Beyond the shouting — understanding reform

Andrew Cannon
Andrew Cannon

Vigorous debate between proponents and opponents on the merits of congressional health reform proposals has, in recent weeks, descended into shouting matches. Unfortunately, understanding of the proposed reform has not always been as deep as the passion on the topic.

Recent discussions have brought attention to a provision deep within the proposal regarding end-of-life counseling for Medicare recipients. Opponents have suggested that the provision opens the door to euthanasia.

A closer look at the actual provision, however, shows that these concerns are overblown. The critical language in the proposal produced by the House Energy and Labor, Education and Labor, and Ways and Means committees reads:

“[T]he term ‘advance care planning consultation’ means a consultation between the individual and a practitioner … regarding advance care planning … Such consultation shall include the following:

“(A) An explanation by the practitioner of advance care planning, including key questions and considerations, important steps, and suggested people to talk to.

“(B) An explanation by the practitioner of advance directives, including living wills and durable powers of attorney and their uses.

“(C) An explanation by the practitioner of the role and responsibility of a health care proxy.

“(D) The provision by the practitioner of a list of national and State-specific resources to assist consumers and their families with advance care planning …

“(E) An explanation by the practitioner of the continuum of end-of-life services and supports available, including palliative care and hospice, and benefits for such services and supports that are available under this title. …”

The provision would allow Medicare to reimburse medical professionals for voluntary end-of-life consultations with Medicare patients. Such consultations would allow Medicare enrollees to make medical decisions before being incapacitated by an illness, or allow the patient to transfer the medical decision-making power to a loved one (a “health care proxy”).

As Senator Johnny Isakson, R-Georgia, pointed out, this provision actually protects Medicare enrollees and their families:

“[T]he most money spent on anyone is spent usually in the last 60 days of life and that’s because an individual is not in a capacity to make decisions for themselves. So rather than getting into a situation where the government makes those decisions, if everyone had an end-of-life directive or what we call in Georgia ‘durable power of attorney,’ you could instruct at a time of sound mind and body what you want to happen in an event where you were in difficult circumstances where you’re unable to make those decisions.”

The “practitioner” described in the legislation is carefully defined and limited as being only a physician, a nurse practitioner, or a physician’s assistant. The relationship between a patient and his or her care provider is in no way disrupted by government officials or an anonymous “panel.”

The provision would block reimbursement for counseling promoting euthanasia as an option. Euthanasia and physician-assisted suicide remain illegal in the majority of states, including Iowa, and this provision does nothing to alter that.

Though the recent discussion of the end-of-life counseling provision in the health reform proposal has brought a considerable amount of disinformation and heated rhetoric, it has brought attention to a service that has been long overlooked.

Jon Radulovic of the National Hospice and Palliative Care Organization told Kaiser Health News that that the discussion is “providing the end-of-life care community with an opportunity to talk about what good care is and the services that are available.”

While the subject of vociferous and inaccurate protests, the end-of-life consultation provision has been endorsed by a number of advocacy and medical groups, including the AARP, the American College of Physicians, and Consumer’s Union, among others.

Posted by Andrew Cannon, Research Associate

Everything on the table? Really?

Back in January, Governor Culver asked lawmakers to “agree that everything’s on the table with respect to balancing the budget and finding cost savings in state government.”

Today, on Ryan Schlader’s WMT-AM radio talk show, State Rep. Nick Wagner, responding to a question about state employee retirement benefits, opined that “I don’t think we should just write anything off the table.”

Both quotes sound good. Do they mean it?

The evidence may come during the next legislative session. Budget policy fell short of the concept in 2009. Otherwise, abuses of Iowa’s tax code would not have been allowed to continue when lawmakers were choosing among services to be cut as revenues declined.

This is not a partisan thing — or it should not be.

Can’t all Iowans agree that any spending by state and local government should (1) carry a demonstrable public benefit, and (2) be subject to regular scrutiny to allow legislators and the public to determine that it does have that benefit?

The Legislature took a small but important first step in 2009 by passing legislation toward the transparency that would allow scrutiny of one of Iowa’s most wasteful programs: the Research Activities Credit (RAC). The RAC is a virtually open-ended business entitlement that results in multimillion-dollar secret checks being sent to big companies that don’t pay any income tax in Iowa.

Ultimately, the law passed this year may begin that process toward better scrutiny.

That’s why the Big Business lobby in Iowa will continue to fight transparency and protect its sweetheart tax breaks while lawmakers make other budget choices that will cut teachers in classrooms, drive up tuitions in community colleges and state universities, and continue to shortchange public safety, environmental quality and recreational assets.

If everything is on the table, it has to include wasteful spending on special-interest tax breaks for companies that don’t pay income taxes.

By Mike Owen, Assistant Director

A day of mixed emotions

IPP bids farewell to outeach coordinator Kristi Lohmeier, who brought our good research into view for advocates and policy makers across Iowa. Good luck toward your Ph.D., Kristi!

