Thursday, October 30, 2008

Innovation and courage: there, not here

Get Ready

Predictions for 2009:

Prediction #1: The radicalism we need. A single-payer healthcare system should now be possible.

I have accused Senator Barack Obama of being a pragmatist.

That’s why I hope that he will seize the day and assign his policy leadership to get cracking on a new national healthcare system. The best approach would be for our existing Medicare system to be expanded to cover everybody.

Medicare for all would turn America into an insurance risk pool of more than 300 million “covered lives,” rather than the dysfunctional patchwork of some who have great health insurance, some who have spotty health insurance, and almost 50 million who have no health insurance at all.

There’s a way to do nationalized Medicare such that bureaucracy is contained and the free exercise of consumer preference is unimpeded—but the bogeyman that the Right will conjure up already has a name or two. It is variously called “socialized medicine” or, for short, “Canada.”

Nobody should be afraid of a Canadian-style healthcare system here. Why? Because the Canadian system works. It meets the test of policy, what I call the John Stuart Mill test, of achieving the greatest good for the greatest number. With some slight modifications, it would work here.

Canadians spend aroundeight percent of their gross domestic product on healthcare. We in the United States spend more than 15 percent of our gross domestic product on healthcare. Life expectancy is higher in Canada than here. Infant mortality is lower. It is true that there are some annoying cases of delay—what the Canadians quaintly call “queuing”—which is a problem that Americans simply won’t tolerate, and for which there is a logical market solution.

A very sane group of American physicians has long endorsed the Canadian approach because these fundamental issues of longevity and mortality are better managed there than here. The Physicians for a National Health Plan (see has 93 co-sponsors in the House of Representatives for H.R. 676, introduced by John Conyers of Detroit.

The need for radical change is quite urgent. That’s because the health-related debt is the hidden financial crisis that lurks behind the mortgage crisis. Why don’t folks have the wherewithal to pay their mortgages? Too often, it’s because they owe huge amounts of money for having had the misfortune of getting sick.

Even Bush Administration people get it. Mike Leavitt, head of the US Department of Health and Human Services, recently said, “If we had any idea how many mortgages were foreclosed because people were crowded out by medical issues…Health-care costs are at the heart of many of the things happening.”

According to the Commonwealth Fund, as much as 41 percent of working-age adults—72 million people—have medical debt or are struggling to pay medical bills. This is a sharp rise from 2005, when the problem faced 34 percent of adults (about 60 million people).

I was never very impressed by Obama’s proposed mandate for employers to insure their employees. Why shouldn’t everybody be in the same risk pool? The patchwork approach is not as sensible a solution to this problem as the Physicians for a National Health Plan approach.

Prediction #2: Democrats are about to screw this community.

Because the Erie County Legislature refused to enact dedicated funding for parks, the arts, and libraries, get ready to kiss them goodbye.

No matter who is elected president, and no matter what economic stimulus package is enacted in Washington, the government in New York State—and that includes our city, our towns, our county, our school districts, and more—will have to raise taxes and cut services.

Governor Paterson will have about a $10 billion hole in his 2009-10 budget. After November 18, when he calls the New York State Legislature back into session, we will have a better idea of how he means to plug the multi-billion-dollar gap in the current budget year. Sharp reductions in revenue from Wall Street will mean severe cuts soon. And then next year, the pain will get worse.

Meanwhile, back here in Erie County, the county executive from Clarence has just proposed a budget that will stay balanced for about a month before it runs out of money.

Democrats in the County Legislature want the blame to fall upon Collins. They theorize that they can run for re-election in 2009 by blaming him for raising taxes and cutting services, even though legislators who cut services will themselves be blamed for…cutting services.

Nevertheless, observers predict three possible scenarios:

1. Democrats in the Erie County Legislature will rush to enact a zero-tax-increase budget before November 17 so that they can say they are against tax increases.

Notwithstanding the fact that county taxes are low, Democrats won’t raise them to fund services. (The New York State constitution allows local governments to raise up to two percent of the assessed value of real property. The value of real estate in Erie County is about $37 billion, which means that Erie County could conceivably have a $740 million tax levy. Today, the tax levy is around $200 million, every nickel of which goes to pay Medicaid. The average homeowner in Erie County pays $500 a year in county taxes. Collins proposes to raise that tax by $20 a year.)

If the Legislature’s Democrats go for Scenario #1, they will abandon libraries, culturals, parks, the Cornell Cooperative Extension, the 4-H agricultural-training program, and various youth- and senior-assistance programs because they believe that no taxpayers will tolerate even a $1.50 per month increase in County taxes.

In the alternative:

2. Democrats in the Erie County Legislature could rush to enact a modified budget that protects libraries, culturals, parks, and the rest, but will warn that County Executive Chris Collins has failed to adequately budget reserves against the coming storm of new state mandates that Governor Paterson will put in his own budget.

