The Wonk Room

Pawlenty Likens Federal Gov To A Drug Dealer, Implies Minnesota Towns, Businesses Are Addicts

Outgoing Minnesota governor and potential Republican presidential candidate Tim Pawlenty appeared on Fox News and Fox Business last night to defend his recent executive order prohibiting the state from applying for grants provided by the new health care law. Pawlenty’s ban could cost the state $1 billion or more in federal funds, but in his national TV tour last night, the governor compared the federal government to a drug hustler pushing its product on willing addicts:

PAWLENTY: Federal government’s acting increasingly like a financial drug dealer, handing out tastes or free samples, trying to get people addicted, further addicted. And we’ve just had it and we’re not taking the bait anymore. We’re not taking the free samples anymore. This is an executive order that says we’re sending them a strong message, but we’re also going to try to make sure the policies are for Minnesota not because some big federal bureaucracy tells us what to do.

Earlier that night on Fox Business’ The Willis Report, Pawlenty implied he didn’t believe that the grants for insurance premium review or reinsurance “make sense.” Watch a compilation:

Of course, the 97 different entities that applied for reform’s reinsurance grants can rightfully take offense to Pawlenty’s drug-dealing analogy and his dismissal of the money as nonsensical. After all, while his refusal to accept early Medicaid funding could be understood as an unwillingness to spend more state funds on the program, his decision to reject grants that require no state contribution is more difficult to comprehend. In fact, Minnesota was one of only five states to reject the federal grants for rate review.

Pawlenty is suggesting that he has a long record of refusing the federal government’s so-called financial drugs, but he recently signaled that he will accept $263 billion from the federal government to help fund the state’s Medicaid program and took additional dollars to fund abstinence-only programs. In fact, as Amanda Terkel reported yesterday, Pawlenty’s own budget instructed state agencies to apply for federal health care grants.

At Least 20 Companies On U.S. Chamber Of Commerce Board Of Directors Applied For Grants From Health Law

Yesterday, I noted that Koch Industries — the oil, chemicals, and manufacturing conglomerate that has also spent millions of dollars opposing health care reform — applied for federal dollars to bolster its early retiree program. Today, Julian Pecquet of Healthwatch lists other corporations who are accepting the law’s appropriations while funding efforts to repeal it. Pecquet conducted “a state-by-state review” of approved applicants and found that “more than a dozen members of the board of directors of the U.S. Chamber of Commerce have also been accepted into the program.” They include:

– Pfizer, PepsiCo, New York Life Insurance Company, Eastman Kodak and IBM of New York;

– Rolls-Royce North America, the Norfolk Southern Corporation and the Altria Group of Virginia;

– UPS and Southern Company of Georgia;

– John Deere and Navistar of Illinois;

– AT&T and the Fluor Corporation of Texas;

– U.S. Airways of Arizona;

– Entergy Services Inc. of Louisiana;

– The Dow Chemical Company of Michigan;

– Anheuser-Busch of Missouri;

– FedEx Express of Tennessee;

– CUNA Mutual Group of Wisconsin;

– Pepco Holdings Co. of Washington, D.C.

As Pecquet points out, “being members of the Chamber’s board of directors doesn’t mean the companies agree with all of its stances” (Pfizer supports the law), but it’s probably worth reiterating just how hard the Chamber has worked to scurry reform. “Over the past year, the U.S. Chamber of Commerce has spent nearly $3 million a week in opposition to President Obama’s major agenda items,” the Washington Post reported last month and poured close to $50 million into anti-reform television ads alone. Now, it plans to spend some $75 million trying to unseat Democrats who voted for the health care law all the while its board members profit from it.

New Lawsuit Against Health Law Claims Reform Is ‘Compelling Participation In The Secular Religion Of Socialism’

A group of conservative activists in Nevada have filed a class action lawsuit on behalf of a handful of Nevadans who oppose the health care law and “all persons in the United States of America who object to being forced to participate in the PPACA.” The group, PeopleV.US, claims that the health care law “violates 60% of the Bill of Rights” and describes its challenge as “the most comprehensive suit filed against the Act.” The effort is being funded by Tony Dane, a Nevada businessman “who runs a robocalling firm and helped GOP Senate nominee Sharron Angle get elected to the state assembly.”

The lawsuit regurgitates some of the familiar claims that the individual mandate violates the commerce clause and the 10th amendment of the constitution, but also adds some new charges [Read the full complaint HERE]:

- The PPACA violates the free exercise of religion protected by the First Amendment to the Constitution by compelling Plaintiffs herein to fund abortion in contravention of sincerely held religious beliefs.

