Historic U.S. Supreme Court Decision Ruling the ACA Constitutional Keeps the Nation on Track to Advance Health Equity

By Brian Smedley, Ph.D.

The U.S. Supreme Court decision upholding the constitutionality of the Patient Protection and Affordable Care Act (ACA) represents a significant advancement in the effort to repair the deeply broken U.S. healthcare system and promote equitable opportunities for good health for all.  As long as its provisions are fully funded by Congress, the law will improve access to health insurance for more than 32 million Americans, prevent insurance companies from cherry-picking enrollees and denying claims because of pre-existing conditions, and incentivize more health-care providers to work in medically underserved communities.  These are among the benefits that the law is already providing, in addition to what is expected as provisions of the ACA come into force over the next two years.

In addition to ruling that the law’s mandate requiring insurance coverage is constitutional, the Court’s decision ensures that other key provisions of the legislation remain intact, many of which hold great promise to address the needs of those who face the greatest barriers to good health—particularly people of color, who are the fastest-growing segment of the U.S. population.

Many people of color face poorer health than the general population in the form of higher rates of infant mortality, chronic disease and disability and premature death.  Not only do these health inequities carry a tremendous human toll, but they also impose an enormous economic burden on the nation at large.  A study released by the Joint Center for Political and Economic Studies found that the direct medical costs associated with health inequities—in other words, additional costs of health care incurred because of the higher burden of disease and illness experienced by minorities—was nearly $300 billion in the four years between 2003 and 2006.  Adding the indirect costs associated with health inequities—such as lost wages and productivity and lost tax revenue—the total costs of health inequities to our society was $1.24 billion in the same time span.

How might the ACA change these dismal statistics?

By expanding access to private insurance through state health exchanges, improving access for more people who live in poverty through Medicaid expansions, and other reforms, more than 32 million uninsured Americans will gain coverage.  All of these provisions would improve the current state of health care for people of color, who are disproportionately un- and under-insured and who face greater barriers than whites to receiving high-quality care, even when insured.

Many other provisions of the ACA have great potential to reduce the risks that make people sick in the first place.  These provisions—particularly those that invest in prevention and improving the distribution of health care resources—can significantly improve opportunities for good health for all Americans, and particularly people of color.

A major reason why health inequalities persist is because of differences in the neighborhoods of minorities and non-minorities.  Research shows that racial and ethnic minorities are more likely than whites to live in segregated, high-poverty communities, communities that have historically suffered from a lack of health care investment, so they have fewer primary care providers, hospitals, and clinics.  To make matters worse, many of these communities face a host of health hazards—such as high levels of air, water and soil pollution, and a glut of fast food restaurants and liquor stores—and have relatively few health-enhancing resources, such as grocery stores where fresh fruits and vegetables can be purchased.

Several provisions of the ACA, such as the authorization to expand the National Health Service Corps, which provides incentives and removes barriers for health care providers who want to work in medically underserved communities, and the Prevention and Public Health Fund, the first mandatory funding stream aimed at improving the public’s health, will directly address these place-related barriers to good health.

Consistent with today’s ruling, efforts to improve opportunities for good health and improve health equity can—and must—be increased.  Government at all levels can, for example, improve health opportunities by stimulating public and private investment to help make all communities healthier.  They can do so by creating incentives to improve neighborhood food options, by aggressively addressing environmental degradation, and by de-concentrating poverty from inner-cities and rural areas through smart housing and transportation policy.

Given that by the year 2042, according to the U.S. Census Bureau, half of the people living in the United States will be people of color, it is imperative that we be prepared to address the health needs of an increasingly diverse population.  Lawmakers should continue to focus on the goal of health equity – a goal that is not only consistent with the American promise of opportunity, but in our long-term economic interest, as well.

Brian Smedley, Ph.D., is Vice President and Director of the Joint Center for Political and Economic Studies Health Policy Institute.

In the Interest of Social Security

by Wilhelmina Leigh, Ph.D.

In its deliberations to develop a plan to reduce the federal deficit by more than a trillion dollars over the next decade, the Joint Select Committee on Deficit Reduction considered a proposal to calculate cost-of-living adjustments (COLAs) in all government programs using the “chained” CPI-U (Consumer Price Index-Urban), rather than the CPI-U.  Implementing this proposal would dramatically reduce Social Security benefits for recipients.  Although reducing federal program benefits by changing the COLA computation is indeed one way to reduce the deficit, reducing benefits is not the only way to eliminate the 75-year projected shortfall (of 2.2 percent of taxable payroll) for the Social Security system.  The shortfall can be closed by holding benefit levels harmless and, instead, increasing revenue directed to the system.  A recent report of the Commission to Modernize Social Security (Plan for A New Future: The Impact of Social Security Reform on People of Color) offers recommendations for doing just that.

