The data prove Boehner’s “idea” about the unemployed wrong, wrong, wrong

John Boehner thinks we’ve made it too easy for the unemployed to go without work. Addressing the conservative American Enterprise Institute last week, the Speaker of the House criticized “this idea” among the jobless that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.” To Boehner, our policy has corrosively enabled those inclined toward sloth to give way to that temptation.

This theorizing has been roundly blasted in liberal circles. Paul Krugman characterized it is a revealing gaffe, exposing conservative disdain for the unemployed. Simon Maloy at Salon said that Boehner had gone off the reservation, drifting off-message from efforts by those like Rep. Paul Ryan to move away from (or at least better conceal) makers/takers rhetoric and knee-jerk distaste for the jobless.

But few have discussed the absolute wrongheadedness of Boehner’s policy diagnosis here. He believes that it’s too easy to stay unemployed. The implication is that public policy should make it harder to be unemployed by, say, cutting off unemployment insurance benefits earlier and making benefits stingier to begin with. This, it’s thought, would give these slackers the kick they need to go out and work.

Never mind that unemployment benefits are already unavailable to the vast majority of the unemployed and already historically stingy. As Krugman explains, “Only 26 percent of jobless Americans are receiving any kind of unemployment benefit, the lowest level in many decades. The total value of unemployment benefits is less than 0.25 percent of G.D.P., half what it was in 2003, when the unemployment rate was roughly the same as it is now.”

Yet the idea that our lavish unemployment benefits drive up unemployment rates persists among conservatives. And it persists in the face of clear evidence to the contrary.

For one thing, unemployment benefits vary drastically from state to state. States aim to replace some portion of an unemployed person’s lost wages. Maximum benefits range from Mississippi’s $235 per week to Massachusetts’s $1,019.

If the Boehner Hypothesis had something to it, we might expect to see lower unemployment rates in states providing the stingiest unemployment benefits. But in fact, Mississippi has 7.9 percent unemployment, one of the highest in the country. And Massachusetts has 5.8 percent unemployment, lower than the national rate.

The Federal Reserve recently studied whether extending unemployment benefits had any effect on the unemployment rate. During the recession, the federal government extended funds for state unemployment benefits. These emergency measures made benefits available to those without jobs past the usual 26 weeks of unemployment to as many as 99 weeks. Conservatives regularly fretted that this weakened the incentive to find work, frequently obstructing extensions to provide more help to the jobless.

The Fed, however, found that these extensions had a minimal impact on the unemployment rate and virtually no impact on the number of people participating in the workforce. “[T]he overall effect of EEB [emergency extended benefits] on the unemployment rate is fairly modest; at its peak (in terms of the average number of benefit weeks provided) EEB boosted the unemployment rate by one-third percentage point.” Moreover, “the effect of EEB on the [labor force] participation rate is estimated to have been quite small.”

This is just the latest piece of evidence refuting the Boehner’s Bootstraps Hypothesis. James Pethokoukis at the American Enterprise Institute helpfully summarized a series of studies that found similar results. One study by the Boston Fed found that cutting off unemployment benefits didn’t nudge people to find work, but rather made them “more likely to drop out of the labor force; transitions to a job appear to be unaffected by UI benefit extensions.”

Another study compared the tellingly similar results in North and South Carolina. Last summer, North Carolina slashed its unemployment benefits so severely that it made itself ineligible for federal emergency unemployment extensions. Mirroring the Red State rejection of ObamaCare’s free Medicaid expansion, North Carolina effectively spurned free federal support for its own long-term unemployed.

Economist Justin Wolfers found that since North Carolina cut its benefits, its economy has fared no better than neighboring states with similar economies that didn’t slash benefits for the unemployed. South Carolina, for instance, has seen slightly faster employment growth that North Carolina has. Contrary to the conservative bootstraps theory, North Carolina doesn’t stand out at all from similar states despite its experiment in inflicting hardship on the long-term jobless. “The bottom line,” Wolfers concluded, “is that North Carolina looks quite similar to its peers, and certainly not better.”

The irony is that Pethokoukis’s work comes from the very think tank before which Boehner continued to cling to his disproven theory of what ails the unemployed. The lesson, I suppose, is that Boehner would do well to survey the work from the forums he speaks at.

And he’d do well to heed Pethokoukis’s conclusion that the “safety net supported American incomes during the recession and its aftermath” — jobless benefits included. It’s time we lay to rest the conservative notion that the jobless need constant work incentives, and maybe instead just need some financial support to help them afford things like Internet, new suits, dry-cleaning, resumes — you know, things that cost money that help people find a job.

Instead of moralizing against the unemployed, we should understand that unemployment insurance plays an important role in helping people through hard economic times. The unemployed don’t need a kick in the pants to help them find work, they need a stronger economy. And that comes when everyone — the jobless included — has a little more spending money in their pockets.

