“Hurting The Most Vulnerable”: Cutbacks To Unemployment Insurance Came Long Before The Great Recession
You may have heard that we’re in the middle of an unemployment crisis. It’s little wonder that an average of 365,500 people per week made new claims for unemployment benefits over the past month. These high numbers have been straining unemployment insurance programs at the federal and state level, and many states have run out of reserves to pay for them, triggering a reduction in benefits. But this crisis wasn’t inevitable. The pull back in unemployment benefits is just another result of state-level choices to cut taxes at the expense of state spending, spending that could be cushioning the blow of the Great Recession.
States are unable to adequately finance their unemployment insurance programs just when they are most needed not because they were unexpectedly overwhelmed. As a new report from the National Employment Law Project shows, it was because they failed to finance them during the good times like they’re supposed to. Here’s the way it works: federal law requires each state to collect unemployment insurance contributions from employers and deposit them into a state trust fund held in the treasury. During good times, the trust funds accumulate reserves so that claims can be paid out during downturns. This makes the program countercyclical, helping to pump money into workers’ pockets and therefore businesses (via their spending) when times are tough.
The problem is that employer contribution rates vary among and even within states. Not shockingly, business groups turn on political pressure to reduce employer contributions and taxes during good times before the coffers are adequately full. And too many states gave in to this temptation before the recession. As the report notes, “Thirty‐one states reduced UI taxes by at least 20 percent between 1995 and 2005.” Meanwhile, from 2000–09 the average UI contribution rate was .65 percent of total wages, “the lowest in the life of our federal‐state UI program.” That left many of the reserves underfunded, especially when they were called upon to respond to the financial crisis.
And now, of course, the demand for these benefits is at a historically high levels. So what have states done to address the fact that they don’t have the funds to pay them out? The solutions “have tended to focus more on curtailing and reducing benefit payments than on the revenue side of the equation,” the report says. That is, rather than looking at ways to hike taxes or employer contributions to make up the shortfall, most states have cut back on benefits for the unemployed.
Over the past thirty years, lawmakers have eroded long-standing features such as the duration of benefits that were “previously seen as untouchable,” and today’s responses follow that trend. Six states have reduced the maximum duration of benefits below twenty-six weeks, which has been the standard since the 1950s. Other states have put up barriers to benefits, like drug testing requirements and excluding seasonal workers. Several states and even the federal government have limited the number of unemployed workers who qualify, forced skilled workers to accept low-wage jobs and lowered the value of payments. Meanwhile, most states did nothing to raise revenues or “passed token policies that will raise a negligible amount of revenue”—the only states to buck that trend were Colorado, Rhode Island and Vermont.
This may sound familiar. That’s because tax cuts have gotten in the way of other important policies at the state level. As Mike Konczal and I showed earlier this year, a handful of ultraconservative state governments were responsible for the massive wave of public sector job losses the country has experienced during the recovery. But layoffs weren’t the only option for dealing with tight state budgets: many of these states also cut corporate taxes or taxes on high-income earners (or both). Estimates have shown that without these job losses, unemployment would likely be a full percentage point lower than what it is now.
And there’s another fiscally irresponsible choice a number of states have said they’ll be making soon: the refusal to expand Medicaid as part of the Affordable Care Act. The Supreme Court ruling that upheld the law struck down the part that would have all but ensured across-the-board participation, and now at least fifteen governors are indicating that they’ll opt out—despite the fact that the federal government will pick up the tab for the full price of expansion in the early years and 90 percent after that. One study even found that the expansion could actually end up saving these states money. But even if that didn’t pan out, Richard Kim recently made a clear case that there are some pretty painless ways for these states to find the money to expand Medicaid. The only catch? They require raising taxes. Either by undoing some unnecessary tax breaks or raising taxes modestly, the states that are threatening fiscal ruin at the hands of this mandate can actually easily afford what it’ll cost them. Small price to pay when Medicaid saves lives.
