Majority Support Future Fund, Most Will Use Health Care Exchange

Budget Beat for June 28, 2013

Evidence Counts – the WVCBP Blog

Unemployment rates in West Virginia’s counties range from 5% to 12%. What is the unemployment rate in your county? Find out in this interactive graph in Sean’s blog post this week.

This week the West Virginia Offices of the Insurance Commissioner released its report on how the insurance exchange, created as part of the Affordable Care Act, will affect health insurance premiums in West Virginia. Brandon explains who will benefits the most in his blog post this week.

Budget cuts to higher education are forcing colleges and universities to increase tuition. This is not only making college less affordable for West Virginia students, it is also decreasing the quality and competitiveness of degrees earned at public institutions. How? Read more in Chris Nyden’s blog post.

WVCBP in the News

As President Obama unveiled his plan to combat climate change this week, many in the Mountain State viewed it as anti-coal. His plan did, however, embrace natural gas as a clean-burning, transitional energy source. In the Charleston Gazette this week, Ted pointed out, however, that having maximum production of both coal and natural gas is not likely. Ted was also quoted in the State Journal stressing that for the President’s plan to not negatively impact West Virginia’s economy, a transition strategy that maps out how to diversify the state’s economy is key.

Speaking of West Virginia’s vast energy resources, according to a new poll by the Union of Concerned Scientists, most of us support a tax increase on coal to support a Future Fund.

Brandon was quoted in this Charleston Gazette article discussing a state-sponsored actuarial study that shows most West Virginians will end up paying less in health insurance premiums under the Affordable Care Act. Enrollment in the health insurance exchange begins in October with coverage effective January 1, 2014.

The Daily Mail published Brandon’s op-ed this week which countered the paper’s position that young people will choose not to participate in the insurance marketplace. Brandon debunked this claim citing a Kaiser Family Foundation poll that shows young people value health insurance as much as older folks and are likely to take advantage of the insurance exchange in 2014.

WVCBP Honored For Our Work on the Earned Income Tax Credit (EITC)

Today the WVCBP was honored to receive the EITC Advocate of the Year award from the Alliance for Sustainable Families. Working with the Alliance and its statewide coalition has been a rewarding partnership and we look forward to expanding that effort to include creating a state Earned Income Tax Credit. Many other states already have such a credit which augments the federal EITC and would provide more assistance to the state’s low-income working families.

TedandJennifer6.28.13

Higher Ed Budget Cuts Hurt Competitiveness of College Degrees

by Chris Nyden

On Tuesday, the West Virginia Higher Education Policy Commission (HEPC) approved an increase in average tuition for West Virginia public college students from $5,687 to $6,067. These increases were partly a result of a $30 million budget cut to higher education in the FY 2014 budget. This is just the second time the budget for higher education has been cut in West Virginia over the past five years, but it represents a national trend where many states have looked to slash spending under harder economic conditions.

This divestment from higher education not only increases costs for students, providing another barrier to attending college, but it also decreases the quality and competitiveness of the degrees at public institutions. This is because governmental budget cuts are a challenge to public higher education not present in the private system. Many of the tuition increases at public schools have been a result of declining state revenues, while tuition increases at private schools typically go toward more services for students.

In fact, over the past three decades, undergraduate tuition at private four-year colleges has increased by 3.5 percent more than the rate inflation on average, compared to 4.4 percent at public four-year colleges. Meanwhile, spending on instruction for students has increased by only 0.75% annually at public schools since 1987 and 1.67% at private schools.

Since 2000, tuition at public colleges in West Virginia has doubled, meanwhile there has not been a similar increase at private institutions. As the chart below shows, tuition at West Virginia public four-year colleges has increased as a share of private tuition since 2000, following a national trend.

Wva Public Private Tuition

So how does this affect students in public colleges?

One of the main effects of losses in revenue is a change in faculty. Because budget cuts make future cash flows unclear and destabilize universities’ financial outlooks, colleges are forced to pay their professors less (or give them a heavier teaching load), provide fewer faculty positions, or provide fewer tenure-track positions if they want to prevent shocks to tuition rates. As a result, many colleges are hiring more part-time faculty or non-tenure-track professors. This might not seem like a big problem, as these professors can teach large groups of students and cost colleges less. However, hiring more of these professors leads to decreases in retention and graduation rates among undergraduates. With fewer faculty as intimately involved and interested in their field, as more research-oriented professors are guided into graduate teaching jobs, students also become less interested. In addition, faculty with heavier teaching loads will have less time to give each student adequate individual instruction.

