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About those 10 reasons, Senator …

Posted September 22nd, 2017 to Blog

Senator Chuck Grassley of Iowa has made the point himself: The Cassidy-Graham bill to repeal the Affordable Care Act (ACA) has many deficiencies.

“I could maybe give you 10 reasons why this bill should not be considered,” he told Iowa reporters.

So, let’s look at some of the reasons, on the merits, why people might have concerns about Cassidy-Graham.

  1. People with pre-existing conditions would lose access to health care. Protection of these people assured now under the ACA would be left to state decisions, with states already cash-strapped.
  2. Many who became eligible for coverage through the Medicaid expansion of the ACA would lose it. In Iowa, about 150,000 people gained coverage by this expansion.
  3. It would change Medicaid expansion to a block-grant program that provides states no flexibility to deal with recessions or prescription drug price increases.
  4. Medicaid for seniors, people with disabilities, and families with children would be capped on a per-person basis. Anything higher would be left to the states to provide. There is neither any assurance states would want to do that, or even be financially able to do so.
  5. Iowa would be marched to a $1.8 billion cliff in 2027 under this bill, with federal support dropping sharply. For context, that is the equivalent of about one-fourth of the current state budget.
  6. Millions would lose insurance coverage. While we’re still waiting for the estimate from the Congressional Budget Office, past repeal proposals show this. And, since this bill offers nothing beyond 2027 for the Medicaid expansion, via block grant or otherwise, the prospect of 32 million people losing coverage (as demonstrated in estimates in previous ACA repeal legislation) is very real.

In Iowa? The graph below shows how Iowa’s uninsured population has dropped with the advent of the ACA, or Obamacare. Census data show uninsurance in Iowa dropped by nearly half in just three years, by about 116,000 — from 8.1 percent uninsured in 2013 to 4.3 percent in 2016.

So, this is a good start on why Iowans might be concerned about Cassidy-Graham — a last-ditch effort to rush into law radical changes in the way millions nationally and over 100,000 in Iowa gained access to health care in just three years.

We invite Senator Grassley to add to the list and get us to the full 10 reasons he suggested that might cause concerns about this bill.

Or better yet, maybe together in a deliberative process that involves everyone, we can come up with a list of 10 things that any health care policy should address.

Surely the list would include insuring more people, assuring more with practical access to health care when they need it, improving public health and reducing costs. We invite Senator Grassley to that discussion.

Mike Owen, Executive Director of the  Iowa Policy Project
mikeowen@iowapolicyproject.org


Health exchanges: Why not fix?

Posted July 12th, 2017 to Blog

What would be your response if someone said to you: “The transmission in my car needs an overhaul. This just proves vehicular transportation doesn’t work, so I am going to get rid of my car and my pickup, even though the truck is still running fine.” You would probably think they were crazy. Why not just fix the car’s transmission?

Yet this is the logic being put forward by Senator Grassley and many others as they seek to repeal Obamacare. Yes, we have a problem with the insurance exchange in Iowa, where we now have just one insurance company offering policies. But instead of pursuing solutions to that problem, our representatives are using it as an excuse to repeal Obamacare, including the Medicaid expansion, which has nothing at all to do with the insurance exchange and in fact is still in good running order.

The lack of insurers in the Iowa exchange is largely a self-inflicted problem. Insurers have left the market in part because the state of Iowa did so little to encourage people to sign up, and to provide assistance in navigating the exchanges. Iowa was also extremely generous in allowing people to continue with existing poor-quality insurance.

The problem was worsened by President Trump’s efforts to sabotage the exchanges during the final weeks of the annual sign-up in January by banning all advertising and encouraging people to think Obamacare was going to end. As a result, the number enrolling in the exchanges, which had been on a pace to exceed that of the previous year, ending up falling short.[1] Too few younger and healthier people enrolled, leaving the insurance companies with older and sicker people.

There are solutions to this problem. Both the Iowa Insurance Commissioner and Iowa Democrats have proposed measures to solve the exchange problem at the state level. But the House and the Senate bills repealing and replacing Obamacare, instead of shoring up the exchanges, repeal the individual mandate. Analyses of their replacement provisions predict that they would worsen the problem instead of solving it, leaving the exchanges with even fewer healthy individuals.[2]

Now about the pickup truck. The Senate’s Better Care Reconciliation Act (BCRA) would likely result in 232,000 Iowans losing health insurance coverage over the next five years.[3] Three-fourths of them would become uninsured because of the loss of Medicaid, the rest because of cuts in premium assistance for policies purchased on the exchange.

Iowa expanded Medicaid eligibility (with 90 percent federal funding under Obamacare) to include low-income non-elderly adults, most of whom are working in low-wage jobs with little or nothing in benefits. The BCRA would effectively end the Medicaid expansion for about 177,000 Iowans.[4] This will hit rural Iowa the hardest, and it will undermine the finances of rural hospitals.

