Health care ‘reform’ just keeps getting worse

The bottom line: worse health care coverage at higher cost to millions, loss of coverage entirely to millions more, in order to finance tax cuts for corporations.

The House Republican plan to replace Obamacare (the Affordable Care Act) with the American Health Care Act (AHCA), which a few weeks ago failed to even come to a vote, has been reincarnated. The new version of the AHCA has apparently won the support of the Freedom Caucus in the House, but in so doing has become significantly worse for millions of Americans.

Here are the key points about this new attempt to “repeal and replace” Obamacare:

  • Despite repeated promises to keep the most popular part of Obamacare, the provision prohibiting insurance companies from refusing to cover those with pre-existing conditions, the new version returns us to the bad old days. While a particular state may choose to keep the prohibition, there is no longer any nationwide requirement that insurance companies issue affordable policies regardless of pre-existing conditions.
  • Nationwide standards for health insurance policies will be rolled back; plans will no longer be required to cover services such as mental health, maternity care, or substance abuse treatment.
  • The nationwide prohibition on lifetime and annual limits on benefits will be gone, meaning the possibility of medical bankruptcy will loom once again for many.
  • The modified version of the bill still effectively ends the Medicaid expansion; about 150,000 Iowans now covered under that provision could lose insurance altogether.
  • The bill still cuts $840 billion from Medicaid over 10 years, most of the savings going to wealthy individuals, drug companies, insurance companies, and other corporations.
  • Premiums and deductibles will still rise for large numbers of persons buying insurance on the exchanges, especially for the elderly, those with lower incomes, and those in high-cost states or areas, such as most of rural Iowa.
  • Under the bill, there would be no limit on the premium an insurance company can charge based on medical history; thus someone with pre-existing conditions could in theory be offered coverage, but at a cost that is simply unaffordable. There is little difference between this situation and straight denial of coverage. A state could choose to prohibit this practice (i.e., to keep the Obamacare provision in place), but few states chose to do so before Obamacare.

While the proponents of this revised plan may argue that it keeps the prohibition on gender discrimination, a woman would pay substantially more for a plan that included maternity coverage. Such coverage would not be a required part of all plans, but instead would be an expensive option.

Just how this revised bill would affect overall coverage rates, premiums, and out-of-pocket costs, awaits a new analysis by the Congressional Budget Office. But it is quite possible that the bill will be voted on in the house without the benefit of that analysis. Part of the pressure to pass the bill now comes from the desire on the part of the Trump administration to come up with large savings to the federal government that can then be used to finance cuts to corporate and individual income taxes.

The bottom line: worse health care coverage at higher cost to millions, loss of coverage entirely to millions more, in order to finance tax cuts for corporations (and probably millionaires as well).

Posted by Peter Fisher, research director of the nonpartisan Iowa Policy Project. pfisher@iowapolicyproject.org

Also see Fisher’s March 2017 policy brief for the Iowa Fiscal Partnership: “Replacing ACA: What you need to know about the AHCA.”

Today’s virtual House graphic: Risky fix to non-problem

The proposed constitutional amendment is a gimmick that would hamper Iowa lawmakers’ ability to meet critical needs. If you want lower funding of K-12 education and higher tuition for the Regent universities, this is one way to get there.

Under the radar at the Iowa Statehouse, a significant and dangerous change is being promoted through a proposed constitutional amendment to cap spending in a state where spending is below the U.S. average.

The amendment — approved by the Senate and soon to be considered in the House — is a gimmick rather than real reform. In fact, because the amendment would require two-thirds approval of both legislative changes to prohibit spending more than an arbitrary limit, it would impede elected representatives from making the kinds of public investments in Iowa’s children, the state’s infrastructure, and our environment that the people of Iowa say they want. To learn more about this issue, click here for Peter Fisher’s brief report for the Iowa Fiscal Partnership.

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 the Iowa Policy Project is offering examples. In today’s graphic, we illustrate the realities of state spending in Iowa, often inflated in political rhetoric.

Repeal of Obamacare: Following the money

Replacing ACA will be costly to many Iowa families, particularly older and rural Iowans.

Congressional Republicans have proposed replacing the Affordable Care Act, known as Obamacare, with the American Health Care Act, or AHCA. To understand why, suppose we follow the money — who loses, who gains?

