Why Pennsylvania needs Public Sector pension reform

Governor Corbett discusses pension reform in Dresher

Governor Corbett discusses pension reform in Dresher

Last week I had an opportunity to attend one of Governor Tom Corbett‘s mini-town hall meetings on Pennsylvania‘s precarious public pension situation.

The Governor is spending a lot of time this Summer pushing the need for public sector pension reform to improve the State’s financial health and put a lid on spiraling property taxes.  The problem he is facing, along with much of the Pennsylvania legislator – or at least among those who will admit there is a pension problem – is that the Pennsylvanians who pay taxes do not view pension reform as a problem let alone a problem with priority.

Much of this disconnect comes from the plain fact that most of us do not understand how State pensions work; how much they cost us; or how they affect the other real problems with which my fellow Pennsylvanians can readily identify.

Recent polls (Quinnipiac University 2013, Franklin & Marshall 2014) found that Pennsylvanians recognized Unemployment, the Economy, Education, and Taxes as the biggest problems being faced in the Keystone State. These opinions are even more disconcerting from a taxpayer’s point-of-view, because it illustrates a very basic fact about the magnitude of the pension problem …

Few appreciate how the State’s pension mess plays into the perceived problems in Education, Taxes and the Economic Health of Pennsylvania.

For that you must look at the numbers.

  • $47,000,000,000. (billion with a capital “B”) … The current pension funding gap in Pennsylvania
  • $65,000,000,000.  … The projected pension gap by 2019.
  • 63 cents of every $1 in revenue … 63% of PA State revenue currently goes to cover State pension responsibilities
    • $2 Billion per year, all covered by PA tax payers
  • $13,000. … The amount each Pennsylvanian would have to pay to cover the current pension fund gap.

State-pensionsForty-one percent (41%) of the annual State budget goes to Education funding.  Another 40% goes to support Health and Human Services (and yes, that’s BEFORE you factor in the potential of accepting on ObamaCare’s proposed Medicaid expansion, which will be funded by the Federal Government to only 90% of costs after 2016) …

The budget percentages for Education and HHS are equally important in understanding the overall picture.  Why?

For one, they illustrate the impact both Education and Social Services have on the State budget.  When you spend 81-82% of your budget in two specific areas, it doesn’t leave much room for the financing of the other good things State government can do.  These huge obligations place the State in a financial straight jacket.  Pension costs make up a significant burden to school districts and public healthcare providers insofar as those costs are a subset of that same funding provided by the State.

As an example, when a School District receives its annual budgeted funding, they must – each year – immediately set aside a significant portion of that funding to be applied towards that school district’s allotment of pension coverage.  As pensions costs grow, school districts are forced to pay more and more for their pension service; and they will have less and less to spend on actual education.

pension-reformSo when you speak of those “real problems” facing Pennsylvania … Education, Unemployment, the Economy and Taxes … there is a genuine, behind-the-scenes connection between pension costs obligations and all those REAL problems.  And more importantly, to financing any solutions to those REAL problems.

So what’s State Government to do?  What tough choices do you make now?  Do you raise Property Taxes again?  Do you raise Corporate Taxes in a state which is already has the HIGHEST corporate tax rate in the country?  Or do you do something about the most easily identifiable and underlying problem?

As a taxpayer, this is a chilling reality.  If you subscribe to the theory that high taxes kill Economic Growth, raising Corporate Taxes is not the BEST alternative.  (And yes, that includes a job creator like the natural gas industry.). Neither of course is raising Property Taxes, which is what school districts must do to meet the growing pension cost budget hole.

Pension reform won’t lower current property taxes.  Replacing pension plans does nothing to alleviate the pension obligations already facing the State.  It’s a solution for the future, putting a lid on rising property taxes by replacing an unsustainable pension structure with one that lessens the future burden on taxpayers!

If you are not yet convinced, take a look at recent examples in countries like Greece and Italy, where excessive pension costs drove cataclysmic threats to economic stability.  Or take a look closer to home …

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Chicago Mayor – and former White House Chief-of-Staff Rahm Emanuel

When uber-Liberal Rahm Emanuel left the cozy confines of The White House as President Obama’s Chief-of-Staff to become the Mayor of Chicago, the first major initiative he undertook was to tackle Chicago’s financially threatening pension problem.  To take a peek at what could happen to cities in Pennsylvania if leaders like Emanuel and Tom Corbett do nothing, look at what has happened in Detroit!