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Hey, Congress actually did something! — and made American childcare a little better in the process

Stop the presses: Congress actually passed a bill last week. An overwhelming bipartisan majority in Congress voted to reauthorize the Child Care and Development Block Grant program, a $5 billion fund for the states to subsidize the cost of childcare for low-income families, which President Obama is expected to sign. And in the process, it patched some glaring holes in our childcare system to make it a little better and safer.

Calling what we have a childcare “system” is frankly too generous. What we have in much of the country is a lightly regulated mess. In a highly-regarded piece last year called “The Hell of American Daycare,” Jonathan Cohn of the New Republic exposed the neglectful patchwork of state under-regulation that led a tragic fire at a home daycare in Texas.

“Excellent day cares are available, of course, if you have the money to pay for them and the luck to secure a spot,” Cohn explained. “But the overall quality is wildly uneven and barely monitored, and at the lower end, it’s Dickensian.”

Some states require hardly any training for daycare providers in health, safety, and child development. As the Center for American Progress has noted, only 13 states even require background checks for workers at daycare centers—and four states don’t even screen for sex abuse history. Sixteen states permit teachers without a high school degree or G.E.D. to lead a daycare center.

Despite lackluster quality, daycare costs continue to soar. Average annual childcare costs are nearly $8,000. For families earning less than $18,000, the rising cost of childcare has consumes a prohibitive 39 percent of monthly income. Researchers believe this has led to a recent uptick in the number of stay-at-home moms, as the prospective cost of childcare leaves little net gain from working.

There are two federal programs that attempt to ease this financial burden. The Child and Dependent Care Tax Credit subsidizes some of the cost of childcare for families. It provides up to $1,050 per child for families earning below $15,000 a year, steadily decreasing to $600 for families earning over $43,000. However, it is nonrefundable, meaning any subsidy for low-income families’ childcare expenses is lost once their tax liability reaches zero.

The second program is a $5 billion annual block grant to the states to pay for childcare for low-income families. It was last authorized in 1996 as part of congressional welfare reform, but Congress had not previously attached strings to the grant to promote childcare quality.

Until now. When Congress reauthorized the CCDBG program, it attached important regulatory conditions addressing some of the hellish problems plaguing American daycare. If states want funding, their daycare centers must now run background checks on all employees. Providers must be trained in first aid, safe sleep practices, emergency preparedness, and avoiding shaken baby syndrome. And states must conduct annual random inspections of each daycare facility, publicizing the results online — a major improvement given that states like California and Iowa had been conducting inspections only once every five years.

These are significant reforms that ought to improve the quality of care across the country. They bring some uniformity to what had been a wildly disparate field of state regulations, bringing into the twenty-first century the places where 11 million children under the age of 5 spend most of their days.

But there’s still much more to be done. Though the reauthorization increases CCDBG funding somewhat over the next six years, it remains an underfunded program. It serves only one out of six eligible families, leaving long waiting lists for vouchers and subsidized daycare seats in many states.

Low-income families who aren’t lucky enough to get subsidized spots continue to pay out larger shares of their income for worse care. And a $600 tax credit for middle-class families is a relative drop in the bucket, enough to cover only about a month of childcare costs for the average family. It’s a drag on our economy when parents can’t justify working in the face of expensive childcare.

Still, it’s heartening to see Congress responding to an under-noticed national crisis. Reauthorizing the CCDBG with conditions to improve quality was the right thing to do. Perhaps going forward, the bipartisan coalition behind the reauthorization will push for more support for working families in order to expand childcare access and affordability.

What would conservatives do with Medicaid?

State-level Republican governors and legislatures are using the voluntary Medicaid expansion to leverage conservative policy concessions from the Obama administration. In states like Missouri and Pennsylvania, this has meant trying to enact work requirements for Medicaid. This would mean that, to receive Medicaid coverage, low-income Americans must be working, actively seeking out work, or participating in a job-training program.

This would be a significant departure from how Medicaid programs are currently constructed. No state has a work requirement for Medicaid — the original Medicaid statute prohibits conditioning coverage on work participation. And the Obama administration has flatly refused to grant a Medicaid waiver for proposed work requirement rules, so these state proposals are unlikely to become law anytime soon.

Nonetheless, the conservative instinct to condition health insurance for the poor on working is telling. And if a Republican wins the White House in 2016, red states would gain a new hearing to enact these ideas through federal waivers.

Interestingly, the attempt to tie Medicaid to working comes at the exact moment that health economists and policy wonks across the political spectrum are aiming to decouple of health insurance from employment for everyone else. Most economists consider traditional employer-sponsored insurance to be inefficient, as it locks workers into their current jobs for fear of losing coverage. They’ve therefore supported reforms to let individuals purchase insurance outside of their workplaces, like ObamaCare’s exchanges.

Some conservatives favor doing just the opposite when it comes to insurance for the poor. True, Medicaid coverage doesn’t have the same job-lock issues as employer-sponsored insurance. It’s a single-payer system, so it follows you from job to job.

But the urge to link Medicaid to employment flows from the conservative obsession with legislating work incentives for the poor. To some conservatives, any government benefit that reaches the poor must be conditioned on working, seemingly because poor people supposedly need constant shocks and prods to keep them employed.

