John E. Maloney's blog

If you were an investor now, would you invest? You would be a dummy if you did, because you should wait to let the GOVERNMENT pick the winners and losers. But even if the GOVERNMENT decides to throw some money at an industry, you would be a dummy to invest. You shouldn’t invest long term money in a place where the GOVERNMENT offers only a short term fix. Care to buy some Chrysler stock?

A dummy needs to understand what will grow an economy and what will not. A dummy may not understand why it is better to invest in business than in government, so I will try, in a dummy sort of way, to explain it.

Banks use money to make loan to businesses and consumers. A business exists for one purpose only, and that is to make a profit. The fishermen in Christ’s time invested in capital equipment such as boats, nets, and tributes to Caesar, hired junior fisherman who they paid a wage, and went out and fished. They then took their catch back and sold it, and from the money they received they bought nets, boats, and paid the junior fisherman whom they employed.

Because banks were not there to lend money, fishermen often formed partnerships. Someone who owned boats, but was too old to fish, contributed his boats and nets and managed the sales. It took a while, but eventually everyone figured out a better form of partnership which was called the corporation. This allowed many partners to share in the profits of the business. There is nothing inherently wrong with making a profit, for that is the purpose of all business whether in Christ’s time or ours.

If a junior fisherman wanted to get into the fishing business, there are two ways he could do it. He could set money aside from his wages and save up and buy nets and boats or he could borrow money and start the process sooner. Recall the parable about the master who gave a different amount of money (talents) to his executives to invest. Even Christ approved of prudent investing, and Christ was no dummy.

The only difference between the "master" and a bank is that a bank is bigger and has more owners (stock holders) Bank’s get money to lend from essentially three sources: the ownership interests that they sell to people who want to own bank stock, money from depositors, and money that the banks borrow from the federal bank. The Securities and Exchange Commission (SEC) regulates the way that potential investors invest in banks. The federal government through the FDIC insures accounts to keep depositors from making "runs on the bank". The federal government through the interest rate it charges encourages or discourages commerce. It is through these interest rate increases or decreases that the "fed" attempts to provide a small slow, but steady growth in our economy. If the "fed" constantly was making large interest rate changes, businesses could not make long term plans for their businesses because those plans would change dramatically with every rate change that GOVERNMENT made.

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What led to our current crisis is that GOVERNMENT lost control of our banking system. In other words, the GOVERNMENT, through the laws it enacted and the regulations it created to implement its policy, lost control of the banking system. Our banking system is like a hospital. It is the primary way that we fix a sick patient. Unless we repair our hospital, we will have no hope of taking care of all the sick patients that we will be seeing during this economic downturn. But before we fix the hospital (the banking system) we need to understand why it needed fixing

Now this system works fine if banks are doing banking, but our politicians decided to allow car companies to merge banking and manufacturing functions. When the manufacturing side could not compete because of the union wages it paid, the stock of the company dropped dramatically because the companies were essentially their own banks which were being dragged down by their manufacturing expense. It is the same reason that the Tribune Company wanted to spin off the CUBS.. If the only control GOVERNMENT has is through incentives, it became much more difficult to help the auto industry because banking and manufacturing had merged together. But make no mistake, it was the legislature and its regulations that allowed this. Banking and manufacturing were always separate until a very few years ago.

The very same thing happened in the housing market. GOVERNMENT got involved again. There are two main factors in every lending decision. (1) How much profit will be made from the deal? (2) What is the risk after default? Let’s examine profit first.

The amount you sell or the amount of interest you are paid is called your gross income. From this you subtract your expenses such as wages, cost of maintaining depreciable assets, supplies, utilities, taxes, etc. What you have left is your profit which corporations distribute to shareholders who own stock. Let’s not employ class envy, because most of these shares are held in retirement accounts of people like you and me-(mutual funds). If the GOVERNMENT can control winners and losers by deciding not to pay its medical providers or taxing the hell out of its product (tobacco), then the bottom line-its net profit-is effected and people will not buy its stock. In the case of the auto industry it was the high cost of its unionized labor that left it unable to compete with Toyota and Honda..