On the losing side are thousands of Iowans who would find themselves facing higher costs for health insurance. Consider a married couple with two young children, and with $40,000 annual income. In Iowa’s metropolitan counties, this family’s tax credits for the purchase of health insurance would fall by $3,469 annually. In rural areas, where health insurance is much more expensive, the same family would face nearly an $8,000 reduction in credits — in other words, an $8,000 increase in the cost of health insurance. For couples in their late 50s or early 60s, the jump in costs is much higher: $11,300 in urban areas, over $17,000 in rural counties. (See an earlier IPP report for details.)

The much greater impact on rural Iowans is because the Republican plan gives everyone the same credit, whether they are in a high-cost or low-cost county. While the credit rises with age,  the credits for older Iowans cover a far smaller share of their much higher insurance costs. Overall, the average Iowa family currently receiving subsidies for the purchase of insurance would see a $2,512 drop in the subsidy.[1]

But who are the winners? The Republican plan includes tax cuts primarily for the wealthiest Americans, as well as drug and insurance companies. The 400 highest-income taxpayers nationally would get annual tax cuts averaging about $7 million each. These taxpayers, whose annual incomes average more than $300 million, would receive tax cuts totaling about $2.8 billion a year.[2]

We now know how two of these cuts, amounting to $31 billion a year, would impact Iowans. The Affordable Care Act was financed in part by these two new taxes. One is the Net Investment Income Tax, the other the Additional Medicare Tax. Both fall primarily on the wealthiest. Repeal of these two ACA taxes would shower $116.7 million in tax cuts each year on just 1.9 percent of Iowa taxpayers. A full 92 percent of those tax cuts would go to the richest 1 percent of Iowa taxpayers — those making $444,000 a year or more, and with an average income of $1.17 million. Those taxpayers would receive on average $7,004 a year.[3]

Basic RGB“Follow the money” is good advice. But what you find when you get there is often not a pretty picture.

[1] Aviva Aron-Dine and Tara Straw. House Tax Credits Would Make Health Insurance Far Less Affordable in High-Cost States. Center on Budget and Policy Priorities, March 9, 2017.

[2] Chye-Ching Huang. House Republicans’ ACA Repeal Plan Would Mean Big Tax Cuts for Wealthy, Insurers, Drug Companies. Center on Budget and Policy Priorities. March 8, 2017. http://www.cbpp.org/research/federal-tax/house-republicans-aca-repeal-plan-would-mean-big-tax-cuts-for-wealthy-insurers

[3] Institute on Taxation and Economic Policy. Affordable Care Act Repeal Includes a $31 Billion Tax Cut for a Handful of the Wealthiest Taxpayers. March 2017. http://itep.org/itep_reports/2017/03/affordable-care-act-repeal-includes-a-31-billion-tax-cut-for-a-handful-of-the-wealthiest-taxpayers-5.php

Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org

Today’s virtual House graphic: Iowa impact of ACA repeal

170119-IFP-ACA-F1

Yes, whatever actions are taken on the Affordable Care Act will come from Congress, but state legislators may be left to pick up the pieces. Iowa legislators, are you paying attention? Are you talking to your federal counterparts about this? (Some are in the state this week.)

What many may not know is the impact the ACA has had on reducing the uninsured population in Iowa. The Medicaid expansion under the ACA is one of the big reasons we have seen a greater share of the Iowa population covered by either public or private insurance.

For more information on how the ACA has affected uninsurance in Iowa — and the stakes of repeal without an adequate replacement — see Peter Fisher’s policy brief, Repealing ACA: Pushing thousands of Iowans to the brink.

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 impact on Iowa, and potentially on state finances and responsibilities, if the federal Affordable Care Act is repealed.

Today’s virtual House graphic: Iowa impacts of ACA repeal

Repeal of the Affordable Care Act will leave fewer people in Iowa with insurance than before the law took effect.

Editor’s Note: The Iowa House of Representatives voted Monday to deny 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, we will offer examples. Here is today’s graphic, to illustrate what could be expected to happen in Iowa if Congress repeals the Affordable Care Act.

170119-IFP-ACA-F2xxRepealing 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.

In fact, repeal of the ACA could leave tens of thousands of adults uninsured who actually had insurance prior to the ACA. Some 69,000 Iowans covered by an Iowa program, IowaCare, became part of the Iowa Health and Wellness Program with the advent of the ACA, while even more Iowans had insurance with the help of ACA subsidies.

Repeal leaves all three of those programs gone — IowaCare, Iowa Health and Wellness, and the ACA subsidies. Thus, fewer will have insurance than in 2013, prior to the ACA, and low-income Iowans will be worse off. This is an issue that state legislators may be left to address with no help from the U.S. Congress, but is not getting attention at the Iowa Statehouse.