Could this happen? Maybe, if the lobbying gets intense. There is strong momentum for Scenario #1. But there is a third possibility:

3) Democrats in the Erie County Legislature will sit in total paralysis until the second week of December, and allow the budget County Executive Chris Collins proposed to go into effect by default.

Here’s what any of those scenarios mean to this community:

If you run a cultural organization in Erie County, get ready to see your County allocation whacked—which will happen starting in January. Don’t expect a nickel in county funding. Why? Because after January, the massive changes in state budgets will come into effect, and wipe out all of Erie County’s ability to write checks to cover non-mandated services.

Culturals should remember that there is no place to go for taxpayer support other than Erie County. Under former Mayor Anthony Masiello, the City of Buffalo cut out any funding for culturals. The current county executive reduced the $5.6 million that former County Executive Joel Giambra budgeted, and then reduced it more.

And why are county elected officials willing to cut funding for the quality-of-life programs and amenities that make this community liveable?

The answer is quite simple: Against the evidence of the presidential campaign now underway, in which the tax-raiser is winning, Democrats in the Erie County Legislature believe that local taxpayers will not vote for any elected official who votes to raise taxes for any reason. Nor do the three Republicans in the Erie County Legislature, even suburban pork king Mike Ranzenhoffer, but that’s not surprising.

Legislature Democrats killed a 2007 proposal for creating a dedicated revenue—basically, a property-tax set-aside—so that community assets would be funded.

Fully funding the library system at about $23 million a year, the culturals at $6 million a year, the Cornell Cooperative Extension and a handful of other items for $1 million a year, plus $6 million a year for capital and operations costs for the county-wide parks system (including all the City of Buffalo parks, the Olmsted Conservancy, plus the more than 10,000 acres of parkland and forests and preserves in the suburbs and exurbs) would cost, at the most, about $36 million a year.

Erie County has the second-lowest county property tax rate in New York State. The county property tax now raises about $200 million a year, all of which goes to pay the Medicaid bill.

If the average county homeowner paid a $35 annual surcharge to a dedicated fund that could not be raided for other purposes, then the libraries, the culturals, the parks, and the rest could all stay open. That price is about 10 cents a day, or $3 a month.

That’s the price. What’s the cost of doing without it?

Ask a Democratic legislator—because if the libraries, culturals, parks, and the rest are cut, it’s because they did the cutting. And remember: There are 12 Democrats in the 15-member Erie County Legislature. That means that they have a veto-proof majority.

Bruce Fisher is visiting professor of Economics and Finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

Reader Comments

30 Oct 2008, 10:24
In my opinion, the Canadian solution to health care would not be acceptable to the majority of Americans. While on vacation in Toronto a few years ago on Dominion Day (July 1) my son had an allergic reaction to something. My wife called 911 for assistance. Unfortunately, there was a doctor's strike underway and most of the hospitals were closed and locked up. When we found an open emergency room (which took 2 hours with police assistance) it took 45 minutes to convince the triage clerk to find a doctor. Then we had the standard wait for treatment.

I realize the American system is not perfect, but it is better than the Canadian alternative.

A better reform would be to enact an any willing provider law. This would eliminate the power of HMO's and health insurers to duplicate the functions of state licensing boards. It would eliminate 1800 companies credentialing departments, reducing expenses and broadening access to care by forcing them to pay any provider willing to accept their fee schedule.

This would not address the uninsured issue. Unfortunately, in my opinion, the vast majority of uninsured in NY are that way by choice. Medicaid, Healthy NY, Family Care Plus and Child Care Plus make health insurance cheaper than smoking cigarettes for middle class families, and free for families in poverty. I know people who smoke who say health insurance is too expensive. Sigh...

Bruce Fisher
30 Oct 2008, 10:49
My shorthand was too short! I agree with the writer, and so do the Physicians for a National Health Plan. The proposed legislation is about creating a single payor, which is the benefit of the Canadian system. That's why the best model here is Medicare -- an established system that allows provider flexibility and consumer choice. Our healthcare financing problem is that today, we force employers to carry the burden, or to shift it -- thus empowering gatekeepers like HMOs, which spend zillions on administration and marketing, and make their money by saying NO to care, even while burdening physicians intolerably. Nobody needs that. The PNHP bill is a good solution.

Peter A Reese
30 Oct 2008, 11:10
The Leg is a slippery slope, because, Marinelli needs Republicans to hold on to her chairmanship.

Scenario #1 won't happen because the Leg would have to take responsibility for the resulting cuts and decide what to cut.

In the absence of Leg staff and expertise necessary to deliver Scenario #2, it is also unlikely. Bruce, you were a member of the executive branch. Those guys have all the budget mod talent.

Therefore, Collins is correct. Scenario #3 is the most likely outcome.