Health care reform can cross the finish line

I returned from Families USA’s Health Action 2010 conference a few weeks ago with a great deal of hope, optimism and energy about the outcome of the health reform effort.

It was invigorating and uplifting to see the enthusiasm and commitment of folks in DC to get the job done, from advocates to senators and representatives to the president.

While the Massachusetts election did place a damper on the previously expected process for completion, it did not change the need for health care reform for millions of Americans.

It did not alter the fact that:

  • the United States is the only industrialized nation that does not provide health care as a basic human right, and so we have more that 46 million Americans without any coverage, and one unnecessary death every 30 minutes;
  • thousands of people continue to lose their coverage every day as many lose their jobs or get priced out of coverage;
  • limits are needed on the amount that families spend on health care costs to stop the dramatic increases in medical-related bankruptcies;
  • insurance companies deny coverage due to health conditions (pre-existing conditions) to those who need it most;
  • insurance companies terminate coverage at the time people need it most – when they get sick; and
  • small businesses need relief to make health care coverage more affordable to their employees.

All of these key issues are included in the bills that passed the House and the Senate. While neither bill is perfect (what bill is?) either one could provide a platform to build on to improve access, coverage and cost for all Americans.

These bills are designed to make coverage more extensive, but less expensive, and stop insurance company abuses, which fill their coffers while denying needed care to people. In addition, President Obama has just released his detailed proposal in preparation for the health care summit on Thursday.

Comprehensive health reform is needed now to stop the tide of increasing numbers of uninsured, sky rocketing premium costs (for individuals and business), and to regulate bad insurance company practices.

In a recent New York Times article, Nicholas Kristof asserts we cannot, based on the evidence, afford not to reform health care. A Michigan perspective is provided by Families USA in their recent release The Cost of Doing Nothing. If you are not convinced yet, check out the Michigan page in a recent Robert Wood Johnson Foundation report.

If necessary, there is a process, reconciliation, which could be reasonably used to get health care reform over the finish line. After more than 100 years of failed attempts, it seems about time. (For a brief history of U.S. health care reform efforts check out the January/February Consumer Connection on the League’s website.)

The reconciliation process can be used for limited purposes, but one of the major purposes is deficit reduction, and the Congressional Budget Office has determined that both the House- and Senate-passed bills would reduce the deficit over time. It also requires a simple majority vote for passage.

If the House passed the Senate bill, reconciliation could then be used to resolve major points of difference between the original passed bills. Using the reconciliation process has been maligned by some, but let’s recall that over the past decade, it has been used repeatedly.

While the intent of the reconciliation process is to pass legislation that reduces the federal deficit, the Bush Administration used that process to enact both the 2001 and 2003 tax cuts, which certainly did not in any way reduce the federal deficit. It is also worth noting that the welfare reform legislation in 1996 was passed as a reconciliation act (the Personal Responsibility and Work Opportunity Reconciliation Act), as was the creation of the State Children’s Health Insurance Program (SCHIP) in 1997.

As the debate continues, I hope that the media and our congressional representatives can restrain themselves from promoting the kind of misinformation and fear-mongering that was used during the summer to confuse and scare people (remember so-called “death panels,” inappropriate accusations of federal take-over of the health care system by some who are secure in their government-run Medicare, erroneous threats that individuals would go to jail if they did not purchase insurance, and on and on).

If members of Congress cannot support the legislation, I hope they would at least be honest about what’s in it. Let them explain to their constituents why they do not want them to have guaranteed health care coverage, not dependent on a job that offers coverage; protection from high rates or denial of coverage if they have pre-existing conditions; protection from sky rocketing cost increases; and dramatic reductions in medical bankruptcies.

Hopefully the president’s health reform summit Thursday will revive the momentum to get comprehensive reform done. In the meantime, call or write to your senators and representatives, and tell them to get comprehensive health reform over the finish line! If you could use a health care reform morale boost, check out the Health Action 2010 conference sessions.

Now let’s get moving!

— Jan Hudson

Working poor tax cuts should be part of debate

Congress will be debating soon whether to extend the controversial tax cut packages passed in 2001 and 2003.