So-called “tough choices” aren’t always so tough. Some of the policies that are exacerbating the effects of the recession and hurting the most vulnerable among us have been implemented because states refuse to look at the revenue side of their ledgers. The choices to lower taxes or ignore raising them aren’t made in a vacuum. There are often painful consequences, borne by those who can least afford it.
By: Bryce Covert, The Nation, August 6, 2012
“Unexpanded Medicaid”: Millions Of Women Could Remain Uninsured If States “Opt Out”
It can seem like just a mirage created by the summer heat: only a few weeks ago the Supreme Court actually handed down a decision that progressives could celebrate. It held that the Affordable Care Act is constitutional, including the individual mandate, meaning that implementation can roll on full steam ahead. I was one of the first to celebrate, in particular for all the ways that the law will help women who need healthcare (which is all of us). As Katha Pollitt recently wrote here, women will benefit dramatically from the ACA. The law bars practices like charging women more just for being women, dropping women’s coverage if they become pregnant or sick, and denying coverage due to “pre-existing conditions” like having had breast cancer or being a victim of domestic violence. It adds new benefits like birth control coverage at no cost to the patient, expanded coverage of preventative services like prenatal care, mammograms, pap smears, and bone-density screenings through Medicare, and requiring insurance companies to cover maternity care.
But one aspect of the Supreme Court’s decision could have some very bad results for women: the ruling that states can opt out of the Medicaid expansion. While this could end up harming men and women, women in particular stand to suffer if states refuse to participate in the program.
The Medicaid expansion is a crucial component of the law’s overall goal of extending coverage to over 30 million uninsured Americans by 2019, covering almost half of the total number of people the bill promised to insure. Originally, the law included a provision that the federal government could take away all of a state’s Medicaid funding if it refused to go along with the expansion, which all but ensured participation. But the Court ruled that such a maneuver was unconstitutional. Just a few days after the decision was announced, seven Republican governors said they would flat out reject the money to expand Medicaid rolls, with at least eight more looking to follow suit. More have said no since then.
This could create a no-man’s land for those who earn less than 100 percent of the Federal Poverty Line, making them ineligible for tax subsidies to help them buy insurance, but don’t qualify for their state’s (unexpanded) Medicaid program. These Americans are surely struggling to get by, but not quite enough to get health coverage promised to those above and below them.
And women are likely to fall into this chasm. Remember that unexpanded Medicaid does not cover most childless adults. Currently, a woman must meet both categorical and income criteria to qualify for Medicaid: she must be pregnant, a mother of a child under age 18, a senior citizen, or have a disability, and each category has income criteria, which differ state by state. Given that women are more likely to be pregnant (duh) but also to fall into the other categories, they are already the majority of enrollees in the program. However, given that many women don’t meet categorical criteria, many don’t qualify no matter how poor they are. Over 17 million women lived in poverty last year, compared to 12.6 million men.
By 2016, 13.5 million women were expected to get coverage under the Medicaid expansion. That figure is now in danger. As the Kaiser Family Foundation reported before the Supreme Court decision, “Medicaid will be the foundation of health coverage expansions to very low-income women.” But not if some Republican governors get their way.
Many of the states already rejecting the expansion are home to the greatest number of women who would benefit. Texas and Florida top the list for the most uninsured women in their states: about 2.4 million and 1.5 million, respectively, and both states plan to refuse the expansion. (Some of these women were supposed to get coverage through the Medicaid expansion, but some will still qualify for the subsidies and be able to buy insurance in the state exchanges.)
Using Kaiser’s predictions, I calculate that there are over 4.2 million women who would be eligible for the Medicaid expansion by 2014 in the states either refusing or indicating they will refuse to participate. That’s a huge chunk of the 10 million women that were expected to be covered by that time through Medicaid.
