The following appeared in the Santa Fe New Mexican on July 12, 2017.
We all know how a bill becomes a law, right? A lawmaker writes a bill, the Legislature passes it, and then the governor signs it. At least, that’s what the New Mexico Constitution says. Unfortunately, losers in the legislative process are increasingly willing to ignore that process, and a rule-making currently underway in Santa Fe shows how.
This spring, the New Mexico Legislature considered imposing new donor disclosure rules on nonprofit organizations. The measure was vetoed by Gov. Susana Martinez over privacy concerns. Now Secretary of State Maggie Toulouse Oliver is attempting to impose those rules by bureaucratic fiat, using a regulation to enact what couldn’t be done through the normal lawmaking process.
Bureaucratic rule-makings can serve an important function. They help to implement and clarify laws that are passed by the Legislature. But here, instead of implementing the law, the Secretary of State’s Office is enacting rules that were rejected in the constitutional lawmaking process. Although pitched as “political disclosure,” as Martinez wrote in her veto message in April, “the broad language in the bill could lead to unintended consequences that would force groups like charities to disclose the names and addresses of their contributors in certain circumstances.”
Furthermore, the rules, if adopted, will almost certainly be challenged in court. It wouldn’t be the first time New Mexico got itself in hot water by adopting “broad language” to try to “improve” political transparency. In New Mexico Youth Organized, et al v. Herrera, the 10th Circuit Court of Appeals held that New Mexico’s definition of “political committee” was unconstitutional. The case concerned two progressive nonprofits that had spent a small portion of their budgets criticizing candidates for ties to health insurance interests.
Nevertheless, the Secretary of State’s Office now wishes to regulate this type of private activity. Forcing nonprofits to comply with rules akin to those for political committees conflicts with the 10th Circuit’s clear guidance that political action committees may “only encompass organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate.” If the defeated bill is enacted as a regulation, citizens will likely see their tax dollars spent defending a rule already rejected in the legislative process.
Even if the state were to prevail in court this time around, these nonprofit disclosure rules would not improve politics in New Mexico. If every citizen group that speaks about candidates’ policy positions and voting records has to behave like a PAC, pretty soon only PACs will have a voice in elections. Grass-roots and volunteer-run groups like New Mexico Youth Organized won’t be able to afford the attorneys necessary to comply with complex reporting rules. How does that help the average New Mexican voter?
Nonprofit speech about candidates allows voters to hear the varied perspectives of groups that do valuable work in our communities. For a variety of religious, civic and political reasons, many donors to these organizations do not want to have their names and home addresses published online for their boss and nosy neighbors to see. Rest assured, many groups will choose silence over exposing their supporters’ private information.
Political transparency and personal privacy don’t have to contradict. Political committees can be made to disclose their donors without inhibiting everyone else from speaking. Donors who earmark their nonprofit gifts for campaign-related speech can be reported to the government without violating everyone else’s privacy.
The secretary of state’s proposed rules, however, would sweep up charities and their supporters as well. This isn’t just political speech. Just mention a candidate by name near any election and you’re at risk under the secretary’s proposed regulation. Martinez wisely chose to avoid this course of action for New Mexico. We should be cautious when considering proposals that restrict or chill charitable giving. We should especially not impose such policies through a subversion of the democratic process.
If this matter were appropriate to be handled by the secretary of state, it would never have been submitted to the Legislature and governor. The secretary’s proposed rules are both bad in substance and an abuse of her rule-making authority.
Bradley A. Smith, who served on the Federal Election Commission from 2000 to 2005, is chairman and founder of the Center for Competitive Politics, the nation’s largest organization dedicated solely to protecting First Amendment political rights. Paul Gessing is president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting liberty, opportunity and prosperity for New Mexico.
Albuquerque, NM – The Rio Grande Foundation has submitted comments to New Mexico Secretary of State Maggie Toulouse Oliver in opposition to proposed new regulations aimed at forcing charitable non-profits – like the 501(C)(3) – Rio Grande Foundation to disclose its donors if the organization attempts to educate voters about public policy issues.
For example, any discussion of a candidate, even an incumbent officeholder who is running the government, can trigger the “independent expenditure” requirements if it is done close in time to an election. Thus all 501(c)(3) organizations are under threat of having to disclose their donors, even if they are only focusing on issues, if they happen to mention a candidate (and candidates are often incumbent officeholders).
Fresh from its efforts to educate voters in Santa Fe on the impact of sugary drink taxes, the Rio Grande Foundation understands all too well how well-intentioned disclosure regulations can hinder citizen involvement in the political process both through the disclosure process itself as well as due to onerous paperwork burdens placed upon citizens.
Foundation president Paul Gessing will be present to deliver public testimony at comment periods in both Santa Fe and Albuquerque.
Good morning Sen. Ortiz y Pino, Rep. Espinoza, and members of the committee. I am Paul Gessing, president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico.