Private institutions also have a better ability to hold onto their best professors. There are substantial gaps in wages between professors at public and private colleges, with the average professor at a public college making over $29,000 less than their private college counterparts. These higher salaries give private institutions the ability to attract better professors.

Proponents of private education may argue that this is a phenomenon just now occurring at public colleges, but has been the precedent market forces set long ago at private colleges. Private colleges have traditionally offered fewer tenured positions and used more part-time faculty. But this is why public higher education is so important. It gives young people the opportunity to receive a high-quality education without as much of a cost barrier as many private colleges.

Budget cuts to higher education are not only pricing students out of a college education, they’re resulting in an inferior product for many West Virginia students.

County by County Unemployment Rates in the Mountain State

Below is a map of county unemployment rates for 2012 in West Virginia. Statewide, West Virginia averaged an unemployment rate of 7.3% in 2012. As the map shows, county unemployment levels ranged from just under 5% to over 12%. The county with the lowest unemployment rate was Monongalia, home of WVU, with an unemployment rate of 4.9%, while the highest unemployment rate was found in Webster County, with a rate of 12.4%. 

The map shows some interesting patterns to the state’s county unemployment rates. The low unemployment rate in Monongalia county seems to follow Interstate 79 through Marion, Harrison, Lewis, and Gilmer counties, all of which have unemployment rates below the state average. Other counties with low unemployment rates include Jefferson County in the eastern panhandle, Kanawha and neighboring Putnam County, and Monroe County in the southeast corner of the state.

The state also appears to have a belt of high unemployment across its midsection, stretching from Mason to Pocahontas County. Unemployment rates are also higher in the state’s southern coalfields, with the counties between Boone and McDowell all having above average rates. 

It is also difficult to see the impact of the Marcellus Shale in the county map, with hotbed counties like Wetzel County with an unemployment rate over 10%.

Compared to 2011, 43 coutnies saw a drop in unemployment rates, with the biggest drop occuring in Hancock County, which fell from 11.3% to 9.4%. 10 counties saw their unemployment rates increase in 2012, with Boone seeing the largest increase, from 7.3% to 10.9%. Both Mineral and Raleigh counties had no change in unemployment rates. Overall the state’s average unemployment rate fell from 7.8% to 7.3%.

The Numbers Are In

Yesterday, CCRC Actuaries, the firm hired by the West Virginia Offices of the Insurance Commissioner to analyze the effect of the Affordable Care Act (ACA), released its report on the expected impact of the health insurance exchange in West Virginia.  The good news is that lots of people will spend less on health insurance and many more people will be insured.  The bad news? Some people will pay more. 

In a nutshell, the majority of West Virginians who currently have insurance through their employer won’t be affected.  Meanwhile, the number of uninsured people in the state will drop from 246,000 to 76,000, a nearly 70 percent decrease, as more people enroll in Medicaid or are able to get individual coverage through the newly created health insurance exchange, dubbed the Marketplace. (Table 1)

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The number of people getting their insurance in the Marketplace will increase nearly fourfold, from 28,000 people to 107,000.  Importantly, around 86,000 of them will qualify for premium tax credits.  As a result, the net cost of health insurance premiums in the non-group individual market will actually decline by 42% on average after tax subsidies.  Without health reform, the average annual premium for health insurance in the non-group market is $4,953, however after reform and tax credits are considered, this annual premium drops to $2,870. (Table 2)

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Of course, not everyone will qualify for tax credits since they are based on a sliding income scale for people earning less than 400 percent of the federal poverty level (FPL).  For those who won’t qualify for the subsidies yet will still get their insurance from the Marketplace, there will likely be an increase in the average premium cost.  For example, a 40-year-old single male who earns more than 400 percent of FPL (over $50,220 annual income) would pay an average of $3,512 in annual premiums without health reform or $4,878 with health reform, an increase of almost 39 percent.  Those who warn about “rate shock” caused by the ACA are almost always referring to this group – the healthy, young, single men with above average incomes. 

Women, however, won’t see anywhere near the same increases.  Historically, health insurers have charged significantly higher premiums for women for the same coverage as men.   Beginning in 2014, however, the ACA will prohibit “gender rating” as it’s called and require that men and women to be charged equally.  So a 40-year-old single woman paying an average of $4,616 in annual premiums on the individual market without health reform will pay the same $4,878 annual premium as the 40-year-old male with health reform, an increase of 5.7 percent.

