Tuesday, May 28, 2013

Nicolae Ceausescu

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Nicolae Ceausescu was the stalinist Communist dictator of Romania from the late 1960s until his overthrow in 1989. He is most famous in the West for his totalitarian governance, personal extravagance, and for banning abortion in an effort to increase the Romanian population. After the fall of the Berlin Wall and the dissolution of Communism in Eastern Europe, Ceausescu was overthrown by a popular uprising. Within days of being overthrown, he and his wife were both executed by an impromptu military court on a wide variety of charges.


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New Pope Elected

The Catholic cardinals have elected a new pope on Wednesday after just two days of deliberations, selecting 76-year-old Argentinian Cardinal Jorge Mario Bergoglio on the fifth vote. He has taken the name of Francis and was not considered to be one of the front runners. He is the first Jesuit pope and the first non-European pope since the 8th century.

Bergoglio has affirmed church teaching on homosexuality, contraception and abortion and is considered to be among the most conservative in Latin America. In 2010, for instance, Bergoglio stated that same-sex adoption is a form of discrimination against children and has said that same-sex marriage is “a scheme to destroy God’s plan” and “a real and dire anthropological throwback.” He strongly opposed legislation introduced in 2010 by the Argentine Government to allow for marriage equality, writing a letter warning that it would “gravely harm the family.”

However, Bergoglio has focused on helping the poor throughout his career, noting, “The suffering of innocent and peaceful continues to slap us, the contempt for the rights of individuals and peoples are so far away, the rule of money with his demonic effects as drugs, corruption, trafficking people, including children, along with material and moral poverty are big problems.”

In 2001, upon becoming cardinal, Bergoglio “discouraged people from spending the money to fly to Rome to celebrate with him and advised that they instead donate the funds to help alleviate poverty at home.” He lived in a simple apartment, cooked his own food, and traveled by bus instead of a chauffeured limousine.

However, Bergoglio has been criticized by the Society of Jesus (Jesuits) for his behavior during the 1976-1983 dictatorship in Argentina, with some journalists claiming that he prevented human rights groups from finding political prisoners by imprisoning them in his vacation home.

During the period of the dictatorship, the Catholic Church failed to confront the regime, even as it was kidnapping and killing thousands. The church eventually issued a blanket apology for its actions in October of 2012, though Bergoglio “invoked his right under Argentine law to refuse to appear in open court” to address two cases in which he was directly involved. When he did testify in 2010, his “answers were evasive,” human rights activists claim.

It has been 1,272 years since a non-European pope led the Church, and is particularly appropriate today, as the number of Catholics have declined in Europe, but grown significantly throughout Latin America. It is now home to 41 percent of Catholics and is “perceived as a Catholic bedrock that needs support to counter the tremendous growth of Protestantism. ”

White smoke billowed from the Sistine Chapel at 7:07 PM at Vatican City, as the crowd cheered loudly in anticipation. The inaugural mass for the new Pope could take place as early as this week.


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Antares Pharma 4Q loss swells on Otrexup costs

EWING, N.J. -- Antares Pharma Inc.'s fourth-quarter loss swelled as the drug developer spent heavily to prepare its potential rheumatoid arthritis treatment Otrexup for regulatory review.

The Ewing, N.J., company said Wednesday it lost $5 million, or 4 cents per share, in the three months that ended Dec. 31. That compares to a loss of $154,000, or less than 1 cent per share, in the final quarter of 2011, when it had fewer shares outstanding. Revenue climbed about 1 percent to $5.5 million.

Analysts expected, on average, a loss of 3 cents per share on $5.3 million in revenue, according to FactSet.

Antares makes self-injectable drugs. Otrexup combines the company's Medi-Jet drug delivery system, which allows patients to inject a drug, and methotrexate, a commonly prescribed treatment for rheumatoid arthritis.

The company's operating expenses more than doubled to $8.8 million in the quarter. That included a $2 million filing fee the company paid in connection with the new drug application it submitted to the Food and Drug Administration.

Antares has said the FDA intends to complete its review and make a decision on whether to approve the treatment by Oct. 14.

For the full year, Antares lost $11.4 million, or 10 cents per share, on $22.6 million in revenue.

The company said it ended the year with $85.2 million in cash and investments and no debt.

Shares of Antares fell 12 cents to $3.48 Wednesday afternoon, while broader trading indexes edged higher.