These tax cuts are widely blamed for the deficit that President Obama inherited when he took office last year and are seen as one of the principal causes of the current deficit. Equally controversial to the hole in the federal budget they created was the fact that most of the tax cuts were aimed at affluent Americans.

One provision in this package, however, has benefited many families who are lower on the income scale: the provision making the child tax credit partially refundable to families making over $10,000 (meaning that these families can receive a partial credit even if the credit amount exceeds the amount they owe in tax).

The child tax credit, which gives families a $1,000 credit per child up to two children and a partial credit for additional children, has seen two other improvements since then. The first improvement was in 2008, when the income eligibility threshold was lowered to $8,500 for that tax year. Then, in 2009, the Recovery Act lowered the threshold to $3,000, making the credit available to many very poor families who would have otherwise been ineligible.

As a result of the 2009 change, a family with two children is now able to receive the full credit when its earnings reach $16,333 (as opposed to $21,993 in 2008 and $23,333 in 2001).

A report by the Center on Budget and Policy Priorities estimates that families of 584,000 children in Michigan would lose all or part of their child tax credit if Congress renews the Bush tax cuts without extending the 2001 and 2009 child tax credit improvements. Nationally, families with incomes above $10,000 would bear 80 percent of the tax credit losses.

It would be unfair to extend tax credits for the wealthy without also extending one that benefits the poor. Not only that, it would be irrational in light of the current economic situation. Like the earned income tax credit, the child tax credit given to low-income working families tends to get spent in local businesses and thus act as a stimulus to local economies. The child tax credit expansion was included in the Recovery Act because it is one of the fastest ways to get additional money flowing through communities, helping to save and create jobs.

Fortunately, the 2001 and 2009 improvements to the child tax credit are in the budget set out by President Obama and in legislation introduced by Senate Finance Committee chairman Max Baucus. However, as we have painfully seen many times in recent years, the sausage-making that goes on as a bill winds its way through committees, debates, floor votes, and conferencing can often result in certain elements of the bill getting dropped.

We need to make sure Congress does not short-change low-income workers as it passes its budgets for the upcoming fiscal year, and the Michigan League for Human Services will keep you informed if any mischief occurs with this credit.

— Peter Ruark

Getting the Right Start in Detroit

Last week neighborhoods within the city of Detroit were able to get a snapshot of maternal and infant health in their community through the report Right Start in Detroit from a new information source called Data Driven Detroit, a data clearinghouse for the city’s neighborhoods.

The report highlighted some dramatic differences among the 39 areas identified in the report.  For example, just under half the mothers of newborns in Conner had received adequate prenatal care compared with almost three-quarters in Rosedale Park. It’s important for community and city decision makers to examine the probable causes behind these numbers and develop appropriate responses to improve the situation.

The circumstances in which a child is born shape not only the early years but often have lifelong consequences. If Detroit and its communities want to have a healthier, better-educated workforce, efforts must begin at the beginning to improve the lives of infants and their mothers.

We hope to see the Right Start in Detroit, produced in collaboration with the Detroit Health Department, become a regular feature tracking outcomes for Detroit infants and their mothers, allowing communities to assess the impact of changes in policy and programs, as well as in the social and economic environment. These data provide a critical tool for neighborhood advocates and city leaders.

— Jane Zehnder-Merrell

Recovery Act’s big impact

Picture a large tanker headed to the shoals. It’s about to hit ground with deadly force, but just before the disastrous end, just barely in the nick of time, it starts to turn. It’s slow — it’s a big doggone boat after all — but it turns and begins to slowly head back to the ocean.

It’s easy to forget but the U.S. economy was headed to the shoals in late 2008. People talked about pulling their funds from their bank accounts. It was money-under-the mattress and cash-buried-in-the-yard-in-a-tin-can times and the specter of runs on the banks felt real.  My book club read The Grapes of Wrath and it no longer seemed like a long-ago story.

The American Recovery and Reinvestment Act, signed by President Obama a year ago today, was the muscle that began to turn that tanker.

