Higher Taxes And Government Services

Given the recent attention to “millionaire’s tax” proposals, I have been asked about higher tax rates on high-income individuals. Whether I support paying higher taxes depends on whether government is spending those tax revenues wisely.

We have many unmet societal needs for which increased government spending could be helpful. In fact, we spend too little on public transportation, supportive housing for people ready to leave homeless shelters, but not ready to pay for market-rate housing, and cutting-edge medical diagnostic tests.

When government taxes us to address unmet needs cost-efficiently, then I should pay my fair share to meeting those needs. However, I see far too many cases in which taxes are effectively transferring income from higher-paid individuals who are creating jobs and livelihoods for other people to high-paid government employees trapped in extremely inefficient, poor-quality government-run systems.

I do not bash unionized government employees or civil servants protected by laws and regulations. They did not unilaterally put themselves into dysfunctional systems and structures, and they often can be change agents for improvement. Typically, elected or appointed leaders created collective bargaining agreements that trap individuals into jobs not designed optimally to deliver services. These same leaders set spending priorities that deny these unionized or civil service employees the ability to do their jobs, or make decisions that improve a government’s financial position in the short term, but create huge problems for their successors.

Our human service delivery systems work in spite of dysfunctional government practices and regulations. Having spent significant time the last several months with people in the not-for-profit human services sector, I have seen people performing heroically to help others, while being dragged down by complex, misdirected, and costly government processes. I have particularly noticed that a non-profit that deals with a homeless person who has mental health, addiction, and chronic disease problems, which is a frequent occurrence, is dealing with multiple and unconnected government-mandated software systems and processes. Why the U.S. Department of Housing and Urban Development and state departments of mental health, addiction, and social services cannot have a single view of the person they are serving is beyond me.

Elderly individuals reside in very expensive nursing homes instead of being placed in their own homes or in less staff-intensive group home settings. I am told that government employees and managers resist this alternative because it means fewer jobs for them. While remote care alternatives may have been inferior a generation ago, the right remote care alternative, combined with a less staff-intensive group home, is probably better for many elderly individuals.

Government works best when it sets ambitious goals which reflect the popular will and when it regulates the outer boundaries of acceptable behavior by individuals or organizations. It works most poorly when it attempts to micromanage the private sector, or takes over operation of a function itself. It is particularly dysfunctional in an area like medical payment systems, because medical science is moving far faster than government processes can react.

For example, the disease classification system on which our Medicare and Medicaid reimbursement systems are based is fundamentally 34 years old. This system, called the ICD9 system (which stands for the 9^th revision of the international disease classification system), was implemented in 1975. While there have been many modifications and additions to it since then, it is not scheduled for fundamental overhaul until the ICD10 system comes into place in 2014.

During the last 34 years, many highly-effective diagnostic tests have been introduced, but their acceptance by CMS, the government body that manages Medicare and Medicaid, takes years, if acceptance happens at all.

Government employees are not incompetent or uncaring. Their slowness of reaction results from the need to follow rigorous processes to insure “fairness” and ample opportunity for public comment. While those are laudable goals, they do not allow for fast response to new learning’s about medicine.