The Medicaid expansion has nothing to do with the health insurance exchanges. Our representatives should stop using a fixable problem with the exchanges as an excuse for passing a broad bill that ends health insurance for tens of thousands of Iowans.

[1] Center on Budget and Policy Priorities, Sabotage Watch: Tracking Efforts to Undermine the ACA. http://www.cbpp.org/sabotage-watch-tracking-efforts-to-undermine-the-aca

[2] Jacob Leibenluft and Aviva Aron-Dine. Senate Health Bill Can’t Be Fixed; Reported Changes Would Not Affect Bill’s Core Features. Center on Budget and Policy Priorities, July 10, 2017. http://www.cbpp.org/research/health/senate-health-bill-cant-be-fixed

[3] Linda Blumberg et al. State-by-State Coverage and Government Spending Implications of the Better Care Reconciliation Act. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2017/rwjf438332

[4] Robert Wood Johnson Foundation and the Urban Institute. The Impact of Per Capita Caps on Federal and State Medicaid Spending. March 2017.

Peter Fisher, Research Director, Iowa Policy Project & Iowa Fiscal Partnership

pfisher@iowapolicyproject.org


Any way you cut it — Americans lose health coverage

Posted June 26th, 2017 to Blog

First, let’s make no mistake: Both the Senate and House bills to repeal and replace the Affordable Care Act (ACA) represent substantial cuts in health coverage, including Medicaid.

People will lose coverage, have less coverage, and/or pay more for it. This is a public policy choice being offered in the drive to repeal ACA’s enhancement of insurance coverage for millions of Americans. In Iowa alone, uninsurance dropped from over 8 percent to 5 percent in just two years.

It is at best disingenuous for anyone to suggest otherwise, or to downplay the cut. Those who want to promote this legislation, for whatever reason, have to own the impact. If they’re afraid of the political disadvantage of admitting it, that’s another story.

The stakes for some 200,000 Iowans are significant, jeopardizing recent health-care coverage gains and putting vulnerable Iowans at risk. An Iowa Fiscal Partnership report from Peter Fisher of the Iowa Policy Project sets the context for this week’s discussions in the Senate.

A new report from the Center on Budget and Policy Priorities (see graph at right) shows how the Senate bill would drive up costs for the 31 states that — along with Washington, D.C. — expanded Medicaid under the ACA.

For Iowa, the estimates are daunting: In 2021, Iowa would have $54 million more in costs, and in 2024, $395 million more — a 315 percent increase.

That CBPP report is part of the exceptionally good information available even in the short time frame we have to understand what is emerging from the backrooms of Washington, out of public view.

See these reports, just produced in the last couple of days by tremendously reputable organizations:

This is our business. We can demand to know the facts and we might just want to know them before the Senate votes — even if some in the Senate might be uncomfortable with that.

By Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org


Kansas experiment yields valuable lessons

Posted June 7th, 2017 to Blog

GUEST BLOG
By Heidi Holliday, Kansas Center for Economic Growth

You’re welcome, America.

Our state, Kansas, just wrapped up a five-year experiment in governance from which the other 49 states can now glean some important lessons. The Kansas Legislature has voted to roll back much of the 2012 package of tax cuts that sent the state into a downward spiral of financial instability and weakened the Kansas’ public schools, universities, Medicaid program, and virtually everything else that the state funds.

With the state facing yet another budget shortfall of $900 million, government leaders decided that enough was enough. Governor Brownback, who heralded the 2012 experiment, was proposing yet more temporary band-aid approaches and more cuts deal with the shortfalls. The Legislature chose a different path and instead sent the Governor a bill that would raise more than $1.2 billion in new revenue over two years by, among other things, repealing a costly tax break for pass-through income, rebalancing individual income tax rates by reinstating a third tax bracket, and reversing course on the Governor’s plan to eliminate our state income tax. Brownback vetoed the legislation but, with bipartisan support, the House and Senate quickly overrode the veto.

Our state has begun the path to fiscal stability and is closer to becoming a model of good policy choices as much as it is a cautionary tale. The damage done to Kansas from this reckless experiment will not be undone overnight, but other states need not wait to act upon the lessons learned.

Put simply, revenue matters. You can’t get something for nothing. We all want and deserve thriving communities with great schools, parks, and modern roads and bridges; and we chip in to pay for that. That’s what taxes are for.

Because of the scope of the 2012 changes, it didn’t take long before Kansans in every corner of the state began connecting the dots between the actions of state lawmakers and the quickly eroding quality of the things that make for a good economic foundation in every community. With every subsequent shortfall, the picture became more clear.

Meanwhile, the promised economic boom — and the revenue rebound that would supposedly follow — never happened (as economists predicted). In the last few election cycles, voters have viewed candidates and their promises through a different lens, and the 2017 Legislature had the experience and public backing to chart a new course.

Most state tax codes, including ours, need further reform, but it’s high time that state tax policy adhere to one basic, proven (and now proven once again) principle — states need revenue to invest in the things that create thriving communities and a prosperous economy. Kansas just learned this lesson again, the hard way, so that your state doesn’t have to.

