A second undercover video of interactions with a DHHS worker was released today. It followed similar patterns to the first video, with the worker at times “coaching” the “customer” on how to best apply for MaineCare even though he had access to a checking account that had his name on it and had $250,000 in it.

You can read MHPC’s reaction to this second video here.

Below is a video you have to see to believe.

A guy walks into a Biddeford, Maine Department of Health and Human Services office, and asks about getting taxpayer-funded government health care. He confesses that he runs a “pharmaceutical imports” business that is operated in international waters, and takes only cash and “precious metals” as pay, keeping no records. He also mentions that he owns a Corvette.

The response of the DHHS worker has to be seen to believed.

You can read the full transcript of the conversation here.

Check out the business card and picture of boat “Ted” showed to DHHS worker.

This video is shocking proof that there is a very real possibility that welfare and Medicaid fraud are taking place here in Maine.

Last fall, MHPC rolled out a major campaign focused on the dependency problem in Maine. Our Fix the System campaign highlighted that our vast welfare system is vulnerable to fraud, waste and inefficiencies and this video shows that those concerns are real and present problems in our state.

We have to reform our welfare system, and we have to do it now.

*If you would like to continue to see government abuse, waste and fraud rooted out, please consider donating to MHPC today to help us continue our work of holding government at all levels accountable to the taxpayer.

Image from New England Public Policy Center Research Report

Recently, the New England Public Policy Institute released a new report called, “How Does New Hampshire Do It? An Analysis of Spending and Revenues in the Absence of a Broad-based Income or Sales Tax.” This report looks at different factors and policies in New Hampshire that permits the state to have neither a sales tax nor a broad-based income tax. The author examines how New Hampshire spends its money and receives its revenue to present an overview of its fiscal model. The paper breaks down New Hampshire’s spending into two types: Spending that is need-based, or due to circumstances such as poverty rate; and policy choices such as fewer public hospitals.

As the author states, this paper does not seek to recommend policy or make any normative assumptions. However, in just “informing policymakers’ discussions,” the paper makes some blatant assumptions about the nature of public spending and the supposed need for it. It presumes that a certain level of poverty in a state dictates a need for a high level public welfare spending. This leads to another assumption that certain levels or types of public services are required at different poverty levels. These assumptions are paradoxical. The taxes that are required to sustain levels of welfare spending, such as Maine’s spending of almost 30% of the state’s general fund, have an impact on the economy’s performance. This has clear upward pressure on the poverty rate, reducing economic opportunities for Maine’s poorest citizens. The need for public spending creates its own need.

The paper assumes a benchmark of needed spending based on the New England regional states and their average poverty levels among certain populations. Essentially, the “need” for this spending is assumed from the spending that is already taking place, averaged across the region. The issue with this so-called measure of need is that it ignores the flexibility each state has in terms of welfare spending. States have a wide array of choices as to how and how much to spend on Medicaid and TANF cash assistance, and they do, indeed, exercise their choice. It just so happens that, besides New Hampshire, New England as a whole chooses to spend more than the U.S. average on welfare programs. If spending on welfare were based on the circumstance of poverty, as the paper supposes, there would be a correlation throughout the states:

Welfare spending throughout the country does not correlate with poverty level. This high variation could be due a host of other factors, including prevailing legislative ideology, public opinion, or political climate. The high variability in states’ welfare spending in relation to poverty level does not support the assumption that the needed response to a higher poverty level is increased spending on public welfare. Montana, which has a poverty rate of 13.5% and similar characteristics as Maine, has chosen to spend less than half of what Maine has in relation to their general fund. At the same time Massachusetts, with a poverty rate less than Maine’s, chooses to spend 27.8% of its general fund on welfare.

