Gary Byron: Our next guest is a nationally recognized columnist who writes about politics and policy. His columns appear in numerous national publications such as The Wall Street Journal and Bloomberg and USA today. The Hill, National Review, and many Connecticut newspapers. Let’s welcome back to the show, Red Jahncke.
So, Senator Ron Johnson and some others gave the, the One Big Beautiful Bill kind of a cold reception when it arrived in the Senate. A warning that the Bill will balloon deficits and debt, which, by the way, are already ginormous. Jamie Diamond, JPMorgan Chase CEO predicted that a crisis — not if, but as soon as six months from now, will occur.
So, look, there’s no greater contributor to the recent rapid growth in deficits and debt than Medicaid, particularly under the Democrats, and thus no more appropriate GOP target financially and politically.
But let’s be honest with each other Red. When we look at, when we look at Medicaid and the cuts that it’s taking, it’s it’s not really for people who are justifiably and legitimately are on Medicaid. It’s cutting waste, fraud, fraud and abuse. It’s cutting back on illegal immigrants who have been on Medicaid for quite some time. It’s cutting back on fraud. That sometimes doctors are guilty of. And, it’s it’s cutting back on people who claim to be disabled who really are not; they’re actually able bodied individuals. And it’s also requiring for those who need some Medicare (speaker meant Medicaid) and can work it, keeping them honest and putting them to work, I think they can work up to a certain amount of hours. Well, I didn’t think this was a political issue. I thought this was common sense. I thought both parties were in agreement on eliminating waste, fraud and abuse. What’s the story here Red?
Red Jahncke: Well, first of all, let’s frame the issue in terms of the aggregates. Medicaid is exploding. It went from $600 billion in 2017 to $870 billion in 2023. That’s almost a 50% increase in just six years. That kind of defines the term “unsustainable.” You ran through some of the issues involved. Two of them stand out in terms of what the One Big Beautiful Bill has in it: single, able bodied, childless adults will no longer be eligible, unless they work, because under Joe Biden, they were able to enroll without any work requirement; that clocks in, I think, at a pretty substantial savings number. The various other things you mentioned, you hope are done on a regular basis year in, year out. That’s be on the lookout for waste, fraud and abuse.
Now, there are two provisions that bear on the issue of illegals being covered by Medicaid. Any state that is using Medicaid money for a program for illegal immigrants will lose a percentage of their federal funding. They’re not supposed to be on the rolls. There are 14 states, according to one of the most respected health care tracking organizations, the Kaiser Family Foundation, now known as KFF.
And, now, there’s the other thing that needs more attention, which is what are called health care provider taxes. And this is a real head scratcher from the very beginning.
Gary Byron: Well, we adopted that in 2012.
Red Jahncke: Yeah. And if you recall, Barnes, Dannel Malloy’s OPM head. At the time, people were asking “why are we taxing hospitals?” And he did his best Willie Sutton impression and said, “because that’s where the money is.”
Gary Byron: But hospitals, most of our hospitals are nonprofit, correct?
Red Jahncke: Well, yeah. You really have to wonder why are we taxing nonprofits.
Gary Byron: Who that aren’t? There might be a couple that aren’t in Connecticut.
Red Jahncke: And then those that are incorporated. Why are we double taxing them? If they’re in corporate form, they’re already paying the corporate income tax. Why are we laying another tax on. So you scratch your head. How can this not increase healthcare costs when we’re overburdening hospitals with taxes? Of course they have to increase their charges so that they can pay the taxes. It’s, it’s really quite a head scratcher.
But then you get to the way these taxes work. These are the actual numbers in Connecticut. Connecticut taxes the hospitals $900 million a year and immediately sends back $600 million.
The state has got $300. But when the $600 goes [back to the hospitals], it’s relabeled a Medicaid Supplemental Payment, which triggers a federal match of about $450 million. So, the state, then, sends the $300 million back to the hospitals. The hospitals are whole, but the state has $450 million just conjured out of thin air to do whatever they want with. There are no strict restrictions on what you do with that.
Gary Byron: So the state didn’t use the money to fund Medicaid, but rather to close its huge budgetary deficit.
Red Jahncke: Yeah. In 2017, 18.
