Off the Charts Blog | Center on Budget and Policy Priorities

This week on Off the Charts, we focused on SNAP (formerly food stamps), health reform, housing policy, the federal budget and taxes, and state budgets and taxes.

• On SNAP, Stacy Dean explained that the farm bill that the House Agriculture Committee approved this week would force nearly 2 million low-income people off the program.  Dottie Rosenbaum noted, in the last in our “Facts on SNAP” series, that SNAP responded as designed to the recession and will shrink as the economy improves.  And Chad Stone pointed out that SNAP enrollment remains high because the jobs market remains abnormally weak.

• On health reform, Shannon Spillane listed some of its accomplishments to date.  Judy Solomon explained why the coming cuts to hospitals that serve many low-income and uninsured patients reinforce the importance of health reform’s Medicaid expansion.

• On housing policy, Will Fischer pointed out that a new tax credit to help low-income renters afford housing would be a valuable complement to the existing Low-Income Housing Tax Credit.

• On the federal budget and taxes, Chye-Ching Huang rebutted recent criticisms of estimates of how tax proposals would affect different income groups.

• On state budgets and taxes, Erica Williams emphasized that North Carolina should reinstate its Earned Income Tax Credit (EITC).

In other news, we released a paper on the SNAP cuts in the House Agriculture Committee farm bill and updated our backgrounder on the number of weeks of unemployment benefits available in each state.

A variety of news outlets featured CBPP’s work and experts recently.  Here are some highlights:

Renters Face a Housing Squeeze
Bloomberg Businessweek
May 17, 2013

The Facts About Food Stamps Conservatives Don’t Want You to Hear
US News & World Report
May 16, 2013

House Agriculture Committee Approves Farm Bill
New York Times, The Caucus
May 16, 2013

Are Health Care Costs Healing Themselves?
National Journal
May 15, 2013

Hospitals could lose $500M in federal money to pay for uninsured in 2014
Associated Press
May 13, 2013

The House is expected to vote today, for the 37^th time, to repeal part or all of health reform.  Nevertheless, in the nearly two and a half years since the first such vote, health reform has made significant progress in achieving its basic goals: helping more Americans get affordable coverage, protecting consumers, and slowing cost growth across the health care system, both public and private.

Here’s a look at some of health reform’s accomplishments to date:

• Health insurance for millions of young adults. Before health reform, young adults were more likely to be uninsured than any other age group. To help address this problem, health reform requires insurers and employers that offer dependent coverage to allow parents to include children up to age 26 on their insurance plans.  That’s a big reason why 3.1 million more young adults had health insurance in December 2011 than in September 2010, according to the Department of Health and Human Services (HHS).

• Free preventive care for tens of millions of Americans. Insurance companies now have to cover preventive care services at no charge, and Medicare provides preventive services without cost sharing, too.  As a result, nearly 105 million Americans received free preventive health care in 2011 and 2012, according to HHS.

  Preventive care includes screenings for chronic illnesses like diabetes and cancer, routine vaccines for adults and children, and other recommended care for kids, such as regular doctor visits.

  Better access to preventive care will help millions of families with their budgets and likely produce other benefits, such as fewer unnecessary deaths from disease, less spending on costly and avoidable illnesses, and a healthier population overall.

• Protections for children and adults with serious illnesses. Health reform bars insurers from denying coverage to children with pre-existing health conditions like cancer, autism, or diabetes.  As a result, for the first time in most states, families with children with serious illnesses, chronic conditions, or special health care needs can buy coverage for their children in the individual health insurance market.

  Also, health reform’s ban on “lifetime limits” on health benefits means that people who get a serious illness won’t have to worry that their benefits will run out or that expensive treatments will push them into bankruptcy — or worse, that coverage limits will prevent them from getting lifesaving care.

• More affordable prescriptions for more than 6 million seniors. Health reform has begun to close the “doughnut hole,” the gap in Medicare prescription drug coverage that many seniors experience once their annual drug costs exceed $2,930.

  Before health reform, seniors had no additional coverage until their costs hit about $6,600.  Now, seniors receive a 52.5 percent discount on brand-name drugs and a 21 percent discount on generic prescription drugs while they are in the coverage gap.

  More than 6 million Medicare beneficiaries have saved more than $6.1 billion as a result of these changes, according to HHS.

• Initial steps to help slow health care costs. Some of health reform’s cost-control provisions, such as cutting overpayments to the private insurance plans that participate in Medicare, are already producing savings.  Other steps are underway to make the health care system more efficient by rewarding effective, high-value health care, although they may not yield results for several years.

  For example, Medicare is cutting payments to hospitals with high readmission rates in order to encourage them to prevent more avoidable readmissions.  Also, many physician-led “accountable care organizations” are up and running.  These organizations are structured to encourage health care providers to take responsibility for the cost and quality of care they deliver, potentially reining in costs.

Related Posts:

• User-Friendly Applications Will Help Uninsured Gain Coverage
• Exchanges Will Offer Consumers Better Choices in Every State
• Want More Low-Income Workers to Have Health Coverage? Expand Medicaid.

