Tuesday, July 21, 2015

Sweet Sixteenth and Breaking Your Heart

Ohio Governor John Kasich became the 16th major GOP Presidential contender today.

Credit: Michael Vadon via WikiCommons

I have a lot of respect for the job Kasich did as the House Budget Committee Chairman in the 1990's when he actually put together and delivered the last balanced budget at the federal level.

When I first became involved in politics in the early 1980's he was held in awe by most of the politicos I came in contact with in the Ohio Statehouse for his hard work and ambition.

Kasich won his first political race at age 26 by campaigning door-to-door for an Ohio State Senate seat after serving as an aide in the same body for three years after graduating from Ohio State University. He became the youngest State Senator in Ohio history at the time.

He then took on an incumbent Democratic Congressman in 1982 and beat him to be elected to the U.S. House in 1982 at age 30.  He served nine terms before retiring in 2000 after briefly flirting with a run for the Presidency in 2000.

He spent the decade of the 2000's with a show on Fox News and a stint with Lehman Brothers. He returned to politics in 2010 by winning the governorship in Ohio and was reelected in 2014.

There is a lot to like about John Kasich but there is also one big negative. He is a politician through and through. He will do some nice things but he will also break your own heart when his interests conflict with yours.

I saw this with Kasich's decision to expand Medicaid in Ohio.

A recent AP story profiled the problems for a number of states, including Ohio. that expanded Medicare. Ohio is mentioned in the story as having seen its projected costs more than double under the expansion compared to forecasts.

More than a dozen states that opted to expand Medicaid under the Affordable Care Act have seen enrollments surge way beyond projections, raising concerns that the added costs will strain their budgets when federal aid is scaled back starting in two years.
Some lawmakers warn the price of expanding the health care program for poor and lower-income Americans could mean less money available for other state services, including education.

The right decision for Ohio was to not get taken in with Obamacare's Medicaid expansion. The Medicaid program was already draining Ohio's budget. It has destroyed state funding to education and made almost every other government program (except for state employee pensions) a footnote in the state budget.

For example, between 1970 and 2014 health care spending in Ohio (most of which is Medicaid related) increased 67 fold. That is 10 times the rate of inflation!

In 1970 spending on health care in the Ohio was 15% of the total state budget and spending on education and transportation and public safety and services was 60%.

Spending on health care today takes up 34% of the Ohio budget. Education, transportation, public safety and services do not even make up a quarter of the state budget.

You can read all of the sorry details of Ohio's descent into Medicaid hell in my blog post, The Redistribution of Ohio.

Medicaid is literally eating away at the fabric of key functions that we have traditionally valued and looked to our states to provide---good higher education, support for local schools, safe and efficient roadways, public safety, prisons and parks.

Why did Kasich unilaterally push the Medicaid expansion through against the wishes of the Republican dominated legislature?

He has a politician's heart. It is hard to change when your entire adult life beginning at age 22 has revolved around politics.

He needed to get reelected as Governor in order to make the announcement he made today. To do that he needed money and he also needed to defuse a possible challenge that he was not compassionate.

After all, the Medicaid expansion was "free" (at least until 2016 when Kasich wouldn't have to worry about it). He could demonstrate he was a reasonable man and not some heartless neanderthal conservative. He could also curry a lot of favor with the health lobby who wanted the expansion for their own self interests.

The big money interests involved with hospitals, health services, health insurance companies and nursing homes wanted those Medicaid dollars. And they are big campaign donors. Kasich certainly did not want to be on the wrong side of those groups heading into his reelection bid.

Who is getting the expanded Medicaid coverage?

Matt Vespa of Hot Air provides some answers.

  • Despite always hearing about "the children", 82% of those who have gained Medicaid coverage are childless. 
  • 45% are able-bodied but do not work.
  • 35% have a criminal record that includes jail or prison time.

Has it helped the hospitals? 

It has not according to a recent analysis by Moody's that was recently reported in The Wall Street Journal. There are fewer unpaid bills but many more patients on Medicaid using services. Since Medicaid's reimbursement rates are only about 50% of the costs of hospital care every added "paying" patient is subtracting rather than adding to the bottom of line.

Hospitals in the mostly blue states that expanded Medicaid were largely expected to benefit from fewer unpaid bills and more paying customers, but that hasn’t generally translated into better operating margins or cash flow, Moody’s found.
In expansion states, hospitals’ unpaid bills fell 13% on average last year compared with 2013, the report found. But, their 2014 operating margins didn’t increase any more than hospitals in the 22 states that have sat out the expansion, the report shows.

John Kasich is sleeping well tonight. How about you?

This is the reality of politics. I don't like it but it is what it is when we elect politicians to political office. And no matter who or what they were before, when they enter the political ring they change with it. It is the nature of the beast.

I like John Kasich. He has many great qualities and he might make a great President.

He may be the Sweet Sixteenth into the race. However, he is still a politician. His Obamacare expansion decision in Ohio showed that.

It is certain he will break your heart when it serves his interests. That is the way it is with any politician.

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