In the case of poverty, rather than assuming the need for certain amounts or types of government spending, it would be more beneficial to look at policy choices and how they have an effect on poverty and concede that welfare spending, like other types of spending, is a choice. Policies that create taxes, more regulations and an overall more burdensome business environment are completely under the control of policymakers. There is no determined level of “need” for any of it and the scaring away of private business, investment and innovation to support that type of spending has consequences:

There is a strong negative correlation between the strength of a state’s private sector and its poverty rate. States that have chosen public policies that have attracted opportunity have a lower poverty rate on average. The New England Public Policy Institute’s paper assumes that poverty is a circumstance that dictated New Hampshire’s lower spending and is outside of its immediate control. However, it is clear that it is the lower spending and minimal taxation that has had a positive effect on its economy and is a consequence of New Hampshire’s economic policy. Maine’s private sector, which was once equal to New Hampshire’s, has suffered. Maine chose to enact a sales tax and an individual income tax; both policies to support more spending. This has led to Maine’s sad economic condition and higher poverty rate. (And if one has doubts based on geography, Rhode Island has a story to tell.)

Welfare programs are supposed to help alleviate poverty and help those who need it; not sustain a certain poverty level. The assumption that it is necessary to spend more on public assistance when there is higher poverty and then, in turn, raise taxes, thus harming the economy, negates the purpose of the program. These programs should move people from poverty to a good job while providing a temporary safety net. This would reduce poverty and is what we “need” to do. In fact, since the 1996 federal welfare reform, rolls have been decreasing throughout the country and the situation of the poor has gotten better. Just increasing welfare benefits and spending simply destroys opportunities for the poorest. It needs to be recognized that a thriving private-sector along with a temporary safety net for families is a much better tool for addressing poverty. Spending more money on programs that trap families in dependence and harm our economy is self-defeating, no matter what the intentions.

When debating policy changes for Maine at the state house or advocating for it, it is important to know where Maine stands. Our new publication the 2011-2012 Maine By The Numbers is a comparison of Maine to other states in a comprehensive list of demographic, economic, and policy measures. Maine, in many of these important measures has historically performed poorly; the latest data shows this trend continuing. Maine is still plagued by an aging population, poor economic performance, a shrinking private sector and a ballooning welfare system.

All the data used in the Maine By The Numbers is from public data from government and national sources. Although we use a ton of data, this is more than an enumeration of measures and outcomes. We compiled this data in order to look at comparisons that make sense. We compare Maine to the US, New England, and rural peer state averages. We then compare Maine to the highest and lowest states. This gives a comprehensive and meaningful look at where Maine stands.

Maine remains the oldest state in the country, with a median age of 43.4, the third highest population above 65 at 15.89% and the 3^rd lowest population under 18 at 22.15%. Maine, with its less than vibrant economy has struggled with attracting young, college graduates and entrepreneurs to live and work. Our chief economist, Scott Moody, has been warning of this “demographic winter” and the economic toll it will take. The ever-growing population of those over 65, especially on the eve of the retirement of the baby boomers, will continually affect our economy and our state budget.

These demographics, without policy changes, could spell disaster for Maine’s future. Our policies today are not attracting young entrepreneurs to Maine. Our private sector is one of the smallest in the nation. While Maine, according to the most recent data, has outperformed its New England neighbors in private sector job growth, its growth has been anemic in comparison to its rural peers.

Maine experienced 0.7% private sector job growth, but it is dwarfed by the 5.4% from our peer states; states including Wyoming, whose growth was more than 22% percent. But you do not have to look 2000 miles west for a state with a booming private sector. Though New Hampshire’s private sector employment grew only 0.4%, its private sector share of personal income is the highest in the country at 75.7%, far exceeding Maine’s 63.6%. Our peer states have been experiencing booming private sectors and have been leading the country in private sector job growth. They have clearly been successful in incubating business investment and bringing jobs to their states, something Maine has not done.

As we outlined in our report: Fix the System: Freeing Maine Families from Welfare Dependency, Maine’s welfare system has grown out-of-control and the numbers show it. In every category, Maine is a bottom-3 performer. Not only does Maine compare poorly with our rural peers states and our neighbors in New England, but we are far out-of-line with the entire country. We have the 2^nd highest food stamp participation rate (13.8%) behind only Louisiana (16.2%), which has been recovering from the devastating effects of Hurricane Katrina—the US average is 8.8%. Although our current economy can be somewhat responsible for our expansive welfare state, looking at similar states shows that our welfare system is nearly all the result of poor policy choices. These policy choice have resulted in Maine spending 1 in every 3 dollars on welfare spending.