It’s slow and frustrating. But there’s plenty of evidence that the economy has tortuously turned and the ARRA gets credit. The nonpartisan Congressional Budget Office estimates that the economy would have shed an additional 2.4 million jobs if not for ARRA.

For those of us in hard-hit Michigan, ARRA has been a lifeline. The Washington D.C.-based Center on Budget and Policy Priorities estimates these direct benefits to individuals in Michigan:

  • A boost in the Food Assistance Program, adding $317 million to the state’s economy;
  • A $25 per week increase in unemployment benefits, injecting $514 million;
  • Additional weeks of unemployment benefits through the Extended Unemployment, a $1.7 billion addition;
  • A one-time $250 payment for Social Security and SSI recipients (and some others) for $471 million in benefits; and
  • The Making Work Pay tax credit, a $1.4 billion increase to families in Michigan.

In addition to dollars flowing to individuals, the Michigan Department of Transportation reported that more than 750 road projects are completed or under way with ARRA money. The federal Recovery Act website reports that $6.5 billion has been paid out in various grants and contracts in Michigan so far. In all, ARRA is expected to send more than $15 billion to Michigan.

It’s frightening to imagine where Michigan would be today without it.

Michigan’s aging sales tax needs a makeover

Michigan continues to struggle year after year with budget deficits that have resulted in cuts to K-12 schools and the elimination of many vital programs. One way to stop making such drastic cuts is to revisit extending the sales tax to more services as Gov. Jennifer Granholm proposed today.

A majority of states have taken steps to raise revenue during this recession to help avoid the very cuts Michigan has made. While we did raise the income tax, temporarily, it’s time for us to consider a permanent solution.  The cuts-only approach has failed time and time again to close the ongoing budget gap as needs increase, as we note in a new League paper on sales tax on services.

As consumer spending habits change, the sales tax has failed to keep pace. Michigan, unlike many other states, taxes just 26 services, or less than 20 percent of all services that could be taxed, according to the Federation of Tax Administrators. However, spending on non-taxable services, such as entertainment and spa services, accounts for over half of all consumer spending. Failing to tax these services means the state forgoes billions of dollars in potential revenue each year.

The Michigan Department of Treasury estimates that taxing all service transactions at the current sales tax rate of 6 percent would yield over $10 billion annually. If all business-to-business, nonprofit and medical services transactions were excluded from taxation, the potential annual yield of a sales tax on services would be approximately $1.65 billion.

In addition to increasing revenue, placing a sales tax on services is a more equitable way of taxing consumption. According to a 2007 study by the Institute on Taxation and Economic Policy, Michigan families with the lowest incomes (less than $15,000/year) devote more than 7 percent of their income to sales taxes while the top 1 percent of Michigan families (income of $365,000/year or more) spend just 1 percent of their income on sales taxes.

Much of this is due not only to the fact that lower-income families spend a higher percentage of their disposable income on goods such as clothing, but because Michigan also taxes goods everyone uses, such as gas and electricity, but not luxury items such as pet grooming.

Previous attempts to expand the sales tax to more services have failed, due in part to haphazardly selecting what services would and would not be taxed. However, recent polling shows public support growing as Michigan residents begin to see the impact that declining revenue is having on their children’s education and their local police and fire departments.

Expanding the sales tax to services is only one part of the revenue solution. Instituting a graduated income tax and taking a closer look at closing business tax loopholes are just two of many other options that can be explored to help Michigan remain viable.

— Jacqui Broughton

What are people to do?

With the devastating cuts in the FY2010 Department of Community Health budget, I’m wondering, what are people to do?

What are Medicaid recipients, who can’t find a doctor or other provider because of the 8 percent cut in Medicaid payments, supposed to do? What are pregnant Medicaid recipients supposed to do when they need dental care to try to give their babies a healthy start, but find that Medicaid adult dental benefits are eliminated?

What are adult Medicaid diabetics who need routine eye and foot care  to successfully manage their disease supposed to do, as those benefits are eliminated? (See the results here but a warning — these pictures of untreated conditions are graphic.)

