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We have seen this film before. Legislators propose a new law that they claim will improve health care, but pushes millions off of health coverage, strips away protections in current law, tells cash-strapped states to pick up the tab, and gives big breaks to the wealthy who don’t need help.

Did you walk out of the theater the first two times? Will you stay for this one? More importantly, will our senators?

In the coming days we will get an analysis of the new Senate bill from the nonpartisan Congressional Budget Office (CBO). The analysis may come with little time in advance of a vote, as the Senate leadership is attempting to rush to a vote before the public, let alone Senate members, have a chance to fully evaluate it. (That is not new, either.)

We all need a sense of what to look for in the official analysis of the new proposal — not what Senator McConnell or Sunday morning-show spin-masters tell us the bill would do.

First, what is the comparison point? To understand the impact on Iowans, the comparison should be to current law, not just to previous proposals.

More than the minor changes it makes to the previous Senate bill, or how it differs from the House-passed bill, we need to know from the new official analysis how this bill differs from current law that has extended health coverage to tens of millions across the country, and some 200,000 in Iowa.

We know, for example, that about 150,000 Iowans are covered by only one piece of the Affordable Care Act (Obamacare), the Medicaid expansion, and that this number will be 177,000 in 2019 if the expansion is preserved.

However, the Medicaid expansion would effectively be eliminated under the new Senate plan, as in the previous, stalled Senate proposal and the House-passed bill. In none of these proposals do we see opportunities to further increase access to insurance for those who are most vulnerable.

In the end, isn’t that what we would expect health care reform to do? Provide more coverage, more efficiently, to all. Continual tweaks in the current and recent Washington plans don’t change a fundamental problem: Millions nationally, and hundreds of thousands in Iowa, would lose health insurance.

Put in stark terms: When people lose health insurance, they can lose access to health care. When that happens, they become sicker. Or they take on debt they can never overcome. Some die.

Ultimately, our state leaders in Iowa — the Governor, and state legislators of both parties — might want to consider how they would cope with the results of this legislation. Are they content with the U.S. Senate and House pushing more budget problems onto their desks, and to Iowa taxpayers? That is the choice Senators Grassley and Ernst will have in the coming days.

Mike Owen is executive director of the nonpartisan Iowa Policy Project in Iowa City.

Contact: mikeowen@iowapolicyproject.org

IOWA FISCAL PARTNERSHIP BACKGROUNDER

Plan would finance tax cuts for wealthy as 232,000 Iowans lose health coverage

PDF (2 pages)

By Peter Fisher, Iowa Policy Project

The overall effect is now clear for the Senate’s attempt to repeal and replace Obamacare — the Better Care Reconciliation Act (BCRA): It would cause millions to lose health insurance in order to finance tax cuts to the wealthiest Americans and corporations. The number of uninsured would soar in part because the BCRA cuts the subsidies that made health insurance affordable to millions of Americans, and in part because it would likely mean the end of the Medicaid expansion in Iowa and other states.[1] New estimates today show that 232,000 Iowans would lose health insurance coverage by 2022 under the BCRA. The percent of nonelderly Iowans who are uninsured would soar from 6.6 percent to 15.4 percent, reversing the gains achieved by the Affordable Care Act (ACA).[2] Nationally, 72 percent of those who would lose insurance coverage are in families with a full-time worker, as both the subsidies for purchase of insurance and the Medicaid expansion under the ACA provided insurance to low-wage workers whose jobs provided little in benefits.

The Senate bill would increase health insurance costs for many who now buy private insurance through the exchange or marketplace, and who receive subsidies in the form of tax credits under the ACA (Obamacare). It would do that by increasing premiums and reducing subsidies. Those premium increases would hit older Iowans especially hard, including those with incomes too high to qualify for subsidies, under either the ACA or the BCRA. That is because the ACA allows insurance companies to charge premiums based on age that vary only by 3 to1, while the BCRA increases that ratio to 5 to 1. Someone age 64, in other words, could be charged five times the premium charged a 21-year-old, instead of just three times. The result under the Senate bill would be lower premiums for the young, but substantially higher premiums for those who are older (but still under 65, where Medicare takes over.)