The older you get the more you benefit from tax credits as well, since health insurers generally charge more for the same coverage for a 60-year-old when compared to a 20-year-old.  Families with children also will receive, on average, larger tax credits when purchasing their insurance from the Marketplace.  (Table 3)

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Judging health insurance policies today to policies in 2016 is not an apples-to-apples comparison.  Many of the policies sold today as high-deductible or catastrophic plans will not meet the minimum standards of what health insurance plans are required to cover starting in 2014.  The new standards prevent insurers from denying coverage, excluding pre-existing conditions, setting lifetime or annual caps on claims, while requiring insurers to cover annual check-ups and other well visits at no or little cost to the patient.  Many young adults, especially healthy men, will see their health insurance premiums increase in the individual market, however, the majority of those 107,000 West Virginians who will be purchasing their health insurance from the Marketplace beginning in 2014 will see not only improved coverage, but cheaper rates.  

Doubling the Minimum Wage and Other Ways to Help the Economy

Budget Beat for June 21, 2013

Evidence Counts – the WVCBP blog

On July 1, interest rates on Stafford student loans are set to double, making higher education even less affordable for West Virginia students and their families. The average college debt for West Virginia students has climbed by $10,000 since 2004 to over $25,000, above the national average. Read more in this week’s blog post by Chris Nyden.

Another hurdle facing college graduates is the wages they can expect upon graduation which have fallen for the past five years. This is part of an overall less-than-favorable jobs outlook which has been slow to recover from the Recession. Even with a college degree, jobs are hard to find, and in West Virginia, there are 3.86 people looking for work for every job opening. Read more in Sean’s blog post.

Wondering exactly who will gain access to health care once West Virginia expand its Medicaid program? In his blog post this week, Brandon explains. And the benefits go far beyond more people having coverage – West Virginia will have a healthier, more productive workforce which means a stronger economy.

WVCBP in the News

State budget cuts are forcing WVU and Marshall University, as well as other institutions of higher learning, to cut back on services and raise tuition. At MU, this has caused a closer look into the university’s budget causing some to question the level of transparency at the school. Ted was quoted in the Huntington Herald-Dispatch this week supporting any efforts to bring more accountability and accessibility to such information and used Ohio University’s more centralized approach as an example of good practices.

The Lexington Herald-Leader ran a comprehensive story on the future of Eastern Kentucky coal. It cited a report from Downstream Strategies and quoted Fiscal Policy Analyst Sean O’Leary on projections of an expected deep decline in coal production for the area, with or without federal regulations.

No Consensus on Effects of Tax Breaks

Even though they are credited with creating jobs and promoting economic growth, as it turns out there is little academic research to prove that tax breaks are an economic shot-in-the-arm. This flies in the face of the position of the Tax Foundation which seems to believe that every tax break is good for a state’s economy. For much more on the topic, check out this brief from the Center on Budget and Policy Priorities.

Capitalist’s Case for a $15 Minimum Wage

We mentioned Nick Hanauer in last week’s Budget Beat. Here is more insightful commentary from him on how a sharp increase in the minimum wage would be good for business, bring more people back to the middle class and stimulate demand for products created by those “one-percenters.” Bottom line: workers are also customers.

March for Jobs and Freedom Remains Unfinished on Its 50th Anniversary

The protesters in Dr. Martin Luther King’s March on Washington had seven demands, four of which have not been met fifty years later: ending ghettos, ending segregation in school, creating a living wage and ensuring jobs for all. Read more in this eye-opening infographic by the Economic Policy Institute.

Who Will Qualify for Medicaid Under Expansion?

With enrollment for the new Health Insurance Marketplace just around the corner and the full implementation of the Affordable Care Act hot on its heels, I wanted to take a moment to consider who will qualify for Medicaid under expansion in West Virginia.

Medicaid is a health program designed to provide comprehensive health and dental insurance for the poor.  These are people who otherwise are most likely uninsured and unable to afford to see a doctor.  Currently, the requirements to qualify for Medicaid in West Virginia are very stringent (Table 1).  Therefore, most Medicaid enrollees are children, the elderly, and the disabled.  A healthy, non-elderly, childless adult cannot qualify for Medicaid in West Virginia under any circumstance, no matter how poor he or she is. 

Last month, however, Governor Tomblin announced that West Virginia would be joining at least twenty other states in expanding the Medicaid program to insure more people.  Beginning on January 1, 2014, the eligibility standards will change significantly.  With the dependent child requirement dropped and increased income limits, virtually any legal resident making less than 138% of the federal poverty level (FPL) will qualify for Medicaid coverage (Table 2).

