June 26, 2015
FY2016 Should be Last Year of Continued Taxpayer and Ratepayer Subsidies for Failed Boondoggle
Exchange Can be More Efficiently Operated by the Federal Government
Providence, RI — Based on yesterday’s U.S. Supreme Court decision upholding the Affordable Care Act (ACA), and with statewide health insurance premiums once again set to sky-rocket, the nonpartisan Rhode Island Center for Freedom & Prosperity suggests that FY2016 should be the last year that Rhode Island taxpayers and ratepayers should be burdened with subsidizing HealthSource RI.
The Supreme Court ruling, which preserved federal insurance subsidies across the nation, effectively removed one of the major arguments of proponents seeking to keep the state exchange funded by Rhode Islanders. Further, based on today’s Providence Journal story that insurance rates could rise by as much as 18% next year, HealthSource RI has obviously failed in its promise to control rate increases.
“There is no longer any legitimate reason for Rhode Islanders to continue to pay for this self-created boondoggle,” said Mike Stenhouse, CEO for the Center. “It’s time to renew the discussion about sending our exchange to the federal government, where efficiencies of scale can allow it to be operated at a significantly lower cost than we can run it on our own in Rhode Island. And now we can do so without any fear of anyone losing their subsidy.”
Rhode Island is one of just 15 states that fully-funds and operates its own insurance exchange. As the Center has documented over recent years, the Ocean State does not have a large enough tax base or insurance base to justify the related high costs.
Mike Stenhouse, CEO
401.429.6115 | firstname.lastname@example.org
About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise think tank. The mission of the 501c3 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.
October 14, 2014 – Providence, RI: The Rhode Island Center for Freedom & Prosperity released today a scoring-summary of the sales tax reduction plan offered by gubernatorial candidate, Allan Fung, who proposes to gradually reduce the state’s sales tax rate to 5.5% over the next four years from its current level of 7%.
According to the Center’s economic modeling program, RI-STAMP, the Fung plan would produce the following ‘dynamic’ results for the Ocean State job market and for state and municipal budgets. As compared with current baseline projections over the next four years …
A 6.25% sales tax rate in year-1 would produce 2043 new private sector jobs; would require $19.9 million in state budget savings; and would add almost $17 million statewide in new municipal revenues
A 6.00% sales tax rate in year-2 would produce 2663 new private sector jobs; would require $28.3 million in state budget savings; and would add almost $23 million statewide in new municipal revenues
A 5.75% sales tax rate in year-3 would produce 3250 new private sector jobs; would require $36.5 million in state budget savings; and would add over $29 million statewide in new municipal revenues
A 5.50% sales tax rate in year-4 would produce 3804 new private sector jobs; would require $46.3 million in state budget savings; and would add almost $36 million statewide in new municipal revenues
For years, the Center has been advocating for an immediate repeal of the sales tax, or a major reduction to 3%, as the most cost-effective way to produce tens of thousands of new jobs and to provide a major boost to Rhode Island’s stagnant economy. According to the Center’s RI-STAMP projections …
A 0.0% sales tax rate would produce 25,426 new private jobs; would require about $313 million in state budget savings; and would add about $150 million statewide in new municipal revenues.
A 3.0% sales tax rate would produce 13,424 new private jobs; would require about $47 million in state budget savings; and would add about $119 million statewide in new municipal revenues.
A detailed analysis of multiple sales tax reduction scenarios, with corresponding RI-STAMP projections, can be found here.
“Shall there be a convention to amend or revise the Constitution?”
The Rhode Island constitution requires the Secretary of State to place such a question on the ballot every 10 years. In 2004, this ballot initiative was narrowly defeated, 52:48 percent. In 1984, Ocean State voters did approve a convention. This year, the RI Center for Freedom & Prosperity expects a similar ballot question — to convene a statewide constitutional convention — to be approved by Ocean State voters in the upcoming 2014 November elections.
