Weekend open thread: Not learning from experience edition

What’s on your mind this weekend, Bleeding Heartland readers? This is an open thread.

Governor Terry Branstad didn’t draw the right lessons from Indiana’s experience when he proposed his Healthy Iowa Plan as an alternative to expanding Medicaid. Below I’ve posted excerpts from Laura Hermer’s recent commentary on the Healthy Indiana Plan.

Iowa’s top economic development official, Debi Durham, still can’t answer basic questions about why the state offered more than $100 million in tax incentives to a company that was going to build a fertilizer plant in Iowa anyway. Follow me after the jump for Durham’s non-responsive response on the Orascom deal during this week’s “Iowa Press” program.

Speaking of which, the Branstad administration is stonewalling Iowa Watchdog reporter Sheena Dooley’s efforts to obtain more information about the Orascom deal.

UPDATE: For the hundredth time, family budgets are not comparable to the federal budget. Plus, Michael Tomasky summarizes three basic principles of fiscal policy that should be conventional wisdom already: “Modest deficits are perfectly sustainable. Budget cutting, far from being ‘responsible,’ hurts the economy. And balanced budgets don’t create jobs-it’s the other way around.”

From Laura Hermer’s op-ed column in the Des Moines Register on March 22:

Branstad is basing his proposal on the Cadillac-priced Healthy Indiana Plan (HIP).

Under HIP, Indiana, with federal help, subsidizes several different private, high-deductible health insurance plans for certain low-income Indianans who otherwise didn’t qualify for Medicaid. Rather than pay physicians cheap Medicaid rates, the plans reimburse them at higher Medicare rates.

According to Indiana’s original proposal, HIP would cover “up to 150,000” uninsured Indianans while “promoting personal responsibility, using private market solutions, achieving better health outcomes, and promoting price transparency” in the process.

Unfortunately, other than in its use of “private market solutions,” there is little indication that HIP has met its objectives. The number of Indianans covered under HIP has fallen far short of the mark. Only 39,000 Indianans have coverage through HIP. Yet, over 430,000 Indianans meeting income and age eligibility for HIP remain uninsured.

Indiana spends a lot more to cover its residents using the Healthy Indiana Plan than it would if it used Medicaid. In its original proposal, Indiana anticipated that HIP would cost slightly less than Medicaid per recipient. This estimate was woefully mistaken. […]

Physicians get a better deal under the program, as they are paid higher rates for health care than what they would get if a HIP recipient had Medicaid. Physicians ought to be paid reasonable rates for their work, and higher rates encourage more physicians to participate. But participating insurers also get a better deal. They are permitted to use up to 15 percent of their premiums on administration and profit. In comparison, traditional Medicaid programs spend, on average, only 3 percent to 5 percent on administrative costs.

Profit for insurers – paid from taxpayer dollars – adds nothing to the care provided and means less money available for coverage.

Public hospitals have been losers in this process. In order to pay for HIP coverage for 39,000 Indianans, the state took more than $50 million from funds that it uses to help reimburse safety net hospitals for uncompensated care. This constituted approximately 40 percent of the state’s uncompensated care funds – funds that allow public hospitals to provide free and reduced-rate care for the uninsured.

If Healthy Indiana Plan covered a substantial portion of Indiana’s uninsured people this might be a prudent trade-off. However, HIP covers only a tiny fraction of Indiana’s uninsured population. Hundreds of thousands of Indianans are left without coverage but still in need of care. Safety net hospitals now have fewer resources to care for them.

There is no evidence that HIP recipients are getting better quality of care than Medicaid recipients. However, the care they are receiving costs more money, puts more money into the hands of private, for-profit insurers, and leaves less money for reimbursing uncompensated care for uninsured Indianans.

Excerpt from Iowa Economic Development Authority Director Debi Durham’s appearance on Iowa Press, March 22. Click here to watch the video or read the full transcript.

Borg: You alluded to it a minute ago and that is Senator Joe Bolkcom and the fertilizer plant in southeast Iowa.  There has been specific criticism, as I said in the introduction, of state incentives given to an Egyptian-based company that is called Orascom to get a fertilizer plant to be built in Lee County, that is down in extreme southeast Iowa, and state Senator Joe Bolkcom, a democrat from Iowa City, said this on Iowa Press.

