Month: May 2013

Recruiting for Big Government: Food Stamps Run Amok

By Elise Hilton

One in five Oregonians participate in the Supplemental Nutrition Assistance Program (SNAP), the federal government’s “food stamp” program. Despite indications that the national economy is showing signs of revival, SNAP usage is at an all-time high:

 

Food-stamp use rose 2.7% in the U.S. in February from a year earlier, with 15% of the U.S. population receiving benefits….One of the federal government’s biggest social welfare programs, which expanded when the economy convulsed, isn’t shrinking back alongside the recovery.

 

Food stamp rolls increased on a year-over-year basis, but were 0.4% lower from the prior month, the U.S. Department of Agriculture reported. Though annual growth continues, the pace has slowed since the depths of the recession. The number of recipients in the food stamp program…reached 47.6 million, or nearly one in seven Americans.

 

It seems to be an easy equation: If joblessness is decreasing and the economy is improving, there should be fewer people receiving government assistance, right? Not so. Why? Part of the reason is that the government is actively recruiting people for SNAP, part is America’s ever-increasing dependence on government to solve our problems; and part is crony capitalism. It’s a heady mix of money, entitlement, and big government.

 

SNAP is symptomatic of America’s current view of the role of government: It is there to take care of our every need. Rather than seeking a way to solve problems of joblessness and hunger, we simply grow the programs once designed to help only in a crisis. Of course, the only way to grow these programs is to increase taxes on those who are working. As Dr. Samuel Gregg points out in his new book Becoming Europe, this creates an atmosphere of conflict, rather than harmony, in society. It means standing behind the food stamp user in line at the grocery store and grumbling about their purchases: In a sense, it is your money they are spending on soda and chips. It also means, according to Gregg, that there is less incentive to be productive on the part of citizens; after all, won’t the government take care of things?

 

The state of Florida, like many others, actively recruits SNAP recipients. According to The Washington Post, Dillie Nerios, a Florida state employee, has a quota of 150 new SNAP recipients monthly:

 

[I]t is Nerios’s job to enroll at least 150 seniors for food stamps each month, a quota she usually exceeds. Alleviate hunger, lessen poverty: These are the primary goals of her work. But the job also has a second and more controversial purpose for cash-strapped Florida, where increasing food-stamp enrollment has become a means of economic growth, bringing almost $6 billion each year into the state. The money helps to sustain communities, grocery stores and food producers. It also adds to rising federal entitlement spending and the U.S. debt.

 

As the name suggests, SNAP is meant to be a “supplemental” program. It has its roots in the Great Depression, when the federal government was faced with a surplus of agricultural goods, and high jobless rates. Food stamps allowed participants to purchase excess items at discount prices. The program vastly expanded in the 1960s, as part of the “Great Society” initiative. No longer were participants limited to purchasing surplus items, and benefits were tied to recipients’ income levels. By 2009, the Obama Administration further eased eligibility requirements, encouraging “states to disregard savings and higher incomes as criteria to disqualify applicants.”

 

The USDA claims that SNAP lifts people out of poverty, but the sheer numbers of those on SNAP belie that. As with many other issues in America, the attitude of many citizens toward hunger has become, “the government will take care of it.” This approach destroys charity on behalf of others and undercuts the dignity of those receiving handouts. Programs such as SNAP go from being “supplemental” to “lifestyle”: People stay on these programs longer and longer, with no incentive to support themselves, or to respond to the generosity of others by striving to contribute in turn to the common good. While most people would tell you that you can’t get something for nothing, SNAP proves them wrong.

 

Finally, SNAP is big business, and not in a good way. According to EatDrinkPolitics, the politics of food stamps and the politics of the food industry are deeply entangled in crony capitalism. For instance, Coca-Cola spent over one million dollars in just one quarter of 2011 lobbying the government regarding use of food stamps. Eighty-three percent of SNAP dollars are spent at supermarkets. In Oklahoma alone, Wal-Mart receives over $500 million in SNAP receipts. Because SNAP benefits are now largely utilized via EBT cards, banks benefit financially as well. It’s not just people becoming dependent on food stamps―it’s business. And business has no desire to see the government cut back on programs from which they are making millions.

