Guest Post: Fix the Funding Cliff Now

The waiting room of Montana’s Community Health Centers are thousands of miles from the U.S. Capitol, but what happens under that dome is hurting the health of thousands of Montanans.

Right now, Montana Community Health Centers are experiencing a federal funding cut of 70 percent that took effect October 1. Centers across the state are making hard choices to trim costs, save jobs, and keep doors open. Our health centers are not alone. The federal Department of Health and Human Services (HHS) has projected that the impact of the funding cliff will result in the closure of 2,800 health center locations, elimination of more than 50,000 jobs, and a loss of access to care for more than 9 million patients. The disruption is already evident. Many health centers in Montana are already making the tough choices about cutting costs amid a massive funding shortfall – implementing hiring freezes, cutting back on programs and deciding whether to close rural sites. In rural areas, where people typically drive miles in any direction to a provider, site closures will pose a significant hardship.

Why should this matter? Because we save lives. In Montana, 17 community health centers in 48 locations are part of a nationwide network that started more than 50 years ago to provide quality primary care in places where doctors and services were scarce or non-existent. We are the family doctor to more than 106,000 Montanans in communities all across the state, almost 1 in 10 Montanans receive their healthcare in one of our health centers. We provide affordable access to primary care and help reduce the incidence of chronic disease in the most economically challenged rural and urban communities all over Montana. Our patients have a more affordable option for preventive care than a hospital emergency room, a fact which allows us to generate millions in health care cost savings in Montana. We are also innovators, working with community partners to respond to public health crises, such as the opioid epidemic and the recent wildfires that raged this summer in Lincoln and Seeley Lake.

There is little doubt that health centers have contributed significantly to cost savings for the American taxpayer. Not only do most Republicans and Democrats support our program, they also want a funding cliff fix. So why can’t Congress get the job done? We are up against a host of factors that include a ticking clock and a busy legislative calendar that is focused on dollars, not doctors or the people who need them.

Congress must act now and turn their attention to fix the community health center funding cliff. Let’s hope they act before it’s too late.

Cindy Stergar

CEO, Montana Primary Care Association

MPCA is the association of Montana’s community health centers, and works to support and increase Montanans’ access to excellent, patient-centered health care. The Mission of the Montana Primary Care Association is to promote integrated primary healthcare to achieve health and well-being for Montana’s most vulnerable populations.

This tax bill is a health care bill too.

We anticipate that the House and Senate will vote on the final GOP tax plan early next week. While this proposal is first and foremost a give-away to the super wealthy and corporations, it’s important to remember that it is also a direct attack on the health care coverage of Montanans.

We briefly explained in an earlier post about why the Senate tax bill would hurt Montanans with health care needs. Today we are going to take a closer look at how this tax bill is a health care bill too:

If the Affordable Care Act’s individual mandate were repealed, 13 million more Americans would go uninsured. While the Congressional Budget Office (CBO) notes that the magnitude of the coverage effects is uncertain, it concludes that there’s no doubt that “the number of uninsured people would be millions higher.”

In Montana, 146,717 people are enrolled in Medicaid as of September 2017, and 86,000 people are enrolled in Montana’s Medicaid expansion as of November 2017.

And, thanks to the Affordable Care Act, Medicaid and the Children’s Health Insurance Program (CHIP), 92 percent of Montana’s children now have health insurance coverage.

With over 232,000 Montanans insured through Medicaid and Medicaid Expansion, cuts to Medicaid would be devastating for our state. Montana is already grappling with an opioid epidemic, as well as major funding cuts to support rural health care needs and Montanans with disabilities. As recent media has reported, Medicaid and Medicaid Expansion has been a critical lifeline for Montanans.

Without the ACA individual mandate, individual market premiums would also increase 10 percent. Fewer healthy people would sign up for individual market coverage with no mandate, which would increase average costs and therefore premiums in the individual market as less healthy and young people enroll and more people with expensive medical needs tilt the cost of health care needs.

The Congressional Budget Office (CBO) estimates that repealing the mandate would permanently raise premiums by 10 percent, and some major insurers have projected larger effects. As Senator Collins has noted, these premium increases would likely erase — or more than erase — the Senate bill’s tax cuts for millions of people who buy coverage in the individual market. Unaffordable premiums should not be a barrier to folks who need coverage.

