Blog

Author’s Note: This is the third in a series of articles about Nebraska’s Medicaid program, the Unicameral’s apparent intent to expand it, and the many reasons why expansion is an uncommonly bad idea. Although they don’t have to be read in order, here are links to the previously-published articles in the series:

• NE Medicaid Expansion: The Race is On
• Let’s See What Condition Our Condition is In

* * * * * * * * * *

You’re probably familiar with the old adage “a fool and his money are soon parted.” Paul McCartney put a twist on this proverb in his lyrics for the song “Come and Get It,” recorded by the group Badfinger.  McCartney wrote:

If you want it, here it is

Come and get it, m-m-m!

Make your mind up fast

If you want it anytime I can give it

But you better hurry ’cause it may not last

Did I hear you say that there must be a catch?

Will you walk away from a fool and his money?

If you want it, here it is

Come and get it

But you better hurry ’cause it’s going fast

Our current crop of state senators should adopt this as their theme song this legislative session.  The lyrics certainly appear to reflect their sentiments with respect to Nebraska’s Medicaid program, except we have 49 “fools” and it’s OUR money, not theirs, they’re inviting others to “come and get.”

Incidentally, if he had a lot more hair and a little more flair in choosing his wardrobe, Health Mello, a Democrat and the newly-elected Chairman of the Unicameral’s Appropriations Committee, could be a clone of Badfinger’s Tom Evans, Jr., who was chosen by McCartney to sing lead on “Come and Get It.”  At least I think so.  See if you agree:

But I digress.

Although, on the whole, “Come and Get It” is not one of McCartney’s more memorable tunes, the lyrics do pose a serious question.  Do people walk away when told to “come and get” someone else’s money or do they accept the invitation?  Specifically with respect to the subject of this article series, does the fact that Nebraska has a liberal Medicaid program affect the behavior of individuals and organizations both within and without the state? In this and the next couple of articles, I’ll demonstrate that it does.  What effect does it have?

Judging from the track record of entitlement programs generally and of Nebraska’s Medicaid program in particular,  they create a moral hazard by encouraging the development of a sense of entitlement in people that is disconnected from either effort or merit.  This “sixth sense,” in turn, makes people comfortable:

• accepting government benefits,
  

• remaining dependent upon such benefits for longer periods,
  

• making life decisions based on getting and/or retaining such benefits

• and, in many cases, claiming benefits to which they are not entitled.

Although there will be some overlap, let’s address each of these bullet points, one by one.  Shall we?

Accepting government benefits: In an article published here in 2010, I related how government-provided “charity” came to be called “entitlements.”  Why the name change?  Because the term “public assistance,” like “charity” and “welfare” before it, came to have too many unacceptable overtones relating to recipients’ loss of self-respect and dignity in accepting help.  There were instances where people in need rejected government assistance because of the stigma, even though they were told “you’re entitled to it; it’s not ‘charity.’”  Thus, the idea of entitlements was born in order to make dependency more palatable to a proud and independent people — Americans of past generations.¹

And, although our president may deny it, statistics demonstrate that dependency HAS become very palatable to us.  A recent Wall Street Journal article, entitled “Yes, Mr. President, We Are a Nation of Takers,” listed these statistics, among others:

• Since 1960, entitlement transfers have grown twice as fast as personal income
• America’s entitlement programs currently dispense entitlement benefits of more than $2.3 trillion annually, which amounts to over $7,400 per American man, woman and child
• In 1960, entitlement spending accounted for less than a third of all federal spending. Today, entitlement programs account for nearly two-thirds of federal spending. In other words, welfare spending is nearly twice as much as defense, justice and everything else Washington does—combined
• Nearly half (49%) of Americans today live in homes receiving one or more government transfer benefits
• Today about 35% of Americans (well over 100 million people) are accepting money, goods or services from “means-tested” government programs, like Medicaid, which is twice as many as in 1980.

Remaining on government benefits for extended periods.  When time-limited entitlement payments are exhausted, many move from one entitlement program to another in order to remain on the public dole.  Witness the explosion of Social Security disability claims that have mounted as the long-term unemployed exhaust their extended (99 weeks and counting) unemployment insurance benefits.  In a recent article, Shelli demonstrated that the increase in disability claims accounts for the improvement in the unemployment numbers published by the administration.  The uptick in the numbers of “disabled” among us has placed the Social Security disability program on the fast track to bankruptcy.

