Together Since 1968

Opponents of accepting the federal funds available to help Virginia’s working poor get health coverage are not only denying their constituents’ needs, they’re also ignoring nearly 50 years of history by trying to drive a wedge between health coverage and the state budget.

Way back in 1968, Virginia lawmakers accepted federal Medicaid funds for the first time to help some low-income people get health coverage. They did it through the budget, and the program has been in the budget for nearly 50 years.

image

More recently, lawmakers came together to help low-income children through the state’s Family Access to Medical Insurance Security program in 1998 and extended the program to pregnant women through budget action in 2005. In 2000, lawmakers used the budget to fund a new program for people dealing with disabilities, and they’ve allowed more people into the program through the budget nearly every year since.

Last year, lawmakers used the budget to set up a process for covering more Virginians. They created the Medicaid Innovation and Reform Commission, gave its members the authority to close the coverage gap, and appropriated the federal money to help pay for the new health care coverage—not through stand-alone legislation, but through the budget.

While lawmakers bicker about whether Medicaid is a budget issue or not, there are folks across Virginia struggling to put food on the table and fuel in the gas tank.  Even as they manage to tread water, not having health insurance means that when they get sick or hurt they are sunk.

Lawmakers have an opportunity to come together to help more working Virginians get the care they need to stay healthy and productive. Medicaid and the state budget have been going strong for nearly 50 years, and there’s no good reason to split them up now.

—Massey Whorley, Senior Policy Analyst

Marketplace Virginia Could Reduce Health Coverage ‘Churn’

UPDATED: April 8, 2014 5:25 pm

As Virginia lawmakers head back to the health care negotiating table, they have one more reason to support ideas like the Senate’s bipartisan Marketplace Virginia proposal. New research shows how using private-sector options to close the coverage gap — like the one being debated in Virginia — can be a key part of a solution to one of the biggest challenges in health insurance: abrupt changes in coverage known as “churning.”

Churning happens when a family’s income changes enough that their access to health coverage changes, too. Get a pay raise and you might no longer qualify for Medicaid. Lose some hours and there goes your tax credit to help pay for private health insurance in the federal marketplace. The result is you bounce – or churn – from one insurance carrier to another.

These transitions can cause long gaps in coverage and disrupt continuous health care. Changes in coverage can force families to find new health care providers or change their current treatments based on what different insurance policies cover. These can be jarring disruptions that hurt families and weaken our health care system. This is a real problem, especially for people stuck in the coverage gap.

And states like Virginia suffer even more from this problem. The study found that states with less poverty have more churning because  more of their residents hover right around the eligibility cutoffs for Medicaid or private health insurance tax credits and subsidies, rather than firmly below. 

Using federal funds to help people afford private health insurance coverage could be done in ways that would reduce these problems for families.

If people could remain covered in private health plans regardless of whether their coverage came via a tax credit in the federal marketplace or a Marketplace Virginia-type approach, churning could be reduced.

Ideas like Marketplace Virginia can reduce churning by up to two-thirds, especially in states with less generous Medicaid programs, previous research has shown. And  only a handful of states make it harder to get Medicaid coverage than Virginia. 

Ideas like this also save Virginia money, close the coverage gap, leverage the private sector, and reduce churn. The House now needs to get on board, and quickly. Otherwise, Virginians stuck in the coverage gap will be left to churn in the wind.

—Mitchell Cole, Research Assistant

On the Money

As House lawmakers continue to resist closing a yawning health coverage gap in Virginia, evidence is mounting that the cost concerns they cite are unjustified.

New data coming in confirms that it would be cheaper to expand Medicaid than many thought.

That’s because the people gaining coverage are healthier — and therefore cheaper to insure — than current, non-disabled Medicaid enrollees. They are less likely to suffer from a number of chronic physical conditions, and they show fewer signs of mental illness. That is true even though they are actually older on average than current enrollees.

Back in January, the state’s Medicaid office took its own look at what expanding Medicaid was costing other states. It found that closing the coverage gap would cost significantly less over the next eight years than had been previously estimated. This, combined with higher-than-expected savings from reduced indigent care costs, meant that Virginia would be able to save $600 million and cover 400,000 uninsured Virginians at the same time.   