Taxes have been an issue in Maine for years. Maine consistently ranks in the top 25, and many times ranks in the top ten, highest taxed states. Our top state individual income tax rate is at 8.5% which is higher than the national average of 5.67%. Our top corporate income tax is even higher at 8.93%, again, beating the national average of 6.51%. The only area where we fall below the national average is our sales tax rate of 5%. These rates are in line with our New England neighbors; however, our personal income level is much lower. The state collects much more revenue as compared to personal incomes in Maine. For example, our state and local individual income tax collection as a percent of personal income is 3.3%, which is 12^th highest in the country and higher than the US, New England and rural peer averages. Our total state and local taxes as a percent of income is an even uglier picture:

Because economies do not operate in a vacuum, Maine’s policies put its economy at a disadvantage compared to neighboring states. Our neighbor New Hampshire, which has chosen to have tax policies, such as zero sales tax, and stream-lined business taxes attracts retail sales and business investment. As outlined in Scott Moody’s recent piece, The Great Tax Divide: Maine’s Retail Desert vs. New Hampshire’s Retail Oasis, Maine’s economy is lagging behind New Hampshire’s significantly and has been for nearly two decades. Many of these measures highlighted in Maine By The Numbers are not the result of destiny. Maine has the opportunity, especially with a reform-minded governor, to fix or eliminate policies that have put us behind our peers. Already with our governor’s new budget, the top income tax rate has been reduced. Serious policy changes are the only way to move Maine toward a brighter future. Hopefully the legislature and governor move to enact more policy reforms that will improve Maine’s numbers.

Our Fixing the System: Freeing Maine Families from Welfare Dependency report, which we released on September 9, continues to get much attention.  Thousands have visited our FixWelfare.com Web site to learn more about how many are trapped in poverty in their own towns and communities and what they can do about it.

On September 16, the US Census Bureau released updated information on those in poverty in Maine.  The numbers are quite revealing:

• In 2009-2010, there were 152,685 individuals in poverty in Maine – about one in nine individuals.  Poverty is defined as a family of two earning less than $14,570 a year or earning less than $22,050 for a family of four.

Yet, the Maine Department of Health and Human Services’ own September welfare report shows that:

• There were 392,398 people on at least one major welfare program in Maine (TANF cash assistance, food stamps and/or Medicaid) last month – almost one in three individuals.

How can this be?  There are almost three times more people on welfare in Maine than the number living in poverty?

What about low-income individuals, typically defined as those earning less than twice the poverty limit or less than $29,140 for a family of two or $44,100 for a family of four?

• According to the Census Bureau, 29.9% of Mainers are low income or 390,673 low-income individuals in Maine.

This means that there are more individuals on welfare in Maine that there are defined as low-income.

And some still try to argue that Maine does not have a welfare dependency crisis?

Families in Your Community are Trapped in Dependence

Maine’s welfare system undermines hard work and traps parents and children in poverty.  We must fix the system to free families from dependency through accountability and hard work.

Click no further than www.FixWelfare.com to understand the extent of Maine’s welfare dependency crisis.  The skyrocketing level of dependence on Maine’s welfare system is a growing crisis-in almost every city and town in the state.

FixWelfare.com is a new site launched by The Maine Heritage Policy Center (MHPC) to show just how many Maine families are trapped in a welfare system that promotes dependency rather than self-sufficiency.  At both county and town levels, users can see the number of people and percent of population enrolled in Maine’s major welfare system programs-Food Stamps, Medicaid, and TANF (Temporary Assistance for Needy Families) cash assistance.  The site also features charting functions that offer town-to-town comparisons of the growth in welfare system dependence since 2003.

MHPC launched FixWelfare.com two weeks after the release of its 33-page report on the issue, titled Fix the System: Freeing Maine Families from Welfare Dependency, which is also available on the new site.

“There has been a lot of discussion on the issue of reforming Maine’s welfare system, but there was very little research and data available to inform those discussions and policy debates,” said Steve Bowen, director of MHPC’s Center for Education Excellence and lead researcher for MHPC’s Fix the System initiative.  ”With our report, and the launching of FixWelfare.com, we hope the public and policy makers will have a better understanding of Maine’s dependency crisis, and what we can do to lift families out of poverty and move them from welfare to work.”

