada is ready to take advantage of the opportunity.

High Tech, Health Care, Energy: The Big Three

One variable the Opportunity Index doesn’t include is the use of office space and its relationship to economic sector growth.  There are three areas which seem to be rebounding: High Tech, Health Care, and Energy.  [PR/Biz] “These three sectors account for nearly 650,000 or 35 percent of the 1.8 million jobs added since the employment trough in February 2010. High-tech employment has surged growing its job base by 5.1 percent (5.9 percent for services and 3.6 percent for manufacturing), surpassing growth of any other sector on a percentage basis. “

So, who is renting or leasing commercial office space now?

“Office-using employment sectors comprise 20.9 percent of total employment in the U.S., while high-tech services makes up just 1.7 percent. Nonetheless, high-tech services jobs increased by 5.9 percent from the trough, while office-using sectors increased by 1.9 percent. Though traditional office users are greater in number, high-tech office users are increasing at three times the pace, and this growth is more concentrated in specific markets thus driving office demand to a greater degree in those places. ” [PR/Biz] (emphasis added)

The main centers for this activity are  San Francisco, Silicon Valley, Seattle, New York, and Baltimore.  No Nevada towns on this list.   The High Tech expansion explains why California isn’t the same anemic blue on the Opportunity Index map, and the following should explain why Utah is a more positive shade as well:

“The Utah Department of Workforce Services projected the state will add 17,000 new jobs this year and 28,000 next year — a significant portion of which will be in the high-tech arena. Economists have also been optimistic — predicting slow, steady improvement on the employment front during 2011.

Not to mention the various recent accolades heaped on the Beehive State from national media like Forbes magazine and Moody’s Economy.com, which listed Salt Lake City and Utah among the best places to do business and best job markets in America.

[...] Kate Mitchell, co-founder and managing partner of Scale Venture Partners — a venture capital fund based in Silicon Valley, Calif., said Utah has the core infrastructure that makes it attractive to potential job creators.

“(You) have great research and universities, great innovation and a very friendly business environment,” she said.”  [DeseretNews] (emphasis added)

If Nevada’s missed the High Tech train, perhaps it could catch a car on the Health Care Services line?  The national average of health care employment as a percentage of the total is about 9.1%.  Nevada’s percentage is 6.3%.  [Kaiser]

There are 35 hospitals in the state, 16 of which are “for-profit,” 13 are non-profit, and 6 are operated by state or local governments.  There were 50 certified nursing facilities, 66% were “for-profit,” 16% non-profit, and 12% government operated, serving 4,761 residents. [Kaiser] There are only 7 certified rural health clinics in the state. [Kaiser]  The DETR projections aren’t all that optimistic for health care institution hiring:

“Health care and social assistance continues to perform well despite some challenges. While Nevada’s hospitals struggle given recessionary and programmatic difficulties, smaller businesses continue to do well during the recession.   Doctor’s offices, dentists and optometrists will continue to add employment during the projection period. Demand for health care services will continue to grow given the aging baby boom population. Employment is predicted to increase by 1.8% in 2011, 2.0% in 2012, and 2.4% in 2013. Total employment for this forecast period will increase by about 6,100 jobs.” [DETR]

The DETR projections wisely notice there will be a need for more institutional employment in the health care services sector in Nevada, but not necessarily that those 61,000 jobs will be toward the median portion of the wage scales or above.

If the employment train may have already left the station in High Tech, and Nevada is still trying to approach the station in terms of Health Care Services, we might look to the Energy Sector for employment growth?

Utility System Construction is expected to include 6,312 jobs by 2018. [DETR] Utilities in general some 4,488 jobs.  Electrical power generation may employ as many as 2,923 people by 2018. [DETR] There is nothing in these 2008-2018 projections to indicate a “boom.”

A Slow Hard Slog Toward Recovery

If our Opportunity Index showing is an indication, Nevada is in for a long and slow economic recovery.  Already poorly positioned in terms of employment in High Tech, Health Care, and emerging Energy investment, the reliance on gaming and retail trade means the state is still reliant on consumer spending to create employment, and the factors which drive consumer spending aren’t all that positive.

Slow money: Economists see a “long term average” of 37.59% in the growth of the M2 (money supply) as positive — we are now looking at a growth rate of about 9.9%. [Treas] There are some technical rationales for this problem, but the bottom line is that the slow growth indicates that wages and salaries aren’t generating economic growth in this realm.   We can argue about whether banks are extending sufficient credit or whether the ARRA funding is insufficient to generate the necessary growth — but the bottom line is that if there is depressed demand for goods and services then employment levels, wages, and salaries will also be deflated.

Temporary Employment:  It used to be said that temporary employment levels signaled the permanent employment trends.  However, this analysis isn’t all that heart warming:

“Temp jobs are now up 19.6% year over year, a record for the series going back to 1990 (when BLS began tracking it).  Private sector jobs less temp jobs are still down 0.7% year over year.  Historically — and I’ll admit going back only to 1990 isn’t a particularly robust data set — when temp jobs are up over 10% year over year, private sector jobs (less temp jobs) are running in the range, on average, of +2.4% YoY,  not -0.7%.  In the 20 year history of the series, never has the year over year gain been 10% or more while the private sector (ex-temp) has been negative.”  [RitHoltz] (emphasis in original)

If this is as good as it gets, then it’s going to be hard to move that M2 number.

The Deleveraging Demon:  There was a time not so long ago when homeowners were courted into the home equity loan market, now that home values have plummeted this is no longer a source of consumer spending as those same homeowners are now paying down debts.  Las Vegas, Atlanta, and Phoenix have posted new “lows” in home prices, indicating that the “worst” is still being explored in the housing market.  [BusWk]

While we await the “bottom of the Nevada housing market,” we may very well want to discuss how the state might better position itself in regard to high tech employment expansion, how to incentivize investment in both public and for-profit health care services, and how to insert the state into emerging energy generation technologies.  Failing that, we’ll be stuck with slow money, temporary employment which doesn’t encourage increases in demand, and the deleveraging demons which continue to plague our national and state economies.

>The Money Shuffle Begins?

>For those counting such things, there are 117 days left in the Nevada Legislature’s current session, and the Senate Committee on Health and Human Services will be meeting today to hear testimony on SB 10 and SB54. [SHHS pdf] SB 54 (pdf) should get some scrutiny.  Current Nevada Statutes (NRS 422.3775) requires that fees paid to the Division of Health Care Financing by nursing facilities be collected in a “Fund to Increase the Quality of Nursing Care.” The statutes now prohibit these funds from being used to replace existing state expenditures paid to nursing facilities. SB 54 would remove that prohibition.