Left Behind by Health Reform in Rhode Island

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Read the first report in this three-part series here …  “Will RIers Purchase Insurance Under Obamacare?”

Read the Part-3 report, Moving Forward with Healthcare in RI

Summary

Arranging for health care is one of the most personal and important decisions any of us can make. Across Rhode Island, families and individuals are seeking access to a wide range of affordable health care options that will provide them with peace of mind, health security, and the financial freedom that will enhance their overall quality of life.

However, the number of Rhode Island residents expected to remain uninsured after implementation of the President’s Affordable Care Act (ACA) could range from over half to up to three-quarters of the currently uninsured population of 124,000, or approximately 70,000–97,000 people in the state.

Consistent with findings from other government and national studies, “Left Behind by Health Reform in RI” further breaks down these figures by identifying the specific groups of people in the Ocean State who are likely to remain without insurance, whether privately owned, subsidized via the state exchange, or via Medicaid.

Despite state government efforts in the past to increase health insurance coverage, the uninsured population has steadily risen over the past decade. So it should come as no surprise that yet another government-centric approach to healthcare, such as the ACA, will not achieve the “near universal” results it was broadcast to produce.

The Center previously published a report (Will Rhode Islanders Purchase Insurance Under Obamacare?) that identified the broad financial disincentives for a significant number of Ocean State individuals and families to obtain private health insurance under ACA and its health benefits exchange. For these and other reasons described in this report, large numbers of Rhode Islanders will continue to lack access to adequate health services.

The summary table below identifies and quantifies the subpopulations of residents in Rhode Island that are expected to continue to include large numbers of uninsured. Detailed discussion of each group is provided in the body of the report.

Rhode Islanders Left Behind: Remaining or Becoming Uninsured

The RI Center for Freedom & Prosperity recommends that public officials in Rhode Island should not sit back on their hands and expect implementation of ACA alone to provide sufficient reform to the state’s health care system to adequately ensure that all residents of the state have access to affordable, quality care. Indeed, our state must not forget about those who will be left behind by ACA. State officials are encouraged to seek additional remedies to address this pending shortfall.

It is not feasible that a government-centric approach can take into account all of the complexities of the vast private healthcare market, or that a one-size-fits-all solution can adequately address the needs of a highly diverse population, as described in this report. Differing financial circumstances and widely varying personal motives for distinct populations cannot be served in this manner. Only a patient-centric, consumer-oriented, free-market approach can solve this riddle.

In this regard, the Center will publish a third report in this health care series that will propose market-based solutions to address the access-to-health-services shortfall… without requiring additional taxpayer funding.

Introduction

The issue of ensuring that all Rhode Islanders have access to affordable, quality health care has long been on the state’s agenda. The state has tried a variety of public policy solutions over the past two decades to address the issue. A few of the measures that have been aimed at reducing the number of uninsured and expanding access to care include:

  • Several expansions of RIte Care eligibility, including covering pregnant and post-partum women between 185 and 350% of the federal poverty level (1994), covering children under 250% of the poverty level (three separate expansions in 1994, 1996, and 1997),  and children of undocumented immigrants (1999).[i]
  • Creation of the premium assistance program RIte Share for Medicaid-eligible persons offered employer-sponsored insurance (2001).[ii]
  • Creation of the RI Office of Health Insurance Commissioner in 2004, with a mission to “broaden the accountability of health insurers,” as well as “Protecting consumers… Encourag-ing fair treatment of medical service providers… Ensuring solvency of health insurers… [and] Improving the health care system’s quality, accessibility and affordability.”[iii]
  • Creation of the HEALTHpact insurance product, first offered in October 2007, to encourage small businesses to offer insurance to employees.[iv]

Despite these and other efforts, however, the number of uninsured in Rhode Island has steadily risen over the past decade. In 2000, approximately 6.9% of the state’s under-65 population was uninsured,[v] accounting for approximately 62,000 persons.[vi] By 2012, the uninsured rate had climbed to 13.4% of the under-65 population, totaling roughly 124,000 Rhode Islanders.[vii]

Rhode Island was not alone in seeing the number of uninsured persons explode over the past decade. As a result, in 2010 Congress passed and the President signed the Patient Protection and Affordable Care Act (hereinafter called “ACA”), which was proposed as a way of achieving “near-universal” health care coverage.[viii]

The state of Rhode Island has chosen to move forward aggressively to implement the ACA, including setting up a state-run exchange for individual and small-group purchasers,[ix] as well as embracing the expansion of Medicaid that the U.S. Supreme Court made optional for states in its 2012 ruling on the constitutionality of the act.[x]

But even with implementation of ACA, there is likely to remain a substantial number of uninsured persons in Rhode Island and nationally. The question then becomes, what can policymakers in Rhode Island do to ensure that the remaining uninsured are able to access and fund the health care they need?

This “Left Behind by Health Reform in RI” paper assesses this question, first by identifying and describing several specific subpopulations that make up Rhode Island’s 124,000 uninsured persons.