Lily French is taking over outreach coordinator duties for IPP. She may be reached at (319) 338-0773 or lfrench@iowapolicyproject.org.

Kristi Lohmeier checks out for the last time at IPP.
Kristi Lohmeier checks out for the last time at IPP.

“All my bags are packed I am ready to go….”

I can’t help having this song running through my head right now, as I prepare to leave the Iowa Policy Project and my fantastic job as Outreach Coordinator.

As the inaugural Outreach Coordinator for the Iowa Policy Project and its umbrella organization, the Iowa Fiscal Partnership, it is with mixed emotions that I pack my office up and drop off the keys. I am leaving the organization that has given me so many incredible experiences, so many wonderful friends and colleagues and so much knowledge of the remarkable state I live in.

My sadness comes from departing the world of policy analysis and making the work relevant and digestible to an audience we rely on to carry our messages of fairness and equity.

My happiness, however, comes from knowing what will become of the position I have worked so hard to create. That position, and those responsibilities, will be all the more improved with Lily French taking the reins.

Lily has been working at the Iowa Policy Project since April of 2008 and in her time she has been in the role of Research Associate, doing ground-breaking research that has had her traveling all across the state discussing policy analysis around economic opportunity issues for low- and moderate-income working Iowans. She will take over my duties officially as of July 30, 2009. Please contact her at lfrench@iowapolicyproject.org to become a part of this exciting transition at IPP! She would love to talk to you!

My appreciation is never ending for the staff at the Iowa Policy Project who took a chance on a hire with a steep learning curve relating to analysis of tax and budget policy, and energy and environmental policy. I couldn’t have had the amazing experiences I have this last 2 1/2 years had it not been for a forbearing, supportive work environment that allowed me to thrive, explore new things and develop a fire for policy analysis and advocacy in Iowa that will carry me through my next great adventure: working toward my Ph.D. at the University of Iowa’s School of Social Work.

It has been a pleasure representing the Iowa Policy Project and working with a whole community of constituents to get good ideas made into great policy. I am sure our paths will cross numerous times in the future, so until then, best of luck to you all!

Posted by Kristi Lohmeier

Explaining the ‘trade’ in ‘cap and trade’

David Osterberg
David Osterberg

“Cap and trade” is a term growing in use but still needing explanation. We all get the “cap” part. The way to clean our water and our air is to “cap” the amount of pollution entering it. The “trade” part is a little more confusing.

The ‘cap’
Let’s assume that we see health or aesthetic damage from all the pollution in the air and that we have identified 121 tons of it being generated by a finite number of factories and other sources. Assume that good science says that we need to cut those identified emissions by half — 50 percent — to have an effect. Because it will be easier to get to that goal by giving the polluters some time to put in the pollution control or close down heavily polluting plants, we decide to reduce emissions by 10 percent a year over the next five years. The identified firms are told they need to cut the entire 121 tons to 110 tons by the end of the first year. That is the “cap” part of cap and trade.

The ‘trade’
The trade part of pollution reduction lets firms choose how to get to the total reduction. A firm with 10 plants equal to 11 total tons can decide to cut a quarter-ton from each of its four newest plants to reduce the 1 ton it is required to meet, and let the other plants produce as they formerly did. This works because we are interested in the total number, and it allows the company to meet the mandate to cut emissions by choosing the cheapest way within the company. A 10 percent reduction from all 10 plants would also get us the 1 ton, but this might be more expensive.

Firms also can trade with each other to help the economy achieve the desired reduction in emissions. The company that chooses to concentrate pollution in a few plants might want to go further than the 0.25 tons in each new plant. Its managers know that next year there will be another 10 percent reduction and 10 percent the year after that, so they might want to cut emissions just once and begin the process of eventually reducing even more. Going further than required this year will earn the firm credits, which can be saved for the next round of reductions, or purchased by a firm with mainly old plants that are hard to refurbish. This creates a market in which a broker agency sets up something like a stock exchange to trade the extra credits of one firm to the firms that want to purchase them. It is assumed that this marketplace will produce a cheaper solution to getting the same 10 percent total reduction in pollution that a simple mandate for each company, or even each plant, to reduce emissions by 10 percent.

The credit marketplace
The price of the credits is not known at the beginning. A firm might plan for a reduction on its several plants when learning that the price of credits is cheaper than first thought. The firm would then buy credits and do the plant cleanup next year. Alternatively, a firm might find the market for credits is so high that it can cut more emissions immediately and pay for part of the job by selling extra credits. That is how markets work and it shows how the trading part of cap and trade can address pollution from the big-ticket generators.

Posted by David Osterberg, Executive Director

Pay Attention to Tax Breaks Behind Curtain

Taxpayers are protected by more transparency on tax-credit spending for businesses that don’t pay taxes.

Iowa took a couple of positive steps — small but important steps — in 2009 to assure greater accountability in economic development subsidies.

While it is important to note those steps, it also is important to note well-funded forces already are using baseless arguments to undermine them in hopes of overturning the strides made in 2009. Iowans not only should reject these efforts, but they should expect improvements in 2010 to build upon 2009.