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Study Explores Why Wrongful Convictions Happen

In the almost 25 years since post-conviction DNA evidence has been used to establish criminal innocence, public perception has been transformed by the realization that completely erroneous convictions are not uncommon, even in cases that land defendants on death row or in prison for life. A new exhaustive social science analysis of many of these exonerations since 1989 has identified ten primary factors that, together, have led to the convictions we now know were wrong.

The study by American University’s School of Public Affairs concludes that it is a confluence of circumstances – and the ultimate failure of prosecutors and/or defense attorneys to mitigate those circumstances – that makes the difference between a “near-miss” in which a person is indicted but never found guilty, and a wrongful conviction.

Some of the worst wrongful conviction cases have been linked to what is known as “tunnel vision,” in which a prosecutor who hones in one suspect has a tendency to reinforce beliefs of that suspect’s guilt, even when the evidence suggests otherwise. In fact, the American University study finds that, surprisingly, it is in cases with the weakest evidence that “tunnel vision” is most likely to be a problem. The scholars explain:

As more resources—money, time, and emotions—are placed into a narrative involving a suspect, the actors involved are less willing or able to process negative feedback that refutes their conclusions. Instead, actors want to devote additional resources in order to recoup their original investment. As a result, evidence that points away from a suspect is ignored or devalued, and latent errors are overlooked. At this point, the police are working to rule in rather than rule out the suspect, and prosecutors have moved from “inspection” mode to “selling” mode. Escalation of commitment contributes and facilitates system breakdown because it dismantles the rigorous testing of evidence that makes the adversarial process function effectively.

To a large extent, the panelists attributed tunnel vision in our cases to a police and prosecutorial culture in which questioning and independent thinking were not valued, procedures were not designed to probe already gathered evidence, and little or no concern was given to learning from past errors. Even if safeguards, such as those mentioned above, are in place, they cannot be used effectively when the officials in the system are blinded by tunnel vision.

The study points out that defense attorneys can also suffer from “tunnel vision” when they fail to question the prevailing narrative. The ten factors that may lead to “tunnel vision” and other iterations of what they call the “perfect storm” are: weak evidence by the prosecution, weak defense (including the use of family witnesses), the prosecution withholding exculpatory evidence, forensic error, inadvertent misidentification of a witness, lying by a non-witness, youth of a defendant, any criminal history by the defendant and the punitiveness of the state. This last factor is particularly noteworthy because it is not at all contingent on flaws in individual cases and thus probably the easiest to address through reform and public education. The study explains:

In a punitive legal culture, police and prosecutors may be more interested in obtaining a conviction at all costs (leading to greater Brady violations, etc.) and community pressure may encourage overly swift resolutions to cases involving serious crimes like rape and murder. Additionally, state punitiveness could contribute to more state actors assuming the defendant’s guilt. This culture eventually works against the defendant, as state agents overlook or under-value evidence that contradicts the assumption of guilt.

While the study, the result of three years of research, provides new social science data that focuses exclusively on what happens to an individual once indicted (a wrongful indictment can be caused by false confessions, eyewitness identifications and other factors), its conclusions and recommendations are not dissimilar from those of many wrongful conviction experts and commissions – that “tunnel vision” is a primary concern, and that formal “checklists,” along with a mechanism for routinely reviewing causes of wrongful convictions, are crucial for reform.


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Elizabeth Warren Slams Republicans For Trying To Weaken Consumer Finance Protections

At a Senate Banking Committee hearing on Thursday, Sen. Elizabeth Warren (D-MA) rebuked Republicans for blocking Richard Cordray’s confirmation as director of her brainchild, the Consumer Financial Protection Bureau. After a bitter confirmation fight in 2011, President Obama bypassed the Senate using a recess appointment to grant Cordray a temporary term until the end of 2013. Republicans are threatening to filibuster him this time around unless the CFPB is drastically restructured.

Warren declined to question Cordray, who has testified a dozen times. She then directed scrutiny to her Republican colleagues, calling them out for using her former lieutenant’s confirmation as an excuse to undermine the Bureau:

What I want to know is why every banking regulator since the Civil War has been funded outside the appropriations process — but unlike the consumer agency, no one in the U.S. Senate has held up confirmation of their directors demanding that that agency or those agencies be redesigned…I see nothing here but a filibuster threat against Director Cordray as an attempt to weaken the consumer agency. I think the delay in getting him confirmed is bad for consumers, it’s bad for small banks, bad for credit unions, for anyone trying to offer an honest product in an honest market. The American people deserve a Congress that worries less about helping big banks and more about helping regular people who have been cheated on mortgages, on credit cards, on student loans and on credit reports. I hope you get confirmed. You have earned it, Director Cordray.

