Medicaid: the beast that’s devouring Oregon’s budget


An increasing number of Oregonians and their elected representatives appear to believe that affordable medical care is a right.

But fewer Oregonians seem to worry about paying for it.

Take Medicaid.

Like “The Eggplant That Ate Chicago,” Medicaid is gnawing away at Oregon’s budget.

Medicaid was created as a Federal-State funded program by President Lyndon B. Johnson in 1965 as part of his “Great Society” initiative. It was originally intended to be a fairly limited government program to subsidize health care for the poor.

But like so many initially modest government programs, Medicaid has metastasized into what one commentator has called “a budget-gobbling fiscal disaster.” Medicaid is now the third largest domestic program in the federal budget after Medicare and Social Security and, as Pew Charitable Trusts noted in a recent report, Medicaid is now most states’ biggest expense after K-12 education.

Spiraling enrollment is the major reason for the cost jumps.

In the beginning, federal and state Medicaid money allowed states to provide medical care only for single parents and children on welfare. Over time the universe of people eligible for benefits grew to include two-parent families, children with speech and development impediments, people who could be cared for at home rather than in an institution, children up to age 5, 8 and then 18, individuals with mental retardation, pregnant women and so on.

Just since 2000, the number of enrollees nationally has more than doubled, going from 34.5 million to 73.5 million. And because Medicaid is an entitlement program, states have to provide required benefits to eligible enrollees, with the state paying part of the cost. In other words, as more people join the program, it costs more.

Medicaid went into effect on July 1, 1966. Just a few million people enrolled the first year and about $850 million of public money was spent on the program, partly because only 28 states implemented it immediately.

Oregon introduced Medicaid in July 1967. By the end of that year, 37 other states had also implemented their Medicaid programs. In 1982, Arizona became the last state in the nation to implement a Medicaid program.

That same year, the first hints of federal cost concerns surfaced when Congress passed legislation limiting Medicaid eligibility to the “medically needy” whose income was at most 133 1/3 percent of the AFDC income eligibility level in a state. But the program’s explosive growth continued.

By 1973, national enrollment had reached 17 million and total Medicaid spending $9.4 billion. By 2013, Medicaid enrollment was 52.3 million and spending totaled $460 billion. In 2016, Medicaid enrollment reached 72.2 million and Medicaid spending totaled $553.5 billion.

The Centers for Medicare and Medicaid Services’ Office of the Actuary projects national enrollment will reach 77.5 million in 2024.

According to the National Association of State Budget Officers, the run-up in Medicaid costs meant that Medicaid spending accounted for 28.2 percent of total state spending in fiscal 2015, the single largest component of total state expenditures, and 19.7 percent of general fund expenditures. The Association projected that in fiscal 2016, Medicaid spending will come out at 29 percent of total state spending and 20.3 percent of general fund expenditures.

Oregon’s Medicaid spending has also seen explosive budget-busting growth, posing fiscal challenges for the entire government.

The Patient Protection and Affordable Care Act (ACA) called for states to expand Medicaid to low income adults and provides federal funds to cover 100 percent of the costs of the newly eligible people from 2014 through 2016. The federal matching rate was then set to decrease over the next four years to 90 percent in 2020.

When Oregon made the well-intended but ill-conceived commitment to expanding Medicaid under Obamacare, a report commissioned by the state estimated that the Medicaid expansion would cost the state $217 million in the 2017-2019 biennium, the first full two-year budget cycle in which the state would begin shouldering some of the costs. The Oregon Health Authority later revised that to $369 million, about 70 percent more.

In June of this year, the Legislature sent to Gov. Kate Brown a plan to raise $550 million in health care taxes to fund Oregon’s Medicaid program in the 2017-2019 biennium.

The Legislature even went so far as to extend Medicaid to children brought to the United States illegally. Coverage will begin in January 2018, with total enrollment of about 15,000 anticipated.

The Oregon Health Authority has calculated that the fiscal impact of this expansion will be about $36 million during the 2017-19 biennium. Under federal law, illegal immigrants can only receive Medicaid for emergency conditions, including pregnancy-related costs. To get around that, Oregon will pay 100 percent of Medicaid costs for illegal immigrants.

Some people breathed a sigh of relief at the enactment of the Medicaid package, but the solution is temporary and elected officials know it. Escalating costs are only going to get worse, partly because of the scheduled decrease in the percentage of the bill to be covered by the federal government.

Newly eligible Medicaid beneficiaries were fully financed by the federal government for 2014 through 2016, but the federal share will decline until the federal government funds just 90 percent of the costs and the states pick up 10 percent starting in 2020.