If the question is approved by voters in 2014, the rules that will govern the constitutional convention (more simply referred to as the “ConCon”) will be determined by the state’s General Assembly in 2015, beginning with how delegates will be elected — at least one for each of the 75 House districts — in a specially scheduled general election. The convention will then convene for a specified length of time, with various constitutional amendment measures to be considered and approved by delegates. Finally, all ConCon-approved amendment measures will be put forth for approval from voters as future ballot initiatives.
What do the candidates for governor say?
Or other statewide and General Assembly candidates? Why are they and the media avoiding the BIG questions?[button url=”http://www.rifreedom.org/2014/07/2014-campaign-six-big-issues-no-one-is-talking-about/” target=”_self” size=”medium” style=”royalblue” ] 6 BIG Questions [/button]
6 Big Questions Not Being Asked of the Gubernatorial Candidates
With the 2014 Rhode Island gubernatorial campaign now shifting into high gear, the Rhode Island Center for Freedom and Prosperity encourages the media, advocacy groups, and citizens to ensure that certain major policy issues are publicly addressed by the full slate of gubernatorial and other statewide and General Assembly candidates.
Each of the issues below has the potential to significantly alter the future of our state, and to date, little, if any debate has taken place, with most candidates talking vaguely about their own plans for broadly related issues. The specific positions of each candidate on these issues and questions would provide clearer insight into each of their individual governing philosophies.
The Center believes that candidates should be forced out of their comfort zones and inform voters of their specific positions on each of these important statewide issues:
1. Constitutional Convention: on the ballot this year will be a referendum for voters to decide if the State should convene a constitutional convention. Advocates believe that a convention is necessary due to the lack of action by the General Assembly in addressing Rhode Island’s most pressing issues and its continued favoritism to special-interest groups.
- Are you in support of a Constitutional Convention for Rhode Island?
- What specific issues would you like to see addressed if a convention were to be approved by voters?
- As governor, if the convention is approved, how would you help ensure that the Convention is conducted a non “politics as usual” manner?
- Would you encourage the election of delegates in a nonpartisan manner?
- How do you feel about sitting lawmakers’ being eligible to run as delegates?
2. HealthSource RI: once federal funding runs out in FY2016, what position will the candidates take regarding use of state funds or assessments to Ocean State taxpayers or policyholders?
- Do you support paying $23 million per year for ongoing operations? Or should we transfer the exchange to the federal government?
- Major insurance premium increases were again approved for 2015, despite HealthSourceRI claims that it would decrease costs. Is this a concern to you?
- Do you support consolidating all public and private healthcare in the state under HealthSource RI? (Per H7819, which was heard in House Finance in June 2014)
- Are you aware of and do you support paying $10-15 million per year for the related Unified Health Infrastructure Project (UHIP)?
- Do you support using financial information collected from individuals applying for health insurance via HealthSource RI to automatically enroll them in other statewide public assistance programs?
- Given the projected $50 million per year increase in the state share of Medicaid costs, can the state afford similar additional increases in other public assistance programs?
- Do you support using financial information collected from individuals applying for health insurance via HealthSource RI to automatically enroll them in other statewide public assistance programs?
3. Educational Choice: While each candidate has put forth some general thoughts on education, no significant reforms have been suggested. A movement is underway in Rhode Island to empower parents with expanded choices for their children’s education, choices that may include some form of scholarship voucher so that no child is condemned to remain in a failed government school.
- Do you support providing expanded educational choice for families? Why or why not?
- Do you specifically support some form of educational voucher?
- Do you support expansion of charter schools? Or expansion of the state’s existing Corporate Tax Credit Scholarship program?
4. Sales Tax Reform: Speaker Mattiello has publicly stated that he will take a look at sales tax reform in 2015. The RI Center for Freedom & Prosperity claims that major reforms in this area would produce a game-changing, massive jobs boost for the state’s economy, much more than any other tax reform idea. Given the chronic unemployment problems we face in Rhode Island …
- As Governor, will you support significant sales tax reform?
- Do you believe any major jobs creation policy idea would be worth pursuing if it was not revenue-neutral?