Watch it:

Warren herself was ousted from the running for CFPB director in an effort to avoid a confirmation battle with Republicans. Still, Senate Republicans are intent on holding up the confirmation of any director to the Bureau. In a letter to Obama last month, 43 Senate Republicans vowed to filibuster any nominee unless they are allowed to hobble the agency’s authority.

Republicans have tried to weaken the Bureau from its inception, claiming it lacks transparency. Unlike other financial regulatory agencies, which are dependent on Congress for funding, the CFPB is intended to be an independent agency with independent funding. If Republicans get their way, the CFPB will lose this independence, making it vulnerable to the partisan shenanigans and funding shortages that have derailed other regulators.

Cordray’s first term demonstrates the CFPB’s efficacy as an independent agency. In one year, the agency has increased supervision over mortgage lenders, brokers, consumer reporting agencies, and large banks, set up programs to help consumers better understand loan agreements and recoup refunds from deceptive and illegal practices, and wrote new rules to prevent wrongful foreclosures.


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How ALEC Is Fueling Efforts To Block Paid Sick Leave And Other Pro-Worker Policies

Our guest blogger is Rachel Curley, an intern at the Center for American Progress Action Fund.

The American Legislative Exchange Council (ALEC), which has been described as a “collaboration between multinational corporations and conservative state legislators”, is waging a campaign against workers, especially those in minimum wage jobs with few to no benefits.

The National Employment Law Project (NELP) recently released a report that tracks “the concrete legislative campaign that ALEC has conducted over the past two years to translate economic ideology into law.” Since 2011, 105 bills “aimed to repeal or weaken core wage standards at the local level” have been introduced in 31 state legislatures, and of those 105 bills, 67 were “directly sponsored or co-sponsored by ALEC-affiliated legislators,” according to NELP. Already, eleven of the 67 bills sponsored by ALEC members have been signed into law.

The report released by NELP highlights three types of bills introduced in state legislatures that reflect “model” legislation already written by ALEC. The report focuses on living wage and prevailing wage repeal and preemption bills, but it also points to other bills designed to repeal, suspend, and weaken state minimum wage laws, as well as ones that weaken overtime compensation policies.

The first one of these preemption bills surfaced in Wisconsin in 2011. The bill targeted a 2008 Milwaukee ballot measure passed with 69 percent of the vote that required city businesses to provide paid sick leave to workers. In response, the Wisconsin legislature passed a law directly nullifying the paid sick leave ordinance. Judge Thomas Cooper of the Milwaukee County Circuit Court upheld the state law, noting that the Wisconsin legislature had “put a bull’s eye on paid sick days” and that the state was completely within its right to void the Milwaukee ordinance.

One sponsor of the bill in Wisconsin was state Sen. Glenn Grothman, a confirmed ALEC member. He previously supported Gov. Scott Walker in repealing the state’s equal pay law by claiming that “money is more important to men” and that “to attribute everything to so-called bias in the workplace is just not true.”

The strategy of ALEC-affiliated legislators, according to NELP, is to repeal current living wage policies or to preempt city and local governments from “establishing a living wage or prevailing wage policy in the first place.” Living wage and prevailing wage policies require employers who receive local government funds to pay their workers according to the cost of living in the area or industry standards for the region.

In Florida, confirmed ALEC member state Rep. Steve Precourt (R) has introduced legislation blocking paid sick leave policies currently under consideration in Orange and Miami-Dade counties. The policy being considered would require local businesses with 15 or more employees to provide leave. What ultimately happens to the local policy won’t matter if the preemptive legislation is passed first.

Other bills designed to preempt paid sick time and local minimum wage rates are working their way through the legislatures in Michigan and Mississippi. Both bills have confirmed ALEC-affiliated sponsors. The paid sick time law passed by the Seattle City Council is also being challenged in the Washington state legislature by Republican lawmakers. Three of the bill’s sponsors — Mike Padden, Barbera Bailey, and Don Benton — are confirmed ALEC members.

