Takeaways from U.S. Senate health care proposal: 22 million more uninsured, higher costs for many

On June 22, Republicans in the U.S. Senate revealed their Better Care Reconciliation Act (BCRA) proposal to “repeal and replace” the Affordable Care Act (ACA), also known as Obamacare. This bill also includes dramatic cuts to health care for seniors, people with disabilities, children and others through Medicaid, as well as $563 billion in tax cuts, primarily for wealthy Americans and the medical industry. Last week the nonpartisan Congressional Budget Office (CBO) released an analysis of the bill, which estimated that if it became law, millions more Americans would live without health insurance by 2026.

Here are a few key findings from the analysis:

  1. The BCRA will mean 22 million more people would lack health insurance by 2026 relative to current law. This means in 2026, 49 million people in the United States will be uninsured, reversing the historic gains in health care coverage made since the passage of the Affordable Care Act.
  2. Medicaid, which provides health insurance to low-income families and children, the elderly, and people living with disabilities, would be cut by $772 billion over the next 10 years. As a result, 15 million fewer people would have health insurance through Medicaid, that they count on to see the doctor when they have the flu, to help manage their diabetes, or when they’re older and need long-term nursing home care.
  3. The cost of health insurance through the individual market would increase substantially for many, especially for older Americans. Under current law, a 64-year-old with an annual income of $56,800 faces an annual premium of $6,800 for a typical health insurance plan. Under BCRA, that premium would be over three times as much, and would take up more than one-third of their income.

The U.S. Senate is expected to vote on this bill after the July 4th recess. While negotiations will be ongoing and minor details could change, the Senate’s proposal would be extremely harmful for millions of Americans. U.S. Senators should reject this bill and instead come up with a plan that builds on the successes of the ACA by further increasing the number of people with quality health insurance and lowering health care costs for all Americans.

-Clark Biegler

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We’re hiring for a fall research internship

The Minnesota Budget Project seeks a research intern who will make a significant contribution to our work on state immigration policy and economic trends affecting immigrants in Minnesota. This intern will conduct research and work with Minnesota Budget Project staff to produce analytic materials. The ideal candidate will have strong quantitative, qualitative and data analysis skills.

The Minnesota Budget Project is an initiative of the Minnesota Council of Nonprofits that combines sound research and analysis with advocacy, engagement and communications strategies to support policies that expand opportunity and economic security to all Minnesotans.

This is a paid internship. More information, including how to apply, is available on the Minnesota Council of Nonprofits website. The application deadline is Wednesday, July 12.

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DACA recipients make important tax contributions to Minnesota

Minnesota’s Deferred Action for Childhood Arrival (DACA) recipients pay an estimated $15 million in state and local taxes, according to a report from the Institute on Taxation and Economic Policy (ITEP). They are contributing to our communities and our economy, and the report shows they would contribute even more if given the opportunity to apply for citizenship.

DACA is a landmark executive action, introduced by President Barack Obama in 2012 that allowed unauthorized immigrants who came to the United States as children to receive temporary deferred action from deportation and work authorization, provided they meet certain requirements.

About 852,000 young immigrants across the country, including 6,740 in Minnesota, have signed up. DACA is a common-sense way to recognize the contributions that immigrants are already making in our communities and reflect the investment that we have made in young people who have grown up here. The initial evidence shows that DACA recipients are gaining education and job experience that enables them to better contribute to their communities.

With the better jobs, more opportunity to work, and higher tax compliance that accompanies their legal work status, DACA recipients increase their tax contributions. However, if DACA recipients were to lose their work authorization and deferment from deportation, not only would this be a significant blow to Minnesota’s communities, but their tax contributions would drop nearly in half, according to ITEP.

On the other hand, taking a step further from DACA and offering citizenship to everyone eligible for DACA would increase Minnesota’s tax revenues by almost $4 million.

Immigrants are important to our communities for many reasons, including bringing greater cultural diversity and revitalizing struggling cities and towns. Their worth is not limited to their economic contributions, but the fiscal impact of DACA recipients is substantial. DACA represents one example of how inclusive policies that support immigrants in the critical roles they play in our communities pays off for Minnesota.

