Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. Maricopa county sheriff Joe Arpaio broke his arm today. The 80-year-old sheriff fell while walking to lunch in downtown Phoenix. He is said to be in good spirits after undergoing x-rays at a local hospital. ASU President Michael Crow is publicly supporting the Governor's plan to expand health care for the poor by expanding AHCCCS. The state's Medicaid program. President Crow joins us tonight on "Arizona Horizon." And also, with us is ASU economist Dennis Hoffman of the W.P. Carey School of Business. Good to have you both here. Why did you decide to speak out on this?
Michael M. Crow: We're past the recession and moving forward and looking at economic opportunity in the future and what we need to bring about for, for the people of Arizona is as much access to opportunity as possible. Worrying about, about the health of everyone, worrying about educational progress for everyone. These are ways in which we can stimulate the economy to move forward.
Ted Simons: And you mentioned it Arizona has had a chance to do right. Explain.
Michael M. Crow: Do right means right now we have got large numbers of citizens who don't have access to health care. We have an opportunity through a financial construct that many of the states are buying into that will allow us to not have to treat these folks in emergency rooms and so forth, which at the end of the day costs us more. We have a lot of children involved, so do right means it's time for Arizona to act the way it has act historically, which is to take care of the sick and educate the children.
Ted Simons: Some say we cannot afford to do right. Do they have a point there?
Dennis Hoffman: Wow, this is, this is a home run on ROI in terms of the dollars that are invested. Against the expected returns. You are talking 10-1. 10-1, Ted. We look at lots of investments across the public and private sectors. And it's hard to find 10-1 clean ROI, and not a leveraged deal or anything like that.
Ted Simons: But, and 90% match sounds great, but, if you cannot afford to start the 90% match, what good is it? We afford to get this going?
Dennis Hoffman: Let's back up a bit. I'm talking 10-1 right off the bat with respect to 200 million provider of tax. A billion as a result of that tax goes directly into hospitals. 160 million of which is rural Arizona hospitals. The hospitals that have been just decimated by the freeze instituted in the last couple of years, and the rest of the hospital sector gets another billion. So you get $2 billion in direct economic benefits to the State of Arizona for this initial provider tax. And the other 10-1 is down the road with the 10% match that will come in a few years.
Ted Simons: Arizona is surrounded by other states that, that seem to be opening up to this. What would it mean if Arizona were to balk at this? Were to pause at this. Were to not keep up with surrounding states? Some say it would not make much of difference. I am guessing you differ?
Michael M. Crow: When we look at the data we have gotten from the Arizona we want survey done by the Gallup poll, and range of other things we get from the University and the analytics we do, the people of Arizona very much have two very high values, the notion of, access to health care and quality education, so this, we think, is actually a core value. There is a few Arizonans that don't agree with that, but it's only just a few. The core value is everybody should have access to health and happiness and advancement and social mobility. These investments that con figured in this strategy help that to occur for the foreseeable future. There may be better ways to do it in the long run, better ways to finance it, but we're not at the long run. This is the way to do it.
Ted Simons: And uncompensated care which I want to talk about. But again, in terms of just public policy, attracting business. Attracting research, attracting investment. How much something like uncompensated care taking care of that certainly, and other aspects the public policy part of this? How does that play a factor?
Michael M. Crow: When we look at companies that he want to stay in Arizona or our own recruitment for faculty and students, faculty, what they want to see is Arizona is a, a place that cares about children, cares about families. And cares about success, and has some way in which everybody has access to the rudiments of life, and above the basic rudiments, it's competition one against all, meaning it's just a competitive free market so this base allows, allows the health needs of about 60,000 people to be taken care of that right now are not being taken care of.
Ted Simons: Some see that going lower than that particular base. We have had them on the program. And debates along those lines. Uncompensated care, the impact company, some say is nowhere near as much as some say it is. What is the impact of the economy?
Dennis Hoffman: Well, look, it's arguably difficult to measure that impact of uncompensated care. I think need to get, you know, a survey, survey the providers directly, find out exactly, dig into their financials. And it's just logical. If you think about this population, these -- these people are going to demand health care services. And this legislation is really about, what's the most efficient way for Arizona to meet the needs of those people? We know that they have needs. And so we have Medicare expansion proposed. And if you look at the data, this is more like restoration than expansion. We're just going back to the levels where we were a couple of years ago. This is not some, some unbridled increase in, in the covered population that we have never had before. So what we've been leaving on the table, though, is the ability for the Federal Government to do some matching here. To help pay the costs of these individuals. And without that, they show up in the emergency rooms, they show up on the providers. And those are real costs. Those are costs that are born by the providers. How do they handle that? They pass them on to the rest of us, to the insurance companies, and our rates are up. And that's the competitive disadvantage that folks talk about.
Ted Simons: And yet we will have people say it is a tiny percentage of hospital revenue and that hospitals, and I quote it twice on this program, are swimming in money, and this is, this is false argument that uncompensated care is going to cripple this industry. How do you respond?
Dennis Hoffman: You cannot disentangle the impact of, of the baby boomer generation, the demands that my generation are going to be placing on hospitals, if I'm a hospital, provider, I will be investing in capitol to meet that demand. And it's going to be mapped one way or the other. Met through private insurance. Or it's going to be met according to current legislation, through some significant increase in Federal support for health care coverage. It's just very logical to me, we have an increase in demand for hospital services coming from lots of different places. And that's just the private sector responding to an increase in the demand.