What went right? Lawmakers at the end of the legislative session approved greater transparency on tax credits, specifically the research activities credit (RAC) that sends multimillion-dollar secret checks to companies that do not pay income tax in Iowa. Under legislation passed in the closing hours of the session, recipients of RAC benefits over $500,000 will be identified publicly so Iowans and their legislators can begin to evaluate whether these tax expenditures are benefiting the state.

In addition, legislators approved a cap of $185 million on certain tax credits, including a “supplemental” RAC program that allows a doubling of the regular RAC credit.

There is much more the Iowa Legislature and Governor Culver should do, but those two steps in 2009 may help show Iowa residents the value of future bigger steps. Part of that making that case involves vigilant attention to false claims, distortion and spin against the kind of transparency that taxpayers deserve.

Victor Elias of the Iowa Fiscal Partnership wrote a cogent summary knocking down the bogus claims in a letter to the editor published in the Des Moines Register.

Long and short: Despite contrary claims by business advocates, businesses will be able to keep all trade secrets private — but their taxpayer investors also will be protected by being let in on the secret of how much money they’re tapping from the Treasury. No information about the nature of research being conducted with public subsidies will be disclosed as a result of the new legislation.

As Elias writes:

The only secret made public by this legislation is finding out the largest corporate recipients of $43.8 million in research-activities credits granted in 2006, $34.1 million of which were checks from the state general fund to companies that paid no Iowa income tax that year.

There is no valid argument to keep that kind of information secret from those who are paying the bills, or from those who set our state’s spending priorities each year during the budget process.

Posted by Mike Owen, Assistant Director

Education pays in Iowa

Lily French
Lily French

Give people access to higher education and a myriad of benefits will surface for individuals and the state of Iowa.

Our new report on the return on investment of workforce education shows the benefits and potential benefits from such investments.

At each level of education beyond high school, Iowans work and earn more. For example, those with a bachelor’s degree earn on average $7.26 more an hour than those with only a high school diploma. Families headed by a parent with a college education are also much less likely to live in poverty — and better set to recover in hard times from a job loss.

So, whether you look at unemployment rates, wages, or poverty, it is undeniable that education pays for Iowans. It also pays for the state, because better-educated people on balance earn more, and pay more in taxes, which benefits the state budget.

Our analysis finds that investing in postsecondary education for low-income adults returns tax revenue more than double the state’s program costs. The return: $3.70 in increased tax revenue for every dollar invested in an associate’s degree for low-income adults, and $2.40 for every dollar invested in a bachelor’s degree.

Other strong reasons support investments now in workforce education:

  • First, the declinine in wages for less-educated workers means more Iowa families are struggling to cover basic living expenses;
  • Second, Iowa will face a labor shortage in the future due to our state’s slow population growth and the impending retirements of the baby boom generation; and
  • Third, employers in Iowa had already identified a shortage of a skilled workers as a problem before the recession, and the top 10 fasting growing occupations in our state all demand workers with postsecondary education.

To summarize, Iowa needs an increase in skilled workers to grow our economy after the recession ends and families in Iowa need higher wages to fully support themselves.

With forward-thinking policy moves now, Iowa can increase education and training opportunities for low-income adults, improving their futures and those of all Iowans who will benefit from a stronger economy.

Posted by Lily French, Research Associate

Watch step in talking about Iowa jobs

This month, high-school seniors step onto stages across Iowa, accept a diploma and a handshake, and leave as graduates. Iowa’s job picture shows more than ever that they had better watch their step as they do.

When Iowa’s unemployment rate hit 5.2 percent in March, it was at its highest place in over 21 years.

News reports in recent days noted that rate fell in April — but it was only to 5.1 percent. It’s certainly better than the alternative, but let’s take a breath. While that rate seems low in comparison to the national rate of 8.9 percent, rates above 5 percent are high for Iowa — again, higher than at any point since these new grads were born.

IPP has been tracking job trends in Iowa every month since 2003. Our “JobWatch” project, as well as our “State of Working Iowa” publications, have attempted to inject some important historical perspective in the examination of job numbers.

While we all want to be hopeful for a better economy and better opportunities, we need to watch our path. No one should miss the larger implications of a one-month drop in the unemployment rate from 5.2 percent to 5.1 percent, or a smaller nonfarm job loss — 1,600 — compared with many times that in three of the previous four months. Those implications: The unemployment rate is high for Iowa, and in a very short time we have lost the meager gains achieved in nonfarm jobs in recent years.

As our latest JobWatch release points out, nonfarm jobs have declined in seven of the last eight months. Those jobs were down 32,800 over 12 months, almost two-thirds of the decline coming in manufacturing. Large drops in December 2008, February and March totaled over 28,000 lost payroll jobs. All figures are seasonally adjusted.

If we, too, watch our step in determining the importance of a statistic here or there, we might help our new grads watch their future steps a little better as well.

Posted by Mike Owen, Assistant Director