Happy Birthday Health Reform, Part 1: A Look Back

March 23, 2012 at 3:39 pm

Two years ago today, President Obama signed the Affordable Care Act — health reform — into law.  Millions of Americans already are experiencing the benefits, and other important parts of the law are starting to move forward.  This series of posts will look at what health reform has accomplished and what it will accomplish over the next few years, as well as certain issues related to health reform.

First, a look back at health reform’s achievements in its first two years:

  1. Prescription drugs are more affordable for 5.1 million seniors and people with disabilities.
    Health reform has begun to close the “doughnut hole,” the gap in Medicare prescription drug coverage that many seniors experienced once their annual drug costs exceeded $2,840.  Before health reform, seniors had no additional coverage until their costs hit $6,448.

    Last year, seniors received a 50 percent discount on brand-name drugs and a 7 percent discount on generic prescription drugs while they were in the coverage gap.  This year, the generic discount jumps to 14 percent.

    5.1 million Medicare beneficiaries have saved more than $3.2 billion as a result of these changes, according to the Department of Health and Human Services (HHS).   The law will close the entire doughnut hole by 2020.

  2. Two and a half million young adults have gained health insurance.
    Health reform requires insurers and employers that offer dependent coverage to allow parents to include children up to age 26 on their insurance plans.  As a result, 2.5 million more young adults had health insurance in June 2011 than in September 2010, according to HHS.

    In the past, most insurance companies dropped children once they turned 19 or a few years later if they were students.  That’s one reason why nearly a third of all young adults lacked insurance in 2010 — a larger share than any other age group.

  3. Tens of millions of Americans are getting free preventive care.
    Insurance companies now have to cover preventive care services at no charge, and Medicare provides preventive services for free now, too.  As a result, nearly 87 million Americans received a free preventive health care service last year, according to HHS:  54 million through private insurance and 32.5 million through Medicare.

    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.

  4. Insurance companies can no longer deny coverage to sick children.
    Health reform bars insurance companies 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.

    This rule will apply to adults, too, starting in 2014.

  5. Insurance companies can no longer cut off care for people who need expensive medical care.
    Health reform bars insurers from imposing “lifetime limits” on benefits.  Now, people who get cancer or another illness that requires expensive treatments 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.

    HHS estimates that before health reform, 105 million Americans had insurance plans with lifetime limits.

Next up: a look ahead at some of health reform’s major benefits that are still in the works.

Low-Income Programs Would Bear the Brunt of Ryan Cuts

March 23, 2012 at 2:31 pm

Most of the cuts in House Budget Committee Paul Ryan’s new budget would come from programs serving lower-income Americans, a new CBPP report finds.  Here’s the opening:

62% of Proposed Cuts in Ryan Plan Come from Low-Income ProgramsHouse Budget Committee Chairman Paul Ryan’s budget plan would get at least 62 percent of its $5.3 trillion in nondefense budget cuts over ten years (relative to a continuation of current policies) from programs that serve people of limited means.  This stands a core principle of President Obama’s fiscal commission on its head and violates basic principles of fairness.

Not much has changed on this front from Chairman Ryan’s fiscal year 2012 budget plan released a year ago.  Then, too, Chairman Ryan proposed massive spending cuts, the bulk of which were in programs that serve low- and moderate-income Americans.  (Compared with last year’s plan, the cuts in low-income programs are larger in dollar terms but slightly smaller as a share of the total cuts.)

Click here for the full report.

When Is a Deal Not a Deal?

March 22, 2012 at 5:35 pm

With defense funding well above the Budget Control Act’s (BCA) funding caps in coming years, and non-defense discretionary funding very far below those caps, House Budget Committee Chairman Paul Ryan’s new budget bears little resemblance to the bipartisan agreement reached last summer (see graph).

Ryan Budget Would Raise Defense Funding Above Budget Control Act Caps, Cut Non-Defense Discretionary Funding Far Below

Debates over whether the Ryan plan is consistent with the BCA have focused on fiscal year 2013, in which the plan’s total discretionary funding is below the BCA cap.  But the Ryan plan departs far more from the BCA over the 2013-2021 period as a whole, shifting large amounts of funding from non-defense discretionary (NDD) programs to defense, while deeply cutting the total (see table).  The Ryan budget thereby walks away from the sole significant bipartisan deficit-reduction measure of recent years less than eight months after that measure was negotiated.

Table 1
Defense Increases, Non-Defense Discretionary (NDD)
Cuts Relative to the BCA’s Statutory Funding Caps
(In billions of dollars)
2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL
Defense 8 11 14 17 20 23 28 32 36 189
NDD -38 -115 -118 -120 -120 -124 -127 -130 -135 -1,026
Total -30 -104 -104 -102 -101 -100 -99 -98 -98 -837
Note: Figures may not add due to rounding.

The Ryan plan would breach the BCA caps on defense funding by $189 billion over the 2013-2021 period, bringing defense funding more than 5 percent above the level set by law.  And it would cut NDD funding by more than $1 trillion below the existing funding caps; in 2021, NDD funding would be 23 percent below the cap.  (Technically, the BCA has three NDD caps for each year to reflect three different aspects of NDD funding; our figures here combine the three.)