-Clark Biegler

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Republicans’ federal health care bill devastating to Minnesotans, would shift significant responsibility to the state

Minnesota’s costs to ensure health care for a particular group of Minnesotans would increase by 228 percent in 2021 if the American Health Care Act became law. This bill would significantly weaken the federal government’s role in funding affordable health care for many low-income Minnesotans and Minnesotans living with disabilities or needing in-home care. That’s according to a recent analysis from the Center on Budget and Policy Priorities.

Last month, Republicans in the U.S. House of Representatives passed the American Health Care Act (AHCA), which cuts roughly $1 trillion from health care while giving hundreds of billions of dollars in tax cuts to high-income Americans and insurance companies. This bill makes severe cuts to Medicaid, totaling $834 billion over the next decade and backing the federal government out of a decades-old promise to work with states to ensure that Americans can afford health care.

The federal government has historically made payments to states for part of the cost of providing health insurance to folks on Medicaid. In Minnesota, Medicaid is called Medical Assistance. The Affordable Care Act, also known as Obamacare, gave states an opportunity to extend affordable health care coverage through Medicaid to adults with incomes under 138 percent of the federal poverty line, or $16,600 for an individual. The federal government covered at least 90 percent of the costs for this expansion group. In Minnesota, expanding Medicaid has contributed to positive results. In 2015, only 4.5 percent of Minnesotans went without health insurance. Compare that to 8.2 percent in 2013, the year before the Medicaid expansion rolled out as part of the ACA.

However, the AHCA would drastically change the federal government’s role. Starting in 2020, states would only receive the standard federal payment rate – 50 percent in Minnesota – for any new enrollees in the ACA expansion population. But many of those who are currently covered by Medicaid could quickly fall to that lower matching rate. People at these income levels often see their incomes rise and fall over the course of a year. One month they may get more hours at work and earn too much to qualify for Medicaid, and then another month, their hours may get cut and they would once again qualify. When they re-enroll, Minnesota would need to pay for 50 percent of their costs instead of the 10 percent under the ACA enhanced rate. The Center on Budget and Policy Priorities estimates that with these substantial payment rate changes, it would cost Minnesota $497 million to maintain the Medicaid expansion in 2021, with costs rising higher in subsequent years.

That’s a significant cost shift to the state, and wouldn’t be an easy gap to fill. This demonstrates why is is so important for Minnesota policymakers to maintain an important funding source for affordable health care, the provider tax, so the state is in a better position to respond to federal health care changes. Without state action, the provider tax is due to disappear on January 1, 2020.

As the AHCA heads to the U.S. Senate for debate and negotiation, lawmakers must re-focus on health reform that improves health care for Americans, building on the strengths of the Affordable Care Act rather than reversing the historic coverage gains made in the past several years. Health reform that moves us in the right direction must maintain or increase the number of Americans with health insurance, lower health insurance premiums and deductibles, and preserve or strengthen protections for pre-existing conditions and benefit standards. The Senate would be wise to focus on those goals rather than pass anything resembling the House version.

-Clark Biegler

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Threats to Medicaid are a threat to Minnesota newborns, seniors, and everyone in-between

For more than 50 years, Medicaid has played a crucial role in the American health insurance landscape. In Minnesota, this state-federal partnership funds Medical Assistance and ensures that a diverse group of our neighbors can afford health care when they need it. The American Health Care Act (AHCA), passed by Republicans in the House of Representatives, would undercut all of that, placing the health of infants, seniors, people with disabilities, parents, low-income workers, and people who simply can’t afford private insurance, at risk.

Thanks to Medicaid, many of the most vulnerable Minnesotans have access to affordable, high-quality health insurance — and, more importantly, access to health care when they need it. That includes:

  • Newborns. In 2014, more than 40 percent of the babies born in Minnesota had their births covered by Medicaid.
  • Older Minnesotans. When Medicare or other insurance options fail to cover the needs of our elders, Medicaid often steps up to the plate. That’s because Medicaid covers essentials that Medicare doesn’t, like long-term nursing home care and hearing aids. Though less than 6 percent of Medical Assistance enrollees are 65 or older, about 17 percent of the money spent on Medical Assistance goes to their care.
  • Minnesotans with disabilities or blindness. About 12 percent of Minnesota’s Medicaid enrollees live with a disability or blindness, and 41 percent of Medical Assistance’s budget goes toward their care.
  • Families with children. Parents and their children represent 63 percent of enrollees in Medicaid (though their care makes up just 26 percent of the Medical Assistance budget). One in three Minnesota children are covered through Medicaid.
  • Working Minnesotans. Lots of employers pay low wages and don’t offer affordable insurance to their employees. Of the non-elderly Minnesotans covered by Medicaid, 66 percent live in a family with at least one person working full time and another 17 percent are living in a family with at least one person working part time. Nationally, of the small share of unemployed, able-bodied adults covered by Medicaid, about three-quarters are caretakers for a family member.