Pending a final vote this week by the Portland, Oregon and Philadelphia City Councils on a paid sick leave ordinances, Seattle, San Francisco, and Washington D.C. are currently the only cities in the country requiring businesses to provide paid sick leave for their employees (along with the state of Connecticut). The New York City Council will hold a public hearing on the earned sick time bill there on March 22.

ALEC and their allies recognize the momentum building behind these pro-worker bills and are intently pursuing a strategy of preempting local authority from adopting these policies. It’s imperative we draw attention and respond to these fundamentally anti-democratic attempts to revoke the rights of American workers.


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Reform food programs in farm bill

Both sides of the aisle agree that the farm bill needs reform. There's widespread support for fixing our broken agricultural programs such as direct payments for farmers. Although these are good proposals in general and should be pursued, they will only make a small dent in overall farm bill spending.

That's because "farm bill" is quite the misnomer. Most of the spending doesn't even go toward farm programs. Eighty percent of the spending in the bill goes toward the Supplemental Nutrition Assistance Program (SNAP), informally known as food stamps. Congress simply won't be able to achieve meaningful farm bill savings if it keeps reforms to the welfare programs off the table.

Like many other line-items in the federal budget, food stamp spending is skyrocketing. Since President Obama took office, the amount that the federal government spends on SNAP has more than doubled. Last year, the federal government spent over $78 billion on the program alone. Although high unemployment is one driver of the growth in food stamp spending, it’s not the only one. The 2002 and 2008 farm bills lowered the eligibility threshold; meanwhile, state governments removed barriers like asset tests to sweep even more people into the program.

A coalition of 27 organizations representing millions of Americans recently sent a letter to Capitol Hill, outlining several fixes to the food welfare provisions the bill. These reforms would bring significant savings to food components of the farm, while continuing to provide a basic social safety net for the truly needy in our society.

One reform that they recommend is replacing the annual appropriation with a block grant for states. This would give states an incentive to control costs. This is an improvement over current policy, in which states have an incentive to procure as many federal dollars as possible. Another fix would be to apply income and asset tests to categorically eligible households. According to the Congressional Budget Office, adding income and asset tests to categorical eligibility requirements would trim average annual outlays by $12 billion over 10 years.

The letter includes more general reforms too, such as rolling back Farm Bill spending to FY 2008 levels: Federal outlays for nutrition programs in 2008 were $37.6 billion; in 2013, they will total $82 billion. Returning spending to FY 2008 levels would strike a balance between fiscal responsibility and providing a reasonable social safety net.

Lastly and most simply, the coalition partners recommend severing the SNAP title from the rest of the farm bill. Food welfare is unrelated to the agricultural subsidies contained in the rest of the bill and it deserves its own treatment in stand-alone legislation. No more combining food programs with agricultural subsidies in order to secure votes.

It’s easy to pledge to rein in spending in media interviews and in campaign speeches, but it’s another thing to put this into practice. Conservatives in Congress can deliver on their promises to rein in spending when it takes up the farm bill later this year by including some or all of these reforms to nutrition programs. Supporting unchecked spending levels is not why their constituents sent them to Washington.

Harbin is a federal policy analyst at Americans For Prosperity.

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NFL Owners May Have Misled Players About Team Profits To Pay Them Less

Panthers owner Jerry Richardson

When National Football League owners locked out players before the 2011 season, they did so claiming that the league’s financial system was driving it down a path of unsustainability. Even though league revenues were growing steadily, many owners, including Carolina Panthers owner Jerry Richardson, argued that they were destined for financial hardship because players were enjoying too large a share of the pie.

According to a team financial statement obtained by the Deadspin last week, however, Richardson wasn’t telling the truth. The Panthers, in fact, made more than $100 million in profits in 2011 and 2012, even as Richardson was claiming poverty:

The statement is for the years ending March 31, 2011, and March 31, 2012. Over the first period, as Richardson argued that the NFL’s business model was hopelessly broken and steered the owners toward a showdown to extract more money from the players, the Panthers recorded an operating profit of $78.7 million. The team had gone 2-14 on the field, but Richardson and his partners were able to pay themselves $12 million.

Over the following year, after the owners had won their lockout and reduced the players’ share of league revenue from 50 percent to 47 percent, the Panthers brought in $33.3 million in operating profit. Richardson began lobbying for public subsidies to renovate his 17-year-old stadium. The team went 6-10.