The table above illustrates how the BCRA would increase health insurance costs for older Iowans, in urban counties and in rural counties. The table assumes that a 60-year-old Iowan purchases a Silver Plan, the lowest cost plan that qualifies for subsidies now under the ACA, in 2020. It compares the cost (the premium paid less the tax credit), first assuming the ACA is still in place, then assuming the BCRA has replaced it. The comparison takes into account both the increase in premiums due to the BCRA’s higher age ratio, and the reduced premium subsidies.

Statewide, the effect of the BCRA would be to increase the cost of a comparable insurance plan by $2,881 on average for a 60-year-old with an annual income of $20,000. The increase would range from $2,340 in the county with the lowest cost impact, to $4,640 in the highest cost county. For a 60-year-old with $40,000 income, the cost increase ranges from $3,630 to $5,940, with $4,177 the statewide average.

At $50,000 the impact of the BCRA more than doubles. That is because an individual with that income level still receives some subsidy under the ACA, but nothing under the Senate bill.[3] The net cost jumps up on average by about $10,100, and exceeds $14,000 in 17 counties. At $60,000 a year income, or any income higher than that, subsidies are not available under either the ACA or the BCRA. But premiums would have risen substantially under the BCRA because of the age ratio change. So any 60-year-old purchasing a policy in Iowa could expect to see costs rise by $3,000 to $5,000.

Because of the changing age ratio, some younger Iowans would see a net reduction in costs because of lower premiums. A 27-year-old Iowan with income over $30,000 would likely see a modest net savings of $250 to $350 per year on average, with that number rising to $850 in some cases. But if that person earned just $10.00 an hour, or the minimum wage, their net cost would increase by about $650 on average. Middle-aged Iowans (age 40) with modest incomes would also see an increase in net costs of insurance, even with an income of $30,000, of $400 to $900.[4]

The table also shows that the net increase in costs is higher in rural counties than in Iowa’s 21 counties that are part of a metropolitan area. This results from the higher cost of health care in rural Iowa.[5] This differential rural impact applies as well to the case of the 40-year-old, regardless of income, and to the 27-year-old with lower income.

The upshot: If you are between about 55 and 65, the BCRA would drive up your health insurance costs dramatically, regardless of your income. If you are a low-wage worker, especially if you live in a rural area with higher health insurance costs, you would also face higher net premiums to purchase insurance. Those higher costs will drive some to go uninsured, most likely the healthiest, which will once again threaten the viability of the insurance market.

[1] Iowa Policy Points blog, Iowa Policy Project, June 26, 2017. https://iowapolicypoints.org/2017/06/26/any-way-you-cut-it-americans-lose-health-coverage/

[2] 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

[3] The ACA ends subsidies at 400 percent of the federal poverty level ($50,100 for an individual) whereas the BCRA ends subsidies at 350 percent of poverty or $43,875.

[4] The estimates in this paragraph are also based on population-weighted county figures from the Kaiser Foundation report cited below the table.

[5] The ACA bases subsidies on a silver plan, whereas the BCRA bases it on a bronze plan, which covers a substantially smaller share of health care costs (58 percent instead of 70 percent), generally through higher deductibles and co-pays. To make a fair comparison, we assumed the same quality Silver plan was purchased. The additional premium required to get a sliver instead of a bronze plan is entirely at the individual’s expense under the BCRA, and that expense is generally higher in rural areas.

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Peter Fisher is research director at the nonpartisan Iowa Policy Project (IPP). The Iowa Fiscal Partnership is a joint public policy analysis initiative of IPP in Iowa City and the Child & Family Policy Center in Des Moines. Find reports at http://www.iowafiscal.org.

In his visit to Cedar Rapids, President Trump rallied his supporters on many issues including energy production. His message Wednesday was not a typical one in wind-producing Iowa.

The President highlighted the opening of a coal mine in Pennsylvania last month as an example of how he was bringing back the coal industry. “I don’t want to just hope the wind blows to light up your house and your factory as the birds fall to the ground,” he stated.

Concern for the fate of avian wildlife is refreshing for a president who recently rolled back regulations that prohibit the dumping of excess spoil into streams near surface mining operations, and who proposed drastic cuts to the budget of the U.S. Environmental Protection Agency.

Given a frequently stated concern of the president — for job creation — he might want to acquaint himself with the economic value of wind energy production in Iowa.

On March 30, 2017, the Iowa Policy Project reported that Iowa produces more electricity from wind per capita than any other state, and has lower average electric rates than when the industry started. Our findings show that the state’s leadership in renewable energy production has not come at great expense to ratepayers.