For more information, see this Iowa Fiscal Partnership policy brief by Iowa Policy Project Research Director Peter Fisher.

Today’s virtual House graphic: Cutting wages in four counties

Local minimum wage ordinances cover one-third of the private-sector workers in the state of Iowa.

Editor’s Note: The Iowa House of Representatives voted Monday to deny 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, we will offer examples. Here is today’s graphic, to illustrate where county-level minimum wages have passed and could be repealed.

Iowa 03-BLUE-countiesxljpIowa Policy Project reports have illustrated the impacts of increases in the minimum wage if enacted at the state level or, in some cases, at the local level. Four counties have enacted minimum wage increases in Iowa, with the Johnson County wage of $10.10 taking effect in three steps and fully implemented last month. Polk, Linn and Wapello counties also have passed county-level minimums.

If the state Legislature were to choose to repeal those local minimums, it would affect one-third of the private-sector workers in the state of Iowa. For more information about the minimum wage in Iowa, visit this page, and this blog post by IPP’s Peter Fisher.

Erasing local minimum wage gains

Legislation to end local minimum-wage increases in Iowa would guarantee different minimums in border communities as Iowa’s state minimum wage trails those of most neighboring states.

The state minimum wage in Iowa has been stuck at $7.25 for over nine years. But because of the actions of four county boards, a third of the private-sector workers in the state are now covered by a local minimum wage ordinance. About 65,000 workers in Polk, Linn and Johnson counties already benefit from an increase in their hourly wage to more than $10.00, or will in the next two years. Another 20,000 or more will benefit indirectly.[1]

Iowa 03-BLUE-countiesxljpBut those wage gains would all be erased under a bill filed in the Iowa House, HSB92. That bill would nullify all of the county ordinances; in a single stroke, it would drive down the wages of about 85,000 Iowa workers.

We know something about who those workers are. Over 40 percent work full time. Many are trying to raise a family on low wages. The vast majority are age 20 or over, and one in five are age 40 or above. They are more likely to be women than men. Many live in in poverty despite working full time.

The average low-wage worker in Polk County who would be affected by the Polk minimum wage, which rises to $10.75 in 2019, could look forward to a raise of over $2,700 a year. But not if that bill becomes law.

The beneficiaries ofIowa 03-BLUE-counties the county wage increases are not confined to the counties that passed them. Thousands of workers commute from surrounding counties, and they come home to spend those higher wages at local gas stations, restaurants, grocery stores and other retail shops. They hire local plumbers and builders and electricians. In all, at least 12 counties in addition to Polk, Linn and Johnson will see a substantial increase in resident incomes and local purchases as a result of those three county minimum wages. Nullifying the wage increases will harm local economies, not just low-wage workers.

The bill goes beyond revoking the minimum wage laws passed recently by locally elected officials. It prevents any local elected body from enacting any ordinance in the future that is aimed at improving the lot of our low wage workforce. City councils and county boards would not be allowed to pass a law aimed at improving local wages, benefits, or sick leave policies, or reforming hiring or scheduling practices, regardless of how badly such measures are considered by elected officials to be needed, or how widely they are supported by local residents.

While some have hoped the state would grandfather in existing local ordinances, and would raise the state minimum by some amount, they stand to be disappointed. The bill leaves the state minimum at $7.25. This despite 70 percent support in Iowa for raising the minimum.

The bill reveals that the alleged concern over a “hodge-podge” of local ordinances was not the real issue. As we have argued elsewhere, the hodge-podge is a bogus argument. Labor markets are local, not statewide, and a local ordinance aimed at dealing with local market conditions makes sense. Nor is it plausible to argue that paying a different wage to different workers is a burden to businesses, who do that all the time.

Ironically, the bill would actually mandate that the current hodge-podge of minimum wages that exists in all of our border metro labor markets must remain. Quad City and Dubuque area businesses will still face an $8.25 minimum on the Illinois side. Council Bluffs and Sioux City businesses with employees on both sides of the river will still face $9.00 minimum wages in Nebraska. South Dakota’s minimum just went to $8.65, Missouri’s to $7.70. No increase in the minimum wage in an Iowa county to bring it into line with a bordering state will be allowed at the local level.

This bill, in sum, would help to guarantee that Iowa will remain a low-wage state.

[1] These estimates are based on an analysis of data from the American Community Survey by the Economic Policy Institute.

2010-PFw5464Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org