That’s going to have a bad enough impact on the state budget, but what happens after that could be even worse. Oregon’s expansion of Medicaid eligibility was considered a no-brainer by supporters because of the 90 percent commitment, but government can be fickle. From a fiscal perspective, it is unrealistic to expect the federal government to continue to pay 90 percent.

Congress could change the state/federal shares at its discretion, a possibility John Kasich, Ohio’s Republican governor, raised on July 19. “…states cannot expect the federal government to continue paying 90 percent of Medicaid expansion costs given our nation’s historic debt; they must accept a gradual return to traditional cost-sharing levels,” Kasich wrote in a New York Times opinion piece.

The federal government has historically provided states with Medicaid funding on a sliding scale based on their per capita income, with more affluent states getting a 50 percent match and poorer states getting up to 83 percent.

If efforts to constrain burdensome Medicaid costs are made again, you can be sure they will be met with overwrought cries of despair. There will also be new accusations like the claim by Sen. Elizabeth Warren (D-MA) that the House GOP’s plan to repeal and replace parts of the Affordable Care Act “…will devastate Americans’ healthcare. Families will go bankrupt. People will die.”

But not tackling the escalating costs of Medicaid will be medical malpractice.

So hold on to your hats, folks. This isn’t over.


Renaming Portland’s Lynch Schools: the abandonment of reason


It’s not right. It’s not wise.

It’s just not fair to the students at Lynch Meadows, Lynch Wood and Lynch View elementary schools in Portland’s Centennial District.

The three schools are set to lose the “Lynch” in their names before the next school year because the District decided the name “Lynch” is an epithet.  Many newer families coming into the district associate the name with America’s violent racial history, Centennial Superintendent Paul Coakley told The Oregonian.

This is (supposedly) adult educators gone mad.

What’s next? Renaming public buildings with names such as White ( lacks tolerance of diversity), Young (implies ageism), Jackson (he owned slaves,, you know), Wilson (a president who re-segregated the federal civil service) or Johnson (President Andrew Johnson obstructed political and civil rights for blacks after the Civil War, contributing to failure of Reconstruction.)

The overly censorious policing of language in order to spare sensitive young minds does the children no good. Instead of protecting the delicate young souls, it lays the foundation for later insistence on trigger warnings, objections to micro-aggressions, the shouting down of controversial speakers, and the unfortunate spread of presentism, the tendency to interpret past events in terms of modern values and concepts.

The correct response by the Centennial School District was not to cater to misconceptions about the word by abolishing its use, but to educate the schoolchildren about the historical roots of the use of the Lynch name at the schools and the philanthropic spirit of the Lynch family, and, yes, that the word “lynch” in America is also associated with the killing of black people, often by racist organizations such as the Ku Klux Klan.

As Jeremy Montgomery, whose son attends Lynch View Elementary School, told KATU, education would be a better solution. “See, I didn’t even know that (the schools were named after a charitable family). If people were more open to that and knew that, I couldn’t see it being a problem at all,” he said.

Tom Singerhouse, who went to Lynch View more than 50 years ago, expressed a similar view to KATU, saying teachers should be teaching their students about the significance of the Lynch family.

Lynch Wood Elementary’s website already provides a history lesson about the school’s name. Take a look (below). It’s fascinating reading and would be a good basis for a valuable history lesson with the schools’ students. They’d certainly learn a lot more than they would from deleting “Lynch” from their school’s name.


                        A History of Lynch Schools

A booklet produced by the Civic Leadership Class of 1964

The name “Lynch School” dates back to 1900 when a one room school was built on the present site of the Lynch School at S.E. 162nd Avenue and Division Street, says a website a reprint of a booklet produced by the Civic Leadership Class of 1964.

According to the booklet, on March 13, 1900, Patrick and Catherine Lynch donated one acre of ground located at Section Line Road (Division) and Barker Road (162nd Ave.) on which was built a new one room school pictured on the front of this booklet.

This is the origin of the name “Lynch.” The Lynch farm originally consisted of 160.3 acres granted to Patrick and Catherine Lynch on August 1, 1874, under the Homestead Act passed by Congress in 1862. The original deed granted the land to the Lynch family and was signed by Ulysses S. Grant, President of the United States. Although the property included land on both sides of Section Line Road, the farm home was located across Division Street in the vicinity of The Hut, a restaurant now situated at 167th and Division.

