William Daley will be a pragmatist in an ideological White House..
When Barack Obama picked fellow Chicagoan Rahm Emanuel to be his chief of staff in late 2008, we applauded the choice as a sign of the President-elect's political maturity. "Mr. Emanuel," we wrote, "can help Mr. Obama understand when he needs to ignore the pleas of the left and govern from the center."
Bill Daley, we've come to praise you.
Yesterday, Mr. Daley was appointed to succeed Mr. Emanuel, and perhaps to help a politically chastened President fulfill the hopes we had for his first chief of staff. The younger brother of the outgoing Chicago mayor is a Democratic moderate who has spent the last decade in private business, most recently as a senior executive at JP Morgan Chase. In the 1990s he was instrumental in helping Bill Clinton pass the North American Free Trade Agreement, and he later served as a pro-free trade Commerce Secretary. As a scion of the Daley dynasty, his political instincts are not in doubt.
Mr. Daley was also among the first top Democrats to see the political risks the Obama Administration ran as Mr. Emanuel was letting no crisis go to waste. "Either we plot a more moderate, centrist course or risk electoral disaster not just in the upcoming midterms but in many elections to come," he wrote in a Washington Post op-ed in late 2009. Sixty-three former Democratic Representatives might now be wondering why they didn't heed that advice sooner.
Not surprisingly, the progressive blogosphere is reacting to Mr. Daley's appointment by howling at the moon. "As more about [Mr. Daley's] activities since leaving the Clinton administration have emerged, the worse [his appointment] looks," wrote one writer on the Daily Kos. But Mr. Obama knows her vote won't be in doubt in 2012. Meanwhile, Mr. Daley can help him try to recapture the constituencies most disappointed by his first two years, particularly political independents and the business community.
Still, we've been wrong before. Whether we're wrong again rests less with the pragmatic Mr. Daley than with the man of the left who is now his boss.
http://online.wsj.com/article/SB10001424052748704415104576066094081529156.html?mod=WSJ_Opinion_AboveLEFTTop
Friday, January 7, 2011
ObamaCare Rewards Friends, Punishes Enemies
The administration waives allies through the health law's onerous restrictions..
By KARL ROVE
A primary task for the new Republican House majority is to undo as many of the pernicious effects of ObamaCare that it can. One of these effects is the spectacle of employers going hat-in-hand to the Department of Health and Human Services (HHS) for waivers from some of the law's more onerous provisions.
In September, HHS Secretary Kathleen Sebelius began granting waivers to companies that provided workers "mini-med" coverage—low-cost plans with low annual limits on what the insurance will pay out. This followed announcements by some employers that they would have to drop these plans because they did not meet the new health law's requirement that 85% of premium income be spent on medical expenses.
By early December, HHS had granted 222 such waivers to provide mini-med policies for companies including AMF Bowling and Universal Forest Product, as well as 43 union organizations. According to the department's website, the waivers cover 1,507,418 employees, of which more than a third (525,898) are union members. Yet unionized workers make up only 7% of the private work force. Whatever is going on here, a disproportionately high number of waivers are being granted to administration allies.
Then, on Dec. 21, Ms. Sebelius announced that insurance companies seeking rate increases of 10% or more in the individual or small group market must publicly justify the hikes under standards set by her department.
Insurance regulation has traditionally been a state responsibility, and 43 states must already approve proposed insurance-rate increases. ObamaCare does not authorize HHS to deny rate increases, but the agency said that if a state "lacks the resources or authority" to conduct the kind of review the agency wants, it will conduct its own.
This proposed regulation will erode the states' dominant role in insurance regulation, centralizing more power in Washington. The HHS announcement also mentioned that it will set different thresholds of what constitutes an "unreasonable" increase for every state by 2012.
The Obama administration's behavior to date suggests that it will not hesitate to take care of its friends. The Senate Republican Policy Committee's health policy analyst, Chris Jacobs, points out that the administration has already given an extravagant gift to the AARP (American Association of Retired Persons), a key player in passing the Patient Protection and Affordable Care Act.
The AARP provided a big chunk of the $121 million spent on ads supporting the bill's passage, as well as $21 million on lobbying in 2009, according to the Center for Responsive Politics. HHS's proposed regulations on Dec. 21 exempted the AARP's lucrative "Medigap" plans from the rate review and other mandates and requirements.
The AARP and other Medigap providers can require a waiting period before seniors with pre-existing conditions have to be covered. Insurers covering those under 65 cannot.
The AARP is also exempt from the new law's $500,000 cap on executive compensation for insurance executives. (The nonprofit's last CEO received over $1.5 million in compensation in his last full year, 2009.) It won't pay any of the estimated $14 billion in new taxes on insurance companies, though according to its 2008 consolidated financial statement, it gets more money from its insurance offerings than it does from dues, grants and private contributions combined. Nor will it have to spend at least 85% of its Medigap premium dollars on medical claims, as Medicare Advantage plans must do; the AARP will be held to a far less restrictive 65%.
It's not hard to connect the dots. The Obama administration is using waivers to reward friends. On the flip side, business executives will be discouraged from contributing to the president's opponents or from taking any other steps that might upset the White House or its political appointees at HHS.
This is not what people had in mind when candidate Obama promised in his acceptance speech in August 2008 to undo "the cynicism we all have about government."
In a speech at the University of Iowa last March, the president heralded health-care reform as "a new set of rules that treats everybody honestly and treats everybody fairly." Determining whether that is true will be another task for House Republicans. They have an obligation to look into this matter, and Mr. Obama can hardly object. It was former Supreme Court Justice Louis Brandeis, whom the president frequently quotes, who wrote in 1913 that sunlight "is the best of disinfectants."
Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.
http://online.wsj.com/article/SB10001424052748704405704576063892468779556.html?mod=WSJ_Opinion_LEADTop
By KARL ROVE
A primary task for the new Republican House majority is to undo as many of the pernicious effects of ObamaCare that it can. One of these effects is the spectacle of employers going hat-in-hand to the Department of Health and Human Services (HHS) for waivers from some of the law's more onerous provisions.
