Budgeting in context

The budgeting decisions of last year ought to be viewed in context.

Andrew Cannon
Andrew Cannon

Following last year’s prolonged legislative session, legislators and the governor congratulated themselves for a budget that fully funded programs and reduced reliance on what they called “one-time funds.”

It is true that state services, systems and structures were funded to a large degree through a stable source, the General Fund (where income and sales taxes are pooled). And funding levels increased generally, especially in comparison to the recession-affected budgets of FY10 and FY11, when many state services and programs took severe cuts.

But the budgeting decisions of last year ought to be viewed in context, as we do in a new report.

First, the use of “one-time funds” proved to be the right choice at the time. Because of the recession, state revenues declined precipitously, which led to a 10 percent across-the-board budget cut. One-time funds now derided by some were used precisely as intended. State “rainy day” funds, reserved for economic emergencies, and the federal Recovery Act (ARRA) combined to fill budget gaps and save services. ARRA provided billions of dollars to Iowa to finance K-12 education, higher education, and health care programs for children, the elderly, Iowans with disabilities and low-income Iowans who had no other access to health insurance.

Second, consider how funding for state services and programs compares to pre-recession funding levels. Even as revenues have bounced back, and funding for many services has stabilized, it is unclear if present levels are adequate to met needs. For instance, state funding for community colleges in FY12 will reach about $164 million, up from FY10 and FY11 levels, but still remain below pre-recession levels. At the same time, community colleges are serving more Iowans than ever, with enrollment reaching 106,000 in FY11, up from 88,000 students in FY08.

Iowa’s other public higher education system, the Board of Regents, this year is working under a 3 percent reduction in funding from FY11. Even with the governor’s proposed FY13 increase, Regents funding would still be below recession levels, to say nothing of pre-recession levels. Students pay the price, with continually increasing tuition costs.

Other programs, such as the Early Childhood Iowa initiative, which provides preschool tuition subsidies and parental education; Child Care Assistance, which helps low-income working parents cover the cost of child care; and the Family Investment Program, which helps the lowest-income families meet basic needs and prepare for employment, all have seen large cuts in funding since before the recession. Even into economic recovery, some programs are still being reduced.

Improving upon last year or the year before is good, but the long-term question asks if we are adequately funding programs to meet Iowans’ needs and to adequately invest in Iowa’s future. Judicious use of public funds is not as simple as cutting services to bring down expenses, but taking a balanced approach that assures adequate funding for services that position Iowa for the future.

Posted by Andrew Cannon, Research Associate

Iowa leads the way to kids’ health coverage

Two recent reports highlight Iowa’s success in extending health insurance coverage to children.

Andrew Cannon
Andrew Cannon

Two recent reports highlight Iowa’s success in extending health insurance coverage to children. Both reports are the work of the Kaiser Family Foundation (KFF), a nonprofit private operating foundation, based in Menlo Park, Calif., dedicated to producing and communicating the best possible information, research and analysis on health issues.

The first report — “Performance Under Pressure: Annual Findings of a 50-State Survey of Eligibility, Enrollment, Renewal, and Cost-Sharing Policies in Medicaid and CHIP, 2011-2012” — demonstrates the steps that all states are taking to cover children. For instance, hawk-i, Iowa’s version of the Children’s Health Insurance Program (CHIP), has expansive income eligibility guidelines, allowing children from families with income up to 300 percent of the federal poverty level ($67,050 for a family of four) to enroll in the program. Only two states (New York and New Jersey) have broader eligibility guidelines.

Iowa has enacted other policies that make enrolling in public programs less cumbersome, less costly, and more consistent with the goal of getting kids covered.

KFF’s second report highlights Iowa — along with Alabama, Massachusetts and Oregon — among states leading the way in children’s health coverage. “Secrets to Success: An Analysis of Four States at the Forefront of the Nation’s Gains in Children’s Health Coverage” notes that Iowa has experienced, thanks to its use of CHIP in policies including hawk-i, a nearly 20 percent decrease in the number of uninsured kids. Efforts to expand and simplify the eligibility and enrollment process are key to Iowa’s success in covering kids.