The Rahm Emanuel story is critically important for one reason a lot of people might overlook.  It illustrates that this is not a problem restricted to one political party or the other.  Pension costs with all its ramifications – from taxes to education to health services to economic vitality – is a Democrat and Republican problem.

So what is the real problem with Pennsylvania’s nightmare pension scenario?  It’s reliance upon Defined-Benefit public pensions …

This is not a new problem, not in the pubic sector, not in the private sector, not in the manufacturing sector, not in the financial industry.  Industry, individual companies, other State governments, even the Federal Government have recognized the threat to financial stability presented by growing defined-benefit pension obligations.

In the interest of full disclosure, I am employed in the Public Sector, employed by the Federal Government since 1980.  In 1986 the federal government introduced a two-tier retirement system under the Federal Employees Retirement System Act of 1986.  The Act essentially grand-fathered all existing employees under the existing Civil Service Retirement System (CSRS), while requiring all new employees – hired after the laws effective date – to participate in the Federal Employees Retirement System (FERS).  The reasoning behind the switch from a Defined-Benefit CSRS to a hybrid Defined-Benefit/Defined-Contribution plan was much the same in 1986 as it is now for Pennsylvania in 2014.

FERS provides its own two-tiered approach, consisting of a Defined-Benefit where a minimum government contribution is mandated.  Then the federal government fully matches any employee contributions up to 5% of salary (the percentage matched drops on additional employee contributions) made to the Thrift Savings Plan (TSP), which acts essentially like a 401(k) with employees able to choose investment options of differing risk and return.

That the Federal Government is out in front of Pennsylvania on anything – by nearly three decades no less – has to be more than a little troubling to Pennsylvania tax payers!  And this again is a problem whose responsibility falls squarely on BOTH political parties.

Former Gov Tom Ridge, not exactly the brightest light on pension sanity

Former Gov Tom Ridge, not exactly the brightest light on pension sanity

In 2001 it was the Tom Ridge Republican administration that cut a foggy-headed deal with the Pennsylvania House of Representatives, where both Democrats and Republicans agreed to significantly increase the pension benefits of Legislators, state workers, and teachers.  They then compounded their stupidity by slashing the taxpayer contribution to service that very same pension obligation.  It’s a case of an entire government turning a blind eye towards its very own economic future!

Changes to the way employee pensions are managed and financed have been rippling through the entire U.S. economy, most drastically of course in the private sector, where change depends not on the consensus of 250 State Legislators who so intimately tied to the very benefits that economic reality demands must change.  But it is virtually impossible to find an employer now who will provide an employee with a defined-benefit pension plan.

It’s a Republican-Democrat problem that will need both parties in the State Legislator to step up to the plate and fix.

Now, I’m not sure Governor Corbett’s approach is the best alternative necessarily for Pennsylvania’s particular pension situation. The devil is always in the details.  However, you must admire Corbett’s tenacity in pushing for pubic awareness of a problem very difficult to fully understand and always controversial … And doing so during an election year!

That, my friends, is Leadership with all its risks and political exposures.

Like the national bi-annual conniption over Social Security insolvency, it’s always the first person who goes through the wall that gets shot.  Yet this is a problem to which even tax & spend liberal Tom Wolf has begun to awaken.  Oh wait a minute … That was for his furniture company, not necessarily the citizens of Pennsylvania!

All politics aside, the message is clear.

If you live in Pennsylvania and believe that the REAL problems we face are Education, Taxes, and Economic Growth, you simply must recognize the threat that growing pension costs pose to the economic health of The Keystone State.  Tell this story to your Pennsylvania neighbors.  Let your voice be heard by demanding your State Representatives and Senators act together with Governor Corbett to address pension reform NOW!

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Turnout in the Horsham 1-3 is approaching 10% (84 voters).  Not sure whether to be relieved that we might hit my 125 prediction or go take a nap …

Both maybe ….?