 

We cannot suggest that SNAP does no good, or that there is no need for a food safety net in our country. Clearly, though, the astronomical growth of SNAP in the past few years has nothing to do with food safety and everything to do with big government, an entitlement culture, and crony capitalism.

Elise Hilton is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research organization. She is the marketing coordinator for the Acton Institute in Grand Rapids, Michigan.

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"Priceless: Curing the Healthcare Crisis" Book Forum

Please join Cascade Policy Institute for our next book forum featuring John Goodman, Ph.D., President and CEO of the National Center for Policy Analysis and Research Fellow at the Independent Institute in Oakland, California.  Dr. Goodman is recognized as the Father of Health Savings Accounts (HSAs). The event will focus on his latest book,  Priceless: Curing the Healthcare Crisis.

Goodman regularly appears on television and radio news programs on Fox News Channel, CNN, PBS, Fox Business Network, and CNBC, and his articles appear in The Wall Street Journal, Investor’s Business Daily, National Review, Health Affairs, Kaiser Health News, and other national publications. Goodman was also the pivotal lead expert in the grassroots public policy campaign, “Free Our Health Care Now,” an unsurpassed national education effort to communicate patient-centered alternatives to a government-run health care system. The initiative resulted in the largest online petition ever delivered on Capitol Hill.

Price for admission includes assorted appetizers, dessert, coffee, and tea.  no-host bar also will be offered and books will be available for purchase.

To attend, RSVP with admission payment to Patrick Schmitt at 503-242-0900 or patrick@cascadepolicy.org by June 25, 2013.

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Ben Franklin Would Approve

Having come of age during tough financial times, Millennials may turn out to be savers. A new study by Merrill Edge shows that young people 18-34 are saving for retirement earlier than previous generations. While the average Baby Boomer began saving at 35, many members of Gen Y are investing by 22.

Some Millennials are saving aggressively. Among those with $50,000 to $250,000 in assets, their average retirement savings are $55,000. Younger adults also take a skeptical view of Social Security: Less than half say they plan to rely on public programs for retirement, down from 63% just two years ago. Almost all young workers eligible for company 401(k) plans choose to use them.

Millennials have witnessed the end of the dot-com boom, the Great Recession, the housing crisis, major financial scandals, and burgeoning student debt. The positive financial news in a bad decade may be that young people now know the truth about financial planning: They can’t take future security for granted without being proactive about good financial habits today. Young people with the discipline to put money away early can help renew a culture of responsibility and thrift, which America needs for a healthy economy and civic life.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

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Legacy of Freedom Celebration

Join Cascade Policy Institute in celebrating the 101st  birthday of Dr. Milton Friedman. We’re opening our office doors for this event to gather supporters of Cascade, Dr. Friedman, and Dr. Friedman’s ideas on capitalism and freedom!

Our featured speaker will be former Oregon State Legislator Jeff Kropf. Jeff represented Linn and Marion counties in the Oregon House from 1998 to 2007. He served as state Director of the Oregon Chapter of Americans for Prosperity from 2007-2011, and he now serves as Executive Director of the Oregon Capitol Watch Foundation. A fifth generation Oregon farmer, Jeff and his wife Peggy Sue own a farm north of Sublimity.

Jeff will speak about his life-long commitment to Milton Friedman’s ideals of Capitalism and Freedom.

We’ll be celebrating Friedman’s birthday with cake, snacks, beverages, raffle prizes, videos and more! So be sure to join us in the festivities!

RSVP to Patrick at 503-242-0900 or patrick@cascadepolicy.org.

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A Problem Bigger Than PERS

By Doug DeFilipps

Education writer Betsy Hammond recently reported that, according to a study done by The Oregonian, in the 2013-2014 fiscal year the budget woes of most school districts will not come primarily from PERS, Oregon’s retirement system for its public employees. The teachers unions (among others) no doubt will celebrate this finding, but they should not.

What is important is not that the financial woes of most school districts are not caused only by PERS, but rather fixing what else is at fault. As Hammond writes, major expenditures include additional hiring, employee health care, and employee pay raises. So the problem is bigger than just PERS: Schools are running up debt and spending taxpayer money, not on greater classroom expenses, but on employees.

