Category Archives: poverty

All Posts, deficit, economy, justice, north carolina, poverty, public education

WORK AND MINIMUM WAGE

A few days ago I came across what seemed like just one more preposterous claim littering our political landscape: that Australia has a minimum wage exceeding $15 American dollars per hour and an unemployment rate of about 5%. The stunning thing is that when I checked this one out I found that it is true. For me, that raised the questions, “How did they do that?” and “Could we do it too?” This column is about some of the answers that I found.

Australia’s achievement is not unique. There are 9 substantial nations with minimum wages higher than ours: Australia, France, Belgium, New Zealand, Ireland, Netherlands, United Kingdom, Canada, and Japan. Five of the nine have lower unemployment rates than the United States. They did not achieve this by running up their national debt. Of the nine, only Japan has a ratio of debt to GDP higher than the US. All the rest have less debt in proportion to their economic output. And although each of the nations is unique, they all have a stronger social safety net for human services than the US.

In my search for answers, I found that how they did it was not particularly relevant. They each found their own ways. The thing that distinguishes them is that they chose to do it. We have not made that commitment.

If we’re missing something, what is it? The surprising answer to that question may be that we are lacking Christian social values. When that thought occurred to me, I re-read Pope John Paul II’s “Encyclical on Work” which was published in 1981. While reading it, I recalled that Dr. Martin Luther King, Jr. was assassinated in Memphis while leading a campaign for economic justice. His concern about income inequality shaped his message that work must be respected with a fair and living wage. He famously said, “On the one hand we are called to play the good Samaritan on life’s roadside; but that will be only an initial act. One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring.”

Returning to the Encyclical I read that, “Work is a good thing for man-a good thing for his humanity-because through work man not only transforms nature, adapting it to his own needs, but he also achieves fulfillment as a human being and indeed, in a sense, becomes ‘more a human being’. … The key problem of social ethics in this case is that of just remuneration for work done. … Just remuneration for the work of an adult who is responsible for a family means remuneration which will suffice for establishing and properly maintaining a family and for providing security for its future.” He goes on to argue that the work of one adult should be sufficient to support a family and that society will suffer if children get inadequate nurture because both parents are working. Regarding the unemployed he added, “The obligation to provide unemployment benefits, that is to say, the duty to make suitable grants indispensable for the subsistence of unemployed workers and their families, is a duty springing from the fundamental principle of the moral order in this sphere, namely the principle of the common use of goods or, to put it in another and still simpler way, the right to life and subsistence.”

In my community the wages paid to a paramedic working full time and supporting a family qualifies the family for food stamps. Here in North Carolina, that is true for many hard working people in both the public and private sectors. I can only imagine the impossibility of supporting a family in any of our 50 states on a minimum wage job or “temp” employment with no benefits.

The other nations that I listed are providing a safety net for the unemployed and they have decided that anyone who is employed merits a living wage. Those nations have better overall school performance because fewer of their students live in poverty. For the same reason, they all have fewer of their number in prison. Too many of our underpaid and unemployed are unable to participate in our economy by earning or learning or spending. That brings up an important business lesson: It is easier to make a profit if your customers have money to spend.

All of this leads me to believe that the Christian social values taught by Pope John Paul II and Dr. King have merit; and if we adopt them we will find our communities, states and nation to be better and more prosperous places to live. Like the Australians, our choice will be driven by our values.

All Posts, budget, economy, medicaid, poverty, public education, taxes

NORTH CAROLINA TAX REFORM

We create some of our own big problems when we act on our beliefs without checking to see if the beliefs are true. Governor McCrory and the North Carolina Legislature are about to do that as they reform our taxes. They have been cutting spending and now they plan to cut taxes with religious zeal based on two erroneous beliefs. One belief is that cutting taxes will stimulate creation of good jobs and economic growth. The other belief is that North Carolina taxes are too high.

