Trump Administration’s New Health Rule Would Reduce Tax Credits, Raise Costs, For Millions of Moderate-Income Families [feedly]

Trump Administration's New Health Rule Would Reduce Tax Credits, Raise Costs, For Millions of Moderate-Income Families
http://www.cbpp.org/research/health/trump-administrations-new-health-rule-would-reduce-tax-credits-raise-costs-for

The Trump Administration's new proposed rule on health care would raise premiums, out-of-pocket costs, or both for millions of moderate-income families. If finalized as proposed, the rule would reduce the amount of health care that marketplace plans have to cover. That would allow individual-market insurers to offer plans with higher deductibles and other out-of-pocket costs than they can now sell through the marketplaces.[1] It would also have the hidden impact of reducing the Affordable Care Act's (ACA) premium tax credits, which help moderate-income marketplace consumers afford health care. As a result, the rule would force millions of families to choose between higher premiums and worse coverage.

THIS MEANS THAT FOR PEOPLE WHO WANTED TO MAINTAIN THE SAME COVERAGE THEY HAVE TODAY, TAX CREDITS WOULD COVER LESS OF THE COST.  As explained in more detail below, the proposed rule would result in reduced premium tax credit amounts because it would lower the standards for "silver" plan coverage. Under the ACA, the premium tax credits that consumers receive to help pay for marketplace plans are calculated based on the local cost of a silver plan. By allowing less generous silver plans, the rule would reduce the value of premium tax credits for many of the more than 9 million consumers who receive them — an effect the rule itself acknowledges.[2] This means that for people who wanted to maintain the same coverage they have today, tax credits would cover less of the cost.

The Administration argues that allowing less generous health plans, with higher deductibles and out-of-pocket costs but lower premiums, will give consumers more choices, draw more people into the marketplace, and, in this way, stabilize the market. But, in fact, this provision of the rule will do just the opposite. Due to the impact on premium tax credits, it will mainly serve to make marketplace coverage more expensive for marketplace consumers. Together with other provisions of the rule, that will almost certainly result in lower enrollment and a weaker risk pool which, in turn, will weaken market stability. Moreover, the rule does nothing to dispel the main source of uncertainty and instability currently affecting the marketplace: the looming threat that congressional Republicans will repeal the ACA, without enacting a comprehensive replacement.

What the Proposed Rule Would Do

The proposed rule allows individual-market insurers to offer plans with higher deductibles and out-of-pocket costs, but lower premiums, than they're now allowed to offer. That's because it allows plans with lower "actuarial value." Actuarial value is the share of a typical consumer's medical costs that the plan covers, as opposed to what the consumer pays directly through deductibles, copays, and coinsurance. For example, in a silver plan with an actuarial value of 70 percent, the plan picks up 70 percent of a typical consumer's costs for covered benefits, while the consumer would expect to pay 30 percent of costs out of pocket.

To help consumers understand and compare plans, marketplace health plans are tiered by actuarial value: 60 percent (bronze), 70 percent (silver), 80 percent (gold), and 90 percent (platinum).[3] Current rules allow insurers to still meet their actuarial value standards if they deviate by a "de minimis" 2 percentage points from these standard values.[4] The proposed rule would allow plans with actuarial values as much as 4 percentage points below the standard values. That would allow bronze plans with higher deductibles than any current marketplace plans.[5] It also would allow silver plans with actuarial values as low as 66 percent. By allowing for such silver plans, the rule would reduce the size of premium tax credits for millions of families, as explained in the next section.