I appreciate this opportunity to provide my organization’s perspective on whether the benefits of Medicaid expansion in New Mexico outweigh the costs and whether a “multiplier effect” exists by which increased federal dollars will generate increased economic growth in our state.
Introduction
Before discussing the economic and multiplier impacts of Medicaid expansion, I feel it is important to discuss the impact of Medicaid on actual health care outcomes. Supporters of free markets and skeptics of the efficacy of government programs are are often accused of being callous or uncaring to the poor, but we actually want government spending to be used in ways that have proven, positive results.
There is no question that Medicaid expansion is a massive expansion of a health care entitlement. According to Congressional Budget Office, between 2014 and 2022, expanding Medicaid will cost American taxpayers at the combined federal and state levels $1 trillion. Before discussing the economic impact on New Mexico, it is important to ask what kind of health care we getting for that money.
For starters, the inspector general of the Department of Health and Human Services found that over half of providers no longer accept Medicaid patients. Of doctors who do accept Medicaid, the provider networks are narrow and nearly one-third face wait times of over a month.
has turned away all newly eligible Medicaid beneficiaries because she can’t sustain her practice expenses if her proportion of Medicaid patients grows much beyond her current 13%.
For a moderately complex office visit, she is paid about the same as [a] nurse practitioner: about $80 from Medicaid and about $160 on average from commercial insurance.
Says Dr. Abernethy, “I would love to see every Medicaid patient that comes through my door.” “If you give people coverage, they should be able to utilize it.” But making it work would extend her workday, and “I have three small children and I miss them.”
Moving from anecdotal to empirical evidence, it is worth considering Oregon’s experience. In 2008, a total of 29,835 Oregonians were given the opportunity to apply for the state’s Medicaid program out of almost 90,000 people on the waitlist. About 30 percent of those who were selected from the waitlist both chose to apply for Medicaid and met the eligibility criteria. Because it examined a unique, real-world experiment complete with a randomly selected control group, the study of Oregon’s Medicaid expansion is considered the “gold standard” in health-care research.
The study’s results have been published in academic journals, including The New England Journal of Medicine and the The American Economic Review in 2013. Its conclusion was that “Medicaid increased health care utilization, reduced financial strain, and reduced depression, but produced no statistically significant effects on physical health or labor market outcomes.”
• A 2010 study of 1,231 patients with cancer of the throat, published in the medical journal Cancer, found that Medicaid patients and people lacking any health insurance were both 50 percent more likely to die when compared with privately insured patients—even after adjusting for factors that influence cancer outcomes. Medicaid patients were 80 percent more likely than those with private insurance to have tumors that spread to at least one lymph node.
• A 2010 study of 893,658 major surgical operations performed between 2003 to 2007 published in the Annals of Surgery found that being on Medicaid was associated with the longest length of stay, the most total hospital costs, and the highest risk of death. Medicaid patients were almost twice as likely to die in the hospital than those with private insurance. By comparison, uninsured patients were about 25 percent less likely than those with Medicaid to have an “in-hospital death.”
• A 2011 study of 13,573 patients, published in the American Journal of Cardiology, found that people with Medicaid who underwent coronary angioplasty (a procedure to open clogged heart arteries) were 59 percent more likely to have “major adverse cardiac events,” such as strokes and heart attacks, compared with privately insured patients. Medicaid patients were also more than twice as likely to have a major, subsequent heart attack after angioplasty as were patients who didn’t have any health insurance at all.
• A 2011 study of 11,385 patients undergoing lung transplants for pulmonary diseases, published in the Journal of Heart and Lung Transplantation, found that Medicaid patients were 8.1 percent less likely to survive 10 years after the surgery than their privately insured and uninsured counterparts. Medicaid insurance status was a significant, independent predictor of death after three years—even after controlling for other clinical factors that could increase someone’s risk of poor outcomes.
In all of these studies, the researchers controlled for the socioeconomic and cultural factors that can negatively influence the health of poorer patients on Medicaid.
So why do Medicaid patients fare so badly? Payments to providers have been reduced to literally pennies on each dollar of customary charges because of sequential rounds of indiscriminate rate cuts. As a result, doctors often cap how many Medicaid patients they’ll see in their practices. Meanwhile, patients can’t get timely access to routine and specialized medical care.
All that being said about the most important issue, the impact of Medicaid on health outcomes, I am primarily here to discuss the financial impact of Medicaid expansion on New Mexico’s economy and state budget.
In the current fiscal year, New Mexico will spend more than $5.5 billion on Medicaid, with state revenue covering just under $900 million of the total. By 2017, fully a third of the state’s population will be on Medicaid. At a time when revenue is dropping from the decline of the oil-and-gas sector, the program is seriously jeopardizing the state’s ability to balance its budget. By 2020, it is estimated that the state’s bill for covering newly eligible Medicaid recipients will be $163 million.