NFL teams, like franchises in other sports, aren’t required to disclose financial statements, and they refused to open their books when players asked during lockout negotiations. That allowed owners in a profitable league to claim poverty and hardship without any check into whether those claims were true. At the same time, tax breaks and special financing deals with the league allows NFL owners to make their financial pictures even more obscure.

As a result of that obscurity, labor disputes like the NFL’s become even more tilted away from players. Owners already hold leverage in such disputes, since the vast majority of players, unlike owners, depend on the game as their only source of income and players have short careers (the average NFL career is between three and six years long), so missing games or full seasons to negotiate more favorable bargaining agreements often isn’t palatable. The results, then, are predictable: owners are able to extract huge concessions from players to their direct financial advantage. In the NFL, NBA, and NHL, all of which locked out players in the last two years, players gave up substantial shares of revenue in their latest negotiations, and in the NFL, the salary cap is now growing at a far slower pace than it once was. While player salaries are still growing, the slowing growth of the salary cap means there will be less money to divide among them, even as the value of all 32 NFL teams continues to grow and league revenues continue to skyrocket.

This isn’t just a football story. The player-owner relationship is emblematic of the problems facing workers across America. Corporate profits have grown to record levels, but workers’ wages have stagnated. Companies like Caterpillar that are raking in record profits of their own are forcing workers off the job and demanding concessions on salaries and health and pension plans. Corporations are using built-in advantages to rig the game against the workers, padding their bottom lines but making workers worse for it. It may be hard to sympathize with million-dollar professional athletes, but the fights they’re having aren’t altogether different from the fights workers are facing across America.


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Medicaid Expansion: Implications for Ohio

Testimony before
Finance and Appropriations Committee Health
and Human Services Subcommittee
Ohio House of Representatives

 March 13, 2013
Edmund F. Haislmaier

My name is Edmund Haislmaier.  I am Senior Research Fellow at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

Thank you Madam Chairman and Members of the Committee for inviting me to testify today on the implications for Ohio of the Medicaid expansion included in the federal Patient Protection and Affordable Care Act (PPACA) of 2010.

State lawmakers debating whether or not to adopt the Medicaid expansion should note that the expansion population differs significantly from the other populations already covered by Medicaid.

Since it’s inception the focus of Medicaid has been on providing health care to vulnerable low-income individuals—namely, children and disabled and elderly adults.  In many instances, the parents of children on Medicaid also receive coverage.

States that now adopt the expansion in PPACA will be extending Medicaid to a different population, consisting of able-bodied adults, the vast majority of whom do not have dependent children.

Table 1 reproduces Ohio data (as well as national data for comparison) from an Urban Institute analysis of the composition of the Medicaid expansion population. The data yield several important observations.

Table 1

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 138% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012

First, because Ohio's current Medicaid program covers parents up to 90% of the federal poverty level (or 96%, if working), just over 10% of the expansion population will be parents.  The other 90% of the expansion population will be adults without dependent children.

Second, the expansion population will be relatively young, with half between the ages of 19 and 34.

Third, the expansion population will be more male than female.  In part, that is due to the fact that Ohio’s Medicaid program already covers pregnant women up to 200% of the federal poverty level.

The Urban Institute estimates that adopting the expansion would increase Ohio Medicaid enrollment by a total of 578,000 individuals.  Of those, an estimated 445,000 are below 100% of the federal poverty level.  This is significant because the other 133,000 individuals, or 23% of the expansion population—who are between 100% and 138% FPL—will be able to instead obtain federally subsidized exchange coverage if Ohio does not expand Medicaid. Table 2 gives the same enrollment composition data for the subgroup with incomes below 100% FPL. In that subset only 5.1% are parents, while 94.9% are adults without dependent children.

Table 2 

Uninsured Adults Newly Eligible for Medicaid with Incomes Below 100% of FPL (Numbers in 1000’s)

Adults without Dependent Children

Source: Genevieve M. Kenney, et. al., “Opting in to the Medicaid Expansion under the ACA:Who Are the Uninsured Adults Who Could Gain Health Insurance Coverage?,” Urban Institute, August 2012.

Because this population consists overwhelmingly of adults without dependent children and is both younger and more male, Medicaid coverage designed for more vulnerable populations is not the most appropriate solution for these individuals.