The individual mandate is also critical to keeping the individual market stable. As the American Academy of Actuaries commented in its recent letter to Senate leaders about repealing the mandate, “increased uncertainty and instability regarding future enrollment, premium rates, and risk pool profiles if coverage incentives are eliminated would increase the risk of insurers incurring losses. Insurers would likely reconsider their future participation in the market. This could lead to severe market disruption and loss of coverage among individual market enrollees”

And last, but not least, if repealing the individual mandate is included in the final federal tax plan, it would also result in the loss of $5.5 million in general fund revenue per year for Montana. Since it is predicted less Montanans would enroll, the state would lose revenue from no longer collecting the health insurance premium tax from enrollees.

Affordable health care coverage for Montanans is a value that we all share. Our Montana congressional delegation should work to advance tax policies that strengthen the state of Montana and invest in our working families. Equally, our congressional delegation should support health care legislation that strengthens the Affordable Care Act—not provisions that work to cut it down.

Get Ready for the One-Two Punch: Anticipated Cuts to SNAP, Medicaid, and Possibly More

As the U.S. Senate & House conferees are crafting the final GOP tax plan behind closed doors in conference committee, we already have a strong sense of who wins and who loses under this bill. Any changes that happen before the chambers vote during the week of December 18th will not repair the devastating provisions of either the House-passed or Senate-passed bills.

As we anticipate the passage of this final tax legislation, we want to turn toward the details of the future implications of a tax bill that adds $1.5 trillion to the national deficit over ten years.

Get ready for the one-two punch: anticipated cuts to SNAP, Medicaid, and possibly more.

As we expected during the federal budget resolution process in the fall, the tax bill that congressional Republicans are finalizing is just step one of a likely two-step tax and budget agenda. The plan looks like:

  1. Cut taxes now that are heavily skewed toward wealthy households and profitable corporations.
  2. Then decry the enlarged deficits that those tax cuts fuel — and insist that they require cuts to programs for mainly low- and middle-income families.

Republican leaders have repeatedly said in recent weeks that after enacting a tax bill, they will turn to budget cuts — particularly “welfare reform,” long a code for cuts to SNAP (formerly known as food stamps), Medicaid, Medicare, among others that help families of limited means afford food, housing, health care, and other basic needs.

Approximately 1 in 8 Montanans struggle with hunger, including 45,000 children living in food insecure homes. Cuts to SNAP would hurt families with kids, seniors, and people with disabilities. As for health coverage, about 232,000 Montanans are insured through Medicaid and Medicaid Expansion as of September 2017. Cuts to Medicaid would be devastating for our state, which is already grappling with an opioid epidemic, as well as major funding cuts to support rural health care needs and Montanans with disabilities.

The budget resolution that Congress approved in October, which created the process and set the parameters for the current tax bill, also calls for $5.8 trillion in budget cuts over the coming decade, including deep cuts in Medicaid, Medicare, and other health care programs; basic assistance including SNAP; and non-defense discretionary funding, the part of the budget that funds education and training, transportation and other infrastructure, medical research, child and elder care, and other important priorities.

GOP leaders appear already poised to seek large budget cuts next year before the final tax legislation makes it to the President’s desk.

Ultimately, the true winners and losers of this federal tax proposal and the subsequent plan to cut services that hundreds of thousands of Montanans rely on haven’t changed with small tweaks to the proposals. Low- and middle-income folks, working families with children, and Montanans with health care needs are all set up to fail if the GOP tax proposal becomes law.

Federal Tax & the State Budget: More Revenue Problems to Come?

As Congress reconciles the differences between the House- and Senate-passed versions of their tax bills this week, here is our next installment of combing through the details of this terrible tax bill.

Both chambers’ tax plans provide large tax cuts to the wealthy and corporations, raise taxes for many low- and moderate-income people, boost the number of uninsured Americans by millions, and expand deficits.

But did you know that the federal tax proposal would also shoot a hole through our Montana state budget?

For today: Federal Tax & the State Budget – More Revenue Problems & Cuts to Come?