How the Proposed Rule Would Reduce Premium Tax Credits

Under the ACA, the premium tax credits that consumers receive to help pay for marketplace plans are calculated based on the local cost of a silver plan. By letting insurers offer less generous silver plans, the rule would reduce premium tax credits for many of the more than 9 million consumers who receive them — and that's true whether a consumer buys a silver plan or any other kind of plan.[6]

Specifically, premium tax credits adjust dollar-for-dollar based on the premium for the second-lowest-cost silver plan where a consumer lives, known as the "benchmark" plan. All else being equal, a plan with a lower actuarial value will have lower premiums than one with a higher value. In particular, a plan that covers 66 percent of a typical consumer's medical costs will have a lower premium than an otherwise identical plan that covers 68 percent of costs. Allowing plans with lower actuarial values to qualify as silver plans can thus result in lower benchmark plan premiums and, in turn, lower premium tax credits. While low-income families would be largely protected by other provisions of the ACA, moderate-income families would be left with the choice of paying higher premiums or opting for worse coverage. [7]

Consider an example: Under the ACA, a family of four with $65,000 of income is expected to contribute $5,664 per year to buy the benchmark plan. Suppose the current benchmark plan has an actuarial value of 68 percent and a premium of $13,080 per year — the national average benchmark premium for a family of four. The family's premium tax credit will equal the difference between the gross premium of $13,080 and the $5,664 that the family is expected to pay: or $7,416. If, however, the benchmark plan's actuarial value falls to 66 percent and its premium falls commensurately, the premium tax credit will fall by $327.[8]

At first blush, the family might be indifferent between these two outcomes because both its premium tax credit and its benchmark premium fell. But in fact, as illustrated by Table 1, the family would now face a worse set of choices.

• It could pay the same amount in premiums as before, but buy a plan with a lower actuarial value, meaning some combination of higher deductibles, higher copays, and higher coinsurance. In the illustrative example in the table, the deductible for a benchmark plan increases by $550 per person under the new rules.
• Or, the family could choose to buy a plan with the same cost sharing as it had before, but it now would have to pay more in premiums. The 68 percent actuarial value plan that previously cost the family $5,664 in premiums will now cost $5,991, a premium increase of $327 per year.

To be sure, the proposed rule does not require all silver plans to reduce their actuarial values to 66 percent.  Just like today, insurers presumably would offer silver plans with a range of actuarial values within the allowed corridor. But because premium tax credits are based on the second-lowest-cost silver plan on offer, they will generally be based on silver plans that adopt the actuarial values at or near the bottom of the allowable range: 68 percent today, 66 percent under the rule. That's especially likely to be the case in more competitive markets.

As a result, while a stated goal of the rule is to expand consumer choice, it actually would leave many moderate-income consumers with worse choices and less affordable coverage.

TABLE 1
How the Proposed Rule Could Affect Coverage Affordability Illustrative Example: Family of Four with Income of $65,000*
	Annual Gross Premium	Premium Tax Credit	Net Premium	Per-person Deductible	Change for Family
Current Rules
68% actuarial value silver plan (benchmark)	$13,080	$7,416	$5,664	$1,900	N/A
Proposed Rule
66% actuarial value silver plan (new benchmark)	$12,753	$7,089	$5,664	$2,450	Deductible ↑$550/person
68% actuarial value silver plan (old benchmark)	$13,080	$7,089	$5,991	$1,900	Premium ↑$327/year

* The illustrative example assumes an initial premium equal to the national average benchmark premium for a family of four with one 40-year-old adult, one 38-year-old adult, and two children. It assumes that 85 percent of the plan's premium covers medical costs, while 15 percent covers administrative costs and profits. Deductible values are calculated using the Centers for Medicare and Medicaid Services 2017 actuarial value calculator assuming a plan with a deductible that applies to all services, a 30 percent coinsurance rate above the deductible, and a $7,200 out-of-pocket maximum.

TOPICS: 

Health, Health Reform

End Notes

[1] The proposed rule would also allow lower-value plans in the Affordable Care Act-compliant, off-marketplace individual market.

[2] The rule notes that this provision "would likely reduce the benchmark premium for purposes of the premium tax credit, leading to a transfer from credit recipients to the government."

[3] These rules also apply in the ACA-compliant small group market and off-marketplace individual market.