NDD covers all non-defense funding other than for “entitlement” programs, such as Social Security and Medicare.  It thus covers a vast array of federal activities:  biomedical and scientific research; veterans’ health care; most education; law enforcement and border patrols; national parks and forests; environmental protection; housing assistance; Head Start; job training; NASA; food, drug, workplace, and consumer product safety; and the Treasury, for example.

The caps discussed here do not reflect the automatic cuts (or “sequestration”) that the BCA calls for given the failure of last year’s “supercommittee” to recommend further deficit reduction.  But the Ryan plan’s NDD cuts are so deep that they would bring NDD funding 16 percent to 18 percent below the scheduled post-sequestration level from 2014 through 2021.

Some may argue that the Ryan budget does not violate last summer’s deal because the NDD caps are not floors; in other words, it would not breach the law for Congress to appropriate less than the cap, only more.  But claiming that last summer’s agreement could legally permit any funding level for NDD programs between zero and the caps — such as a level so low that it would require eliminating Pell grants, the FBI, or veterans’ health care, for example — is a technicality.  Such an outcome clearly is not what President Obama and many other congressional leaders thought they had negotiated last August.

More importantly, the Ryan budget clearly does breach the defense caps — and by a lot.  If policymakers believe that difficult bipartisan deals will be discarded only months after being worked out, then bipartisan agreements will become even harder to reach than they already are.

Ryan Budget Takes Big Bite out of Food Stamps

March 22, 2012 at 3:43 pm

Millions of people would lose part or all of their SNAP (food stamp) benefits under House Budget Committee Chairman Paul Ryan’s new budget, a new CBPP analysis shows.

The Ryan plan would cut SNAP — the nation’s most important anti-hunger program — by $133.5 billion or more than 17 percent over the next ten years.  (Click here for the state-by-state impact.)  Since more than 90 percent of SNAP expenditures are for food assistance, a cut of that size would require scaling back SNAP eligibility and/or reducing benefits.

To illustrate the size of the cut:

  • If the cuts came solely from new eligibility restrictions, more than 8 million people would need to be cut from the program, if the cuts began taking effect in 2013.
  • If the cuts came solely from across-the-board benefit cuts, SNAP benefits would have to be cut by about $22 to $27 per person per month in 2016 dollars.

Contrary to Chairman Ryan’s claim that large SNAP cuts are necessary to rein in the program, the recent rise in SNAP expenditures is temporary and mostly reflects the depth of the recent recession.

  • As the first graph shows, the growth in SNAP participation peaked in the fall of 2009 and has slowed to a path that suggests the caseload may start to decline in the near future.
  • CBO Projects SNAP Will Shrink as Share of GDP

  • As the second graph shows, the Congressional Budget Office projects SNAP to return essentially to pre-recession levels as a share of the Gross Domestic Product once the economy fully recovers.  Thus, SNAP isn’t contributing to the nation’s long-term budget problem because it is projected to grow no faster than the economy over time.

SNAP Participation Growth Has Slowed Dramatically Since the End of the Recession

President’s Budget Would Hike Rents on Poorest Households

March 22, 2012 at 1:00 pm

More than half a million of the nation’s poorest families would face higher rents under the President’s proposal to raise the minimum rent in the rental assistance programs that the Department of Housing and Urban Development (HUD) administers.

Our new report takes a detailed look at the proposal, including its state-by-state impact.  The affected families include 725,000 children and are disproportionately minority.

The proposal to raise the minimum rent from a maximum of $50 to a mandatory $75 a month  — with no discretion for state and local housing agencies to set a lower required payment — would have the biggest impact in states that provide relatively little help to the most vulnerable families and individuals.

Nationally, about 12 percent of households receiving HUD-funded rental assistance would face higher rents.  But the percentage ranges from nearly 24 percent in Tennessee, which has the nation’s second-lowest TANF benefit level as a share of the poverty line and no General Assistance program, to 2 percent in New York — which has the nation’s highest TANF benefit (48.8 percent of the poverty line ) and is one of only 12 states that provide General Assistance benefits to childless employable adults.

Proposed Rent Increase Would Further Impoverish Poorest Households Receiving Federal Housing Assistance

As I noted earlier, this proposal comes even as a study finds that the number of U.S. families with children living on less than $2 per person a day — a standard the World Bank uses to measure serious poverty in third-world countries — has more than doubled since the mid-1990s, to roughly 1.5 million.  For a family of three at that level (that is, living on $6 a day), a $25 per month rent increase means that it will have only $3.53 per day to spend on other necessities, as the graph shows.

In fact, the graph almost perfectly illustrates the impact in Tennessee, where a family of three receives only $185 a month in TANF benefits — or about $2 per person per day.

The worsening of severe poverty rebuts the Administration’s rationale that minimum rents should rise to reflect inflation.  Rents have indeed gone up in recent years, but the incomes of extremely poor families generally haven’t, because of stagnating wages and shrinking cash assistance.

The Administration’s claim that its proposal is needed to save money doesn’t hold up either.  For various reasons, the proposal would likely save less than half of the Administration’s $150 million estimate next year.  Surely policymakers can find a better way to secure $75 million than by making some of the poorest Americans still more destitute.