The second factor, is the risk after default. If I lend you money to buy land and you are not able to pay me back, I foreclose on the land, sell it, and repay myself as much as the collateral will bring. If the collateral sells for an amount greater than the loan, there is a surplus which will be given back to the borrower. Land won’t go anywhere and will not have wild fluctuations in value like you will with a car. Some assets the government will allow you to depreciate over longer periods of time. Land cannot be depreciated at all.

A second factor determining risk is the ability of the borrower to repay. This has nothing to do with recouping money from the collateral. If I reposes and sell a car after default, I can still sue you for a deficiency from that loan. If you have other assets that I can reach to repay the loan, I can go after those.

The interest rate is a function of income and default is a function of expense. The risk of default is usually determined by a credit score. The lower the credit score the higher the interest rate that a borrower will pay. You have to consider both of these factors together to decide whether one business makes more profit than another. The claim that a loan is usurious can only be considered after taking into account the risk of default. If half your loan portfolio is in default, you will have to charge extremely high "juice" to make a profit.

In a free market system like we have, it is the free market that should determine the winners and losers, not the GOVERNMENT. If every business is out there to make as much profit as it can, business people will make business decisions. If they can make more money selling ice Eskimos than they can make selling some other product, that is what they will do.

We will take a brief aside for a moment here and explain the difference between the parties on the stimulus package. The Republicans suggest that GOVERNMENT should not pick winners and losers in a free market economy. To do so will keep investors on the side line, because risks cannot be determined in a free market manner. When risk cannot be determined in a free market manner, the business community has no demand for the money. Since there is no demand for the money, you cannot stimulate business, only government.

So let’s return to the housing crises to examine what happened there. Banks are in the business of servicing loans. If the government wants a bank to do something, it does so through incentives. It lowers the interest rates that the bank can borrow from the fed is one way. If a bank can borrow money at 1% and lend it out at 3% it will make a 2% profit which is the motive of every business. But if the fed offers money to banks at 1% and there is no one out there willing to borrow because they have no incentive to do so, then it does not matter how low the interest rate. The supply of money is there, but there is no demand for it.

In the case of the housing drop, government got involved to help determine supply, demand, profit and expense. It determined the supply of money by encouraging Freddy Mac and Fanny May to make loans to sub prime borrowers. It determined the demand for these loans by offering prime rates for sub prime borrowers. If you normally would have had to pay 13% interest to get a loan, you will make a lot more loans if you offer this group loans at 7%.

The GOVERNMENT changed supply and demand by changing the ratio between loan to value. Now instead of requiring 20% down to obtain a 7% loan, the GOVERNMENT required nothing down to get a 7% loan. In other words, the government was loaning 100% of the value of the asset. If the asset became worth less than the amount owed, many people walked away through bankruptcy which also aided these sub prime borrowers through bankruptcy judges who also should have read this paper. I acted as a trustee, debtor’s attorney, and creditor’s attorney over the years. When I represented a debtor with a car who had to make a reaffirmation decision, I would always ask them whether it was in their best interest to reaffirm a debt for $10,000 when the car was only worth $7500.

The GOVERNMENT also messed with the profit and expense of the bank. In other words, it gave the banks profit and expense incentives to encourage the banks to execute the policy that the GOVERNMENT wanted. The profit of the banks were fixed from the beginning because they were guaranteed by the GOVERNMENT. The GOVERNMENT approved each Fanny and Freddy loan. The GOVERNMENT also told the banks when to foreclose, whether to object to bankruptcy plans, and controlled every step in the process. After the loans were made, the banks were just servicing agents for the GOVERNMENT. The next person to suggest culpability of the banks in this should get a cream pie right in the face. And if the borrower could not pay, the government had to pick up the tab. Thus the banks avoided expense in their bottom line. Thus GOVERNMENT (not the President) was totally responsible for the problem.

So the solution is not more government regulation. The solution is to go back to sound business practice which means that the government needs to keep its hands out of the soup.

What happened in the great depression is a good example of government in action. The depression continued for 6 years after Roosevelt took office. To suggest that Hoover was the cause of the depression and that Roosevelt fixed the problem is a historical myth. Roosevelt was a liberal whose policies kept us in the depression until he finally obtained the excuse he needed to get us out of the depression which was WWII.