First, let’s look at how much we are actually spending compared to other states. Counting all forms of state taxes including corporate and personal, we collected $2320 per person in 2011. That ranked us 34th highest among the 50 states. Gross State Product measures the total economic output within the state. Our combined state and local government spending as a percent of our Gross State Product ranked 44th among the 50 states. That means that the tax burden on our state economy was lower than all but six states.

Our spending on public K-12 education has been a hot topic. Our per pupil spending in 2011 ranked 44th among the 50 states and the legislature has already cut it below that level. As a percent of GSP, our per pupil spending ranked 46th. The K-12 tax burden on our GSP was 4.8%. Some states with low GSPs are trying to catch up with the rest of the nation. While we go backwards, low wealth states like West Virginia, Mississippi, Alabama, South Carolina and Arkansas are placing a tax burden of 7% to 8.4% on their GSP to support K-12 education.

What about the other reason for cutting taxes – to bring more jobs and economic development? High wage employers will be looking for a highly educated and skilled workforce. That is the reason, for example, that tech industries have concentrated around Seattle, San Francisco and Boston. It is because strong public education K-PhD produces a strong workforce and because those regions provide the quality of life (some of which is tax supported) which attracts and retains highly skilled people. Here in North Carolina, the Research Triangle Park has been a viable competitor for those companies. A few other communities have made some headway, mostly in proximity to universities which help attract the workforce.   A tech company might put a call center or data center in other parts of our state (and that would be a good thing) but the corporate headquarters and the R&D functions which provide the best jobs will be elsewhere.

If our taxes and wages are reduced enough, we may indeed attract some jobs because there are some businesses which consider small differences in tax rates as an important criterion when choosing a location. They are also typically looking for the lowest labor costs. They don’t need a highly educated and skilled workforce and they keep benefit costs low by using as many temporary workers as they can. Those are also the jobs which are most vulnerable to outsourcing and automation. Having a mix of jobs available is a good thing but if we can’t attract our share of the high wage jobs then why will our brightest and most ambitious children return home for their careers? Or will they migrate to other parts of the country (or the world) for better wages and the environment that they want?

My conclusion is that the legislature and the Governor have entered us in a race to the economic bottom and if they continue cutting taxes and spending we are likely to win that race. I hate waste and don’t enjoy paying taxes but I’m very willing to pay for excellence in public education from birth through college. And I’m willing to pay fair wages to public servants who make our lives safer and better, and for parks, arts, and other government programs which promote the general welfare. Business leaders already know, but may require an occasional reminder, that it is a lot easier to earn a profit when your customers have money to spend. For that to happen, we need high wage jobs and a high skill workforce and public education to support both.

Tax reforms to close loopholes, to begin taxing services, and to reduce corporate taxes may indeed be good things but the design of the changes should increase rather than decrease state revenue and the tax burden must not be shifted to the middle class and poor who are least able to bear it.

I am an optimist. I believe in the people of my community and my state – good people who are working hard toward better lives for themselves and their families. We need to see ambition and optimism from our leaders including an understanding of that phrase “promote the general welfare” from the US and North Carolina constitutions. Taxation is not a win-lose game and neither is good government. When we spend our resources wisely on education and enhancements to quality of life, we all win. When wages go up, so does demand for products and services. It is time now for North Carolina to reclaim our dual heritage as a pro-business and progressive state.

All Posts, budget, deficit, economy, justice, poverty, taxes

KEEPING MEDICARE SOLVENT

There is a straightforward way to keep Medicare financially solvent without reducing benefits, changing the retirement age, or raising taxes. Medicare should pay standard rates for each service to all health care providers and let them compete to see who can provide the best combination of cost and quality for that price. The payments should be enough to allow high quality and efficient health care providers to earn a modest profit but should not include special provisions for favored organizations or locations. Right now the rates vary to unjustifiable degrees and patients are not even aware of it.