A Flawed Theory
The “multiplier effect” is the theory that government spending stimulates jobs creation and income growth. Many proponents of Medicaid expansion claim that since it is largely funded with “free” money from Washington, it is an economic-development tool. But, as Harvard economist Robert Barro explained in a September 2009 National Bureau of Economic Research paper, “it is wrong … to think that added government spending is free.” The money Washington is sending to New Mexico for Medicaid must come from either taxes or borrowing.
The national debt is currently $18.6 trillion. At least in the short term, the burden is sure to grow. Unfunded liabilities for Social Security and Medicare are estimated to be in the hundreds of trillions of dollars. This level of debt-creation will not continue. New Mexico, a state uniquely dependent on Washington appropriations, cannot count on an endless spigot of federal cash, for Medicaid or any other program. A reckoning is coming. It is likely to be very ugly for taxpayers in the Land of Enchantment.
The ‘Medicaid Multiplier’ Exposed
On the issue of the multiplier itself, after conducting a survey of the economic literature, Valerie Ramey, an economist at the University of California, San Diego concluded: “For the most part, it appears that a rise in government spending does not stimulate private spending; most estimates suggest that it significantly lowers private spending.” Studies by many others, including economists at the International Monetary fund, concur with Ramey’s finding.
In an effort to better understand the alleged “multiplier effect,” the Rio Grande Foundation recently examined economic performance in the 24 states that expanded Medicaid in January 2014, comparing it with the 20 states that did not. Despite tens of billions of “free” money flowing into expansion states with no state match required until 2017, the percentage of job growth in the two groups was essentially the same, with a slight edge to the non-expanding states:
The absence of a Medicaid “multiplier” is particularly stark in New Mexico. Residents continue to leave our state, the labor participation rate is falling, and unemployment is rising. Our state has yet to recover the number of jobs it had during its employment peak, more than seven years ago. The state’s extensive matrix of welfare programs is surely an incentive to remain on public assistance rather than seek opportunities in the job market.
There are many weaknesses in the claim that Medicaid expansion creates jobs for the workers needed to treat newly eligible beneficiaries. While employment in New Mexico’s health-services industry is rising, it is not at all clear that Medicaid expansion is causing the growth. The sector has been adding jobs for many years, and even increased its employment during the Great Recession.
Even if it were the case that Medicaid expansion creates healthcare jobs, in the assessment of Harvard scholars Katherine Baicker and Amitabh Chandra,
(e)mployment in the health care sector should be neither a policy goal nor a metric of success. The key policy goals should be to achieve better health outcomes and increase overall economic productivity, so that we can all live healthier and wealthier lives. Our ability to ensure access to expensive but beneficial treatment is hampered whenever health care policy is evaluated on the basis of jobs. Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.
One penalty of Medicaid expansion that its proponents consistently avoid addressing is the impact it has on those with non-government coverage. Broadening the program imposes “a hidden tax on … people with private insurance. Expanding Medicaid leads hospitals and doctors to shift costs onto patients with private insurance thus making private insurance less affordable and contributing to the vicious cycle of increasing the number of people without insurance.” Prices for insurance premiums are rising—not falling, as Obamacare supporters claimed – and Medicaid expansion is a likely contributor to the cost of private coverage.
In Conclusion
Prior to the enactment of this new health care law, Medicaid provided New Mexico with 70 cents on the dollar with little evidence that it “stimulated” New Mexico’s economy.
Perhaps the worst aspect of Medicaid expansion is that, like so many federal programs, it relied on the promise of “free money” to the states. If any welfare program is worth enacting or expanding, it should be the taxpayers of New Mexico that support paying into a program for the benefit of their friends and neighbors. After all, we all do want better health care outcomes.
A cash-grab based on long-discredited Keynesian “stimulus” theory with little or no health benefits isn’t just unwise, it’s immoral. Think of what else we could do with $1 trillion.
In the short term, New Mexico should work with other states to press the federal government for the flexibility required to fix a badly broken and irresponsibly unsustainable program.
Medicaid desperately needs a sweeping overhaul. Reforms must be consumer-oriented, permitting beneficiaries to obtain private coverage in a competitive marketplace. Time limits similar to those imposed under the creation of the Temporary Assistance to Needy Families program in the 1990s, are also worth consideration.
In the long term, aggressive implementation of proven economic-development strategies will create the prosperity that will enable New Mexicans to obtain private insurance, either through their employers or purchased individually. The way to gauge successful healthcare policy in New Mexico is to track how many people are leaving, not joining, our population of Medicaid enrollees.
If you haven’t heard the news, the Federal Bureau of Land Management (BLM) recently held a well-attended public hearing in Farmington on the issue of “venting and flaring” of methane from natural gas wells. Droves of Four Corners residents came out in opposition to the costly new regulations being considered by the Obama Administration.