Spending projects (like TVA) will not pull you out a financial downturn very quickly. There is a simple dummy reason for that. When a bank lends money to a junior fisherman, the junior fisherman becomes a senior fisherman who hires other junior fisherman and the cycle repeats itself. When a bank lends money to someone to build a dam (TVA), that project ends when the dam is built. Also you will notice that the business itself does not pay taxes (TVA), but the fishermen do. This is the reason why we should stimulate the economy (the free market), not government.

I love all the newspaper stories trying to throw poor Roland Burris under the bus. They remind me of the story of the Jews dragging the poor woman who committed adultery before Jesus and asking him whether they should stone her to death. Don’t you love this analogy so far?

Good church going Christians, like the editorial writers of the Sun Times, would surely appreciate Jesus’ response which was to start writing their sins in the sand.

Once there was a prominent doctor who worked at south side Chicago hospital. This doctor, and his physician wife, owned a historically land marked home, with a nice brick fence all around it. It had been registered with the Chicago Historical Landmark Commission for many years. Michelle Obama happened to work at the same Chicago hospital where the doctors worked. Michelle Obama was also on the Chicago Landmark Commission that decides "issues" relating to properties of that type and had been for six years.

Now the Obamas have a friend named Tony Rezco that we all know corrupted Rod Blagojevich, His modus operandi was to shake down hospitals through his influence with the Heath Facilities Planning Board. The hospital where Michelle and the good doctors worked never seemed to have any problem getting their building projects approved. Maybe this was why Michelle had her salary tripled when she became the director of Community Development at that hospital.

The doctors suddenly decide to move to Iowa, and a year later they wind up out East. Were Michelle Obama and Tony Rezco the reason these doctors decided to sell their home? I guess we will never know. Isn’t it funny how the press that is so anxious to dissect ambiguous questions from a hostile Senate panel is so reluctant to pursue the Rezco connection.

The house had a brick fence around it and trees growing in the side yard. Did the press buy the fact that the environmentally sensitive Obama was going to sell the narrow side yard and allow the trees to be removed? Did the press investigate whether selling off 10 feet would have left enough to build in an R1 or R2 classification? Was the press troubled by the fact that tried to hide the transaction inside an Illinois land trust? Was the press bothered by the fact that Rezco purchased the fence when it was clearly the responsibility of the owner of the new historical property? Did the press buy Obama’s explanation that Tony Rezco knew about real estate and he didn’t? Did they ask him whether his wife might have known something about real estate? Did you ever hear that Michelle was on the Chicago Land Mark Commission or whatever it was called?

All those that regularly posted here know my leanings, but does anyone dispute what hypocrites we have over at the Chicago Sun Times (and elsewhere)? The same paper that endorsed Rod Blagojevich is now leading the charge against Roland Burris. The outrage seems to depend upon whose ox is being gored.

I  spent five years on the Interagency Authority on Residential Facilities for Children (1993-1997) as a voting member and was the Chairman of the Transition Committee.  Many of the comments I make here came from a lot of good people such as Father John Smyth who ran the shelter system for the City of Chicago.  I also have served for the last 12 years on the Advisory Board of Lincoln Challenge Academy which is a 22 week residential program for high school drop outs.  About 75% come from the inner city and about 73 percent are minorities. There have been many good people on that Board there too, such as General Donald Lynn (from Mahomet) who was the original founder of the Challenge Academys now in 30 states. I say this not to boast, but to acknowledge that what I am about to say is the a very imperfect solution to a multi-faceted problem and the ideas are not mine.  We are also -well past blaming the parents, the schools, and race. 

Every Community and City College Campus in this State, needs a structured residential academic and independent living center where young men and women can go to at any time to escape the gangs and violence of their schools and neighborhoods.  In order to get admitted to this setting, the applicant will need  to be a volunteer,  obtain a neighborhood sponsor such church or community organization, and agree to the terms and conditions of the admission policy.  These centers would conduct individual testing, plan academic and vocational pathways, and provide individualzed case and multi-disciplinary management.

These centers would have several functions.  (1)  They would be the induction center for other programs like Lincoln Challenge Academy (2) They would serve as a academic enhancement center for gifted students (3) They would serve as rehabilitation centers for drug and alcohol addicted teenagers. (4) They would serve as placement and housing specialists for students returning back to the Community from places like Lincoln Challenge Academy (5) They would serve as summer bridge colleges from graduating high school students. (6) They would serve as structured living arrangements for first year college students. 

