Category Archives: Entitlements

WTJU Podcast: COVID-19 and the Economy

By Peter Galuszka

Here’s is the twice-monthly podcast produced by WTJU, the official radio station of the University of Virginia. With me on this podcast  are Nathan Moore, the station general manager, and Sarah Vogelsong, who covers, labor, energy and environmental issues across the state for the Virginia Mercury, a fairly new and highly regarded non-profit news outlet. Our topic is how Virginia is handling the economic fallout from the COVID-19 pandemic.

Right Wing Uses Virus To Stifle Needed Reforms

Statue of Gov. Harry F. Byrd on the state capitol grounds.

By Peter Galuszka

Right-wingers in Virginia have been apoplectic for months that Democrats finally captured the General Assembly after years of Republican control.

They also were enraged that the legislature this winter passed a number of reforms that would draw Virginia into the 21st Century such raising the minimum wage, boosting collective bargaining, tightening rules on carbon pollution and raising taxes for cigarettes, a deadly product.

Now such conservatives are using the COVID-19 pandemic as an excuse to throttle or delay such needed reforms. They have banded into groups such as the Coalition fort a Strong Virginia Economy. They have used the Virginia Municipal League’s complaints against the reforms, claiming they cost too much, as a way to derail new measures.

According to the left-leaning blog site Blue Virginia, one of the more extreme advocates for scrambling changes is Dave LaRock, a far-right Republican delegate from Loudoun County. A pronounced gay-basher, LaRock wants to squelch all of the reforms made by the more progressive General Assembly. Continue reading

A Look at Richmond and COVID-19

By Peter Galuszka

Here is a roundup story I wrote for Style Weekly that was published today that explains the effects of COVID-19 on the Richmond area. Hopefully, BR readers will find it of interest.

It was a tough piece to report. The impacts of the deadly virus are very complicated and multi-faceted. An especially hard part was trying to keep with the fast-changing news, notably the number of new cases and deaths. We were updating right up until the story closed Monday afternoon. It was hard to talk to people with social-distancing and closings.

The experience shows the delicate balancing act between taking tough measures to stem the contagion and keeping the economy going. My view is that tough measures are needed because without them, it will all be much worse, particularly more illness and death as the experience in Italy has shown.

Incredibly, our utterly incompetent president, Donald Trump, now wants to focus on the economy more than taking necessary containment steps. It’s far too soon for that. Regrettably, a number of Bacon’s Rebellion commenters are sounding the same irresponsible tune in keeping with their big business and anti-regulation laud of free market capitalism. Continue reading

The Ohio Energy Bill Subsidy Virginia Would Copy

Three of the six electric utilities charging customers to provide others with Ohio PIPP subsidies. Per 1,000 kWh the surcharge to customers is $3.19 for Toledo Edison, $3.34 for Ohio Edison and $2.37 for The Illuminating Company.

by Steve Haner

Both the Virginia House of Delegates and Senate have voted to increase the price of electricity to most Virginians in order to subsidize the bills of low-income utility customers. How much? They have no idea. But the program in Ohio being copied adds from $1 to $3.66 to the price of 1,000 kilowatt hours for those not subsidized.

The Virginia version is even borrowing the name and acronym from Ohio, the Percentage of Income Payment Program (PIPP). The charge in both is called a “universal service fee.” In 2020, the Ohio program will cost ratepayers $301 million to subsidize the power bills of about 275,000 low-income households. The Public Utility Commission of Ohio (PUCO) sets the amount charged in each utility’s service territory and the Ohio Development Services Area transfers the necessary funds to the various electricity providers.

The largest electricity provider in that state of 11.7 million people, Ohio Power, has the highest “adder” on its rates, $3.66 per 1,000 kilowatt hours used. That works out to $44 per year for a residential customer using exactly that amount monthly. A large industrial or commercial user would pay the same rate until monthly consumption hit 833,000 kilowatt hours, when a reduced rate kicks in on additional consumption. The first 833,000 kilowatt hours of usage in Ohio Power’s territory is hit with a $3,050 monthly surcharge.  Continue reading

No Basis for Governor’s Community College Claim

Enrollment trend at Reynolds Community College.

by James A. Bacon

Last month Governor Ralph Northam announced a plan to spend $145 million to make community college tuition-free for low- and middle-income students pursuing jobs in high-demand fields. As justification for this massive entitlement expansion, he cited numbers from Reynolds Community College showing that students who dropped out before completing their degrees “usually had earned a 3.1 grade point average when they left school.” The reason they left, he asserted, was not an inability to keep up academically but a lack of money.