As we noted last month, Iowa’s efforts to cover kid not only help the kids and their families, but also help the state. The U.S. Department of Health and Human Services awarded Iowa with a $9.5 million Children’s Health Insurance Program Reauthorization Act bonus payment in late December, in reward for the state’s efforts to expand children’s health insurance coverage.

Though Iowa has implemented some of the policies that led to success in kids’ coverage in the adult health coverage program, Medicaid, additional policy changes could further reduce the overall rate of uninsurance in the state. For instance, Iowa’s Medicaid eligibility thresholds are Iowa are quite low, especially in comparison to hawk-i eligibility levels

Both Kaiser reports note that Iowa, like every state, will face challenges to maintain and further improve its health insurance coverage. Budgetary pressures, burgeoning caseloads and a growing strain on information technology systems make it difficult. However, both articles illustrate a number of policies Iowa could pursue to continue to be a leader in kids’ health coverage.

Posted by Andrew Cannon, Research Associate

Expanding kids’ coverage pays dividends

Iowa is one of 23 states receiving a children’s health program bonus for its performance in 2011.

Andrew Cannon photo
Andrew Cannon

Iowa has made a huge effort in recent years to expand health insurance coverage to children. Those efforts are paying dividends to the newly covered children and their families, of course, but also to the state.

The 2009 Children’s Health Insurance Program Reauthorization Act (CHIPRA) gave states new tools to make insuring kids easier. Many of these tools meant a reduced workload for state enrollment officials, and made it easier for families to obtain coverage for their children. CHIPRA also provided cash bonuses to states that implemented the tools and excelled in enrolling children in public health insurance programs.

On Wednesday, the U.S. Department of Health and Human Services announced that Iowa is one of 23 states receiving a CHIPRA bonus for performance in 2011. Iowa is one of just five states to have implemented nearly all of the CHIPRA enrollment tools. Iowa’s $9.5 million bonus can be used to further improve enrollment and eligibility processes or to offset the cost of increased enrollment.

In addition to streamlining the  Medicaid and hawki (Healthy and Well Kids in Iowa — the state’s CHIP program) enrollment process, Iowa has also increased enrollment beyond a baseline level, further increasing the size of the bonus. In November 2011, more than 34,000 children were enrolled in hawk-i, with 248,000 enrolled in Medicaid, compared to 22,300 and 219,000, respectively, in July 2009, just months after CHIPRA passed.

Undoubtedly, the effect of thousands of Iowa parents losing their jobs and health insurance has contributed to enrollment increases. Nonetheless, the tools CHIPRA made available, as well as Iowa’s implementation of many of them, made the process of enrolling kids in public health insurance programs less onerous for many parents at a time they most needed assistance.

Posted by Andrew Cannon, Research Associate

Health reform stakeholders should be careful what they wish for

Andrew Cannon photo
Andrew Cannon

Two thoughts as the 2012 legislative session nears: What is worth your time and attention? And, be careful what you wish for.

Both are vital reminders for all of us in our increasingly busy world. But as Iowa lawmakers again consider proposals for the competitive health insurance marketplace, or health insurance exchange, these reminders are relevant to health reform stakeholders.

Last legislative session, way back before the Fiscal Year 2012 budget gridlock, or the property tax debate, several lawmakers issued proposals for the creation of an exchange.

One proposal (which won the support of the health underwriters’  and insurance brokers’ lobby and no one else) seemed far more interested in protecting the insurance brokers than it was in creating an exchange that helps Iowans get affordable, quality coverage. Under that proposal, every purchase in the exchange would have been mediated by a broker, who, by law, would have received at 5 percent commission on each insurance sale in the exchange.

It’s worth remembering how the exchange is intended: Individuals, families, and small businesses will be able to quickly and easily compare health insurance plans — based on price, value, benefits and other relevant factors — and premiums will be based strictly on age, geographic area, and smoking status. Pre-existing conditions will be a thing of the past.

