We’ve been offline for over a month. Initially it was due to the holidays. More recently, we’ve been buried in prototyping some very exciting information offerings and we should have something to show shortly.
In the meantime, a backlog of interesting stuff has built up and we’ll start posting today.
Thanks for your patience.
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Joshua M. Brown, a financial advisor, responding to JPMorgan Chase & Co. chief executive officer, Jaime Dimon’s lament that Americans hate the rich:
I am writing to profess my utter disbelief at how little you seem to understand the current mood of the nation. In a story at Bloomberg today, you and a handful of fellow banker and billionaire “job creators” were quoted as believing that the horrific sentiment directed toward you from virtually all corners of America had something to do with how much money you had. I’d like to take a moment to disabuse you of this foolishness.
America is different than almost every other place on earth in that its citizenry reveres the wealthy and we are raised to believe that we can all one day join the ranks of the rich.
…
Likewise, when Steve Jobs died, he did so with more money than you or any of your “job alliance” buddies – ten times more than most of you, in fact. And upon his death the entire nation went into mourning. We set up makeshift shrines to his brilliance in front of Apple stores from coast to coast. His biography flew off the shelves and people bought Apple products and stock shares in his honor and in his memory. Does that strike you as the action of a populace that hates success?
No, Jamie, it is not that Americans hate successful people or the wealthy. In fact, it is just the opposite. We love the success stories in our midst and it is a distinctly American trait to believe that we can all follow in the footsteps of the elite, even though so few of us ever actually do.
So, no, we don’t hate the rich. What we hate are the predators.
What we hate are the people who we view as having found their success as a consequence of the damage their activities have done to our country. What we hate are those who take and give nothing back in the form of innovation, convenience, entertainment or scientific progress. We hate those who’ve exploited political relationships and stupidity to rake in even more of the nation’s wealth while simultaneously driving the potential for success further away from the grasp of everyone else.
…
So please, do us all a favor and come to the realization that the loathing you feel from your fellow Americans has nothing to do with your “success” or your “wealth” and it has everything to do with the fact that your wealth and success have come at a cost to the rest of us. No one wants your money or opportunities, what they want is the same chance that their parents had to attain these things for themselves. You are viewed, and rightfully so, as part of the machine that has removed this chance for many – and that is what they hate.
America hates unjustified privilege, it hates an unfair playing field and crony capitalism without the threat of bankruptcy, it hates privatized gains and socialized losses, it hates rule changes that benefit the few at the expense of the many and it hates people who have been bailed out and don’t display even the slightest bit of remorse or humbleness in the presence of so much suffering in the aftermath.
Nobody hates your right to make money, Jamie. They hate how you and certain others have made it.
Don’t be confused on this score for a moment longer.
That pretty much says what needs to be said, but go read the whole thing.
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We’ve already talked a little bit about how New York is undertaking a fundamental change in its Medicaid program. Similar changes are underway in many states.
As part of this change, Medicaid clients in long term care are being transitioned from fee-for-service programs to various forms of managed care, including managed long term care.
How might the transition of clients in a wide variety of programs work and what might the transition look like? The State’s plan is to move X thousand clients per month into managed care. Will it really work like that? That may be a reasonable benchmark, but if too rigidly adhered to, it may create unreasonable expectations and make even more turbulent, what is already going to be a very disruptive change.
So here are two seemingly simple questions.
Question #1:
Which of the lines in the diagram do you believe best represents the change over time of the number of long-term care clients into managed care? Don’t get hung up on the numbers. Will the movement start fast and then slow? Will it start slow and then accelerate? Will it continue accelerating until everyone is in managed care?
Question #2:
What do you believe are the key underlying mechanical forces making the transition happen? Are clients (and workers) being pushed from fee-for-service to managed care? Are they being pulled by managed care from fee-for-service. Yes, they are being pushed by a change in State policy, but what it comes to the mechanics of effectuating that, how will it work? Will the flow from FFS to managed care be constrained by such factors as insufficient resources to enroll clients in plans? Once enrolled, will there initially be sufficient trained and coordinated teams that will actually do care and case management? How long will it take to hire, train, and acculturate new staff?
Why are we doing this? We’re building a model (think flight simulator) of this change.
First, many, many elements of the system have to be transitioned to make this work without undue disruption in the lives and care for thousand of clients. For example, the workforce, primarily aides also have to be transitioned. If the transitions of clients and aides is not at least roughly in synch, some clients will be at least temporarily without adequate care. Second, many, many organizations need to figure out how to best deploy and coordinate their resources. Third, we need to manage expectations. All too often, we’ve set unrealistic deadlines and then, just when things were being to move effectively, abandoned the attempt or panicked and caused further disruption.