So what exactly does this mean?  Put simply, a lot more people will gain health insurance.

For example, in 2013 a single mother with one child cannot make more than 35% of the FPL, or $5,429 in a year, to qualify for Medicaid coverage for herself.  To put this in perspective, this mother would have to work less than 15 hours per week at minimum wage ($7.25/hour) to qualify for Medicaid.

However, under the new expansion guidelines, this same mother will be able to earn up to $21,404 in a year and still qualify for Medicaid.  That means she could work a full-time job making more than $10 an hour without having to be concerned about losing health insurance coverage for herself or her child.

Similarly, under today’s eligibility guidelines, a married couple with two children could earn no more than $8,242 to qualify for Medicaid.  Beginning in 2014, they will both be able to work full time making a combined $32,499 and still be eligible for coverage.

The new guidelines will also eliminate the asset test currently required for non-disabled adults and the elderly.  Individuals in these categories with assets that exceed around $4,000 in value, even including cars or retirement savings, may be ineligible for traditional Medicaid coverage, regardless of their income.  Under expansion, these assets will no longer be considered and eligibility will be based strictly on income.

As I’ve discussed before, the costs and benefits of Medicaid expansion in West Virginia go far beyond just federal versus state dollars.  Not only will we see fewer uninsured people, more healthy people, and a healthier, more productive workforce, but we can also expect to see a shift in the incentives that currently keep some people, especially those with pre-existing health conditions, locked in unemployment, and a boost to the state labor market.  

With 3.8 Million Job Openings Last Month, Is There a Skills Gap?

Last month, the Labor Department’s Job Opening and Labor Turnover Survey showed that there were 3.8 million job openings for the month of April. Groups like the U.S. Chamber of Commerce have pointed to the number of job opening as proof of a skills gap, arguing that there are not enough skilled workers to fill the available jobs, and unemployment would be lower if the workforce was better educated and more skilled.

But there are a few problems with blaming the worker for high unemployment. First, while 3.8 million job openings sounds like a lot, it is well below pre-recession levels.

3.8 Million Job Openings Still Below Healthy Levels

Source: Economic Policy Institute analysis of Current Population Survey data

And while job openings are still below pre-recession levels, unemployment is still high, and there are simply not enough jobs for everyone who is looking for one. As of April 2013, there were 3.1 unemployed workers for every job opening nationwide, and 3.86 unemployed workers for every job opening in West Virginia. While that number has been falling, it is still double its pre-recession level.

More Unemployed Workers Than Job Openings

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Source: Economic Policy Institute analysis of Current Population Survey data

Even if the economy continues its recent growth, it will be years before there are enough jobs for everyone who wants one.

Unemployment rates are elevated across education levels as well. The unemployment rate for college graduates is still double its pre-recession level, which is not what you would expect if there truly was a shortage of workers with a college education.

Unemployment Up For All Levels of Education

Source: Economic Policy Institute analysis of Current Population Survey data 

If businesses really needed workers, they would pay for them. But that hasn’t happened either. The median wage for college graduates has gone down in the past five years, when the opposite should be happening if there is a skills gap.

Wages Down For College-Educated Workers

Source: Economic Policy Institute analysis of Current Population Survey data 

In fact, low pay may be the reason why there are jobs going unfilled. And businesses aren’t trying very hard to fill them. The National Bureau of Economic Research has found that “recruiting intensity” is low, meaning that businesses aren’t trying very hard to fill their openings, like through more advertising or increased compensation.

There is no doubt that improving the education and skills of the labor force, both nationally and in West Virginia would be a good thing. But it is disingenuous to blame high unemployment on the so called “skills gap.” There are job openings, but there are far more people looking for jobs. And businesses that can’t fill their openings should try raising their wages before blaming workers.

What Do Rate Hikes on Student Loans Mean for West Virginia Students?

by Christopher Nyden, Research Associate

Barring another last-minute agreement, the interest rates on subsidized Stafford student loans are set to double from 3.4 percent to 6.8 percent on July 1. These loans are offered to students who depend on them to attend college.

Doubling rates will significantly increase the debt burden for West Virginia college graduates. As the chart below shows, the average debt of a graduate of a West Virginia four-year public college is now over $25,000 – surpassing the national average of $23,065 – and has grown by over $10,000 since 2004.