In September, HHS Secretary Kathleen Sebelius began granting waivers to companies that provided workers "mini-med" coverage—low-cost plans with low annual limits on what the insurance will pay out. This followed announcements by some employers that they would have to drop these plans because they did not meet the new health law's requirement that 85% of premium income be spent on medical expenses.
By early December, HHS had granted 222 such waivers to provide mini-med policies for companies including AMF Bowling and Universal Forest Product, as well as 43 union organizations. According to the department's website, the waivers cover 1,507,418 employees, of which more than a third (525,898) are union members. Yet unionized workers make up only 7% of the private work force. Whatever is going on here, a disproportionately high number of waivers are being granted to administration allies.
Then, on Dec. 21, Ms. Sebelius announced that insurance companies seeking rate increases of 10% or more in the individual or small group market must publicly justify the hikes under standards set by her department.
Insurance regulation has traditionally been a state responsibility, and 43 states must already approve proposed insurance-rate increases. ObamaCare does not authorize HHS to deny rate increases, but the agency said that if a state "lacks the resources or authority" to conduct the kind of review the agency wants, it will conduct its own.
This proposed regulation will erode the states' dominant role in insurance regulation, centralizing more power in Washington. The HHS announcement also mentioned that it will set different thresholds of what constitutes an "unreasonable" increase for every state by 2012.
The Obama administration's behavior to date suggests that it will not hesitate to take care of its friends. The Senate Republican Policy Committee's health policy analyst, Chris Jacobs, points out that the administration has already given an extravagant gift to the AARP (American Association of Retired Persons), a key player in passing the Patient Protection and Affordable Care Act.
The AARP provided a big chunk of the $121 million spent on ads supporting the bill's passage, as well as $21 million on lobbying in 2009, according to the Center for Responsive Politics. HHS's proposed regulations on Dec. 21 exempted the AARP's lucrative "Medigap" plans from the rate review and other mandates and requirements.
The AARP and other Medigap providers can require a waiting period before seniors with pre-existing conditions have to be covered. Insurers covering those under 65 cannot.
The AARP is also exempt from the new law's $500,000 cap on executive compensation for insurance executives. (The nonprofit's last CEO received over $1.5 million in compensation in his last full year, 2009.) It won't pay any of the estimated $14 billion in new taxes on insurance companies, though according to its 2008 consolidated financial statement, it gets more money from its insurance offerings than it does from dues, grants and private contributions combined. Nor will it have to spend at least 85% of its Medigap premium dollars on medical claims, as Medicare Advantage plans must do; the AARP will be held to a far less restrictive 65%.
It's not hard to connect the dots. The Obama administration is using waivers to reward friends. On the flip side, business executives will be discouraged from contributing to the president's opponents or from taking any other steps that might upset the White House or its political appointees at HHS.
This is not what people had in mind when candidate Obama promised in his acceptance speech in August 2008 to undo "the cynicism we all have about government."
In a speech at the University of Iowa last March, the president heralded health-care reform as "a new set of rules that treats everybody honestly and treats everybody fairly." Determining whether that is true will be another task for House Republicans. They have an obligation to look into this matter, and Mr. Obama can hardly object. It was former Supreme Court Justice Louis Brandeis, whom the president frequently quotes, who wrote in 1913 that sunlight "is the best of disinfectants."
Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.
http://online.wsj.com/article/SB10001424052748704405704576063892468779556.html?mod=WSJ_Opinion_LEADTop
Democrat lawmakers push 75% state income tax increase
Personal rate would rise to 5.25% from 3% for 4 years
By Ray Long and Monique Garcia, Tribune reporters
SPRINGFIELD — — Gov. Pat Quinn and top Democratic lawmakers reached a tentative agreement Thursday on a major, post-election income-tax increase and a $1-a-pack cigarette-tax hike to stabilize the state budget and provide a cash infusion for schools.
The plan, detailed by Senate President John Cullerton following closed-door meetings with the governor and House Speaker Michael Madigan, still faces a review by rank-and-file members of the Democratic-led legislature in the waning days of a lame-duck session.
Under the proposal, the state's 3 percent personal income-tax rate would rise to 5.25 percent for four years, then fall to 3.75 percent. All told, that's a 75 percent increase.
The personal income-tax hike is expected to net the state roughly $6.2 billion, and a corresponding corporate income tax increase could raise an additional $1 billion, Cullerton said. The rate businesses pay would temporarily jump from 4.8 percent to 8.4 percent.
The cigarette tax increase, which is expected to raise $377 million, would go into what was described as a "lock box" to increase education funding. Lawmakers said they hoped to double that amount using other funds to provide more than $700 million in new school funding this spring.
To gain votes for the package, the plan also would provide $325 in property tax credits to homeowners this year and a direct check to taxpayers in subsequent years.
As a measure of how desperate state government's finances are, Cullerton said the state would use the income-tax hike to borrow $12.2 billion. Of that, $8.5 billion would pay overdue bills and $3.7 billion would cover a government worker pension payment lawmakers skipped when putting together the current budget, he said.
"I think it's the right time to do it because we are in desperate need of paying our bills," Cullerton said. "Just think about how we're going to be after we pass this. We would have all our bills, all those people that are owed money, $8 billion would go back into the economy. People will be paid on time. Our credit rating will be dramatically improved."
The proposal still could be changed slightly as lawmakers pore over the finer points, Cullerton added.
The first vote on the tax package will be in the House, but lawmakers were left guessing whether the legislation would be ready to consider by Friday or, failing that, when they return Sunday.
"I think it will pass the Senate, but it has to pass the House first," Cullerton said.
Madigan declined comment, but spokesman Steve Brown said "things are progressing, but I'm not prepared to offer any details at this time, and I certainly wouldn't predict when there might be a vote."
Quinn is to be sworn in to a four-year term Monday, two days before the legislative session ends and the reset button is hit as the new General Assembly is seated. The Senate returns Monday, and could send Quinn the tax hike only hours after he takes the oath of office, leaving him largely in a take-it-or-leave-it position.