This transition is necessary and really long overdue. We won’t be able to avoid some surprises, but we do need to minimize them. While worthwhile, this entire enterprise is immensely complicated and to do it well, we need to have a sense of how all the moving parts interact with one another.
Feel free to post your answers in the comments. Just click “comments” and register. Or to contact me directly. And we will be making that easier shortly.
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Reading a New York Times Story on Mitt Romney’s continued receipt of income from Bain Capital, a company he left in early 1999, I was reminded of the special tax deal that hedge fund and private equity operators get.
Tax treatment of hedge fund and private equity compensation has been another point of political contention. The debate in Washington boils down to whether the “sweat equity” provided by investment managers in putting deals together should entitle them to the special 15 percent tax rate on long-term capital gains, as opposed to the rates of up to 35 percent that normally apply to people providing services.
The lower rate had traditionally been reserved for investors who put their own capital at risk, but I.R.S. rulings in the early 1990s extended it to the share of profits paid to private equity and hedge fund managers. Democrats in Congress have periodically sought to rescind that privilege, and the Obama administration is considering another push to change that provision.
Mr. Romney’s retirement deal, like that of other private equity managers who keep a portion of their firms’ profits when they retire, could give him the lower rate on profits from deals he had nothing to do with.
“The rationale for having a capital gains preference is to encourage investors to put their cash into investments,” said Mr. Fleischer, the University of Colorado law professor. “Romney here isn’t even putting in any labor.”
Moreover, much of his income from the arrangement has probably qualified for a lower tax rate than ordinary income under a tax provision favorable to hedge fund and private equity managers, which has become a point of contention in the battle over economic inequality.
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Thanks to Lisa Henty, from the Orange County, NC Budget Office, for reminding us that the Government Accounting Standards Board (GASB) is seeking public comment on a Preliminary Views proposing that state and local governments prepare financial projections to better present their economic conditions.
From the December 6, 2011, GASB press release:
The GASB is seeking public comment on its proposals, which are outlined in Preliminary Views, Economic Condition Reporting: Financial Projections. Based on its research and input from financial statement users, preparers, and auditors, the GASB believes that the following information is necessary to assist users in assessing a government’s economic condition:
- Projections of cash inflows and cash outflows, with explanations of the known causes of fluctuations
- Projections of the financial obligations, including bonds, pensions, other postemployment benefits, and long-term contracts, with explanations of the known causes of fluctuations
- Projections of annual debt service payments, including principal and interest Narrative discussion of governments’ dependencies on other governments to provide its services.
“The GASB is issuing this document for public comment because of significant concerns expressed by users of state and local government financial reports regarding the importance of understanding whether governments are on a financially sustainable path,” said GASB Chairman Robert Attmore. “The current economic downturn has emphasized what has been known for a long time: information is not always publicly available regarding the financial challenges facing governments.”
The GASB proposed that financial projections should be (a) based on current policy, (b) informed by historical information, and (c) adjusted for known events and conditions that will affect the government’s finances during the projection periods. Governments would be required to present projections for at least the next five fiscal years. The projections would be reported as required supplementary information following the notes to the financial statements.
Public hearings will be held March 29, 2012, 8:30 a.m. PDT, in Los Angeles, California and April 17, 2012, 8:30 a.m. EDT, in New York City.
Project information may be found here.
It all comes down to cash. Always (I had one of these t-shirts too, though not so early in life).
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Episode 4,564:
When we last tuned in, the New York State Public Health and Health Planning Council had politely suggested that Albany County might want to re-evaluate its plans to build a new, ridiculously expensive Nursing Home. The rationale was that the State was about to issue new nursing home rates based on an entirely new methodology that’s been in the works for several years.
The Albany County Legislature blew off the State by passing Albany County Resolution 11-508 (NH CON).pdf before the new methodology was finalized and released. That is, as noted earlier, they don’t care what it costs.
After all the usual “whereases,” Resolution 11-508 says:
RESOLVED, That the Albany County Legislature hereby declares its continuing support for the development of a new Albany County Nursing Home and is again requesting approval of the proposed new Certificate of Need, and, be it further
RESOLVED, That the Albany County Legislature is aware that patient reimbursement rates may change but believes that a new and property-run facility will be affordable, and, be it further
RESOLVED, That the Albany County Legislature is particularly troubled by plans to privatize county nursing homes, … etc, etc….
This was introduced at the last second when many members were not paying attention, was not reviewed by Committee, and passed by voice vote.