You’re welcome.

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The Kansas Center for Economic Growth is part of the State Priorities Partnership (SPP), a nationwide network of policy analysis groups coordinated by the Center on Budget and Policy Priorities. The Iowa Fiscal Partnership — a joint initiative of the Iowa Policy Project and the Child & Family Policy Center — also is a member of SPP.


AHCA: Shifting Costs to States

FOR IMMEDIATE RELEASE TUESDAY, JUNE 6, 2017

Cutting Medicaid Expansion: Huge Cost Shift to Iowa, Other States

IOWA CITY, Iowa (June 6, 2017) — A new report shows Iowa would have to spend almost three times what it does now to cover low-income adults who would lose health coverage under the House-passed American Health Care Act (AHCA).

To keep up the benefit to those families, AHCA would force Iowa and the 30 other states that expanded Medicaid to absorb a greater share of the cost. The Center on Budget and Policy Priorities (CBPP), estimates the cost to Iowa to rise $192.5 million in 2021.

“This is an enormous cost-shift to Iowa, and we already have seen our state’s leaders cutting back revenues, and trying to cut more. Facing those fiscal constraints already, it is hard to see how the state could pick up those costs, which puts health coverage for many thousands of Iowans in jeopardy,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project (IPP).

The new analysis by the Center on Budget and Policy Priorities shows that Iowa’s costs would continue to soar. By 2023, the state would have to find an additional $335.8 million to maintain coverage for people benefiting from the Medicaid expansion. That would be a 288 percent increase from the cost under current rules.

“The real question is whether Iowa’s political leaders on both sides of the aisle are willing to speak up about this to assure Iowa’s senators, Charles Grassley and Joni Ernst, are aware of the decisions being put on state lawmakers’ plates,” Owen said.

Peter Fisher, IPP research director, noted that about 150,000 Iowans benefit from the Medicaid expansion, which was part of the Affordable Care Act (ACA).

“Many thousands of Iowans have health coverage now because of the ACA and the Medicaid expansion,” Fisher said. “As we have stated before, any plan to replace ACA can be judged on how well those gains are maintained.

“The House bill would at best jeopardize the gains, and with higher costs for insurance, almost guarantee far greater numbers of Iowans would be uninsured.”

The CBPP report estimates the bill would jeopardize coverage for 11 million newly eligible low-income adults who enrolled in Medicaid under the expansion.

The report is available at http://www.cbpp.org/research/health/house-republican-health-bill-would-effectively-end-aca-medicaid-expansion.

In states that adopted the Medicaid expansion, the federal government pays at least 90 percent of the expansion costs — an enhanced rate compared to the regular Medicaid program. This change cut uninsurance rates in half for non-elderly adults in Medicaid expansion states, from 18.4 percent in 2013 to 9.2 percent in 2016.

Under the AHCA, however, the federal government would pay only the regular Medicaid matching rate, 58.5 percent in Iowa, for new enrollees beginning in 2020. Anyone whose Medicaid coverage lapses for more than two months becomes a new enrollee. Because Medicaid recipients cycle on and off the program, in the space of just a few years most enrollees would be “new,” and would lose Medicaid coverage altogether unless the state came up with the millions required to keep them on.

With the loss of the Medicaid expansion, the percent of Iowans who are uninsured could rise to levels even higher than existed prior to Obamacare. That is because those individuals who received some coverage from IowaCare, and who since moved to the Medicaid expansion, would not have IowaCare to fall back on when the expansion ends.

The Iowa Policy Project is a nonpartisan public policy analysis organization based in Iowa City. IPP and the Child & Family Policy Center in Des Moines together analyze fiscal policy issues as the Iowa Fiscal Partnership, www.iowafiscal.org.

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Jeopardy for women, rural health

Posted May 16th, 2017 to Budget, Economic Security

IFP NEWS — 

House bill jeopardizes health for women and rural Iowans

National reports pinpoint issues for Iowans with loss of Medicaid expansion

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Capitol-DSC_0119-240200IOWA CITY, Iowa (March 16, 2017) — The House plan to cap and cut Medicaid — and effectively end the Medicaid expansion — will have a disproportionate impact on women and hinder coverage as well in rural communities.

Two new reports by the Center on Budget and Policy Priorities (CBPP) illustrate the challenges as attention turns to the Senate. Of particular note is the threat to the expansion of Medicaid in Iowa and 30 other states to low-income adults previously not covered.

“Previous analysis has shown the Medicaid expansion currently assures coverage to as many as 150,000 Iowans. The call to ‘repeal and replace’ the Affordable Care Act is a hollow one in that we have yet to see a replacement that protects access to health care to this vulnerable population,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project (IPP), part of the Iowa Fiscal Partnership (IFP).

A summary by IFP and CBPP of the previous House Republican plan had estimated that the earlier House Republican plan not only would cut health coverage, but also cut taxes for the wealthy while making health care more expensive for poor and rural Iowans. The report noted the Congressional Budget Office had projected the plan would wipe out all gains in health coverage achieved under the ACA.