[4] Starting in 2018, certain bronze plans may have actuarial values of up to 65 percent, but still not below 58 percent.

[5] Catastrophic plans with lower actuarial values can be sold through the marketplace, but are only available to a small subset of consumers and do not qualify for premium tax credits.

[6] Data on consumers currently receiving premium tax credits are as of early 2016: Centers for Medicare and Medicaid Services, "March 31, 2016 Effectuated Enrollment Snapshot," June 30, 2016, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-06-30.html.

[7] It appears that the proposed rule partially protects consumers who qualify for cost-sharing reductions — those with incomes below 250 percent of the federal poverty level — from increases in costs. When these families purchase silver plans, insurers are required to provide them with cost-sharing reduction "variant" coverage with higher actuarial values, for which the insurers are reimbursed by the federal government. The proposed rule does not appear to modify actuarial value requirements for these variant plans. However, the rule would still reduce premium tax credits for these families, increasing their net premiums if they choose to purchase plans in a metal tier other than silver (and in some cases if they choose to purchase a silver plan other than the local benchmark). Meanwhile, families with incomes above 250 percent of the federal poverty level qualify only for premium tax credits, not cost-sharing reductions.

[8] This calculation assumes that 85 percent of the plan's premium covers medical costs, while 15 percent covers administrative costs and profits. Thus, the reduction in actuarial value from 68 percent to 66 percent lowers the premium by $327. Here's the arithmetic: 85%×$13,080×(1-66/68).

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Eastern Panhandle Independent Community (EPIC) Radio:Paris in the air, Common Ground on Labor Beat

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Blog: Eastern Panhandle Independent Community (EPIC) Radio
Post: Paris in the air, Common Ground on Labor Beat
Link: http://www.enlightenradio.org/2017/02/paris-in-air-common-ground-on-labor-beat.html

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What Would Eliminating the Income Tax Mean for West Virginia? [feedly]

What Would Eliminating the Income Tax Mean for West Virginia?
http://www.wvpolicy.org/what-would-eliminating-the-income-tax-mean-for-west-virginia/

Reducing the income tax and replacing it with a higher sales tax is a strategy that has been tried over and over in other states with little or nothing to show, other than revenue erosion that brings cuts in support for schools, transportation and other true building blocks of broad prosperity. A better course for West Virginia would be to reform the tax system in ways that would close our looming budget gap, tie what people owe more closely to their ability to pay, and help more hardworking men and women provide their families with a secure future.

While there are no details yet about what a West Virginia income tax cut would look like or what would be included in a sales tax hike, State Senate leadership and Governor Justice said their goal was to eliminate that tax altogether. Income tax cuts and proposals in other states have involved significant increases in other taxes – those that affect low- and middle-class households more than the wealthy – and major cuts to essential services.

Replacing the income tax with a broader based sales tax and rate increase in West Virginia would raise taxes on 60 percent of families while giving the top 1 percent a tax break of over $27,000. Instead of cutting the income tax, lawmakers should pursue efforts to limit itemized deductions, modernize tax brackets, and create a refundable Earned Income Tax Credit.

On Wednesday, February 15, WVCBP Executive Director Ted Boettner presented at the Covenant House in Charleston on how a shift from income tax to a higher sales tax would benefit the wealthy and destabilize the state's revenue system. View the presentation.

VISIT WEBSITE
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Asia’s Ascent into the Global Economy [feedly]

Asia's Ascent into the Global Economy
https://blog-imfdirect.imf.org/2017/02/15/asias-ascent-into-the-global-economy/

By iMFdirect

Barry Eichengreen says what happens in China doesn't stay in China anymore.

Eichengreen is Professor of Political Science at the University of California, Berkeley, and in this podcast he characterizes the emergence of Asia, and of China in particular, as "the most important economic event affecting the world in the last quarter century."