Episode 4,565:
So now the new rate methodology has been finalized, the State has done its analysis of effects, and the new rates go into effect on January 1, 2012. While we’ll go into a detailed analysis, later, here are the State numbers of the effects. Note that the comparisons are against what would otherwise be the case, not comparisons to the County budget, or the certificate of need application. I’d bet that the consultants, who are technically capable, professionals who did the CON work actually estimated the impact and factored it into the CON, but the County officials involved are ignoring these analyses anyway so they didn’t even know that.
Anyway, here are the State’s numbers (numbers in parentheses are negative):
More on that later.
Episode 4,566: So last night, the outgoing County Executive, Michael Breslin vetoed Resolution 11-508. Here’s his veto message: Res No. 508 veto letter.pdf This won’t be a voice vote.
Preview of coming episodes:
Now that was a tease, wasn’t it? Stay tuned for our next exciting episode!
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SInce 1974, based on their characterization as “companions,” much like babysitters, home care workers have been exempt from provisions of Federal Labor Law regarding minimum wages, overtime and travel time. Evelyn Coke, a home care worker Long Island sued her employer regarding these, ultimately her case reached the US Supreme Court. (Here’s a video from SEIU regarding Ms. Coke.) The Court found in 2007 for the employer, but made it clear that the Federal Department of Labor had the authority to require application of these regulations to home care workers.
In the long-term care system, no one spends more time with patients than aides, not doctors, not nurses, not therapists. If we are going to improve the functioning and performance of that system, aides must be an integral part of, indeed the anchor of, care teams. They should no more be excluded from basic labor law protections than, say, nurses.
Today, in a White House ceremony, the President and the Secretary of Labor announced proposed rules which will extend these requirements to home care workers. Ms. Coke died in 2009, but today’s ceremony included Pauline Beck, a home care worker that the President had spent a day working with in 2007. This must have been a wonderful moment for Ms. Beck.
Here’s the USDOL announcement and here’s a link to the Notice of Proposed Rule Making.
From today’s New York Times:
December 15, 2011
Wage Protection Planned for Home Care Workers
By STEVEN GREENHOUSE
The Obama administration said on Thursday that it would propose regulations to give the nation’s nearly two million home-care workers minimum wage and overtime protection after those workers had long been exempted from coverage.
Labor unions and advocates for low-wage workers have pushed for the changes, asserting that the 37-year-old exemption improperly swept these workers, who care for many elderly and disabled Americans, into the same “companion” category as baby sitters. The administration’s move calls for home-care aides to be protected under the Fair Labor Standards Act, the nation’s main wage and hour law, as most other workers are.
“The nearly 2 million in-home care workers across the country should not have to wait a moment longer for a fair wage,” President Obama said in a statement. “They work hard and play by the rules and they should see that work and responsibility rewarded.”
These workers, according to industry figures, generally earn $8.50 to $10 an hour — around $17,000 to $20,000 a year — compared with the federal minimum wage of $7.25 an hour. In its announcement, the White House said 92 percent of these workers are women, nearly 30 percent are African-American and 12 percent Hispanic, with nearly 40 percent of them relying on public benefits like Medicaid and food stamps.
While industry experts say the overwhelming majority of today’s home-care aides are paid at least the minimum wage, they also say that many do not receive time-and-a-half premium when they work more than 40 hours a week.
“The job they do is a real job and they deserve the same basic rights as any other workers,” said Steven Edelstein, national policy director of PHI PolicyWorks, a nonprofit group that seeks to improve conditions for home-care workers. “This industry has one of the nation’s fastest-growing work forces, and the challenge is to make these better jobs if we’re trying to attract good people to come and provide the services.”
Labor Secretary Hilda L. Solis has made clear for several months that she was considering updating decades-old regulations in several areas, including the home-care industry, where workers often provide services like tube feeding, wound care or assistance with physical therapy. The changes the administration is proposing will be subject to 60 days of public comment.
In recent weeks, numerous Republican lawmakers have criticized the anticipated proposals, saying they would increase costs for federal and state programs as well as individuals.
At a hearing last month, Representative Tim Walberg, a Michigan Republican who is chairman the House subcommittee on work force protections, said, “Medicare and Medicaid expenses will likely increase as a result” of narrowing the companionship exemption. He added that the move was going to make senior citizens and their families “less able to afford home care, which is typically paid not by insurance, but by families themselves.”
In 1974, the Labor Department exempted “companionship” workers from coverage under the Fair Labor Standards Act, a move that focused on babysitters at a time when the home-care industry was in many ways in its infancy.