Gary Byron: I was there. I remember this.
Red Jahncke: And you remember the $2.2 billion deficit. And with the way the numbers worked out in 2017. Malloy siphoned $750 million. He didn’t send the $300 million back to the hospitals. He kept that. He got $450 million from Uncle Sam. He had $750 million to close the budget deficit. The hospitals, they’re paying the tax. They’re the designated and the intended recipients of the dollars. They knew what was going on. They sued the state.
Gary Byron: Yeah, but there was a settlement.
Red Jahncke: Yeah.
Gary Byron: Yeah, I remember this. I was in the legislature at the time. I remember this.
Red Jahncke: It’s hard to really believe that this all goes on, but this is a huge nationwide phenomenon where states literally siphon money out of Uncle Sam to do with whatever they want. And remember I said that I don’t believe the states are using their, * quote* state funds for the free health care for illegal immigrants. Of course they’re not, because they’re using this money. But the money isn’t tracked. The Center for Medicaid and Medicare Services does not collect data on what’s going on here.
Gary Byron: Well, I know, to some people, it sounds a little complicated. But I got to take a break here.
Red, Connecticut State employees, they’re retiring with pension benefits higher than their last salary. I mean, some public sector union abuses are not only alive and well, they’re more egregious than ever. It’s a classic scheme. It’s called spiking. But how are they able to get away with it? I think it’s working a ton of overtime the last three years of their employment. Therefore, raising their pensions.
Red Jahncke: It’s exactly that, Gary. You, couldn’t have described it better. But the numbers are just astounding. We did a study that we just conducted for Nutmeg Research Initiative and the Yankee Institute. We looked at the top ten employees in the last five fiscal years with the most overtime.
11 have retired. Those 11 worked overtime, received overtime pay, that was two times their salary pay in their last year on the job. So, when you say they work humongous hours of overtime, they certainly do. If you look back in their pay history before three, four years ago, they were working maybe 10% of their salary in terms of overtime pay. So yes, in the last three years on the job, they pile on over time.
Gary Byron: Right. This is not sustainable. It wasn’t sustainable then. It’s certainly not sustainable now.
Red Jahncke: Yeah. Let’s contrast [with] Dannel Malloy. And who would ever have thought that I would sing the praises of Dannel Malloy? I never thought I would, but Malloy in 2017 negotiated a deal with SEBAC that essentially eliminated overtime spiking for post-2017 hires.
Gary Byron: I remember.
Red Jahncke: Yeah. Okay. So again, we’re on the same page here. The pre-2017s. They’re still 28,000 on the job today. And when these kinds of of pensions are extended at time of retirement, it is bankrupting the state. You cannot have people retiring with a pension that’s 40% higher than what they earned on the job in their last year of employment. Yeah, 20 years for working for the state. Most people have at least another 20 years to work. They’re going to sit there and pull a paycheck from their next job at the same time they receive a pension benefit that’s 40% higher than they ever made from the state.
Gary Byron: Red, it also doesn’t help that our current governor, Ned Lamont, is giving COLAs [pay raises], on an annual basis, to the tune of like 30%. The fact that during in that SEBAC agreement that you just mentioned, the negotiations for collective bargaining with, I believe his name is Daniel Livingston. There was a provision in there that nobody could lose their job, that if a department was closing, they would just simply move you to another department. I only have about one minute remaining. Do you want to comment on that?
Red Jahncke: Well, yeah. The no-layoff provision has been in place under the contracts for over a decade. So you can’t be fired.
Gary Byron: That’s what I’m saying.
Red Jahncke: Yeah.
Gary Byron: This is so unsustainable.
Red Jahncke: Yeah. It’s amazing. It’s amazing. When you were referring to the raises under Ned Lamont, he’s given them a 33% compound pay raise over the years he’s been in office.
Gary Byron: The end of our time there, Red, I’m so sorry. The Fox News is going to step on us. Thank you for your time. We’ll get you back on again in a few weeks.
Red Jahncke is a nationally recognized columnist, who writes about politics and policy. His columns appear in numerous national publications, such as The Wall Street Journal, Bloomberg, USA Today, The Hill, Issues & Insights and National Review as well as many Connecticut newspapers.