STATEMENT: UHIP Cost Overruns Just the Beginning of ‘Dependency Portal’ Costs

/in , /by

STATEMENT
September 10, 2015

UHIP Cost Overruns Just the Beginning
“Dependency Portal” will dramatically drive up social service costs.
New “uninsured” figures misleading.

Providence, RI — Chalk up another accurate projection based on research by the nonpartisan Rhode Island Center for Freedom & Prosperity.

The near quarter of a billion dollars in ballooning cost over-runs recently projected by the RI Department of Health, is just the tip of the iceberg, according to the Center, which for years has been warning about the unsustainable costs associated with the Unified Health Infrastructure Project (UHIP).

With a similar net cost to Rhode Islanders as the 38 Studios debacle and the initial 38 Stadium proposal, the UHIP project is yet another example of government inefficiency and special interest spending, which will consume upwards of $77 million in state taxpayer dollars as well as hundreds of millions from federal taxpayers. The now $364 million boondoggle was initially budgeted to be $135 million.

Dependency-Portal-take-2But the final cost of UHIP could end up dwarfing these figures for Rhode Islanders, notwithstanding additional annual operational costs. A major goal of UHIP is to ensure that the state provides as much social service aid to as many people as possible. Nicknamed the “Dependency Portal” by the Center in 2012, UHIP will proactively promote people’s eligibility for a wide array of public assistance programs, based on the financial and personal information they submit to the state when applying for a healthcare exchange subsidy or for Medicaid.

“It is one thing to upgrade informational systems; it is an entirely different issue when those upgrades are used as a strategic tool to encourage people to become dependent on government assistance, and driving up costs for taxpayers,” warned Mike Stenhouse, CEO for the Center. “It is not the proper role for government to discourage a productive and self-sufficient lifestyle.”

Following the state’s aggressive implementation of the President’s Affordable Care Act, or Obamacare, by erecting a costly exchange and by expanding Medicaid, Rhode Island taxpayers are already suffering from a $50 million or so increased annual burden for previously eligible Medicaid participants, not to mention an even higher Medicaid bill for the state is expected once the federal government ends its 100% subsidy for newly eligible participants.

Most costly, once UHIP’s “dependency portal” function kicks in, it is anyone’s guess as to how much higher other social service programs will rise in cost each year, such as welfare, SNAP, TANF, housing and childcare assistance, etc …

While the Center recognizes that it may be beyond point-of-no-return with the UHIP project, the Center encourages legislative leaders to closely monitor and prohibit strategic use of UHIP to dramatically expand Rhode Island’s social services network, as opposed to what should be its goal to improve the state’s administration of that same network.

In a related development, with regard to the latest drop in uninsured rates touted by the DOH, given that the vast majority of the newly insured have signed up for Medicaid and did not purchased private insurance via the state’s health insurance exchange. While some believe these Medicaid increases are a major step towards a single-payer, socialized healthcare industry, the Center believes the new figures do not represent a major success for the exchange and do not justify that RI taxpayers should continue to fund its highly expensive annual operations .

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The mission of the 501-C-3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

STATEMENT: REMI Toll & Bond Report Overstates Benefits; New Model Next Week

/in , , /by

FOR IMMEDIATE RELEASE
September 3, 2015

Economic Drawbacks Under-Stated, Benefits Overstated
Pro Government Spending Analysis is Not Balanced with Free Market Analysis

Providence, RI – As projected months ago, the economic development analysis released yesterday by the Raimondo administration, conducted by Regional Economic Models, Inc. (REMI), is based on pro government spending theory that under-states the negative impact of extracting new funds out of the private sector economy, and does not take into account the more traditional free market economic theory, according to the RI Center for Freedom & Prosperity.

“On the one hand, and obviously, when hundreds of millions of dollars are spent on a project like this there will be a near-term boost in jobs and economic activity, as the REMI report suggests,” commented Mike Stenhouse, CEO for the Center. “However, on the other hand, there is also a negative ongoing impact on the economy through the imposition of new tolls, taxes, or fees. The REMI model minimizes this effect, while free market models normally project a greater long-term negative impact to economic growth.”

The Center plans to release a policy concept paper next week that will put forth an alternative funding and delivery model, that would complete the vital bridge and road repair project at a lower cost and in a more timely manner, while also removing risk of likely cost overruns from taxpayers or ratepayers.
Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The mission of the 501-C-3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

STATEMENT: Center Questions Governor’s Choice of Firms to Analyze Toll Impact

/in /by

FOR IMMEDIATE RELEASE
September 3, 2015

Economic Modeling Theory Central to Analysis

As an existing state vendor, REMI’s objectivity questioned

Providence, RI — Regional Economic Models, Inc. (REMI), the firm selected by Governor Raimondo to evaluate the economic impact of her proposed truck toll plan, will likely provide an analysis that reflects only one view of economic theory, according to the Rhode Island Center for Freedom & Prosperity.

As part of the special 2013 Sales Tax Commission hearings, the Center met in Boston with staff from REMI, to compare their Keynesian economic modeling assumptions with the market-based assumptions of STAMP, an alternative modeling tool created by the Beacon Hill Institute (BHI). After the meeting and after consultation with BHI, it was the conclusion of the Center that the REMI model places too high a premium on the economic impact of government spending: This runs counter to traditional free-market theory, which holds that there is higher economic value to private sector vs public sector spending.

With regard to the trucker toll plan, which would take money out of the private sector in order to fund a half a billion dollar construction bond plus another half a billion or so in financing fees, the REMI model will undoubtedly show a net economic benefit for the state. Alternative models, such as STAMP, would likely show a different result.

The economic multiplier that REMI apparently utilizes when it comes to government spending is far too optimistic according to the Center and other economists who believe the true government multiplier effect is less than one-to-one; meaning that for every dollar taken out of the private sector and spent by the government, there will be less than a one dollar return, resulting in a net economic loss.

“In addition to the vast differences in economic theory, when there is no firewall between the state government as customer and REMI as vendor – necessary to ensure an objective analysis – lawmakers should not view the REMI report as gospel,” commented Mike Stenhouse, CEO for the Center. “In hiring REMI, the Governor pretty much knows what she’s going to get.”

According to RIOpenGov.org, the Center’s government transparency portal, REMI is an existing vendor to the RI Department of Revenue and has previously received payments totaling over $35,000 from the state since 2010.

The Center believes that Rhode Islanders can enjoy the benefits of an improved infrastructure and the jobs that go along with it, without a toll, without a corresponding economic loss, and without enriching Wall Street insiders. This can be accomplished without double-taxing the private sector if the highly needed construction projects were to be paid out of existing general revenue funds. This would require lawmakers to exercise the budget discipline necessary to prioritize infrastructure spending over other, non-essential spending programs.

The Center urges the Raimondo administration to direct REMI to conduct analysis of a second scenario – one that pays for infrastructure upgrades out of existing general funds – then compare the results. The Center further suggests that a STAMP analysis by BHI would be helpful in providing alternative perspective.

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The mission of the 501-C-3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.