Almost from the day he took over from the ousted Rod Blagojevich in early 2009, Quinn has called for an income tax increase to right the state's books. He campaigned on the proposal that the state should raise the personal income tax to 4 percent from 3 percent. Though Quinn won with only 47 percent of the vote, he declared his victory a "mandate" to raise taxes.
Last summer, Quinn's budget director predicted in an interview that Illinois would raise the state income tax rate from 3 percent to 5 percent in early January. The governor admonished the aide for speaking out of turn and suggested David Vaught's comments were misunderstood by an out-of-state reporter.
Now lawmakers are considering a tax hike that's even higher.
Senate Republican leader Christine Radogno of Lemont called it "dishonest" for Quinn to consider an income tax hike that's more than twice as much as he embraced during the campaign.
"To me, that's kind of a bait and switch, and I think it's wrong, and it's wrong to do it in a lame-duck session," Radogno said.
Quinn released a statement saying he's working with Cullerton and Madigan to "build framework that will allow the state to pay its bills, stabilize the budget and strengthen the Illinois economy."
Major details began falling into place this week after members of the Black Caucus, particularly in the Senate, rejected the notion of raising an income tax without guaranteeing new money for schools and property tax relief for homeowners.
In May 2009, the Senate approved legislation to raise the income tax to 5 percent, extend the sales tax to some services, provide property tax relief, give targeted tax breaks to the poor and pump up money for education. The legislation was championed by Cullerton and Sen. James T. Meeks, D-Chicago. But Meeks, fellow African-Americans and Latino senators balked when high-level talks this time failed to include those items.
The move by Democrats in the closing days of the post-election session reflects a dramatic final effort to deal with a state budget reeling from years of overspending, the compounded effects of the recession on unemployment and tax revenue, and massive borrowing to cover the need for a tax increase.
With Illinois' financial problems escalating each budget year, the state is facing prospects of a $15 billion budget deficit and more than $8 billion in overdue bills to providers of social services, primarily to the poor. At the same time, its massively underfunded public employee pension system faces the prospect of selling off assets to help cover retirement payments.
Though Democratic leaders, particularly Madigan, maintained the need to get the votes from minority Republican lawmakers to pass a tax hike, it is questionable that the size of the increase — despite a significant portion being designated as temporary — will win many GOP votes.
In a move aimed at winning over some Republican support, the House sent Medicaid reforms to the governor. Medicaid applicants would be required to prove Illinois residency as well as show one month's income before they could sign up. Recipients would no longer be automatically re-enrolled, and those abusing the system could face a $2,000 fine.
Income limits would also be put in place for the All Kids health insurance program. To qualify, applicants would have to have an annual income at or below 300 percent of the federal poverty level, or $66,150 for a family of four.
Also in the House, lawmakers defeated a second attempt to allow marijuana to be used for medical purposes. The bill fell four votes short.
Tribune reporter Rick Pearson contributed from Chicago.
rlong@tribune.com
mcgarcia@tribune.com
http://www.chicagotribune.com/news/local/ct-met-illinois-tax-hike-0107-20110107,0,6270739,full.story
By Ray Long and Monique Garcia, Tribune reporters
SPRINGFIELD — — Gov. Pat Quinn and top Democratic lawmakers reached a tentative agreement Thursday on a major, post-election income-tax increase and a $1-a-pack cigarette-tax hike to stabilize the state budget and provide a cash infusion for schools.
The plan, detailed by Senate President John Cullerton following closed-door meetings with the governor and House Speaker Michael Madigan, still faces a review by rank-and-file members of the Democratic-led legislature in the waning days of a lame-duck session.
Under the proposal, the state's 3 percent personal income-tax rate would rise to 5.25 percent for four years, then fall to 3.75 percent. All told, that's a 75 percent increase.
The personal income-tax hike is expected to net the state roughly $6.2 billion, and a corresponding corporate income tax increase could raise an additional $1 billion, Cullerton said. The rate businesses pay would temporarily jump from 4.8 percent to 8.4 percent.
The cigarette tax increase, which is expected to raise $377 million, would go into what was described as a "lock box" to increase education funding. Lawmakers said they hoped to double that amount using other funds to provide more than $700 million in new school funding this spring.
To gain votes for the package, the plan also would provide $325 in property tax credits to homeowners this year and a direct check to taxpayers in subsequent years.
As a measure of how desperate state government's finances are, Cullerton said the state would use the income-tax hike to borrow $12.2 billion. Of that, $8.5 billion would pay overdue bills and $3.7 billion would cover a government worker pension payment lawmakers skipped when putting together the current budget, he said.
"I think it's the right time to do it because we are in desperate need of paying our bills," Cullerton said. "Just think about how we're going to be after we pass this. We would have all our bills, all those people that are owed money, $8 billion would go back into the economy. People will be paid on time. Our credit rating will be dramatically improved."
The proposal still could be changed slightly as lawmakers pore over the finer points, Cullerton added.
The first vote on the tax package will be in the House, but lawmakers were left guessing whether the legislation would be ready to consider by Friday or, failing that, when they return Sunday.
"I think it will pass the Senate, but it has to pass the House first," Cullerton said.
Madigan declined comment, but spokesman Steve Brown said "things are progressing, but I'm not prepared to offer any details at this time, and I certainly wouldn't predict when there might be a vote."
Quinn is to be sworn in to a four-year term Monday, two days before the legislative session ends and the reset button is hit as the new General Assembly is seated. The Senate returns Monday, and could send Quinn the tax hike only hours after he takes the oath of office, leaving him largely in a take-it-or-leave-it position.
Almost from the day he took over from the ousted Rod Blagojevich in early 2009, Quinn has called for an income tax increase to right the state's books. He campaigned on the proposal that the state should raise the personal income tax to 4 percent from 3 percent. Though Quinn won with only 47 percent of the vote, he declared his victory a "mandate" to raise taxes.
Last summer, Quinn's budget director predicted in an interview that Illinois would raise the state income tax rate from 3 percent to 5 percent in early January. The governor admonished the aide for speaking out of turn and suggested David Vaught's comments were misunderstood by an out-of-state reporter.