Those are the immediate impacts on low-income, uninsured women. The ruling may have other far-reaching impacts on women’s lives, however. As Jessica Mason Pieklo writes at RH Reality Check, the idea that the federal government can’t withdraw all Medicaid funds from states that don’t follow federal requirements might have other consequences. The first may be states that are trying to prevent Medicaid from contracting with providers that also offer abortions (i.e., in many cases, Planned Parenthood). Such a case is going on in Indiana right now. As Pieklo writes,
Thanks to the majority in NFIB v. Sebelius, conservative states looking to enact state-wide funding bans may have the framing necessary to pin the federal government. That’s because the language of Roberts’ opinion as to the Medicaid expansion is vague enough to argue that the federal government can’t coerce a state into funding Planned Parenthood by threatening to withhold all of that state’s federal Medicaid money, especially, since conservative states argue, they believe cutting Medicaid funds is the only way to guarantee state dollars do not fund abortion services.
Planned Parenthood and its affiliate centers provide services to 3 million people annually, including 4 million tests for sexually transmitted infections, 770,000 Pap tests, and 750,000 breast exams. Banning Medicaid from contracting with Planned Parenthood will hurt the low-income women who need these services—but states may now have a legal leg to stand on if they try to do just that.
Perhaps the worst thing of all? The excuse that Republican governors are using to get out of the Medicaid expansion may not even hold up. They claim to be worried that even though the federal government will pick up the whole tab for the first few years, the portion they’ll have to pay after that (10 percent) is too burdensome on their budgets. Yet there is evidence that expanding Medicaid could actually help their finances. Rejecting the Medicaid expansion may not even make fiscal sense, but no matter what it doesn’t make moral sense. It could leave millions of women exposed, unable to afford health insurance but not able to participate in Medicaid.
By: Bryce Covert, The Nation, July 17, 2012
“A Deal Too Good To Pass”: Why It’s Still In States’ Interests To Expand Medicaid
For supporters of the Affordable Care Act, it was hard to hear—over the cheering—anything besides the fact that the Supreme Court today kept the law almost entirely intact. But the Court did make a slight change to a crucial part of the ACA: Medicaid expansion. Under the law, by 2014, states are supposed to extend their Medicaid programs to cover people under 65 with incomes up to 133 percent of the federal poverty line. An analysis from the Center on Budget and Policy Priorities shows that means 17 million more people would have access to health care over the next 10 years. Before today, it looked like states didn’t have much choice in the matter. If they didn’t make the necessary expansion, they would lose all federal Medicaid dollars. In their brief, states argued that wasn’t much of a choice—federal Medicaid grants simply constitute too much money to lose. Back in February, Timothy Jost had a very helpful explanation of the states’ argument on this point in Health Affairs. As he wrote:
A state that refuses to expand its Medicaid program will under the ACA lose all Medicaid funding. Medicaid is the single largest source of federal funding to the states, accounting for 40 percent of all federal money dispersed to the states. States do not really have a choice to walk away from federal Medicaid funding, they argue. The states do not, therefore, really have a choice to refuse to participate in the Medicaid expansions. This coercion, the states contend, is unconstitutional.
According to SCOTUS Blog, the Supreme Court basically agreed: The feds can’t cut all Medicaid funding for states that refuse to expand. Now, states that choose not to extend benefits will forgo the money they would have received for doing so—but they won’t lose the money they’re already getting for current Medicaid services. But while states can now avoid the extension more easily, there’s still no practical reason to go down that path. “It’s still an incredibly good deal for the states,” says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities. Already the federal government pays, on average, 57 percent of Medicaid costs. But the ACA gives states much higher levels of funding when it comes to extending benefits. As a CBPP report in March noted, the feds will pay a whopping 93 percent of the costs of expansion over the next nine years:
Specifically, the federal government will assume 100 percent of the Medicaid costs of covering newly eligible individuals for the first three years that the expansion is in effect (2014-2016). Federal support will then phase down slightly over the following several years, and by 2020 (and for all subsequent years), the federal government will pay 90 percent of the costs of covering these individuals. According to CBO, between 2014 and 2022, the federal government will pay $931 billion of the cost of the Medicaid expansion, while states will pay roughly $73 billion, or 7 percent.