The data on the site comes directly from government sources including the United States Census and the Maine Department of Health and Human Services.  The site also includes symptoms of Maine’s dependency crisis, proven solutions to fix Maine’s welfare system, and a petition Maine people can sign in support of welfare reform that fixes the system to one that actually lifts families out of poverty while preserving the safety net for Maine’s truly needy.

“Maine’s dependency crisis is closer to home than people think,” said Chris Cinquemani, MHPC’s director of communications.  ”412 of Maine’s 488 towns reporting have seen an increase in the number of people enrolled in Maine’s welfare system since 2003.  Instead of lifting people out of poverty and moving them toward self-sufficiency and work, Maine’s welfare system is designed to trap families in dependency.  The system is broken.  Unless we fix the system, in three years more Mainers will be on welfare than will have a job in the private sector.”

“Visit FixWelfare.com,” Cinquemani concluded.  ”See how close to home Maine’s dependency crisis really is, and sign the petition in support of reform.  We must fix Maine’s broken welfare system.  Maine families have been trapped in dependency for too long.”

Even in a small state like this, it is amazing what happens to you when you dare to question state agencies and departments about the work they do. For an example, one need only look at how Brenda Harvey, the commissioner of the Maine Department of Health and Human Services (DHHS) has responded to MHPC’s new welfare reform paper Fixing the System: Freeing Maine Families from Welfare Dependency, which was released last week.

The message from Commissioner Harvey? How dare you criticize us!

The commissioner’s assault on us began the initial news articles to report on our new study. In the Portland Press Herald’s first report on the study, for instance, the commissioner disputed a finding that was not even in our study, saying that “the suggestion that our budget has grown exponentially under the Baldacci administration is absolutely incorrect.” As evidence, she submitted that “the general fund, the state of Maine taxpayers’ money, for DHHS over the governor’s eight years has seen an 8.1 percent increase.”

Nowhere in out report, however, do we discuss the general fund budget of the Department of Human Services. The data we use to support our claim that welfare enrollment has exploded under Governor Baldacci comes from DHHS itself, in the form of the monthly reports it issues on welfare caseload levels. That data shows that the total unduplicated number of Mainers receiving benefits from the TANF, Food Stamp and Medicaid program rose from 226,000 in 2003, when Baldacci first came to power, to 388,000 today, an increase of 70 percent.

Harvey goes on to say “this report and the timing of this report (during the gubernatorial campaign) is clearly supporting a political agenda.” However, she offers no evidence–not one shred of evidence–to prove that MHPC has worked in cooperation with any political campaign, which is something the Center does not do. She simply makes an assertion, based on no facts of any kind, as is not challenged on it by reporters.

According to the Press Herald, the commissioner goes on to claim that the MHPC study “inflates enrollment numbers by including MaineCare, which provides state-subsidized health insurance to needy children and the disabled.” DHHS does exactly the same thing, however, when it includes MaineCare enrollment in the unduplicated count of welfare cases contained in its reports (The MaineCare numbers are in the “overflow” reports).  What constitutes “welfare?” According to the DHHS; TANF, Food Stamps, and, yes, the state’s Medicaid program, MaineCare, are all welfare programs.

Harvey lashed out at MHPC again on Wednesday, suggesting in a Bangor Daily News article that “her biggest concern with the MHPC report was its distortion of statistics to create a misleading story.” Her evidence of this? The MHPC report, she says,  “claimed Maine ranked second among states for households receiving food stamps.”  “Harvey,” the paper reported, “said Maine is actually second in putting food stamps in the hands of eligible people, which is a big difference.”

It may well be that Maine is second in “putting food stamps in the hands of eligible people,” but it is also (and it is concerning that the commissioner doesn’t know this) second in the percent of households receiving food stamps, just as we reported in our paper. Our source? The United States Census Bureau, which issued this report last fall. In it, the Census reports that “among the states with the highest food stamp/SNAP participation were Louisiana (16.2 percent), Maine (13.8 percent), and Kentucky (13.7).” Maine ranks, just as we reported in our paper, second in the nation in the percent of households receiving food stamps. As with her charges against us in the Press Herald, her charges here went unchallenged by the reporter writing the piece.

So we’re distorting the facts?

I am fine with criticism of the paper, and we’ll deal with some of the other criticism we’ve faced in a later blog. I do have some concern, however, that a public official, acting in her official capacity, is doing plenty of distorting of the facts herself, including making baseless accusations and bald-faced misrepresentations of our report.