Now lawmakers are considering a tax hike that's even higher.
Senate Republican leader Christine Radogno of Lemont called it "dishonest" for Quinn to consider an income tax hike that's more than twice as much as he embraced during the campaign.
"To me, that's kind of a bait and switch, and I think it's wrong, and it's wrong to do it in a lame-duck session," Radogno said.
Quinn released a statement saying he's working with Cullerton and Madigan to "build framework that will allow the state to pay its bills, stabilize the budget and strengthen the Illinois economy."
Major details began falling into place this week after members of the Black Caucus, particularly in the Senate, rejected the notion of raising an income tax without guaranteeing new money for schools and property tax relief for homeowners.
In May 2009, the Senate approved legislation to raise the income tax to 5 percent, extend the sales tax to some services, provide property tax relief, give targeted tax breaks to the poor and pump up money for education. The legislation was championed by Cullerton and Sen. James T. Meeks, D-Chicago. But Meeks, fellow African-Americans and Latino senators balked when high-level talks this time failed to include those items.
The move by Democrats in the closing days of the post-election session reflects a dramatic final effort to deal with a state budget reeling from years of overspending, the compounded effects of the recession on unemployment and tax revenue, and massive borrowing to cover the need for a tax increase.
With Illinois' financial problems escalating each budget year, the state is facing prospects of a $15 billion budget deficit and more than $8 billion in overdue bills to providers of social services, primarily to the poor. At the same time, its massively underfunded public employee pension system faces the prospect of selling off assets to help cover retirement payments.
Though Democratic leaders, particularly Madigan, maintained the need to get the votes from minority Republican lawmakers to pass a tax hike, it is questionable that the size of the increase — despite a significant portion being designated as temporary — will win many GOP votes.
In a move aimed at winning over some Republican support, the House sent Medicaid reforms to the governor. Medicaid applicants would be required to prove Illinois residency as well as show one month's income before they could sign up. Recipients would no longer be automatically re-enrolled, and those abusing the system could face a $2,000 fine.
Income limits would also be put in place for the All Kids health insurance program. To qualify, applicants would have to have an annual income at or below 300 percent of the federal poverty level, or $66,150 for a family of four.
Also in the House, lawmakers defeated a second attempt to allow marijuana to be used for medical purposes. The bill fell four votes short.
Tribune reporter Rick Pearson contributed from Chicago.
rlong@tribune.com
mcgarcia@tribune.com
http://www.chicagotribune.com/news/local/ct-met-illinois-tax-hike-0107-20110107,0,6270739,full.story
Thursday, January 6, 2011
God was behind Big Bang, universe no accident: Pope
By Philip Pullella Philip Pullella – 1 hr 23 mins ago
VATICAN CITY (Reuters) – God's mind was behind complex scientific theories such as the Big Bang, and Christians should reject the idea that the universe came into being by accident, Pope Benedict said on Thursday.
"The universe is not the result of chance, as some would want to make us believe," Benedict said on the day Christians mark the Epiphany, the day the Bible says the three kings reached the site where Jesus was born by following a star.
"Contemplating it (the universe) we are invited to read something profound into it: the wisdom of the creator, the inexhaustible creativity of God," he said in a sermon to some 10,000 people in St Peter's Basilica on the feast day.
While the pope has spoken before about evolution, he has rarely delved back in time to discuss specific concepts such as the Big Bang, which scientists believe led to the formation of the universe some 13.7 billion years ago.
Researchers at CERN, the nuclear research center in Geneva, have been smashing protons together at near the speed of light to simulate conditions that they believe brought into existence the primordial universe from which stars, planets and life on earth -- and perhaps elsewhere -- eventually emerged.
Some atheists say science can prove that God does not exist, but Benedict said that some scientific theories were "mind limiting" because "they only arrive at a certain point ... and do not manage to explain the ultimate sense of reality ..."
He said scientific theories on the origin and development of the universe and humans, while not in conflict with faith, left many questions unanswered.
"In the beauty of the world, in its mystery, in its greatness and in its rationality ... we can only let ourselves be guided toward God, creator of heaven and earth," he said.
Benedict and his predecessor John Paul have been trying to shed the Church's image of being anti-science, a label that stuck when it condemned Galileo for teaching that the earth revolves around the sun, challenging the words of the Bible.
Galileo was rehabilitated and the Church now also accepts evolution as a scientific theory and sees no reason why God could not have used a natural evolutionary process in the forming of the human species.
The Catholic Church no longer teaches creationism -- the belief that God created the world in six days as described in the Bible -- and says that the account in the book of Genesis is an allegory for the way God created the world.
But it objects to using evolution to back an atheist philosophy that denies God's existence or any divine role in creation. It also objects to using Genesis as a scientific text.
http://news.yahoo.com/s/nm/20110106/ts_nm/us_pope_bigbang
VATICAN CITY (Reuters) – God's mind was behind complex scientific theories such as the Big Bang, and Christians should reject the idea that the universe came into being by accident, Pope Benedict said on Thursday.
"The universe is not the result of chance, as some would want to make us believe," Benedict said on the day Christians mark the Epiphany, the day the Bible says the three kings reached the site where Jesus was born by following a star.
"Contemplating it (the universe) we are invited to read something profound into it: the wisdom of the creator, the inexhaustible creativity of God," he said in a sermon to some 10,000 people in St Peter's Basilica on the feast day.
While the pope has spoken before about evolution, he has rarely delved back in time to discuss specific concepts such as the Big Bang, which scientists believe led to the formation of the universe some 13.7 billion years ago.
Researchers at CERN, the nuclear research center in Geneva, have been smashing protons together at near the speed of light to simulate conditions that they believe brought into existence the primordial universe from which stars, planets and life on earth -- and perhaps elsewhere -- eventually emerged.
Some atheists say science can prove that God does not exist, but Benedict said that some scientific theories were "mind limiting" because "they only arrive at a certain point ... and do not manage to explain the ultimate sense of reality ..."