That means, all in all, states will only see a 2.8 percent increase in what they would have spent on Medicaid if there was no health-care bill. The expansion is also in the interests of health-care providers. The ACA was meant to vastly decrease the amount of health care hospitals have to provide with little or no compensation. It was for that reason, Park says, that providers agreed to reductions in Medicaid and Medicare rates. But without the Medicaid expansion, working adults who are too poor to afford health care but not poor enough to qualify for Medicaid could still be left without coverage in some states. “Now there’s going to be a donut hole in the middle if the state doesn’t proceed,” says Park. That’s bad business for hospitals. There’s another factor that states will have to consider: the savings they will realize as populations begin to get healthier. According to the CBPP report, there will be 33 million fewer uninsured people by 2022. Uninsured people are expensive; they often rely on expensive emergency-room care, rather than getting preventative and early treatment which is ultimately cheaper and more effective. The Urban Institute reports that in 2008, $10.6 billion in state and local dollars went toward hospital care for the uninsured—20 percent of the total costs. The percentage is even higher when it comes to mental-health services. With the expansion, those costs will likely go down dramatically. States may have the option now to forgo the Medicaid expansion. But the results won’t be pretty.
By: Abby Rapoport, The American Prospect, June 28, 2012
“Tax Shifting And Political Power”: Why Romney Loves The States And Hates The Feds
One of the main goals of Mitt Romney’s domestic program, to the extent that it can be discerned, is to transfer programs from the federal government to the states. Just which programs Romney wants to ship to the states, he does not say. But the goal is on his mind, and he has touted it both in private remarks to donors and in his recent speech to a tea-party group last Friday. Perhaps not coincidentally, economist and Romney adviser Greg Mankiw wrote a New York Times column this last weekend touting the virtues of pushing more policy toward the states.
Sometimes, locating policy at the state level can result in some kind of progressive policy innovation. Romney’s Massachusetts health-care plan offers one example. But this was a relatively rare event, brought about by the combination of its being a highly Democratic state that happened upon a large federal windfall unavailable to other states. In most cases, moving a policy to the states will tend to make it more conservative — less generous to the poor and vulnerable, and less burdensome upon the rich and powerful.
How do state programs differ from federal programs? For one thing, they’re paid for differently. Federal taxes charge the rich a higher rate than the poor. State taxes tend to charge a higher rate on the poor than the rich. So even if nothing at all changes about the program, simply breaking one federal program into 50 programs of the same cumulative size amounts to a lump sum transfer payment to the rich from the non-rich.
But making something a state program almost certainly means it will not stay the same size. State governments, unlike the federal government, must balance their budgets every year. When the economy contracts, this forces state (and local) governments into austerity mode. That’s why you’ve seen lots of laid-off teachers and police officers but not many laid-off Marines or IRS agents.
Finally, and most important, states are competing with each other. Every government has a general incentive to provide the best services for the lowest cost. But when you’re a state, you have an additional incentive. You don’t merely want to provide the best general environment, you also want to provide an environment that specifically appeals to business owners and rich people, and repels the poor and sick. After all, rich people may pay a lower average tax rate but they still pay more tax dollars than the non-rich. And poor and sick people suck up tax dollars.
So suppose a state decides it wants to provide really generous services for poor people — say, good medical care (that is, better than your standard Medicaid package) along with child care to help single parents work and scholarships so that any talented but poor kid can go to college. And the voters decide to pay for it by taxing the rich at higher rates. At some point, it will dawn on the voters that, however attractive this arrangement sounds, they may run the risk of driving rich voters into neighborhood states, and, worse still, serve as a magnet for poor and sick people who want to enjoy the comfort and opportunity denied to them elsewhere. All this would make this plan more costly, and possibly altogether unworkable. Indeed, exactly this consideration comes into play all the time when states debate their tax and spending policies.
Interestingly enough, Mankiw makes this argument in his Times column. He does not mention the possibility that offering more generous provisions to the poor and sick may attract more of them to a state. But he does note that, “Because capital is more mobile than labor, competition among governments significantly constrains how capital is taxed.”