* * * * * *

So Pennsylvania’s DOMA (Defense of Marriage Act) was struck down today.  Am I a bad person for not caring … Neither celebrating or belaboring …

is it OK that I never cared what others do in the privacy of their own world to express whatever love they feel?

Is it OK that accepting the concept of Personal Liberty, brought here in The Declaration of Independence – that makes this country so strong – leads me to the conclusion that I should have no feeling or take no action one way or the other?

Is it OK to be of the mind that I have way too much to manage in my own life to have the time, energy, or desire to manage everyone else’s life?

Can I rightfully believe that we have way too many and much more important issues and problems facing us than this?

DOMA’s dead?  Wonderful …

Now can we get some REAL problems solved?!?

 

The Power of Pancakes

pancakes2IHOP declared today to be National Pancake Day.  It says so on my Facebook feed, so it must be important.  It is also Happy Faschnaut Day, a.k.a. Donut Day.

National Carb Days are almost semi-religious holidays for corporate Big Carb evolving from fear for the dawning of the Christian Lenten season, where Catholics in good standing will forsake the siren calls of the IHOP/Dunkin Donut/soft pretzel triumvirate.

Well, maybe not so much the latter in this area.  That’s a Philly thing.  We can only go so far in demonstrating our devotion.  We barely survived edicts of meatless Fridays, which tended to put an economic crimp in the local cheesesteak economy.

In any the case, the point of this post is to celebrate the mystical properties of the pancake!  Any connection with National Pancake Day is purely coincidental.

I say this because I witnessed the Power of the Pancake this weekend!

The story has its genesis in the struggle of addressing the needs for elderly parent care.  There is never an easy solution to the question, what do you do when parents are aging to the point where more focused supervision is required?

My experience includes the breadth of care options available, from Independent Living through intensive, full-time managed care to end-life hospice services.  There are blessings and curses with each choice.

Our latest experience and challenge is the decision to invite our last parent to join us in our home.  My father-in law in a good guy, one I have always gotten along with though he has his blustery side and bouts with stubbornness.

When the choice was presented, I agreed easily enough, although there was a bit of anxiety about how such an arrangement might change a home dynamic with which we were all comfortable.  My wife’s piece-of-mind over a relative living alone was enough to persuade me.

KOQ-571.tifOur solution was to remodel our basement in recognition of my FIL’s desire to remain as autonomous as possible.  So autonomous in fact that his new digs are the nicest in our home (just in case your first impression was an episode right out of the King of Queens)!  The transition however has been anything but seamless.

We had to move him in earlier that expected and before his new palace was in move-in shape.  The remaining construction and approaching holidays made the situation a bit dicier, resulting in a hangover that threatened our expectations for limited disruption to the established household routine.

The difficulties which developed involved the usual sources of close-proximity conflict … mismatched expectations, fumbled communications, and the tendency to avoid rocking anyone’s boat at all costs.  Growing frustrations however required that the situation be addressed sooner rather than later; before the atmosphere we were trying to protect turned fetid, breeding anger.

I was tasked with being the Diplomat of Harmony.

My solution?  Breakfast!

nrAjVpmpU4T94vbK4Wmnt7_CmRKB49G7m-wiN6BxBqf03Octsc48KiZUqOpxXfhzNtnR=s151So this past weekend I invited my FIL out for breakfast at Hatboro Dish!  I did not tell him the reason for the invite.  Found out later he was suspicious, thinking we were going to through him out.  (Insert link for King of Queens episode)

Carol, not a fan of Big Breakfast, opted to let the guys hammer things out at an establishment full of sharp objects.

As we sat down, Jim dithered over the menu options.  I chose the bakery-quality cinnamon roll French toast, which is made by Lochel’s Bakery a few hundred feet up York Road, and Jim chose the pancakes … with strawberries … and whipped cream … soon to be marinated in maple syrup poured from a jar, not emptied from cheap plastic packaging.

Did I mention he’s diabetic?  However, it’s my belief that once you get to a certain age, you should be free to enjoy whatever you can, reasonably and safely.  I let him enjoy his loaded pancakes.