While the region struggles with distribution and inequality issues, Eichengreen says Asia, has managed to lift millions, if not billions of people out of poverty and into middle income status.

Highlights:

• Throughout the conversation, Eichengreen underlines the important linkages between Asian economies and the global financial system, and at one point suggests the very nature of Asian markets could work to their advantage in today's economic environment. "Asian markets by and large are smaller and less liquid than so called Western markets. So they have room to run and they need to use it."

• Eichengreen also talks about the significance of the Chinese Renminbi being added to the IMF's Special Drawing Rights basket, but says more needs to be done in order to internationalize the currency. "What would really make the Renminbi a true international currency is if China developed deep and liquid financial markets that made holding Renminbi denominated currencies, doing cross-border business with the currency, attractive not only to residents but to foreigners as well."

Listen to the podcast here:

https://soundcloud.com/imf-podcasts/barry-eichengreen-asias-ascent

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Piketty: For a democratic Euro-zone government

For a democratic Euro-zone government

Partager cet article

Thomas Piketty

The Euro zone needs a proper government : a joint budget, common rules of taxation, an investment and borrowing capacity, a growth strategy and a model for sustainable and equitable development. But to achieve all these one day the Euro zone must first focus on creating democratic institutions enabling common decision making. There is no point in discussing a government for the Euro zone if the democratic instance to which this government will be responsible is not clearly stated.

At the moment, the main decision-making instance in the Euro zone is the Council of Finance Ministers. The problem is that this Council is usually incapable of taking decisions. For years now, the Euro zone has been supposed to be adjudicating on the restructuring of the Greek debt which everyone knows is unsustainable and these decisions are constantly deferred.

REASONS FOR INACTION

Take another example: for years now there have been a growing number of corporate income tax scandals. Everyone knows now that there is widescale avoidance of this tax by multinationals that often pay rates which are derisory. However, the Euro zone has still not been capable of taking the slightest tangible decision. We are still at the stage of discussing the setting up of a common tax base and we have still not seriously considered the question of a common minimal tax rate. What meaning is there in agreeing on a common tax base if each country can then fix a rate close to zero and attract all the company head offices?

The reason for this lack of action is that in operation, the Council of Finance Ministers usually observes the principle of unanimity: on taxation, a veto from Luxembourg is enough to block everything. Some rare decisions can in principle be taken with a majority vote but in practice the major countries have a right of veto. Thus Germany and its Minister for Finance stick obstinately to the absurd idea that Greece must produce a huge primary budgetary surplus of 3.5% of GDP for decades to come, and this idea blocks any decision.

The problem lies in the very structure of the Council of Finance Ministers which is a machine for opposing national interests to each other (or erroneously perceived as such) and leads to inertia. As soon as one single person represents a country of 80 million inhabitants (Germany) or 65 million inhabitants (France), it is almost impossible for this person to quietly accept being outvoted. This prevents any level-headed majority decision – and even any public deliberation.

A NEW PARLIAMENTARY ASSEMBLY FOR THE EURO ZONE

Therefore the Council of Finance Ministers should be replaced by a true parliamentary assembly for the Euro Zone, in which each country would be represented by a certain number of elected members from their respective national parliaments, in a number proportionate to the country population and the various political groups. For example, there would be 30 members from the German Bundestag and 25 from the French National Assembly, on an all party basis. We would quickly realise that opinions on the Greek debt or corporate taxation rates vary considerably within each country, including in Germany, and it would become possible to take majority decisions which enable them to move beyond national oppositions. We should also bear in mind here that Germany makes up 27% of the population in the Euro zone while France, Italy and Spain together constitute 50% with Belgium, Greece and Portugal and the other countries constituting 23%.

An alternative solution would be to fall back on a sub-formation from the Euro Zone within the European Parliament. It seems to me distinctly preferable to base the Euro Zone Parliamentary Assembly on the national parliaments. On one hand, because they have the requisite democratic legitimacy to engage national taxpayers and on the other, because it is essential, by means of this major democratic innovation to formally recognise the existence of a hard core which is more closely integrated than the European Union as a whole, and has its own institutions.