Many lawmakers have doubted those numbers, but the real-world experience shows that the Medicaid office was on the right track. So when the state assumes a small share of the cost of providing this coverage after 2016, it will be much less than previously expected.

But just because the new Medicaid enrollees are in better health doesn’t mean closing the coverage gap in Virginia is any less pressing. Many of the newly eligible do need help managing chronic conditions. Even more would greatly benefit from routine checkups and preventive care, before conditions become chronic and disabling — and more costly.

These latest findings add to a growing body of evidence that expanding Medicaid costs less than some feared — and that opponents of expansion are running out of excuses.   

—Mitchell Cole, Research Assistant

Hybrid Pressures

Among the many problems with the 2013 compromise transportation law is that it failed to minimize the harm done to low-income Virginians when raising the state sales tax. Yes, raising taxes does affect everyone who pays those taxes, but the sales tax isn’t based on anyone’s actual ability to pay and lower-income people spend more of their total income on necessities, so the increase  hit them  harder than high-income people.

Once the law is fully phased-in, the very lowest-income households in the state, who earn less than $21,000, will pay six times more of their income in the new taxes for transportation than people with incomes in the top 1 percent, who earn more than $509,000. And for low-income families in Northern Virginia and Hampton Roads, where the tax hikes were larger, the impact will be even more severe.

Instead of fixing that problem, though, legislators took up the cause of 75,000 hybrid-vehicle drivers in the state. That’s less than 1 percent of the vehicles on the road. Ten bills were filed this session to repeal the additional $64 fee assessed on hybrid drivers as part of the transportation funding package. The particular bill that was signed by the governor, HB975, will go into effect July 1, 2015.

While there are good reasons why this tax was misguided in the first place, the reality is that repealing it will reduce revenues for transportation by nearly $7 million next year. And the state will refund another $2.2 million in hybrid taxes already paid this year.

Instead, lawmakers could have relieved some of the pressure on low-income working families across the state by making the state’s earned income credit (EIC) refundable, meaning that if the credit exceeds what the household owes in income taxes, they could get the difference in the form of a refund.. Lawmakers even had a bill to do it. HB1151 would have reduced the disproportionate impact of sales and excise taxes on low-income families.

To help hammer home the difference this change could have made for families, we built an online calculator that allows folks to estimate how Virginia’s current EIC helps households, and more importantly, how making it refundable would bring bigger benefits.

Hybrid drivers won a repeal of a tax they deemed unfair. That’s fair enough. Low-income Virginians deserve the same consideration.

—Sara Okos, Policy Director

Against the Odds

There’s good news about Virginia’s health insurance marketplace this week: It has already exceeded its enrollment target for this year, signing up nearly 103,000 people. The credit for this success belongs to Virginia’s hard-working, under-resourced navigators and application counselors, not the state, which forfeited millions of dollars in federal funding for consumer assistance.

Virginia only has a handful of navigators – less than 20 for the 624,000 consumers eligible to buy insurance in the marketplace. They are funded through a federal grant of $1.8 million to help walk consumers through their options in the federal marketplace.

While that may seem like a lot of money, it’s miniscule compared to what other states have received. And it’s not even close to what Virginia had the chance to get.

That’s because Virginia lawmakers made a critical mistake when they refused to pull in the additional resources available to states that take an active role in consumer assistance. That decision, motivated by the desire of some lawmakers to see health care reform fail, severely limited the resources available to help connect consumers with coverage.  

Virginia could have had 10, perhaps even 20, times as much funding had the state been more engaged. For example, Virginia got $3 per consumer eligible to buy insurance in the marketplace, while Arkansas, which agreed to actively help, received $63 per consumer.

It’s amazing that the navigators and application counselors have helped so many people with so little, but just think about what could have been if Virginia lawmakers had put their constituents ahead of partisan politics.

—Massey Whorley, Senior Policy Analyst

Head Scratcher

Think members of the House of Delegates are hesitant to accept federal funds to pay for health care and save the state money? Think again.