If the AHCA becomes the law of the land, the federal government would cut $800 billion from Medicaid over the next decade. Federal policymakers would be backing out of a decades-old promise to work with states to ensure that financially and physically vulnerable people can still afford health care. These Medicaid cuts don’t make make America’s health care system stronger, but they do pay for the AHCA’s large and unnecessary tax breaks that primarily benefit high-income Americans and insurance and medical device companies.

Policymakers should refocus their efforts on bringing down the price of health insurance (and health care) for the millions of Americans who worry about paying their bills every month. Posing an existential threat to a decades-old partnership between the states and the federal government that secures the health of newborns and their great-grandparents alike isn’t the way to do it.

-Ben Horowitz

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President Trump’s budget proposal hurts people, communities, Minnesota

President Donald Trump’s budget proposal hurts our nation’s families, communities, and state and local finances. It undermines basic tenets of the American Dream by taking supports away from people climbing into the middle class, gives tax cuts to the already wealthy, and relies on faulty economic assumptions about economic growth and deficit reduction. Low-income families, people with disabilities, students, and seniors would all bear the brunt of Trump’s budget cuts.

The budget released today would cut about $2.5 trillion in the next decade from what’s called entitlement spending, much of which will come from services that support people who need health insurance, are hungry, or are living with disabilities. For example, Trump’s budget includes harsh cuts that will cause millions of Americans to lose their health coverage. Trump proposes major cuts to Medicaid, which over 1 million Minnesotans currently rely on for health care coverage when they get the flu, break an arm, or need to treat their diabetes. The president’s budget proposal would cut Medicaid by $610 billion over 10 years and shift funding responsibilities to states. These cuts are on top of the harmful changes proposed in the American Health Care Act, which passed in the U.S. House earlier this month. In total, this represents over $1.8 trillion in cuts over 10 years to Medicaid and subsidies from the Affordable Care Act that help low- and middle-income people afford health insurance.

Trump’s budget also undermines the government’s ability to fight hunger through the Supplemental Nutritional Assistance Program (SNAP), also known as food stamps. His proposal cuts SNAP by over $190 billion over the next 10 years. The budget assumes states would pick up some of the cost to ensure that low-income Americans don’t go hungry, including almost 455,000 Minnesotans. Forty-five percent of Minnesota households receiving SNAP benefits include children, and over one-quarter include a senior or someone living with a disability.

Trump’s budget also includes unprecedented cuts to the non-defense discretionary (NDD) portion of the budget, cutting it by $54 billion in Fiscal Year 2018. It eliminates energy assistance for low-income people, cuts job training, and harms many other services that build vibrant communities and a strong economy. (This is done while increasing funding for defense by $54 billion.) Under Trump’s budget, NDD funding would be slashed even further over the next decade, by $1.6 trillion.

Non-defense discretionary funding is already at low levels. And Trump’s proposed budget would bring NDD spending in the coming fiscal year to its lowest level as a share of the economy in six decades. By 2027, NDD would be at its lowest level as a share of the economy since President Herbert Hoover’s administration.

The Trump budget would also dramatically harm essential state services. About 30 percent of the state of Minnesota’s funding comes from the federal government. Federal grants to state and local governments are already at historically low levels, and with both huge reductions in federal funding and multiple proposals for states to take on more funding in areas that are currently shared, poses an extremely serious threat to services that assist families, children and the elderly all across Minnesota.

The president’s proposal also includes huge tax cuts that would benefit the already wealthy. The budget eliminates the estate tax, which plays an important role in creating a level playing field among taxpayers. The estate tax applies to the estates of the wealthiest 0.2 percent of Americans, and only a handful of small businesses or farmers in the entire country will owe any estate tax. At the same time, Trump’s budget cuts the Earned Income Tax Credit and the Child Tax Credit, which reduce taxes for struggling families.