Based on the Senate tax bill, the Montana Department of Revenue estimated that the federal tax changes could impact the State General Fund to a tune of $122.5 million per year in 2018 and 2019. The estimated revenue changes as a result of corporate and individual income tax provisions are shocking to say the least.

That $122.5 million per year figure breaks down along four different tax categories:

  • The Senate provisions for individual and pass-through income tax result in $80 million lost in general fund per year.
  • The Senate provisions for corporate income tax result in $13 million lost in general fund per year.
  • The repeal of the ACA’s individual mandate in the Senate bill will result in the loss of $5.5 million in general fund revenue per year. Since it is predicted less Montanans would enroll, the state would lose revenue from no longer collecting the health insurance premium tax from enrollees.
  • The Senate bill could also cause Montana to lose $24.0 million in federal mineral royalty payments each year. This revenue loss would impact Montana counties that depend heavily on coal and oil production.

Just last month the state legislature held a special session to address the budget crisis in our state and find answers to solve the $227 million revenue shortfall on top of $218 million in present law reductions already taken during the regular legislative session and through triggered cuts in SB 261.

Montana cannot weather another hit like this.

Senator Daines and Representative Gianforte should work to advance tax policies that strengthen the state of Montana and invest in our working families. A vote for the federal tax bill would be a vote to send Montana spiraling back into a budget crisis.

 

Pass-Through Provisions Are Not for Main Street

By now you have heard that the tax bill Congressional Republicans are rushing to get to the President’s desk by Christmas will be a costly new giveaway to the very wealthy and major corporations at the expense of working families in Montana.

Last week we outlined who wins and who loses under the U.S. Senate tax plan. Now we want to dive deeper on the details through a blog series over the next several days.

First up: Pass-Through Provisions Are Not for Montana’s Main Street

Racing to pass a tax bill last week, U.S. Senate Republicans made this bad bill even worse by rushing to include a few provisions that skewed the bill even more toward the rich.

One of the last minute edits sweetened the pot for owners of unincorporated businesses who declare their profits as “pass through” income on their personal tax returns — income from businesses such as partnerships, S corporations, and sole proprietorships that owners claim on their individual tax returns and is now taxed at the same rates as wages and salaries.

The version that passed the Senate Finance Committee would have let business owners deduct 17.4 percent of their pass-through income from their taxable income, meaning that it would be tax free (subject to certain restrictions). That deduction is heavily skewed to the most profitable businesses and wealthiest business owners, who receive a greater share of their income from pass-throughs and enjoy a larger tax break per dollar of deductions since they are in higher tax brackets.

To secure the vote of Senator Steve Daines, GOP leadership agreed to raise the deduction percentage by nearly a third, to 23 percent.

Although Senators Daines claimed that he was trying to help owners of small businesses, the fact is that nationally the richest one per cent of households receives more than half of all pass-through income the economy generates.

Because Montana allows all deductions permitted by federal law, the 23 percent deduction to federal income taxes in the passed Senate bill would be taken out again at the state level. According to the Montana Department of Revenue, this pass-through deduction combined with other changes to income tax, would result in a state revenue loss to $80 million.

While sold as a benefit to Main Street, this revised pass-through provision is a sham. As we have explained before, it does not help Montana’s small business owners. It is just one more give-away to the super wealthy in Montana, it increases pressure on Montana’s already strugging budget, and it leaves the average working family high and dry.

Why the Senate Tax Bill Hurts Montana Small Businesses & Main Street – Even with a change to benefit pass-through entities

On Monday Senate Daines announced that he would vote “No” on the Senate tax proposal, citing that the current bill does more for large corporations at the expense of small businesses. While we appreciate Senator Daines’ concern that this bill doesn’t work for Montana, the issues and threats we face in this tax bill are far greater than this narrow issue.

Daines’ concern relates to the provisions for pass-through entities. Pass-through entities include partnerships, sole proprietorships, S-corporations, and other companies whose earnings pass straight through to owners’ individual returns, rather than being taxed at the corporate level.

The current Senate bill includes a new deduction for taxpayers who have income from a pass-through entity. The Senate bill provides a 17.4 percent deduction on income earned from pass-through businesses, effectively bringing the taxpayers top tax rate down to about 32 percent. Senator Daines is calling to increase this deduction to 20 percent on income, which would further lower their rate.

