Making the Case for Tax Incentives, Slowing Health Spending, and The Price of a Life

Plus: A Small Victory for Detroit, And More Management News
by | January 20, 2011
 

The benefits of tax incentives for businesses are debated widely. Over time, we've become pretty much convinced that they're largely a way for corporations to pit one state against another or one city against another, and in so doing get a break on their taxes without necessarily benefiting the states and cities over time. We think it's kind of a zero-sum game.

We could be wrong, of course. But we were particularly interested to see the December 2010 report of the Maryland Business Tax Reform Commission, which weighed in on that issue. Its recommendation was to make no "substantive changes to economic development incentives [at] this time, but to create a workgroup to work with the General Assembly, taxpayers and other stakeholders to ensure that incentives are measurable and cost effective."

That sounds more than fair to us. As long as it can be proven that the incentives are cost effective, we've got no problem with them. But the report also said something that troubled us: "Members expressed concerns about the burdens additional reporting requirements would place on taxpayers, and the burdens additional reporting requirements would put on State agencies with extremely limited budgetary resources." As far as we can see, if companies aren't willing to do the paperwork necessary to demonstrate that they should get free money — and if agencies don't think that analyzing this kind of information is part of their job — there's something seriously wrong.


Good news is sometimes squashed by reality. On January 6, the front page of the New York Times featured a blurb boldly titled "Health Spending Slows." This excited us, and we immediately plunged deeper, with thoughts of sharing this good news with you in the next B&G Report. But it turned out that the underlying cause for the slower rate of spending was directly attributable to people who had lost their insurance or their jobs and simply couldn't afford health care. Sigh....


What price life? While we're on the topic of cutting health-care costs, we can't resist bringing up the state of Arizona. Back in October, in order to save Medicaid money, the state decided to limit resources available for transplants. The move was designed to save $1.4 million out of a $1 billion shortfall in the next budget. Since then, according to the Huffington Post, two deaths have appeared to be tied directly to this funding change (though in medical matters, it's extremely difficult to be sure of cause and effect).

We won't pretend we're medical ethicists, but we can't wondering when the cost-benefit figures start to get unsettling. Assuming that both these deaths were genuinely attributable to the Medicaid cuts, the state has saved $700,000 per life over three months. If that rate is ongoing, it will save under $200,000 per life this year. These are incredibly tough management decisions to make. But we wonder what seems like a reasonable number to the citizens of Arizona.

The one bet we'll be happy to make is that they'll think the number is a whole lot higher if the life in question is their own, rather than some unknown Medicaid recipient.


Congratulations to Detroit's administration. For the first time in years, the city has submitted its comprehensive annual financial report to the state on time. This may seem like an unimportant matter relative to Detroit's many and varied problems. But from our perspective, it's a gold-plated straw in the wind. In past years, delays in the delivery of this document meant that Michigan withheld millions of dollars in revenue-sharing funds. Now, the city will likely get its money on time. The report itself indicated that Detroit is heavy-laden with big problems, including those related to its retirement funds. But disclosing this kind of information in a timely way is a start.


We're sick and tired of the oft-repeated government mantra, "We'll do more with less." As far as we're concerned, doing the same with less is a far more legitimate and likely goal. Or doing more with the same. Maybe we're being a little too tough on leaders who talk about doing "more with less," but in these times, that sounds like a politically motivated phrase, not a realistic one.


The tradeoff between control and flexibility is one that governments face every day. How much money to spend on fraud prevention, for example, in order to potentially save $1 of fraud. While careful cross-checking is an essential element in government, it can sometimes go too far, as Dannielle Blumenthal noted in her blog on GovLoop. She wrote, "So frequently, vetting is a way to try and avoid being shot down later on. The idea is that you circulate the concept so many times, change it per feedback to such an extent, that when it ultimately gets implemented later on (if at all) nobody can say, 'I told you so.' Because you've got the email to prove they had a chance to comment."


Technology is regularly cited as a solution for some of the problems with the states' Medicaid programs. Just last week, the Kaiser Family Foundation's Commission on Medicaid and the Uninsured released a survey that helps bring readers up to date as to where progress has been made — and where it's still coming. A Kaiser release about the study says states still have a lot to do:

"The survey finds that states continue to adopt technology to modernize their programs. Many of these improvements have helped to reduce barriers to enrollment and renewal for families, while also streamlining administrative processes and achieving administrative efficiencies. For example, about half of the states (29) took advantage of a new option to rely on an electronic data match with the Social Security Administration to more efficiently and accurately verify citizenship status of applicants for Medicaid and CHIP. The survey also found states making progress in using electronic data matches to verify other aspects of eligibility.

"Yet states still have a significant amount of work to do, the survey finds. The new health reform law calls upon states to implement an integrated, web-based, technology-driven enrollment process for Medicaid, CHIP, and coverage in the new health insurance Exchanges. While all states make their Medicaid application available online, only slightly more than half (29) allow for the application to be electronically submitted with an electronic signature and most of these still require families to submit paper documentation via mail or fax. In light of a rule proposed by the Administration at the end of 2010 to provide states with a 90% federal matching rate to prepare their Medicaid eligibility systems for health reform, new grant funding, and the likelihood of additional guidance and funding opportunities in the months ahead, more activity in this area is expected in the coming year."


After years of our sharing particularly good quotes, this is the first time the source has been a sitting president. But we really like this one, and we think it's right on target: "Often, the best source of information about waste, fraud, and abuse in government is an existing government employee committed to public integrity and willing to speak out. Such acts of courage and patriotism, which can sometimes save lives and often save taxpayer dollars, should be encouraged rather than stifled." — President Barack Obama


Another quote: "Zero is the new increase." — Linda Czipo, executive director of the Center for Non-Profits in New Jersey.


Keeping regular track of the location of government employees — including police — through vehicle GPS systems seemed a little like Big Brother to us, as we mentioned in a piece about a month ago. Interestingly, the item didn't provoke bundles of e-mails from employees who didn't want to be tracked in this way. Instead, the bulk of responses came from supervisors who argued that they have neither the time nor inclination to keep tabs on employees — unless there was solid evidence that such oversight was necessary. They pointed out, as well, the immense benefits that GPS equipment can offer to public services.

Chris Carnahan, operations manager for public works in Aurora, Colo., wrote, "We have been using GPS equipment to track street sweepers and snow plows in our city for many years. The benefits to managing those operations are enormous and there are some very real safety benefits as well. During a major winter storm, when you can barely see the road in front of you, there is a certain comfort in knowing that your exact location can be ascertained immediately should you need help. Although it is possible to use GPS tracking in a 'live' mode, sitting at a terminal staring at little icons moving around a map is probably not something most supervisors have a lot of time to do. From that standpoint, Big Brother is rarely watching."

One cautionary note arrived from a California correctional officer, who brought up an additional concern: Even if GPS systems aren't used by supervisors, they might be used by others. He wrote, "My concerns with any GPS in a police unit is this: If there are approved times where an officer is allowed to have a short meal break at their home, it could endanger them and their family. If this transmittal is or becomes in the public domain, it risks putting the officer's family (and the officer too) at risk if criminals intent on causing damage find out where the officer lives."

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Smart Management