Friday, August 31, 2018

The Chained CPI: Fuzzy math and your pocketbook

We have, for as long as I’ve been around, a federal government that has a spending problem and because of that it has a revenue problem, too.

So what is a government to do? Congress could openly raise taxes and cut benefits. That’s political suicide, as a spendthrift would be a marked man as would his pennywise foil.

So, those tasks need to be done secretly. There is no more clandestine of a way to do that than to manipulate the statistics that govern our public policy.

One of those newfound gimmicks is the Chained Consumer Price Index (CPI). The GOP Congress attached it to federal tax reform last year, applying its use to personal and corporate taxes for the first time ever. Now that it’s no longer taboo, there’s talk of applying it to Social Security as well, something the Obama Administration toyed with in 2013 and 2014.

In the old CPI method, the cost of a fixed basket of goods and services was tracked over time and that growth in value represented the inflation rate. The Chained CPI takes that simple, straightforward calculation and turn it on its head, making it subjective and something of a fantasy.

In the new method federal economists adjust the basket for assumed changes in buying behavior; no longer is it a designated collection of items. In their eyes, if a shopper won’t buy a beef roast because it went up X dollars, he would probably buy a replacement meat, like pork chops. So, the Chained CPI adjusts for the modified basket, as theoretical as it may be, and tracks the price of the chops, noting their price variance instead of the roast that used to be in its place.

Since the modified basket will feature lower-priced replacements, the Chained CPI will produce an inflation rate that is lower than the standard CPI. On average, it will cut the accepted inflation rate by a third of a percentage point per year. It doesn’t seem like much, but it is. Inflation was pegged at 2.5 percent for 2017. The Chained CPI brings that number down to 2.2 percent. That works out to be a 12 percent difference.

That change will yield big results for Washington. It’s been said that over the first decade alone, a fully-integrated Chained CPI (one applied to both revenues and expenses) would shrink the deficit by nearly $345 billion, through a combination of $125 billion in new tax revenues and $220 billion in spending cuts.

The new revenues will be achieved by sticking it to those who pay income taxes. Since wages will in many cases -- especially in a good economy -- rise at a rate greater than what will be a much smaller inflation rate, more people will jump into higher tax brackets – more quickly, too - since those brackets are continually adjusted for inflation. At the same time, personal tax loopholes will grow at an equally smaller rate, preventing people from deducting higher dollar amounts that would have tracked the CPI previously in place. We’re not talking peanuts: According to federal studies published a few years back, over the first 10 years of a Chained CPI the tax burden for a lower-income family will be 15 percent higher.

If the chained CPI is extended to Social Security in the coming years, the feds will see significant cost savings gleaned from those who rely on the government for a retirement income.

Social Security beneficiaries count on their benefits growing at a rate in step with inflation. In recent years the calculated rate of inflation has not been high enough to warrant a significant cost-of-living adjustment (COLA), if one at all. 2017’s COLA was 2 percent, the second highest over the last decade, and there were no COLAs for 2009, 2010, and 2015.

Seniors have been really feeling that. For 10 years now, their retirement income hasn’t been growing in step with what they’ve been seeing at the grocery store or, especially, in their property tax bills. Imagine that for the long haul, but worse. Under Chained CPI, someone collecting Social Security will receive $560 less per year after 10 years and almost $1,000 less per year after 20 years.

The weight of the Chained CPI will bring a good many people down – taxpayers and beneficiaries alike. It’s an unscientific manner to calculate one of our economy’s most important statistics and an easy way for Washington to earn and save money, without making the hard, important decisions that they should.

From the 03 September 2018 Greater Niagara Newspapers and Batavia Daily News

Friday, August 24, 2018

Medicaid needs accountability for cost control

New York’s Medicaid system is the second-costliest in the nation as our total bill comes to around $62 billion per year. California pays out $18 billion more than we do, but their population is nearly twice ours.

The feds fund 51% of New York’s expense, but you can readily see what you contribute to the program: In most counties across the state 54% to 62% of the county property tax goes towards Medicaid and many also designate 1 full percentage point of their sales tax for the program (they call it “the Medicaid penny”).

That’s a pretty significant sacrifice by taxpayers at the local level and it is perhaps the biggest contributor to one of New York’s most dramatic and damning flaws – inordinately high property taxes.

In order to contain those costs, Medicaid needs a total overhaul. That’s been written about here on this page many times before, as I’ve touched on everything from residency requirements to downsizing of the program’s benefits to utilizing Medicaid funds to pay for private insurance.