Here is an example to demonstrate what is currently wrong. In Medicare’s diagnostic classification system, the most frequently occurring inpatient payment is for hip and knee replacement surgery on uncomplicated (otherwise well) patients. There are separate diagnostic categories with higher payment rates for complicated patients. In 2011 Medicare paid for 427,207 of these procedures and the average payment was $14,324. That adds up to over $6 billion. The best paid hospital in the country was the Baylor Surgical Hospital in Fort Worth, Texas which received $38,686 per surgery. The worst paid was Saint John Hospital in Broken Arrow, Oklahoma which received $9,130. Baylor got more than two and a half times the national average and more than four times the price Saint John Hospital would have received for the same service to the same patient. Here in North Carolina, UNC Hospital was paid the most, $20,610 while the North Carolina Specialty Hospital in Durham was paid the least, only $11,058. In the Piedmont Triad, the payments were $18,656 to NC Baptist Hospital, $14,045 to Forsyth Hospital, $13,758 to Moses Cone Hospital, $12,726 to High Point Hospital, and $12,412 to Randolph Hospital. The same pattern exists for other diagnoses and similar variances exist for medical practices.   Readers who want to explore the data in detail can find it at the CMS.gov website or Email me and I will send the link to you.

The hospitals that are paid more do not get better results for their patients. Nor do they have better patient satisfaction. Supposedly the payment variances are because of factors like regional wage differences and costs incurred in educating specialty physicians. That may sound reasonable but the net effect is that Medicare subsidizes high costs at expensive hospitals and penalizes those with lower costs – the exact opposite of a free market economy. The political clout of local congressional delegations has been a huge factor at times, with special rates being set for certain cities or states. Medicare’s proper role is to purchase good health care for beneficiaries regardless of where the patient lives or which health care provider they choose. If we taxpayers are to subsidize medical education (and I believe that we should) then money should be appropriated for that purpose and separate contracts should be established to fund the medical education that taxpayers are purchasing. Educational grants should not be hidden in Medicare.

Medicare pays extraordinarily high prices to a few organizations which often use the surplus to acquire other hospitals or medical practices at the expense of taxpayers and consumers. Then they raise the prices. The UNC system, which also gets preferential rates from the state’s troubled Medicaid system, has used its taxpayer subsidized profits to gain control of large medical practices and other hospitals. With the increased negotiating leverage of the UNC system, prices can then be raised to insurance companies and benefit plans. Private insurance markets, just like Medicare, pay more in large cities and to large hospital systems. The idea that large size brings economies of scale is mostly a myth in health care. If the myth were true, the biggest hospitals would have the lowest costs. They don’t. But they do get paid more just for being big. The American ideal of a free market in health care where high quality and low cost are rewarded can work if we will design our payment system to work that way.

If Medicare rates are set and periodically adjusted to levels that allow good quality hospitals and doctors to make a modest profit, the best hospitals and physicians will thrive. Poor performers will fail financially or be taken over by someone else. That is how competitive marketplaces work. Healthcare resources will be more evenly distributed across the country if payment rates are standardized. We will soon discover that it is less expensive and more convenient to deliver high quality care outside of the bureaucracies of huge medical centers. If payment rates for doctors were the same in extremely rural areas of North Carolina as they are in Raleigh, there would be plenty of doctors in the mountains and down east. The need for the federal agency that operates rural clinics would likely disappear.

 

A free and competitive market will bring more community based health care, less centralization around large medical centers, better quality, better accessibility and lower cost. It will also bring powerful opposition from the organizations now being paid the most.

All Posts, budget, deficit, economy, environment, medicaid, poverty, public education, taxes

THE REPUBLICAN PORCH STEP

I had an uncle old enough to be my grandfather who cleared land, cut lumber, and built the home on his Tennessee farm with his own hands. As visitors approached, he warned them not to use the steps on the side of the porch. “Those are Republican steps.” he would say, “They look solid but if you trust them they’ll let you down.” Since handing over the legislature and the governor’s office to Republicans, a lot of North Carolina voters are learning what he meant. Republican candidates said it was time for a change after generations of Democratic control, pointing out numerous scandals and sloppiness in governance by one party. Republicans promised openness in government, less intrusion on personal liberties, lower taxes, improvements in public education and more jobs. Governor McCrory ran a campaign based on economic development and less intrusive government. Sadly, their actions don’t resemble their promises.