Once we finished our morning meals, it was time for The Talk.  Dreading the moment I put all my cards on the table, I wasn’t sure how Jim would take the challenge.  Changes had to be made.  But addressing them would not necessarily be easy.

What I found out though was that Jim was as unsettled about what was going on as we were.  We had a factual, very honest discussion of expectations vs. reality as it existed.  It was more relaxed than I had anticipated … a friendly, direct, unemotional conversation about how to improve the home situation.

Our discussion couldn’t have gone better.  Almost immediately function and comfort returned to our home!

Now this pleasant outcome could be attributed to a number of things –  personality traits, mindsets, shared values – that helped us at the breakfast table that day.  Either way you look at it, it’s hard to have a bad morning when looking over a stack of pancakes!

Chris Christie’s very good, hush-hush Day

e93e3153ee628c054b0f6a7067002518Chris Christie went to Chicago, a city of Democrats if ever there was one,on Tuesday to speak to the Economic Club of Chicago.  His appearance was viewed favorably by those who heard it.  He was intelligent, engaging, and as critical as always of really, really bad ideas.

Did you hear?

Probably not, since its coverage – what little there is – is tough to find among the clutter of bridge lane closures, helicopter rides, and glee from both ends of political spectrum.

You would think – maybe – it was a Top Secret national security brief for the dearth of media coverage.  So allow me to educate.

Among the topics Christie touched on was the difference between income equality vs. income opportunity.

(Pardon the link to the  “Morning Joe” segment, but it was the only site I could find the segment I wanted. Besides the exchange between Nicolle Wallace, a former George W. Bush staffer and Chuck Todd is pretty entertaining.) 

It was an intelligent discussion with which I was impressed.  Of course the member of the Economic Club liked what Christie said, being they know a bit about what’s good for an economy.

The other interesting segment from Christie’s hush-hush day was this little riff on former President George W. Bush.  He recognized Bush’s superior political skills compared to recent GOP presidential candidates.  It was right up my alley!

But of course, Christie just keep getting hammered over a few lane closures on a bridge no one outside New Jersey/New York cares about.  Fortunately, the Governor continues to simply go about his job; managing the Republican Governors Association; and testing the waters for a run in 2016.

Perhaps Mr. Christie realizes that any good President must demonstrate the ability to push through the political BS in order to get things done.  It’s a lesson the current resident of 1600 Pennsylvania Avenue could have used before he was handed the keys.

Welfare reform through Transitional Living Funds

U.S. REP Sheila Jackson Lee (TX-18)

U.S. REP Sheila Jackson Lee (TX-18)

OK, OK … I know a lot of people are having a really hard time digesting U.S. Representative Sheila Jackson Lee‘s suggestion that the benefits many of the poor accumulate under “Welfare” should be re-branded to as “Transitional Living Funds“.

Now, putting aside the fact that few people – other than Liberals – would be tricked by simply renaming a Government give-away to some other seemingly innocuous term, I think Representative Lee is actually onto something!

The key to my intrigue is that very first word.

Of the three primary definitions of the word TRANSITION in the Merriam-Webster dictionary, let’s look at the most commonly used.  (The third deals with “musical modulation”.)

TRANSITION: 1. a : passage from one state, stage, subject, or place to another :  change;  b :  a movement, development, or evolution from one form, stage, or style to another … 2. an abrupt change in energy state or level (as of an atomic nucleus or a molecule) usually accompanied by loss or gain of a single quantum of energy … TRANSITION

I think she’s on to something!

Transitional Living Fund would suddenly become exactly what they were intended to be for most healthy individuals not strapped with insurmountable life problems … a means for surviving extremely difficult times in life, where one stares into the bleak abyss of abject poverty through no fault of their own.

Those individuals by definition could now be expected – under this new definition of welfare – to change, to seek ways to improve their lot in life, and maybe – EGADS! – be held to a minimal level of Personal Responsibility!

They might be asked to do what any reasonable person would be expected to do when faced with severe life challenges.  They would be given a LIMITED period of time – Let’s say a year. – to TRANSITION themselves towards a better way of life; a plan for their future and their families future success; a job.

