Virginia Lawmakers Agree: Banning Insurers From Covering Abortion Hurts Low-Income Women

This week, Virginia became the 21st state to restrict coverage for abortion services in the health insurance marketplaces set up under Obamacare. Over the past several years, that’s become an increasingly common tactic to restrict abortion access, as anti-choice lawmakers rush to prevent insurers from being able to cover the cost of the legal medical procedure.

Even though the measure banning abortion coverage — which was an amendment that Gov. Bob McDonnell (R) tacked onto a broader General Assembly bill — ultimately passed the legislature, it still sparked a debate that cut across party lines. Republican and Democratic lawmakers both suggested that preventing women from using their insurance coverage to pay for abortion services is ultimately a class issue, a point confirmed by women’s health advocates:

But members of both parties agree that the measure’s biggest impact will likely fall along class lines, landing hardest on some of the people the federal health-care overhaul was designed to help: working women who barely get by on their incomes.

“Those people that can afford insurance outside of the exchanges will be able to buy whatever they want. People that can’t afford to buy outside of the exchange will have to buy policies that don’t cover these procedures,” said Sen. John C. Watkins (R-Powhatan), who sponsored the bill but opposed the amendment by Gov. Robert F. McDonnell (R). “It just sets up a class situation, in my mind.” [...]

Cianti Stewart-Reid, executive director of Planned Parenthood Advocates of Virginia, said that the only real effect of the amendment would be to limit access for women who make too much money to qualify for Medicaid but not enough to purchase their insurance on the private market.

“What it means is that women — by and large low-income but working women in Virginia — won’t have access to abortion,” Stewart-Reid said.

Abortion access is, of course, an incredibly important class issue. Of all the women who have abortions in the United States, 42 percent fall below the federal poverty line — partly because low-income women often still struggle to access affordable and reliable contraception. And when women are denied the opportunity to have a legal abortion, that greatly increases their risk of falling into poverty.

And the restrictions that state lawmakers pile on top of women seeking to have an abortion often hit low-income women the hardest. For example, 24-hour waiting periods — which force women to make multiple trips to a clinic — ultimately mean women are paying the costs for the additional transportation, the additional childcare, and the additional lost income during the time off of work. On top of the hundreds of dollars that an abortion procedure can cost out-of-pocket, that quickly adds up to be too much for poor women who are already struggling to pay the bills.

Virginia lawmakers were correct to identify the class dynamics exacerbated by unnecessary restrictions on abortion coverage. Unfortunately for the women in the state, however, their anti-abortion governor is expected to sign the legislation into law.

View the original article here

Effective Marginal Tax Rates for Low-Income Workers Are High

The Congressional Budget Office (CBO) released a report on effective marginal tax rates for low-income workers.[1]

An effective marginal tax rate as defined by the CBO is the change in taxes and change in government benefits associated with increases in income. Because tax rates and government benefits change as income changes, an individual’s effective marginal tax rate can rise and fall drastically as he works more hours.

While much focus in the past two years has been on the top end of the income scale—the “Buffett Rule,” the “1 percent”—the effects of taxation and government benefits are severe among the bottom 1 percent as well. With marginal effective tax rates exceeding 60 percent in many cases, the tax and benefit structure actively discourages earned success.

There are five lessons from the CBO report that policymakers should learn.

Lesson #1: Unintended Consequences Are Important.

The architects of policies such as Section 8 housing or food stamps never intended to create a poverty trap. But as benefits are added up, the combined effect is to steadily devalue earned income.

Chart 1, adapted from the CBO report’s Summary Figure 1, shows the futility of work for a single parent with one child. If he does not work at all, he receives $19,300 in government benefits. If he instead earns a salary of $30,000—which is full-time work at $15 per hour—he has disposable income of $28,000. This means that he is working full-time for only $8,700 per year more than if he did not work at all, making his effective take home wage $4.35 per hour ($8,700/2,000 hours per year). Is it rational to expect someone to work hard for such a low wage?

Lesson #2: Policymakers Should Think Dynamically.

Most government benefits aimed at the poor have “static” justifications. That is, a program to provide health care to the poor is predicated on their current poverty. But it may have important prospective effects. Once the program comes into existence, it changes the costs and benefits of staying in school, working, and even marrying. Some of the worst policies of the 20th century were those that penalized responsible fatherhood, as the Moynihan Report[2] famously addressed in 1965.

Lesson #3: The Main Argument in Favor of the Minimum Wage Is Weak.