Oregon is a state that believes in investing in its children and their future, but that is not what is happening here. Money is being spent on the employees of the education system rather than on the education itself. Oregon’s parents and taxpayers should not put up with this; they should demand real change. They should demand that their tax dollars follow students to the schools of their choice and that school districts rein in their administrative and employee expenditures.

Doug DeFilipps is a research associate at Cascade Policy Institute. He is a recent graduate of Santa Clara University.

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Is Being on Medicaid Better Than Having No Insurance at All?

By Roger Stark, MD, FACS

Does having health insurance actually save lives or improve health more than being uninsured? This question has not been answered until very recently.

In 2008, Oregon lawmakers decided they had enough additional public money to add 10,000 people to the state’s Medicaid program. So, Oregon officials held a lottery that ultimately signed up 6,400 new Medicaid enrollees. A further 5,800 people were eligible for the program but were not selected. People in this group had the same health and economic profile as the lottery winners. This created the perfect test case on the effectiveness of Medicaid in providing care. These 5,800 people became the control group in an objective, randomized study.

The two-year results of the health comparison study were published recently in The New England Journal of Medicine. The conclusion is surprising. It turns out that having Medicaid health insurance does not improve health outcomes, nor does it improve mortality statistics, compared with having no insurance coverage at all. The Medicaid group had no improvement in the important objective measurements of blood sugar levels, blood pressure, and cholesterol levels. The study did find that vaguely defined “mental health” did improve. However, this was done via subjective telephone interviews, not objective clinical data. For those few people requiring prolonged medical and hospital treatment, having Medicaid did improve their financial status because their medical bills were covered by federal and Oregon taxpayers.

The existing Medicaid program has 60 million enrollees nationally at a cost of $430 billion per year. Looking forward, the cost is estimated to increase to $900 billion per year by 2019. Medicaid is an extremely inefficient program, and reimbursement for doctors and other providers is about half of what private insurance pays for the same services. Doctors are not able to pay their own overhead with these low payment rates. Consequently, existing Medicaid patients have trouble getting access to health care.

The Washington State Medical Association did a recent survey of primary care providers. Results showed 18 percent had dropped all Medicaid patients, and 24 percent were not taking new Medicaid patients, due to poor payment and the complexities of Medicaid cases compared with privately insured patients. Getting access to health care is a significant problem for people in the existing Medicaid program in Washington. It turns out that having insurance on paper is not the same as actually obtaining health care services.

The Affordable Care Act, or ObamaCare, gives states the option to expand Medicaid to at least 16 million new patients nationally and 280,000 in Washington State. The law says that any adult over the age of 18 who earns less than 138 percent of the federal poverty level will be eligible for Medicaid. The estimated cost of this expansion to taxpayers is at least $450 billion over the first 10 years, beginning in 2014.

The Oregon study confirms that Medicaid does not provide better health care to people than having no health insurance at all. These terrible results not only come with a huge taxpayer cost, but also trap poor individuals in a virtually worthless health insurance plan.

The Washington State Legislature is considering expanding Medicaid in the current state budget negotiations. The federal government is bribing states with federal taxpayer money to expand Medicaid. Many state lawmakers support the expansion because it feels like “free” federal money, and they reason that Medicaid is better than no health insurance at all. The large, randomized Oregon study shows this is not true.

Of course, state taxpayers are also federal taxpayers, so ultimately the people of Washington State will pay for this Medicaid expansion. Medicaid is a pay-as-you-go program. The idea of leaving free federal money on the table makes no sense. If Medicaid doesn’t expand, the burden of taxes should be reduced for everyone.

Medical outcomes for people in the Medicaid program are no better than outcomes for people without health insurance. This fact makes it very difficult to argue that Medicaid is better than no insurance, especially considering the tremendous cost involved. Washington’s state legislators would do better to improve their existing Medicaid program; eliminate waste, fraud, and abuse; improve access; and make the program a real safety-net health insurance plan that provides quality care at a reasonable cost. Oregon’s state legislators should do the same.

Dr. Roger Stark is a health care policy analyst at Washington Policy Center in Seattle, Washington and a retired cardiothoracic surgeon. He has authored numerous in-depth studies on health care policy. Dr. Stark was one of the cofounders of the open-heart surgery program at Overlake Hospital in Bellevue and served on the hospital’s governing board. He is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center.