After that Transitional Period they would be expected to pass onto a more stringent period of Personal Progress.  Maybe they could still receive some of all of their TLF benefits PROVIDED that they continue to follow a program intended to find them a suitable job and their TLF benefits would be offset by whatever wages they are able to earn.

Think about it … Personal Improvement, a way out of the morass of poverty and helplessness.  Heck, it even sounds like Progressiveness!  And what Liberal doesn’t embrace that term?!?

Nah … It’ll never happen!

But a big “Thank You!” to REP Sheila Jackson Lee for trying!

Montgomery County Republicans: Healing acts, and a recipe for Success

PA State Rep Mike Vereb

PA State Rep Mike Vereb

On a cold night in early December the Montgomery County (PA) Republican Committee took another big step towards dumping a decade of internal discord by the side of the road.  The rifts that seemed insurmountable only a few months ago, have been bridged and will finally begin to fade from memory.  The Party can push on to a brighter future.

And no peeking backwards is allowed …

As new Co-Chair of the MCRC Finance Committee, Bob Asher stated during October’s MCRC love fest, ” … we can’t have any more rearview mirrors on the bus.”  Asher, along with his Co-Chair compadre, Vahan Gureghian will form a solid backbone for future Republican success in Montgomery County.

The struggles that have faced the Montgomery County GOP in recent years have been expensive, costing opportunities for leadership of County Government; control of County Row Offices; and a growing disadvantage to Democrat registration numbers.  In addition, the infighting has cost the County GOP dearly in unity and focus.

Then suddenly the skies cleared; the feud was over!

In the days leading up to the annual MCRC dinner in October, that would feature an appearance by Governor Tom Corbett, the leaders of the Montgomery County Republican Committee put differences aside to form a much stronger alliance, and created a powerful mechanism for promoting Republican ideals that have made Montgomery County among the choicest counties in which to live.

Finance Co-Chairs Vahan Gureghian and Bob Asher with Governor Corbett

Finance Co-Chairs Vahan Gureghian and Bob Asher with Governor Corbett

Then out of the blue MCRC Chairman Robert Kerns submitted his sudden resignation leaving the County GOP leaderless at a crucial time, a crisis that threatened to undo all the progress the Party had recently made.

And into the breach stepped Pennsylvania State Representative Mike Vereb!

Vereb has served in the Pennsylvania House of Representatives since 2007, and has run successfully for re-election in 2008, ’10 and ’12.  Previous to his successful run for the PA State House, he worked in the West Conshohocken Police Department and served as President of the West Norriton (PA) Board of Commissioners.

Now, I haven’t been much of a regular attendee at the Montgomery County Republican Committee events despite my membership as a Horsham Republican committeeman.  High-powered politics is not my forté.  I prefer to observe, comment (Hence the blog!) and support in whatever way I can those whose values and policies I agree with.

Those who stumble from time-to-time on this tiny slice of the internet super-megatropolis may be familiar with some of my more pointed rants and ravings when it comes to issues like wayward Liberal logic or deception, poor leadership, and – more recently – the dangerous tendency by my political party when it comes to marginalizing its moderate wing of thought.

If it comes to this, so be it!

If it comes to this, so be it!

That last point is one that’s been weighing on my mind for quite some time.  For me, the issue illustrates just how willing the GOP is – on both regional and national levels – to take seriously the depth and breadth of viewpoints existing within those who labor for the ideals the Party represents.

It has been a discouraging to hear constantly that only Big C Conservatives speak truly to the important issues of the day.  That, if you do not share their vision, you are not pure somehow as a Republican.  That only those who hold tight to the hard Right vision are worthy of expressing their views.

Worse from my point-of-view, it’s really very, very bad politics, particularly in a region where so many Moderates live, work and raise families.  And when it comes to Electoral Math, it certainly does not improve the chances of success Nationally.

It was with this mindset I resisted the idea of attending Mr. Vereb’s unchallenged rise to the MCRC Chairmanship.  That was until he made a somewhat personal appeal that I attend such an important event. (OK … It was simply a personal Facebook plea, but nonetheless …)

So on a chilly night in early December I schlepped out to the Westover Country Club to see what would happen for myself.  I wanted to HEAR the message that would come from the prospective Chairman.