According to a brief by the National Academy of Social Insurance, over the first ten years after implementation of the chained CPI-U, two-thirds of the deficit reduction achieved would come from cuts in benefits that would be borne by elderly and disabled Americans.  The remaining third would come from revenue increases associated with adjustments to tax brackets and other parameters of the tax code.  After the first decade, deficit reduction due to revenue gains is projected to decrease, while benefit cuts are expected to remain indefinitely.  Reductions in Social Security benefits would be especially problematic for African Americans, among whom benefits (averaging only $1,035 per month for retirees in 2009) are the sole source of income for 40 percent of retiree households ages 65 and older.

The Commission to Modernize Social Security focused on proposals that would both eliminate the projected shortfall and increase benefits for selected vulnerable populations, rather than on proposals that would reduce benefits. Two of the proposals in its report—eliminating the $106,800 cap on wages taxed for Social Security, and extending Social Security coverage to all state and local government employees—would jointly generate enough revenue to eliminate the projected shortfall.  These two proposals along with a gradual increase in the payroll tax rate of one percentage point and taxing contributions to salary reduction plans (such as flexible spending accounts) would generate enough revenue to not only cover the shortfall but also fund benefit increases for the oldest recipients, students, caregivers, and widowed spouses.

It is in the nation’s interest to reduce its deficit.  It is also in the nation’s interest to provide a tune-up to the Social Security system so it will remain solvent over the next 75 years.  Achieving the first goal by reducing the modest benefits that provide a lifeline to so many Social Security recipients of color, however, is not the right way to go.

Wilhelmina A. Leigh is Senior Research Associate of the Economic Security Initiative of the Civic Engagement and Governance Institute at the Joint Center for Political and Economic Studies. More information on Dr. Leigh and her work can be found at the Joint Center website.

Wireless Taxes: Extra Cash You Don’t Have in Difficult Times

by Joseph Miller, Esq

“This tax, that tax, what do they all mean?  Well, I guess I have to pay them if I want to keep this phone.”  Sound familiar?

Earlier this month, the House of Representatives passed the Wireless Tax Fairness Act of 2011, which would freeze any increases in state and local taxes on wireless services.  Now that the House has passed its version of the bill, the Senate should follow suit and pass this legislation.  Both chambers should consider passing a similar measure—the Digital Goods and Services Tax Fairness Act of 2011—which would prevent new taxes on digital goods and services.  Digital goods such as apps and e-books do not burden state resources in the same way that physical goods and services do, and so they should not be taxed at the same rate.

Preventing tax increases on wireless services is a small but significant step toward ensuring that broadband remains affordable for low-income consumers who are disproportionately people of color.  Increases to wireless bills that may seem slight to middle-class and upper income consumers can be enough to cause low-income consumers to cancel or forego their wireless service.  For example, a recent paper by Glenn Woroch estimates that adding $4.17 to the average wireless bill of $47.21 would lead to a 7% drop in wireless subscribership levels.

Three of the top 5 states with the highest wireless tax rates are home to large cities with African-American and Latino populations exceeding the national average.  In some states, wireless service taxes are more than twice the sales tax placed upon physical goods.  New York, for example, has the highest wireless service tax rate (17.78%) among states with majority-minority cities.  Contrast this with New York’s state-wide sales tax rate of 8.25%.  Other such states include Florida (wireless service tax: 16.57%/statewide sales tax: 7.25%) and Illinois (wireless service tax: 15.85%/statewide sales tax: 9%).

Congress should prevent increases to state taxes on digital goods and services as well.  The Joint Center for Political and Economic Studies has reported that African-Americans (32%) and Latinos (29%) are more likely than white Americans (23%) to download apps to their cell phones.  Further, according to Nielsen, 45% of Latinos and 33% of African-Americans own smartphones, as compared to 27% of white mobile users.  And what would the apps market be without smartphones?

Smarter devices and services have made quality goods and services more accessible to low-income consumers.  However, a regressive tax mechanism applied to wireless service, digital goods and digital services would further repress this potential utility of mobile broadband.  For example, several online services can assist low-income consumers in buying groceries if they live too far away from well-stocked and more reasonably priced supermarkets.  Previous studies have shown that many low-income, urban neighborhoods are “food deserts” without feasible access to stores with an array of quality produce and meats.  Online services, such as Peapod, deliver quality meats, seafood and produce to consumers beyond the one-mile radius of partnering supermarkets. Last week, Amazon debuted a new service that allows consumers to purchase basic groceries—including coffee, cereal, meat, and seafood—with few geographic restrictions at all.  Thus, while further raising wireless taxes may create a revenue stream to fund other state and local initiatives, the gains from those initiatives will be negated by nudging low-income consumers toward purchasing lower quality goods at higher prices, and thereby exacerbating negative health and economic outcomes.