Also troubling is that this budget relies on unrealistic economic assumptions, which hide the real impact of the budget. The budget assumes that his proposals will spur dramatic economic growth rates that most economists find implausible and reduce the federal deficit. For example, Trump’s budget assumes that his $5 trillion in tax cuts will have no negative impact on federal government revenues, when in fact they would increase the deficit.

The president’s budget proposal is deeply troubling and would create profound hardship for people in Minnesota while giving large tax breaks to the wealthy. The president’s budget proposal is just the starting point in the federal budget process. Next, Congress will develop their budget outline, and they will ultimately pass the next federal budget, which may or may not look like Trump’s proposal. Congress should soundly reject the proposals introduced today and the principles behind it.

-Clark Biegler

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Legislature’s Health and Human Services bill makes drastic cuts to health care for families and children, relies on gimmicks

On May 9, the Minnesota Legislature passed a Health and Human Services (HHS) omnibus bill that reduces general fund spending on HHS by $482 million using accounting gimmicks, deep cuts to health care services, and cuts to affordable child care. On May 12, this bill was vetoed by Governor Mark Dayton. At a time when federal policymakers are posing great threats to our state budget, legislators should re-focus their efforts on maintaining Minnesota’s stable financial footing while making smart investments in policies that support some of our most vulnerable neighbors.

Cuts to health care would amplify harmful impact of potential federal policy

The bill proposes to stop paying for inflationary increases in Medical Assistance, which would cut the funding available for health insurance for the state’s lowest-income children and families by $545 million in FY 2020-21. The cuts would grow even larger over time. The bill does not specify how those cuts would be made. It isn’t clear how the state could both reduce funding for Medical Assistance and meet its legal obligation to serve all eligible Minnesotans. Funding reductions of this magnitude could only be achieved through further policy steps to reduce eligibility for Medical Assistance, cut payments to health care providers, or limit what health care services are covered.

The bill also fails to act to maintain Minnesota’s provider tax. A law passed in 2011 would eliminate the provider tax in 2020, knocking out a vital, 25-year-old fiscal pillar from efforts to expand access to Minnesota’s nation-leading health care system. Allowing this repeal to move forward would reduce health care funding by $999 million in FY 2020-21 and put MinnesotaCare and other affordable health insurance options for about 1.2 million Minnesotans at risk.

The bill would threaten health care for Minnesotans at a time when grave threats are already on the horizon. For example, the Affordable Health Care Act (AHCA) passed by the U.S. House of Representatives would cut federal health care funding for Minnesota by $2.5 billion by FY 2021, with even larger cuts in the future.

Unclear policy changes unlikely to deliver promised savings

The bill contains about $250 million per biennium in savings from several provisions that lack evidence to support their claims of anticipated savings. It could put the state’s budget out of balance if the promised savings don’t materialize.

For example, a new eligibility audit program in the Department of Human Services is projected to save $140 million. The savings would supposedly be found by adding additional layers of paperwork to the process people follow to stay eligible for Medical Assistance. Other states following a similar path predicted, but did not find, large savings, and wound with lots of Medicaid-eligible people losing health insurance along the way. Additionally, the state is already in the process of rolling out a similar program due to a law passed in 2015; it is unclear how this new proposal could generate additional savings on top of the savings already accounted for from that proposal.

Two other areas where the bill assumes large savings without providing evidence involve reforms to assessment and support planning for people with disabilities and changes to the state’s health care delivery systems. These proposals may make sense, but without a detailed fiscal analysis, it is unclear how they will result in the assumed $107 million in savings in FY 2018-19.

Budgeting gimmicks obscure real costs of the proposal

Legislators further reduce near term spending in Health and Human Services by employing a simple accounting trick that shifts costs into the future. Here’s how it works: if the state makes a payment on June 30, 2017, it shows up on the balance sheet for FY 2017; if the state makes that same payment on July 1, 2017, it occurs in FY 2018. The bill moves some payments to medical providers forward one fiscal year into the future, creating savings of $173 million in FY 2018-19 and $24 million in FY 2020-21. That lowers costs in the short term, but the state would still be responsible for making those payments in FY 2022-23 — the first years that don’t show up on this year’s budget spreadsheets.

Similarly, the bill makes changes to important services for the elderly and people with disabilities with implications for FY 2022-23, making it difficult to fully understand the fiscal impact of these proposals.