In this post, I questioned the numbers. I didn’t dispute them, but I wanted to know more about where they came from and what caveats might apply before committing to a $145 million spending program. I promised to ask J. Sarge (as we Richmond old-timers still refer to the college) where the 3.1 GPA number came from and report back.

So, I have obtained the information, and now I’m reporting back. Bottom line: Northam got part of the story right, but he drew totally unwarranted conclusions from the data. The justification for the $145 million initiative has no empirical foundation basis.

Let’s see what the Governor said when announcing the program in his State of the Commonwealth speech, and then let’s see what the data is to support it. Continue reading

A Spending Boost We Won’t Object to: Medicaid Fraud Prevention

Participants in the REAL LIFE program.

by James A. Bacon

As legislators ponder the next two-year budget, which incorporates a $2.2 billion-per-year increase in spending (14%) in FY 2022 compared to the current fiscal year, they would do well to take into account a new Medicaid scam.

Medicaid covers expenses categorized as “mental health skill building.” These mental-health services are particularly valuable to the homeless, drug and alcohol addicts, and people coming out of incarceration. Since the enactment of Medicaid expansion, the number of agencies providing such services has increased significantly. And so have the fraudsters who have learned how to game the system.

‘We have seen mental health skill builders drive their clients to our Community Center, sit in the waiting room sometimes for two to three hours while waiting for us to deliver services; meanwhile they are billing Medicaid,” says Sarah Scarbrough, director of REAL LIFE, a nonprofit that serves marginalized populations. Continue reading

JLARC: Medicaid Jumps 19% In Expansion Year

Source: JLARC October 7 report on state spending over time, in this case a decade of sustained economic growth with no recession.

By Steve Haner

Every year, the Joint Legislative Audit and Review Commission issues a report looking at ten years of state spending, sliced and diced various ways. In recent years, the headline results have largely been surprisingly consistent and the 2019 report issued Monday fit the pattern. As seen before:

  • Medicaid program costs lead the charge, exploding almost 19% in one year due to the expansion that started January 1, 2019, even though the fiscal year was one-half over by then. It went from $10 billion to $11.9 billion. The average annual growth over the decade has exceeded 7% and $600 million.
  • Keeping up with Medicaid, and exceeding it in some categories, are the various forms of transportation spending. In the decade since the base year of the report, fiscal year 2010, Virginia has passed both statewide and regional transportation tax increases, and various toll projects have been completed – all flowing through the state’s books.
  • The third budget element that has seen major growth is higher education, with the vast majority of the new money coming from tuition, fees and auxiliary operations at the state schools, not state tax dollars. When all the schools are lumped together, their spending growth is right in line with the other two mega programs, and the higher education totals push past the growth in state funds transferred for local public schools. Local public schools don’t charge tuition and fees they can raise at will.
  • Virginia’s general economic performance lagged the national average for the entire decade, with average annual gross domestic product growth of 1.4% (versus 2.2% nationally), per capita income growth of 2.8% (versus 3.4% nationally) and labor force growth of 0.9% (versus 1.5% nationally.)  The GDP is adjusted for inflation.

Continue reading

Don’t Abandon Medicaid Work Requirement

Cover art from 2014 JLARC report on Virginia’s array of workforce training programs. Another state report notes almost 860,000 served in 2017.

By Steve Haner

To Republicans who supported the 2018 decision to expand Medicaid services to more Virginians – and encouraged yes votes from reluctant colleagues — the promise to couple those benefits with pathways toward gainful employment was a key reason. The compromise has worked in other states as well.  Continue reading

Medicaid Expansion Cost Still Off-Budget, Elusive

By Steve Haner

All the signs point to trouble. The next state budget, a two-year plan to be proposed in December, adopted by March and implemented in July, may be caught between stagnant revenue and soaring spending.  The spending charge will be led once again by Medicaid.

