Trying To Get It Right

Dale Folwell is the State Treasurer of North Carolina. He was responsible for getting the state out of debt to the federal government unemployment benefits program (over the objections of many Democrats) and is now working to bring transparency to health benefits for state workers (again over the objections of Democrats and some Republicans).

The Carolina Journal reported on June 17th that Mr. Folwell is actually  making some progress.

The article reports:

With a deadline just 13 days away, Community Care Physician Network, North Carolina’s largest network of independent physician clinics, announced Monday, June 17, it signed on to the State Health Plan’s cost-cutting Clear Pricing Project.

Community Care Physician Network is associated with 2,500 primary care clinicians, pediatricians, family medicine physicians, obstetricians/gynecologists, psychiatrists, psychologists, nurse practitioners, and physician assistants. The group has more than 880 practices statewide. The network treats more than 2.5 million North Carolinians, including 700,000 Medicaid beneficiaries.

“Their physicians are leaders in our state in developing the highly regarded medical home model. They’re known nationwide for high quality care, patient satisfaction and by using their innovative, collaborative approach to drive down costs,” Folwell said in a news release announcing the move.

Folwell says health care costs must be reduced immediately. The State Health Plan is only 3% funded, has $35 billion in unfunded liabilities, and will become insolvent in 2023. The Treasurer’s Office projects taxpayers could save $258 million and plan members $57 million annually under the Clear Pricing Project. The changes take place in 2020. Providers have until June 30 to join the project.

“It made good sense to us,” Conrad Flick, Community Care Physician Network co-president, said of linking with the reconstructed plan. “We’re dedicated to our communities and our patients, and focused on providing them with better and more cost-effective health care.”

The article concludes:

The N.C. Healthcare Association, the lobbying arm of hospitals and large health systems, continues to oppose Folwell’s plan. The group pushed for passage of House Bill 184 to halt the reforms and launch a two-year study instead. The House passed the measure, but it has gotten no traction in the Senate.

Hospitals say the cost-cutting features of Folwell’s plan jeopardize the survival of rural hospitals. Folwell said most rural hospitals will be better off financially under the plan, and nine of 10 primary care physicians will get more money.

Montana is among a handful of states that use the reference-based pricing model for their state health plans. Officials there told Carolina Journalthe results are positive.

Dale Folwell is attempting to bring the same sort of fiscal sanity to healthcare in North Carolina that he brought to unemployment benefits. Let’s hope that he is successful.

An Interesting Twist On Identity Theft

Yesterday The Daily Signal posted an article about $360 a week in unemployment benefits to be paid to Michael Ryder, who according to the records involved worked at a restaurant chain in Detroit, Michigan.

This is a picture of Michael Ryder:

Isn’t he beautiful? However, I doubt that he worked in a chain restaurant in Detroit. Michael is owned by lawyer Michael Haddock.

The article reports:

“I’m not sure what he’s going to do with the money,” Haddock said.

Haddock contacted the unemployment agency and the restaurant to take care of the mistake. A state investigator with the unemployment agency said while Haddock received an initial claim, the system eventually flagged the claim as suspicious.

“Unfortunately, Michael Ryder’s claim will not be allowed. I know firsthand it is rare for ‘man’s best friend’ to contribute financially to the household and that will continue in this instance,” Tim Kolar, state administrator of investigations with the Unemployment Insurance Agency, said.

The agency also warned people of identity fraud, which can occur with unemployment claims.

“It’s important to note that no money was paid out,Upload Files” Talent Investment Agency spokesman Chris DeWitt said. “Criminals get a hold of people’s personal information like name, address, and Social Security numbers and file a false claim. This is a crime. ”

It would be interesting to know if the potential identity thieves had a stolen Social Security number for Michael Ryder.

If Your State Has High Unemployment, Read This

Forbes Magazine posted a story last Tuesday about what has happened to the North Carolina economy. The change began in 2013 (just before we got here). At that point the North Carolina General Assembly was controlled by Republicans and a Republican was governor.

The article reports:

Unemployment insurance (UI) reform in North Carolina continues to be the gift that keeps on giving. The 2013 UI reform, made possible by the Republican-dominated General Assembly and Governor Pat McCrory, will enable $240 million in tax savings for state employers in 2016 alone, thanks to a UI Trust Fund that has grown to over $1 billion. In addition, the Tar Heel State’s 2013 tax reform bill will once again lower the corporate income tax rate, from 5% to 4% (it was 6.9% prior to 2013).

Please follow the link above to read the entire story, but here are a few of the highlights:

In February of that year, Governor McCrory signed a bill that reduced the maximum amount and duration of unemployment benefits to levels in line with those of neighboring states. This triggered the cutoff of long-term federal UI benefits being moved up by six months.