In other words, locating more programs at the state level essentially gives the rich and powerful political power disproportionate to their numbers. The voters may agree on a given level of redistribution, but the ease of moving between state lines imposes a constraint that doesn’t exist at the federal level. (Well, it exists in theory — you can move to a different country, but it’s harder, and given that the United States has a less redistributive tax and transfer system than any other advanced country, the option doesn’t really come into play.)
As Mankiw points out, “redistribution is harder when people and capital are free to move to other jurisdictions that offer better deals.” If your goal is to reduce the amount of money that the government takes from the rich and gives to the non-rich, then sending programs to the states makes a lot of sense. And pretty much all the evidence we have suggests this is in fact the Republican Party’s main goal.
By: Jonathan Chait, Daily Intel, April 20, 2012
“Re-investing Resources”: ALEC Gives In, But There’s No Reason To Celebrate
After weeks of pressure, the American Legislative Exchange Council (ALEC) appears to be backing away from long-term efforts at creating barriers to voting (voter-ID laws) and pushing “Stand Your Ground” legislation. The latter allows those who feel threatened in public places to use force; Florida’s version is currently at the center of the Trayvon Martin case. Giving in to public pressure, ALEC announced Tuesday that it was disbanding its Public Safety and Elections task force, which promoted such legislation and helped see it proliferate. The organization is now “reinvesting these resources in the task forces that focus on the economy.” ALEC’s spokesperson did not respond to interview requests nor did Public Safety Task Force Chair Jerry Madden, a Texas state representative.
ALEC, which proudly calls itself “the nation’s largest, non-partisan, individual public-private membership association of state legislators,” has operated as a largely secret arena in which corporate sponsors and conservative legislators share ideas. The group offers model legislation to its members, which has in the past simply been introduced in legislatures unchanged. While the group says its goals are job growth and economic development, it has actively promoted voter-ID legislation to make it harder to vote as well as anti-union measures and those to limit lawsuits. The group also pushes for law taxes and decreased regulation.
As controversy grew around the slaying of Trayvon Martin and Florida’s Stand Your Ground laws, ALEC found itself on the ropes. The Martin shooting sparked widespread public outcry. Civil-rights group Color of Change helped lead public campaigns against ALEC and its affiliated companies for its support of such laws. In the face of growing grassroots pressure over the last few weeks, major ALEC corporate members like Coca-Cola and PepsiCo have dropped membership, as have McDonald’s, Kraft Food, Mars and others. Just Monday, a New York Times editorial slammed ALEC for its role in promoting Stand Your Ground legislation.
In the statement announcing the end of the Public Safety and Elections task force, the organization shifted its focus to “free-market, limited government, pro-growth policies.”
But this hardly constitutes a victory. ALEC still has a variety of task forces: There’s the Civil Justice Task Force, Education Task Force, and Health and Human Safety Task Force, all of which seem a bit removed from the group’s ostensible goals. The Civil Justice Task Force’s efforts appear largely focused on tort reform, as evidenced by the latest initiative “Expanding the Law Under New Restatement of Torts” and its latest publication, “The State Legislator’s Guide: Tort Reform Boot Camp.”
Then there’s the disturbing impact on health care and education. As The Nation showed in its “ALEC Exposed” series, the group has lobbied all out against health-care reform, while its education task force, headed partially by an executive for the for-profit online education company Connections Academy, has pushed hard for vouchers and increased privatization in American public schools. Its latest publication, a report card on education, begins with by comparing the battle over education reform to the World War II, with teacher unions being—you guessed it—Germany and Japan.
In the end, the Public Safety and Elections task force has already had its success. Voter-ID laws have proliferated around the country, making voting harder for poor and minority Americans. And according to the Times, Stand Your Ground is already law in 24 states.
Color of Change and its boycott isn’t likely to stop the pressure any time soon. In a statement responding to the news, executive director Rashad Robinson didn’t mince words: “To simply say they are stopping non-economic work does not provide justice to the millions of Americas [sic] whose lives are impacted by these dangerous and discriminatory laws courtesy of ALEC and its corporate backers.
By: Abby Rapoport, The American Prospect, April 17, 2012
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