The new reports by the Center on Budget and Policy Priorities — last week on women’s coverage and Tuesday on rural communities — clarify the challenges further. (See links to the CBPP reports below.

Not only do women make up a majority of Iowa’s Medicaid beneficiaries, but they also are the primary users of family planning and maternity benefits, and are more likely to use Medicaid’s long-term services, CBPP analysts reported.

“The Medicaid expansion loss alone is critical for women, even though it is not the only impact,” Owen said. According to the analysis, women are 54.6 percent of the Medicaid population in Iowa, but 50.4 percent of the total population of the state. In addition, the report stated, 40 percent of total births in Iowa in 2010 were covered by Medicaid.

CBPP’s report Tuesday notes that Medicaid “has long played an essential role in delivering health care in rural America.” It also notes that the rural share of the 11 million people — 14 percent — who gained coverage through the Medicaid expansion is greater than the rural makeup of the population as a whole (12 percent).

Iowa is among the eight Medicaid expansion states where more than one-third of expansion enrollees live in rural areas, the report stated. It estimates 61,600 — or 44 percent of all expansion enrollees in Iowa —live in rural areas.

“If rural health matters, then clearly the Medicaid expansion needs to be a priority and not an afterthought tossed aside for political purposes,” Owen said.

The Iowa Fiscal Partnership (IFP) is a joint initiative of the Iowa Policy Project and another nonpartisan organization, the Child & Family Policy Center in Des Moines. Iowa Fiscal Partnership reports are at http://www.iowafiscal.org.

 

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For more information, see:

Interactive map with county-by-county and congressional district breakdown of Medicaid expansion enrollment (January 2017) http://www.iowapolicyproject.org/2017Research/170325-ACA-MedicaidExp.html

IFP backgrounder, “Replacing ACA: What You Need to Know About the AHCA.” March 16, 2017. http://www.iowapolicyproject.org/2017docs/170316-acha-bgd.pdf

Center on Budget and Policy Priorities report: “House-Passed Bill Would Devastate Health Care in Rural America,” May 16, 2017. http://www.cbpp.org/research/health/house-passed-bill-would-devastate-health-care-in-rural-america

Center on Budget and Policy Priorities report: “Medicaid Works for Women — But Proposed Cuts Would Have Harsh, Disproportionate Impact,” May 11, 2017. http://www.cbpp.org/research/health/medicaid-works-for-women-but-proposed-cuts-would-have-harsh-disproportionate-impact

Repealing ACA: Pushing thousands of Iowans to the brink

Likely turmoil in insurance market, higher premiums, and harm to the economy

Instead of incentives to invest, the proposals reward decisions made with no subsidy needed

Updated March 2017

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By Peter S. Fisher

Repealing the Affordable Care Act (ACA) without an adequate replacement, as Congress and the incoming Trump administration appear poised to do, jeopardizes the health care coverage and economic well-being of the most vulnerable Iowans. About 230,000 fewer Iowans would have health coverage in 2019 if the law is repealed, including 25,000 children. Thousands of adults working in low-wage jobs — such as those waiting tables, working on construction sites, bagging groceries, or providing care to children, the sick, and the elderly — would lose coverage if the Medicaid expansion is repealed. For families unable to afford health coverage on the individual market prior to health reform, coverage subsidized by tax credits could disappear, and 42,000 individuals would lose their insurance. More people would turn to hospitals and other health providers for uncompensated care, which would likely be provided in emergency rooms, leaving those who are insured to pay the bill through their own premiums, or for health-care providers to swallow the cost. Iowa’s economy would suffer as $626 million in federal funds would be withdrawn from the state, costing Iowa 6,700 jobs. The insurance market would be thrown into immediate disarray, raising premiums and reducing insurance options. Such are the prospects for Iowa as decisions loom in Washington on the ACA.  

The Affordable Care Act dramatically expanded health insurance coverage in Iowa

The number of Iowans without health insurance declined by almost 93,000 between 2013 (prior to implementation of the Affordable Care Act) and 2015, the second year in which the ACA and the insurance exchange were fully implemented in Iowa. This represents a 37 percent decline in the number of uninsured. Statewide, the percent of persons without insurance declined from 8.1 percent to 5 percent. Increased coverage came in two ways: (1) about 47,000 more individuals purchased private insurance directly, with subsidies available to most of those through the ACA, and (2) about 70,000 more Iowans obtained health insurance from Medicaid.

170119-IFP-ACA-Table1

At the same time that options expanded for people to access publicly funded or subsidized coverage, the number of Iowans obtaining health insurance through their employer actually increased by 28,000 over the two-year period. The ACA, in other words, does not appear to have caused employers to eliminate health insurance and push employees onto public plans.

170117-ACA-T2-Race

The most dramatic decrease in the number of uninsured occurred for non-Hispanic white Iowans, among whom the number dropped by 85,000, accounting for 92 percent of the decrease statewide. The uninsured rate for this population declined from 7 percent to about 4 percent. The ACA had much less dramatic effect in reducing the uninsurance rates among Hispanics, African Americans and other non-white Iowans, where the uninsured share remained at 12 percent or higher.