But, what I haven’t touched on before is personal and financial accountability by Medicaid recipients.

Why isn’t that a focus of the State?

It is for everyone else in their day-to-day lives.  

If you are one of the 9 million New Yorkers who receives health care through your employer or a family member’s employer you know full well the pressure to cut costs and/or lessen the growth in them. You’re likely inundated with documents and edicts from your boss or insurer to get a primary care physician, have an annual physical, participate in wellness and cessation programs, shop frugally for prescriptions, and choose care venues properly.

It’s been drilled into our heads that if we don’t do these sorts of things the employer will pay more for insurance as will the employee, be it with higher premiums, deductibles, or copays.

It’s good business and personal finance to do those activities. Why waste money and pay more for anything?

But, more importantly, it’s good for the body. We should actively pursue preventive practices and good behaviors – even without the carrot of savings.

Unfortunately, that same code of conduct is not applied to the 6.4 million people in the state who receive Medicaid and, as noted above, everyone is paying dearly for that.

State officials should bring those practices to Medicaid.

Insurers press their clients to have a doctor and some have gone so far as to work with employers to penalize those who don’t – and don’t get an annual physical – with higher premiums the following year. You really can’t do that exactly to a Medicaid client (there are no premiums) but the state could assess penalties, a fine if you will, every year for those who don’t engage primary care. Having a doctor is critical – he or she has the knowledge and skill to identify and address illnesses and set patients on the paths to better health (and lower costs). 

Likewise, penalties need to be exercised on those who don’t participate in defined wellness programs. It’s no different than a private insurer or employer charging higher premiums to those who smoke. This is an absolute must-have for Medicaid. 29% of adults on Medicaid smoke, a rate more than double that of the privately insured. Persistence of this statistic leads to lung cancer, COPD, congestive issues, and more.

Proper venue selection is critical in cutting back on Medicaid expenditures. In your insurance bulletins or employee newsletters you’ve likely been told that you should never go to an emergency room unless of course it’s an actual emergency (hence the name); you should always go to your doctor or urgent care. The common number thrown around is that an ER is 10 times more expensive than urgent care.

That pressure isn’t there in Medicaid and it shows. Using Kentucky as an example, in 2015, nearly half of all ER visits were funded by Medicaid. A University of Colorado study completed last year found that half of Medicaid recipients prefer ERs over doctors and UC because they are “convenient”. That said, it is high time that a substantial copay was put into effect for ER use and one that is especially punitive for non-emergencies, so “what’s best” is chosen over “what’s most convenient”.

All of this can only work if care is managed.

In the workplace, insurers and employers consistently educate the insured on health care, what options exist, and what is encouraged and discouraged, statements that are then repeated by the employees’ doctors.

Medicaid patients aren’t, for the most part, afforded that. They don’t have someone in their face all of the time expounding the virtues of costs savings and the benefits of healthy living.

It’s time the state picked up that mantle and utilized best practices to not only save money, but also to improve, and even save, the lives of New York’s Medicaid population.

From the 27 August 2018 Greater Niagara Newspapers and Batavia Daily News

Thursday, August 23, 2018

EXPLORING THE NIAGARA FRONTIER: The orchid that’s a weed

Talk to anyone who knows, grows, and loves plants and they’ll express a special love for orchids. Horticulturalists, botanists, and gardeners love them for their beautiful, fragile, and, in many cases, rare flowers.

With such universal love for these wonders of nature, you’d never expect to hear an orchid ranked alongside a weed, flowers that are, despite their beauty, considered lowly because they appear in abundance, show up in lawns and gardens, pop up in waste areas, and are a non-native species.

But, there is one orchid here in Western New York that fits that bill….the helleborine orchid.

Some consider this orchid a weed because it is an alien, an invasive species. It’s the only non-native orchid in the state. The European flower escaped some gardens in the Syracuse area in the late-1800s and quickly spread throughout the Empire State and beyond, now claiming the Great Lakes states and southern Ontario as its home.

I have seen it in good numbers in the Southern Tier, the Adirondacks, and to a lesser extent on the lake plains. That can’t be said for any other orchid in the state as natives like lady slippers are incredibly rare.  Doesn’t matter if it’s a lawn, roadside, or some of the wildest territory imaginable…the helleborine orchid thrives in places that our native orchids don’t and do.