Under the changes, industry experts said, for the first time many home-care agencies would be required to pay their aides for the hours spent each day traveling between patients’ homes.
According to the federal government, the nation’s over-65 population will climb to 72 million in 2030, from 40 million today, with an estimated 27 million of them needing some form of home care.
In 2007, the Supreme Court issued a decision involving a New York home care aide, Evelyn Coke, who often worked 70 hours week, ruling that she was not entitled to overtime pay under existing regulations. The court said it was up to Congress or the Labor Department to change the rules.
The White House said that nearly 90 percent of home-care workers are employed by agencies. Officials with the National Association of Home Care and Hospice said Thursday’s announcement would cause many agencies to hire more workers, instead of paying an overtime premium to employees who worked more than 40 hours a week.
“The vast majority of these workers are women, many of whom serve as the primary breadwinner for their families,” Secretary Solis said. “This proposed regulation would ensure that their work is properly classified so they receive appropriate compensation and that employers who have been treating these workers fairly are no longer at a competitive disadvantage.”
Yes, home care costs may go up some as a result of the new regulations. However, most employers will adapt just as other employers do, such as by hiring more workers (not a bad thing in this economy) rather than paying overtime. Taking advantage of low income workers is no better rationale today than it has been three decades for nearly four decades.
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As we noted earlier, Mike Breslin, the retiring Albany County Executive vetoed a number of legislative changes to his proposed budget. They would have had the unusual effect of increasing property taxes because he vetoed increased revenue estimates and new forms of “savings.”
This past evening, by a very close vote (two-thirds of the members required), the Legislature overrode those vetoes so their modifications to his budget stand. This was in the face of an editorial in the Albany Times-Union endorsing the vetoes, and saying, “our opinion: The Albany County executive objects to an unrealistic budget. Overriding his veto could spell big fiscal trouble.” That’s not all it could spell.
Big picture?
Though a bit “wonkish,” the specifics that caused Breslin to question the Legislature’s budget will have specific operational effects as well as an overall financial impact.
Just remember: “retail rules.”
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Albany County Executive Michael Breslin, with just a couple weeks to go before his 16 year tenure ends, has issued a series of unusual budget vetoes. These may be his most significant budget vetoes ever and they certainly are within the past half-dozen years, but there’s a twist. They would lead to increased property taxes and will make for some interesting, but probably inevitable, political decision making.
Because, he believes that the Legislature’s sales tax revenue estimates are exaggerated and projected savings are either faulty, exaggerated, or cannot be accomplished timely, he argues that the budget is not truly balanced, indeed dangerously unbalanced. Here’s Breslin 2012 Budget Vetoes.pdf. Breslin’s key points:
While the Legislative changes may lower the tax increase on paper, they put the County in a precarious position to maintain operations. A number of Legislative changes rely on unrealistic savings and overly optimistic revenue estimates, and are operationally unworkable.
These Legislative amendments are fiscally irresponsible are are tantamount to deficit spending, in 2012, which will create a need for future tax cap overrides and significant tax increases in 2013, 2014 and beyond. These amendments set us on a course to drain surplus to fill the gaps created by unrealized savings factors and revenue enhancements.
Therefore the Legislature’s overriding the vetoes keeps the tax levy down, but puts everyone on record as being irresponsible if things go bad (a reasonable possibility). Not overriding means that tax levy goes up 13.4%, which is not quite as eye-popping a number as the original 19.2 percent, but pretty damn high nonetheless and considerably higher than the 8.7 percent the Legislature has already voted on.
The net effect of these vetoes would be to increase the property tax levy above what the Legislature approved by over $3.5 million from $82.0 million (an increase of 8.7%) to $85.5 million, an increase of 13.4%.
Though he issued no other vetoes, Breslin also raised doubts about several other items that totaled $2 million.
Since veto overrides require a two-thirds majority, this vote will actually require more than the vote to override the cap on growth in the property tax (60 percent).
I strongly suspect that the entire Legislature will vote to override, probably even those who believe that the numbers are bogus. Should they not do so, they’ll get tagged individually for an even bigger tax increase. However, these votes are unlike the vast majority of budget votes in that they are highly specific and about broad financial issues that very few members take the time to learn. So there may be some individual accountability for all returning members where there is usually none.
From another perspective, incoming County Executive-Elect, Dan McCoy, (also the current Chairman of the Legislature) would likely be embarrassed by a failure to override, but as the new County Executive he would be much advantaged starting with a much more certain financial footing. First, he would have more operating flexibility in 2012 and would be able to fill the vacant jobs he’s anxious to fill. Second, it would give him a higher base from which to do his first Executive Budget a year from now.