Among this population, low-income is largely a reflection of certain factors, and those factors also tend to correlate with age.  In general, low-incomes among younger adults (those in their twenties) tend to result from combinations of poor education, lack of skills and limited workforce participation.  They are less likely to have serious or chronic medical conditions. In contrast, those older than age 30 with low incomes are more likely to also have chronic health conditions or behavior health issues, such as substance abuse.

Consequently, any health care assistance provided to this population should incorporate strong incentives for both work and healthy behavior, neither of which are features of the Medicaid program.  A health care assistance program for this population should include the following specific design features:

Any coverage should be subsidized on an income-related sliding scale, so as to avoid creating economic disincentives for work. Assistance should be conditioned on a strong work requirement.  Recipients should be required to be working, actively seeking work, or engaged in job preparation activities, on a full-time basis. A recipient could satisfy this requirement by engaging in more than one of those activities, as appropriate to the individual’s circumstances, provided that the total effort was normally 40 hours per week. The coverage should be structured to emphasize the provision of primary care services. Like private insurance, the coverage should include strong disincentives (such as significant copays or deductibles) for inappropriate use of hospital emergency department services. For those with chronic conditions such as diabetes, or behavioral health issues such as substance abuse, the program should offer disease management and behavior modification programs, accompanied by compliance monitoring and tangible rewards for successful participation.

If Ohio covers this population through a Medicaid expansion, then federal Medicaid rules will prevent the state from implementing some of these features, such as work requirements, and will also limit the state’s ability to implement others, such as more appropriate copay structures or rewards for behavior modification.  Furthermore, any variances for this population from the standard coverage provided to existing Medicaid populations will require federal approval.

Consideration needs to also be given to how Ohio adopting the Medicaid expansion will interact with other provisions of the PPACA.

For example, it is commonly assumed that because the PPACA requires employers to extend dependent coverage to children of their workers up to age 26, that most young adults will be covered on a parent’s policy.  However, if a young adult does not qualify as a dependent on someone else’s tax return he or she is treated as a separate household for Medicaid or exchange eligibility purposes.  Furthermore, there is no requirement that a young adult enroll in the health plan of a parent’s employer, if that option is available.  When the PPACA requirement for dependent coverage up to age 26 went into effect many young adults shifted from coverage under their own employer’s plan to coverage under a parent’s employer plan.  It can similarly be expected that when the new exchange subsidies and Medicaid expansion take effect, many young adults will shift from employer coverage to Medicaid or exchange coverage if they qualify for that coverage based on their own income.

It has also been widely noted that the design of the employer mandate in the PPACA will encourage employers to favor hiring more part-time workers and fewer full-time workers.  That is most likely to occur with respect to lower-wage and younger workers.  Extending Medicaid coverage with no work requirements to those individuals will make that option more attractive for employers.  Not only is that likely to result in higher than projected Medicaid enrollment over time, it will also exacerbate growing rates of youth unemployment and underemployment.  Relative to their European counterparts, young adults in America today are less likely to have health insurance but more likely to have jobs.  Expanding Medicaid unconditionally to this population is a good way to increase youth unemployment and underemployment to European levels.

Similarly, colleges and universities typically provide health plans to students.  However, because several of the PPACA’s new insurance rules will make that coverage much more expensive, many higher education institutions are considering dropping their student plans. That is much more likely to happen if a state expands Medicaid, thus enabling students, particularly graduate students who do not have access to coverage under a parent’s policy, to obtain Medicaid coverage.

Rather than adopting the PPACA’s broad Medicaid expansion, Ohio should instead extend Medicaid coverage only to the remaining parents and disabled adults below 100% of the FPL who are not already covered by the program.  For non-disabled adults without dependent children who are below 100% of the FPL, Ohio should then design a state-only funded health care assistance program that is more suitable for that population.  Such a program should be constructed on the design principles outlined above.

As noted, a strong work requirement should be a key feature of such a program.  Indeed, increasing employment and hours worked among this target population not only will benefit those individuals, but will also reduce the need for the program, and thus limit the cost to the state.  That is because once a worker earns more than the federal poverty threshold he or she will become eligible for the PPACA’s federally subsidized exchange coverage.  The current federal poverty threshold is $11,170 and the current federal minimum wage is $7.25 an hour.  A full-time (40 hours a week, 50 weeks per year) minimum wage worker earns $14,500 in annual income, or 130% of the poverty threshold.  Indeed, at Ohio’s current, higher, minimum wage of $7.85 per hour, all that is needed to exceed the federal poverty threshold (and thus qualify for federally subsidized exchange coverage) is 30 hours work per week for 50 weeks per year, or 40 hours work per week for 36 weeks per year.