Those who favor raising the minimum wage generally appeal to the idea that those working low-paying jobs need to increase their consumption more than others. But the CBO’s research shows that in the relevant income range, the marginal effective tax rate is above 65 percent for the example single parent (Chart 2, adapted from the CBO report’s Figure 2, page 7). Thus, a minimum wage increase of 10 percent would increase the single parent’s take-home pay by less than 4 percent—if he kept his job, which is no sure thing, since increases in the minimum wage hurt the job prospects of such workers.[3]

Meanwhile, the arguments for lowering the minimum wage are strong: Competitive wages employ more people, keep more businesses open, and employ those in greatest need of a job.

Lesson #4: Obamacare Makes the Problem Worse.

The phase-out of “Premium Assistance Credits” significantly raises the marginal effective tax rate for a single parent earning between $22,000 and $62,000 per year (see CBO, Figure 7, page 26). This is an example of a program that raises marginal tax rates without “raising taxes.” The government collects less revenue than before—in fact, it pays out a handsome benefit—but discourages work even more.

Lesson #5: Poverty Is Poorly Measured.

As The Heritage Foundation has argued elsewhere,[4] poverty statistics that measure only earnings are poorly defined. The CBO report shows that even for some of those with no earnings at all, social programs in the U.S. provide enough disposable income to elevate them above the poverty line. The example single parent, when earning nothing at all, receives benefits worth 128 percent of the federal poverty line.

Technical Insights

Beyond the substantive lessons that can be drawn from the report, note four technical insights:

This year is even worse than 2012. With the expiration of the temporary payroll tax cut, marginal tax rates rose 2 percentage points for most earners.The CBO’s calculation of government benefits overstates the benefit. Many government benefits are distributed by means other than cash: health care, housing, and food stamps, for example. While there are good reasons for doing so, economics shows that people would prefer to receive cash. If they chose to spend the cash in exactly the same way, then they would be no worse off. If they made other choices, they would (by revealed preference) be better off. Thus, the benefits of government programs are less than the total spent on behalf of recipients. That means that the real effective marginal tax rates presented here might also be overstated. At the same time, there are non-monetary costs to government programs and ample non-government costs to work, all of which interact with the costs measured by CBO.Income is not the only variable. Tax and benefit policies are extraordinarily complex. The interaction of income, taxes, and benefits can vary by number of children, student status, age, and state, to name a few. Policies can have dynamic effects on choices other than how many hours to work—people may be more (or less) likely to move, marry, or commit crime depending on policies.Composition matters. Not everyone who files a tax return on earnings of $10,000 is similar. The CBO report wisely uses the example of a single parent with one child to avoid compositional fallacies when comparing different income ranges. A single adult earning $20,000 may be more affluent than a married couple with children earning $30,000.

Common Sense from the CBO

The high marginal effective tax rates, and their effects on regular people, have long been noted by economists.[5] In the United Kingdom, experts recognized the poverty trap created by government policy and initiated a major reform of the social welfare system, which will begin taking effect in 2013.[6] Casey Mulligan has contrasted the British simplification of welfare with growing complexity in the United States.[7]

With the tax code ripe for reform, policymakers should remember: Marginal tax rates are dangerously high for some on the lower end of the pay scale.

—Salim Furth, PhD, is Senior Policy Analyst in Macroeconomics in the Center for Data Analysis at The Heritage Foundation.

[5]Harvard professors Jeff Frankel and Jeff Liebman relate one woman’s experience to the economic research on the “poverty trap” created by government policies. See Jeff Frankel, “Effective Marginal Tax Rates on Lower-Income American Workers,” Jeff Frankels Weblog, February 2008, http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2008/02/08/8/ (accessed December 20, 2012).

View the original article here

11 GOP Governors Still Need To Decide Whether Or Not To Deny Health Care To Low-Income Americans

Gov. Scott Walker (R-WI) announced on Wednesday that he will turn down Obamacare’s optional expansion of the Medicaid program, which makes him the thirteenth Republican leader to refuse to extend public health insurance to additional low-income Americans. Six GOP governors — in Arizona, Michigan, New Mexico, North Dakota, Ohio and Nevada — have expressed support for expanding Medicaid, and the rest still need to decide what they want to do about that particular provision of the health reform law.

