Beware the Big-Number Boogeyman

(Promoted by Colorado Pols)

Colorado’s total state budget is $29 billion. That’s right; billion with a “B.” That’s a big number. It’s bigger this year than it was two years ago.

All too often, Colorado’s most extreme conservatives use these oversimplified statements as if they are some kind of thunderclap in the raging debate over our state’s finances. It’s a particular line of attack I call the “Big-Number Boogeyman” argument.

The Big-Number Boogeyman’s tactic is cynical, yet effective. He throws around big numbers most of us can’t relate to and points out how the budget keeps growing. He is quick to dismiss those advocating for more public investment as hopelessly greedy liberals who can’t prioritize.

Last week, the Colorado Springs Gazette took a page out of the Big-Number Boogeyman’s handbook.

In an editorial, it erroneously depicted a shrinking K-12 budget as a direct consequence of the state’s decision to expand Medicaid coverage for those with incomes at 133 percent of the federal poverty line ($16,000/year).

To make its argument, the Gazette relied on the wrong facts. Instead of looking at the $11 billion general fund, it used Colorado’s $29 billion total state budget (all funds).

(If you’re starting to think like the Boogeyman and his followers, you’re probably saying to yourself, “Wow, $11 billion is a big number.” Before I lose you, divide that $11 billion by our population. It accounts to a mere $2,000 for every man, woman, and child.)

Remove the Big-Number Boogeyman bias and here’s what’s left: It may seem like Medicaid’s share of the budget is exploding, but that’s because Medicaid expansion is funded by a federal government match. When you look at the general fund — the true measure of where our tax dollars are going — you see percentages for Medicaid have remained virtually unchanged over the last five years.

Based on its incorrect theory, the Gazette then declared a solution to the problem (one it created by using out-of-context numbers): If we want higher paid teachers, kick people off Medicaid. Fiscal crisis solved!

The Big-Number Boogeyman and his henchmen went wild.

“$29 billion and we can’t find money for roads and schools?”
“We just need to prioritize better!”
“The budget grows bigger every year. How much more do you want?”

(more…)

The Trump Budget: 15 Threats to Opportunity in Colorado

(Promoted by Colorado Pols)

President Trump released his “Skinny Budget” March 16, a broad outline of his priorities for the federal budget.  He proposes to increase spending on defense by $54 billion and pay for it with cuts to other areas.

Based on our initial review of the data provided, we find his budget to be shortsighted.  It chokes off investments that promote opportunity for moderate- and low-income Americans and shifts the costs from the federal government to the states and families. It hurts many of the people who Trump claims to represent and, when coupled with his other proposals on health care and tax reform, will exacerbate income inequality.

While there’s not much data in the skinny budget – he put more details in some of his tweets –Trump’s vision for America is clear.

About $8 billion or 30 percent of Colorado’s $27 billion total operating budget for this year comes from the federal government, most of it going to health care, human services, education and transportation.

While important, federal funding to the states has been declining for decades when measured as a percentage of the overall economy. Nationwide, federal spending on grants to the states is lower today than it was over three decades ago in 1980.  It is substantially lower than it was in 2010, with discretionary spending down by about one-third since then.

Here are some of more egregious proposed cuts and how they make it difficult for Coloradans to get ahead economically.

(more…)

Three Ways the GOP Health Plan Will Erode Colorado Gains

(Promoted by Colorado Pols)

We’re keeping a close eye on how the Congressional Republicans’ newly proposed American Health Care Act (AHCA), introduced on Monday, would impact Colorado. The measure would effectively repeal many aspects of the Affordable Care Act (ACA) through a budget process. The plan contains major threats to the health care status quo in Colorado.

The early signs point to higher costs for low- to moderate-income people, older people and sicker people. The AHCA would dramatically shift Medicaid costs to states, under the guise of “greater flexibility” and “modernization.”

If health insurance premiums soar, if people don’t get help with paying higher costs, or if they lose Medicaid coverage, hundreds of thousands of Coloradans will lose health coverage because they can’t afford it. That puts us right back to where we started before the ACA.

