As I mentioned in my previous article, I had the opportunity to visit with Representative Bangerter, and we talked about a number of things. One topic I had to bring up was the Medicaid expansion. We all know that’s going to come up in this election cycle.
I’ve mentioned before, I’m not only concerned about burdening the taxpayers. I’m particularly concerned about the disincentives the program its self creates. Most folks who’ve never had a reason to look it up might not know. In order to qualify for Medicaid a given household is limited to $3,000 in assets, with reasonable exceptions of course, like one vehicle, one’s home, etc. This is very appropriate. Folks should be expected to use what they have before asking the taxpayers for help, but if a family gets knocked down that far, they should have both incentive and opportunity, to help themselves back up.
My suggestion in this matter was that it might be worthwhile to consider implementing a new incentive. Once folks get knocked down far enough to qualify for Medicaid, we can give them another way to work their way back up. Sure, getting a better paying job is the most productive way for one to improve their situation, but even with a good education, that’s pretty hard to do these days. The long standing, next best way, is to save and invest, but if you’re only allowed to save $3,000 you aren’t going to get very far.
I do not, and would not advocate raising the qualification standards. They are there for a good reason, but here’s my thought. What if we created some kind of new savings account, only for people on Medicaid, and with very strict guidelines, call it maybe a life improvement savings account. Now before anybody jumps to any conclusions, I’ve thought this out, and I think I’ve got a good idea of how this can work, mind you I’m speaking as a conservative.
So for starters, one of the first things I consider is, if we do this, what is enforcement going to cost the taxpayers? Well, I’m going to introduce my answer with a question. How many industries are more accustomed to accommodating regulation through internal diligence than our banking system? Yes, I know a lot folks don’t care so much for banks right now, but you do have to give credit where it’s due. Banks are scrutinized relentlessly. So we don’t force banks to cooperate, but we hold those that do accountable. We ensure the enacting legislation specifies and provides funding for a limited random auditing process. When it comes to a bank, the more substantial the penalty, the less frequent the audits need to be and we can still be confident that they will enforce integrity on their end. So then you might ask why the banks would want to take on this new responsibility. Well that one is even easier to answer.
I’ll admit I only have a moderate understanding of how the banking system works, but I do know this. The money banks have on deposit doesn’t sit in a vault. The money a bank has in deposit is what they use to back loans, and the interest on loans is where they make their profit. The more a bank has on the books at any given time, the easier it is for them to give a loan, and loans don’t just make money for the banks. Loans drive the economy, actually even more than consumers do. Loans allow producers to put more of their product on the market fast enough to keep up with demand, and even push ahead of demand. This is how markets are able to expand and drive down retail prices at the same time. This is what a good economy does.
So how would a new type of savings account help the situation? Well that’s where we’ve got to be careful. The guidelines are the key. There is always some potential for abuse, but with careful consideration we can reduce the likelihood enough to make it worth doing.
This idea is feasible with strict spending rules. You can only use the money you save for things that will improve your means. That can be a lot of things like a home, energy efficiency improvements on the home you already have, or maybe just a more fuel efficient vehicle. Practical things with an obvious enabling benefit, but these things need to be specified in the enacting legislation. We don’t want to leave any wiggle room for manipulation, because that’s how good ideas turn into new problems.
As a taxpayer and conservative I don’t have any problem helping people who need it, but I would prefer to help people get to the point where they don’t need help anymore.
Take a family that’s paying say $600 a month for a small apartment. This family can improve their own means, without getting a new job, by saving up and buying a place of their own. In the Helena area it’s not hard to find an older mobile home in decent condition for 5 or 6 thousand. Granted they’ll still have lot rent, but that’s rarely more than $300 a month. Just by being patient, saving up, and spending responsibly, this given family can cut this aspect of their living expenses by half.
With the current restrictions, this family would lose their Medicaid when they’re only half way to their goal. That stops many from even trying.
The growing lack of personal motivation in our society is a problem. We can’t legislate the way people think, but every once in a while it might be possible, to create a new circumstance, where some at least might change their minds on their own.
Now I’m not going to tell you exactly what Representative Bangerter said about my idea. I would very much encourage you to ask her yourself, but I will say it was a very positive response, and I enjoyed discussing it with her.
Glenn W. Uncles Jr.
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