He said scientific theories on the origin and development of the universe and humans, while not in conflict with faith, left many questions unanswered.
"In the beauty of the world, in its mystery, in its greatness and in its rationality ... we can only let ourselves be guided toward God, creator of heaven and earth," he said.
Benedict and his predecessor John Paul have been trying to shed the Church's image of being anti-science, a label that stuck when it condemned Galileo for teaching that the earth revolves around the sun, challenging the words of the Bible.
Galileo was rehabilitated and the Church now also accepts evolution as a scientific theory and sees no reason why God could not have used a natural evolutionary process in the forming of the human species.
The Catholic Church no longer teaches creationism -- the belief that God created the world in six days as described in the Bible -- and says that the account in the book of Genesis is an allegory for the way God created the world.
But it objects to using evolution to back an atheist philosophy that denies God's existence or any divine role in creation. It also objects to using Genesis as a scientific text.
http://news.yahoo.com/s/nm/20110106/ts_nm/us_pope_bigbang
Illinois Senate advances Medicaid reform measure
The Illinois Senate overwhelmingly approved a Medicaid reform measure that many agree is a good step forward on the way to restructuring Illinois’ health care program for the poor and disabled
Currently, there are 2.8 million Illinois residents enrolled in Medicaid, and the program is at an all-time, unsustainable high. For years the Senate Republican Caucus has said that the state simply can’t keep up with the growth of the Medicaid program, which has consumed more and more of the budget each year.
House Bill 5420 targets inefficiencies in the system that will not only help contain the unsustainable growth of the program, but also ensure program recipients are receiving the best possible health care.
State Sen. Dale Righter (R-Mattoon) was a sponsor of the legislation, and said that the measure embraces the national trend toward managed care principles. For many years Senate Republicans have urged a movement towards managed care which has been shown to reduce costs, while improving patient care.
“Utilization of managed care principles will increase dramatically over the next four years under this legislation. Ultimately 50 percent of all people will be required to be in a system of care coordination, or managed care, which will provide for better care for the enrollees and save taxpayer money over the long haul,” explained Righter.
If signed into law the measure would eventually eliminate the “Section 25” loophole that has allowed the state to pay Medicaid providers late. Over the years this loophole has enabled Illinois government to defer payments to doctors, pharmacists, hospitals and nursing homes while portraying deficit spending as “balanced.” House Bill 5420 will eliminate the ability of state government to do that.
Righter noted that one of the most important components of the bill is a two year moratorium on any new Medicaid programs or expansions of Medicaid programs, which is meant to send a clear signal that Illinois needs to control program expansions.
“One of the real issues Republicans have had over the last several years with regards to public assistance programs is the unwillingness of the state’s leaders to tighten down on eligibility or verification of the people who are on Medicaid. This bill will make a dramatic change." Righter said, explaining that the measure will require more accurate reporting to better reflect an applicant's true income.
The senator also explained that the legislation will also require active redetermination: “In other words, if someone has been on the program for 12 months, it’s been the practice of the HFS over the last several years to simply send a letter out asking if their circumstances have changed. Even if they didn’t get a letter back, the patient was left on the program. That’s going to come to an end.”
Another key provision of the bill will impose reasonable income restrictions on the state's "All Kids" programs, which previously did not contain any income limits. An auditor general review last year found that even at the highest income levels, which could exceed $100,000, taxpayer dollars were subsidizing health insurance costs.
Having been advanced by the Senate, House Bill 5420 now moves to the Illinois House for consideration.
Senate Republican Caucus
309 State Capitol
Springfield, IL 62706
Currently, there are 2.8 million Illinois residents enrolled in Medicaid, and the program is at an all-time, unsustainable high. For years the Senate Republican Caucus has said that the state simply can’t keep up with the growth of the Medicaid program, which has consumed more and more of the budget each year.
House Bill 5420 targets inefficiencies in the system that will not only help contain the unsustainable growth of the program, but also ensure program recipients are receiving the best possible health care.
State Sen. Dale Righter (R-Mattoon) was a sponsor of the legislation, and said that the measure embraces the national trend toward managed care principles. For many years Senate Republicans have urged a movement towards managed care which has been shown to reduce costs, while improving patient care.
“Utilization of managed care principles will increase dramatically over the next four years under this legislation. Ultimately 50 percent of all people will be required to be in a system of care coordination, or managed care, which will provide for better care for the enrollees and save taxpayer money over the long haul,” explained Righter.
If signed into law the measure would eventually eliminate the “Section 25” loophole that has allowed the state to pay Medicaid providers late. Over the years this loophole has enabled Illinois government to defer payments to doctors, pharmacists, hospitals and nursing homes while portraying deficit spending as “balanced.” House Bill 5420 will eliminate the ability of state government to do that.
Righter noted that one of the most important components of the bill is a two year moratorium on any new Medicaid programs or expansions of Medicaid programs, which is meant to send a clear signal that Illinois needs to control program expansions.
“One of the real issues Republicans have had over the last several years with regards to public assistance programs is the unwillingness of the state’s leaders to tighten down on eligibility or verification of the people who are on Medicaid. This bill will make a dramatic change." Righter said, explaining that the measure will require more accurate reporting to better reflect an applicant's true income.
The senator also explained that the legislation will also require active redetermination: “In other words, if someone has been on the program for 12 months, it’s been the practice of the HFS over the last several years to simply send a letter out asking if their circumstances have changed. Even if they didn’t get a letter back, the patient was left on the program. That’s going to come to an end.”
Another key provision of the bill will impose reasonable income restrictions on the state's "All Kids" programs, which previously did not contain any income limits. An auditor general review last year found that even at the highest income levels, which could exceed $100,000, taxpayer dollars were subsidizing health insurance costs.
Having been advanced by the Senate, House Bill 5420 now moves to the Illinois House for consideration.
Senate Republican Caucus
309 State Capitol
Springfield, IL 62706
This is what you voted for IL-Democratic leaders push for income-tax compromise
By Ray Long and Monique Garcia, Tribune reporters
SPRINGFIELD — — House Speaker Michael Madigan took the rare step Wednesday of walking the floor of the Senate to garner support for a major income-tax increase, a move some Democratic lawmakers hope will lead to a compromise as a lame-duck session draws to a close.
