Gov. Brown seeks Medi-Cal Cuts: Entitlements vs. Safety Net

That headline in my local paper say, “Brown seeking Medi-Cal cuts: Governor requests flexibility from the White House.”  We should commend Governor Brown for taking the initiative to address the overwhelming costs of Medi-Cal (Medicaid) that is bankrupting our state.  California is in a much worse position than most of the other states because, as the Governor found out when he took office, California is in the top one or two of any state in any measure of the amount of entitlements we are providing to our population per capita. In his first budget, Gov. Brown took on this issue and began the effort of reducing these most generous programs, which may have made sense when we were one of the richest economies in the nation, to the median benefits offer of all the national state programs.  This is a very pragmatic, and still generous, approach considering we are now the top state in the national measure when you look at fiscal insolvency.

We need to address this issue now as the time has run out as our deficit build and we become one of the most cost ineffective places for business in a national economy that is one of the most cost ineffective locations to do business on the planet.  Kudos to Governor Brown for taking these very hard steps directly in the hard face of his own parties’ public ideology and attempting to get to a solution to this massive problem.

But overall the problem is not one of just Medi-Cal in California.  It is a much larger problem, a systemic one.  It is a problem that traverses all the programs including Medicare and Social Security.  Beginning with the Social Security, conceived as a temporary safety net program to help the aged who had their savings and investments devastated by the one-two punch of the collapse of the stock market followed quickly by the depression as a result of the great drought induced dust bowl in the mid-west.  In turn, Social Security and the myriad programs that have followed have evolved from that of a simple safety net. Originally, first seniors, and then others, could look to these safety nets as a small aid to what they could earn and save for themselves to tide them through a short difficult time that may occur beyond their real ability to plan.  Now with the extension of Social Security to include Medicare and Medicaid, these programs are not viewed as a safety measure but as a replacement.

If we look to Medicare as an example, it can be argued that it is a vital insurance program to support the healthcare needs of our aging population and our disabled.  And for some this is clearly the case. But it can also be argued that for many, even though the checks are being written to providers covering their health care needs in later years, if this is really supposed to be a safety net, the government is not paying for their health care; it is paying for the purchase of that flat panel TV when I was forty-five, or the vacations I took, or the new car I purchased every four years, or some other expense I would not have made if I had not had the expectation of the government picking up the tab for my potential catastrophic healthcare needs in my last five years of life.

I know the former discussion is not a pleasant one to have as it brings us back to the point that our actions today have ramifications for tomorrow.  In the generation prior to mine, they had the belief that they needed to save much of their excess money for a rainy day.  We have come to believe that the rain is now offset by our wonderful and blatantly generous Uncle Sam.  So, we are empowered by the change from the safety net to that of an entitlement, to believe we are OK to purchase that vacation home, instead of saving the money because when, not if, we get sick, Medicare will take care of it.  I remember my father preaching to my siblings and I in the 1960s that we should never count on these programs because: a) It was our responsibility to plan and pay for ourselves and family—not our neighbors responsibility, and b) The government will probably not have the money when we need it, as this system just won’t work.

Well thanks for the advice, Dad; I took it to heart and have followed your example.  But despite my savings, we, the citizens of the U.S. and of California are at a point you so correctly predicted, and poor California’s Governor Jerry Brown now has to be the first state leader to start taking away all the things we have been trained to be dependent on.  You see, much of these expenses are no longer about emergencies and simply providing for a base existence. They are now becoming more about quality of life.  It is not enough to provide basic services for the poor; we need to also give them cell phones.

I don’t want to see people suffer, and I don’t want to deprive people of some form of basic existence.  But with the coffers bleeding cash at a pace that is now in excess of what we can produce on an annual basis we need to start to make distinctions between emergency necessary for life services, and those services that provide more for the quality of life!  I commend Governor Brown, for taking these steps.  I know they are not easy for him because of his strong humanitarian heart.  I am glad he recognizes the need to make pragmatic adjustments and take unpopular steps to find a solution.  With this accolade also comes caution.  We need to remember that even Governor Brown is human, and is in a system that will require him to make some decisions that he and the rest of us may not like, simply to get part of this done.  We can expect all the purists to take shots at every single deficiency and change from all sides with no recognition as to the realty of a public and political governmental process.

Regardless, he is acting on what he believes will contribute overall to the solution of this complicated equation for the viability of California and its citizens–and that, I can appreciate.

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)