Archive | Health Care

RSS feed for this section

SustiNet: Will CT Compete in the Global Economy or Not?

For more than a century, the defense and insurance industries have been bulwarks of the Connecticut economy but within the last year, both are waving distress flags at the state’s leaders.

United Technology’s CFO Gregory Hayes bluntly told reporters that, “Anyplace outside of Connecticut is low-cost.” Similar themes were again sounded this week by Aetna CEO Mark Bertolini who said, “. . . Quite frankly, Connecticut falls very, very low on the list as an environment to locate employees.”

The message from these industry leaders is clear. Connecticut’s economic problems aren’t just a byproduct of the recent downturn. The state faces a competitiveness crisis that won’t go away until it is addressed.

Liberal leaders in the legislature will lay out their vision for how to confront the matter starting Monday at a joint meeting of the Public Health, Human Services, and Insurance and Real Estate Committees as they hold a public hearing on the landmark SustiNet health care legislation.

Democratic officials have zeroed in on health care and energy costs as two key burdens on Connecticut’s economy and are keen to address both in this legislative session.

Though they rightly assert that health insurance is too costly in Connecticut, their solution – SustiNet – is equally unaffordable.

Though proponents of the law say that it will save the state $224 million under the pessimistic scenario and $425 million under the optimistic scenario, the vast majority of the “savings” are actually costs shifted to the federal government. In an era of trillion dollar federal deficits and a debt rapidly approaching parity with the GDP, this makes SustiNet a fingers-crossed, toss a penny in a fountain, wear your lucky underwear kind of plan.

It would be deeply irresponsible for the legislature to consider such a plan even in good times; in the current fiscal crisis legislators should meet it with startled disbelief. But if you go on over to the Legislative Office Building today, there they will be. If you listen closely enough, you might be able to hear “Nearer my God to Thee”, too. Feel free to hum along.

Being unaffordable simply isn’t a dealbreaker because for many champions of the law, that’s a happy byproduct. In their November 2010 Fiscal Accountability Report, the Office of Policy and Management noted the “ratcheting effect” that economic downturns have on taxes as budget deficits compel tax hikes which, once the economy recovers, fund new programs that grow constantly until the next downturn which necessitates further tax increases.

SustiNet will be one more big turn of that ratchet.

The people will see if Governor Dannel P. Malloy takes the opposite approach to solving the competitiveness crisis on Wednesday when he delivers his budget address to the General Assembly. In next-door New York, Governor Andrew Cuomo is turning heads and winning high praise by pledging significant reductions in the cost of government, streamlined bureaucracy, and no tax hikes, all premised on the shocking idea that making it easier to compete in the economy improves competitiveness.

Whether Connecticut will try to compete by becoming more competitive or by creating new programs is the decisive question that policymakers face. This week, we’ll start to see what their answer will be.

For the opposing view on this story, check out Jon Pelto’s “Wait, What?” for his insightful piece on SustiNet.

Finding Clarity Amid the Confusion

Now that the long and often angry debate over health care reform has produced a new law, its merits and flaws will finally get to be tested in reality rather than in the speculation and conjecture that have shaped its reputation to this point.

This problem is not unfounded. After President Franklin Roosevelt announced his plan for a social security program to protect the jobless, the elderly, and widows against what he later characterized as the “hazards and vicissitudes of life,” the New York Times published the entirety of the proposed bill on Jan. 18, 1935, over three pages.

Nearly 75 years later, the fact that the highly complex health care reform package came in a 1,990 page document fueled the uncertainty and distrust that was expressed at town hall meetings and in rallies all across the nation. Even after its passage, the task of figuring out just what is in it remains challenging.

Like Social Security, health care reform is expected to extend insurance coverage to 30 million Americans who would not otherwise be covered. Reformers have correctly trumpeted this fact as a major accomplishment that ought not to be considered lightly. Those that plan to campaign for repeal will face troubling questions about how to otherwise indemnify people who will be covered once the law goes into effect.

It is, however, equally difficult to miss that the law’s financial implications are tenuous at best over the long run. On this account, the derisive comparisons between the reform opponents of 1935 and 2010 lose some of their spite.

The passage of time hasn’t been kind to 1936’s Republican Presidential candidate Alf Landon, who campaigned on the repeal of the Social Security Act. In a speech entitled “I Will Not Promise the Moon,” Mr. Landon noted this about the government’s proclivity to spend rather than save: “There is every probability that the cash they pay in will be used for current deficits and new extravagances.” Though the turning pages of history haven’t improved his popularity, they have proved him correct.

And perhaps so to shall it be with health care reform. The Congressional Budget Office estimates, which have been trumpeted by the President and other reformers, assert that the changes will reduce the federal deficit over the next two decades. Hopefully, these projections turn out to be more accurate than those used in the past. In 1965 at the inception of Medicare, it was estimated that the program’s 1990 cost would be $12 billion. It actually cost $107 billion.

Skeptics may not be popular, but their concerns are well justified.

This muddled picture of costs and benefits makes it difficult to find sensibility amid the reforms. The moral certitude that comes from extending coverage to millions of Americans is tempered by the moral bankruptcy of ignoring the financial pitfalls for the entire nation. If history serves as a guide then both sides will be able to find validation for their views.