Of course one does not just start building residential facilities.  It is best  to model programs like this in places like C/U where the best academic minds can plan all the elements of the program.  The Community and City College Boards of Trustees will need to see the beneit of the program.  It is obvious that there are other things that we need to do to get to this point too.  Non-government Universal Health Care for Children linked to the Community Colleges and our schools are a necessary beginning to any diversion programs in the lower grades.  This is where special education needs to be funded too. 

I was one of  Treasurer Judy Baar Topinka's children's issue advisors during her last campaign against Blago.  I agreed to be Romney's guy here in Champaign after I heard he enacted a non-government plan for health care in Massacusetts.  You can search this site for details that I have posted  over the last couple of years.  I think we will have a debate about this in the fall and I think both sides are going to propose something.  This is an outline of the plan and the rationale for each statement.  Let's start with philosophy.

PHILOSOPHY

1. The Republican plan should be a non-government plan.  Government adds cost to almost everything it runs.  Government regulations, vested pensions, union influence,  lawyer domination, poor economic return.

2.  We should not be putting our insurance industry out of business and substitute it with a Blago type philosophy that suggests that the State of Illinois will fund government worker's pensions when he darn well decides to fund them.  Replacing the insurance works with bureacrats  does not make sence.

3.  The least regressive and most equitable mechanism to collect  premiums for a health system is through our income tax system.  Now a Bill Clinton type will scream that this makes it a government plan.  It doesn't.-  No more so than requiring a dead beat father to pay his child support payment through the State's Attorney's Uniform Recipricol Support System.

4.   A health care system cannot be developed in one election cycle and must be phased in gradually.  The advice we always give our kids is to study each subject in school because it keeps your options open.  Long  t erm plans are better than short term election promises.

5.   We need to get doctors and hospitals out of the insurance business,  away from the Health Facilities Planning Boards and other vehicles for political bribery, reduce the enormous cost of defensive medicine, and do it without socializing medicine.

THE PLAN

1.   Because there is an election,  some form of mandatory insurance is going to be required in the adult system. (22-65)

2.  The Republican Plan should start with a non-government program to provide 0-21 universal health care to children.

3.  The Plan will start by building clinics in every school district.  

4.  Doctors will be encouraged to deliver services here through various incentives such as reasonable and customary practices, limited tort immunity, charitable foundation participation, volunteer participation and through the discounted sale of their bundled  fee claims to insurance companies who then can fight for reimbursement from the collection mechanism we select.  

5.  This system can then be expanded as the participant ages because 21 years  olds become 22, then 23.  At some point we can accelerate the system as it develops.

I wish I had half the class of Romney. I loved his speech on religion in politics and  his withdrawal speech at the Conservative Convention.  His endorsement today was something he did not need to do.   As his former coordinator here in Champaign County, I am asking all his supporters to get behind McCain.   We may disagree with him on one or two issues, but if we are looking for the perfect candidate, we will have to wait awhile.

I iike Obama as someone who could,  finally and forever, kill affirmative action based on skin color.  I would dearly love to judge people, including Republicans, by the content of their character.   Unfortunately,  I believe that Obama needs to mature a little more in his policy considerations before he is ready for this office.   Maybe in four years.    

The first rule of medicine (do no harm) is the first rule for a President of the United States:  protect the country.  Hauling butt ought of Iraq is not the way to do that..

When the ranks of those that work for government continue to grow, we jeapordize the pensions and employment of those who are now employed.  Obama's promises will expand government  and  put added pressure on our economy..  At this point in our history, our economic policy should be one where  we  reduce govenrment.

We need Universal Health Care for Children, but not the Medicaid plan of Blago that Obama endorses.   This would be a disaster for the country. We certainly do not need to put the insurance companies out of  business, nor do we want to discourage our young men and women to become doctors.  We certainly do not need socialzied medicine or a govenrment plan that believes that doctors and hospitals can remain solvent when we pay our providers what govenment wants to pay them. 

MSSNBC post debate poll showed Romney winning the debate by over 30% over McCain and even more against Rudy.  It was the best  performance by a candidate in a debate ever.  Rudy is toast and Romney wins Florida by 10% over McCain. 