Ted Simons: And there is an argument that says with this program, you are basically partnering with the Federal Government, and there are those saying that you are partnering with a bankrupt Federal Government. How do you respond to that?
Michael M. Crow: Well, I find it, that character sakes to be strange, almost unbelievable. The Federal Government is a very complex creature with an elaborate and complex mechanism for making democratic decisions. We have got some decisions to make to get our financial house in much better order than it's in now, but we're taking our, our argumentatively deliberate time, allowing democracy to work the course and we will come to a point that we will make changes, dramatic changes in the financial structure of the country and so forth, but we don't shut down while doing that. The probability of bankruptcy of the United States is, is, is, it's, it's -- it's beyond comprehension because we can re-engineer the country at will once we determine the path that we want to go on. What we're in is an elongated argument about what that path is, and when we're done with that path, there will still be public support for education, there will still be public support for, for health care, and there will still be substantial public support for a range other social and physical infrastructures and there might not be public support for other things but public support for this will still exist, and then I just think that that's, that's a somewhat spurious argument.
Ted Simons: Does it make more sense for critics when they say you cannot trust the Federal funds. May not be bankrupt but you cannot trust the Federal funds will be there or an administration or a Congress in seat then, may not feel the same way as leaders feel now?
Michael M. Crow: That's always the case, not a function lack of trust but the fact that the political device and is mechanisms and decisions are always changing. What we do know is that, is that health care, as a positive outcome for all our citizens, is, is a shared value or a shared objective across the vast majority our population.
And the idea of a shared value and a shared objective, again, there are some saying we don't need to share this much, this is too much sharing on the part of some and going into an industry, health care in particular, that already has a significant part of the GDP.
Dennis Hoffman: If you want to go down the sharing, there is lots of different pathways here to, to argue, and it seems to me they come on the same, come out the same way. But, right now, the general fund is taking the brunt of the burden for this population. The benefits economically accrue to the hospital and health care industry. This particular legislation moved some of the costs through the hospital provider fee, over to the industry and has them pay the, the additional state share for this particular population. Again, efficient.
Michael M. Crow: But freeing up then resources for the state to make investments in high priorities related to education. So, this is an attempt on the part of the Governor's plan and the strategy to, to allow the hospitals to absorb some of this cost themselves. Put them some at risk, secure the investment and free up state investments for investment in education.
Ted Simons: And yet regardless, if it's the state, the Federal, and match this, match that, and we're all paying, and right now we're kicking the can, I don't know how many times I have heard this about this can getting kicked, and it's a bigger can every year.
Dennis Hoffman: Ok. Ideology is just, I think, is block people's capability to do basic arithmetic here, Ted. And I understand the argument. I have heard the argument myself. So, let's try it this way. Suppose we're one of a handful of states that choose to opt out but everybody else opts in, if these, these naysayers correct. If this is the road down to, to, to, you know, some, some tremendous financial problems for the country. We're on the hood for these problems at the end of the day. What we're -- and again, I'm not suggesting that there are going to be problems in this particular area. We have got to address some long run budget issues. At the Federal, the Federal level, that are very different from, from Medicaid, it's mostly Medicare. And in terms of, of the, the obligations that exist, and the way that we have chosen not to fund those obligations. As we have gone along. But, the, the, you know, the issue for me, is about, about stimulating the state's economy. President Crow, I think, is, has been, has done a very good job articulating the human side of this, the benefits. Why this is the right thing to do. And you know, I'm an economists. I tend to live in this, in this crazy world, is it a wise investment to do this? Or not do this? Or whatever. This is 10-1. This is a no brainer.
Ted Simons: You are an economist, and yet we hear a lot from folks who are very much into ideology. And they are saying well, say this is doing good, they are saying this is not doing good. This is doing wrong in terms of the country's health and the future. How do you respond to that?
Michael M. Crow: I think a lot of the arguments that we're in a financially difficult moment have tremendous validity. We have an issue now about establishing priorities. We have decided in the United States to, to fund certain things in a particular way that are quite expensive, including in health care, we have allowed certain costs in education to not be constrained, and perhaps, we can do a better job constraining them, so I think that there is work for everyone, both in the, in the form of the institutions to find ways to lower costs so what we need, and I think the frustration from the folks that find this an appalling strategy, they are saying, you know, how can we keep on doing this? I think that's the right question. The answer, is we cannot change instant how we're going to solve these things. We need institutional level redesign, we need decision-making redesign, and we need to restructure how, how bills are paid and how things are prioritized, and we have end of life decisions to make in health care and education prioritization decisions to make and ways to inject technologies and other ways of doing things, so there is no, no simple methodology that says that's not going to work and that will solve our problems. That does not solve any problem. All that does is, is allow us to build up, pentup, unsolved issues. We need to find new ways to solve these issues. This is a, a methodological approach that allows us to do that.
Ted Simons: With that said, give me the message you want to get out, you spoke out publicly on this, bottom line message?
Michael M. Crow: Bottom line message is that the Governor's approach to combining sort of health and wellbeing as a policy objective around this health care health care strategy and education strategy is important to Arizona's future, particularly, after coming off this, this very significant great recession.
Ted Simons: And 30 seconds left. Message?
Dennis Hoffman: We have, indeed, very big, long run problems. The concern that I have is, is that, is that the, the naysayers appear to want to address those problems somehow by sending a message with respect to this particular set of legislation. That's a bad deal for Arizonans. In the numbers, are clear.
Ted Simons: We have got to stab right there, thanks for joining us. We appreciate it.
Dennis Hoffman: Thank you.