The percent of the population that was uninsured dropped in nine of the 10 most populous counties in Iowa, in most cases by a substantial amount. The uninsured rate in the more rural remainder of the state also declined dramatically, from 9.2 percent to 5.3 percent. All told, about 41,000 fewer Iowans in the 10 largest counties were uninsured in 2015, while 52,000 fewer Iowans in the remainder of the state had coverage.

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Repeal would increase the number of uninsured Iowans

The ACA has made good-quality health insurance available to thousands of low-income individuals and families in Iowa who otherwise could not afford coverage. About 55,000 Iowans purchased insurance on the exchange during the 2016 enrollment period, and 85 percent of them qualified for the premium tax credit.[1] The average monthly premium for those purchasing insurance on the exchange was $425, with $303, or 71 percent of this cost, covered by the credit. The ACA subsidy that is now in danger reduced the average cost to ACA enrollees to $122 per month.  Nearly 28,000 people in this group also received cost-sharing reductions (CSRs), which lowered deductibles and other out-of-pocket costs for them by roughly $28 million that year.

The Urban Institute has estimated that if the ACA is repealed, 230,000 fewer Iowans will have health insurance coverage in 2019 than if the law is left as is.[2] Of these, 42,000 are individuals who will receive tax credits for the purchase of health insurance if the ACA continues, credits worth on average $4,281 per recipient per year. The credit covers over two-thirds of the cost of health insurance on average. Few people could afford to keep their coverage if they lose that subsidy.

As a result of these losses in coverage, the Urban Institute projects that ACA repeal would increase the number of uninsured in Iowa from 153,000 to 383,000, a 150 percent increase.[3] This includes an increase of 25,000 in the number of uninsured children, as well as 68,000 more uninsured parents.[4]  The percentage of Iowa children without health insurance would more than double, from 3 percent to 6.2 percent.

Taking Medicaid coverage away from thousands of adults would likely lead to an increase in the number of uninsured children. This is because adults who are uninsured are less likely to enroll their children in Medicaid or hawk-I.[5]  For many children in Iowa, this will mean not just poorer health, but poorer long-term prospects overall. Research has shown that better health care as a child is associated with greater educational attainment and higher earnings as an adult.[6]

Repeal of the Medicaid expansion would cut eligibility below pre-ACA levels

In 2014 Iowa created its own version of the Medicaid expansion, called the Iowa Health and Wellness Plan. As of January 2017, 151,000 people were enrolled in the Wellness Plan. See Appendix Table for enrollment by county. All of those individuals now in the Wellness Plan are at risk of losing health insurance if the Medicaid expansion portion of the ACA is repealed.

170119-IFP-ACA-Fig2

Prior to the ACA, Iowa had created a Medicaid waiver program called IowaCare that extended Medicaid benefits to many adults not eligible under traditional Medicaid.[7] There were 69,000 people enrolled in IowaCare in FY2013.[8] With the advent of the ACA in 2014, those enrolled in IowaCare were automatically shifted to the Iowa Wellness Program, and IowaCare ceased to exist. If Congress repeals the Medicaid expansion, all those in the Wellness Program would be at risk of losing coverage. People losing coverage would include those formerly in IowaCare, unless the state re-created such a program under a waiver request once again and got approval for that waiver from the federal government. This is unlikely. Thus the repeal of the ACA could leave tens of thousands of adults uninsured who actually were insured prior to the ACA, or who could have been covered if IowaCare still existed.  This would leave low-income Iowans worse off than they were in 2013, prior to health reform taking effect.

Working Iowans would be hurt by Medicaid expansion repeal

The majority of the non-elderly adults receiving Medicaid are working Iowans. In 2015, 61 percent of Medicaid recipients age 18 to 64 were working at least part time. A third of those were working full time at low-wage jobs that left them earning near the poverty line. Many of these adults get their health coverage through the Iowa Wellness Program and are thus at risk of becoming uninsured if the Medicaid expansion is repealed.

Basic RGBAmong the adult Medicaid recipients in Iowa who are working, about 45 percent work in 10 industries. They are waiting tables, working on construction, bagging groceries, or serving children, the sick, and the elderly. They are working in jobs that pay little and provide few if any benefits.

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Uncompensated care would rise with repeal

The ACA expanded insurance coverage to thousands of Iowans who would otherwise have sought emergency room or other care that they could not pay for, but which hospitals and doctors nonetheless are obligated to provide. This “uncompensated care” was greatly reduced by the ACA. With repeal and the loss of insurance coverage for 230,000 Iowans, it is estimated that total uncompensated care in Iowa in 2019 (assumed to be the first year in which repeal is fully in effect) would more than triple, from $345 million to $1.2 billion.[9] Over a 10-year period, a $10 billion rise in uncompensated care in Iowa is anticipated. All Iowans would feel the effects, as hospital fees and insurance rates would rise to make up for these costs, and as hospitals retrench.