Just how much the decision to expand Medicaid will cost in the future remains elusive.

The state’s fiscal prospects were explained to the General Assembly’s money committees September 16 and 17 by Secretary of Finance Aubrey Layne.  The highlights are summarized in this article for the Thomas Jefferson Institute for Public Policy, using the image of a strand of worry beads.  The article is being distributed today.  Continue reading

Does the Left Have an Understandable Position on Immigration and How Much Does It Matter?

by Don Rippert

Debate: The debate on immigration in America continues to rage. People who hold right-of-center political beliefs seem to think that the U.S. immigration laws should be vigorously enforced. There may be some “wiggle room” on the right. For example, some conservatives believe there should be exceptions to deportation for those illegally in the United States so long as they have been here a fairly long time, paid taxes, stayed out of legal trouble, etc. Without commenting on the reasonableness of the conservative position, it is understandable.

The position held by Americans with left-of-center political beliefs is hard to fathom. While few liberals will openly say they are in favor of “open borders” the sum total of their beliefs seems to indicate that “open borders” is exactly what they seek.

This issue is important for Virginia because some areas of Virginia have very low numbers of foreign born residents, while other areas have very high numbers of foreign-born residents. For example, the 2010 Census found that 12.9% of people living in America were foreign born. Virginia had 11.4% of its residents recorded as being foreign born. However, Arlington County (Virginia’s 6th most populous county) had a foreign born percentage of 28% in 2000. Social services are affected by immigration. The cost of teaching English as a second language in public schools is directly impacted by the percentage of residents born in foreign (non English speaking) countries.

Author’s apology in advance – this is a long post. By far the longest I have ever published. However, this is a complex topic with both liberals and conservatives more than willing to misrepresent the data. I saw no way to properly handle the topic with brevity.

Continue reading

Unpaid Bills, Debt Collection, and Hospital Profits

Carlos Ortiz. Photo credit: Wall Street Journal

Carlos Ortiz underwent tests last year at Mary Washington Hospital in Fredericksburg for dizziness stemming from an inner-ear problem. When the 65-year-old uninsured gardener couldn’t pay his $15,000 bill, the nonprofit institution took him to court. Mary Washington was suing so many patients that day that the circuit court had cleared the docket to hear all the cases.

As it turns out nonprofit hospitals are more likely than for-profit hospitals to garnish patients’ wages to collect their bills, according to a study of Virginia hospitals published Tuesday in the Journal of the American Medical Association and reported upon by the Wall Street Journal. In 2017 Virginia nonprofits filed 20,000 lawsuits against patients for unpaid debt.

Remarkably, the study found, nonprofits are more likely than for-profits to file lawsuits against patients for unpaid debt. These numbers do raise fundamental questions about Virginia’s social compact with its nonprofit hospitals. But hasty judgments are not in order. Continue reading

A Nonprofit Insider’s View on Child Nutrition

Last week I asked the question how, given our nation’s’ extensive social safety net, it is possible that children in Virginia go hungry and suffer from malnutrition. Are government support payments deficient? Are food deserts to blame? Do people squander their Supplemental Nutrition Assistance Program (SNAP) stipends? Is something else going on? The explanations we hear from the usual sources don’t seem to add up.

That piece triggered a response from Robin Mathews, who worked with recipients of SNAP and WIC programs as an employee in the nonprofit sector for several years. “I feel like I’ve seen just about all,” she says. Here are key points she makes in response to specific questions I raised in the post. (I have reproduced her comments here with light editing.)

Eligibility for SNAP. Unemployment rates are low but the income guidelines are stringent; a single parent with two children working full time at Amazon earning $15 an hour would not qualify for SNAP or WIC so these programs may be intended to supplement the “working poor” families.

Could single mothers’ budgets be stretched by live-in boyfriends who don’t qualify for food stamps? Of course, but what I see more often in public and subsidized housing is the “live in” who is not always a boyfriend but a “boarder” who has income (sometimes from selling drugs and guns) to pay for items not covered by SNAP and contributes this in exchange for the room and board/food he receives from the recipient who is eligible. Continue reading

If Kids Are Going Hungry, Does Anyone Care Why?

