Health reform ruling one of many; should not affect implementation

Andrew Cannon, research associate
Andrew Cannon

Until this week, health reform had cleared a number hurdles. Federal district court judge Henry Hudson’s ruling Monday struck down the individual responsibility provision of the health reform law.

And though it was certainly disappointing news for supporters of the Patient Protection and Affordable Care Act and could have serious negative consequences if the decision is upheld by the Supreme Court, the ruling shouldn’t cause either reform supporters to despair or reform opponents to rejoice.

First, some perspective: the individual mandate has already faced three federal court challenges, including yesterday’s ruling. Judge Hudson’s ruling against the individual mandate is the only ruling to strike down any portion of the Affordable Care Act. Both earlier rulings found that individual mandate in particular and the entire health reform law fell within Congress’ constitutional powers under the Interstate Commerce clause.

The individual responsibility provision (Section 1501 of the Affordable Care Act) requires all individuals to purchase health insurance or face a tax penalty, with exceptions for those with religious convictions against health treatment and individuals facing extreme financial hardship. In order to prevent insurance companies from denying coverage to sick individuals or excluding preexisting conditions from coverage, a requirement that all individuals have insurance had to be included. Without such a provision, there would be a serious temptation for individuals to “game the system” — avoid purchasing insurance until they got sick.

But the other reason that this ruling is not as bad as it’s been made to sound, and in fact has some positives for health reform supporters, is that it struck down just that one provision of the law. Though Judge Hudson ruled that the individual responsibility provision was a constitutional overreach by Congress, he stated that the rest of the law falls within Congress’ constitutional purview. Virginia’s Attorney General, Kenneth Cuccinelli, requested that Judge Hudson halt the implementation of the law. Judge Hudson denied that request.

Lawmakers can (and should) continue to work toward the law’s full implementation, even in light of Judge Hudson’s ruling. The constitutionality of health insurance exchanges and the expansion of Medicaid are not in question.

This is just one ruling of three thus far, and undoubtedly more to come. When the legal wrangling is settled, we’ll know whether or not the individual responsibility requirement — and the tighter insurance regulations that rely on it — remains a workable part of the law. If the provision is found to be unconstitutional, there are workable solutions that would keep the insurance regulations in place and replicate the effects of an individual responsibility requirement. Until then, however, policymakers should continue their implementation efforts.

Posted by Andrew Cannon, Research Associate

Give thanks for what we do and do not have

Iowa does not have a reputation for having great water quality, but it could be worse.

Will Hoyer
Will Hoyer

My job here at IPP requires me to think a lot about water. Iowa does not have a reputation for having great water quality, and there are certainly plenty of threats, but it could be worse. As Thanksgiving approaches here are a few things I’m thankful for:

1) We don’t have companies extracting natural gas using unknown chemicals and potentially fouling our groundwater like Pennsylvania, New York, Michigan and other states do.

2) We have adequate water (for the most part). You don’t have to go too far to find areas where water quantity is a serious concern, like in Nebraska and Wisconsin. Travel further, to places like Florida and the American southwest and the issues get even more serious. Certainly increased chances of drought in the Midwest are recognized as a possibility with climate change, but to date we’ve avoided drought for a few decades.

3) We don’t (yet!) have major oil pipelines running across our state. It just so happens that they rupture occasionally like this one did in Michigan. A few years ago, Wisconsin had an oil pipeline break, too. And now there’s a pipeline proposed that would cross Nebraska.

4) While we’ve seen our fair share of flooding in parts of the state, we’re not going to see the problems that coastal cities will as sea levels rise.

5) We don’t have acutely toxic groundwater like this city in California does.

We in Iowa are plenty busy working on polluted runoff, CAFOs, emerging contaminants and seasonal flooding, among other things. That’s plenty for now.

Happy Thanksgiving!

Posted by Will Hoyer, Research Associate

Can’t Fix Iowa’s Budget Problems With Cuts Alone

Iowa must address revenues as part of a balanced approach to balanced budgeting. Cutting spending misses half of the equation.

Iowans have been kidding themselves for years.

We have seen proposal after proposal come and go, but hardly ever reaching as far as the floor of either the Iowa House or Iowa Senate.

Sooner or later, it will have to happen. Iowa will address the revenue drain that lobbyists and politics have punched into the floor of the state Treasury.

The 10 percent across-the-board cut announced today by Governor Culver is significantly deeper than anyone was predicting even a day earlier, when the Revenue Estimating Conference forecast a $415 million drop in expected revenues for this fiscal year.

Iowa’s economy has suffered in this recession, and like 47 other states, has been staring down revenue shortfalls as a result. But as Iowa Fiscal Partnership analysts have suggested for years now, it did not have to be this bad.

Iowa Fiscal Partnership
Iowa Fiscal Partnership
From IFP’s statement today:

An across-the-board cut still allows the Legislature to come back and make more targeted decisions in January, and restore funding to essential services that cannot sustain the kinds of cuts we’re talking about today.

In short, we simply must be willing to address revenues. It is disingenuous to view our budget imbalance as happening on one side of the ledger. All parts of the budget — spending, reserves built up for possible downturns, and taxes forgiven — must be part of the solution.

Our response will affect not only the state budget, but the state’s economy as well. If we deal with this only by cutting spending, we will make it all the more difficult for the economy to recover, and for Iowans to return to work. … (W)e must look not only at spending and how taxes are collected — but also at the taxes we don’t collect at all. It’s all part of Iowa’s bottom line.

  • Tax credits to business have grown from $180 million to $421 million in just three years. That includes millions of dollars in secret checks written to corporations to do research they might have done anyway.
  • We continue to leave more — as much as $80 million — uncollected from multistate corporations because we won’t adopt better accounting rules to plug tax loopholes and assure Iowa profits are reported. Not only is that lost revenue, but it’s unfair to Iowa businesses competing with those corporations.

Those are the kinds of spending we do that don’t show up in the budget — and are going to be unaffected by the Governor’s cuts announced today, cuts that could result in layoffs in education, corrections and other important services.

Iowa’s revenue troubles are magnified by the serious recession. But make no mistake, they did not have to be as bad as they are today. Forward-thinking choices now can help us avoid more days like today down the road.

Governor Culver has demonstrated willingness in the past to look at proposals to stop the leaks through Iowa’s tax loopholes. And in recent days, he has responded to the problems with the film tax credit program by calling for a review of all Iowa tax credits, a position shared by both The Des Moines Register and The Gazette in Cedar Rapids.

Both moves are a good starting place for a balanced approach to balanced budgeting.

Posted by Mike Owen, Assistant Director