The BLM is currently accepting comments and will do so until April 8, 2016. The Rio Grande Foundation has submitted the following comments and encourages you to submit comments (click here to do so) (or at the email or mailing address below) in opposition to the proposed “venting and flaring” rule.
February 17, 2016
U.S. Department of the Interior, Director (630)
Bureau of Land Management
Mail Stop 2134 LM
1849 C St. NW.,
Washington, DC 20240
OIRA_Submission@omb.eop.gov.
Attention: OMB Control Number 1004-AE14
To Whom it May Concern:
I am the president of a free market policy research organization called the Rio Grande Foundation. We are based in Albuquerque. Our research focuses on New Mexico’s economy which is uniquely-challenged among US states. Our unemployment rate has been the highest in the nation for two months running. Our poverty levels are among the highest in the nation. As a state, New Mexico is the third-most dependent on the oil and natural gas industries as a percentage of our budget.
Given that the Bureau of Land Management controls 13.5 million of New Mexico’s surface acreage, approximately 2 million fewer acres than are occupied by the State of West Virginia, federal regulations have a tremendous impact on New Mexico’s economy.
On a statewide basis:
There are 54,457 operating oil and gas wells in New Mexico
The oil and gas industry employs 69,000 people in New Mexico;
The average salary is $71,500 compared to the overall state average salary of $39,660
56% of the oil and 63% of the natural gas is produced from Federal (BLM leases)
In fiscal year 2014 the industry provided $2.1 billion of the state of New Mexico’s $6 billion general fund revenues (35%)
I should also note that while my organization is based in Albuquerque, we study the entire New Mexico economy. A recent report from the US Department of Labor labeled the Farmington area as suffering “extreme economic duress,” noting that it had the largest increase in its unemployment rate among 387 metropolitan areas nationwide in 2015 .
The northwestern New Mexico city saw its unemployment rate rise 2.1 percentage points last year, to 7.3 percent. The last thing New Mexico’s Four Corners area needs is a new set of costly federal regulations that negatively impact the region’s economy.
Methane Emissions are the object of the proposed regulations
Venting and flaring of large amounts of methane represents lost profits to industry. While it is sometimes unavoidable, there are efforts already under way within industry to curtail the amount of emissions.
Methane is both a product and by-product of oil and natural gas production. Onshore oil and natural gas operators are becoming more efficient at capturing methane emissions, and at reducing methane emissions from production activities. The national trend of methane reduction is supported by GHG reporting data, and it holds true despite a historic increase in oil and gas production over the past several years.
Without regulations overall greenhouse gas emission in the San Juan Basin have decreased from 10.7 million metric tons in 2007 to 7.3 million metric tons in 2014.
Vented methane emission in the San Juan are down due to cost effective and efficient practices including:
o Better operating practices that are decreasing the number and duration of venting events.
o Reduced pneumatic device emissions by reclassifying, removing, replacing and retrofitting high-bleed pneumatic devices.
Good Regulations vs. Bad Regulations
Good regulation practices:
o Single and appropriate entity responsible for regulation;
o Effective in meeting public policy goals: environmental, health and safety;
o Based on science;
o Cost effective: the overall benefit of regulation is greater than the cost.
The proposed venting and flaring rule is bad regulation for the following reasons:
o Redundant and contradictory with other federal regulations and state regulations;
o Requires extensive capital and operating expenses with little or no additional benefits;
o Not based on science and in fact, locks in operating and technology solutions that have been shown to be inferior;
o Cost prohibitive especially in era of low community prices will force existing wells to be plugged with the loss of future production, jobs, taxes and other revenues.
What are weaknesses in the BLM’s approach?
o The BLM has attempted to understand economic impacts of these rules in isolation and has overestimated the benefits and underestimated the costs;
o We believe the cumulative economic impacts of the proposed changes should be considered in total across all their proposed rules;
o As proposed, these changes are significant and will have major impacts on investments in new and existing projects on federal and Indian lands, with the potential for job losses, premature well closures and significantly lower federal and tribal revenues;
o The BLM should conduct a more thorough economic impact analysis rules in isolation and has overestimated the benefits and underestimated the costs should be considered in total across all their proposed rules.
I am very concerned with the proposed BLM rule because as currently drafted it will lead to wells being prematurely plugged and devastating loss of jobs and needed economic activity in the Four Corners region and New Mexico as a whole.
Good morning Sen. Ortiz y Pino, Rep. Espinoza, and members of the committee. I am Paul Gessing, president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico.
I appreciate this opportunity to provide my organization’s perspective on whether the benefits of Medicaid expansion in New Mexico outweigh the costs and whether a “multiplier effect” exists by which increased federal dollars will generate increased economic growth in our state.
Introduction
Before discussing the economic and multiplier impacts of Medicaid expansion, I feel it is important to discuss the impact of Medicaid on actual health care outcomes. Supporters of free markets and skeptics of the efficacy of government programs are are often accused of being callous or uncaring to the poor, but we actually want government spending to be used in ways that have proven, positive results.