Health reform cuts supplemental Medicaid payments for hospitals that serve many low-income and uninsured patients because the need for such payments should shrink as more low-income people gain coverage through the law’s Medicaid expansion.  The Department of Health and Human Services (HHS) has now issued a proposed rule to allocate these cuts among the states — and the rule makes clear that adopting the Medicaid expansion is the right choice for states.

That’s true for two reasons.  First, under health reform the federal government will largely pay for the Medicaid expansion.  Second, the states will face cuts in these hospital payments — the so-called “disproportionate share hospital” (DSH) payments — whether or not they expand Medicaid.

Health reform cuts DSH payments by $18.1 billion through 2020.  The cuts start at $500 million in fiscal year 2014, when the Medicaid expansion first takes effect, but they grow sharply in later years, to $5.6 billion in 2019 and $4 billion in 2020.

Under the proposed rule, which applies to fiscal years 2014 and 2015, the size of each state’s cut will largely reflect the number of uninsured in the state and how well the state targets its DSH payments to hospitals with the most Medicaid and uninsured patients.  (Under health reform, President Obama and Congress directed HHS to take these factors into account in apportioning the cuts.)  A state’s decision whether to expand Medicaid will not be a factor.

To be sure, a state’s decision on the Medicaid expansion will likely affect its number of uninsured in coming years.  If HHS continues to take the number of uninsured people into account in allocating the cuts after 2015, states that don’t expand Medicaid could see somewhat smaller DSH cuts than other states because they will have more uninsured.  But, given the magnitude of the total cut in later years, such states will still face substantial DSH funding cuts.

The bottom line?

Hospitals and low-income people in states that expand Medicaid will be far better off.  Hospitals will gain much more in payments for the care they provide to large numbers of low-income people who will gain insurance through the expansion than they may lose in DSH payments.  And low-income people will be much better off with health coverage than if they remained uninsured.

This week on Off the Charts, we focused on the federal budget and taxes, SNAP (formerly food stamps), health reform, the economy, and state budgets and taxes.

• On the federal budget and taxes, Kathy Ruffing warned that the House-passed “debt prioritization” measure is simply default by another name.  Chye-Ching Huang laid out key issues in reforming international tax rules and explained that a new study from Treasury Department analysts highlights the risks of corporate tax reform.  And, in advance of Mother’s Day, Arloc Sherman noted the benefits of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) for mothers and children.

• On SNAP, a series of posts from Stacy Dean and Dottie Rosenbaum explained that the program helps vulnerable people, showed that it encourages and rewards work, and highlighted its strong record of efficiency.

• On health reform, we excerpted Paul Van de Water’s congressional testimony on the law’s tax on insurance providers.  Edwin Park explained why changes promoted by health reform opponents would undermine the law’s Medicaid expansion.  Jesse Cross-Call noted, in advance of Mother’s Day, that state policymakers could better support all women by taking advantage of the Medicaid expansion.

• On the economy, we highlighted a New York Times op-ed by Jared Bernstein on why full employment should be a central policy goal.  Chad Stone reflected on the relationship between U.S. debt and economic growth in light of errors found in the influential paper by economists Carmen Reinhart and Kenneth Rogoff.

• On state budgets and taxes, we highlighted a radio interview in which Michael Mazerov made the case for the Senate-passed bill requiring all large Internet retailers to charge any applicable sales taxes.

In other news, we released Paul Van de Water’s testimony on health reform’s insurance provider tax and a fact sheet on how many lower-income working mothers in each state receive the EITC and CTC.  We also updated our state-by-state fact sheets on who benefits from SNAP and updated our backgrounder on Medicaid.

In testimony today before a House Small Business subcommittee hearing, CBPP Senior Fellow Paul Van de Water explained how the health insurance tax — a fee on health insurance providers that is part of the Affordable Care Act (ACA) — will help to pay for extending health coverage to 27 million people and allow reform to move forward in a fiscally responsible way.  Here’s an excerpt:

The law specifies how much the fee is to raise each year; this total is apportioned among providers based on their share of the U.S. health insurance business. Over the 2014-2023 period, the fee will raise about $116 billion. . .

As with any excise tax, supply and demand will determine how the tax’s burden is ultimately split between providers and purchasers.  Insurers have recently turned in strong financial results and thus are well positioned to bear some of the tax. But a portion of the tax is likely to be passed on to consumers.  The Joint Committee on Taxation estimates that premiums subject to the fee will be 2 to 2½ percent higher than they would otherwise be.

That is only part of the story, however.  Health reform also contains many provisions that will slow the growth of premiums.  The new health insurance exchanges will increase competition among plans and create economies of scale.  Standardization of benefits and the prohibition of medical underwriting will reduce administrative costs.  The individual mandate, as well as the subsidies to help people purchase coverage, will bring more relatively healthy workers into the insurance pool.  Premium increases of 10 percent or more are subject to state or federal review, and insurers must provide rebates to their customers if they spend less than 80 percent of premiums on medical care.  The ACA also includes a large number of initiatives to identify and implement more efficient ways of delivering medical services.

All things considered, CBO estimates that health reform will slightly reduce premiums for employer-sponsored health insurance in the near term.

Click here for the full testimony.