…Ironically, in his 2010 economics textbook, Krugman (Paul Krugman) expressed an opposing sentiment. “Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect,” wrote Krugman, explaining that granting more generous benefits “reduces a worker’s incentive to quickly find a new job.”

…Due to the reforms, however, the federal UI tax hikes were halted in 2014, and dropped back to standard rates after the debt was paid off last year. The result has been significant tax relief for job providers.

The second major change in 2013 was the recalibration of DES under the leadership of former state House Speaker pro-tempore Dale Folwell. Today, the call center answers 97% of incoming calls, up from a dismal 5%, and the average appeals process has been driven down to just 74 days from seven months.

…Today, North Carolina’s fiscal health is in far greater shape than it was in 2012, thanks to bold unemployment insurance reforms that will enable an additional $240 million in tax relief for state employers in 2016. For a roadmap to UI reform, states should look no further than North Carolina, where a crackdown on fraud has saved tax dollars and early debt repayment has enabled massive savings for job creators.

The numbers above are helping draw additional businesses and jobs to North Carolina. I like that, but I also wish that other states would follow our lead. The five-percent plus unemployment rate in America is a joke–the labor participation rate is dangerously low. I am hoping for all Americans to have a chance to find the jobs they want. Following the example set by North Carolina would be a step in that direction.

Cutting The Apron Strings

Unfortunately the federal government has developed apron strings that could hold up the George Washington Bridge. The federal government is always willing to fund things they want you to do (not mentioning that the money comes from the states to begin with) and often expects you pay back the loan or accept unfunded mandates as a result of the money given. The extension of unemployment benefits the federal government offered the states a while back was a classic example of this. States were encouraged to extend unemployment benefits for as much as two years. The federal government would pick up the tab. Unfortunately the money had to be paid back to the federal government. The way to do that was by increasing the unemployment taxes businesses pay. This, of course, cut down on the money businesses had to expand and hire people.

ABC11.com has the story of what has happened in the State of North Carolina:

At a news conference, McCrory thanked Republican leaders in the North Carolina House and Senate for coming up with reforms to help retire the debt.

“Let me give you a little history,” McCrory told a crowd of lawmakers and government higher-ups. “In February 2009, North Carolina started borrowing from the federal government to extend unemployment insurance benefits.”

The governor went on to sum up how the state found itself saddled with nearly $3 billion in debt and why paying it off matters. For starters, because each year the state didn’t pay off the debt, North Carolina businesses would end up paying incrementally more in taxes.

…McCrory said this year alone, with the debt paid off, North Carolina businesses would save $280 million in penalties.
Obviously there are those who are objecting to the cuts made in unemployment benefits and the length of time they can be collected. On July 1, 2013, extended unemployment benefits ended.
The chart below is from the Bureau of Labor Statistics:
 NCLaborStatsHeading
LaborStatisticsNorthCarolinaThere are two lessons here–first of all,there is no such thing as free money from the government and second of all, when you subsidize a behavior, it increases, when you take away the benefit, it decreases.
Congratulations to the Governor and Legislature of North Carolina.

Recovery???

Yesterday the Washington Times posted an editorial about President Obama’s request to extend unemployment benefits for another three months. The original extension of unemployment benefits to 99 weeks occurred in 2008, at the height of the recession. According to the Obama Administration, the recession ended in the summer of 2009. So why do people still need two years of unemployment benefits?

The editorial reminds us:

Since the Great Recession began in 2008, Congress has supplemented the 26 weeks of jobless benefits traditionally provided by the states, extending them to 99 weeks.

Ordinarily, this wouldn’t be an issue because such extensions have been temporary, but Mr. Obama’s economy has spawned a jobless “recovery,” and more workers continue to join the unemployment line.

Democrats see this not as an opportunity to reconsider the failure of Obamanomics, but as an excuse to spend another $25 billion. The Senate will vote this week on a three-month extension with a $6.5 billion price tag.

…There’s a negative consideration to extending unemployment subsidies time after time. A 2008 Princeton University study comes to the obvious conclusion that workers are much more aggressive in their job searches as their benefits near the end, “increasing sharply in the weeks prior to benefit exhaustion.”

Alan B. Krueger, a former chairman of Mr. Obama’s Council of Economic Advisers, was a co-author of the report. A Swedish study, finished in 2008 as well, concluded that more generous unemployment benefits increased unemployment rates. The linkage, it said, is “fairly robust.”

The year before, Sweden reformed its unemployment compensation system, such that recipients could receive up to 60 weeks of benefits, but with a catch. The longer someone is unemployed, under the new program, the less he receives in assistance.

The diminishing benefits have been a powerful inducement to look for work.

Unfortunately, extending unemployment benefits has become a political issue, which means that no one is considering whether or not it will actually help or hurt the country or the economy. Until Congress includes enough patriots who want to do what is right for the country, we can expect to have more political gamesmanship on this and other issues.