And even though most GOP leaders claim that expanding Medicaid would be too costly, they’re actually being lobbied by hospital companies, economists, and health care experts who all say the financial benefits — since the federal government will fully fund the first several years of expansion — are too good to turn down:

“It’s fascinating, because on the political level, it’s a classic clash between money and politics,” said Dan Mendelson, CEO of Avalere health advisory company. He said he and his 170 advisers working with the health care industry are hearing plenty about expansion.

“It sets up a really difficult tension between the Republican governors and the hospitals, but there’s an increasing level of political cover being given to the governors to expand their programs,” Mendelson said. [...]

In Florida, a recent poll found that 60% of residents would like to see Medicaid expanded, Mendelson said. Several economic studies have found the states may benefit both by federal funds going into local economies, as well as taxes from those sales going back into the coffers of local government.

The significant federal funds allocated to states that choose to expand Medicaid led the hospital industry to wonder if governors were bluffing about rejecting the expansion. That quickly proved not to be the case, as stubborn GOP politicians in some of the states with the highest rates of uninsurance in the nation still refused to cooperate with the health care reform law.

Diverse coalitions across the country have partnered to pressure resistant lawmakers to expand their Medicaid programs. The growing list of GOP governors who have accepted the optional expansion over the past few weeks seemed to signal that political deadlock may soon give way to reality, but the remaining Republican leaders may buck that trend when they eventually announce their own decisions.

View the original article here

How Dental Coverage Falls Short For Low-Income Americans

Four-year-old Torrie Smith, a little girl in a low-income Colorado household, suffers from devastating dental health issues. Her plight could have been avoided with regular preventative dentist check ups, which would have been free for Torrie under Medicaid — but her mother Wendie didn’t know about the dental health benefits afforded to Torrie under the public insurance program until it was far too late.

Torrie’s issues underscore the considerable gaps in America’s dental health coverage system. Dental insurance remains elusive even for many who have employer-sponsored health coverage — some estimates peg the number of Americans forgoing dental care at over 100 million, with children and the poor being disproportionately affected. That’s particularly bad news considering that dental problems are lifelong problems, and poor dental health early on in life leads to a status quo in which over a quarter of elderly Americans over the age of 65 lose all of their teeth.

And as the Coloradoan reports, even Medicaid beneficiaries face a dearth of coverage due to low reimbursement rates for dentists accepting Medicaid patients:

State Medicaid data reported to the federal government show that less than half of the 453,000 Coloradans under age 21 who were eligible for benefits in federal fiscal year 2011 received some kind of dental service. Only a quarter of Colorado counties met a 2010 state goal of getting at least 44 percent of Medicaid-eligible residents under age 19 to visit a dentist, according to an I-News analysis of state records.

“Dental disease is not self-resolving,” says Diane Brunson, director of public health for the University of Colorado’s School of Dental Medicine. “It’s not like catching a cold and you put up with it for a week or 10 days and you’re fine. You have to get treatment. And it’s so much more beneficial all the way around — to the child, to their family, to taxpayers — if dental problems can be prevented.”

While the state appears to be making strides in improving its numbers, part of the problem is the paucity of dentists willing to see Medicaid children. Only 10 percent of Colorado’s 3,500 or so dentists are considered “significant” Medicaid providers, meaning that they are reimbursed for at least 100 visits per year. Moreover, 20 of Colorado’s 64 counties do not have a dentist who accepts Medicaid.

A large part of the problem has to do with a lack of knowledge regarding essential health care benefits, which leads to the vast majority of Americans not claiming preventative dental care that they are eligible for. “When she came along,” Wendie said of Torrie, “they gave me a (Medicaid) card and said it was for her doctor visits. They didn’t say dental or anything like that.” That’s nothing new when it comes to Americans and their preventative care benefits — only one in five Americans in high-deductible insurance plans know that much of their preventative care is free.

But as the Coloradoan’s article points out, it also has to do with Medicaid’s historically low reimbursements for doctors. Since states share a considerable amount of authority along with the federal government when it comes to determining Medicaid’s budget, the program is often an easy target for budget cuts. But those cuts carry with them a considerable human cost for some of America’s poorest residents. As ThinkProgress has consistently reported, that makes implementing Obamacare’s optional Medicaid expansion a medical imperative for the American poor — but as Torrie’s story shows, educating families about the care that they are eligible for is just as important.