The actual Republican agenda appears to have three themes. First and foremost, hold on to power, even if that requires depriving citizens of their rights. The second theme is to financially reward supporters and punish opponents. The third is to impose the social and religious values of their extreme base on all North Carolinians.

Republicans are cementing their grip on power. By gerrymandering our districts they won 69% of North Carolina congressional seats with 49% of the votes. Now they are proposing laws designed to discourage voting by citizens they think are likely to support the opposition. They have proposed laws to:

  • Take away the $2500 per dependent tax credit from parents of college students who vote where they go to college (and live for most of the year).
  • Eliminate early voting on Sundays, which is especially popular among African American churches.
  • Cut back early voting to one week.
  • Restrict the number of early voting locations.
  • End the practice of registering and voting on the same day.
  • Pass a voter ID law, designed to deter voters who don’t have a driver’s license.

Republicans propose to financially reward supporters and penalize opponents. They want to cut corporate taxes, estate taxes, and income tax rates and pay for the cuts by expanding the scope and amount of the sales tax. By taxing food and other necessities then cutting taxes for corporations and those with higher incomes they can redistribute income from the working poor to the Republican base. There are proposed laws to reward generous Republican contributors by legalizing sweepstakes cafe gambling and payday lending (sponsored by our own Senator Tillman).   They passed a law allowing hydraulic fracturing for natural gas while severely limiting the liability of companies for pollution of ground water and land, even if it is caused by intentional violation of safety regulations.

Then they punished the poor – perhaps with the notion that most poor folks either don’t vote or vote for Democrats. They reduced unemployment compensation for the long term unemployed and raised college tuition, making upward mobility for those with low incomes even harder than it was before. Their funding cuts increased financial problems for our public schools. Their solutions include allowing charter schools to hire uncertified teachers without even doing background checks (Senator Tillman again). They rejected $15 billion dollars of federal money to pay for Medicaid expansion through 2019. That punishes the poor who need health care along with the hospitals and doctors who are required by law to provide emergency services whether they are paid or not. The Medicaid expansion would create 25,000 new jobs, mostly in the private sector. Do Republicans think voters won’t miss those jobs or notice that we still have to pay our $15 billion in federal taxes? At one time we were fighting a “war on poverty”. Now it feels like Republican leadership is fighting an undeclared war on the poor.

 

The third element of the Republican agenda has been to impose the social and religious values of their extreme conservative base on the rest of the population.   Randolph County’s own Allen McNeill co-sponsored a bill to exempt North Carolina from the US Constitution and allow government establishment of an official religion. You can find it on the legislature’s website or just Google “HJR 494”. One proposed imposition on personal freedom is a requirement to provide written notice to a spouse two years in advance and attend state approved counseling before filing for divorce – even in cases of domestic violence. There is a bill requiring doctors to get written consent from parents before providing pre-natal care to a pregnant minor or answering questions from minors about STDs or birth control. And one of the first acts of the Republican majority was to encourage a constitutional amendment which prohibits the state from recognizing same-sex marriages or unions – even those performed in states where they are legal. Soon they will be spending our tax dollars to defend that useless amendment in court.

As candidates, Republicans promised less intrusion on personal liberties, lower taxes, improvements in public education and more jobs but they are delivering something quite different. Like my uncle’s porch steps, they looked reliable but they are letting us down.

All Posts, budget, economy, justice, medicaid, poverty

THOUGHTS ABOUT THE UNINSURED

What should happen when a person with no health insurance and little money needs a major health care service? Let’s imagine it for a fictitious person. Sara is a 61 year old widow who has two part time jobs, one at a restaurant and the other at a dry cleaning establishment. Neither provides health insurance. Her annual income from both jobs is about $28,000. She has little money saved and will have only social security income if she is forced to retire.