No one wants to see children go hungry, so one’s natural instinct is to sympathize with a new initiative like No Kid Hungry, which is helping parents and caregivers locate free meals in their communities with a simple text message. But a Richmond Times-Dispatch article profiling the program makes a startling statement:

The school year is over this week for most local schoolchildren, which means so are the daily meals many of them rely on as their main — and sometimes only — source of nourishment.

Note the RTD’s emphasis: School breakfast and lunch programs are sometimes the only source of nourishment for American school children. The RTD is asserting, presumably drawing upon the authority of its sources, that some kids in America don’t have access to any food during the summer. Is that not an astonishing statement? If true, is that not an an extraordinary indictment of our social safety net? Continue reading

The Push for EITC Cash Grants Accelerates

A useful EITC example from the Commonwealth Institute’s website. Whether anybody “earns” a credit is debatable, but that claim will appeal to those who benefit.

With the 2019 General Assembly now a handful of weeks away, the main advocacy group for a new cash welfare entitlement in Virginia is ramping up its efforts with various appeals, perhaps testing themes for later use.

On Wednesday on its website the Commonwealth Institute for Fiscal Analysis was arguing that the state Earned Income Tax Credit (EITC) should be converted to a “refundable” cash grant because of how it would help “communities of color,” who pay a larger percentage of their income in state and local taxes.

A few weeks back, the focus was on how “veterans and their families deserve full credit.”  And, of course, they have broken down their data by legislative district, conflating the number of people who claim the EITC already with the number who would benefit from their idea.  Not everybody who now claims the state EITC would qualify for a grant.

The first to advocate for converting the tax credit into a cash payment was Governor Ralph Northam, who mentioned it last summer as his favored use for the windfall state income tax dollars generated by conformity.  It has nothing to do with that windfall.  In order to benefit from this idea, you already must be paying zero state income tax.

In recognition of that, the argument now is people need to get the balance returned in cash because they are still paying sales, excise and other taxes, just not income taxes.  It’s not good enough to zero out their income tax, advocates claim.

As previously explored, the Earned Income Tax Credit is a program with conservative credentials and has succeeded in improving the finances of low-income working families.  At the federal level, if your income and family size qualify you for a credit which is larger than your tax bill, the difference is sent to you in cash.  To call it a “refund” is political fiction, because it is not cash you paid in taxes to start with.  It just comes at the same time the rest of us are getting refunds.

The federal version has grown into a major income transfer program, about $60 billion annually, and as always with these programs the push to expand them is constant.  A Democratic House of Representatives will be more attentive.

In an earlier tax reform effort, Virginia added its own version of the program, allowing a credit against state taxes equal to 20 percent of the federal EITC.  But Virginia did not take the second step of paying cash grants from state revenue to people who had larger credits than tax bills.  That is what Northam and the Commonwealth Institute are talking about doing now.

The cost impact is about $250 million, based on an earlier legislative proposal which failed, but a full analysis is lacking.  The cost to taxpayers – and it is a cost to taxpayers, not a refund and not tax reform – will need to be more carefully spelled out when a bill finally appears.  Advocates have developed a calculator for individuals and for some the grants would be substantial.

While this proposal is not tax reform, but instead is a way to share the windfall revenue with low-income working families, the idea is not incompatible with tax reform.  It would be possible to couple it with an increase in the standard deduction or some other change in personal income taxes that actually aligns with to the conformity windfall.  It is only a question of how much revenue with which the legislature is willing to part (for some, the answer is none).

The proposal to expand the standard deduction would reach far more Virginians – more in “communities of color,” more veterans, more in every legislative district – than would turning EITC into a cash grant.  The problem for some on the left is they would not all be poor or working-class and might even be well-off.

What they would not be is the same people.  As noted before, to qualify for the cash grant Northam and the Commonwealth Institute are talking about, you already must be paying zero state income tax.  If the EITC credit has already wiped out your state tax bill, an additional standard deduction is of no value.

But there is this, which should appeal to the Commonwealth Institute:  The additional standard deduction would add to the number of people who pay zero income tax.  An EITC cash grant would go to those already paying zero but would not grow their ranks.

And this:  The additional standard deduction would stay with you as your income grew.  EITC – whether a credit or both a credit and grant — shrinks as your income grows, and that is what people really want, growing income.