5. RhodeMapRI: is a major economic development plan for the state, quietly advanced by the Chafee administration and signed-on to by multiple municipalities and other organizations, that has largely flown under public and media scrutiny. This self-described “sustainable living” plan is funded by the federal department of Housing and Urban Development (HUD) and is largely based on an environmentalist and economic justice agenda, that may even include future racial quotas for communities.
- Are you aware of and do you generally support the RhodeMapRI plan?
- Do you believe that unelected federal bureaucrats should be dictating the future economic development of our state?
- Or should any plan for Rhode Island be developed by our own elected officials?
In other cities and counties across the nation where similar plans have been implemented, such as Westchester County, NY, residents have complained about a loss of individual property rights, loss of sovereignty of locally elected government, and unequal property taxes levies.
- Do you share these concerns or do you believe they justify the larger goals of the plan?
6. Unionization of Independent Business Owners: in June of this year, the U.S. Supreme Court’s ruling on the Harris v Quinn case led most legal experts to believe that the ruling has a direct impact on last year’s successful effort to unionize home childcare workers in Rhode Island. The 2013 law and subsequent election that would force the payment of union dues or fair-share fees is now likely unconstitutional for such non full-time state employees.
- As governor, what will you do regarding ongoing negotiations with the SEIU?
- What will you do to return workplace freedom to this group of childcare workers?
- What is your position on the unions’ stated intention to unionize other private workers — as quasi public employees — in other industries?
OpEd by Mike Stenhouse, CEO, as it was published in the Providence Journal, 1/12/14
As the 2014 legislative session begins, the leaders of Rhode Island’s political class have signaled that they will not let themselves consider any big ideas to boost our state’s stagnant economy or to improve our dismal jobs outlook.
There has been much speculation about what issues the General Assembly will take up. Unfortunately, if recent history is our guide, legislators will do more harm than good, as they see it as the government’s duty to help those who they perceive are in need — those who are harmed by the very policies their predecessors have implemented over the years.
Indeed, public policy in the Ocean State is tearing families apart. We all know of a recent graduate, often one of our own children, who has left town to look for work in a more fertile state; one of our parents who has retired to a lower cost-of-living state; a prominent business or community leader who has fled to avoid taxes on his or her heirs; or a business owner or entire family that has simply uprooted and moved to regions that offer more opportunity.
The government of Rhode Island has implemented dozens of taxes and regulations that have proven harmful to economic growth and job creation. In far too many categories, Rhode Island ranks at or near the bottom — a last-place team.
Yet political leaders act as if they’re not allowed to do anything about it, rather than seeing the status quo as the enemy of our future.
Instead of creating new Band-Aid fix bills, maybe lawmakers should eliminate some of the statutes that have harmed our chances for prosperity in the first place. The most productive path for legislators in 2014 may be to wipe out destructive policies.
Perhaps the General Assembly should be judged this year not by how many new policies it creates, but by how many existing, anti-growth policies it repeals or rolls back.
For starters, we could repeal or roll back the state’s regressive sales tax; or the requirement that families have no choice on what schools best educate their children; or punitive estate taxes that drive wealthy people to other states; or restrictions on out-of-state companies to sell health insurance in Rhode Island; or the minimum franchise tax, which stifles entrepreneurship; or corporate welfare, to level the playing field; or even renewable energy mandates that drive up costs for every family and business. All of these policies have created a drag on our economy, reducing opportunities for those who wish to succeed.
We continue to inflict legislative wounds on ourselves. We are suffering death by a thousand cuts. Isn’t it time we reversed course and healed some of these wounds?
To do this, we would also have to roll back spending levels, the holy grail of the political class; spending levels that fabricated the very same onerous taxes and fees that are the root cause of our economic woes. This seems beyond the imagination of the political class. Yet, this is allowed. Other states are doing it. We are allowed to change course and create a brighter future for ourselves.
Rhode Island is not defined by its government or a budget number at the bottom of a spreadsheet. Rather, Rhode Island is about the hopes and dreams of real people and real families. We should no longer be held hostage by a failed budget. Should our lives and chances for prosperity be restricted by a number? Or, rather, should the budget be crafted to serve our needs? Which should be the higher priority: the well-being of real people or an arbitrary revenue figure? In Rhode Island, we have it precisely backwards.