However, small tweaks like this one do not fix this bill. There are several key provisions of the Senate tax plan that are far more harmful to middle-class Montanans and small businesses, which Senator Daines has not yet addressed.

For example, decreasing the corporate tax rate from 35 percent to 20 percent largely benefits large corporations that are experiencing record profits, while tax revenue from the same group has been plummeting. The decrease in the corporate tax rates further tilts the scales in favor of large corporations, giving them an unfair edge over Main Street small businesses. 
At the end of the day, the Senate bill’s corporate tax cuts are permanent, while pass-through entities would see a tax hike by 2027 because the deduction is a temporary provision set to expire after 2025.

Repealing the State and Local Tax (SALT) deduction means increased taxes for small business owners and their customers, and increased pressure on state budgets.

Finally, repealing the individual mandate requirement under the Affordable Care Act would cause 13 million Americans to become uninsured. The increase in uncompensated care costs could force some providers to close their doors or cut back spending in ways that undermine the quality of care. Providers might also raise prices, shifting costs to people with private insurance coverage (including employer coverage). Or, states or the federal government might be forced to step in to cover some of these uncompensated care costs, shifting costs to taxpayers.

Regardless of what changes are made to the Senate tax bill before a vote later this week, this proposal is still bad for Montana, and it does nothing to help working families. Main Street small businesses don’t benefit from tax cuts to millionaires and billionaires. They deserve Congress to work in a bipartisan manner to find ways to really help small businesses.

US Senate Tax Plan in Montana: Winners and Losers

In mid-November, the House passed a tax plan that would add $1.5 trillion to the federal deficit and increase taxes on working and middle-class people to pay for permanent tax cuts for large corporations and the super wealthy. The proposal also sets up deep cuts to Medicaid, Medicare, education, and SNAP that would add to the pain families feel as a result of this bill.

The Senate bill has the same basic flaws as the House bill, but this time the tax legislation also includes a direct attack on the Affordable Care Act, resulting in millions of Americans losing coverage. As we anticipate the Senate vote this week, let’s take a closer look at who are the real winners and losers in the Senate tax plan:

WINNERS

The Super Wealthy: Despite all of the talk about helping the middle class, wealthy individuals and their heirs win big from the Senate tax plan. The top tax rate for millionaires has been shaved down to 38.5 percent from 39.6 percent, while the exemption from the estate tax—which is a an inheritance tax on multi-million dollar estates—doubles to $11 million for individuals and $22 million for couples. The Senate bill also eliminates the alternative minimum tax (AMT), a levy aimed at ensuring that higher-earning people pay at least some tax.

By 2025 (when most of the Senate bill’s provisions would be in place), high-income households would get the largest tax cuts as a share of after-tax income, on average. Meanwhile households with incomes below $30,000 would, on average, face a tax increase.

Multi-National Corporations: The Senate bill slashes the corporate tax rate from 35 percent to 20 percent, going into effect in 2019. U.S. oil companies with foreign operations would pay reduced taxes under the Senate bill on their income from sales of oil and natural gas abroad. Beer, wine and liquor producers would also reap tax reductions under the Senate measure. Like the House bill, the Senate bill creates a lower corporate tax rate for multinationals’ foreign profits. That’s a big incentive for companies to shift profits and investments offshore to get the lower rate, and it advantages large multinationals compared to small, domestic firms.

The Senate bill makes all these tax cuts for corporations and multinationals permanent—paying for that by repealing the individual mandate and making millions more uninsured, even while allowing provisions that are intended to benefit middle-income families expire at the end of 2025.

Senate tax plan

LOSERS

Montanans with Health Care Needs: The Affordable Care Act’s individual mandate would be repealed, which would cause 13 million more Americans to be uninsured and raise individual market premiums by 10 percent. The individual mandate is critical to keeping individual market coverage affordable and keeping the individual market stable. The $338 billion in savings from repealing the individual mandate are being used to pay for making part of the Senate bill’s corporate tax rate cut permanent, which overwhelmingly benefits high-income households: the top 0.1 percent of households would get an average tax cut of about $100,000 annually.