Tom Kacich (kacich@news-gazette.com ) wrote a wonderful commentary on Lincoln Challenge Academy on Sunday, December 16, 2007.  The program is a 22 week program twice a year and is run by the Illinois National Guard.  The program is for 16-18 year old high school drop outs.  About 2/3 of the nearly 800 students that go through Rantoul, Illinois each year get the GED during the training or within one year.  About 2/3 are from inner city areas and about 2/3 are minorities.  Sadly, as was mentioned in the article, many of the cadets have to go back to the inner city.  

There are some community members here in Champaign/Urbana who would like to develop a post challenge residential program for students are not yet ready for independent and unsupervised living.  I made some comments about the Unit 4 situation a couple of days ago on this blog.  My point was that many students, not just those coming out of Challenge, needed some supervised "case management" if you want to call it that.  

If you read the article you will know that the 10,000 students that have come through LCA need this programs desperately.  We need to protect their investment by caring for them a little longer until they can really live independently.  I would appreciate your comment. 

In the Book, A Mormon in the White House? by Hugh Hewitt, he mentions a pro-choice quote of Romney when he ran for Senate in 1994 against Ted Kennedy.   Mitt gravitated toward the pro-choice view  through 2002 when he ran for Governor of Massacusetts.  Because I am his County Co-coordinator, I wondered about the statement in his literature that says that: " And, as Governor, Mitt Romney always sided with life in the fight to protect the unborn."

The answer is that while he was Governor, he did always take the pro-life position and stated his reasons when he vetoed a pro-choice bill as governor.  (page 108)  I think this might make for an interesting discussion, so I will reproduce the reason that were stated in the Boston Globe.

I am pro-life.  I believe that abortion is the wrong choice except in cases of incest, rape, and to save the life of the mother. I wish the people of America agreed, and that the laws of our nation could reflect that view.  But while the nation remains so divided over abortion, I believe that the states, through the democratic process, should determine their own abortion laws and not have them dicated by judicial mandate.

Because Massachusetts is decidedly pro-choice, I have respected the state's democratically held view.  I have not attempted to impose my own views on the pro-choice majority.  For all the conflicting views on this issue, it speaks well of our country that we recognize abortion as a problem.  The law may call it a right, but no one ever called it a good, and, in the quiet of conscience people of both political parties know that more than a million abortions a year cannot be squared with the good heart of America.

You can't be a pro-llife governor in a pro-choice state without understanding that there are heartfelt and thoughtful arguments on both sides of the question.  Many women considering abortions face terrible pressures, hurts, and fears; we should come to their aid with all the resourcefulness and empathy we can offer.  At the same time, the starting point should be the innocence and vulnerability of the child waiting to be born. 

Being the Romney County Coordinator, I reserved a "Romney Table" at the Republican Christmas party.  A supporter of another candidate asked me the question at the party:  "Will Romney change his mind again and revert to pro-choice?  

I am a divorced Catholic.  My wife is a Protestant and a social worker that was an Administrative Case Reviewer for DCFS.  During my first marriage I was one of a very few Republicans on the ultra liberal  Urbana City Council.  Being an attorney, I am pretty good at flip flopping.  I was formerly the hand picked County Coordinator for Judy Baar Topinka, who was pro-choice.  HMMMMM-I am stalling.  Ok-here is how I think Governor Romney would react to that question when it came up during his presidency.  This is not his view,  but I am guessing it is pretty close.

Roe vs. Wade determined that a woman had the right to an abortion based upon her right to privacy.   This was a very very weak judicial argument  which almost every attorney who has read the case and its multiple concurring opinions would probably agree. The privacy argument was totally unnecessary and the justices could have just as easily used freedom of religion as a more rational basis, or even the rights of the States to set health and safety standards. 

Their unfortunate reasoning led to let the pro-choice lobby to stretch the privacy rights into areas that no-one ever dreamed.  Now we argue whether the CIA can monitor phone calls to stop terrorists.  Now it seems we would rather have someone die from a terrible medical condition rather than reveal to anyone they might have it.  And it was so unnecessary.

The right to an abortion during the first tri-mester could have been allowed by the Supreme Court based upon the religious view of when "life begins".  Catholics believe that the Pope, speaking from the chair, declared that a child receives an immortal soul at the moment of conception.  But some believe that an immortal soul is present only at the first fetal heart beat. 

