Tuesday, January 18, 2011

Making Money With Options

Counterfeiting is an arm’s race to nowhere. An endless struggle, with both sides trying to out-wit the other. While treasuries all around the world try to find new ways to make counterfeiters sweat, and ultimately unable to make fake money, the counterfeiters in the world just need to figure out how those individuals are making new money, and copy it. There have been plenty of options in the past, like watermarks, ink that never dries, holograms, and colors that can’t be copied. But, they’ve all been figured out in one way or another. But now, thanks to thin-film transistors, it may be almost impossible for counterfeiters to get the job done.

The new technology, which is still being fleshed out, is designed to literally wrap around paper money. The thin-film transistors are made out of gold, organic molecules, and aluminum oxide. The transistors are then set into a patterned mask, and laid on top of the money. How would merchants be able to tell if it’s the real deal? Once the film is in place, there would be about 100 different organic and invisible transistors on each side of the paper note. Thanks to a small 3 volt current, the note would seem to turn “on and off.”

So instead of having to use a special marker, a person would just pass the bill over a sensor, and if it manages to generate the required voltage, the bill is real, and they can buy whatever it is they intended on purchasing. There’s no doubt that this seems like a huge step to fight counterfeiting, but let’s face it: it’s necessary. Will it solve the problem? We can probably hope it does for a long time, but it’s probably not a permanent fix.

[via TG Daily]

The big news out of a majority of state capitols is that Obamacare’s Medicaid mandates will exacerbate state budget problems and drive many states to the brink of insolvency.

Thirty-three Republican governors and governors-elect have signed a letter to the White House and Congress making an emphatic appeal that Obamacare’s Medicaid provisions be repealed.

Medicaid pays health care and long-term care expenses for certain categories of individuals. Medicaid has many problems, but the central one is that it costs taxpayers nearly $400 billion annually without providing recipients a high quality of care.

National spending on Medicaid has more than quintupled over the past two decades, and about 16 percent of the population is currently enrolled. A recent study from the University of Virginia found that Medicaid patients have worse surgical outcomes than individuals without insurance. Despite these problems, Obamacare relies heavily on the Medicaid program to reduce the number of individuals without health insurance.

Obamacare’s Medicaid mandates include a requirement that states maintain current program eligibility along with a required Medicaid expansion that is expected to increase national enrollment by around 20 million. If a state reduces eligibility for Medicaid, it will lose all its federal support for the program, which is at least half of every state’s Medicaid spending. This means a state would lose the federal tax contributions its taxpayers send to Washington that eventually return to the state in the form of Medicaid reimbursement.

“States are unable to afford the current Medicaid program, yet our hands are tied by the maintenance of effort (MOE) requirements,” the governors wrote. “The effect of the federal requirements is unconscionable; the federal requirements force governors to cut other critical state programs, such as education, in order to fund a ‘one-size-fits-all’ approach to Medicaid. Again, we ask you to lift the MOE requirements so that states may make difficult budget decisions in ways that reflect the needs of their residents.”

Although the letter was signed by only Republicans, Medicaid is at least as much of a concern in blue states. For example, the new governor of New York, Andrew Cuomo, has proposed cutting $4 billion of projected spending on Medicaid (this savings will be split between the state and the federal government) to help close a $10 billion budget gap.

How will states reduce Medicaid spending, given that they are prevented from reducing program eligibility? There are two primary options: (1) reduce provider payment rates, and (2) cut program benefits. Almost all states have undertaken these actions over the past several years. Reducing payment rates decreases the number of providers who accept Medicaid recipients. Cuts to Medicaid benefits, which are often more generous than those offered by private insurance, have also occurred. The combination of these cuts will likely reduce quality of care and increase the number of recipients who head to emergency rooms for basic care.

Of course, states could keep their Medicaid programs in tact and take the scalpel to other budget items, such as education, transportation, or law enforcement, which are also being cut in many states. Or they could dramatically increase state taxes. How do these options sound?

The one option that should be off the table is a continuance of the federal Medicaid bailout, which was enacted as part of the February 2009 stimulus bill. This provision greatly increased the federal contribution toward state Medicaid spending and disproportionately benefited states with the most bloated programs. The country cannot afford to further increase the national deficit to fund the broken Medicaid entitlement. Instead of throwing more money at Medicaid, policymakers at the federal and state level should grapple with its structural problems.

Medicaid is desperately in need of reform at the federal and state levels, not expansion. States have different characteristics and priorities and need greater flexibility to tailor the Medicaid program to their own specifications. This is true of states with Republican and Democratic governors. This Congress should seriously consider the immediate budgetary concerns of the states as well as structural reforms that would improve care for beneficiaries and reduce taxpayer burden in the longer term. In fact, states should also demand greater flexibility from the federal government in terms of eligibility, benefits, cost sharing, and overall administration and management.


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