In so doing, Brenda Harvey has sent a clear message – criticize the Department and the commissioner herself will go on the offensive, up to and including telling outright lies about what your report actually says.

This is what we get from a DHHS commissioner who, according to MaineOpenGov.org,  makes over 170,000 a year in pay and benefits?

As Tarren has made clear, Maine faces an unsustainable explosion in welfare dependence.

In our research, we have identified a handful of state policies that we feel have been instrumental in expanding the welfare rolls.

• Maine has some of the most liberal eligibility limits in the country, allowing people to enroll in the state’s various programs who would be disqualified from enrolling in other states. 
• Maine does not enforce work participation requirements, and, as a result, ranks near the bottom in terms of the percent of welfare recipients who are working.
• Maine does not impose time limits in an effective way, with the result that Maine has the third highest proportion of long-term TANF recipients in the nation. 
• The sanctions Maine imposes for the violation of program rules are among the weakest in the nation, with the predictable result that program rules are violated.
• Maine’s welfare programs are poorly managed, with the state’s Department of Health and Human Services repeatedly being cited by state and federal authorities for errors and poor performance.

Fixing the system means taking three big steps:

First, we need to focus the resources we have on the truly needy. This is a state that offers subsidized child care to families with $40,000 in income. A married couple with three children can earn more than $50,000 a year and still receive taxpayer-funded health care under the state’s Medicaid program, an eligibility limit more than three times the national average.  A person can receive assistance under the LIHEAP program while earning 200 percent of the Federal Poverty Level, a rate higher than that found in 39 other states.

Maine is one of only five states that provides TANF, Food Stamp, and Medicaid benefits to legal non-citizens through a state-funded program, and is one of only nine states that provides TANF and Food Stamp to drug felons with no strings—such as drug testing or treatment—attached.

There are people who are truly in need across our state, people who have no other source of assistance and support. We need to focus our resources on them, rather than make government assistance programs a middle class entitlement.

Second, we need to define success as a paycheck, not more welfare checks. It is clear from our data, that Maine has a welfare system that is designed for dependence.  On policy after policy, when Maine has the option of expanding access or limiting access to these programs, it is always the policy of the state to expand access in some way.

Not long ago, the state agency that runs Maine’s TANF program was called the Bureau of Family Independence. Today, it is called the Office of Integrated Access and Support, and what it seems intent on doing is providing more and more Mainers with more and more access to more and more government handouts.

What we need is a relentless focus on getting people from welfare to work. In our paper, we outline a series of steps Maine should take, including a more focused and aggressive jobs program modeled on successful programs in other states, tough sanction policies for those that fail to meet work requirements, and strict time limits to prevent welfare from becoming a way of life.

Last, we need to overhaul the state’s welfare bureaucracy. We need the Department of Health and Human Services to move from a focus on expanding dependency to a focus on work and self-reliance. We need to streamline a system that is dizzying in its complexity so that people who enroll in these programs have a clear path to self-sufficiency. We need to have the state’s welfare agencies authoring monthly reports detailing how many of the clients they serve have moved on from welfare to work. In short, we need to define success in a whole new way.

And, because names have meaning, we need to change the name of the agency that runs the state’s major welfare programs. The name we suggest in the paper is one we stole from Arizona: EMPOWER (Employing and Moving People Off Welfare and Encouraging Responsibility).

Following these three steps—focusing aid on the truly needy, moving from welfare checks to paychecks, and overhauling the welfare bureaucracy—will mean a more effective welfare system, and a stronger, more prosperous Maine.

Read the full publication - Fix The System

View the press conference powerpoint

The legacy of Governor John Baldacci is this:

• a massive expansion of the number of people trapped in Maine’s welfare system
• a massive explosion in public welfare spending in Maine
• no change in Maine’s poverty rate

Maine’s welfare system undermines hard work and traps parents and children in poverty.  We must fix the system to free families from dependency though accountability and hard work.

The challenge of the next governor and next legislature is to reverse these destructive and unsustainable welfare trends.

The facts are clear – between March 2003 and March 2010, Maine’s welfare system enrollment skyrocketed 70 percent, from 226,000 to more than 381,000 individuals.