If the General Assembly must choose, it should choose tax reform and increase the standard deduction.  If its willing to do both, well, this is why the legislative process is great theater.  It cannot be predicted.

Medicaid Expansion’s Achilles Heel: the Doctor Shortage

Source: “Virginia Physician Workforce Shortage” presentation to the Joint Commission on Health Care, Sept. 2013.

The Northam administration sold Medicaid expansion to the public in part by claiming that the net cost to Virginia taxpayers would be minimal. Uncle Sam would pay for 90% of the cost of extending medical coverage to up to 400,000 Virginians, and the state’s 10% share would be offset by savings in prisons, mental health, and other areas. What no one talked about, except in the fine print, was the necessity of increasing reimbursements to physicians.

The Richmond Times-Dispatch editorial page explains today why higher reimbursements for physicians are an integral and unavoidable part of Medicaid expansion:

Medicaid underpays its physicians, reimbursing them at only 71 percent of the rate they get paid by Medicare, and an even smaller percentage of what private insurers pay. As a consequence, only 63 percent of physicians accept Medicaid patients, and only 71 percent of those are taking new patients. So, when Medicaid expands eligibility to as many as 400,000 near-poor Virginians this year, many will find it difficult to find a primary care physician, and they’ll wind up seeking care in the emergency room, just like they always have.

The Department of Medical Assistance Services (DMAS), which administers Virginia’s Medicaid program, now is asking for $19.1 million in the second year of the next biennial budget for Virginia’s share of the cost to lure more docs into the program. The hope is that hiking reimbursements from 71% of the Medicare benchmark to 80% of the benchmark will induce a meaningful number of physicians to take more Medicaid patients.

How likely is that?

Virginia has about 25,000 full-time-equivalent physicians, according to “Virginia Physician Workforce: 2016” published last year by the Healthcare Workforce Data Center (HWDC).

Source:  “Virginia Physician Workforce: 2016”

HWDC found that 57% of physician were accepting new patients at their primary office. Of those who are taking in more patients in their primary offices, 35% can accept no more than 50, while 23% can accept between 50 and 99 new patients. If I understand its presentation correctly (see the chart to the left) HWDC estimated a “new patient capacity” of about 14,000 at both primary and secondary locations. That’s a drop in the bucket compared to the expected influx of 400,000 new Medicaid patients.

The shortage is not likely to improve. Nearly 4,000 doctors, about 17% of the physician workforce, are over 65 years or older. Although many docs plan to work into their 70s, 8% of Virginia’s physicians plan to retire within two years, and 30% expect to do so within 10, estimates the HWDC.

If 8% of physicians retire in the next two years — about 1,000 per year — there are two ways, broadly speaking, to replace them. (1) working physicians can take in more patients, and (2) hospitals can recruit more doctors.

Female physicians work fewer hours on average than males at all ages. Source:  “Virginia Physician Workforce: 2016

While older physicians are predominantly male, the younger generation of physicians is half female. That’s great for gender equality, but it stretches the profession even thinner because female physicians tend to work fewer hours than males (presumably because, as mothers, many are juggling professional and domestic responsibilities). As male physicians age out and are replaced by females, doctors on average will tend to work fewer hours, meaning they will see fewer patients. For this and other reasons, 2,531 doctors told HWDC they were planning to decrease patient hours compared to 2,183 who said they were planning to increase their hours within the next two years — a net of 348 doctors intending to cut back.

Another way to accommodate 400,000 more Medicaid patients is to train and recruit new doctors. According to HWDC data, Virginia medical schools granted 1,322 residencies over the past five years. That’s a pipeline of barely 600 per year. Assuming every Virginia resident stayed in Virginia (which they don’t), the number fall significantly short of the 1,000 or so doctors expected to retire. That means the gap must be filled by recruiting doctors from outside the state. How likely is that to occur? Who knows. That’s a big uncertainty.

Some regions of Virginia will be able to absorb the influx of Medicaid patients better than others. The major metropolitan areas have higher doctor-population ratios than the non-metros. Indeed, as shown in the map at atop of this post, a 2013 presentation to the Joint Commission on Health Care designated much of the state as “primary care shortage areas.” That presentation cited a shortage of 126 primary care physicians in those areas. Continue reading