Comprehensive and equitable tax policies are absolutely critical for creating a mobile broadband environment that is more conducive to improving conditions in low-income communities.

If you are interested in learning more about the effect of excessive state and local taxes on wireless service and digital goods and services, read the Joint Center for Political and Economic Studies’ report released ahead of yesterday’s House vote.

Joseph Miller, Esq. is Deputy Director and Senior Policy Director of the Media and Technology Institute of the Joint Center for Political and Economic Studies in Washington, DC.  More information on Joseph Miller and his work can be found at the Joint Center website.

Ask Someone Who Isn’t Working …

by Wilhelmina A. Leigh, Ph.D.

“If you think the system is working, ask someone who isn’t.”  Acting on this bumper-sticker advice by surveying people who are not working reveals not only their anguish and depression about being unemployed, but also their belief that the labor market system, and particularly government employment services, are broken and must be fixed.   The American Jobs Act of 2011, recent legislation developed by the Obama administration, offers ways to fix this system.

Unemployed workers surveyed in both 2008 (Peter D. Hart Research Associates, Inc., for the National Employment Law Project) and 2009 (Knowledge Networks for the John J. Heldrich Center for Workforce Development at Rutgers University) agreed that the public workforce system is broken.  In addition, the system has been found to contribute to longstanding racial/ethnic disparities in the labor market, such as those reflected in the September 2011 unemployment rates among African Americans (16.0 percent), Hispanics (11.3 percent), and whites (8.0 percent). A 2005 Joint Center study entitled A Mixed Record found that the public workforce system had just that kind of record in providing jobs for African Americans and Hispanics.  By every performance measure associated with Workforce Investment Act (WIA) programs (the centerpiece of the public workforce system), adult programs were found to be less successful for blacks and Hispanics than for whites and Asians.  Another study finding—that black and Hispanic WIA adult populations were less likely than whites to receive WIA training services—may help explain these differentials.  The WIA Dislocated Worker program, on the other hand, was equally successful for blacks, Hispanics and whites.

Elements of the American Jobs Act of 2011 could create a more even-handed public workforce system.  The Act explicitly prohibits discrimination by employers and employment agencies on the basis of an individual’s status as unemployed (Title III, Subtitle D, “Fair Employment Opportunity Act of 2011”).  If rigorously enforced, this Act could narrow the persistent unemployment rate gaps between people of color and whites.  Along with the “stick” of prohibiting discrimination on the basis of employment status, another provision (Title III, Subtitle B) would offer a “carrot” to employers to hire the long-term unemployed.  Employers who hire individuals who have been unemployed at least six months would be eligible for a maximum tax credit of $4,000.

Yes, people who are not working think the public workforce system is not working, either.  In addition, people of color who are not working achieve mixed outcomes from this system.  Features of the American Jobs Act of 2011—specifically, its mandate not to discriminate against the unemployed and its incentive to hire the long-term unemployed—could go a long way toward resolving these problems.

Wilhelmina A. Leigh is Senior Research Associate of the Economic Security Initiative of the Civic Engagement and Governance Institute at the Joint Center for Political and Economic Studies. More information on Dr. Leigh and her work can be found at the Joint Center website.

Health Costs of Air Pollution in California

RAND Briefing to California Delegation on Health Costs of Air Pollution,

As you may know, RAND recently published a study that estimates spending on hospital care in California due to the harmful health effects of air pollution. The lead author of the report, John Romley, will be in Washington, DC on Thursday, June 24, to brief findings from the research to California delegation staff. The briefing is  from 2:00 p.m. – 3:00 p.m. at 234 Cannon House Office Building. It is sponsored by Congresswoman Zoe Lofgren and Congressman David Dreier

The harmful health effects of air pollution are well understood. Less is known about the cost burden that these effects impose on the health care system. RAND researchers addressed these questions by estimating spending on hospital care in California due to the failure to meet federal and state standards for particulate matter and ozone emissions. More people in California live in areas that do not meet federal air quality standards than in any other state.

The analysis found that:

* Failing to meet federal air quality standards led to nearly 30,000 hospital admissions and emergency room visits in California from 2005 through 2007.
* The resulting spending was about $193 million over the three-year period.
* Public insurers Medicare and Medi-Cal spent the most-$104 million and $28 million, respectively-and private insurers spent $56 million.

The results suggest that publicly funded insurers as well as employers and private insurers would benefit financially from reductions in air pollution.

Please RSVP to kristy_anderson@rand.org or 703-413-1100 ext. 5196, if you would like to schedule a meeting with Mr. Romley for a separate meeting.