Former U.S. Senator Bill Roth (R-DE) was the principal sponsor of the 1993 Government Performance and Results Act (GPRA). The idea behind the act is to concentrate efforts on effective government programs, and reform or abolish ineffective government programs.

This approach was used with great success in New Zealand. The government became more effective, and smaller (we love the smaller part). Maurice McTigue of New Zealand was a major player in implementing this approach there. He is now at the Mercatus Center of George Mason University in Virginia, and is helping the U.S. Government implement the GPRA.

SAFE sponsored a visit of McTigue to Wilmington, DE to address the Retired Men’s Luncheon Club of over 200 members. While here, he visited local offices of the Delaware Senators and the Delaware Representative, and met with the two Delaware State Representatives.

Information about the visit was given in Newsletters No. 21 and 22.

Former Senator Bill Roth wrote an editorial article about the GPRA, which was published in the 3-15-02 News Journal (Wilmington, DE). Referring to that editorial, Bill Morris, wrote a 3-19-02 letter to the editor expressing our support of the GPRA. Copies were sent to the staff members in the offices of the U.S. Representatives and the two U.S. Senators who receive this newsletter. The accompanying note read:

"Please let the Congressman (Senator) know of our interest in the GPRA."

 

The letter is reproduced in the next item. Members in other states are encouraged to express support for the GPRA to their Congressman and Senators. Feel free to use the following letter and let us know if you’d like a copy of Bill Roth’s article.

In a March 15 News Journal column, former Senator Bill Roth discussed the Government Performance and Results Act of 1993 (GPRA) which he sponsored.

Under the GPRA, government programs are expected to actually achieve results. For example, in evaluating a job training program, it would not be acceptable to say that 10% more trainees went through the program than in the year before. The question would be "Was the % of graduates finding and keeping jobs significantly greater than if they hadn’t gone through the program".

New Zealand used this approach years ago and their government became more effective and smaller. The GPRA is slowly being implemented here. It should get more attention.

I fervently hope the GPRA will be used to make the federal government smaller, for the sake of our children and grandchildren. A smaller government would make it easier to fix Social Security and pay off the debt.

Energetic application of the GPRA to give us a smaller government would be a huge help to members of Generation X. It would help them cope with the demands of retired baby boomers, and unpredictable problems that will arise in the future.

William E. Morris, President

Seniors Against Federal Extravagance

President

Bill Morris, Wilmington, DE

(302) 475-7060

President-Elect

Barry Dorsch, Wilmington, DE

(302) 478-0676

Treasurer

Ed Fasig, Wilmington, DE

(302) 999-0611

Director, 2002-2004

John Boughton, Wilmington, DE

(302) 475-6718

Ed Fasig, Wilmington, DE

(302) 999-0611

Director 2002-2003

Orville Wetmore,

Wilmington, DE

(302) 652-0107

 

Director 2002

Jerry Martin, Wilmington, DE

(302) 478-5064

Dick Reese

(302) 478-4970

John H. Boughton

The Medicare/Medicaid programs of federally funded medical assistance have been operating since 1965. This social effort by the Federal Government now accounts for more than twelve percent of all federal spending. It is reasonable to ask for a summary of its accomplishments, its costs and to estimate its likely performance in the future.

The push toward compulsory health insurance began in the late 19^th Century driven by Chancellor Bismarck, in Germany. Other European nations steadily joined in with government directed compulsory health coverage through the rest of the 19^th and early 20^th centuries. The USA was more reluctant to accept the idea, and even the slow increase in acceptance was stalled by WWI. The Great Depression of the ‘30’s stirred more interest and the idea was debated. However, significant support didn’t develop until after WWII.

The early expression of this support was the passage in 1960 of the Kerr-Mills Act featuring states’ involvement and a voluntary, means-tested program. The acceptance by the states of this program was slower than many of its supporters liked, so pressure was continued to expand and "federalize" it, resulting in the passage in 1965 of the King-Anderson legislation, giving us the basis of the Medicare of today. It is interesting to speculate on how many legislators actually read the 300 page document before voting on it.

In effect, Medicare is compulsory. In order for a senior citizen to opt out of Part A, he or she must also give up Social Security benefits. Most seniors, at this time, have been contributing to both Medicare and Social Security for all their working lives and would understandably be reluctant to forego both classes of "earned" benefits. When one enrolls in Part A, the government automatically enrolls the citizen in Part B. However, one may opt out of Part B without forfeiture of Social Security benefits.