An investment in low-income families offset by unnecessary cuts to child care assistance

The bill would increase the cash assistance available to Minnesota’s most financially vulnerable families for the first time in more than 30 years. Families accessing the Minnesota Family Investment Program would see their monthly assistance increase by $13. That’s still far too low — the maximum grant for a family of three is just $532 — but it is a long overdue step in the right direction.

Unfortunately, even as the bill increases assistance for some families, it would decrease funding for a vital support for others. Parents who use Basic Sliding Fee Child Care Assistance can go to work or school secure in the knowledge that their child has stable, nurturing care. But Basic Sliding Fee is not fully funded, leaving 5,000 families on a waiting list. And the waiting list represents only a fraction of the families who are eligible and go unserved.

Proposed changes to Basic Sliding Fee’s eligibility criteria would allow the state to serve the same number of families for about $3.7 million less per year. But despite the long waiting list, the bill is not reinvesting those savings in affordable child care; instead, they reduce funding for Basic Sliding Fee by an equivalent amount. By doing so, they lose the opportunity to serve about 250 more families per year.

Health and human services are too important for gimmicks and broad cuts

Minnesota has a history of finding innovative ways to ensure many of the most vulnerable Minnesotans receive the health care and other services they need to thrive. Among many other things, the HHS budget pays for critical services for the elderly and people with disabilities, and for programs that connect families with affordable child care options. Minnesota lawmakers should not place Minnesotans’ well-being at risk by making drastic cuts and assuming savings from proposals that have not gone through a rigorous policy-making process. When the state has a large surplus and is facing historic funding threats from the federal government, it’s time to invest wisely and defend the health care and other services that support our neighbors.

-Ben Horowitz

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Balanced tax bill should be the goal; Legislature’s tax bill has a ways to go

There’s more to be done to get to a tax bill that takes a balanced approach between tax cuts and state investments, and is balanced in terms of who is included. The tax bill the Legislature sent to Governor Mark Dayton’s desk earlier this week falls short (House File 4).

Expanding economic opportunity should be a priority for tax and budget decisions this year. House File 4 has taken some steps to include Minnesota workers and families, but there’s more work to do.

On the positive side, the Legislature’s tax bill includes the Child and Dependent Care Tax Credit. The bill would update the size of the maximum tax credit for which families can qualify, and would make the credit available to more families, providing an additional $36 million to families over the two-year FY 2018-19 budget cycle. Expanding this tax credit is an investment in building the state’s workforce for today and tomorrow. A greater ability to afford child care not only allows parents to go to work, but also employers are better able to find and retain the employees they need. The bill takes a good first step; moving further toward the governor’s version would be an even stronger commitment to addressing the child care needs of Minnesota families.

However, the bill’s most glaring omission is its failure to include an expansion of the Working Family Credit. When workers receive this tax credit, they are able to gain traction in the workforce because they can better afford reliable transportation and other things they need to succeed, and they can save a little to deal with temporary setbacks.

The Working Family Credit also provides positive effects for children. Research on similar credits finds they improve children’s chances of success in school and later as working adults. A final strength of the Working Family Credit is that it effectively reaches households all across the state: 48 percent of those receiving the credit live in Greater Minnesota and 52 percent in the seven-county metro area.

House File 4 takes a step forward by addressing barriers to accessing the credit faced by some Native American members of our communities. But policymakers should also enact an expansion like what was in the Legislature’s 2016 tax bill and is proposed in Dayton’s budget. This would benefit an estimated 372,000 Minnesota workers and families by increasing the credit and including more Minnesota workers, particularly by lowering the age requirement for workers and married couples without children from 25 years old to 21.

Fortunately, House File 4 does not include the House’s proposed cuts to the Renters’ Credit, which would have cut into the property tax refunds received by Minnesota seniors and people with disabilities living on fixed incomes, as well as families living paycheck to paycheck.

However, the Legislature’s tax proposal takes up more than two-thirds of the state’s projected surplus for FY 2018-19. This heavy emphasis on tax cuts means that the Legislative budget also cuts funding for affordable health care for Minnesota families and fails to make needed investments. Big tax cuts, and especially ones that grow over time, are particularly unwise given that federal policymakers are considering proposals that could cost the state billions of dollars in funding.

It’s beyond the scope of this blog to look comprehensively at everything in the 385-page bill, but here’s a quick take on the five items with the largest cost in FY 2018-19.