“Contrary to some of the warnings we heard two decades ago, the growth of wind power to 36 percent of the electricity we use in Iowa has not hurt our competitiveness in attracting businesses. It has not hurt our efforts to keep household spending for electricity under control,” said IPP’s founder and lead environmental researcher, David Osterberg.

Additionally, the wind energy industry provides well-paying jobs that support a number of families in rural Iowa where local economies are hurting. A technician salary starts at $24.50 per hour, which is very good money in rural Iowa. See IPP’s 2003 report, “Wind Power and Iowa Economy.” It found:

“Wind-powered electricity adds slightly more jobs and economic output to the Iowa economy than coal and natural gas. Furthermore, this homegrown source of electricity offers a new cash crop to farmers, spurs the development of new industries (such as turbine manufacturers and maintenance companies) as well as existing industries, and provides stable energy prices.”

While U.S. coal industry is on the decline both in production and consumption, the wind energy industry keeps growing worldwide.

Wind energy might just be an answer President Trump is looking for.

Posted by Sarah Garvin, IPP Research Associate

sgarvin@iowapolicyproject.org

Often lost in the spin surrounding debates over the minimum wage is the reality of who benefits. As indicated in the graphic above, the typical talking points promoted by the business lobby fall through the cracks — the same way many people attempting to support their families fall through the cracks due to Iowa’s current minimum wage policy. The illustration above outlines the demographic makeup of over 300,000 workers who would benefit if Iowa raised its minimum wage to $10.10. Four counties have moved to go that high, or higher, between now and 2019 under ordinances already passed.

There is no pending legislation to raise Iowa’s paltry $7.25 state minimum wage — and, in fact, choices being made in the Legislature effectively will render that state law meaningless. That is because local minimum wages are targeted for repeal and the Senate majority leader has indicated he will not entertain any legislation to raise the state wage, leaving that issue up to Congress, which shows no sign of action, either.

For more about the minimum wage in Iowa, both statewide and locally, visit this page on the IPP website.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. In today’s graphic, we illustrate the impact of a statewide minimum wage increase. Previous “virtual House graphics” illustrate impacts of local minimum wages approved in counties where wages higher than the statewide $7.25 has been approved.

The governance issues raised by the anti-bargaining bill that just passed the Legislature are many, some in the process, and some in the new legislation itself.

Posted by Mike Owen, executive director of the Iowa Policy Project

mikeowen@iowapolicyproject.org

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate the cost and nature of Iowa’s tax subsidies to companies to do research.

Iowa’s lucrative research subsidy provided as much in 2016 to companies that do not pay Iowa state income tax as legislators recently approved as an increase in state school aid.

Unlike the typical use of a tax credit, the Research Activities Credit (RAC) is refundable and provides a check to the recipient for the amount of the credit not needed to erase taxes. In other words, if the company does not owe income taxes and has a research credit, it gets a check for the amount of the credit remaining.

A new report from the Department of Revenue (DOR) shows that in 2016, 207 corporate refunds were issued totaling $40.4 million (see graph above). Corporate claimants used another $8.7 million from the credit to erase tax liability, leaving the total cost of the corporate credit at $49.1 million.

For context, Iowa lawmakers this session provided $40 million as an increase in state aid for local school districts, defending the 1.11 percent increase as all the state could afford.

In most cases, beneficiaries of this tax credit and the tax credit “refunds”* are very large companies, DOR reports show. The graph above shows the overall cost of corporate claims on the RAC (beige), with the blue share of the bars showing the share of corporate claims paid out in checks to companies that paid no corporate state income tax to Iowa.

For more information and a list of companies that benefited from over $500,000 in RAC claims in each of the last seven years, see this Iowa Fiscal Partnership news release.

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* To refresh, these tax credit “refunds” are not refunds of taxes paid above what was owed, but of tax credits that exceed the amount of taxes owed. In 2016, the share of these research tax credits paid as “refunds” accounted for $4 out of every $5 of the cost of the credits.

For more information about Iowa tax credits and breaks for business, see this page on the Iowa Fiscal Partnership website: http://www.iowafiscal.org/category/research/taxes/tax-credits/

See also this related “Virtual House graphic” on Iowa’s growth in tax credit spending.