The exchange should permit small businesses to leverage some of the bargaining power of the larger employers. Many small businesses that offer employees coverage will be eligible for tax credits.

According to projections from the nonpartisan Congressional Budget Office, however, most exchange users will be individuals and families. Low- and moderate-income (up to 400 percent of the federal poverty level, or about $89,000 for a family of four) individuals and families who do not receive insurance through an employer will be eligible to receive sliding-scale premium assistance in the form of tax credits. Small businesses are likely to comprise a much smaller slice of the exchange-user pie.

This brings us back to the question this post opened with, what is worth your time and attention?

Do brokers really want to be involved in every purchase of health insurance in the exchange? Remember that most of these exchange customers won’t be HR folks, familiar with the ins and outs of insurance terminology. Most won’t be the proprietors of small businesses that have dealt with brokers in the past and know what sort of benefit and cost-sharing packages their employees have or haven’t liked.

Most exchange users are going to be members of ultra-small groups — families. Many will have moderate levels of income ($37,000 a year to about $89,000 a year for a family of four). For many, the terminology of health insurance terminology will be a new language. Deciding what benefit package they want or need will be a calculus as difficult as, well, calculus.

Is a bill like last session’s SF391 really the best use of a broker’s time and attention? I’m not a broker, so I’m in no position to say.

But it seems that rather than spending four hours describing insurance terms, benefits, and options to a family of four that has never purchased health insurance and earns $35,000 a year is a far less effective use of time than spending an hour on the phone with a seasoned HR rep from a business with 30, or even just 10 employees. And let’s not forget that many exchange users will end up not even purchasing insurance, but become enrolled in the newly expanded Medicaid.

Regardless of health reform implementation, there will be continued demand for the services of insurance brokers. They provide a valuable service, and are trusted by many small businesses and entrepreneurs. That won’t change.

But if brokers push for a repeat of last year’s offerings, they may just give themselves business that they don’t really want. Be careful what you wish (and lobby) for.

Posted by Andrew Cannon, Research Associate

Public employees pay for, earn insurance

Public employees pay for whatever health-insurance arrangement they have in the form of lower take-home pay.

Andrew Cannon photo
Andrew Cannon

The news media need to call out some folks on their claims about public workers’ pay and benefits.

Health insurance is part of compensation for hours worked, skills used and services rendered on the behalf of the employer — in the context of current Iowa political discussion, on behalf of taxpayers who benefit from those hours, skills and services.

Thus, it’s puzzling to see references such as these:

•   A Des Moines Register editorial today cited “growing resentment — envy, perhaps? — among private-sector workers” about some public-sector workers’ benefits, including “free health insurance in some cases.”

•   A KCCI-TV report on the Des Moines Business Record Daily e-newsletter noted one lawmaker opened debate by “calling for public employees to begin paying something for their taxpayer-funded health care plans.” This lawmaker further claimed “it’s not fair for Iowans to foot the bill for the 84 percent of state workers who pay nothing for their benefits.”

I’ll bet no one quoted in such reports can produce one public employee who is receiving free health insurance. Public employees pay for whatever health-insurance arrangement they have in the form of lower take-home pay. Plus, in many cases, there are employee contributions to health insurance, particularly for family coverage, and there are co-pays and deductibles. So let’s take a step back and see what the facts are before spouting off.

As Iowa Policy Project research has shown, public workers’ pay is generally lower than for workers in the private sector with comparable education or skill levels. Where they do make up some of that gap is in negotiated health-insurance benefits. And even then, the total “deal” is likely to be lower than it is for a similar worker in the private sector.

No decision on the current collective bargaining legislation should be made under the mistaken notion that public workers are getting something for free. They have negotiated for it, and they are working for it. And if they’re not paid there, they have a right to negotiate for it in some other way.

Posted by Andrew Cannon, Research Associate