I was quite pleasantly surprised!

Chairman Vereb recognized that the Party had become complacent, living off past victories, and not consistently or effectively communicating its message.  It’s a message that should ring loudly for many, including our Democrat neighbors, who have chosen Montgomery County as the place to live for its good schools, safe communities and low taxes.

The message to be stressed is that these things do not occur by accident.  That such development was the result of excellent leadership, sound policies, and effective management.  That throughout the County these successes resulted from decades of Republican stewardship.

The strategy worked quite well for Horsham Republicans on Election Day 2013.

imagesThe message should be a tone-setter for all efforts to promote Republican leadership, the foundation for MCRC efforts to win elections in those areas where the Party’s leadership has a demonstrated record of Success.

At this point of Vereb’s speech, I still wasn’t really totally listening.  It was what Mike said next grabbed me and convinced me the County GOP is headed towards much, much better days!

” … the best interests of our party must always come before personal agendas. … we must be inclusive and welcoming not only of different ideas about how to effectively promote our party and its candidates, but as to what the practical policy goals of our party must be.”

Music to my ears … But the best what yet to come.

“No political party ever expanded its base by requiring unquestioned adherence to a single ideology or perspective. … We are residents of a diverse county in one of the most diverse states in our nation …”

A lesson with which those at the highest reaches of the Grand Old Party will someday have to come to grips.  To win elections – and with that the opportunity to lead, to shape, to find success – the Republican Party has to maximize its philosophical reach to those of moderate economic and social viewpoints.

“Demanding uniformity from our fellow Republicans will only invite electoral losses and policy disasters.  However, by accepting reasonable differences of opinion we will be better positioned to achieve our overall goal of electing Republicans who will make sure government operates efficiently, effectively and is responsive to the interests of hard-working taxpayers.”

Now, to be honest, I’m not entirely sure whether Vereb was speaking of outside political fortunes or the exorcism of past Committee sectarian conflict, but I chose to interpret his message on the broader political stage.

The simple fact is that Republicans can not be politically successful in the four suburban counties surrounding Philadelphia without embracing some moderate social and economic views.  So the MCRC must find a way to accommodate such thinking in concert with traditional Big C Conservative ideals.

A challenging task?  Certainly … But Mike Vereb’s take on diversity, inclusiveness, and Republicans of all stripe working together to extol the civil virtues of Republican leadership to voting taxpayers, who enjoy living in Montgomery County, sure sounds like a recipe for Success!

The Corbett approach to Medicaid sanity

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Once a month the Horsham Republican Committee meets to discuss political developments – both local and regional; to strategize on political organizing within Horsham Township; and to update the Committee on issues of Party management.

To be honest, the meetings can be a bit dry, and that’s even if you’re a bit of a political junkie.  It’s not often that we get into REAL political discussions that provide interesting insights into the issues of the day.

This past Wednesday was different with a small but animated gathering of committee representatives (who represent township Republicans in matters of Party interest), local Republican pols, and the local Party leadership.

My keenest interest is always with the progress – or lack thereof – in Horsham Township’s redevelopment plan for the NAS-JRB Willow Grove property.  At present the Horsham Local Redevelopment Authority (HLRA) is awaiting the approval of its redevelopment plan, which was submitted in the Spring of 2012.

It’s been a year-and-a-half, and no decision as yet from the U.S. Navy.  The Federal Government, which must review and approve the plan before fully vesting the HLRA with redevelopment authority, indeed takes its time when mulling over any decision.  In this case, the Navy, charged with the responsibility of conducting an Environmental Impact Statement (EIS) has met delays in completing their evaluation.  The plan – due this Fall – will not be ready until Winter at the earliest.

Which means, look for it in the Spring or Summer.

The Navy blames the effects of sequestration.  But frankly, as a federal employee, I can speak confidently that, if it wasn’t the effects of sequestration, it would have been something else that would delay such a huge and complex evaluation.  No, not unexpected at all …

Several other issues were also touched on briefly as updates from Harrisburg.