The lobbying effort unfolded as the Senate overwhelmingly approved reforms in the state's expensive Medicaid program that are aimed at consolidating health care, cutting fraud and waste, and saving money.
Madigan, who is also Illinois Democratic Party chairman, joined Senate President John Cullerton in fanning out on the Democratic side of the full Senate shortly after the two Chicago powerhouses emerged from a closed-door summit with Gov. Pat Quinn, a longtime booster of an income tax hike.
The plan would raise the personal income tax rate to 5 percent from 3 percent, potentially for two to five years, largely to stabilize the state's woeful budget. Lawmakers also would raise the personal income tax an additional one-quarter to one-half percentage point beyond that to borrow money to start paying down a multibillion-dollar backlog of bills.
But several Democratic senators are unhappy because they're being asked to vote for a tax hike that would not provide more money for schools or property tax relief. A similar 67 percent hike in the income tax rate the Senate approved in May 2009 would have done just that and more. But that plan stalled in the House.
"What we're indeed asking people to do now is to pay more money but not receive any of the benefits other than us paying down our debts," said Sen. James Meeks, D-Chicago, who championed the earlier proposal. "If we act now but we don't include any property tax relief, or any money for education, it is the fear of some of ours that we'll never get around to it.
"If that's the proposal on the table, from my perspective, it's unacceptable," said Meeks before Madigan stopped by his desk.
Madigan made the point to senators that Illinois needs to get its finances in order, pay the backlog of bills, and improve a credit rating that is so low it is costing the state more to borrow money, according to several lawmakers.
"This is Madigan's, certainly his way of telling you that, 'something has to be done, and I'm going to be the one to do it,'" said Sen. Lou Viverito, D- Burbank, a longtime Madigan ally who spoke to the speaker for several minutes.
Viverito said he is hopeful Madigan can craft a compromise plan that would be accepted in the Senate, possibly with some of the components of the version that previously passed the chamber.
Cullerton said the parties in negotiations are "very close" but still needed to reach an overall framework.
After exiting the Senate, Madigan declined to give specifics or to predict if the House would vote this week. He placed the blame on Republican lawmakers who have shown little interest in jumping aboard a tax increase proposal.
"They are continuing on a campaign plan which means they are not participating in governmental decisions," Madigan said.
No votes were taken on a tax hike Wednesday, but the Senate did agree 58-0 on Medicaid reforms long sought by Republicans.
Under the legislation, Medicaid applicants would be required to prove Illinois residency and show one month's income before they could sign up. Recipients would no longer be automatically re-enrolled and those abusing the system could face a $2,000 fine.
Income limits would also be put in place for the All Kids health insurance program — $66,150 for a family of four. Officials said the limit would result in about 3,100 children losing coverage.
Senate Republican leader Christine Radogno said she is happy with movement on Medicaid reforms, but is waiting on changes to workers' compensation laws and the education system before she would consider a tax increase.
"We did try to help them from getting into this mess in the first place," said Radogno, of Lemont. "Democrats have been in place for eight years; they have created this hole, and if they feel the way out of it is a tax increase, they have the votes to pass it."
rlong@tribune.com
mcgarcia@tribune.com
SPRINGFIELD — — House Speaker Michael Madigan took the rare step Wednesday of walking the floor of the Senate to garner support for a major income-tax increase, a move some Democratic lawmakers hope will lead to a compromise as a lame-duck session draws to a close.
The lobbying effort unfolded as the Senate overwhelmingly approved reforms in the state's expensive Medicaid program that are aimed at consolidating health care, cutting fraud and waste, and saving money.
Madigan, who is also Illinois Democratic Party chairman, joined Senate President John Cullerton in fanning out on the Democratic side of the full Senate shortly after the two Chicago powerhouses emerged from a closed-door summit with Gov. Pat Quinn, a longtime booster of an income tax hike.
The plan would raise the personal income tax rate to 5 percent from 3 percent, potentially for two to five years, largely to stabilize the state's woeful budget. Lawmakers also would raise the personal income tax an additional one-quarter to one-half percentage point beyond that to borrow money to start paying down a multibillion-dollar backlog of bills.
But several Democratic senators are unhappy because they're being asked to vote for a tax hike that would not provide more money for schools or property tax relief. A similar 67 percent hike in the income tax rate the Senate approved in May 2009 would have done just that and more. But that plan stalled in the House.
"What we're indeed asking people to do now is to pay more money but not receive any of the benefits other than us paying down our debts," said Sen. James Meeks, D-Chicago, who championed the earlier proposal. "If we act now but we don't include any property tax relief, or any money for education, it is the fear of some of ours that we'll never get around to it.
"If that's the proposal on the table, from my perspective, it's unacceptable," said Meeks before Madigan stopped by his desk.
Madigan made the point to senators that Illinois needs to get its finances in order, pay the backlog of bills, and improve a credit rating that is so low it is costing the state more to borrow money, according to several lawmakers.
"This is Madigan's, certainly his way of telling you that, 'something has to be done, and I'm going to be the one to do it,'" said Sen. Lou Viverito, D- Burbank, a longtime Madigan ally who spoke to the speaker for several minutes.
Viverito said he is hopeful Madigan can craft a compromise plan that would be accepted in the Senate, possibly with some of the components of the version that previously passed the chamber.
Cullerton said the parties in negotiations are "very close" but still needed to reach an overall framework.
After exiting the Senate, Madigan declined to give specifics or to predict if the House would vote this week. He placed the blame on Republican lawmakers who have shown little interest in jumping aboard a tax increase proposal.
"They are continuing on a campaign plan which means they are not participating in governmental decisions," Madigan said.
No votes were taken on a tax hike Wednesday, but the Senate did agree 58-0 on Medicaid reforms long sought by Republicans.