House leadership has been resolute in their position that Virginia should not accept the billions of federal dollars available to help nearly 400,000 low-income Virginians afford health insurance. They claim that’s because the federal government can’t be trusted to keep up its end of the bargain.

Yet, the House seems perfectly happy to use federal funds in other health programs. Take for example their recent actions on the state budget.

Instead of closing the coverage gap, the House claims they bolstered the safety net by restoring cuts outgoing Governor McDonnell made to Medicaid payment rates for hospitals.

How’d they do that? By using $36.3 million in federal funds, along with $35.3 million in state general funds.

The House also took steps to fund services for low-income pregnant women and young children in a way that saves the state $400,000.

How’d they do that? By using $1.2 million in federal funds instead of state funds.

These approaches are EXACTLY the same as what the state could do if it closes the coverage gap. Virginia lawmakers could accept the federal funds to cover low-income Virginians and generate savings from programs that currently help them get care through the safety net.

Given all the rhetoric, you’d think House leaders wouldn’t dare use federal funds for health care or anything for that matter.

—Massey Whorley, Senior Policy Analyst

It’s Been in the Budget Before

Extending health insurance to more Virginians belongs in the state budget. In fact, despite what opponents of closing the health care coverage gap lead you to believe, extending health insurance to more Virginians has been a budget issue for the last three years.

Governor McDonnell made extending health insurance to more uninsured Virginians a budget issue in late 2011. He laid out a plan that would have allowed nearly 400,000 uninsured Virginians to get coverage with his proposed 2012-2014 budget.

Then, in 2012, the General Assembly eventually passed a budget that included the federal funding allocated to cover uninsured Virginians with incomes below 138 percent of the federal poverty line.

Following the Supreme Court decision in 2012, state lawmakers spent the 2013 session taking more budget actions on this critical issue. Governor McDonnell backtracked on his previous budget and moved to eliminate the program that would cover more of Virginia’s working poor. The General Assembly settled on a compromise, which was also detailed in the budget. Specifically, the compromise created the Medicaid Innovation and Reform Commission and gave its members the authority to close the coverage gap.

As the debate continues in 2014 on how to close the coverage gap, the backdrop continues to be the state budget.

In fact, there is no reason to think that the issue would be separate from the budget given the history and the need to bring Virginia’s federal tax dollars back to fund the program. Getting federal funds to help low-income workers pay for their health insurance is exactly like getting federal funds the state uses to fund education, transportation, and public safety.

You know where those issues play out? That’s right, the budget.

—Massey Whorley, Senior Policy Analyst

Following the Call

Military families around the commonwealth are holding their breath as unemployment legislation from the Senate (SB18) makes its way through the House of Delegates this week.  Here’s why.

Right now, 45 states provide unemployment benefits to the spouses of our men and women in uniform when their families are uprooted because of reassignments.

Virginia isn’t one of them. SB 18 would fix that.

Our military families have few options when Uncle Sam moves them around the state or the country and they lose a second income. They have to follow orders, even if that means sacrificing a spouse’s job.

But that’s hard when a household relies on two incomes. Virginia’s lawmakers can step in to help these uprooted families, by allowing military spouses to receive unemployment benefits while they transition between jobs.

This would soften the blow for military families and help them get back on their feet after they get reassigned.

On average, recipients of unemployment benefits get $297 a week to help them make ends meet. That can keep a family afloat during a rough transition. And it can give military spouses a little bit of time to find a job that best makes use of their skills.

What would it cost?

Not much. Virginia’s employers would see an average increase of $0.40 per employee in their contributions to the state unemployment insurance fund over the next couple of years. Forty cents. And that doesn’t take into account the local economic benefits of helping military families make ends meet. Keeping those families in the black will help stimulate local economies, creating jobs and helping local businesses. 

Virginia has the third-largest military population of any state. SB 18 gives lawmakers  the chance to help a lot of the families that have made such large sacrifices — and to make Virginia the military friendly state it aims to be. The Senate passed this much-needed change last week. It’s time for the House to do the same.

—Mitchell Cole, Research Assistant

 

Lights. Camera. Boondoggle.