  • Movement on Pennsylvania’s transportation bill, which is seeing progress in the State House after the Senate passed their version earlier in the year.  The biggest hurdle would be in reconciling the two versions as passed, particularly to the level of funding.  There are roughly $5 billion in infrastructure improvements that have been underfunded for decades and well overdue for remedial action.
  • Pension reform at the State level is getting much discussion.  With the State’s two pension plans (state employees, public school employees) underfunded by $47 billion (!) and projected to grow to $65 billion without action, Governor Corbett has moved pension reform to the top of his list of priorities.  Currently, the biggest reform under consideration is moving new employees in both categories into 401(k)-type programs that are similar to those found in the private sector.
  • A brief discussion on the national Affordable Care Act (Obamacare) revealed one persistent problem in Pennsylvania’s rural health services … Finding doctors to work in the less income-lucrative areas of rural Pennsylvania.  This has long been a problem nationwide, not just in PA.  One solution, proposed by the Corbett Administration in its recent proposal for expanding Medicaid as part of its ACA compliance, is a student loan forgiveness program for any doctors who agree to spend a specified amount of time in Pennsylvania’s more doctor-needy areas.
PA Governor Tom Corbett

PA Governor Tom Corbett

The discussion I found most interesting this night dealt with the recent Corbett Administration proposal for expanding Medicaid.  Some of the facts and issues covered …

  • All state-run Medicaid programs vary in benefits and costs from state-to-state.  The terms of Medicaid coverage are negotiated by each state individually.  Passage of the ACA effectively “locked in” every state’s specific Medicare program in whatever form it existed at the time.
  • After eight years of Ed Rendell’s Democrat Administration in Harrisburg, Pennsylvania’s current Medicaid program is one of the most generous – if not THE most generous – state program in the U.S.  This goes a long way towards explaining why some states, such as New Jersey and Arizona are more willing and able to accept the ACA-mandated expansions required for full state participation in federal-run healthcare exchanges.
  • Currently the State and Federal governments combine to spend about $19 billion a year to cover 2.2 million Pennsylvanians on Medicaid!  $19 billion …!!
  • The federal government’s ACA Medicaid expansion financial contribution maxes out at 90% after three years of fully funded coverage. That 10% unfunded liability equals an additional estimated  $200 million – as a minimum – that will have to be covered by the Pennsylvania state budget!
  • Even before any ACA-mandated Medicaid expansion, Pennsylvania estimates Medicaid costs will grow by $400 million in fiscal year 2013-2014.
  • A Rand Corporation study showed that Pennsylvania would save roughly $154 million a year by not expanding Medicaid coverage.

So it’s pretty easy to see why the Corbett Administration is not all that anxious to get on board an ACA-mandated Medicaid expansion.

As with the Philadelphia School District’s annual funding crisis, the Corbett Administration has taken a very responsible approach to any expansion of the financial commitment falling to Pennsylvania’s tax payers.  The Governor realizes that without reforms accompanying this constantly growing financial responsibility, the economic health of the State will be threatened.

images-3In the Philly school crisis, by which you can calibrate your calendar each year, additional funding was offered to the City through negotiations with Mayor Michael Nutter’s administration.  The catch was that the settlement required reforms that call for concessions by the Philadelphia teacher’s unions.

Concessions are necessary on the cost-side of the Philadelphia school issue, if the cycle of funding crisis followed by funding crisis is ever to be broken.  You should not be surprised in realizing that funding solution never really had a chance to succeed.

As for the Medicaid expansion, the facts are that without serious reforms in the way the Pennsylvania program is managed, the state’s’s tax payers and businesses will be on the hook for that rather significant $200 million hole in the Pennsylvania budget … on top of the projected $400 million shortfall for FY13-14 … plus all other projected increases.  Cost reform is essential to Pennsylvania’s future fiscal sanity.

There’s also the very real possibility that the Federal government may not be able to uphold even its 90% Medicaid expansion funding as promised.  And what happens then? 

For these reasons, the Corbett Administration’s approach to the ACA federal exchange and Medicaid expansion proposal should be lauded as the kind of fiscal sanity one should expect from their Governor.