Medicaid is voluntary and not directly coupled to Social Security or other benefits. It was intended to help low income families and some disabled persons. Some seniors are eligible for both Medicare and Medicaid.

Part A of Medicare provides limited coverage of in-patient hospital care, home care, skilled nursing facility care and hospice care. This part of Medicare is usually thought of as the "Hospital" part. Part B, (Supplemental Medical Insurance, SMI) pays portions of approved doctor visits and other services not covered in Part A. These include ambulance service, out-patient hospital care and some tests and home care services. The senior pays a $100 annual deductible and then 20 percent of most additional covered charges. There is also a Part C program, known as Medicare+ Choice. This was introduced with the Balanced Budget act of 1997. It was intended to provide seniors with more choices and incentives to enroll in private plans, but the complexity of the regulations has continuously reduced the number of insurers participating from 346 at the end of ’98 to 174 in Jan ’01. Fourteen percent of Medicare beneficiaries were enrolled in these plans in early ’01.

Medicaid is a means tested, related program which is for low income families including children, adults, seniors, some Medicare beneficiaries and some disabled persons.

Medicare, Part A (Hospital program) covering seniors and some disabled people, is currently funded by a 2.9% payroll tax. This is nominally divided evenly between employer and employee, but in effect the employee pays it all, as it is part of The "Cost of Employment" to the employer. In 2000, 39 million people were enrolled in Part A and the program cost was about $131 billion. In 2000, the payroll tax generated $144 billion versus the cost of $131 billion. To get a feel for these numbers, the USA has ~280 million people. $131 billion represents a cost of about $468 per year for every adult and child in the country.

Medicare Part B, (Doctors’ Services) covers most of the same people as Part A. It is funded from general taxes and by premiums paid by the seniors. In 2000, 38 million people were enrolled in the program which cost ~$90 billion.

Medicaid, for low income persons and families, is funded by Federal and State taxes. In 1998, the last year for which data are available, 41.4 million people were enrolled and the cost of the program was about $116 billion (Federal) and $8.5 billion (State and local).

The support of Parts A and B represent a significant expense now, ~$220 billion in 2000, and these costs are projected to rise to ~$490 billion/yr by 2011. (Projection by Congressional Budget Office)

A concern of many, in part, considering the cost of the programs, is that they do not provide "catastrophic" coverage nor long term care. These are most difficult for seniors to handle "out –of-pocket".

The tinkering with the programs over the last 35+ years has produced approximately 130,000 pages of regulations, but does not seem to have reduced the out of pocket costs of most of the covered seniors. The rising costs without obviously improved coverage and care represent a real concern for citizens of the future about whether the programs into which workers now pour money, will be sustainable.

We can discuss this in more detail in the next issue.

AARP’s new Executive Director, William Novelli continues the AARP Tradition of misleading Americans about the "trust fund". He has written "No one in Congress today is proposing anything that would actually hurt trust fund balances."

We know (and Novelli knows) the trust fund is nothing but IOU’s, and there is no "trust fund balance". Political pressure will force payments to baby boomers and that political pressure will continue after all the IOU’s are redeemed. In short, the trust fund is meaningless.

Novelli also speaks of "allowing the trust fund to hire professional money managers to diversify its investments and realize a greater return."

This implies that there is money in the trust fund (again, there isn’t). What it means is that if the federal government doesn’t spend all of the excess of Social Security taxes over Social Security payments, the government would become the owner of a substantial part of industry. Bad idea on its face. Much better to let taxpayers use some of their Social Security taxes to invest in stocks and bonds.

With the investments in the hands of individuals rather than the government, some money could be inherited by the next generation. This would be particularly helpful for low income Americans who do not succeed in saving any money. With money remaining from a personal retirement account, the children wouldn’t have to start from zero.

"GOP strategists reshaping rhetoric for older Americans" according to an April 7^th Associated Press article.

Candidates will talk of "personal retirement accounts" rather than "privatizing". Rather than speaking of reforming Social Security, they will speak of saving it or protecting it.

SAFE is a non-partisan organization, but we shouldn’t hesitate to borrow ideas from the GOP or anybody else that will make our arguments more persuasive.