Recently Sara has had severe pain when she stands for the extended periods required by her jobs. Her doctor referred her to an orthopedic surgeon. Sara delayed follow-up because of the cost but recently her pain increased enough that she spent money for an office visit. The surgeon determined that Sara needs a hip replacement. The price of the hospital and physician fee is about $40,000 which is well beyond her means. Sara fears she will soon be fired from her jobs because she can’t be on her feet for long periods.

Should Sara be able to get the surgery that would correct her problem? Is “no” an acceptable answer? If the answer is “yes”, who should pay for it? Today, one of two things would happen. Sara might have to do without the surgery. The other possibility is that the doctors and hospital will replace her hip without payment and try to pass the cost along to those who will pay. If there are too many patients like Sara, the hospital will fail financially and many doctors will move to more prosperous communities.

There are 50million uninsured Americans today with little or no ability to pay a large health care bill. http://aspe.hhs.gov/health/reports/2011/cpshealthins2011/ib.shtml Many residents of Randolph and Montgomery Counties fall into that category. As we get ready to vote next month, I hope that Sara and the millions like her will accompany our consciences into the voting booth: a man delaying a hernia repair that he needs, a woman who feels a lump in her breast and hopes it is nothing rather than seeing a doctor today; someone who skips the colonoscopy where a polyp could be removed before it becomes colon cancer. Some of us are the uninsured. Most of us know them personally.

Two Republicans, Teddy Roosevelt and Richard Nixon; and three Democrats, Harry Truman, Bill Clinton, and Barack Obama have pushed for laws to provide health care for all who need it. In a very messy legislative process President Obama finally got a law passed which gets us most of the way there. Republican opposition was absolute and they blocked the legislative process at every turn; preventing the dialogue that could have improved and simplified the bill. From the beginning their stated agenda was to prevent the President’s re-election rather than to collaborate in governing for the benefit of all.

President Obama is praised by some and vilified by others. Critics point out that the law is complicated and imperfect. That is true. Advocates, me included, point out that when the new law is fully implemented it will be a vast improvement over what we have today.   The debate should not be about repealing it; instead we should be deciding how to improve it. In particular, we need initiatives to reduce the cost of health services so that they will be more affordable.

We need today’s Republicans to step up to the responsibility of proposing workable ways to provide more service for less money while covering the uninsured. It IS achievable. Every other developed nation has accomplished it while spending less than we do now. http://www.oecd.org/dataoecd/52/42/49188719.xls  . We can do it too. Those nations set a clear policy of universal coverage and designed economical ways of achieving the goal. Mitt Romney knows that. He is the architect of a Massachusetts program which is nearly a twin to ObamaCare. But he and Renee Ellmers, and the Republican Party have abandoned the humane ideas of Roosevelt and Nixon. While doing that, they also deserted the uninsured, the poor and the middle class.

Did you know that more family bankruptcies are caused by health care bills than by home foreclosures? http://www.washingtonpost.com/wp-srv/politics/documents/american_journal_of_medicine_09.pdf It is the uninsured middle class and the poor who will bear the burden of a Republican victory this November. Have you heard talk of “class warfare”? Well, this is it. The Republicans want to repeal a law providing health care for the uninsured while cutting taxes for the wealthy. That is economic warfare on the uninsured middle class and the poor. Otherwise, Republicans would have a proposal for how to provide health care. They have also abandoned the doctors and hospitals that are required to provide emergency service with no payment. And in their proposal to “block grant” Medicaid they have deserted the disabled and frail elderly. They pledge to cut federal Medicaid funding. Two thirds of Medicaid spending is for nursing home patients who have depleted their personal resources. Much of the remainder is for childbirth or medical care of sick children.

We can’t afford all things for all people. There will always be two or more levels of care, with the wealthy able to obtain services not available to others. But we can afford to provide most needed and effective services to everyone; and we can find ways to get our costs down. Achieving that will require a national commitment of voters and political parties over a period of many years. It begins with implementing the law that was passed after a century of effort and it should continue with gradual improvement. We are Americans and we are up to the task if we will commit to it.

How will you respond to Sara’s need and to the needs of millions like her? We should take Sara and our consciences along with us when we go to the polls. There, but for the grace of God, go I.