The non-partisan Congressional Budget Office (CBO) has not released its analysis of the AHCA. Even though we lack this crucial, unbiased information about what the plan will cost taxpayers and how many people stand to lose health coverage, the House is rapidly pushing this bill through the legislative process.

While we policy analysts wait, here are some educated guesses about the three ways the GOP plan will erode many of the health care gains that our state has made.

(more…)

All Eyes on Cory Gardner: Protect Main Street, not Wall Street

(Promoted by Colorado Pols)

By Rich Jones

Sen. Cory Gardner (R).

A critical vote could come in the U.S. Senate as soon as this week. And Sen. Cory Gardner has the chance to stand up for his constituents instead of appeasing Wall Street interests lobbying him to stymie local and state efforts to tackle our nation’s retirement needs. Nearly 800,000 Coloradans have no access to retirement plans at work and many businesses struggle to offer their employees low-fee options. Colorado is selling itself as a start-up friendly state. But few entrepreneurs can easily offer benefits like retirement programs. Making it easy for everyone to begin building wealth early in their careers helps all Coloradans.

Last month, the U.S. House approved H.J Res. 66 & H.J. Res. 67 and sent these ill-conceived measures to the Senate. They would bar state and local governments from creating low-fee savings plans that help people without options at work to get a jump start on saving.

Our country faces a retirement crisis of epic proportions. The U.S. Census bureau just released data showing that 55 million Americans have no retirement plan at work. Even worse, the average retirement savings is a paltry $5,000.

When individuals save, states do too. Economists in Utah found that if retirees who had the smallest nest eggs had boosted their savings by just 10 percent, or about $14,000 on average during their working years, taxpayers could have spent $194 million less to support them.

Given the gravity of the crisis, it’s perplexing that members of Congress would want to halt innovation in the states, especially Republicans who have long touted states’ rights. These plans have the backing of numerous state officials — including many Republican state treasurers — in Indiana, Idaho, Louisiana, and Utah.  The bipartisan National Conference of State Legislatures urges the Senate to defeat H.J. Res 66 writing, “Passage of this resolution … will result in an unwarranted preemption of state innovation, will restrict the ability of millions of hardworking Americans to save for retirement, and will prove costly to federal and state budgets”.

Dig beneath the surface on the vote in the House and you’ll see that many Congress members are trying to pay back their pals in the finance industry who don’t want average Americans to have low-fee, automatic alternatives. Senators should be more sensible and help workers of all ages save for their later years.

(more…)

Get a Handle on Colorado’s Fiscal Challenges With ’12 Charts’

As legislators begin to write the budget, state economists are projecting that General Fund revenues will exceed the TABOR/Ref C limit. It has been more than a decade since Colorado last hit the TABOR limit, but the consequences are clear: Colorado will be returning tax dollars before restoring the cuts made to vital services.

This is not a new problem in our state, and it's not the first time we've weighed in and said we need to have a statewide conversation about both our fiscal challenges and the kind of state we want to be. But this seems like a good time to say it again. And we've brought visual aids — Colorado's Fiscal Challenges — in 12 Charts.

Structural problems in the state's tax code increasingly undermine the state's ability to support the public structures that underpin our quality of life. From a flat income tax that does not capture significant tax revenue from the highest income brackets to an obsolete sales tax structure, Colorado's fiscal structures need a tune-up. With TABOR rebates on the horizon, we believe a statewide conversation must start with renewed energy. We hope our 12 Charts educate and engage decision-makers, advocates and allies to address both our unavoidable short-term challenges and our impending long-term ones.

 We think these charts tell a compelling story – that Colorado must act now to preserve its high quality of life.
 

 

For Veterans Day, Help Curb Loans That Harm Military Families

(Help win the war on payday lending, a battle close to our hearts – promoted by Colorado Pols)

bigstock-Neon-Sign-series-payday-loan-259047411-e1363870922652

Tomorrow is Veterans Day, so this is a good time to highlight ongoing action by the Department of Defense that is designed to protect active-duty service members and their families from abusive lending practices.