The largest provision would exempt more Social Security income from the income tax, a $218 million reduction in FY 2018-19 and $242 million in FY 2020-21. Over the past several years, we’ve pointed out that such proposals provide no benefit to the lowest-income seniors, whose Social Security benefits are already exempt. In fact, House Research finds that only about 35 percent of Social Security benefits are subject to income tax.

The Social Security provision in House File 4 is more targeted than prior iterations; it provides an exemption that gets smaller at higher income levels. But its cost remains a concern, and will grow in future years as seniors make up a larger share of the state’s population. Policymakers should beware of tax cuts that grow dramatically over time, and thereby threaten the state’s ability to sustainably fund the services that seniors count on, from community-based services to high quality nursing home care.

The second largest item in the bill is a dramatic reduction in the estate tax. This proposal for $162 million in tax cuts in FY 2018-19 and $195 million in FY 2020-21 benefits only a small number of taxpayers – about 1,100 of the highest-value estates. It would be a dramatic reversal from Minnesota’s recent progress toward a tax system that is more equitable across income levels. In addition, it creates further inequities among taxpayers, because it would allow a greater amount of unrealized capital gains in large estates to fully avoid being subject to taxation.

Rounding out the top five are three tax cuts for businesses:

  • Exempting up to $150,000 of each commercial/industrial property’s value from the statewide property tax, and freezing the total amount the tax raises;
  • Expanding Section 179 expensing; and
  • Expanding the Research & Development Tax Credit.

Combined, these three items total up to about $300 million in FY 2018-19 – more than one-quarter of the entire tax bill. Their cost grows to $424 million in the next biennium, particularly because of the freeze on the statewide property tax.

The Legislature’s tax bill is an agreement between the House and Senate majorities, and provides the baseline for their ongoing negotiations with the governor.

Dayton has already vetoed this tax bill, in part because of its provisions related to private schools. One would allow families to include what they pay for private school tuition as eligible expenses towards the K-12 Education Credit, and the other would create a new 70 percent tax credit primarily for donations to organizations that provide private school scholarships to low- and middle-income families. Organizations including the Minnesota Council of Nonprofits have raised concerns about singling out donations to just one kind of organization for special tax benefits, rather than providing equal treatment for all charitable donors and charitable organizations.

There’s not much time left and a ways to go to reach a balanced tax bill, but the way to get there is clear: making everyday Minnesotans a stronger priority within the tax bill, and significantly reducing the size of the tax bill so that we can invest in our schools, our families, and our communities.

-Nan Madden

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Legislature’s higher education budget makes some financial aid investments but misses important opportunity

Policymakers have put together their visions for Higher Education in FY 2018-19. The Legislature’s conference committee report includes $125 million in additional funding, about an even split between the House and Senate’s original proposals of $149 million and $100 million. The conference agreement though is much lower than Governor Mark Dayton’s proposed $318 million in Higher Education investments.

Dayton’s Higher Education budget included $62 million in FY 2018-19 for three improvements to financial aid through the State Grant Program. These changes would:

  • Allow the grant to “fill in” for federal financial aid. Minnesota “Dreamers,” young people who came to the country as children and do not have legal status, are ineligible to receive federal Pell Grants. However, the State Grant formula currently calculates financial aid assuming students receive this federal grant, meaning that Dreamers receive much less financial aid than they need to afford college. The proposal would increase the grant award for these students so that they receive financial aid comparable to their citizen counterparts.
  • Increase the annual living allowance by $550 to better assist students in meeting their basic needs.
  • Reduce the family contribution by $500 to make college more affordable for lower-income families.

The House and Senate agreement allocates $19 million in FY 2018-19 to the State Grant Program. The agreement lowers the amount families contribute for college. It also funds a House provision for a report to estimate post-secondary expenses and what students and their families should contribute in order for the financial aid system “to fully meet the financial aid needs of lower- and middle-income Minnesota college students,” as well as the Senate provision to increase the annual living allowance by about $500 to assist students. However, while the House and Senate increase State Grant funding, they miss the opportunity to improve financial aid for immigrant students.