How you spend your money reveals what your priorities are. By that measure, Virginia lawmakers would rather help Hollywood movie moguls make a profit than help low-wage working families make ends meets.

A bill passed by the House of Delegates (HB460) and set to be considered by the Senate Finance committee would raise the maximum dollar amount allowed under Virginia’s motion picture tax credit to $12.5 million per year, which amounts to up to $25 million across the state’s two-year budget.

That’s a 400 percent increase.

Currently the credit is limited to $5 million over two years. That’s money that gets drained from the general fund instead of being used for crucial  services like schools, health care, and public safety that boost our overall economy, not just a sliver of it.

No one denies that creating and retaining high-quality jobs is vital to the economic future of the commonwealth. But the idea that dishing out more Hollywood handouts will lead to more stable employment in the commonwealth is pure fiction made for the movies.

The most rigorous studies show that motion picture tax credits aren’t effective generators of economic development. The jobs that they create are temporary and low-paying. In the movie biz, most highly paid, highly skilled workers are brought in from other regions, while low-skilled workers are the ones hired locally and  take home only a fraction of the total wages associated with a project. Because the film industry is highly mobile, those jobs don’t last after a movie wraps.

Given the commonwealth’s central role in the history of our country and our proximity to the nation’s capital, there’s a good chance that many of the movies that will reap these extra benefits would have been filmed here without the bigger handouts. In fact, when the makers of “Evan Almighty” came to Virginia in 2007, they weren’t lured here by the tax credit, according to the head of Virginia’s film office: “No one thought to ask about state incentives until after production began,” she told the Richmond Times Dispatch.

Needlessly giving away tax revenue is bad enough, but when you contrast this victory for Hollywood with the defeat of a bill that would help hard-working Virginians make ends meet for the long haul, it gets even worse. HB1151 would have beefed up Virginia’s earned-income credit (EIC) for working families. It may not have the star quality of a blockbuster script, but the EIC offers real help to real people.

Right now the EIC acts as a temporary support to help low- and moderate-income families reduce the Virginia income taxes they owe. But it can do more to help these families.

Low-income workers in Virginia pay more in state and local taxes as a share of their income than high-income Virginians. HB1151 would have addressed this imbalance by making the EIC refundable, a feature that the motion picture production tax credit already enjoys. As a refundable credit, workers who qualify for the EIC would get a tax refund if their credit is greater than the income tax they owe, just as movie studios get a check from the state if their credit exceeds their state taxes.

But unlike the movie credits, tax credits for working families are proven to produce positive outcomes. They help families climb out of debt, buy necessities, pay their bills on time, and build savings and assets that help keep them from falling behind later. They provide a stepping-stone that helps families get out of poverty and get ahead. 

But  it looks like Virginia lawmakers would rather use precious resources to give movie moguls a Hollywood ending, while an important measure to help low-wage working families in Virginia gets cut out of the script.

—Sara Okos, Policy Director

Bad Math

The refusal by House budget writers to close the coverage gap in Virginia takes their disregard for Virginia’s needs to new heights. Their proposal would turn down billions of federal dollars that could help Virginia and leave thousands of their own constituents without much-needed health care coverage. Instead, they are offering a paltry consolation prize to hospitals and other safety net providers that is both stunningly inadequate and squanders scarce state funds.

Taken at face value, the House scheme allocates $86.9 million to the safety net, with $50.6 million of that coming from state funds and the rest from federal funds. Most of that money restores a previous cut to hospital reimbursement rates and tries to catch up with the cost of inflation. Back that out as something the state already should have been paying for, and all you get is $6 million in “new” money.

Even including all the funding, the House scheme doesn’t come anywhere close to the investment legislators could be making by accepting the $2.9 billion in federal funds over the next two years already allocated for the state to close the coverage gap.

image

No one should be fooled by this. The House budget writers are refusing to help more working Virginians get medical care; they are declining a massive influx of federal dollars that would both pay for health coverage and relieve other state budget pressures; and they are squandering hundreds of millions of Virginia taxpayer dollars each year in lost budget savings and unnecessary costs.

That’s both bad math and a bad deal for Virginia.

—Massey Whorley, Senior Policy Analyst