The decline in health insurance coverage and the rise in uncompensated care could be especially challenging for Iowa’s rural hospitals. Rural hospitals are more likely to be in a precarious financial situation if they are in a state that did not expand Medicaid, and repeal would throw all Iowa hospitals into that situation. Since 2010, 80 rural hospitals across the country have closed, the majority in non-expansion states.

Repealing the ACA would cause immediate harm

Repeal of the ACA would likely follow the provisions of the repeal bill passed by Congress last year. This would eliminate immediately the individual mandate to purchase insurance or pay a penalty, while retaining popular provisions such as the requirement that insurance companies not deny coverage because of pre-existing conditions. The result is that many healthy individuals would drop their coverage.  Insurance companies would be left with the sickest and most expensive customers, which would prompt some to leave the state’s individual insurance market or to raise rates for remaining customers if they stayed.  The health insurance market would thus be devastated quickly, even though full repeal of the subsidies and other provisions of ACA would be delayed, possibly until 2019.

Repeal would also endanger some of the ACA’s most important consumer protections. No “replacement” plan has been proposed, but it is likely that the quality of insurance policies in the individual market would deteriorate, with rising deductibles, the return of limits on how much insurers will pay out in benefits each year or over a person’s lifetime, and failure to cover such things as maternity care, mental health, or prescription drugs.

With repeal of the individual mandate and the subsidies, it would be untenable to maintain the ACA’s protections for people with pre-existing health conditions. In Iowa, the number of adults with pre-existing conditions that would have led to denial of insurance coverage prior to the ACA has been conservatively estimated at 448,000, or about 24 percent of non-elderly adults in the state.[10] Ensuring the individual insurance market is accessible and affordable for this group, should they need to purchase coverage there, has been a major achievement of the ACA , but one made possible only because of the mandate and the marketplace subsidies, which broadened the pool of individuals the insurance companies were covering to include many healthier adults. Without the broader pool, insurance companies will not continue to offer quality, affordable policies, to the detriment of all those buying health insurance in Iowa.

Contrary to what some in Congress have been saying, the exchanges are not in a death spiral — higher premiums causing healthy individuals to forgo insurance, leaving the insurance companies with a more costly pool, leading to higher premiums, etc. Enrollment through the exchanges has increased each year since inception in 2014, and 2017 enrollment is ahead of last year’s. There is evidence that the premium increases this year are a one-time correction for underpricing in previous years, not the beginning of a trend.[11] In fact it is repeal, not continuation, of the ACA that would push the exchanges into a death spiral.

Repeal would shower benefits on the wealthy

Repeal of the taxes financing the ACA would lavish tax cuts on the highest-income households in the country. The Medicare taxes imposed by the ACA fall only on individuals with incomes above $200,000 or couples with incomes above $250,000. The 400 richest households in the country would receive a $2.8 billion windfall in 2017 if these taxes were ended, for an average tax cut of about $7 million a year for each household.[12] Without the revenue from these and other taxes imposed by the ACA, it would be difficult or impossible to finance a replacement.

Repeal would harm Iowa’s economy

The repeal of the ACA would have a substantial impact on the Iowa economy, cutting off billions in federal money flowing into the state, and reducing income and employment, not just in the health care industry, but throughout the economy.

Repeal of the ACA would result in the loss of $626 million in federal funds in 2019, and a total of $7.4 billion from 2019-2028.[13] That would reduce payments to health care providers throughout the state, who in turn would reduce purchases from vendors and cut employment. Ripple effects would follow: vendors would cut payroll, and the reduced spending by employees both of the health care providers and of the vendors would mean reduced purchases of goods and services in Iowa, and reduced state taxes. Repeal of the ACA (including the taxes that finance it) would cost Iowa 6,700 jobs,[14] not just in the health care sector, but also in sectors such as construction, retail, finance and services.

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[1] U.S. Department of Health and Human Services, ASPE Issue Brief, March 11, 2016. Health Insurance Marketplaces 2016 Open Enrollment Period: Final Enrollment Report For the period: November 1, 2015 – February 1, 2016.

[2] Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available online at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation

[3] Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation

[4] Matthew Buettgens, Genevieve Kenney, and Clare Pan. Partial Repeal of the ACA through Reconciliation: Coverage Implications for Parents and Children. Washington, DC: The Urban Institute, December 21, 2016. Available at: http://www.urban.org/research/publication/partial-repeal-aca-through-reconciliation-coverage-implications-parents-and-children. 