The DoD has proposed extending restrictions on predatory lending, which traps many service members and their dependents. The proposal would expand the number of lending products covered by the military’s 36 percent interest rate cap, and it would close loopholes that lenders have used to get around the current rate cap.
The proposed rule was published in the Federal Register on Sept. 30. A 60-day comment period ends Nov. 28. (See below how you can help support this rule.)

Colorado has implemented successful payday lending reforms, but the new rule would apply here as well. It would limit the interest and fees that military borrowers could be charged to 36 percent APR. Because loans here have a minimum six-month term, they are currently exempt from the DoD’s 36 percent rate cap. According to data from the attorney general’s office, in 2012, Colorado's payday loans had an average effective rate of 129 percent APR.

The Consumer Financial Protection Bureau strongly supports the DoD’s proposed rules, as do a wide range of consumer groups, including the Center for Responsible Lending, Consumer Federation of America and the National Consumer Law Center.

(more…)

Claims on Seniors and ACA in Senate Race Don’t Mesh With Facts

(Don't believe the hype – promoted by Colorado Pols)

obamascare

Two campaign claims are being made in Colorado’s U.S. senate race about the Affordable Care Act and seniors. Political ads are often designed to scare or anger people rather than inform them, and that sure seems to be the case here.  

Claim No. 1
The Affordable Care Act “cleared the way for cuts to Medicare Advantage,” and “didn’t protect Colorado seniors” but instead puts “them in harm’s way.”

Medicare Advantage (MA) is the private insurance version of traditional Medicare. MA plans must cover all of the traditional Medicare benefits, but they have additional benefits, for which policyholders pay extra. More than 256,000 Coloradans are enrolled in Medicare Advantage plans, and they represent about 36 percent of the state’s total Medicare population.

The federal Medicare program reimburses Medicare Advantage insurance companies for the cost of traditional Medicare coverage. Prior to the Affordable Care Act (ACA), MA plans were paid 14 percent more on average per enrollee than for enrollees in traditional Medicare. That translated into an additional $1,280 per MA enrollee, or about $14 billion in higher payments to insurance companies. Those excess payments contributed significantly to concerns about Medicare’s long-term financial solvency. In 2009, it also meant an additional $40 per year in Part B premiums for all Medicare beneficiaries. The excess payments were also ironic, since one of the big selling points for Medicare Advantage legislation in the late 1990s was that its reliance on private-market insurance would reduce long-term Medicare spending.

In response, the ACA included provisions to reduce MA overpayments while at the same time providing incentives for improvements in quality. The transition to lower rates began in 2012 and is scheduled to end in 2017. Between 2009 and 2014, those reimbursements were reduced by an average of 8 percent.  Even so, in 2014, MA plan reimbursement rates are still about 6 percent higher than traditional Medicare.

Additionally, while cuts were implemented over the last two years, because of reductions in overall Medicare spending, reimbursement payments to MA carriers will actually increase rather than decrease in 2014 and 2015.

It’s also illegal under the ACA for Medicare Advantage plans to reduce or eliminate traditional Medicare benefits.  

(more…)

Colorado’s Health Exchange on Track to Meet Budget Goals

Connect for Health Colorado, our state’s health insurance exchange, had its first anniversary as a marketplace last week. That’s a milestone, but a more important milestone comes in 2015. That’s when the marketplace must be financially self-sufficient.

Based on early projections, it looks like the marketplace is on its way to meeting that goal.

Connect for Health Colorado’s Finance Committee recently offered a revenue projection for the current year. Using a conservative approach, it projects that revenue for 2014 is about $600,000 above earlier estimates, and total revenue for the year is expected to top out at $5.4 million.   

Revenue for Connect for Health Colorado comes from a 1.4 percent administrative fee on premiums for health plans sold through the marketplace, as well as a number of other sources. The average monthly premium this year is about $337.  

During the first open-enrollment period, many analysts and pundits predicted low enrollment, especially given technical problems experienced in the rollout of the federal exchange. As it turned out, both national and state enrollment numbers were better than expected. Connect for Health Colorado’s enrollment turned out to be well above projections. As of Sept. 2, enrollment reached 146,110, well above the midrange estimate of 136,300. And now, enrollment is more than 148,000, according to estimates.