College Loan Debt for West Virginia Students Higher than National Average

A Center for American Progress (CAP) report estimates the rate hike will cost the average recipient in West Virginia $824 over the life of his or her loan. Statewide, this number is over $55 million.

Last year, the United States Public Interest Research Group (U.S. PIRG) analyzed how many West Virginia students this would affect. According to its report, approximately 60,000 students and 49 percent of Stafford loans would be affected by the rate changes immediately.

Further exacerbating this problem are state budget constraints already placing more burden on students at West Virginia colleges, a topic previously covered by Sean.

These constraints likely mean students will have to take even more out in loans, which makes estimates like those from CAP conservative. Costs will likely rise because more students will need subsidized loans, while others will take more money out per loan.

There are several proposals currently in Congress to solve the student loan dilemma. Libby Nelson of Inside Higher Ed has a convenient table of all these bills.

President Obama’s proposal would actually drop the subsidized Stafford rate to 3.09 percent, easing the interest payments on many West Virginia college students. The Senate Democrats’ proposal, co-sponsored by Senator Rockefeller, would drop subsidized rates even further to approximately 2.04 percent. However, this rate is variable over time because it is tied to the three-month Treasury rate. Both of these proposals could save many West Virginia students from even more debt.

Piling more debt on the backs of West Virginia college graduates makes little sense, given that the state ranks last in the United States in the number of workers with a college degree. It does not make any more sense around the country where businesses are demanding an educated workforce.

Amidst these budget cuts and doubling interest rates on loans for college students, it is important to reframe these policies and look at their effects. If our state is going to thrive and advance in this new economy, we need to invest more in higher education, not less.

Come Out and Celebrate Juneteenth Events

 

All the Non-Pepperoni Roll News You Want to Know

Budget Beat for June 14, 2013

So, the pepperoni roll was recently voted America’s favorite food in the “Taste of America” contest and West Virginia has some of the best to offer. Here are some other things about West Virginia we thought you might like to know:

Evidence Counts – the WVCBP blog

This week the Equal Pay Act turned 50. While some women are now earning closer to what their male counterparts take home, women with children have seen less narrowing of the gender pay gap. Not only do they earn less, they are less likely to be hired. Read more in Sean’s blog post.

The full implementation of the Affordable Care Act next year is expected to boost the state’s self-employed by 6,000 or 13 percent. Since people will no longer face “job lock” or the need to stay in a job because it is where they get their health insurance, they will have more freedom to start their own businesses and purchase insurance in the ACA’s marketplace. Read more about how the ACA will be good for the state’s small business owners in Brandon’s blog post.

While the nation recovers from the recession, West Virginia is one of just eight states enacting budget cuts for its upcoming fiscal year. The effects of past business tax breaks are now being felt and policymakers are reacting by cutting funding to higher education and other important programs. Another option, however, would be to tap the state’s rainy day fund, the third-biggest in the nation. Read more in Sean’s blog post.

Our new health policy analyst, Brandon Merritt, experienced first-hand this week why the reforms coming from the Affordable Care Act are a good thing. Read more about the red tape he is experiencing as he switches health care providers.

WVCBP in the News

Brandon and Ted’s OpEd in the Charleston Gazette explains how Governor Tomblin’s decision to expand Medicaid will do much more for the state than reduce the number of people without access to health care. It will also help alleviate other problems like unemployment, prison overcrowding and substance abuse.

Another OpEd by Brandon on health care appeared in The Huntington Herald-Dispatch, this one on how the Affordable Care Act will help promote entrepreneurship in West Virginia since people will have another option, besides their job, to get health insurance.

Middle Class is the Real Job Creator

Check out this testimony given by Nick Hanauer, one of the first investors in Amazon.com, before the U.S. Senate in which he credits the middle class with being the Job Creators, not corporations. He points out that businesses actually want to create the fewest number of jobs necessary, thus lowering costs and increasing profits, and that businesses cannot thrive without a prosperous middle class to buy their goods and services.

Meet Our New Outreach Coordinator – Alyson Clements!

This week the WVCBP welcomed Alyson Clements on board as its Outreach Coordinator. Alyson comes to us with experience in state policy from her work at the ACLU’s West Virginia office. She will be the Center’s lead on the Our Children Our Future campaign and its symposium this fall, and will also work with our other coalition partners on all of our areas of policy and research focus. You can reach Alyson at aclements@wvpolicy.org.

 

 

 

 

Juneteenth Celebration Kicks Off This Weekend!