[5] Government Accountability Office. Medicaid and CHIP: Given the Association between Parent and Child Insurance Status, New Expansion May Benefit Families. February 2011. Available at:  http://www.gao.gov/new.items/d11264.pdf .Georgetown Center for Children and Families, Medicaid Expansion: Good for Parents and Children. January 2014. Available at: http://ccf.georgetown.edu/wp-content/uploads/2013/12/Expanding-Coverage-for-Parents-Helps-Children-2013.pdf  

[6] Medicaid’s Long-Term Earnings and Health Benefits. Center on Budget and Policy Priorities, May 12, 2015. Available at: http://www.cbpp.org/blog/medicaids-long-term-earnings-and-health-benefits   Medicaid at 50: Covering Children Has Long-term Educational Benefits. Center on Budget and Policy Priorities, July 7, 2015. Available at: http://www.cbpp.org/blog/medicaid-at-50-covering-children-has-long-term-educational-benefits

[7] Traditional Medicaid covers low-income individuals who are aged, blind, disabled, pregnant women, children, or parents of children on Medicaid.

[8] https://dhs.iowa.gov/sites/default/files/IowaCare_Narrative.pdf

[9] Matthew Buettgens, Linda J. Blumberg, and John Holahan. The Impact on Health Care Providers of Partial ACA

Repeal through Reconciliation. The Robert Wood Johnson Foundation and the Urban Institute, January 2017.

http://www.urban.org/sites/default/files/publication/86916/2001046-the-impact-on-health-care-providers-of-partial-aca-repeal-through-reconciliation_0.pdf

[10] Gary Claxton, Cynthia Cox, Anthony Damico, Larry Levitt, and Karen Pollitz.Pre-existing Conditions and Medical Underwriting in the Individual Insurance Market Prior to the ACA. Kaiser Family Foundation, December 12, 2016. Available at: http://kff.org/health-reform/issue-brief/pre-existing-conditions-and-medical-underwriting-in-the-individual-insurance-market-prior-to-the-aca/

[11] Sarah Lueck. “Commentary: Even as Insurance Market Improves, GOP’s ACA Repeal Would Kill It.” Center on Budget and Policy Priorities, January 17, 2017. Available at: http://www.cbpp.org/health/commentary-even-as-insurance-market-improves-gops-aca-repeal-would-kill-it

[12] Brandon DeBot, Chye-Ching Huang, and Chuck Marr  ACA Repeal Would Lavish Medicare Tax Cuts on 400 Highest-Income Households. Center on Budget and Policy Priorities, January 12, 2017 Available at: http://www.cbpp.org/research/federal-tax/aca-repeal-would-lavish-medicare-tax-cuts-on-400-highest-income-households

[13] Includes Medicaid expansion funding and insurance subsidies. Linda J. Blumberg, Matthew Buettgens, and John Holahan. Implications of Partial Repeal of the ACA through Reconciliation. Washington, DC: The Urban Institute, December 2016. Available online at http://www.urban.org/research/publication/implications-partial-repeal-aca-through-reconciliation

[14] Josh Bivens. Repealing the Affordable Care Act Would Cost Jobs in Every State. Economic Policy Institute, January 31, 2017. http://www.epi.org/publication/repealing-the-affordable-care-act-would-cost-jobs-in-every-state/

 

pfisher240200Peter S. Fisher is Research Director for the Iowa Policy Project. He holds a Ph.D. in economics from the University of Wisconsin-Madison and is professor emeritus of Urban and Regional Planning at the University of Iowa. A national expert on public finance, Fisher is frequently quoted in the Iowa and national media on issues involving tax policy and economic development strategies. His critiques of various state business climate rankings are posted on a website, Grading the States, at www.gradingstates.org.

Iceberg ahead — but how big?

Posted December 21st, 2016 to Blog
060426-capitol-swwThe Des Moines Register disclosed Wednesday afternoon in a copyright story that the private, for-profit companies now running Iowa’s Medicaid program are finding big problems in the first year.

With big policy decisions ahead on the future of Medicaid, not only in Iowa but in Washington with a new administration, it is reasonable to wonder if Governor Terry Branstad’s go-it-alone Medicaid privatization is only the tip of the iceberg — and how big the iceberg may be.

Besides the great uncertainty for health-insurance coverage for millions if Congress repeals the Affordable Care Act (ACA) without a replacement, there is the idea that Congress might block-grant Medicaid. The goal would be to save the federal government money — not to assure health care for the most vulnerable as Medicaid now provides.

A block-grant approach means states would be allotted a share of funds for Medicaid, and when it is gone, that’s it — services would be cut. In that scenario, the decisions would be made in the states. As noted by Edwin Park of the Center on Budget and Policy Priorities:

Such a block grant would push states to cut their Medicaid programs deeply.  To compensate for the federal Medicaid funding cuts a block grant would institute, states would either have to contribute much more of their own funding or, as is far more likely, use the greater flexibility the block grant would give them to make draconian cuts to eligibility, benefits, and provider payments.

Maybe someone can provide the campaign literature from the 2016 legislative races that illustrates successful candidates’ thoughts on whose coverage would be the first to go. Who gets cut off? Someone will have to decide that if we go to a block-grant program.

It probably won’t be Governor Branstad making that tough decision, by the way. The new ambassador-to-be will be off doing diplomatic stuff in China when these hard decisions are made.