The deed to the property donated to the Lynch School District in 1900 describes the location of the survey markers marking the boundary of the property as being located three inches below the wheel ruts in the adjoining roads. The stone markers had chiseled grooves on the top side for identification purposes. The stone marking the corner of the property at S.E. Division 10″ x 15″ x 22″ set flat side down 3″ below surface of gravel in the north wheel rut of graveled Section Line Road and tamped firmly in place”.

The area around the Lynch School was entirely devoted to agriculture in the late 1800s and early 1900s. Threshing was a community undertaking and many boys missed school because they were needed at harvest time.

The original one room Lynch School which started with fifteen to twenty students increased in number until in 1914 there were about fifty students in the one room school. Some say there were as many as sixty for the one and only teacher. Some of the former students of those “good old days” say that the only way the teacher could handle all eight grades was to divide up her time so each class had a recitation period. She would start in the morning with the first grade, and would by afternoon, finally get around to the eighth grade.

Meanwhile, the rest of the classes were working on assigned work. Of course, some activities and classes were jointly carried on together, such as music, writing practice, and practicing for school plays. In 1915 a large multiple purpose room, which served as an auditorium and meeting place for community functions was built onto the existing one room school. Folding doors were extended during the day making it into two classrooms giving the school a grand total of three rooms.

The Lynch P.T.A. was first organized in 1917 and undertook as its main project, the serving of hot soup and chocolate at lunch time. Residents who remember those days, say it was prepared at the W.B. Steel home where the Big Dollar Shopping Center is now located. Several of the boys would be asked to go over and carry back the kettles of soup and cocoa along with a pail or two of water before lunch.



Is the #Ilani Casino going to cannibalize the Oregon lottery?


Opening day at the Ilani Casino

The word Ilani means “sing” in the Cowlitz language. The Cowlitz Indian Tribe is surely singing the praises of the thousands of Oregonians gambling at the tribe’s new $510 million Ilani Casino near La Center, WA.

The attitude at the Oregon Lottery is not quite so buoyant.

In September 2016, the state’s Office of Economic Analysis (OEA) predicted a decrease in lottery sales of approximately $120 million per year in the 2015-2017 biennium due to the opening of the casino, particularly because of a slowdown of the rate of Video Lottery growth.

The Video Lottery is the Oregon Lottery’s cash cow.

You know the typical casino ad. The gorgeous blonde’s crystal blue eyes gaze adoringly at the urbane, fashionably dressed man as he places a bet. The couple is surrounded by smiling, equally fashionable friends enjoying the gaiety.

You almost expect Jay Gatsby to stroll into the scene from West Egg and enjoy the fun.

The raw reality at video lottery sites in Oregon is usually quite different. On a recent afternoon, all the machines at one site in Hillsboro were being used only by solitary, slightly disheveled men and women in jeans and sweatshirts.

All of them looked hypnotized by the glow of the screen in front of them. Almost motionless, except for the rapid movement of their hands to push the play buttons, they sat mute in the dim light.

MIT anthropologist Natasha Dow Schüll knows such people well. In her book, “Addiction by Design,” she shows how the rhythm of gambling at electronic terminals puts people into a trancelike state in which gamblers keep playing not to win, but so they can stay “in the game” and maximize their “time on device.”

Oregon voters overwhelmingly approved the lottery in 1984. It launched in 1985 at a Portland event featuring an 84-foot-tall inflatable King Kong, perhaps symbolizing the behemoth the lottery would become.

Oregon’s approximately 11,909 Video Lottery terminals deployed throughout the state are now a major part of a rising river of lottery money flooding Oregon. The money has turned the state into an addict as Oregon’s total lottery take has gone from $87.8 million in 1986 to $ 1,230,189,728 in the Fiscal Year Ended June 30, 2016. Video Lottery has been responsible for most of that growth, taking in $876,475,310 in FY16, 71.3 percent of total revenue.

To say the least, the Oregon lottery is a very big business.

The Ilani Casino has already shown it can attract huge crowds and their gambling dollars and the Cowlitz expect millions of guests. Who wouldn’t prefer to gamble at a Vegas-style over-the-top casino just 25 miles north of downtown Portland instead of at a dark, claustrophobic room in a roadside strip mall.

So, will Ilani cannibalize sales from state lottery operations?

Some studies offer strong evidence that it will. An analysis of the relationship between Indian casinos and state lottery revenue in Arizona found that a 10 percent increase in the number of casino slot machines was associated with a 2.8 percent decline in lottery sales. Another study found that riverboat gambling expenditures had a negative and statistically significant impact on state lottery revenues, while a third study found that an increase of $1 in commercial casino revenues reduces net lottery revenues by $0.56.