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Economic Recovery????

Fox Business reported today that the weekly jobless claims jumped to 368,000 this week.

The article reports:

Initial claims for state unemployment benefits surged 68,000 to a seasonally adjusted 368,000, the Labor Department said on Thursday. That was the largest weekly increase since November 2012. Claims for the prior week were revised to show 2,000 more applications received than previously reported.

No explanation has been given for the jump. The claims report also showed an increase in the number of people collecting benefits. The number jumped 40,000 to 2.79 million in the week ended Nov. 30.

On Sunday I posted an article (rightwinggranny.com) questioning the accuracy of the unemployment numbers we are being given. It is interesting to compare the actual numbers with the numbers being given out during the previous week.

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If The American Economy Is Recovering Why Do We Need To Extend Unemployment Benefits?

I am not unsympathetic to people who have lost their jobs during the recession. I know that there are a lot of them. I don’t mind paying unemployment benefits to people while they look for jobs. I just don’t understand why unemployment benefits should be paid to people for almost two years. I don’t think that encourages people to look for jobs.

The Wall Street Journal posted an editorial today about the economic impact of extended unemployment benefits. The article reminds us that according to the current unemployment numbers, the unemployment rate is 7 percent–not 10 percent rate as it was when the extension of benefits was originally passed.

The article reports:

This also ignores that states and employers are already paying for this supposed free lunch in the form of higher job-killing payroll taxes under the Federal Unemployment Tax Act, or Futa. At least 24 states have been forced to raise this tax since 2010 and the Labor Department says it will rise again in 13 states to repay $20 billion in loans and interest they owe the feds for helping to finance state-funded benefits. This federal tax is applied to 0.6% of a worker’s first $7,000 of annual wages. The rate rises automatically by 0.3% for every year states fail to repay their unemployment insurance loans from Uncle Sam.

…Economist Martin Feldstein long ago proposed a better plan to create a self-insurance component of unemployment insurance with tax dollars going into an employee trust fund for each worker that could be drawn during a bout of unemployment. Workers could keep whatever money was left over at retirement, which would encourage workers to become re-employed more quickly after losing a job.

Instead the current system provides as much as two years of benefits for not working and raises payroll taxes on employers even as some 20 million Americans are still unemployed, underemployed or discouraged from looking for work. None of this will help the economy create more jobs, which is what the jobless need far more than another government check.

The American taxpayer cannot afford to pay people not to work for extended periods of time. We are in danger of losing our work ethic. There was a time in this country when a person would take any job available rather than take money from the government. Unfortunately, we have come a long way from that time. Unemployment benefits should be paid for a long enough time period to allow a person to find a job. Two years is simply too long to pay a person for not working.

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How Much Of Our Tax Dollars Goes To Fraud

Newsbusters posted a story today about numbers released by the St. Louis Federal Reserve last week on unemployment fraud. Their research found $3.3 billion in fraudulent unemployment claims in 2011.

This is a chart from the article:
Scarier still, there were people in this country making in excess of $100,000 a year that received unemployment benefits in 2011:

Considering the media’s panic over $85 billion in supposed sequestration cuts, you would think they’d be interested in this.

The only media that covered this were the Wall Street Journal on Friday and a Huffington Post on Sunday.

It seems to me that this is something that American taxpayers might be interested in. Not only do we have a spending problem, we also have a dishonesty problem.
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Improper Unemployment Payments

Yesterday CNS News posted a story about $5,159,629,434 in improper unemployment insurance payments for all 50 states, U.S. territories and the District of Columbia for the period July 1, 2011 to June 30, 2012.

The data is included in a chart on the Department of Labor (DOL) website.

The article reports:

The DOL outlines its “core strategies to reduce improper payments” and other actions it is taking to improve performance at the state level, including providing funding to the states.  (See TOP Document.pdf )

“On Sept. 27, 2012 the Department announced the award of approximately $169 million in supplemental budget requests (SBRs) to 33 states for projects related to program integrity and performance to address their root causes most likely to quickly reduce improper payments.”

I don’t think fraud is the biggest problem with unemployment insurance. Now that unemployment benefits can be collected for more than a year, how much incentive do people have to look for work during that year? The fraud in the payments needs to be addressed, but so does the length of time benefits can be collected. I understand that the economy is not creating jobs, but does extending the amount of time people can collect money for being unemployed actually help the economy,  the unemployment rate, or those people looking for jobs.

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The Week After

Investors.com posted an article yesterday listing the things we have learned about the economy since last week’s election. It’s not a pretty list.

This is a chart from the article:

Some of the highlights are lower earnings, increased poverty, jobless claims increasing, inflation creeping up, coal plants closing, food stamp enrollment climbing rapidly and small banks going out of business.

What a mess President Obama has inherited from his predecessor.

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