It’s become so abundant in Wisconsin that state environmental officials have encouraged homeowners to pull them up out of the ground and destroy them. Many are quick to do so, because the thick leaves when the flowers are not in bloom make for unattractive sprouts.

If you get them in your yard, let them be, let them bloom. Someone’s weed is another’s beautiful wildflower.

The helleborine orchid is certainly no exception to that rule.

The plant will produce many attractive, small, nodding flowers that are a very light purple, and sometimes greenish, in hue. The plant can grow to be 36” in height, but that is an exceptional specimen. Most are less than 14”.

Another reason to leave them alone, especially if you see them in a forest with very good soil, is that early in their growth the leaves look like those to the rare lady slipper. If you picked the plant to dispose of it and inadvertently killed one of the “good” orchids that would be a real heartbreaker.

Orchids are to be appreciated. Even those that don’t belong. I let them grow in my lawn and appreciate the beauty that they bring every August. You should, too.

From the 23 August 2018 All WNY News

Friday, August 17, 2018

New York mandates sexual harassment training

Any employers worth their salt have had sexual harassment policies in place for years now. At most workplaces, you are given the policy on Day One of your employment and you likely receive reminders on its existence and use.

That won’t cut it anymore in New York State.

And almost all employers don’t know that.

That’s because hidden deep within the state budget (which in theory but not practice is supposed to be just a spending bill), on page 83 to be exact, was a new law that mandates sexual harassment policies and training for all employers and their employees in the Empire State.

The deadline for implementation of these new standards is fast approaching. The law and, in turn, its revised policies and in-person training go into effect on October 9th and must be accomplished by year end. Most of the unknowing private sector is now facing crunch time to both update and initiate, which is a laborious task because employers will have to throw out most everything they’ve ever done, have their legal counsel review their new standards, develop a training program, and schedule chunks of workdays for training.

Looking over the law, which not only was a direct response to the #MeToo movement but also a political tit for tat as New York Governor Cuomo was intent on beating his adversary New York City Mayor de Blasio to the punch (NYC also passed their own standards this spring), the policies and methods utilized by many managers will need some serious tweaking.

You will need to look through your current employee handbook and make sure it meets the law. Your sexual harassment policy must have: a corporate statement prohibiting sexual harassment; a statement that sexual harassment is a form of employee misconduct and sanctions will be enforced against individuals engaging in sexual harassment and managers and supervisors who knowingly allow such behavior to continue; info about local, state and federal laws related to sexual harassment; a designated complaint form; examples of conduct and behavior that could or would constitute sexual harassment; a defined procedure for timely and confidential investigation of complaints which includes due process for all parties; and a statement that retaliation against individuals reporting sexual harassment or who testify or assist in any proceeding is unlawful.

There’s a lot to digest, but it doesn’t end there.

The law also mandates that employers provide training on an annual basis, not just at the point of hire. In all its nebulousness, the regulations require that it be “interactive”. It doesn’t define “interactive” but at a minimum it likely means that it has to be done in person (or, in this modern era, online) and in detail – there is no more handing out the policy and considering that the end of discussion.

In your seminar you must: provide an explanation of what sexual harassment is; give examples of sexual harassment; talk about local, state, and federal laws concerning sexual harassment and remedies available to victims; and discuss employees’ right of redress and all available forums for handling complaints. I repeat: This has to be administered every single year.

If this seems like a lot, and you dread the bill associated with having your lawyer redesign your entire sexual harassment system and you don’t feel that you are competent enough to design from scratch a classroom experience, the state budget required that the New York State Department of Labor and the Division of Human Rights develop a standard sexual harassment policy and training module that employers could use. Last week, I reached out to Human Rights to see if all of this was yet available -- and it is not. I encourage you to check their website later in September.  

This is far and away the most expansive sexual harassment law in the nation. No other state, no other jurisdiction, mandates training for all employees. By comparison, California requires training for only the managers and supervisors of employers with 50 or more workers. New York’s law has no limitation on job title or size. All employees in all businesses need the training – it doesn’t matter if they work for a landscaper or pizza shop employing 6 people or retail store or factory employing 100 – every worker needs it.   

All employers, through good and ethical business practice, should have had a policy to begin with. If they did have one, they’ll have to change what they’ve been doing, some a little, some a lot. If they didn’t have one, consider this the much-needed wake-up call to catch up with the times and do what is necessary entrepreneurially, socially, and -- now -- legally.

From the 20 August 2018 Greater Niagara Newspapers and Batavia Daily News