Of that total, 90 percent paid the initial premium and obtained coverage. The 10 percent non-payment rate is not especially surprising.  Most of these new enrollees were likely uninsured and unfamiliar with the health insurance market and processes. Some of these potential enrollees may have been determined to be eligible for Medicaid after their initial enrollment. Some may have taken jobs with health benefits. Others may have decided not to purchase coverage and instead paid the individual mandate tax penalty. For 2014, that penalty was the lowest it will ever be – $95 for a single adult and a maximum of $285 for a family, or 1 percent of family income, whichever is larger.   

One key area where data is still lagging is the number of policy cancellations and renewals. In fact, the marketplace does not have comprehensive data for policyholder attrition. The carriers provide that data, and there is no hard-and-fast deadline for submitting it. The actual attrition or cancellation rate for individual-market policies in 2014 will probably not be available until April or May of next year.   

Another factor complicating data collection on cancellation notices is the introduction of a federal grace period. The Affordable Care Act created a 90-day grace period for enrollees who receive a federal subsidy to pay their premiums before an insurer can terminate coverage. These are lower-income individuals, and some may have trouble consistently making premium payments. The grace period means, after making an initial payment, policyholders can go up to three months without making a payment before coverage is terminated. Almost 60 percent of marketplace enrollees receive federal subsidies and are considered enrolled until carriers report termination of coverage.  

In its revenue calculations, Connect for Health Colorado used a conservative assumption of retaining 70 percent of enrollees. That estimate was not an actual cancellation rate and was used for financial planning purposes only. The point of the 70 percent estimate was to show that even with a high cancellation rate, the marketplace would still have sufficient revenue.

Another positive note is that enrollment is increasing. Even though some people are leaving the system, even more are coming in. Under the ACA, insurance can be purchased only during predefined open-enrollment periods, unless there has been a “qualifying life event,” such as a divorce, marriage, birth or loss of coverage.  Connect for Health Colorado is getting roughly 4,000 enrollees per month from people experiencing life-changing events. This clearly shows interest and demand.

In addition, upcoming individual mandate penalties are expected to have a greater impact on consumer choices. The penalty for 2015 will increase to $325 per single adult and up to $975 per family, or 2 percent of family income, whichever is larger.  In 2016, the penalty will max out at $695 per adult and $2,085 per family, or 2.5 percent of family income, whichever is larger. As the penalty increases, there will be a greater incentive to purchase coverage.   

For 2015, Connect for Health Colorado offers a range in estimating enrollment: 54,500 on the low end, 80,000 at midrange and 128,500 on the high end. We won’t know actual numbers for more than a year, but if the midrange estimate is correct, the marketplace will be enrolling substantially more people than might leave under a high attrition rate.  

The results of the midterm elections and federal court challenges to the Affordable Care Act could have an impact on the exchanges and the insurance market. So how the health care reform law and the exchanges will affect enrollment over the long run remains to be seen.

But for now, in Colorado, estimates and trends are heading in the right direction.

— Bob Semro

Department of Defense Extends Restrictions on Predatory Lending

The U.S. Department of Defense (DoD) released a proposal on Friday that would extend restrictions on predatory lending, which traps many active-duty service members and their dependents. The proposed rule would expand the number of lending products covered by the military’s 36 percent interest rate cap, and it would close loopholes that lenders have used to get around the current rate cap.

“This is a strong rule that closes loopholes and ends the debt trap for military borrowers,” said Rich Jones, director of policy and research at the Bell Policy Center. “Because it applies to products that are subject to the Truth in Lending Act, it prevents lenders from getting around it in the future and extends protections to more forms of credit.”

Colorado has implemented successful reforms of payday lending, but the new rule would apply here as well. It would limit the interest and fees that military borrowers could be charged to 36 percent APR.  Because loans here have a minimum six-month term, they are currently exempt from the DoD’s 36 percent rate cap. According to data from the Attorney General’s Office, in 2012, Colorado’s payday loans had an average effective rate of 129 percent APR.