If we can roll back certain taxes and spending levels, and if the political class can prioritize the well-being of its residents over its fixation on revenues, tens of thousands of new jobs could soon be created, along with a lower cost of living and renewed opportunities for all Ocean State families and businesses.
We must free ourselves from burdensome taxes and a culture of dependency, and be unleashed to improve our own lives and prosperity.
As an analogy, we don’t have to look any further than the 2012 Boston Red Sox, which, as a last-place team, fired its manager, traded away expensive, non-productive players, and brought in fresh talent. The Sox reinvented themselves, and became World Champions just one season later.
Rhode Island faces a similar situation: We must demand new leadership, repeal non-productive policies, and right-size spending. We can do this. It is allowed!
ELIMINATE THE STATE SALES TAX TO CREATE JOBS: The RI Center for Freedom & Prosperity proposes the elimination of Rhode Island’s sales tax as a means of high-impact economic development. Our RI-STAMP economic model suggests that the loss in state revenue would not be as large as static projections might suggest and would be well worth the boon to Rhode Islanders across the state.
The release by the Chafee Administration of a redacted report on waste and fraud in Rhode Island’s human services programs failed to provide the total taxpayer dollars discovered by Ken Block’s Simpatico software firm that were spent on illegal or other inappropriate activity; instead the report was limited to examples of impropriety and generalities of findings within the state’s Medicaid and food-stamp program.
Based on a brief analysis of related national findings and anticipated state budgets, the RI Center for Freedom & Prosperity estimates that up to $185 million dollars may be currently wasted in the Ocean State. With planned Medicaid expansion, this total could approach a whopping $221 million in future years, almost three times the amount of the 38-Studios debacle … every year.
The biggest portion of the fraud likely comes from Medicaid abuse. Common estimates of such waste and fraud nationally assume that 10% of related spending applies. In our updated report on the Zero.Zero sales tax initiative, the RI Center for Freedom & Prosperity referred to a U.S. House of Representatives Committee on Oversight and Government Reform document that uses that number.
Estimates from the federal Department of Health and Human Services, however, put current “improper payments” at 7.1%, with 6.4% as the target.
The governor’s budget document for fiscal year 2014 revises the current estimate of what the state will spend this year on “medical assistance” (i.e., Medicaid) to $1.616 billion, going up to $1.743 billion next year. Using the 2013 estimate puts the range for waste, fraud, and abuse for Medicaid alone at between $114.7 million and $161.6 million.
The other large portion of wasteful government spending in the report pertains to the food stamp program – also known as the “Supplemental Nutrition Assistance Program” (SNAP) – which uses electronic benefit transfer (EBT) cards to distribute the funds.
As predicted by a post in The Ocean State Current prior to the report’s release by the Chafee administration, and based on report on government waste that U.S. Senator Tom Coburn (R, OK) published in October, dead people in Rhode Island often receive food-stamp benefits.
Coburn’s report actually provides a low-end, for our purposes, estimating around 3% in “improper payments” nationwide. The more official number from the Department of Agriculture is 3.8%, however the Associated Press reported that Rhode Island’s “error rate” for the food stamp program in 2012 was 7.69%.
Governor Chafee’s revised expenditure for SNAP in 2013 is $298.2 million, recommended to hold steady through 2014. That puts the range for food stamp waste, fraud, and abuse between $11.3 million and $22.9 million.
In summary, our Center estimates that the total amount of criminal and abusive activity in Rhode Island’s current human services programs is in the range of $126 million to $184.5 million.
However the story does not end with today’s figures. With the Governor, Lieutenant Governor, and the Secretary of Health and Human Services opting to support expansion of Medicaid, as provided under the Affordable Care Act, the RI Center for Freedom & Prosperity expects that an additional $36.5 million of taxpayer money will be abused as part of the anticipated $365 million in new Medicaid spending in future years.
This could bring the total amount of waste and fraud up to $221 million per year.