There is no question that Medicaid expansion is a massive expansion of a health care entitlement. According to Congressional Budget Office, between 2014 and 2022, expanding Medicaid will cost American taxpayers at the combined federal and state levels $1 trillion. Before discussing the economic impact on New Mexico, it is important to ask what kind of health care we getting for that money.
For starters, the inspector general of the Department of Health and Human Services found that over half of providers no longer accept Medicaid patients. Of doctors who do accept Medicaid, the provider networks are narrow and nearly one-third face wait times of over a month.
has turned away all newly eligible Medicaid beneficiaries because she can’t sustain her practice expenses if her proportion of Medicaid patients grows much beyond her current 13%.
For a moderately complex office visit, she is paid about the same as [a] nurse practitioner: about $80 from Medicaid and about $160 on average from commercial insurance.
Says Dr. Abernethy, “I would love to see every Medicaid patient that comes through my door.” “If you give people coverage, they should be able to utilize it.” But making it work would extend her workday, and “I have three small children and I miss them.”
Moving from anecdotal to empirical evidence, it is worth considering Oregon’s experience. In 2008, a total of 29,835 Oregonians were given the opportunity to apply for the state’s Medicaid program out of almost 90,000 people on the waitlist. About 30 percent of those who were selected from the waitlist both chose to apply for Medicaid and met the eligibility criteria. Because it examined a unique, real-world experiment complete with a randomly selected control group, the study of Oregon’s Medicaid expansion is considered the “gold standard” in health-care research.
The study’s results have been published in academic journals, including The New England Journal of Medicine and the The American Economic Review in 2013. Its conclusion was that “Medicaid increased health care utilization, reduced financial strain, and reduced depression, but produced no statistically significant effects on physical health or labor market outcomes.”
• A 2010 study of 1,231 patients with cancer of the throat, published in the medical journal Cancer, found that Medicaid patients and people lacking any health insurance were both 50 percent more likely to die when compared with privately insured patients—even after adjusting for factors that influence cancer outcomes. Medicaid patients were 80 percent more likely than those with private insurance to have tumors that spread to at least one lymph node.
• A 2010 study of 893,658 major surgical operations performed between 2003 to 2007 published in the Annals of Surgery found that being on Medicaid was associated with the longest length of stay, the most total hospital costs, and the highest risk of death. Medicaid patients were almost twice as likely to die in the hospital than those with private insurance. By comparison, uninsured patients were about 25 percent less likely than those with Medicaid to have an “in-hospital death.”
• A 2011 study of 13,573 patients, published in the American Journal of Cardiology, found that people with Medicaid who underwent coronary angioplasty (a procedure to open clogged heart arteries) were 59 percent more likely to have “major adverse cardiac events,” such as strokes and heart attacks, compared with privately insured patients. Medicaid patients were also more than twice as likely to have a major, subsequent heart attack after angioplasty as were patients who didn’t have any health insurance at all.
• A 2011 study of 11,385 patients undergoing lung transplants for pulmonary diseases, published in the Journal of Heart and Lung Transplantation, found that Medicaid patients were 8.1 percent less likely to survive 10 years after the surgery than their privately insured and uninsured counterparts. Medicaid insurance status was a significant, independent predictor of death after three years—even after controlling for other clinical factors that could increase someone’s risk of poor outcomes.
In all of these studies, the researchers controlled for the socioeconomic and cultural factors that can negatively influence the health of poorer patients on Medicaid.
So why do Medicaid patients fare so badly? Payments to providers have been reduced to literally pennies on each dollar of customary charges because of sequential rounds of indiscriminate rate cuts. As a result, doctors often cap how many Medicaid patients they’ll see in their practices. Meanwhile, patients can’t get timely access to routine and specialized medical care.
All that being said about the most important issue, the impact of Medicaid on health outcomes, I am primarily here to discuss the financial impact of Medicaid expansion on New Mexico’s economy and state budget.
In the current fiscal year, New Mexico will spend more than $5.5 billion on Medicaid, with state revenue covering just under $900 million of the total. By 2017, fully a third of the state’s population will be on Medicaid. At a time when revenue is dropping from the decline of the oil-and-gas sector, the program is seriously jeopardizing the state’s ability to balance its budget. By 2020, it is estimated that the state’s bill for covering newly eligible Medicaid recipients will be $163 million.
A Flawed Theory
The “multiplier effect” is the theory that government spending stimulates jobs creation and income growth. Many proponents of Medicaid expansion claim that since it is largely funded with “free” money from Washington, it is an economic-development tool. But, as Harvard economist Robert Barro explained in a September 2009 National Bureau of Economic Research paper, “it is wrong … to think that added government spending is free.” The money Washington is sending to New Mexico for Medicaid must come from either taxes or borrowing.