While a fully insured program would be desirable, the PPACA’s new regulations imposed on private insurance will likely make that option too inflexible and expensive. The existing Cover Tennessee and Cover Florida programs will encounter those problems next year.  Consequently, an Ohio program should, at least initially, directly reimburse participating enrollees and/or providers.  However, the state could also contract on an “administrative services only” (ASO) basis with one or more insurers to run the program.  Existing managed care organizations would be obvious candidates.  If a suitable work-around to the PPACA’s insurance market rules can be devised, it may be possible to later shift the program onto a fully insured basis.

The state should look to fund the program by redirecting other, existing state spending.  In particular, the presence of federally subsidized exchange coverage will enable the state to discontinue Medicaid coverage for optional populations with incomes above either 100% of the FPL or otherwise federally mandated minimum levels, saving the state its share of the current costs.

In particular, Ohio can reduce Medicaid eligibility for working disabled adults from the current level of 250% FPL to 100% FPL, and pregnant women from the current level of 200% FPL to 138% FPL.  Once the PPACA’s “maintenance of effort” requirement on coverage of children in Medicaid and CHIP expires, the state will also be able to reduce eligibility levels for children to the federally mandated minimum of 138% FPL.  It is important to note that all of the individuals who would lose Medicaid coverage as a result of these changes will be able to obtain replacement federally subsidized exchange policies that provide comprehensive coverage with low enrollee premiums and very low cost sharing.

Given that a subset of the target population for the new program (non-disabled adults without dependent children below 100% FPL) will have chronic health conditions or behavioral health issues, the state should also consider repurposing to the new program some portion of existing spending on substance abuse treatment and state supplemental payments to hospitals and clinics for uncompensated care. For example, Ohio currently receives $115 million a year in grants from the federal Department of Health and Human Services’ Substance Abuse & Mental Health Services Administration (SAMHSA), $66 million of which is Substance Abuse Prevention and Treatment Block Grant funding.

In conclusion, it is an undisputed fact that the United States spends more on health care—on a per-capita basis and as a share of gross domestic product—than any other nation.  It is also a fact that the results of all that spending are sub-optimal. That is particularly evidenced by inadequate access to medical care among some sub-populations—particularly young adults. 

Congress failed to adequately address this situation when it enacted the PPACA.  What Congress should have done is to redesign health care financing incentives to generate a better-value, lower-cost system and then direct the resulting savings into expanding access.  Instead, in PPACA Congress shoved more people into a failing system and burdened the country with even higher public and private health care spending.

As Ohio and other states consider their own health reform measures, they should not simply go along with a set of bad federal policies, but should instead pursue the more appropriate, effective, and less costly reforms that Congress failed to include in the PPACA.

Madam Chairman, this concludes my prepared testimony. Thank you for this opportunity and I will be happy to answer any questions you or the other members may have.


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Obamacare Tax Increases Will Impact Us All

The trillion dollars in tax increases from the Affordable Care Act have the potential to hinder small business and investment, and further set back a struggling economy.

The Joint Committee on Taxation recently released a 96 page report on the tax provisions associated with Affordable Care Act. The report describes the 21 tax increases included in Obamacare, totaling $1.058 trillion – a steep increase from initial assessment. The summer 2012 estimate is nearly twice the $569 billion estimate produced at the time of the passage of the law in March 2010.

Last summer, the House Ways and Means Committee detailed the breakdown of each tax provision in a chart, which we reproduced here.

March 2010 Estimate, 2010-2019, $US billion

June/July 2012 Re-Estimate, 2013-2022, $US billion

Additional 0.9 percent payroll tax on wages and self-employment income and new 3.8 percent tax on dividends, capital gains, and other investment income for taxpayers earning over $200,000 (singles) / $250,000 (married)

“Cadillac tax” on high-cost plans *

Annual tax on health insurance providers *

Annual tax on drug manufacturers/importers *

2.3 percent excise tax on medical device manufacturers/importers* 

Limit FSAs in cafeteria plans *

Raise 7.5 percent AGI floor on medical expense deduction to 10 percent *

Deny eligibility of “black liquor” for cellulosic biofuel producer credit 

Codify economic substance doctrine

Increase penalty for nonqualified HSA distributions *

Impose limitations on the use of HSAs, FSAs, HRAs, and Archer MSAs to purchase over-the-counter medicines *

Impose fee on insured and self-insured health plans; patient-centered outcomes research trust fund *

Eliminate deduction for expenses allocable to Medicare Part D subsidy

Impose 10 percent tax on tanning services *

Limit deduction for compensation to officers, employees, directors, and service providers of certain health insurance providers

Modify section 833 treatment of certain health organizations

Additional requirements for section 501(c)(3) hospitals

Employer W-2 reporting of value of health benefits

* Provision targets households earning less than $250,000.