The Consumer Financial Protection Bureau strongly supports the department’s proposed rules, as do a wide range of consumer groups, including the Center for Responsible Lending, Consumer Federation of America and the National Consumer Law Center.

 “As one of the agencies charged with enforcing the Military Lending Act, we have seen firsthand how lenders use loopholes to prey on members of the military,” said Richard Cordray, director of the CFPB.

Congress passed the Military Lending Act with bipartisan support in 2006 to protect active-duty service members and their dependents from abusive credit practices and high-interest predatory loans. It capped loans at 36 percent and gave DoD authority to determine the kinds of loans covered by the law. DoD limited the loans that were covered to (1) closed-end payday loans for no more than $2,000 and with a term of 91 or fewer days; (2) closed-end auto title loans with a term of 181 or fewer days; and (3) closed-end tax refund anticipation loans. In closed-end loans, the borrower receives the full amount of the loan up front and must repay it, including interest and other charges, by a specific date.  

Because the loans subject to the 36 percent rate cap were defined narrowly, lenders made minor changes in their products, such as extending the term for payday loans beyond 91 days, to get around the cap. According to the CFPB, some lenders tweaked their products and continued to sell military families products with annual percentage rates as high as 500 percent.

The new rules will extend the 36 percent rate cap (referred to as the Military Annual Percentage Rate) to all types of credit that are already subject to protections of the Truth in Lending Act.  These include all payday, credit card, auto title and most forms of installment loans. The Military Lending Act specifically exempted residential mortgages and loans used to buy items such as cars.  Because the protections include the broad range of products subject to the Truth in Lending Act, the DoD will not have to constantly rewrite the rules as lenders make changes in their products.

Under the law, lenders also have to provide military borrowers with additional disclosures and are prohibited from requiring service members to submit to arbitration or waive their rights under the Service Members’ Civil Relief Act. Lenders also cannot impose onerous legal requirements on them.

The proposed rule is to be published in the Federal Register today, and the public will have 60 days to comment on it.  It is expected to go into effect by next year.

– Rich Jones, director of policy and research

 

Campaign Ads Criticize the ACA, But Are the Claims Accurate?

(Facts beat fiction every time – promoted by Colorado Pols)

As it turns out, maybe not.

As it turns out, maybe not.

​Every time we turn on the TV, we see a new political ad opposing the Affordable Care Act. How do some of these claims stand up to closer examination?

Claim: 355,000 Coloradans have received cancellation notices for health insurance policies.

What you need to know: It’s true that thousands of Coloradans were notified in 2013 that their policies would not be renewed in 2014. Note the time frame: It was a one-time event, prompted by provisions in the ACA that required insurance policies to meet minimum standards.

Whether the letters were called “cancellation notices” – an incorrect term – or “non-renewal notices” – a more accurate description – the reason for the change in most cases was that the policies did not include the ACA’s 10 essential benefits. These include preventive-care services and coverage for pregnancy and mental health, and they are designed to ensure that Americans have adequate insurance for health emergencies.

Use of the term “cancellation notice” implies that customers were cut loose, left high and dry. In fact, because of the ACA, insurance companies were required to give customers the option of purchasing an alternative policy. Customers also had the option of buying a competing plan through the health insurance exchange. Those plans had the potential to be cheaper, and if a customer’s income was low enough, subsidies could make coverage even more affordable.

Also, after complaints and to help people navigate the new landscape, the Colorado Division of Insurance allowed policyholders to keep non-compliant plans through the end of 2015, as long as the carrier continued to offer them.

Finally, it’s worth remembering that the individual market was unpredictable for customers before the ACA. Insurance companies often canceled or changed policies every year, forcing families to scramble for new policies or settle for ones that often didn’t meet their needs.

(more…)

Colorado a Role Model on Health Reform, and That’s No Accident

(Promoted by Colorado Pols)

The No. 1 goal of the Affordable Care Act is to make sure that more Americans have health insurance.

How’s that working out?

We learned recently that, nationally, the uninsured rate has dropped from a high of 18 percent in 2013 to 13.4 percent as of June, according to the Gallup-Healthways Well-Being Index.