Whatever the case may be, it is essential for the candidates in the forthcoming elections to finally make specific proposals concerning the setting up of a democratic government for the Euro Zone, without which all the discussions on re-launching Europe and the economic government will remain wishful thinking.

[This is a translation of a tribune originally published in French)

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John Case
Harpers Ferry, WV

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Heads up—the GOP is helping Wall Street pick your pocket [feedly]

Heads up—the GOP is helping Wall Street pick your pocket
http://www.epi.org/blog/heads-up-the-gop-is-helping-wall-street-pick-your-pocket/

While the headlines are dominated by White House leaks and personnel scandals, the Trump administration and Republicans in Congress have been quietly helping the financial industry siphon off your retirement savings. First, the administration announced that it was reviewing a rule scheduled to take effect in April requiring financial advisors to work in their clients' best interests. Yes, you read that correctly. Some people presenting themselves as financial advisors can now legally steer you to rip-off investments, a glaring problem the Obama administration addressed in a commonsense rule six long years in the making.

The rule, backed by the Consumer Federation of America, Senator Elizabeth Warren, Vanguard founder John Bogle, and others, applies to brokers, plan consultants, and others advising participants in 401(k)-style plans and IRAs who don't already adhere to a fiduciary standard. Among other things, it prohibits financial professionals from pretending to offer disinterested retirement advice while working on commission and from steering retirement savers to higher-cost investments when similar but lower-cost options are available. Importantly, the rule protects job-leavers from being lured into rolling over their pensions and 401(k)s into higher-cost IRAs, at a time in their life when many people are vulnerable to bad advice.

How can anyone argue against the fiduciary rule with a straight face? The financial services industry counters that if some clients don't get bad advice, they may not be able to afford advice at all. This is like dietitians arguing that clients may not be able to afford nutritional advice if it's not paid for by Coca Cola. The industry also says the rule could put some people out of business, which isn't reason to oppose it—it goes without saying that we shouldn't prop up a business model where survival is dependent on fleecing savers.

Read more

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Fwd: Time Is Already Running Out on Our Democracy