** Includes CBO’s $216.0 billion estimate for “Associated Effects of Coverage Provisions on Tax Revenues” and $6.0 billion within CBO’s “Other Revenue Provisions” category that is not otherwise accounted for in the CBO or JCT estimates.

Source: Joint Committee on Taxation Estimates, prepared by Ways and Means Committee Staff

These new taxes will hit small businesses hard. Owners of small businesses will face a tax increase on self-employment income and the employer mandate will pose huge challenges to many small businesses. Businesses that work with small profit margins and have workers with relatively low wages may have to close up shop. Businesses that are able to comply will be forced to reduce worker wages and raise prices on customers.

The cost of compliance is another ding on the budgets of small business, large business, medical providers and individuals. The Obamacare Burden Tracker pegs the total cost of compliance at 127.6 million hours. That’s 127.6 million hours of productive work the U.S. economy loses to complexity. 

Add the complexity and the cost to small businesses to the investment tax increase in the ACA, and the tax provisions in the law could do some real damage to economy. Following the fiscal cliff tax increases and the additional 3.8 percent investment tax from the ACA, the U.S. now has a combined state and federal capital gains rate of 28 percent, up from 19 percent in 2012. High investment tax rates discourages the free flow of capital and damages long-term economic growth.

The economic effects of the increases in investment taxes from the ACA won’t necessarily be felt immediately, but will harm future development. Less capital will lead to less future productivity, which will lead to lower future wages.

But small businesses and individuals will feel the other effects of the tax increases in the ACA much sooner, as businesses learn to comply with the law and all its provisions over the next couple years.


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Senate Democratic Budget Reduces Deficit By $1.85 Trillion, Half From Revenue

Sen. Patty Murray (D-WA)

A day after House Republicans outlined their budget proposal for fiscal year 2014, Senate Democrats unveiled a broad outline of their budget, which Senate Budget Committee Chair Patty Murray (D-WA) said will reduce the deficit to less than three percent of gross domestic product while bringing total deficit reduction to $4.2 trillion over the last four years.

The Democratic budget would replace the automatic budget cuts, known as sequestration, that took effect on March 1 with a different set of cuts that will achieve $1.95 trillion in total cuts and revenues. Here are the main provisions of the Democratic budget as outlined by Murray:

$1.85 trillion in total deficit reduction: The Senate budget achieves $1.85 trillion in total deficit reduction split evenly between spending cuts and new revenues and bringing total deficit reduction since President Obama took office to more than $4 trillion once combined with past spending cuts and tax increases. It includes $493 billion in domestic spending cuts, $275 billion of which would come from health savings determined by the Senate Finance Committee. The other $240 billion would come from defense and the end of the war in Afghanistan, and the budget would save $242 billion in interest savings.

$975 billion in new revenues: The budget would achieve half of its deficit reduction from new revenue increases derived from the elimination of tax expenditures and loopholes, though it does not include specifics on which would be eliminated. That would be left to the Senate Finance Committee as part of a broader tax reform bill. A report from the Center for American Progress found that there were more than $1 trillion in tax expenditures that could be eliminated. Those include subsidies for oil and gas companies, a loophole that benefits hedge fund managers, ending tax breaks for corporations that move jobs overseas, and limits on deductions for wealthy taxpayers.

$100 billion in stimulus spending: The budget also includes $100 billion for programs meant to boost the economic recovery, including $50 billion for infrastructure projects. The rest would go toward worker training programs and other forms of stimulus spending, according to Murray.

The Democratic budget would not achieve balance over the 10-year budget window, a point the Budget Committee’s Republicans repeated throughout the markup today. The House GOP budget, by contrast, claims to balance in 10 years, though those claims are built almost entirely on unrealistic revenue projections.


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