Is that what these new legislators signed up to do when they put their names on the ballot? But they could check in with Senator Grassley and Senator Ernst to find out if Iowa Statehouse job descriptions might change in the months ahead.

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
Contact: mikeowen@iowapolicyproject.org

On Labor Day, don’t forget single workers

Posted September 2nd, 2016 to Blog

Our focus at the Iowa Policy Project frequently emphasizes the impact of public policy on working families.

But the demand of meeting a household budget is faced by more than parents, whether in single- or married-couple families. Single workers without children also need to get by.

So, on Labor Day weekend, let’s make sure the spotlight hits those folks as well. Here are three areas:

•    the Earned Income Tax Credit (EITC);
•    the Cost of Living in Iowa; and
•    the minimum wage.

EITC
chuck_marr-5464A new report from the Center on Budget and Policy Priorities (CBPP) focuses on single working people who do not raise children and thus do not benefit from the Earned Income Tax Credit (EITC). Childless workers under age 25 are ineligible for that benefit, notes CBPP’s Chuck Marr, who states:

On Labor Day, many of these low-wage workers will be serving meals in restaurants, ringing up back-to-school supplies at the mall, or driving a truck down the highway. They deserve a decent day’s pay for a hard day’s work, but many of their paychecks are too small to make ends meet. An expanded EITC that targets this group would do more to help deliver a decent day’s pay.

There are bipartisan proposals on the table in Washington to extend the EITC to these workers, 7.5 million of whom are now “taxed into poverty,” Marr notes. The table below shows the Iowa impacts of these proposals.

Iowa Workers helped under Obama, Ryan plans Workers helped under Brown, Neal plans
Cooks  6,000  6,000
Cashiers  5,000  6,000
Waiters and waitresses  5,000  5,000
Retail salespersons  4,000  5,000
Custodians and building cleaners  4,000  4,000
Laborers and freight, stock, and material movers  4,000  4,000
Truck drivers  4,000  4,000
Nursing, psychiatric, and home health aides  3,000  4,000
Maids and housekeeping cleaners  3,000  3,000
Stock clerks and order fillers  2,000  3,000
Child care workers  2,000  2,000
Construction laborers  2,000  2,000
Food preparation workers  2,000  2,000
Grounds maintenance workers  2,000  2,000
Personal and home care aides  2,000  2,000

Source: Chuck Marr blog, Center on Budget and Policy Priorities

CBPP has done much work on this issue. See this earlier report and another report by Marr and his colleagues at CBPP.

Cost of Living in Iowa
2010-PFw5464As IPP’s Peter Fisher shows in Part 2 of our “Cost of Living in Iowa” report for 2016, more than a quarter of working single persons statewide (27.5 percent) do not make enough at work to meet a basic-needs household budget. In fact, for those workers who fall short, they fall more than $10,000 short, on average. It is worth noting that this basic needs gap is even more severe for single parents, who fall almost $23,000 short, on average.

Minimum Wage
One of the efforts being used to stop or hold down local minimum wage increases in Iowa is the issue of “cliff effects” in work support programs — particularly Child Care Assistance — in which benefits abruptly drop for a worker if he/she gets slightly higher pay.

This is a very real issue for some workers, but not for the vast majority of workers who would benefit from a minimum wage increase statewide to $12 (phased in over five years), because they do not have children.

It makes no sense to block a wage increase for the three-fourths or more of workers who are not affected by the child care issue.

Rather, Iowa could raise the minimum wage and, separately, improve access to its Child Care Assistance program so that the cliff effects are eased or erased. There are ways to do so. See Fisher’s report with Lily French from 2014, Reducing Cliff Effects in Iowa Child Care Assistance.

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org


State policies should focus on homegrown jobs

Posted March 15th, 2016 to Blog

2-3-16sfp-f1A recent report by Michael Mazerov and Michael Leachman finds that the vast majority of new jobs in a state are homegrown: They are created by start-ups and by firms already in the state who are expanding. Only 13 percent of new jobs come from new branch plants of out-of-state companies, or  actual plant relocations to a state. They argue that public policies need rethinking as a result:

“State economic development policies that ignore these fundamental realities about job creation are bound to fail. A good example is the deep income tax cuts many states have enacted or are proposing. Such tax cuts are largely irrelevant to owners of young, fast-growing firms because they generally have little taxable income. And, tax cuts take money away from schools, universities, and other public investments essential to producing the talented workforce that entrepreneurs require. Many policymakers also continue to focus their efforts heavily on tax breaks aimed at luring companies from other states — even though startups and young, fast-growing firms already in the state are much more important sources of job creation.”

Michael Mazerov and Michael Leachman. State Job Creation Strategies Often Off Base. Center on Budget and Policy Priorities, February 3, 2016. http://www.cbpp.org/research/state-budget-and-tax/state-job-creation-strategies-often-off-base#_ftn23

2010-PFw5464Posted by Peter Fisher, IPP Research Director

 

Editor’s Note: This also ran on IPP’s “Grading the States” website — gradingstates.org