What are families in crisis due to unemployment or home foreclosure supposed to do when public mental health services are reduced by $40 million, so services are not available? What are local health departments supposed to do when H1N1 or other critical public health issues are raging in their communities, but their funding is cut?

I have heard no policymaker provide solutions to the dilemmas caused for Medicaid recipients and other low-income residents as critical public services provided by the Department of Community Health are reduced or eliminated.

I have heard how some people are coping – one woman, with a dental infection, was told by an urgent care facility to be careful not to contract a cold or flu at this time of year, while she waits three months for an appointment at a free dental clinic to treat her infected tooth. Hopefully, she won’t be hospitalized with something more serious before her appointment. I’m sure there are hundreds, if not thousands, of others in similar circumstances.

A recent NY Times article reported the results of a poll on the trauma of being unemployed. Almost half of the respondents reported suffering from anxiety or depression, with a quarter of them seeking help from a mental health professional.

With the cut in mental health funding, it is questionable whether services will be available in Michigan, the state with highest unemployment rate in the country, to help these residents deal with their financial stress and emotional issues related to being unemployed.

If reliance on the hospital emergency room is the option that policymakers would provide, then these program cuts, rather than “saving” state dollars, will in fact cost more. If the solution is not to seek treatment, that’s inhumane.

As a nonprofit focusing on human services, the League is very concerned about the options available to low-income families and individuals to deal with what, in every other industrialized nation, is a basic right.

We believe the federally defined optional services must be restored, and there are many options available to policymakers to provide the needed revenues to restore these services.

A few examples are available in our Facts Matter publication.

As I ponder this, I am also thinking about the release of the FY2011 Executive Budget Thursday. Will it provide public policy solutions, or simply more budget cuts?
— Jan Hudson

Unemployment extension critical

Michigan has much to lose if Congress does not act quickly to renew the unemployment insurance (UI) extensions in last year’s economic stimulus bill.

It is not just because Michigan has led the country in the unemployment rate for 33 out of the past 36 months.

In December, Michigan and the nation entered the 24th month since the beginning of the 2007 recession. As this chart shows,  this marks the first time Michigan had a higher unemployment rate during the current recession (14.6 percent) than it did during the same month relative to the 1981 recession (14.2 percent in July 1983).

The early 1980s are well known as Michigan’s toughest times, as unemployment topped 16 percent several months in a row.  However, during the 24th month of the 1981 recession, the unemployment rate was on a slow but consistent downward slope, while the unemployment rate in recent months has barely dropped at all.

Because many workers have been unemployed for a very long time despite faithfully looking for work, unemployment insurance has been a crucial safety net. Many long-term unemployed workers have exhausted their regular benefits, and are only continuing to receive unemployment insurance because of the extensions in the American Recovery and Reinvestment Act.

Those extensions, however, will expire at the end of February. Without congressional reauthorization, unemployed workers who have not used up all their weeks of unemployment insurance will lose those unused weeks and will be left without any UI at all.

New numbers released last week from the National Employment Law Project  show that without Congressional action, nearly 62,000 jobless Michigan workers will become ineligible for federal unemployment benefits in March. By June, this number will swell to more than 225,700 unemployed Michigan workers. Congress must renew the extensions before Friday to continue the benefits without interruption.

Remember that the UI safety net not only helps unemployed workers and their families avert crisis, but is good for the state and local economies as well. When workers spend their unemployment checks on necessities such as food, clothing and household needs, it helps to keep local businesses thriving.

The Congressional Budget Office estimates that UI benefits generate up to $1.90 in GDP per every dollar spent, making the UI provisions a very effective economic stimulus.

Michigan cannot afford for Congress to let this lapse. Fortunately, the Senate leadership is hoping to get the bill to the floor this week, have an expedited debate, and pass it in enough time to get it over the House of Representative so that both Chambers of Congress can pass it before they recess on February 12.

Both of Michigan’s U.S. Senators are helping push this effort. This will ensure that the state unemployment offices keep the programs up and running without any interruption in benefits to workers.