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Let Them Eat Cake!

By Doug DeFilipps

Imagine your government laid a tax on the entire population, one in which in the same amount is paid by virtually everyone. And people are not simply taxed the same percentage of income, but the same dollar amount. Now imagine the money raised from this tax is spent on entertainment for the upper classes. You might think this sort of thing only happened in ages past, under rulers like Marie Antoinette; but it is happening today, here in Portland, Oregon. An annual head tax of $35 per resident over the age of 18 is being levied―the only exception granted is for those living under the poverty line.

 

The funds will go first to Portland-area schools, with the goal of hiring one art teacher to every 500 students. The remainder will fund various art endeavors in the city. These endeavors include the Oregon Symphony, as well as other organizations and museums. I am by no means trying to diminish the cultural importance of any of these artistic organizations. I myself thoroughly enjoy visiting museums around the city.

 

However, I also know that many of these are patronized primarily by middle- and upper-class Portlanders―not low-income Portlanders. Nonetheless, lower-wage earners will be forced to pay for these artistic endeavors through the new tax in spite of the fact that they enjoy them far less. Though the tax is only on those making above the poverty line ($23,681 for a family of four), I think it is safe to say that not everyone making above that amount is exactly rich.

 

Equally appalling is that, as mentioned above, people with low incomes will pay the exact same amount as people with high incomes, in spite of the fact that $35 means a great deal more to them. Why should those who have the least sacrifice the most for something that will benefit them the least? Furthermore, the Portland art community is already generously supported voluntarily. If the wealthy are already willing to open their wallets, why should the poorest be forced to open theirs?

 

The City of Portland is imitating Marie Antoinette’s follies. Most of the tax dollars that went to pay her expenses were raised through highly regressive taxation mostly imposed on poor peasants. These included the Gabelle, a tax on salt that fell most heavily on the poor. Those same poor peasants, for the most part, would never see or enjoy what their money had paid for (the Palace at Versailles was open to the public but well out of traveling distance for most). They would never see Marie Antoinette’s lavish jewels or gowns or walk through the lovely gardens outside her Petit Trianon.

 

It is also worth pointing out that this kind of tax is forbidden by the Oregon Constitution. The constitution, which supersedes any laws passed by the city, specifically forbids a head tax. The Arts Tax obviously would fall under the category of a head tax, demanding an equal amount from all adult citizens regardless of means.

 

The Portland Arts Tax is unnecessary and unfair. It taxes those who are least able to pay for something they will rarely, if ever, use. And since many Oregonians already subsidize the artistic institutions the tax will benefit of their own free will, why should everyone else be forced to?

Doug DeFilipps is a research associate at Cascade Policy Institute. He is a recent graduate of Santa Clara University.

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Why Do Transit Officials Lie About Light Rail?

The transit agency for Vancouver (C-TRAN) is reconsidering its support for the Columbia River Crossing Project, which includes light rail to Vancouver. In a staff report prepared for this week’s C-TRAN board meeting, the following claims are made:

  • Light rail offers faster service (17 MPH) than bus rapid transit (14.5 MPH);
  • The extended Yellow MAX line will arrive in Vancouver every 7.5 minutes; and
  • Light rail will carry 6,100 people over the Columbia River during the peak period.

All of these answers are wrong.

C-TRAN express buses running from various points in Vancouver to Portland city center currently average 31-45 MPH (depending on the route) in the morning peak period. In the afternoon peak they average 20-30 MPH traveling northbound.

Current Yellow MAX line service is one train every 15 minutes, all day. There will be no peak-hour service to Vancouver at 7.5-minute intervals, because TriMet has reduced service by 14% in the past five years. The agency is broke.

Finally, the maximum one-way capacity of a two-car light rail train is approximately 274. Multiplying this times eight trains per hour in the peak direction is 2,192 riders, not 6,100.

The fact is, C-TRAN’s express bus service is far superior to the slow MAX, so why spend $930 million on a slow train to Vancouver? That’s the question that should be asked.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Salem Report: Why the Legislature Can’t Face Reality

Please join us for Cascade’s monthly Policy Picnic, led by Cascade President and CEO John A. Charles, Jr., on Wednesday, May 15, at noon.