Iowa Press – March 1, 2013 – Senator Joe Bolkcom: Lee County has been particularly hurt by the recession, these are important jobs to bring to the state.  But I think in the case of Orascom and the negotiations here we put way more money on the table than we needed to.  There are federal incentives worth more than $300 million that were not taken into consideration in my judgment.

Iowa Press – March 1, 2013 – Borg: Just particularly critical of that particular incentive.

Iowa Press – March 1, 2013 – Senator Joe Bolkcom: I’m particularly critical of this economic, this specific economic deal and think that we have given away the farm on it.

Henderson: Ms. Durham, were you snookered as some of the senators allege?

Durham: I was not.  And actually when you see the entire case before you, you would agree that it was not.  We were in competition with Illinois and competition just beyond incentives, as the Senator alludes to.  We were in competition because actually they had a preferred site and from a logistics point of view was actually more preferred as far as the cost of operation. So no, I do not believe we were snookered and it’s like I said to the Senator, you know, I negotiated that deal, I stand behind that deal, I did — and if you look at it by their own code we were allowed to do 10% into that deal from an investment tax credit.  I don’t set the legislation and the parameters of the legislation.  We negotiate every deal and there’s less — 8% into that.  So we stayed within in the code.

Borg: This is political grandstanding then by Joe Bolkcom?

Durham: I think it was political theatre what we saw.  First of all, legislators have every right to hold me accountable for how I’m using the tools in which they give.  Now, what they also didn’t tell you was this, that prior to that deal ever being made I called Senator Bolkcom along with the leadership on both sides of the aisle, in fact I called about 35 legislators to say, here’s the deal, here’s what is happening, I want you to understand the parameters in which this deal was struck.  Furthermore, after the deal was announced we sent a release out to every legislature and the media with all the details of the deal, full transparency around this. So I do believe what occurred at that committee was more about political theatre than it really was whether this was a good deal or not.

Lynch: There is some question whether you set the bar too high by offering $100 million in tax credits and whether there’s going to be enough to attract other economic development prospects, I think the $70 million in tax credits to CF Industries located in Sioux City and now there’s talk about another fertilizer plant, a Turkish company, up in Mitchell County and the state’s offer is apparently $35 million.  Do you have enough tax credits to buy these prospects to get them to come here?

Durham: Well, first of all, let’s take a step back.  The tax credits allocation was $185 million that was backed down during the recession to $120 million.  Right now the economy is opening up.  Now, we’re at a tipping point because you will not see this activity last forever.  At the time it was brought down no one anticipated we’d be seeing the size of projects we’re seeing, billion dollar projects was unheard of.  So what we’re saying is restore the cap but keep the cap because if you think about it, in 2006, 2007 and 2008 we didn’t even have a cap on our credits.  The Department of Revenue will tell you though that 42.5 percent of the tax credits that are allocated in a deal never, ever get claimed for a variety of reasons.  So when you look at it in its totality is one deal particularly more rich than another?  Absolutely.  And that is a fair criticism.  But what I said is look at our entire portfolio of nearly $6 billion and if you look at how, for instance, for $6 billion we have eligible, these companies are eligible for $400 and some million of tax credits.  We negotiated, totality, $130 some million and if you apply the revenues numbers of 42 point some percent will never get claimed I’m saying we’re getting these deals for a bargain.

Like her boss, Governor Branstad, Durham evades the real issue: why did you offer a corporation so much money when Iowa already had a $300 million advantage over Illinois? Durham and her staff didn’t do basic due diligence and by her own admission took what corporate executives said at face value.

Check out this Iowa Watchdog story by Sheena Dooley. Excerpt:

Iowa Watchdog requested access to all emails sent or received by Branstad from June 2012 through March that contained the words “Orascom,” “Debi Durham” or “Lee County.”  Attorney Larry Johnson responded to the request saying there were “no documents responsive to this request.”

He directed further questions to Tim Albrecht, Branstad’s spokesman. Albrecht did not return calls seeking comment.

Really, the governor neither sent nor received any e-mails about a deal involving the largest tax incentive package in Iowa history?

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