Under the legislation, Medicaid applicants would be required to prove Illinois residency and show one month's income before they could sign up. Recipients would no longer be automatically re-enrolled and those abusing the system could face a $2,000 fine.
Income limits would also be put in place for the All Kids health insurance program — $66,150 for a family of four. Officials said the limit would result in about 3,100 children losing coverage.
Senate Republican leader Christine Radogno said she is happy with movement on Medicaid reforms, but is waiting on changes to workers' compensation laws and the education system before she would consider a tax increase.
"We did try to help them from getting into this mess in the first place," said Radogno, of Lemont. "Democrats have been in place for eight years; they have created this hole, and if they feel the way out of it is a tax increase, they have the votes to pass it."
rlong@tribune.com
mcgarcia@tribune.com
Tuesday, January 4, 2011
Illinois Has Days to Plug $13 Billion Deficit That Took Years to Produce
By Tim Jones - Jan 3, 2011 2:58 PM CT
Illinois lawmakers will try this week to accomplish in a few days what they have been unable to do in the past two years -- resolve the state’s worst financial crisis.
The legislative session that began today as the House convened will take aim at a budget deficit of at least $13 billion, including a backlog of more than $6 billion in unpaid bills and almost $4 billion in missed payments to underfunded state pensions.
The fiscal mess is largely of the lawmakers’ own making, and failure to address the shortages threatens public schools, local governments and other public services, said Dan Hynes, the state’s outgoing comptroller.
“We’ve reached a very critical and concerning point,” Hynes said in an interview in his Chicago office, with packing boxes stacked in the corner. “What’s missing right now is a general understanding by the public of where we are, of how bad it is, and what the fallout would be if we don’t deal with it properly.”
What the public may not appreciate, Wall Street does. Illinois shares with California the lowest U.S. state credit rating from Moody’s Investors Service, which in September forecast possible “further financial deterioration.” Unlike California, Moody’s assigned Illinois a negative outlook.
Illinois’s deficit, about half its $26 billion general-fund budget, puts it among the U.S. states confronting $140 billion in shortfalls in the coming fiscal year after closing $160 billion in gaps this year, according to the Center on Budget and Policy Priorities, a Washington research group.
Debt Costs Rising
Hynes, 42, predicted the deficit might rise to $15 billion by midyear, and that prospect has come with a price tag. The cost of insuring Illinois debt against default rose to a five- month high last week as the state headed into this year without a plan to finance a $3.7 billion pension-fund contribution.
Insuring $10 million of Illinois debt against default cost $350,000 a year on Dec. 29, more than California’s $298,000, according to data compiled by Bloomberg. Illinois and Arizona were the weakest states in a Dec. 30 financial-strength index report from the Chicago office of BMO Capital Markets, a financial services company.
Lawmakers meeting in Springfield will consider spending cuts, an expansion of casino gambling and a proposal from Democratic Governor Pat Quinn to borrow $15 billion to pay overdue bills and help fill the budget hole.
The bill before the House would create five new casinos, including one in Chicago, and authorize electronic gaming at horse-racing tracks and nine existing casinos. The measure has passed the Senate.
Borrowing Plan
Quinn, 62, also has proposed boosting the state income tax to 4 percent from 3 percent, raising about $3 billion a year.
The governor needs Senate approval of a borrowing plan to make this year’s payment into the pension funds. The Illinois State Board of Investments will start buying back assets sold to pay benefits if lawmakers approve the debt sale, William Atwood, executive director of the panel, said in an interview on Bloomberg Television today.
The three pensions run by the board, which manages $10 billion, have been selling assets to pay retirees since Illinois failed to contribute for the fiscal year that began July 1.
Borrowing by Illinois is what credit analysts, Hynes and bond investors point to as a major reason why the state’s financial standing fell so far so fast.
Gross Criticism
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California, said Illinois was one of the states whose debt he would avoid.
“Illinois is probably in the worst shape,” Gross said in a Dec. 28 interview on CNBC.
The widening gap between Illinois’s expenses and revenue drew criticism from Moody’s. The disparity underscored the state’s “chronic unwillingness to confront a long-term, structural budget deficit,” it said in a Dec. 29 study.
The worst financial crisis since the Great Depression and politicians’ unwillingness to cut budgets explain the descent since 2008, said Tom Johnson, president of the nonpartisan Taxpayers’ Federation of Illinois. Annual sales and income-tax revenue fell for the first time in modern history, he said.
“The state was hoping for a quick recovery or inflation, and they didn’t get it,” Johnson said in a telephone interview. “And there was no appetite to reduce the escalating costs of spending.”
‘Revenues Went South’
The falloff in revenue aggravated the state’s historic practice of delaying payments to vendors and carrying those costs on from one year to the next.
“Revenues went south, spending went north,” Johnson said. “It’s unsustainable.”
The current-year budget deficit of $13 billion is roughly half the size of the state’s general-fund budget. Borrowing to pay bills continues. In November the state sold $1.5 billion of bonds backed by tobacco settlement payments to help pay vendors.
“We have seen a lot of the budgetary tools that really don’t qualify as real solutions used, whether it’s short-term borrowing, pension borrowing, delays in payments, the sale of future revenues,” Hynes said.
Illinois business leaders have warned that the state’s failure to properly fund pensions means the plans will run out of money to pay promised benefits before the decade ends.
“We’re in the midst of the most severe financial crisis in recent memory,” Miles White, chairman of Abbott Park, Illinois- based Abbott Laboratories, said Sept. 27 at a forum on state affairs.
Operating Expenses
“The state has been spending $3 for every $2 it takes in, and borrowing to cover its current operating expenses,” said White, chairman of the Civic Committee of the Commercial Club of Chicago.
The state had $64 billion of assets to pay estimated liabilities of $126.4 billion as of June, or less than half the amount needed for almost 723,000 workers, retirees and other beneficiaries, according to bond documents.
The question facing lawmakers is whether they can reverse the slide into more debt. The gravity of the situation is registering with the General Assembly, said James Nowlan, a former member of the state House and now a senior fellow at the University of Illinois Institute of Government & Public Affairs.