View the original article here

Michigan Governor Supports Extending Medicaid Coverage To Nearly Half A Million Low-Income Residents

Michigan Gov. Rick Snyder (R)

Michigan Gov. Rick Snyder (R) is set to announce his support for Obamacare’s optional expansion of the Medicaid program at a press conference on Wednesday afternoon. The announcement, which comes a day before the governor will address his budget priorities for the upcoming legislative session, will make Snyder the sixth Republican leader to agree to the health law’s Medicaid expansion.

Implementing this aspect of President Obama’s health reform law will be particularly impactful in Michigan, where an estimated 470,000 uninsured residents will gain health coverage. The health policy groups that provided Snyder’s office with research about expanding Medicaid — including the fact that the state could save up to $1 billion over the next decade by accepting the federal funding to increase their Medicaid rolls — are welcoming the governor’s decision:

Snyder’s support for Medicaid expansion “really is a big deal,” said Marianne Udow-Phillips, director of the Ann Arbor-based Center for Healthcare Research & Transformation, which provided research to the governor’s office. CHRT concluded Michigan would save more than $1 billion in the next ten years as the federal government picks up the cost for health care for those who currently are not covered by insurance.

Moreover, most primary care doctors reported to CHRT that they are able to accept new patients who now would have insurance, she said.

“What’s really powerful about this is that the governor did come at this from a very objective, analytical approach,” she said. “He looked at the facts, he pulled research from our center and … lots of people,” Udow-Phillips said. “I don’t want to say we’re surprised, but we’re very pleased that the facts did speak for themselves.”

The state’s Medicaid expansion will still have to be approved by Michigan’s legislature, where conservative opponents of Obamacare could present a roadblock. State-level resistance to health care reform has considerably slowed the implementation of the Affordable Care Act — but, as Snyder joins the growing list of Republican leaders who are conceding that implementing Obamacare makes sense for their constituents, the tide may be about to turn.

View the original article here

Low-Income Black Youth Are More Likely To Consume Calories From Sugary Drinks

Black youth are nearly twice as likely as their white counterparts to take in large quantities of their daily calories from sugary drinks, according to a new study examining American beverage consumption. Low-income children of all racial backgrounds also tend to drink almost twice as many sugary beverages as wealthier Americans do.

Considering the fact that sugar-filled drinks have been conclusively linked to an increased risk for obesity, the study’s results reveal some of the racial and economic disparities within the nation’s obesity epidemic. “Some groups may be more at risk for soda, others may be more at risk for fruit drinks, all of which … have the same sugar base that contributes to obesity and disease,” one of the study’s co-authors, health policy researcher Lisa Powell, explained.

This particular study didn’t try to figure out why that’s the case, although Powell did suggest to Reuters that “cultural norms” and cost could both be factors. But other studies have examined the links between race, class, and nutrition — and research has confirmed that access to healthy food is divided along racial and socioeconomic lines. Even aside from cost barriers, lower-income Americans tend to live in neighborhoods that lack healthy, high-quality food in nearby grocery stores, and they often struggle to access the transportation they need to go grocery shopping. The fast food industry also contributes to nutrition disparities by targeting its marketing to low-income communities.

It’s not clear whether the soda industry is also disproportionately targeting low-income or minority groups, but it wouldn’t be the first beverage sector to try. Alcohol advertising has been proven to particularly target black youth, even despite the fact that African-American teens tend to drink less alcohol than youths from other racial groups.

View the original article here

Effective Marginal Tax Rates for Low-Income Workers Are High

The Congressional Budget Office (CBO) released a report on effective marginal tax rates for low-income workers.[1]

An effective marginal tax rate as defined by the CBO is the change in taxes and change in government benefits associated with increases in income. Because tax rates and government benefits change as income changes, an individual’s effective marginal tax rate can rise and fall drastically as he works more hours.

While much focus in the past two years has been on the top end of the income scale—the “Buffett Rule,” the “1 percent”—the effects of taxation and government benefits are severe among the bottom 1 percent as well. With marginal effective tax rates exceeding 60 percent in many cases, the tax and benefit structure actively discourages earned success.

There are five lessons from the CBO report that policymakers should learn.

Lesson #1: Unintended Consequences Are Important.

The architects of policies such as Section 8 housing or food stamps never intended to create a poverty trap. But as benefits are added up, the combined effect is to steadily devalue earned income.

Chart 1, adapted from the CBO report’s Summary Figure 1, shows the futility of work for a single parent with one child. If he does not work at all, he receives $19,300 in government benefits. If he instead earns a salary of $30,000—which is full-time work at $15 per hour—he has disposable income of $28,000. This means that he is working full-time for only $8,700 per year more than if he did not work at all, making his effective take home wage $4.35 per hour ($8,700/2,000 hours per year). Is it rational to expect someone to work hard for such a low wage?