Working Folks: Many families making less than $30,000 a year would face tax increases starting in 2021 under the Senate bill, according to Congress’ nonpartisan Joint Committee on Taxation. By 2027, when many of its provisions would have expired, those at the top would still get large tax cuts, but every income group below $75,000 would face tax increases, on average.

Working Families with Children: The Senate plan’s signature “middle class” tax cut, its Child Tax Credit (CTC) increase, provides almost no benefit ($75 or less) to 10 million children in low-income working families, and provides less than the full $1,000 increase in the credit to millions more. At the same time, it newly extends the full $2,000 per child credit to couples with incomes between $110,000 and $500,000. Even this meager increase would be temporary, as the Senate tax plan ends the entire CTC increase after 2025. Low-income working adults without children and non-custodial parents are also largely excluded from the plan’s tax cuts, so millions would continue to be taxed into or deeper into poverty.

Charities: Charities that support low-income families and supplement government services are nervous about the impact of doubling the standard deduction. The National Council of Nonprofits warns that charitable deductions are likely to go down under this bill. While the GOP enables the wealthy to continue deducting their charitable giving, many middle- and upper-middle-class families would no longer get that tax break, because they probably would stop itemizing their deductions. At the moment about 30 percent of Americans itemize, but under the GOP bill, the standard deduction roughly doubles from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples, meaning fewer people would probably itemize.

All of us in Montana: About half of Montana’s budget comes from federal funding. If these cuts become law, state policymakers will have to find ways to pay for health care, food aid, grants for college, and more. Thanks to low revenue due to our own trickle-down policies, it is highly unlikely Montana will make up the difference. This tax proposal on top of our current budget crisis in the state will be devastating to our economy, our communities, and our families that are already struggling.

Montana Represents at National Budget & Policy Conference

DOs_ImAV4AAMbspThe Montana Budget and Policy Center was well-represented by four of our six staff members at the IMPACT 2017 Conference held in Washington, DC last week. Tara Jensen, Heather Cahoon, Adrienne Bombelles, and Kirsten Gerbatsch all attended.

With hundreds of people in attendance from over forty states, you may wonder how Montana fared. Well, we made a real splash at this year’s conference by sharing our state EITC success story, our state-tribal policy research, and our creative tactics in the ongoing fight to preserve access to affordable health care.

State-Tribal Policy Analyst Heather Cahoon kicked off the conference on Wednesday evening by reading three of her own poems in front of a packed house. The rest of the MBPC team was proud to watch her share her talent and life experiences with national foundations, organizations, and colleagues from around the country.

Tara Jensen

Tara Jensen, Co-Director of Public Affairs and Operations, spoke at two sessions on Friday.

In the session “A Whole New World: Strategies That Work to Impact Federal Debate,” Tara presented on a panel with staff from Idaho, New Jersey, and West Virginia, sharing our strategies in Montana to preserve the Affordable Care Act, Medicaid, and other investments that build opportunity for all Americans.

Tara also spoke at an EITC-specific workshop. In 2017, Montana was the only state to pass a refundable state earned income tax credit. Tara spoke about how we worked with partners to make our tax system more fair, get more resources to low-income families, and how this work is helping to build power and equity in addition to boosting incomes.

Kirsten Gerbatsch

Outreach and Communications Coordinator Kirsten Gerbatsch presented at the a workshop to communications professionals about the work MBPC has done in the past year to lift up spokespeople’s voices from all over the state in order to defend the Affordable Care Act.

Now, having returned to Montana after a full week, we are back at work feeling invigorated to continue our efforts on the state budget, the federal tax bills, and the on-going efforts to preserve the ACA and Medicaid.

The House Republican Tax Plan: Lion’s Share of Tax Cut Given to Richest 1 Percent of Montana Households, Grows Over Time

Today the US House Ways and Means Committee will begin its work on the House Republican tax cut bill.

House leadership continues to tout this tax proposal as a plan to boost the middle class. Yet a closer look at the bill’s details reveals that it provides an increasing share of tax cuts for the nation’s – and Montana’s – richest households while also increasing the federal deficit by $1.5 trillion over the next decade.

The share of tax cuts to the wealthiest taxpayers in Montana will grow over time due to phase-ins of tax cuts that mostly benefit the rich. The plan also includes the eventual elimination or erosion of tax credits and deductions that benefit low- and middle-income taxpayers.