The legislative agreement also includes some support for the state’s public colleges and universities. The agreement includes $78 million in operations support for Minnesota State Colleges and Universities for FY 2018-19 and directs Minnesota State to freeze tuition, and then lower tuition at colleges and freeze tuition at universities. Originally, the Senate bill included additional assistance to non-metro area Minnesota State two-year colleges. For the University of Minnesota, there is more limited operations support totaling $17 million and the University is “encouraged” to move tuition rates toward the median tuition for public Big Ten universities. The House bill included language making a percentage of state funding for Minnesota State and the University of Minnesota contingent on meeting certain goals, but this language was not included in the Legislature’s bill.

-Clark Biegler

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House Republicans vote to slash more than $1 trillion from federal health insurance while giving giant tax cut to nation’s wealthiest families

Earlier this month, Republicans in the U.S. House of Representatives voted to cut roughly $1 trillion of support for Americans’ health care while giving hundreds of billions of dollars in tax breaks to millionaires and insurance companies. The version of the American Health Care Act (AHCA) that passed the House would also gut many of the Affordable Care Act’s protections for people with “pre-existing conditions,” allowing insurers to charge people more for being pregnant or surviving cancer.

As the AHCA heads to the Senate, lawmakers must re-focus on health reform that improves the health care situation. They should build on the strengths of the Affordable Care Act rather than reversing the historic coverage gains made in the past several years. Health reform that moves us in the right direction must maintain or increase the number of Americans with health insurance, lower health insurance premiums and deductibles, and preserve or strengthen protections for pre-existing conditions and benefit standards.

As it stands, the AHCA would make the country’s health landscape worse. The full impact of the AHCA remains unclear because House Republicans chose to vote before the non-partisan Congressional Budget Office (CBO) could complete an analysis. However, here’s what we know the bill would do:

  • Slash access to affordable health insurance for low-income workers, people with disabilities, seniors, children, parents and others. The AHCA contains $800 billion in cuts to Medicaid over the next 10 years. Medicaid provides quality coverage to the lowest-income Americans, and its costs are growing more slowly than those in private employer plans. No amount of alleged “flexibility” for states regarding their Medicaid programs will counter this dramatic loss in resources. As a result, health care coverage for 1.2 million Minnesotans will be put at risk as Minnesota loses $2.5 billion in federal funding by FY 2021.
  • Dramatically increase the number of uninsured Americans. In March, the CBO estimated that 24 million people would no longer have insurance by 2026 if the original AHCA passed.
  • Gut protections for people with pre-existing conditions. In the new bill, people with pre-existing conditions like hypertension or diabetes could be charged higher premiums by insurance companies, who will once again be allowed to discriminate their pricing based on such factors. This will be particularly hard on older Americans. More than four of every five Americans aged 55 to 64 has at least one pre-existing condition. On top of the higher costs they will face for health conditions that are often beyond their control, the bill also allows older Americans to be charged five times as much for health insurance premiums as their younger neighbors.
  • Inadequately fund high-risk pools, a health care idea that has failed in the past. People with severe medical conditions would be sent into high-risk pools, but these would be underfunded. Because the bill does not allocate enough funding to sustainably support these efforts, such pools would face the same problems such policy interventions faced in the past. Our sickest neighbors will face exorbitant premiums, too-low lifetime limits, and reductions in benefits.
  • Cut taxes for millionaires and the medical industry. Over 10 years, the AHCA provides $275 billion in cuts that will only benefit households earning more than $200,000; the largest cuts will go to households with incomes over $1 million. On top of that, over the same time period, the bill provides $145 billion in tax cuts to insurers and medical device companies while simultaneously allowing insurers to charge sick people higher costs for their care. And these tax cuts would be just the start. As Majority Leader Paul Ryan has said, one goal of the AHCA is making further tax cuts for corporations possible.
  • Weaken and reduce employer-sponsored health insurance. The CBO projected that 7 million fewer Americans would be covered by their employers as a result of the original AHCA proposal. Under the latest version, employees of large companies could face additional risks. Current law allows large employers to choose which state’s health insurance regulations they’d like to follow when they craft their employee benefits. So, if just one state were to use the AHCA’s provision that allows a waiver of the ACA’s requirements that prohibit lifetime limits, large employers everywhere would be allowed to institute lifetime limits within their insurance plans, placing workers at large companies at great financial risk.

We’ll continue to keep you in the loop on the latest developments in the national health care debate here on Minnesota Budget Bites. Stay tuned for an update once the Congressional Budget Office releases their analysis of the version of the AHCA that has already passed the House of Representatives.

-Ben Horowitz

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