In Maryland, the opening of casinos affected lottery revenue almost immediately, with traditional lottery sales decreasing by 2.2 percent in fiscal year 2013 and 1.7 percent in 2014, raising fears of a continuing downward slide. But revenue has since rebounded to $1.76 billion in FY15 and $1.9 million in FY16.

Pennsylvania’s lottery was on a roll, too, with steadily increasing sales, but beginning in 2006, when casinos began to open across the state, lottery sales leveled off and then declined. The hardest hit locales in terms of traditional lottery sales were close by areas within a one hour drive. But, as in Maryland, the downward trend was temporary. Pennsylvania’s lottery sales have gone up every year since 2010 and in FY16 the lottery posted record revenue of $4.1 billion.

In Massachusetts, lottery sales didn’t decrease statewide after a casino opened in June 2015, but lottery revenues for agents nearer the casino grew more slowly on average than the rest of the state.

Ilani’s impact on the Oregon Lottery may well follow the pattern in other states, with sales affected most significantly in the Portland Metro Area, particularly in areas that border Washington, and with video lottery being the hardest hit.

According to a March 2017 report by the Oregon Office of Economic Analysis, more than half of Oregon’s statewide video lottery sales occur within the Portland Metropolitan Statistical Area (MSA). About 11 percent of statewide video lottery sales occur within just the northern portion of the Portland MSA – from the St. John’s neighborhood through the Parkrose neighborhood, including Hayden Island.

Anecdotal evidence, plus statistical analysis, indicated that the border effect with the State of Washington, which does not have video lottery in its bars and restaurants, was large, the report said.

This is particularly true directly across the two interstate bridges in Portland. If these northern Portland zip codes see a 40-50 percent decline in video lottery sales, the report said, that means total statewide video lottery sales would decline 4.5 to 5.5 percent. Factoring in additional losses of around 10-15 percent throughout the rest of the Portland region brings the total impact to nearly 12 percent, relative to no casino baseline.

But if the experience of other states holds true, the negative impact of Ilani on even video lottery games in Oregon may not last.

Richard McGowan, a professor at Boston College and an expert on the economics of gambling, explains that the limited impact of casinos on lottery receipts is because the customer bases for lotteries and casinos also don’t overlap as much as people might assume. “Most lottery tickets are bought on impulse when people go in to buy milk and gasoline,” McGowan said. “You have to plan to go to a casino.”

Ilani is, however, likely to impact Oregon’s entertainment venues over the long term. Gaming serves as a substitute for other forms of entertainment, so the more Oregonians go to Ilani to entertain themselves, the less money they will spend in Oregon. But that’s another story.








The #Oregonian: the disintegration of a once great American print newspaper

“Three centuries after the appearance of (James and Benjamin) Franklin’s ‘Courant’, it no longer requires a dystopic imagination to wonder who will have the dubious distinction of publishing America’s last genuine newspaper.”    Eric Alterman


Contents of print edition of The Oregonian, Wednesday, July 5, 2017

Stories on front page: 2

Front page stories written by Oregonian reporters: 1

Total number of stories by Oregonian reporters: 11

Stories from Associated Press and wire reports: 13

Stories from the Washington Post: 1

Stories from the Tribune News Service: 1

Stories from The Marshall Project: 1

Oregonian staff editorials: 0

Food insert:

    Stories by the Tribune News Service – 1

         Stories by the Washington Post – 2

         Stories by Oregonian reporters – 0

Oregon Craft Beer Month Official Guide:

         Stories by marketing personnel – 4

       Stories by Oregonian reporters – 0





Personal Income Taxes Floating Oregon’s Boat; Corporate Taxes shrinking.


Oregon has a new distinction. In 2016, broad based personal income taxes represented 69.6 percent of state government revenue, the highest share in the country, up slightly from 69.1 percent in 2015 and up substantially from 37.7 percent in 2010.

Since about 1980, corporate income taxes have become an increasingly smaller share of total state tax revenues and a smaller share of businesss’ costs across the country, according to the Federal Reserve Board of San Francisco.

Broad-based personal income taxes are the greatest source of tax dollars in 28 of the 41 states that impose them, the Pew Charitable Trusts reported today.

In fiscal year 2016, the share of total state tax revenue from personal income taxes grew to its largest percentage in at least 65 years, Pew said. The share from general sales taxes also increased from the previous year, while those from corporate and severance taxes edged down.


Taxes and federal funds together account for more than two-thirds revenue for the 50 states, another Pew study reported. Taxes are the largest revenue source in 46 states, while federal funds are greatest in three.