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Time Is Already Running Out on Our Democracy    Kali Holloway February 13, 2017 Alternet   "I think things have tightened up very fast; we have at most a year to defend the republic, perhaps less," Snyder stated in an interview with German outlet Süddeutsche Zeitung. "What happens in the next few weeks is very important." Snyder, whose multiple books include On Tyranny: Twenty Lessons from the Twentieth Century, points out that Americans must dispense with wishful thinking about institutions helping to curb Trump's power.     , IoSonoUnaFotoCamera via Flickr/CC,     Timothy Snyder, a Yale scholar and an authority on European political history, has spent decades studying the rise of fascist movements. With the ascension of Donald Trump to the U.S. presidency, Snyder sees echoes from history, and warns that the time to save America from autocracy is in short supply. "I think things have tightened up very fast; we have at most a year to defend the republic, perhaps less," Snyder stated in an interview with German outlet Süddeutsche Zeitung. "What happens in the next few weeks is very important." Snyder, whose multiple books include On Tyranny: Twenty Lessons from the Twentieth Century, points out that Americans must dispense with wishful thinking about institutions helping to curb Trump's power. In fact, that misguided notion is precisely what landed us in this situation. "The story that Americans have told themselves from the moment he declared his candidacy for president, was that one institution or another would defeat him or at least change his behavior—he won't get the nomination; if he gets the nomination, he will be a normal Republican; he will get defeated in the general election; if he wins, the presidency will mature him (that was what Obama said)," Snyder recounts. "I never thought any of that was true. He doesn't seem to care about the institutions and the laws except insofar as they appear as barriers to the goal of permanent kleptocratic authoritarianism and immediate personal gratification. It is all about him all of time, it is not about the citizens and our political traditions." In the days after the election, Snyder penned a must-read Slate article that recalled historical markers from Hitler's rise to reveal the similar path of Trump's advance. The historian had hoped to cajole Americans out of complacency, to urge them to "find their bearings," to remind them none of this is normal and that democracy is in the crosshairs. "The temptation in a new situation is to imagine that nothing has changed," Snyder says. "That is a choice that has political consequences: self-delusion leads to half-conscious anticipatory obedience and then to regime change... Most Americans are exceptionalists; we think we live outside of history. Americans tend to think: 'We have freedom because we love freedom, we love freedom because we are free.' It is a bit circular and doesn't acknowledge the historical structures that can favor or weaken democratic republics. We don't realize how similar our predicaments are to those of other people." "I wanted to remind my fellow Americans that intelligent people, not so different from ourselves, have experienced the collapse of a republic before. It is one example among many. Republics, like other forms of government, exist in history and can rise and fall." Snyder points to the desperate need to shake off historical amnesia as the Trump administration looks to authoritarian regimes as models. "[O]ne reason why we cannot forget the 1930s is that the presidential administration is clearly thinking about them, but in a positive sense," Snyder stated. "They seem to be after a kind of redo of the 1930s with Roosevelt where the Americans take a different course—where we don't build a welfare state and don't intervene in Europe to stop fascism. Lindbergh instead of FDR. That is their notion. Something went wrong with Roosevelt and now they want to go back and reverse it." "During the campaign [Trump] used the slogan 'America First' and then was informed that this was the name of a movement that tried to prevent the United States from fighting Nazi Germany and was associated with nativists and white supremacists. He claimed then not to have known that. But in the inaugural address he made 'America First' his central theme, and now he can't say that he doesn't know what it means. And of course Bannon knows what it means. America First is precisely the conjuration of this alternative America of the 1930s where Charles Lindbergh is the hero. This inaugural address reeked of the 1930s." Snyder urges immediate resistance to the administration's targeting of Muslims, immigrants, blacks and LGBT people, because if it can "slice off one group, it can do the same to others." He says protest and pushback should continue with regularity. "The Constitution is worth saving, the rule of law is worth saving, democracy is worth saving, but these things can and will be lost if everyone waits around for someone else." He also notes that the speed with which the Trump team has worked to hammer home its agenda is a strategy designed to cause fatigue and depression. The key is not to be grow tired or become resigned. In particular, he cautions against succumbing to Trump's attempts to paint all those who reject his agenda as un-American. "The idea is to marginalize the people who actually represent the core values of the republic," says Snyder. "The point is to bring down the republic. You can disagree with [protesters], but once you say they have no right to protest or start lying about them, you are in effect saying: 'We want a regime where this is not possible anymore.' When the president says that, it means that the executive branch is engaged in regime change towards an authoritarian regime without the rule of law. You are getting people used to this transition, you are inviting them into the process by asking them to have contempt for their fellow citizens who are defending the republic. You are also seducing people into a world of permanent internet lying and away from their own experiences with other people. Getting out to protest, this is something real and I would say something patriotic. Part of the new authoritarianism is to get people to prefer fiction and inaction to reality and action. People sit in their chairs, read the tweet and repeat the clichés: 'Yes, they are thugs' instead of 'It is normal to get out in the streets for what you believe.' [Trump] is trying to teach people a new behavior: 'You just sit right where you are, read what I say and nod your head.' That is the psychology of regime change." The only way to stop is to not obey, Snyder reiterates.    For more of Snyder's insights on history's lessons and how to apply them to Trump, check out his 20-point guide on forms of resistance.  Kali Holloway is a senior writer and the associate editor of media and culture at AlterNet.	VIEW ONLINE PRINT SUBSCRIBE VISIT PORTSIDE.ORG TWITTER FACEBOOK

 

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