And the same survey has numbers for Colorado: In 2013, 17 percent of residents had no insurance. A year later, after the start of the ACA, the number is down to 11 percent.  Colorado ranks fifth among all states in reducing the size of its uninsured population.

Colorado’s success didn’t happen by accident, and it stands in stark contrast to states that have not pursued reforms, either on their own or though the ACA.

In Colorado, it took foresight and cooperation among lawmakers, policy-makers, administrators and other stakeholders. When the ACA came along in 2010, Colorado had already taken many important steps to reform health insurance and access to health care.

(more…)

Pew Study Finds Colorado Has Lowest Payday Loan Costs

The Pew Charitable Trusts has found that Colorado has the lowest cost to borrowers for payday loans among all the 36 states that allow these loans. Pew calculated the average charges and the annual percentage rate (APR) that payday lenders charged for a $300 loan taken out for five months, the national average for loan amount and length of loan.

At $172 and 129 percent APR, Colorado’s loans were the cheapest of all 36 states.

This compares to Texas, the state with the highest fees, where borrowers pay, on average, $701 and 454 percent APR.

In Texas and the other states with higher rate caps, payday lending companies charge borrowers far more for the same $300 loan than in states with lower rate caps. Pew’s research shows that credit is not constrained in states with lower rate caps. Researchers specifically point out that in Colorado, after reforms passed to lower rates and extend the length of payday loans, about half of the payday loans stores closed. But now each remaining store is serving 80 percent more customers and borrowers’ access to credit is “virtually unchanged.”

We are proud of the role the Bell played in advocating for the reforms to payday loans enacted in 2010.  A previous Pew analysis found that Colorado borrowers are saving about $40 million per year as a result of the changes in the law.

Income Inequality Surges in Colorado, According to New Report

(This is a release sent out today by the Bell Policy Center, Colorado Center on Law and Policy and Colorado Fiscal Institute.)

The gap between the wealthiest Coloradans and everyone else turned into a chasm following the Great Recession, according to a report released today. In that time, Colorado's top 1 percent accounted for all of the state's growth in income, while the other 99 percent saw a decline in income.

The report, The Increasingly Unequal States of America, is published by the Economic Policy Institute. EPI’s Colorado partners include the Bell Policy Center, the Colorado Center on Law and Policy and the Colorado Fiscal Institute.

(more…)

Pew Report Sees Colorado’s Payday Reforms as Model for U.S.

(Promoted by Colorado Pols)

Last week, the Pew Charitable Trusts singled out Colorado’s payday lending law as a very effective reform that could serve as a national model.

In a new report, Payday Lending in America: Policy Solutions, Pew determined that Colorado’s “new” payday loans are more affordable for borrowers, resulting in significant savings and the elimination of the constant churning of loans that trapped many borrowers in a cycle of debt.

The Bell Policy Center actively worked for several years to reform payday loans and was one of the leaders of the coalition that successfully pushed through legislation in 2010 (HB10-1351).  The reforms reduced the fees on payday loans, extended the payback period to a minimum of six months, authorized installment payments, allowed early repayment without penalty and required all fees to be refunded on a pro-rated basis depending on how long the loan was outstanding.

(more…)

2012 Payday Lending Fees $59 million Lower Than Under Old Law

(Successful, hard-won reform – Promoted by Colorado Pols)

The latest numbers on payday lending in Colorado are in, and they show that consumers continue to benefit from reforms enacted in 2010.

In 2012, payday borrowers paid $36 million in fees for about 441,000 loans, according to the latest annual report from the Colorado Attorney General’s Office. That’s about $59 million less than they paid for 1.6 million loans in 2009, the last full year before reforms took effect. (Press release here.)

The average actual annual percentage rate on the loans in 2012 was 129.4 percent compared to 318.5 percent in 2009.

Colorado’s reforms established a six-month minimum loan term on payday loans, allowed them to be paid off early and changed the fees allowed on loans.  It also required lenders to refund a portion of the fees if the loans were paid off early, based on the amount of time the loan was outstanding.

Critics said these reforms would put payday lenders out of business. However, the data shows that with 287 locations, these loans are still widely available in Colorado. 

(more…)