For example, after five years, the bill eliminates a $300 non-child dependent credit that benefits low- and middle-income families while fully repealing the estate tax that impacts less than 1% of very large estates.

The 10-year outlook for the plan reveals that by 2027, the share of tax cuts given to the wealthiest 1% of households in Montana would grow from 34 percent in 2018 to 49 percent by 2027, for an average yearly tax cut of $50,890.

Middle-income taxpayers’ average tax cut would erode from $600 from $200. In fact, by 2027, one in six Montanans with incomes between $36,000 and $57,000 would actually face a tax hike.

Average Tax Cuts to Top 1% of Montana Taxpayers Dwarf Those Going to All Other Income Groups

Tax Cuts for the Wealthiest Could Result in Deep Cuts to Critical Services for Montanans

Equally problematic to who is benefiting, this tax plan will also result in a massive increase to the federal deficit, that will likely put pressure on federal spending cuts down the line. This budget pressure would then hit our state budget when federal programs get slashed and costs get shifted to the state and local governments. In our state, we know from experience that tax cuts will lead to larger deficits — they will not pay for themselves over the next decade.

Already-struggling families, seniors, and people with disabilities would lose more from cuts to food assistance, health care, housing assistance, and workforce development and educational opportunities than they would gain from the tax cuts outlined in this House bill.

Amidst our current budget crisis, Montana cannot afford additional budget pressure as the result of federal cuts to programs that support low- and middle-income families. Federal funds are the largest funding source for Montana at $4.5 billion or 44.7 percent of the 2019 biennium budget. Our state cannot adequately serve the people of Montana if we see federal support for children, families, and seniors begin to erode as a result of this tax plan skewed heavily to the richest taxpayers.

Our Montana Congressional Delegation should not support any tax bill that is heavily weighted to help the wealthiest, does little to support working Montana families, and swells the budget deficit.

Open Enrollment & the Alexander-Murray Bill

Open Enrollment for 2018 begins tomorrow, November 1st, and this year the enrollment period is shorter — lasting for only six weeks—from November 1st until December 15th.

The Affordable Care Act has been the target of countless efforts of repeal and replace, as well as direct sabotage from the Trump administration. However, going into the 2018 Open Enrollment, the ACA is still in place.

The Alexander-Murray bill is currently the only plausible bipartisan market stabilization package to strengthen the ACA in Congress. The Congressional Budget Office found that Alexander-Murray would benefit both consumers and federal taxpayers by reducing individual market premiums beginning in 2019 and reduce deficits by $3.8 billion over ten years – while maintaining coverage rates.

The legislation would:

  • Guarantee cost-sharing reduction (CSR) payments to insurers through 2019;
  • Restore a significant portion of the Trump Administration’s cuts to ACA marketplace outreach and enrollment assistance;
  • Expand eligibility for so-called “catastrophic plans,” which are high-deductible plans that are subject to ACA rules and consumer protections but are currently available only to people under age 30; and
  • Simplify and alter some aspects of the ACA’s “Section 1332” waivers, which allow states to modify certain provisions of the ACA as long as the waivers cover as many people, provide coverage at least as affordable, provide coverage at least as comprehensive, and do not increase the federal deficit.

By guaranteeing payment of CSRs, the agreement would lower individual market premiums, prevent insurer exits, and save the federal government money – next year, and even more so in 2019.

By restoring funding for outreach, the agreement will help hundreds of thousands of people get coverage they need and help keep premiums low for all consumers, since outreach is especially important to encouraging healthy people to buy insurance.

While the Alexander-Murray proposal is not perfect, it is a step in the right direction. Most importantly, it signifies progress toward bipartisan action on health care, and away from damaging efforts to repeal the ACA, radically overhaul Medicaid, and take away coverage from millions of people.

We need swift, bipartisan Congressional action on this front in the passage of Alexander-Murray. The sooner this agreement is enacted into law, the more it will do to help consumers and strengthen markets in 2018.

During this enrollment period, call Senator Daines and Senator Tester, and ask them to reject calls from the White House, from Senator Hatch and Congressman Brady, and others to undermine the Alexander-Murray bill. We cannot risk the coverage of millions of Americans and destabilize the individual market with continued partisan health care games.