During the second tri-mester, is when a fetal heart beat occurs.  During this time and in many cases during the last tri-mester, there are health and safety issues which the States have every right to regulate. 

This view would not be easy to explain in a 30 second sound bite, so this is why I suspect he simply states that it should be up to the States to regulate the whole issue for heath and safety reasons.  As a matter of public policy, it is a vast improvement over the slippery slope that the "right of privacy" has sent us over.

1. If every child is entitled to a free public and appropriate education, then surely one must admit that every child is entitled to free public and appropriate health care.

2. Government runs bad programs. There is no organized decision making structure. Too much politics. No long term planning past the next election. Too expensive and inefficient.

3. Government has a role and that role is the collection of premiums for a State of Illinois wide insurance system for children.

4. The "fair share" that each person should pay toward children’s insurance should be proportional to the taxes or tax credits they pay. Parents should contribute additionally monies based upon the number of their children and should give up some of their "exemptions" or "deductions" based upon the number of their children.

5. Every child in the State should be under one standard policy which covers essentially everything. Alternatively, the insurance policy should be the same as the one that Senators have for their children. If a child is covered under a policy paid for by their company, the company will be required to pay the employee additional wages or to contribute the premium to the State plan since all are covered under only one policy. (We are all in this together.)

6. We should attach children’s heath facilities to every school district in this State. This is the infrastructure we need to develop. See Urbana School District 116's public health facility.

7. Special education services should be funded and paid for through this "system".

8. The "providers" should sell their claims under "ususal and customary" principals to the insurance companies who would in turn be reimbursed by the State collection system. If a dispute arose between the insurance company and the State, these disputes would be resolved by a system of mediation wherein the block granting entity (the feds) would act as the mediator. Best evidence of the correct reimbursement rate would be the average of like kind communities in other States. The disputed amount would be paid and subtracted from the next block grant payment to the State.

9. Because the school districts are municipal corporations with some degree of tort immunity this would encourage doctors who wished smaller malpractice premiums to deliver their services at the school.

10. We would assign data assurance managers whose job it would be to collect data, screen and assess medical records or diversionary services. Any teacher or administrator could refer.

WHY THIS IS NECESSARY (Start with something everyone agrees upon)

We do not want to put the insurance industry out of business. We do not want to put government in charge of anything. We should not put a national health care system in place until we have modeled similar successful systems. We have not built a National Health Care infrastructure. We do not want more voters to be dependent upon government. We need to have people pay for what they get in proportion to their wealth in the least regressive way possible. It does not make sense to keep proposing something that has failed before. There is no exit strategy if it is not successful because our infrastructure will be gone. All attempts by government to impose wage and price controls on free enterprise have failed. Health insurance is not health care. It is not a health insurance "contract" if the government only pays what it wishes to pay.

The sooner we start diversion programs for our children, the more money we save in the long run.

WHY DO IT THIS WAY

Children are more entitled than the elderly. We do not want politics to run health care. The least regressive tax is the income tax. The most efficient premium collection system is one already in place. As between two people with the same income, a parent should pay more if his child receives free health care. One standard "cover all policy" avoids the bait and switch of group rate advertising. It is cheaper for a doctor to go see 30 kids at school than for 30 parents to miss work taking their kid to the doctor. Special education policy is an example of government at its worst in so far as delivering "bang for the buck". Politicians will attempt to shift "provider’s" reimbursements to their priorities (reelection) unless there are some checks and balances put in place. The trial lawyer lobby makes very little off of kids, so they will not buy off their political backers over this. One of the biggest draw backs to care for kids is adequate case management especially in special education area.

CONCLUSION (Doctor-Do no harm!- This should apply to us too.)

I would like the federal government appropriate monies to try models similar to this one in about 5 states through block grants. . Now we can compare a government run entitlement program (medicare) with a free market entitlement program. I know medicare is not what I would want for my National Health Care program. But, if this children’s model works efficiently, I would certainly be willing to revisit this National Health Care debate.

I believe that we should delay passing any adult universal health care plan until we tackle children’s health care. After we have several models to chose from, then we can decide whether we want a medicare model, or a private insurance model.

 
This is a reply to Rex Bradford on a paper I submitted in my OLLI class dealing with a non-government controlled health plan for children.
 