The national debt is currently $18.6 trillion. At least in the short term, the burden is sure to grow. Unfunded liabilities for Social Security and Medicare are estimated to be in the hundreds of trillions of dollars. This level of debt-creation will not continue. New Mexico, a state uniquely dependent on Washington appropriations, cannot count on an endless spigot of federal cash, for Medicaid or any other program. A reckoning is coming. It is likely to be very ugly for taxpayers in the Land of Enchantment.
The ‘Medicaid Multiplier’ Exposed
On the issue of the multiplier itself, after conducting a survey of the economic literature, Valerie Ramey, an economist at the University of California, San Diego concluded: “For the most part, it appears that a rise in government spending does not stimulate private spending; most estimates suggest that it significantly lowers private spending.” Studies by many others, including economists at the International Monetary fund, concur with Ramey’s finding.
In an effort to better understand the alleged “multiplier effect,” the Rio Grande Foundation recently examined economic performance in the 24 states that expanded Medicaid in January 2014, comparing it with the 20 states that did not. Despite tens of billions of “free” money flowing into expansion states with no state match required until 2017, the percentage of job growth in the two groups was essentially the same, with a slight edge to the non-expanding states:
The absence of a Medicaid “multiplier” is particularly stark in New Mexico. Residents continue to leave our state, the labor participation rate is falling, and unemployment is rising. Our state has yet to recover the number of jobs it had during its employment peak, more than seven years ago. The state’s extensive matrix of welfare programs is surely an incentive to remain on public assistance rather than seek opportunities in the job market.
There are many weaknesses in the claim that Medicaid expansion creates jobs for the workers needed to treat newly eligible beneficiaries. While employment in New Mexico’s health-services industry is rising, it is not at all clear that Medicaid expansion is causing the growth. The sector has been adding jobs for many years, and even increased its employment during the Great Recession.
Even if it were the case that Medicaid expansion creates healthcare jobs, in the assessment of Harvard scholars Katherine Baicker and Amitabh Chandra,
(e)mployment in the health care sector should be neither a policy goal nor a metric of success. The key policy goals should be to achieve better health outcomes and increase overall economic productivity, so that we can all live healthier and wealthier lives. Our ability to ensure access to expensive but beneficial treatment is hampered whenever health care policy is evaluated on the basis of jobs. Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.
One penalty of Medicaid expansion that its proponents consistently avoid addressing is the impact it has on those with non-government coverage. Broadening the program imposes “a hidden tax on … people with private insurance. Expanding Medicaid leads hospitals and doctors to shift costs onto patients with private insurance thus making private insurance less affordable and contributing to the vicious cycle of increasing the number of people without insurance.” Prices for insurance premiums are rising—not falling, as Obamacare supporters claimed – and Medicaid expansion is a likely contributor to the cost of private coverage.
In Conclusion
Prior to the enactment of this new health care law, Medicaid provided New Mexico with 70 cents on the dollar with little evidence that it “stimulated” New Mexico’s economy.
Perhaps the worst aspect of Medicaid expansion is that, like so many federal programs, it relied on the promise of “free money” to the states. If any welfare program is worth enacting or expanding, it should be the taxpayers of New Mexico that support paying into a program for the benefit of their friends and neighbors. After all, we all do want better health care outcomes.
A cash-grab based on long-discredited Keynesian “stimulus” theory with little or no health benefits isn’t just unwise, it’s immoral. Think of what else we could do with $1 trillion.
In the short term, New Mexico should work with other states to press the federal government for the flexibility required to fix a badly broken and irresponsibly unsustainable program.
Medicaid desperately needs a sweeping overhaul. Reforms must be consumer-oriented, permitting beneficiaries to obtain private coverage in a competitive marketplace. Time limits similar to those imposed under the creation of the Temporary Assistance to Needy Families program in the 1990s, are also worth consideration.
In the long term, aggressive implementation of proven economic-development strategies will create the prosperity that will enable New Mexicans to obtain private insurance, either through their employers or purchased individually. The way to gauge successful healthcare policy in New Mexico is to track how many people are leaving, not joining, our population of Medicaid enrollees.
Recently, Paul Gessing sat down with Dan Mayfield of the Morning Brew to discuss several issues the Foundation is working on. Specifically, we talked about an event the Foundation put on relating to civil asset forfeiture. And, while that event has come and gone, several of the issues discussed remain relevant and topical in advance of the 2016 legislative session.
Recently, Gov. Martinez signed the nation’s strongest protections for civil asset forfeiture. The Rio Grande Foundation, ACLU of New Mexico, and Drug Policy Alliance held a press conference on the issue. The full conference can be seen below:
KOAT TV also covered the press conference although they focused heavily on the DUI provisions that have been enacted by some cities and which may or may not conflict with the new legislation.