- The PPACA violates the Constitution because the federal government lacks legal authority under the Fifth Amendment to the Constitution to deprive Plaintiffs herein of the liberty right to refuse to divulge medical confidences to a private insurer or its agent, to obtain health insurance; to not receive medical treatment or treatment of a particular kind; and to not pay for unwanted treatment; and to receive treatment of their own choosing.

- The PPACA violates the Thirteenth Amendment of the Constitution’s prohibition against involuntary servitude because it involuntarily creates a debt and coerces Plaintiffs herein to work off the debt by threat of legal sanction.

- The PPACA violates the First Amendment of the Constitution’s prohibition against the government’s establishment of religion by establishing, promoting and compelling participation in the secular religion of Socialism.

The suit also asks some key questions: “Does the PPACA violate the Privacy Rights of Plaintiffs under the case of Roe v. Wade by allowing the government to control their private health care decisions and giving the government control over Plaintiffs’ bodies?,” “Does the PPACA set up a government sponsored secular religion in violation of the establishment clause of the First Amendment?.”

The latter receives full treatment, with references to Karl Marx and Lenin:

See also “Liberal Fascism” by Jonah Goldberg, Broadway Books, 2009, which points out that fascistic socialism has become the U.S. state religion in America, beginning with Woodrow Wilson and continuing to the present.

137. As Trotsky wrote: “Marx is the prophet with the tables of the law and Lenin the greatest executor of the testament” (see the report at the Seventh All Russian Party conference of April 5th, 1923 as published in LENIN by Blue Ribbon Books, New York,1925).

Trotsky was second in authority only to Lenin in 1923 and even he calls Marx a prophet, comparing him to Moses with the tables of the law see (Ex. 24: 12) and Lenin becomes the executor of that religion’s new “testament.”

These statements of Trotsky must be given “great weight”:

In such an intensely personal area, of course, the claim of the registrant that his belief is an essential part of a religious faith must be given great weight.

The lawsuit lists the INDEPENDENT AMERICAN PARTY OF NEVADA and the NEVADA EAGLE FORUM as plaintiffs — the groups are “devoted to the preservation of constitutional/conservative values and oppose socialism, marxism, fascism, and any such form of state religion or government controlled health care” — and specific individuals, Dane included, who “object to the PPACA because it is the establishment of Socialism as a civil / secular religion, and compels participation in this state sponsored religion by way of the Individual Mandate and the shared responsibility payment.”

All in all, the usual Tea Party arguments about the Commerce Clause and the Tenth Amendment fade into the background of this rather colorful document and one wonders if and when Sharron Angle will join the cause, given her connections to its backer.

A New Proposal To Change The Counter-Cyclical Effect In Medicaid Funding

Michael O’Grady and Jennifer Baxendell Young have offered a new proposal to reverse the ‘counter-cyclical’ effect in Medicaid funding — in which states are overridden with higher Medicaid costs during periods of economic recession, often forcing the federal government to increase its contribution (known as FMAP) to the program. O’Grady and Young would automatically trigger a higher federal contribution during economic downturns and allow the states to repay the loan over a five year period:

The proposal we are considering is to adjust downward a state’s share during an economic downturn. The adjustment would allow states facing economic hardship to make a lower contribution during the downturn, i.e., the FMAP would increase and the federal government would pay more. However, unlike current practice, the additional federal funds would be paid back using a lower FMAP (therefore a higher state share) once the state’s economy rebounded. The design would achieve the dual policy goals of providing federal help to states during a downturn, and not adding to the federal debt.

To achieve this, a number of steps would be taken:

First, there would need to be a trigger mechanism (not controlled by the states) that would indicate economic vulnerability. Some possibilities might be the state’s unemployment rate rising above 10 percent or an annual reduction in state gross domestic product (GDP) of more than 5 percent

Second, there would need to be a sliding scale emergency FMAP adjustment where the federal government picks up a higher percentage based on how bad the state’s economy is. For example, a 1 percent increase in the federal share for every 1 percent of the state’s unemployment rate beyond 10 percent.

Third, the adjustment should not occur until the next fiscal year. This lag is designed to serve two purposes. First, this mechanism is not intended to address short-term dips in a state’s economy. That is for the state to manage. Second, accessing federal relief should not be an option of first resort. Instead, states should exercise the program management tools they possess (not that those are easy or desirable) before asking federal taxpayers for help.