Today, almost one in three Mainers is trapped in the welfare system.  Let me repeat that: almost one in three people in Maine are on some type of welfare program.   All this, despite the fact that Maine has a poverty rate below the national average.

In Maine right now, 29 percent of the total population is on some form of welfare.  By any measure, Maine is the most welfare dependent state in the nation.  Maine ranks second in the nation in the percent of its population on Food Stamps, second for TANF cash assistance, and second for Medicaid.

If these trends continue, Maine is on pace to have more people on welfare by 2013 than there are people working in all private sector jobs.

Maine spent nearly $2.5 billion a year on its welfare system as recently as 2008, up from only $1.4 billion a decade earlier – that’s 50 times more than we spent on economic development ($47.6 million) and more than our entire K-12 public education spending ($2.278 billion).

What are we getting for all this welfare and all this welfare spending?  Maine’s poverty rate is growing despite the welfare system’s huge cost and size. Between pre-recession 2001 and pre-recession 2007, the portion of Mainers living in poverty grew from 10.3% to 10.9%.

That’s financially unsustainable.  But more importantly, it is morally unacceptable.

Maine has a proud tradition and a national reputation for self-reliance and a strong work ethic.  Yet, our current welfare system robs families of the hope of a better life by keeping them in a system that undermines hard work and traps parents and children in poverty.

The report that we are releasing today is the story of Maine’s dependency crisis.  More importantly, the report lays out a clear path of reforms of how we can Fix the System and free families from welfare dependency through accountability and opportunity.

Read the full publication - Fix The System

View the press conference powerpoint

The other day I took a quick drive to Cumberland Farms in Augusta for a Red Bull to get me through an evening cookout with friends.  While waiting in line, I couldn’t help but overhear part of a conversation between two friends behind me.  The exchange went like this:

Girl #1:  She fired me!

Girl #2: Why?

Girl #1: She was [expletive deleted] screaming at me so I told her to stop.  She said I have an attitude problem.

Girl #2: Oh no.

Girl #1: That’s OK, I’m making more on unemployment than I was with her.

This casual conversation raises some questions.  Is unemployment really more lucrative than a hard day’s work?  Are our tax dollars being used to get people through tough times, or are they pumped into a system that perpetuates government dependency?

I did a little digging…

On the Maine Department of Labor Web site, there is a nifty guide to “How the Unemployment Insurance Program Works.”  To be eligible, a claimant must meet the following requirements:

1)      The separation from employment must not be the claimant’s fault.

2)      The claimant must be able to work and actively seeking employment.

3)      The claimant must submit a weekly claim form for each week of unemployment benefits.

Fair enough, perhaps, but scrolling through the entries under the “What’s New” portion of the site paint a different picture.

Unemployment claimants will get their very own debit card. Soon, a debit card will be issued to every new Maine unemployment recipient.  Benefits will automatically be deposited onto the card, making it unnecessary to leave the house to cash a check.

Another hassle-free unemployment perk: direct deposit. The marketing for unemployment direct deposit on the Department of Labor’s Web site is stellar—“Save Time & Get Your Unemployment Benefits Faster!”

Don’t want to wait on hold?  There are a series of online services that make a phone call to Unemployment Claims Centers unnecessary.  With just a few mouse clicks, you can: file a new unemployment claim, file a weekly unemployment claim, check the status of an unemployment claim, appeal a decision on your unemployment claim, and more.  Who wants to stay on the phone with human resources or a temp agency when you can resolve all your unemployment issues online?

There’s even some helpful hints in case your unemployment benefits are running out.

Unemployment was created with the noble goal of offering a helping hand to our vulnerable neighbors who need it most.  It seems clear, however, that the system has been reformed to the point that it is often easier, and more profitable, to continue collecting taxpayer-funded unemployment benefits rather than seeking work.

Yes, there are individuals who use their time to identify ways to beat the system and continue collecting unemployment without doing much else.  But can we really blame other people who take advantage of an entitlement program that seems specifically designed to create additional dependency on state government?

Until the systems are reformed—both unemployment and other entitlements—we cannot expect a shift in attitude or culture.  We need to change the way we help people so more will realize that a job with hard earned wages is preferable to a government hand out.