The legislature continues to spend more than Oregonians can afford. Join John in discussing the psychology of legislative decision-making.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to ten guests on a first come, first served basis, so sign up early. To RSVP, email Patrick Schmitt at patrick@cascadepolicy.org or call 503-242-0900.

Sponsored By

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Three Years Later, ObamaCare Remains a Troubled Law

By Roger Stark, MD, FACS

President Obama signed the federal health care bill, The Affordable Care Act (ACA), into law three years ago. Let’s look at what has happened over the past three years.

The law remains extremely unpopular with Americans. Since passage, polls have consistently shown at least 50 percent of voters disapprove of the law. A recent Kaiser Family Foundation poll revealed that only 41 percent of respondents actually understood the law, while 57 percent did not.

The estimated cost of the law has gone up dramatically. Originally, the nonpartisan Congressional Budget Office (CBO) estimated ObamaCare would cost $940 billion over its first 10 years. This was based on a deception written into the law of 10 years of revenue starting in 2010 but only six years of benefits starting in 2014.

The CBO now estimates the cost to be $2 trillion over the 10 years starting in 2012. Revenue comes from a $716 billion cut to Medicare providers and over $1 trillion in new or expanded taxes. None of the significant Medicare cuts have taken place as scheduled, so the cost overrun of ObamaCare has already started. Health insurance companies are warning of 30 to 116 percent increases in premiums, and the government’s own CBO estimates at least 10 to 13 percent increases in rates.

Even President Obama sees the failure of parts of the law. He has signed the repeal of the long-term care provision, or CLASS entitlement. He also signed the repeal of the $1.7 billion Small Business Tax Reporting Requirement, which would have forced businesses to report every vendor transaction over $600 to the IRS. A bipartisan majority in the U.S. Senate recently voted 79 to 20 to repeal the 2.3 percent tax on medical device makers’ revenue (not profits).

The administration has, to date, granted 1,600 waivers to unions and various favored companies allowing them to opt out of ObamaCare. For the rest of us, the government has issued 20,000 pages of new regulations for implementation of the law and will force patients to fill out a 21-page application to receive care under the ACA (that’s the EZ form; the long form is 60 pages).

Medicaid expansion and new government-run insurance brokerages, or exchanges, are fundamental provisions of ObamaCare. Yet, 18 states have opted not to expand Medicaid, and 26 states have no plans to set up a state-run exchange.

The proponents of ObamaCare cling to a number of inconsequential benefits. Young adults from ages 19 to 25 now can be covered on their parents’ health insurance plans. These are the young and healthy, however, and the vast majority don’t need health care and don’t have much impact on health care costs. Also, when they turn 26 their parents’ coverage ends. They then will have to pay more than their fair share for health insurance because of the community rating requirement that forces young, healthier people to pay the same premium as older, sicker individuals.

Proponents also tout the mandated preventive care in the law. Yearly physical examinations and other preventive care are not “free,” and for large numbers of patients have no impact on health outcomes, nor do they save money.

We are also told the law prohibits insurance companies from denying coverage to patients because of pre-existing conditions. Research shows that only 62,000 people in the United States are in this group with no insurance and a pre-existing health problem. Spending $2 trillion to provide coverage to this small group is irresponsible and could be handled by shared-risk pools like the one Washington State already has.

The ACA is a 2,700-page, achingly complex, monstrous law that will soon control one-sixth of our economy. The country continues to dislike ObamaCare and remains puzzled by its mind-numbing complexity.

Everyone agrees health care needs to be reformed. Patients making informed choices in a free market―not top-down government mandates that will only result in higher costs, not better care―will put patients in charge of their health care decisions and their own health care dollars.

Dr. Roger Stark is a health care policy analyst at Washington Policy Center in Seattle, Washington and a retired physician. He has authored numerous in-depth studies on health care policy. Dr. Stark was one of the cofounders of the open-heart surgery program at Overlake Hospital in Bellevue and served on the hospital’s governing board. He is a guest contributor for Cascade Policy Institute, Oregon’s free market public policy research center.

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