And the unemployment/disability connection is only one example.  Prior to welfare reform in the 1990s, it was possible to remain on welfare indefinitely so long as you did not work, did not save, and did not marry.²  In  a speech he gave in 1988, then-President Reagan described welfare as “a poverty trap that wreaks havoc on the very support system the poor need most to lift themselves out of poverty: the family. Dependency has become the one enduring heirloom, passed from one generation to the next, of too many fragmented families.”  We recently took a giant step backward toward recreating that situation with President Obama’s waiver of the work requirement imposed on the welfare system under the Clinton-era welfare reforms.

Making life decisions based on getting and/or retaining such benefits. In the vernacular, it’s called gaming the system. The stereotype that probably immediately comes to mind is the pejorative image of the “welfare queen” who has yet another child in order to increase her monthly welfare benefits. Although that stereotype is broader than Medicaid, which is the main subject of this article and the series to which it belongs, I’ll address that stereotype as it pertains specifically to Medicaid in a subsequent article in this series. So, we’ll set that aside for the moment. Other (less incendiary) examples are available.

For instance, in an article published on this site in December of 2010, I asked the same question I’m addressing in the present article and answered it by recounting a story I’d recently read in the newspaper:

“Do people base some of their most important life choices on the income-based eligibility guidelines utilized by [welfare] programs? You bet. A case in point: A young bride, paralyzed from the chest down when one of her bridesmaids pushed her into a swimming pool just prior to her wedding, recently postponed her marriage plans because she discovered she would no longer meet Medicaid income requirements as a married person. The reluctant bride and her fiancé plan to live together without the benefit of marriage instead. Although she’s reticent to name the bridesmaid who pushed her or, apparently, take legal action to hold that person accountable for her negligent action, the young bride IS comfortable relying upon her fellow citizens to cover her medical bills for the indefinite future — all while living in a ‘household’ which no longer technically qualifies for that assistance.”

But there’s a more recent example in the news. formerly http://www.nationalreview.com/articles/313429/keep-pay-raise-i-can-t-afford-it-michael-g-franc#  Congressional hearings were recently held concerning the issue of welfare as a disincentive to work.  Representative Gwen Moore (Dem., Wisc.) submitted both written and oral testimony at that hearing.  Rep. Moore is a product of inner-city Milwaukee, a former entitlement recipient, and the first black person to represent her state in Congress.  In her written comments, Rep. Moore lambasted the hearings as “predicated on a series of false assumptions about our social safety net.”  Yet, in her oral testimony, Rep. Moore admitted:

“I once had a job,” Moore acknowledged, “and begged my supervisor not to give me a 50-cents-an-hour raise lest I lose Title 20 day care.” The same work disincentive arose when she contemplated the health coverage she received through Medicaid. “I would want to work if in fact I didn’t risk losing Medicaid.”

Star Parker, an author and former welfare recipient, tells a similar story in this segment from John Stossel’s television show concerning the effects of welfare on our culture:³

Claiming benefits to which they are not entitled.  I’ve argued here that entitlement programs present a moral hazard –  such programs essentially punish or discourage self-reliance and personal responsibility while simultaneously encouraging and legitimizing dependency.  BUT:

“[T]he size of the moral hazard problem depends on the values that individuals hold. People with a strong work ethic would find it unacceptable to rely on benefits without actively looking for jobs, while others with weaker values try to remain on benefits for as long as possible. So the average values in a country have an impact on the size of the moral hazard problem and hence on the cost of providing generous . . . benefits.”

Jean Baptiste-Michau, an economist and the researcher who made the above-quoted observation, designed and conducted a study to test it.  He studied responses to the World Values Surveys administered to the citizens of many countries in every decade since the 1980s.  Specifically, Michau analyzed respondents’ answers to the following question:

“Please tell me whether you think it is always justified, never justified or something in between to claim government benefits to which you are not entitled.”

Using the responses of persons born in the 1930s as a baseline, Michau found that the later people were born, the the less likely they were to say that it is “never justified” to cheat the benefit system.  Persons born in the 1960s as opposed to the 1930s were 12 percent less likely to answer “never justifiable.”  The effect accelerated for those born since the 1960s, with persons born in the 1970s 19 percent and persons born in the 1980s 24 percent less likely to consider it “never justifiable” to cheat or game the benefit system.  Michau concluded that forty (40) years of living in the British welfare state has undermined moral values and, essentially, wrecked the work ethic of the British people.⁴

CONCLUSION:  I’ll have more to say about these issues and relate them specifically to Medicaid and to Nebraska in subsequent articles.  Suffice it to say at this point that Nebraskans are not immune to the moral hazard and are quickly developing that “sixth sense” — the entitlement mentality.

Images in the post were found at the following links…

Tom Evans, Jr., photo formerly

Senator Heath Mello photo