“I think they’re finally educated that all the one-time adjustments and shenanigans have been pulled, and they are now facing the fiscal abyss,” Nowlan said in a telephone interview. “But maybe I’m too hopeful.”
To contact the reporter on this story: Tim Jones in Chicago at tjones58@bloomberg.net
http://www.bloomberg.com/news/2011-01-03/illinois-must-plug-13-billion-deficit-in-days-that-took-years-to-produce.html
Illinois lawmakers will try this week to accomplish in a few days what they have been unable to do in the past two years -- resolve the state’s worst financial crisis.
The legislative session that began today as the House convened will take aim at a budget deficit of at least $13 billion, including a backlog of more than $6 billion in unpaid bills and almost $4 billion in missed payments to underfunded state pensions.
The fiscal mess is largely of the lawmakers’ own making, and failure to address the shortages threatens public schools, local governments and other public services, said Dan Hynes, the state’s outgoing comptroller.
“We’ve reached a very critical and concerning point,” Hynes said in an interview in his Chicago office, with packing boxes stacked in the corner. “What’s missing right now is a general understanding by the public of where we are, of how bad it is, and what the fallout would be if we don’t deal with it properly.”
What the public may not appreciate, Wall Street does. Illinois shares with California the lowest U.S. state credit rating from Moody’s Investors Service, which in September forecast possible “further financial deterioration.” Unlike California, Moody’s assigned Illinois a negative outlook.
Illinois’s deficit, about half its $26 billion general-fund budget, puts it among the U.S. states confronting $140 billion in shortfalls in the coming fiscal year after closing $160 billion in gaps this year, according to the Center on Budget and Policy Priorities, a Washington research group.
Debt Costs Rising
Hynes, 42, predicted the deficit might rise to $15 billion by midyear, and that prospect has come with a price tag. The cost of insuring Illinois debt against default rose to a five- month high last week as the state headed into this year without a plan to finance a $3.7 billion pension-fund contribution.
Insuring $10 million of Illinois debt against default cost $350,000 a year on Dec. 29, more than California’s $298,000, according to data compiled by Bloomberg. Illinois and Arizona were the weakest states in a Dec. 30 financial-strength index report from the Chicago office of BMO Capital Markets, a financial services company.
Lawmakers meeting in Springfield will consider spending cuts, an expansion of casino gambling and a proposal from Democratic Governor Pat Quinn to borrow $15 billion to pay overdue bills and help fill the budget hole.
The bill before the House would create five new casinos, including one in Chicago, and authorize electronic gaming at horse-racing tracks and nine existing casinos. The measure has passed the Senate.
Borrowing Plan
Quinn, 62, also has proposed boosting the state income tax to 4 percent from 3 percent, raising about $3 billion a year.
The governor needs Senate approval of a borrowing plan to make this year’s payment into the pension funds. The Illinois State Board of Investments will start buying back assets sold to pay benefits if lawmakers approve the debt sale, William Atwood, executive director of the panel, said in an interview on Bloomberg Television today.
The three pensions run by the board, which manages $10 billion, have been selling assets to pay retirees since Illinois failed to contribute for the fiscal year that began July 1.
Borrowing by Illinois is what credit analysts, Hynes and bond investors point to as a major reason why the state’s financial standing fell so far so fast.
Gross Criticism
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California, said Illinois was one of the states whose debt he would avoid.
“Illinois is probably in the worst shape,” Gross said in a Dec. 28 interview on CNBC.
The widening gap between Illinois’s expenses and revenue drew criticism from Moody’s. The disparity underscored the state’s “chronic unwillingness to confront a long-term, structural budget deficit,” it said in a Dec. 29 study.
The worst financial crisis since the Great Depression and politicians’ unwillingness to cut budgets explain the descent since 2008, said Tom Johnson, president of the nonpartisan Taxpayers’ Federation of Illinois. Annual sales and income-tax revenue fell for the first time in modern history, he said.
“The state was hoping for a quick recovery or inflation, and they didn’t get it,” Johnson said in a telephone interview. “And there was no appetite to reduce the escalating costs of spending.”
‘Revenues Went South’
The falloff in revenue aggravated the state’s historic practice of delaying payments to vendors and carrying those costs on from one year to the next.
“Revenues went south, spending went north,” Johnson said. “It’s unsustainable.”
The current-year budget deficit of $13 billion is roughly half the size of the state’s general-fund budget. Borrowing to pay bills continues. In November the state sold $1.5 billion of bonds backed by tobacco settlement payments to help pay vendors.
“We have seen a lot of the budgetary tools that really don’t qualify as real solutions used, whether it’s short-term borrowing, pension borrowing, delays in payments, the sale of future revenues,” Hynes said.
Illinois business leaders have warned that the state’s failure to properly fund pensions means the plans will run out of money to pay promised benefits before the decade ends.
“We’re in the midst of the most severe financial crisis in recent memory,” Miles White, chairman of Abbott Park, Illinois- based Abbott Laboratories, said Sept. 27 at a forum on state affairs.
Operating Expenses
“The state has been spending $3 for every $2 it takes in, and borrowing to cover its current operating expenses,” said White, chairman of the Civic Committee of the Commercial Club of Chicago.
The state had $64 billion of assets to pay estimated liabilities of $126.4 billion as of June, or less than half the amount needed for almost 723,000 workers, retirees and other beneficiaries, according to bond documents.
The question facing lawmakers is whether they can reverse the slide into more debt. The gravity of the situation is registering with the General Assembly, said James Nowlan, a former member of the state House and now a senior fellow at the University of Illinois Institute of Government & Public Affairs.
“I think they’re finally educated that all the one-time adjustments and shenanigans have been pulled, and they are now facing the fiscal abyss,” Nowlan said in a telephone interview. “But maybe I’m too hopeful.”
To contact the reporter on this story: Tim Jones in Chicago at tjones58@bloomberg.net
http://www.bloomberg.com/news/2011-01-03/illinois-must-plug-13-billion-deficit-in-days-that-took-years-to-produce.html
Subscribe to:
Posts (Atom)