McCoy’s sidekick, Shawn Morse, Chairman of the Audit & Finance Committee and wannabe replacement as Chairman of the Legislature, would gain nothing in the short-term from an override. This is his budget. Morse’s public statements challenged the County Executive. “It’s not a message I haven’t heard before,” he said. “Last year, they said we overestimated with about nine different things and they all came to fruition so we’re comfortable that the same thing will happen this year.” He has not, however, revealed his list of nine, much less the data to support that argument.
The real test will not likely occur in the next ten days, but in the 10 months. Morse, in particular, is asking the individual members of the Legislature to trust him, not only personally but technically. We’ve already noted that this is the first time in memory that the Legislature has substituted its own sales tax estimates for the Executive’s and noted the tenuous base upon which they did so. And we’ve also noted that the County is now regularly running out of cash at the end of each year (something that Breslin also noted in his veto message).
Since this is a dispute between the Executive and Legislature and the independently-elected County Comptroller, Mike Conners, has a history of involving himself in budget issues, perhaps they should task him with acting as an arbitrator or doing his own estimates that they would mutually agree to use. In past revenue estimating disputes between the Governor and the two houses of the Legislator, they have, turned to the State Comptroller. They won’t however and if they were to do so, he would likely not take the risk himself of being held accountable for a different set of estimates.
Breslin faced similar issues last year, issued vetoes, but then withdrew them at the last minute.
We’ll provide the details a bit later in a more technical post. But as suggested above, the real story is not in the next 10 days. It’s in the next 10 months.
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I used to write a lot about New York’s Medicaid program here (here are the Medicaid posts).
But then, just as a cap on growth of local government (New York City and counties outside NYC) Medicaid liabilities was created, I went to work for one of those counties. The county liability is now fixed by statutory formula. Thus, there wasn’t much of anything that could be done operationally at the local level. Indeed, the incentives reversed and it made more sense to shift county costs into Medicaid, which of course we did from time-to-time. So make your formula calculations, budget for it and otherwise spend time and energy elsewhere. Employee health benefit costs were growing faster anyway.
Well, a couple things have happened this year and the game has changed again.
First, the State finally decided to bring the rest of the Medicaid population into some form of capitated, case-managed care. When the State originally imposed mandatory managed care in the mid-1990’s, it exempted, the elderly, those needing long-term care, those with behavioral/mental health issues, and those with other disabilties, i.e., everyone who was sick, i.e., those who used the vast majority of services and accounted for the vast majority of expenses.
But this year, as part of the State budget process, New York decided it’s time for everyone to get into the case managed/managed care pool. They’re using lots of new names, lots of new program definitions and there are a lot of open issues, some of them pretty big, about how the transition is going to work, but clearly there’s a new direction. And the change of direction is a big one. There are many elements to these changes and I’ve had my doubts since the beginning about the aggressiveness of the schedule. (And that could become worse. The responsible Health Department offices are only partially staffed today and it’s entirely possible that they will lose more staff in layoffs.)
Second, the Legislature gave to the Commissioner of Health, what are referred to in Albany as “superpowers.” If the reforms do not lead to the targeted savings, the Commissioner, i.e., the Governor can do pretty much whatever’s necessary to reduce expenditures. In 30 years, I’ve never seen such a delegation of legislative authority to the executive, especially in health or Medicaid policymaking.
Third, for a couple reasons, the State began the planning to move the current administrative functions performed by local governments to itself. Many counties objected (ironic, huh?), but there are two sound reasons, namely that the State is increasingly the liable party, and second, because program and plan enrollment needs to be coordinated with health insurance exchanges required by the Affordable Care Act. We’ll return to that topic sometime.
Fourth, unrelated to Medicaid, the State imposed a cap on property tax growth for most local governments. Though there are technical elements and adjustments, generally the cap is about two percent per year. The cap can be exceeded but not with a simple majority vote of the county’s legislative body. Instead, additional process requirements are imposed and a 60 percent majority is required.
But in many counties two percent of the property tax levy is roughly equal to three percent of the base year Medicaid cost. Thus, the entire allowable growth allowed in property taxes will be eaten up by the State’s formula-driven Medicaid increase.
As counties have struggled through their budget processes, they’ve blamed the State of New York, perhaps even more than usual. The county rebellion is bubbling. Some State Legislators are talking about taking over the Medicaid liability. That’s a good idea, but neither simple nor cheap ($7-8 billion). We’ve got some ideas on how to handle this and hope to start describing them in the next few weeks.
Clearly there’s more to come.
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