 
 
On November 18th, 2007 at 08:07 PM, John E. Maloney said:

Rex- Under this plan,  every child is entitled to basically unlimited health care.  Basically under this plan, everyone pays in proportion to what they are able to pay as measured by federal tax returns after taking the number of dependent children into consideration.  Using the federal government's taxing system to determine the "fair share" keeps Blago from messing with it. 

The only role of the State is to have the State Treasury  figure out, how much is needed and to deposit that amount in the State Treasury to be distributed to the providers.  But here again, my distrust of the State as a reliable payor is so great that I build in another protection that insulates the providers from the State.

  I do not have the providers directly tap into the pool, but rather, have them sell their claims to insurance companies on a discounted basis.  Since every child will be on this insurance and since everything is covered there will not be very much argument, but I suspect that the State, as it always does, will try to screw the providers.

To further prevent the State from questioning claims or elgibility for payment, I have the paper work and verification that the service has been provided to elgible recipients processed by the insurance companies after purchasing budles of these claims from hospitals and doctors.  How valuable do you think it will be to a provider not to have to deal with the State or have to process reimbursement from a hundred different insurance companies, and track their payment.  

The insurance companies will buy them on a discounted basis.  The providers will be paid up front on a discounted basis and then sell their bundle to the State pool.  The insurance company will make their profit processing the claims and taking the risk of delay, etc. 

If the State tries to screw the insurance company , the insurance company can appeal this determination to the feds and if successful, the money (together with a bad boy penalty) will be assessed against the State, paid immediately by the feds, and subtracted from the grants that the feds normally pay through the State.  Thus the State will not be able to make up some stuff that the doctors were over charging.  If their is a question on whether their is overcharging,  the "reasonable and customary" rates owed by the State to the insurance company will be resolved by taking an average of the ususal and customary rates in like sized demographic areas in other parts of the United States.

Although this may seem to you to be somewhat overdone and unnecessary,  the reason behind this elaborate mechanism is because this will eventually be the way that special education monies are funded by a combination of federal, State, and local tax dollars.  

It is a little hard to understand at first, but it really is very simple.

(1)  One standard policy means no arguments as to what is covered and what is not.

(2)  A mechanism that is a fair way to determine reimbursement rates and charges.

(3)  A simple way to insulate the providers from the State so they can practice medicine and not have to worry about collections, State reimbursements, or processing insurance claims. 

(4)  A simple way to insulate the insurance companies from the State so that they do not have to litigate any problem with the State of Illinois in the Court of Claims which is essentially just an arm of Blago.

 (5)  "Fair share" on premiums is also not determined by the State, but in the same manner that federal income tax is determined (less a loss of certain dependency deductions).

What you have left is essentially a State Universal Health Care for Children funded not through taxes, but under a mechanism that is fair to the parents of the kids, fair to the taxpayers (not regressive),  fair to the providers, fair to the insurance companies, and certainly fair to the State because administrative costs of the children's system will be cut in half.  It is also fair to taxpayers because federal monies, earmarked for Special Education, can be distributed to the State through this mechanism.  This will have the effect of eliminating local property tax dollars from funding of special education programs.      

I think that Mitt beats all Republican candidates on Republican issues.  I think he has a good cross over appeal in general election because he could win as Governor in Massacusetts or Utah.  To be popular in the most conservative State and the most liberal one is really amazing. 

You can call him a flip flop on abortion, but I believe that is because he believes that a child does not get an immortal soul until sometime after conception (as opposed to Catholics).   Mormon's also do not baptize their children until age 8 (the age of reason).  Thus on abortion (I think) he can claim that he has "always protected the unborn" (as he defines it).   Since he is the furthest right of Hillary, Obama, or Rudi-I say so what-he is from Massacusetts and did not jump up and down on the issue.

Health care is the big reason I support him  Blago, Stroger, and Jones, waste so much money here that no one in this State will argue with me that we should give them one more time to run State wide health care.  There doctors would be out passing campaign literature.  Mitt actually put out an insurance based health program that actually lowed premiums in Mass. a lot.  I think he should start out with school linked heatth for children like my guest editorial in the NewsGazette, and maybe he will.  We certainly need to build the runways before we start flying the planes.