Why Raising Health Reform’s Threshold for Full-Time Work Would Be Counterproductive

April 1, 2014 at 1:03 pm

The House this week will consider the “Save American Workers Act,” which would raise the threshold for full-time work under health reform from 30 to 40 hours a week.  As we have explained, however, this step would aggravate the very problem that the bill purports to solve — that health reform may lead to more part-time work.

Health reform requires employers with at least 50 full-time-equivalent workers to offer coverage to full-time employees or pay a penalty.  Critics claim that employers are shifting some employees to part-time work to avoid offering them health insurance.  As the Wall Street Journal has reported, however, recent data provide scant evidence of such a shift.  And there’s every reason to expect the impact to be small as a share of total employment.

Raising the threshold from 30 to 40 hours would make a shift toward part-time employment much more likely — not less so.  Only about 8 percent of employees work 30 to 34 hours a week — that is, at or modestly above health reform’s 30-hour threshold.  But 43 percent of employees work 40 hours a week and thus would be vulnerable if the threshold rose to 40 hours (see chart).

If you exclude workers at firms that already offer health insurance and thus won’t be tempted to cut workers’ hours, more than twice as many workers would face a high risk of reduced hours if the threshold rose to 40 hours, according to New York University economist Sherry Glied.

The Congressional Budget Office (CBO) confirms that raising the threshold could put more workers at risk.  “Because many more workers work 40 hours per week (or slightly more) than work 30 hours per week (or slightly more),” CBO writes, raising the threshold “could affect many more workers than are affected under current laws.”

Equally or more important, CBO finds that the House bill would increase budget deficits by $74 billion over ten years (as fewer employers would pay penalties for not offering coverage) and leave more people uninsured.

Health reform’s critics are touting reports that some school districts have limited or reduced employees’ hours in response to health reform.  Nevertheless, the National Education Association (NEA) opposes the bill.  Some employers have overreacted because they don’t fully understand the employer responsibility requirement, the NEA finds, and others have simply used the requirement as an excuse to cut hours.  The bill would do nothing to resolve these issues.

Two Takeaways From New Hampshire and Michigan’s Medicaid Expansions

March 31, 2014 at 11:40 am

New Hampshire’s legislature has passed and Governor Maggie Hassan has signed into law legislation that will expand Medicaid as part of health reform effective July 1.  This means that combined with Michigan, where expansion takes effect tomorrow, an additional 600,000 uninsured people will be newly eligible for Medicaid coverage.  It also means a majority of states have taken health reform’s Medicaid expansion, as our map shows.

For policymakers in Maine, Missouri, Utah, Virginia, and other states currently debating whether to expand, the news from New Hampshire and Michigan offers important lessons:

  • Federal officials are willing to work with states to craft reasonable expansion plans.  The legislation passed in New Hampshire directs state officials to pursue a demonstration project — often called a “waiver” — that would use Medicaid dollars to buy coverage for newly eligible beneficiaries through the marketplace.  If approved, this approach would be similar to those in place in Arkansas and Iowa.

    New Hampshire likely will gain federal approval for its demonstration project because it steered clear of onerous provisions being discussed in other states that would make it difficult, if not impossible, for people to gain and maintain coverage.  For example, policymakers in Pennsylvania and Missouri have discussed tying people’s Medicaid eligibility and premium obligations to whether they are working or actively looking for work.  Such provisions have no relation to the purpose of Medicaid, which is to provide health coverage to people with low incomes.

  • States can expand at any time, but the sooner, the better for states and the uninsured.  The Medicaid expansion is a great deal for states, but especially so from now through the end of 2016 while the federal government pays the entire cost of covering the newly eligible.  (The federal government will pay no less than 90 percent of the cost in the years thereafter.)  While New Hampshire’s proposed waiver will not take effect until January 1, 2016, newly eligible beneficiaries will be able to enroll in the state’s existing program on July 1 of this year.  This is a win for both the Granite State’s finances and for the uninsured.

Why the New Ryan Budget Will Likely Be at Least as Extreme as Last Year’s

March 31, 2014 at 10:51 am

We’ve issued a short paper on what to look for in the budget that House Budget Committee Chairman Paul Ryan is expected to release this week.  Here’s the opening:

Basic budget arithmetic suggests that House Budget Committee Chairman Paul Ryan’s coming budget will be at least as extreme as his budget last year, and likely more so.  The Congressional Budget Office’s (CBO) latest deficit projections are roughly $1 trillion higher over the coming decade than last year’s projections.  If the new Ryan budget, slated for release this week, is to achieve the same goals as last year’s — reaching balance within ten years and reversing sequestration cuts in defense without raising revenues — it will need to expand its already steep cuts in domestic programs by hundreds of billions of dollars.

Last year, Ryan’s budget focused its deepest cuts on programs that benefit low-income people.  These cuts, which included massive reductions in Medicaid and SNAP (formerly food stamps) as well as the repeal of all health reform benefits, constituted about 72 percent of the budget’s total program cuts.  As a result, last year’s budget would have resulted in large increases in poverty and deprived many millions of affordable health insurance.  Further cuts in low-income programs are highly likely if the new Ryan budget again relies solely on program cuts while boosting defense funding and avoiding any cuts in Social Security and additional savings in Medicare.