Fourth, the difference between the regular FMAP and the emergency FMAP would be treated as a loan with a five-year payback window.

Fifth, as the state’s economy recovers, the five-year payback window would start. This could be designed to have the payback start within five years of the initial triggering event. The result is a maximum payback period of 10 years.

Sixth, the payback mechanism would be a higher percentage share from the state until the additional federal money is repaid, plus an amount equal to the market rate for federal borrowing during the time period of the emergency FMAP.

In other words, the proposal would make changes to FMAP so that it moves more flexibly with the economy. All the politicking around increasing the FMAP contribution (everything we saw during the fight to pass the $26.1 billion package) would just move to the back end, when states actually have the capacity to repay the additional FMAP dollars. But significantly, states will be able to deal with the surge of new applicants without lowering eligibility, reducing funding, or dealing with all the political implications of accepting additional dollars from Washington.

Pawlenty To Accept Medicaid Match Because It ‘Doesn’t Further Some Stupid Policy Agenda’

As he issued an executive order preventing the state from applying for any of the grants available in the new health care law, Minnesota Governor Tim Pawlenty signaled that he would accept $263 million in federal dollars to bolster the state’s Medicaid program — funds he previously described as a ‘bailout’ of the states. “The federal government should not deficit spend to bail out states and special interest groups,” Pawlenty said earlier this month after the House reconvened for an emergency vote and passed a $26.1 billion bill providing aid to state governments. “Minnesota balanced its budget without raising taxes and without relying on more federal money. The federal government’s reckless spending spree must come to an end.”

Putting aside the fact that the $26.1 billion measure was fully paid for (and even reduced the deficit by $1.4 billion), Pawlenty searched for another explanation as to why he’s willing to accept a transfer of federal funds into the state Medicaid program but would not apply for grant dollars authorized by the health care law. The enhanced Medicaid payments are “not Obamacare” and won’t “further some stupid policy agenda,” he concluded:

“We’ll likely take that money,” Pawlenty said in an interview at the State Fair Tuesday. “It’s not Obamacare, it is something that we were going to be doing anyhow…”We’re going to take the money for those things that we were going to do anyhow and for the Medicaid (money), we were going to do that anyhow,” Pawlenty said. [...]

Further, the governor said, Minnesota is a net donor to the federal government — sending in more money than it gets back — so “where it’s appropriate and where it’s wise and doesn’t further some stupid policy agenda or otherwise concerns us or sign us up for something that is unsustainable or otherwise cause us a problem, we’re going to apply for those other pots of money.”

Earlier this year, Pawlenty rejected federal funds from the health care law to expand the state’s Medicaid program, a point he highlighted in yesterday’s executive order.

Costs Of Expanding Medicaid Program May Be Lower Than They Appear

Since health reform became law, states have expressed a great deal of anxiety about expanding their Medicaid programs, releasing studies demonstrating that the state portion of the expansion (the law expands the program to 133% of the FPL) would run in the billions of dollars. But now, a new report from the Urban Institute finds that the expanded population may be healthier than current Medicaid enrollees and that states can lower their Medicaid price tag by expanding their enrollment efforts:

Results from our microsimulation model indicate that the adults who enroll in Medicaid under reform are likely to be more expensive to cover than those who remain uninsured but still not likely to be as expensive as those currently enrolled in Medicaid. [...]

The higher the Medicaid participation rate among the eligible population of adults and the less adverse selection that occurs, the lower the average costs will be under reform, and the broader the mix of new enrollees will be in terms of health status. This does not mean that the new population covered by Medicaid will be uniformly in good health since there are still relatively high percentages in fair or poor health and with two or more chronic conditions within the underlying population. But on average, those newly covered are likely to be healthier and less costly than those who are currently enrolled.

In other words, sates will have to expand their enrollment efforts to net healthier (and maybe younger) enrollees who are below the poverty line to balance the costs of covering the sicker population. But that may take some time. The study finds that “a high rate of adverse selection is especially likely in the initial period following implementation of the Medicaid expansion and the other major policy changes associated with health reform, as we expect that those with the greatest health needs will be among the first to enroll.”

Fortunately, states will receive the highest federal matching fund during that critical early period. The federal government picks up the entire tab of Medicaid expansion until 2016 and then pay for 95% of the expansion in 2017, 94% in 2018, and 93% in 2019. As we get into the out years, however, it will be critical for states to enroll more people if they wish to lower their per capita spending.