Hobbesian Choices

The chairs of the House and of the Senate budget committees both introduced their budget proposals this week. The committees will vote on them soon, though none of us can say exactly when at this point. Typically the bills are introduced and passed in about 3 days. The minority party always whines that they don’t have enough time to even read the bill before it passes. Not this year. It’s not clear to me that we have the votes to pass the budget in the House Ways and Means committee, nor is it clear in the Senate.

Both budgets make deeper cuts than we’ve seen since the early 80s, and would be like we saw in the depression if it were not for the federal stimulus plan. Our revenue projection would be almost a billion dollars lower if not for the plan’s predicted effect on the economy, and there is about $3 billion in direct aid to the states. It all comes with stringent rules for its use (“strings”) and is hard to track in the budgets.

For the first time in modern history, this budget is less than the previous 2-year budget, by about $1 billion. This is despite significant inflation in the costs we face and increases in population. For example, there are more students in public school, and not just because of population increases. When the economy tanks, people transfer from private schools to public ones, increasing the caseload even more. This happens in other areas too – our Medicaid caseloads are up, as are many other costs of providing the same services we did last year.

What this means is that we won’t provide the same service we did last year. Current budgets include:

  • Raising class sizes and laying off the teachers. We’ll lay off 3-5 thousand teachers from the 728 program. The senate budget cuts it more.
  • Eliminating support for 10,000 “slots” in higher education. This is 10,000 fewer students in Washington that will be able to get a college education.
  • Cutting much the Basic Health Plan, a program that provides health care to low-income working adults.
  • Reducing the rates we pay to nursing homes that take care of our low-income elderly on Medicaid. We squeeze these pretty hard, and they’ll get squeezed harder by this. It will be harder to find a nursing home or other long-term care facility near your home, particularly if you are in our district where the real-estate prices are high.
  • Laying off thousands more workers in other parts of state government.

I can go on. You can find the budgets online if you want, or you can read the news stories about what we’re cutting in the papers, should we still have any next week.

My concern with what we’re doing is that we don’t really know what the bottom of this part of the business cycle looks like. We’re expecting unemployment to increase through the rest of this year, bottoming out around 10%. We’re at 8.4% now. When we try to do the budget in 2011-13 we’ll face a similar problem, but without federal stimulus money to backfill the problem. I believe we need to make some structural decisions – what lines of business do we want to be in and what can we not afford to do.

Our commitment to healthcare is admirable. We provide a variety of programs for various segments of society. I personally have a new-found appreciation for this. When I worked at Microsoft I don’t remember filling out any paperwork for my care. I may have been oblivious to it, but pretty much it was covered by the company. In the past two years I’ve gone through more intensive interventions than I would have ever imagined (a stem-cell transplant for non-hodgkins lymphoma that worked) and I had a lot of opportunity to sit in the Fred Hutch waiting room watching people get or not get the care they needed based on the quality of their coverage. You can imagine what happened to those who didn’t get coverage.

As a state we cannot cover everyone using the revenue we have now. Today we cover 100,000 people in the basic health plan (BHP) at various levels of subsidy. It costs over half a billion dollars to do this. There are 600,000 more who have no insurance. There isn’t enough money in Washington to cover people using the BHP model – if we covered the 600,000 it would drive employers to let more people be covered by the plan, eventually destroying the employer-based care system. Our current budget cuts this number in half.

Our hospital system is broken because uninsured people show up and the state requires that they care for them. (We don’t let people bleed to death in the street.) The costs are shifted onto everyone else, regardless of how the payment or lack of it is handled. Healthcare is eating our state budget alive, and destroying the cost base of our manufacturing economy.

The immediate question is what should we do? Should we shift this money to public health – vaccinations, preparation for catastrophic disease outbreaks, etc. Perhaps to beef up our community clinics? How about to long-term care so we are not making the nursing home experience nasty, brutish, and short? These are the painful choices we have to make in the next few weeks.

It’s possible to imagine a system that works, and I’ll write about some options in another newsletter, but this is a federal responsibility, and they should get started. Our state budget will not get fixed until this happens. This is very frustrating. I want to improve the number of students who can get a college education here so that companies will have people to employ, and so that good jobs at Microsoft will go to our kids, not kids we import from other states and other countries.

As you can see, I’m frustrated with this budget. We will pass a balanced budget, but it will be incredibly painful for most of the things that I came here to do and people I came here to help.

About the Author

Ross
I am the Director of the Department of Early Learning for Washington State. I formerly represented the 48th Legislative District in the State House of Representatives, chairing the Appropriations committee and spent many a year at Microsoft.