Prominent conservative health economist Avik Roy showed the foolishness of this line of thinking in a recent interview. Roy, the author of How Medicaid Fails the Poor, recently released a conservative healthcare reform proposal detailing how we can “transcend” ObamaCare, using its existing structure to achieve conservative policy preferences.

In the interview, Roy explained — and justified — why his proposed revamp of Medicaid doesn’t include a work requirement:

 “[S]omebody asked me the other [d]ay, he said ‘Avik, is there a work requirement … ‘ (A conservative asked me this …) ‘Is there a work requirement in your plan for eligibility for these exchange subsidies for low-income people?’ and I said no.

“The guy said: ‘Well that’s a problem. We should have a work requirement.’

“I said to him: ‘Would you ask for a work requirement for a low-income unemployed parent to send his child to primary school?’ Of course he didn’t answer.”

Now of course, there may be conservatives for whom this point isn’t an argument-stopper — they may very well support work requirements for parents to send their kids to public school. After all, we’ve seen recent conservative discomfort with giving school kids government handouts in the form of free school lunches.

Though he defends public health insurance for the poor from shortsighted work requirements, Roy is hardly a fan of Medicaid. In Transcending ObamaCare, he argues that it generates little in the way of beneficial health outcomes for the poor in comparison to going uninsured.

Roy acknowledges that the root cause of this has been low Medicaid reimbursement rates to physicians. Doctors are reluctant to take Medicaid patients because Medicaid pays so little. Studies have found Medicaid patients are denied doctors appointments six times more often than those with private insurance — even when they tell the doctor that their child has a serious medical illness.

Why does Medicaid pay so much less? It’s because of the quirky and inefficient cooperative federal structure of Medicaid. “Medicaid is jointly funded by state governments and the federal government,” Roy explains. “Because neither party has full responsibility for the program, both parties have engaged in irresponsible behavior.” Federal regulations prohibit states from charging more to Medicaid patients, and states have responded to budgetary crises by slashing reimbursement rates, plunging as low as 29 percent of private reimbursement rates in New York.

(It should be noted that comparing Medicaid and private insurance reimbursement makes Medicaid look exceptionally bad. It fares a little better when compared to what Medicare pays, as calculated by the Kaiser Family Foundation. For instance, New York’s Medicaid program pays 55 percent of the Medicare rate, and the average state pays about two-thirds of what Medicare pays. Still underfunded, but a bit better.)

Roy’s solution is to blow up Medicaid and give the poor subsidized private insurance on health exchanges. Very well. It’s a totally legitimate proposal that would extend ObamaCare’s subsidy-exchange structure to those below 133 percent of the federal poverty line — the current cut-off point between expanded Medicaid and ObamaCare’s marketplaces.

And in the Obama era of liberal pragmatism, it’s a proposal in spirit with the technocratic amenability to using any practical means to achieve progressive goals. Obama wanted to enact affordable universal coverage in the United States — long a liberal goal — but didn’t mind using Mitt Romney’s private insurance-based marketplace structure to get us there, rather than insisting on liberal means like single-payer.

In the Medicaid expansion already, the administration has been willing to accept conservative ideas on how to extend health insurance to the poor. Indeed, Roy’s plan would largely mimic the so-called “private option” that Arkansas negotiated with the Department of Health and Human Services, using Medicaid funds to subsidize private insurance for those newly eligible for Medicaid coverage.

These are fine ideas, but are hardly the only way to heal Medicaid’s woes. As Roy explained, Medicaid’s problems stem from low reimbursement rates, which in turn stem from its inefficient joint federal-state financing structure. So why not simply federalize Medicaid? The federal government is better positioned to sustain social insurance programs than the stares are. It faces less budgetary pressure, particularly during recessions, because (unlike the states) it can run up deficit spending when social welfare program rolls expand in a weakened economy. This stabilizes financing for these sorts of programs, preventing them from being hollowed out by emergency state budget cuts.

The federal government could then raise reimbursement rates to something closer to what Medicare pays. And to get rid of any lingering discrimination against Medicaid patients, it could simply make such discrimination illegal, relying on testers in the same way housing discrimination laws are enforced.

Yes, this would cost the federal government more, but it would also relieve the states of a significant budgetary burden. It would also better serve the poor, as historically, the federal government has been a far better steward of low-income programs than the states have been. (See welfare reform / TANF; the 24 Medicaid expansion opt-out states; etc.)  And it might even save the government money in the longterm by letting the poor get more check-ups and preventive care, keeping the government from footing costly ER and advanced illness bills later on.

Still, Roy’s proposal is a refreshingly thoughtful constructive critique of ObamaCare — an all-too-rare conservative feat in the years since healthcare reform. If nothing else, maybe it will teach conservatives to love (or at least begrudgingly accept) ObamaCare by showing that it lays a foundation that they too can work with, finally breaking that fever that has plagued conservative politics since 2009. And though Roy would revamp Medicaid, at least doesn’t want to shackle the uninsured poor with work requirements.