— Peter Ruark

‘Reform’ in eye of beholder

At the end of each year, many lists are released — from top stories of the year to best pictures of the year to most overused words of the year.  I would like to nominate the word “reform” for that last list.

“Reform” seems to have become the magic word in Lansing. If you want support for a proposal, call it a reform. If you are putting out an agenda, call it a list of reforms. Why? Because polls and focus groups have shown that the word “reform” resonates well with the public.

I thought I knew what a reform was, but because it seems to be used in so many different ways these days, I thought I’d better check. According to Dictionary.com, a reform is “the improvement or amendment of what is wrong, corrupt, unsatisfactory.” So I guess a reform really depends on your perspective—whether something is wrong, corrupt or unsatisfactory in the first place.

I suppose if you think the state provides too many services to its residents, then you would consider it a reform to eliminate some of those services. But on the other hand, if you think the state needs to do more to help vulnerable families, it would be a reform to provide increased and improved services.

If you believe that people who make more money should pay a higher percentage of taxes, you would find a graduated income tax to be a reform. But if you believe lower taxes for businesses is more of a priority than tax relief for families, then you would support business tax reform.

Maybe you are in the camp that sees police officers and firefighters as being overpaid and think a mandated across-the-board pay cut is an appropriate reform. Or perhaps you see the need for greater investment in our communities and would support a reform that increases that investment.

I think you get the point. There are a lot of plans and lists floating around Lansing right now under the banner of “reforms.” They might only be a reform in the eye of the beholder, however. It’s important to take a close look and decide if they meet your definition of reform.

–Karen Holcomb-Merrill

State of the State: Devil’s in the details

The devil is always in the details. Last night’s State of the State address laid out a vision for Michigan’s transformation, but very few details as to how to pay for the initiatives needed to move Michigan forward. We’ll have to wait for next Thursday’s budget presentation to learn how the  governor’s vision becomes reality.

In the meantime, a few things are worth noting about last night’s speech. The governor pointed to three things essential for Michigan’s transition: diversifying our economy, educating our people and protecting citizens along the way.

The latter—ensuring a strong safety net—received no attention whatsoever in the governor’s remarks. No mention of restoring last year’s Medicaid cuts, no mention of shoring up the state’s cash or emergency assistance programs, no mention of the need to pass unemployment insurance reforms that will help unemployed workers and garner $139 million in federal American Recovery and Reinvestment Act funds.

The governor also reiterated her plan, released last week, to prod approximately 7,000 state employees to retire and replace only two-thirds of these experienced workers.

This proposal is being made despite the fact that state employment, as Treasurer Bob Kleine points out in today’s Lansing State Journal, is already at its lowest level since the 1970s.

Michigan has 11,000 fewer employees than a decade ago—a reduction of 17 percent. Michigan now ranks near the bottom in national rankings of state and local employees in relation to population.

State government has already borne the brunt of two waves of early retirement.  Experience and institutional memory went out the door and most departments of state government have been hindered since in their ability to deliver services, and at the same time ensure accountability.  The governor’s proposal will only exacerbate this already difficult situation.

A new income tax credit intended to improve access to capital for small businesses is also troublesome, not because entrepreneurs don’t need venture capital to expand and create new jobs, but because the state lacks the revenue to pay for new tax credits.

One bright spot in the governor’s address is the announcement that the state, by the end of the year, will open 10 learning labs in the Detroit area to help workers who need to strengthen their basic literacy skills in order to succeed in education or technical training.

The learning labs will help these adult learners improve their reading, teach them English or help them get a high school diploma. Michigan has an enormous problem that must be tackled—fully one in three working-age adults read below a sixth-grade level.  This impediment precludes these adults from participating in federally funded job-training programs and also relegates them to noncredit remedial classes before they can enroll in classes that actually lead to jobs.

Having digested what the governor referenced in last night’s address, we’re now anxious for the details.  Hopefully we’ll hear about new revenues that will stem the tide of further cuts and make it possible for Michigan to finally begin to invest in its citizens and their communities.

— Sharon Parks