Lesson #2: Policymakers Should Think Dynamically.

Most government benefits aimed at the poor have “static” justifications. That is, a program to provide health care to the poor is predicated on their current poverty. But it may have important prospective effects. Once the program comes into existence, it changes the costs and benefits of staying in school, working, and even marrying. Some of the worst policies of the 20th century were those that penalized responsible fatherhood, as the Moynihan Report[2] famously addressed in 1965.

Lesson #3: The Main Argument in Favor of the Minimum Wage Is Weak.

Those who favor raising the minimum wage generally appeal to the idea that those working low-paying jobs need to increase their consumption more than others. But the CBO’s research shows that in the relevant income range, the marginal effective tax rate is above 65 percent for the example single parent (Chart 2, adapted from the CBO report’s Figure 2, page 7). Thus, a minimum wage increase of 10 percent would increase the single parent’s take-home pay by less than 4 percent—if he kept his job, which is no sure thing, since increases in the minimum wage hurt the job prospects of such workers.[3]

Meanwhile, the arguments for lowering the minimum wage are strong: Competitive wages employ more people, keep more businesses open, and employ those in greatest need of a job.

Lesson #4: Obamacare Makes the Problem Worse.

The phase-out of “Premium Assistance Credits” significantly raises the marginal effective tax rate for a single parent earning between $22,000 and $62,000 per year (see CBO, Figure 7, page 26). This is an example of a program that raises marginal tax rates without “raising taxes.” The government collects less revenue than before—in fact, it pays out a handsome benefit—but discourages work even more.

Lesson #5: Poverty Is Poorly Measured.

As The Heritage Foundation has argued elsewhere,[4] poverty statistics that measure only earnings are poorly defined. The CBO report shows that even for some of those with no earnings at all, social programs in the U.S. provide enough disposable income to elevate them above the poverty line. The example single parent, when earning nothing at all, receives benefits worth 128 percent of the federal poverty line.

Technical Insights

Beyond the substantive lessons that can be drawn from the report, note four technical insights:

This year is even worse than 2012. With the expiration of the temporary payroll tax cut, marginal tax rates rose 2 percentage points for most earners.The CBO’s calculation of government benefits overstates the benefit. Many government benefits are distributed by means other than cash: health care, housing, and food stamps, for example. While there are good reasons for doing so, economics shows that people would prefer to receive cash. If they chose to spend the cash in exactly the same way, then they would be no worse off. If they made other choices, they would (by revealed preference) be better off. Thus, the benefits of government programs are less than the total spent on behalf of recipients. That means that the real effective marginal tax rates presented here might also be overstated. At the same time, there are non-monetary costs to government programs and ample non-government costs to work, all of which interact with the costs measured by CBO.Income is not the only variable. Tax and benefit policies are extraordinarily complex. The interaction of income, taxes, and benefits can vary by number of children, student status, age, and state, to name a few. Policies can have dynamic effects on choices other than how many hours to work—people may be more (or less) likely to move, marry, or commit crime depending on policies.Composition matters. Not everyone who files a tax return on earnings of $10,000 is similar. The CBO report wisely uses the example of a single parent with one child to avoid compositional fallacies when comparing different income ranges. A single adult earning $20,000 may be more affluent than a married couple with children earning $30,000.

Common Sense from the CBO

The high marginal effective tax rates, and their effects on regular people, have long been noted by economists.[5] In the United Kingdom, experts recognized the poverty trap created by government policy and initiated a major reform of the social welfare system, which will begin taking effect in 2013.[6] Casey Mulligan has contrasted the British simplification of welfare with growing complexity in the United States.[7]

With the tax code ripe for reform, policymakers should remember: Marginal tax rates are dangerously high for some on the lower end of the pay scale.

—Salim Furth, PhD, is Senior Policy Analyst in Macroeconomics in the Center for Data Analysis at The Heritage Foundation.

[5]Harvard professors Jeff Frankel and Jeff Liebman relate one woman’s experience to the economic research on the “poverty trap” created by government policies. See Jeff Frankel, “Effective Marginal Tax Rates on Lower-Income American Workers,” Jeff Frankels Weblog, February 2008, http://content.ksg.harvard.edu/blog/jeff_frankels_weblog/2008/02/08/8/ (accessed December 20, 2012).

View the original article here