SANTA FE, NM—Today, Governor Susana Martinez signed HB 560 into law, ending the practice of civil asset forfeiture in New Mexico. Civil asset forfeiture, also known as “policing for profit,” allows law enforcement officers to seize personal property without ever charging—much less convicting—a person with a crime. Property seized through this process often finds its way into the department’s own coffers. HB 560, introduced by NM Rep. Zachary Cook and passed unanimously in the legislature, replaces civil asset forfeiture with criminal forfeiture, which requires a conviction of a person as a prerequisite to losing property tied to a crime. The new law means that New Mexico now has the strongest protections against wrongful asset seizures in the country.
“This is a good day for the Bill of Rights,” said ACLU-NM Executive Director Peter Simonson. “For years police could seize people’s cash, cars, and houses without even accusing anyone of a crime. Today, we have ended this unfair practice in New Mexico and replaced it with a model that is just and constitutional.”
“With this law, New Mexico leads the nation in protecting the property rights of innocent Americans,” said Paul Gessing, President of the Rio Grande Foundation. “Convicted criminals will still see the fruits of their crime confiscated by the state, but innocent New Mexicans can now rest easy knowing that their property will never be seized by police without proper due process.”
“New Mexico has succeeded today in reigning in one of the worst excesses of the drug war,” said Emily Kaltenbach, State Director for Drug Policy Alliance’s New Mexico office “Like other drug war programs, civil asset forfeiture is disproportionately used against poor people of color who cannot afford to hire lawyers to get their property back. This law is an important step towards repairing some of the damage the drug war has inflicted upon our society and system of justice.”
“New Mexico has shown that ending policing for profit is a true bipartisan issue with broad public support,” said Lee McGrath, Legislative Counsel for the Institute of Justice. “America is ready to end civil asset forfeiture, a practice which is not in line with our values or constitution. This law shows that we can be tough on crime without stripping property away from innocent Americans.”
Bipartisan legislation has already been introduced in both houses of Congress that would dramatically reform federal civil asset forfeiture laws. The Fifth Amendment Integrity Restoration (FAIR) Act has been introduced in the Senate by Sen. Rand Paul (R-KY), Sen. Angus King (I-ME) and Sen. Mike Lee (R-UT). In the House, Rep. Tim Walberg (R-MI), Rep. Scott Garrett (R-NJ), Rep. Tony Cárdenas (D-CA), Rep. Keith Ellison (D-MN) and Rep. Tom McClintock (R-CA) introduced an identical version of the FAIR Act.
Today in the House Business and Employment Committee, HB 75 which would make New Mexico the 25th state in the nation to adopt “right to work” legislation, passed with bi-partisan support. Rio Grande Foundation president Paul Gessing provided expert testimony which can be seen below. Next up is House Judiciary Committee:
Thank you for the opportunity to testify on the issue of whether to make New Mexico a “right to work” state. I believe that this is the most important single issue being addressed during the 2015 legislative session and I am pleased to be here.
Before I get started telling you what “right to work” is, I’d like to share with you what it is not.
“Right to Work” is not anti-union. Such laws simply restore individual choice over whether to join or not join a labor union. Moreover, federal law does not obligate unions to represent non-members. The National Labor Relations Act allows unions to sign “members’ only” contracts that apply only to dues-paying members. In 1938, the Supreme Court expressly upheld union’s ability to negotiate only on behalf of members. As William Gould, chairman of the NLRB under President Clinton, wrote, “the law now permits members-only bargaining for employees” — unions can exclude non-members from their contracts.
The second thing that “right to work” is not is that it is not an economic panacea. Supporters of the law hope that by adopting such a law New Mexico will be more economically-competitive. There is ample data to show that businesses, especially those providing high-paying jobs for skilled workers, tend to locate new facilities in “right to work” states far more often than they do in non-RTW states.
How do we know this? There are reams of data showing that RTW states create more jobs, are seeing faster population growth, and are experiencing faster personal income growth than their non-RTW brethren. And, while median incomes are higher in non-right to work states, once the cost of living is factored in, median incomes in RTW states are about $5,000 higher than in non-RTW states.
I’m happy to go into that data with the Committee in detail, but let’s look at real-world businesses and the site selection professionals who help businesses locate for a living.
The first and most famous case involves the airplane manufacturer Boeing which is primarily located in Washington State, a non-right to work state. In 2009, Boeing broke ground on a facility near Charleston, in South Carolina, which is a RTW state. The facility is expected to generate 3,800 jobs and invest $750 million over the next seven years.
Boeing’s move generated a great deal of controversy, but it was clearly a decision made in part to avoid future facility shutdowns. It is worth noting that Boeing’s employees are highly-skilled and well-paid. Boeing was not moving in search of lower wages, but to avoid having its technology and resource-intensive assembly lines beholden to frequent strikes.