As in past years, Chairman Ryan may not provide many details about how his proposed cuts would be achieved.  Last year, he called for converting Medicaid and SNAP to block grants, leaving it to the states to make the tough choices about which poor children, low-income seniors, or people with disabilities would not receive help.  Similarly, his budget included about $660 billion of unspecified ten-year cuts in mandatory programs — failing even to specify which programs would be cut.  And it gave little or no details on how to cut non-defense discretionary programs more than $600 billion below the already very austere post-sequestration levels.

With almost $1.3 trillion in unspecified ten-year cuts and its Medicaid and SNAP cuts occurring through block grants, last year’s Ryan budget obscured its real impact and the severe hardship it would impose.  Its lack of specificity, and the decision to wall off large parts of the budget from any deficit reduction at all, belied any attempt to portray that budget as a courageous document that makes hard choices.

Click here for the full paper.

In Case You Missed It…

March 28, 2014 at 4:34 pm

This week on Off the Charts, we focused on the federal budget and taxes, the safety net, housing, and state budgets and taxes.

  • On the federal budget and taxes, we excerpted Jared Bernstein’s congressional testimony on the long-term debt.  Chuck Marr praised Senate Budget Committee Chairman Patty Murray’s new proposal to expand the Earned Income Tax Credit (EITC) for low-wage workers not raising minor children.  Paul Van de Water explained why three House bills to change the budget process are ill-advised.
  • On the safety net, we excerpted Sharon Parrott’s commentary on why the EITC, while highly effective, isn’t a substitute for the safety net as a whole.  Arloc Sherman pointed out that House Budget Committee Chairman Paul Ryan’s recent poverty report largely ignored anti-poverty programs’ long-term successes.  Kathy Ruffing explained why Supplemental Security Income, which the Ryan report criticizes, should be strengthened, not cut.
  • On housing, Douglas Rice highlighted a New York Times editorial calling on policymakers to restore vouchers lost due to sequestration.
  • On state budgets and taxes, Michael Leachman listed five reasons why other states shouldn’t follow Kansas’ lead and enact massive tax cuts.

In other news, we issued a paper on lessons for other states from Kansas’ tax cuts, Jared Bernstein’s testimony on the federal debt, and Sharon Parrott’s commentary on why the EITC isn’t a safety net by itself.  We also updated our chart book on the legacy of the Great Recession and our backgrounder on where our state tax dollars go.

CBPP’s Chart of the Week:

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

Kansas Can’t Tax Cut Its Way to Prosperity
US News and World Report
March 27, 2014

Leading Senator Adds to Momentum for Helping Childless Workers
Huffington Post
March 26, 2014

 

Ryan Report Largely Ignores Anti-Poverty Programs’ Long-Term Successes

March 28, 2014 at 12:46 pm

House Budget Committee Chair Paul Ryan’s recent poverty report largely ignores evidence that anti-poverty programs can open doors of opportunity and yield lasting benefits for participants and society as a whole — even when this evidence comes from the same researchers whom the report cites for other purposes.

Here are a few examples:

SNAP (formerly food stamps).  Disadvantaged children born in counties with access to food stamps grew up to be healthier than children in counties without it, according to a major study.  They also were 18 percentage points more likely to finish high school, and girls from these counties rated higher on an index of adult “self-sufficiency” outcomes such as education, income, and staying off welfare.  The Ryan report ignores this evidence, while citing a different study by two of the same researchers on the program’s short-term work disincentives in its early years.

Working family tax credits.  Additional income from the Earned Income Tax Credit (EITC) and Child Tax Credit leads to significant increases in students’ test scores, a study found.  The authors also noted that such test-score gains tend to lead to sizeable improvements in students’ earnings as adults.  While the Ryan poverty report praises the EITC’s work incentives — and cites another study by one of the same researchers on the link between marriage and economic mobility — it ignores this and other research on the EITC’s long-term gains for children.

Head Start.  The Ryan report says that Head Start is “failing to prepare children for school,” citing the lack of measurable differences between Head Start students and a control group during elementary school.  But this conclusion ignores evidence of the program’s long-term benefits.

One study found that former Head Start attendees score higher than their siblings on a “composite index” of long-term outcomes in areas such as education, employment, and health status.  Another  study compared low-income counties that offered varying amounts of Head Start in 1965 (because some counties received more federal help launching the program) and found higher high school graduation and college enrollment and better health outcomes in the Head Start counties decades later for people of the right age to have participated in the program.

Importantly, such long-term gains don’t depend on sustained test-score gains, according to several studies of Head Start and similar interventions.  For example, a review of three leading preschool pilot programs notes that although participants’ test-score gains diminished over time, these participants were much likelier to finish high school and enter college than other students.  The Ryan report cites this study but only to show that the programs benefited girls more than boys.

To be sure, some Head Start programs need improving.  But these studies suggest that recent efforts by the Obama Administration and Congress to strengthen quality and accountability are a better way to go than simply abandoning the Head Start model.

The Ryan report grimly concludes that federal programs are “failing to address” poverty.  Poverty certainly remains too high.  But the report seems determined not to recognize the long-term successes of existing programs even when the evidence is in plain sight.