Notably, Airbus, the European conglomerate and main competitor to Boeing, has 9 US facilities. As seen in Figure 1, only its Washington, DC-based government affairs division is located in a non-RTW state. Airbus could have chosen anywhere in the US to build its facilities having entered the market in 1990. It chose RTW.
They are not alone. Another foreign aircraft manufacturer, Embraer which makes regional and corporate jets, also could have built anywhere in the US. They chose RTW Florida as the location for not one, but two manufacturing facilities employing a total of 1,000 workers.
Of course, aviation is not the only manufacturing industry that favors RTW states. Even if Michigan’s shift to RTW is not included in the data, as Figure 2 illustrates, automobile manufacturing is increasingly moving to states that have RTW laws on the books.
It is no accident that manufacturers, especially those building new facilities, are choosing to locate in RTW states. After all, the people they trust to help locate their businesses also believe in the importance of RTW.
I just discussed the auto industry’s shift to RTW states. New Mexico was recently in the running for Tesla’s “gigafactory” which wound up choosing RTW Nevada for its facility. John Boyd, the principal at his namesake site selection firm said of New Mexico’s chances to lure Tesla “manufacturing companies look for reasons to scratch off states when considering where to build major facilities — and no right to work law is at the top of the list.”
Boyd also said, “I can’t underscore how critical right to work status is.” In conclusion, Boyd again reiterated the dire need for a right to work law in New Mexico saying, “New Mexico has enormous potential to become a manufacturing hub, especially if it were to adopt right to work legislation.”
Boyd is not alone. When Michigan went “right to work” in 2013, Site Selection Magazine interviewed several site selection experts on the issue. The following comments, all from professional site selectors relating to a real-world law passing indicate strong support for “right to work” laws:
Said Jason Hickey, principal of Hickey & Associates in Washington, D.C., “We believe there will be an enormous impact, especially for medium-tier companies who are poised to grow.”
Tracey Hyatt Bosman of BLS & Company in Chicago calls Michigan’s adoption of RTW “a dramatic demonstration of the state’s commitment to the transformation of their business environment.”
Bosman echoes other site consultants when she adds, “Some companies simply insist on locating in a right-to-work state. Michigan’s new legislation removes a roadblock and will bring the state’s extremely skilled work force into consideration for more projects.”
It was hard to find anyone in the site selection profession who saw a downside. Michigan’s swift reversal of decades of labor law.
Said Brent Pollina of Pollina Corporate Real Estate in Chicago, “Where it will have an effect is when there are companies who are looking for locations. Michigan will no longer be eliminated because they are not a right-to-work state. As a result, there should be a significant increase in the number of projects that Michigan receives because they are no longer being eliminated at the early stages of searches. The change also sends a strong signal to business and industry.”
As with any issue, if you look hard enough you can find those who will say RTW is “ineffective” or “not a factor” in businesses’ location decisions. However, I have never heard an economic development expert say RTW was a negative.
In conclusion, RTW costs taxpayers nothing. And, at a time when Washington is no longer a reliable base for our economy and with dramatically-reduced oil prices impacting our states’ most significant economic bright spot, there is no better or more important time for New Mexico to adopt a Right to Work law.
It is not a panacea, but a serious starting point for developing New Mexico’s under-developed private sector.
(Albuquerque, NM) —The Rio Grande Foundation today joined with 375 trade associations and chambers from 50 states representing a wide range of industries to voice strong concerns with the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers’ flawed proposed rule to dramatically expand the scope of federal authority over water and land uses across the U.S. and called for the proposal to be withdrawn. The effort was led by the U.S. Chamber of Commerce. The comments are available here.
The rule is simply an attempt by Washington, D.C., bureaucrats to take over the economies and the livelihoods of everyone in the western U.S. It has little to do with environmental protection, and everything to do with a political takeover of our most precious resource – making everyone in the west dependent and beholden to Washington bureaucrats.
As the groups’ comments state, “The proposed rule is really about the Agencies’ overreaching attempt to replace longstanding state and local control of land uses near water with centralized federal control. In light of the overwhelming evidence that the proposed rule would have a devastating impact on businesses, states, and local governments without any real benefit to water quality, the Agencies should immediately withdraw the waters of the U.S. proposal and begin again. The current proposed rule is simply too procedurally and legally flawed to repair.”
The comments detail several examples of the impacts of the proposed rule, including:
Maps prepared by EPA show the rule could expand federal jurisdiction over waters from 5 million river and stream miles to well over8 million river and stream miles;
The rule would make most ditches into “tributaries.” Routine maintenance activities in ditches and on-site ponds and impoundments could trigger permits that can cost $100,000 or more;
These permitting requirements would likely trigger additional environmental reviews that would add years to the completion time for ordinary projects;
Even if a project can get a permit, firms will often have to agree to mitigate environmental “damage” with costly restoration/mitigation projects;
The proposal would likely also result in more stringent storm water management requirements, which would affect retailers, companies with large parking lots, “big box” stores, etc.