In an upcoming report, the Center will explore several options that Rhode Island’s policymakers, civic leaders, and individual citizens might be able to promote or pursue in order to obtain either health insurance as traditionally understood or alternate health care financing sources. That paper will offer several specific policy recommendations for the state, all of which have the benefit of not adding costs to citizens or the state while generally preserving or expanding individual freedom for residents of Rhode Island.

It is the hope of the RI Center for Freedom & Prosperity that this “Left Behind by Health Reform in RI” paper can stimulate thoughtful discussion about how best to address the substantial number of uninsured residents who are likely to persist in that condition even after implementation of the ACA. By taking a proactive lead on this issue, Rhode Island can become a national leader in health care reform and serve as a model for other states to follow.

Uninsured After ACA

Even after the ACA is fully implemented in 2016,[xi] it is widely expected that a large number of persons will remain uninsured.

While estimates vary, depending on source, the Congressional Budget Office and Congress’s Joint Committee on Taxation anticipate the number of uninsured in America roughly to be cut in half after implementation of ACA, reducing the number of uninsured from 56 million persons to only 30 million after implementation.[xii] If this is accurate, the national uninsured rate would decline to approximately 11%, an improvement from the current 20% estimated rate.[xiii]

For Rhode Island, results would likely be modestly better, owing in large part to having an already lower rate of uninsured as well as a smaller-than-average population of undocumented immigrants. The number of uninsured persons in Rhode Island has recently been estimated to be 124,000, or 13.6% of the state’s under-65 population.[xiv] A paper by the Robert Wood Johnson Foundation estimated that approximately 53,000 Rhode Island residents would remain uninsured after ACA implementation, reducing the rate of uninsured to 5.8%.[xv]

But there is good reason to believe that these projections substantially overestimate the number of people who will gain insurance under ACA, while also underestimating the number likely to lose insurance coverage. The key reasons that the number of uninsured in Rhode Island may not decline as substantially as predicted include:

  1. The tax penalty for not purchasing health insurance is lower (often much lower) than the expected after-subsidy out-of-pocket premium for purchasing insurance.
  2. Younger persons are likely to see premiums rise substantially above current rates, pricing many of them out of the market and exempting them from the mandate.
  3. ACA’s “guaranteed issue” and “community rating” requirements create incentive for relatively healthy youths to delay insurance purchase until they are sicker and older.
  4. The IRS is limited in its ability to collect the tax penalty for not purchasing insurance, only being permitted to reduce tax refunds.
  5. Small businesses, which are least likely to offer insurance to employees today, are exempted from the requirement to provide insurance to employees, and tax credits to help with the cost of providing coverage are too small, too complex, and temporary, limiting their ability to expand coverage to employees of small firms.
  6. Large employers subject to the employer mandate generally already provide insurance to employees, and many of those that do not (particularly in the restaurant and retail industries) are able to shift employees to part-time status to avoid the penalty.
  7. Even with the penalty, larger firms employing mostly low- and moderate-income employees may find it financially advantageous to terminate coverage and pay the fine rather than paying health insurance premiums.
  8. Health insurance is considered to be a relatively inelastic good by economists, meaning that a moderately lower out-of-pocket premium payment paired with a weak penalty for not purchasing insurance is unlikely to prompt large numbers of people to purchase insurance.

Subpopulations

Below are several communities and demographic groups that are likely to continue to see relatively high uninsured rates in 2016 and beyond.

Young & Invincible

A large component of the uninsured population is the so-called “young invincibles,” a group that can be generally thought of as healthy and under the age of 35. For this population, often just starting their careers and earning relatively modest incomes, with few health needs and little worry about paying for medical care, health insurance is simply not something they place much value in, especially if premiums are much higher than might be considered actuarially appropriate. One of the primary purposes of the individual mandate in the ACA is to get this relatively young and healthy population who might not ordinarily purchase health insurance to do so, which should bring down premiums for the rest of the population, if successful.

The past experience of the eight states that enacted both guaranteed issue and community rating requirements in their individual health insurance markets in the 1990s strongly demonstrate why such a mandate might be considered necessary: All eight states saw young and healthy policyholders drop coverage as their rates rose beyond actuarially justifiable premiums, leading to higher rates for remaining policyholders, which in turn set off another round of younger and healthier persons (compared to those remaining) dropping coverage, again raising rates for those remaining. This process continued in all eight states, creating a “death spiral” in premiums that did little to lower the number of uninsured (and may in fact have increased the number of uninsured), drove premiums to levels unaffordable for most, and caused most insurers to exit these markets.[xvi]

However, the mandate under ACA is relatively weak, because for most, the cost of paying the tax penalty is less — in many cases, far less — than paying insurance premiums.[xvii] Moreover, the ability of the IRS even to collect the penalty is extremely limited; it is only allowed to reduce tax refunds, and no criminal or civil charges may be filed, nor wages garnished or bank accounts seized.[xviii] It is therefore highly questionable whether much of Rhode Island’s “young invincible” population will in fact purchase insurance.

For example, a young, single person in his or her mid-twenties in Rhode Island with an annual income of $32,000 (279% of federal poverty level) would under ACA be expected to pay approximately $2,850 out of pocket for a “Silver” level plan, compared with a $695 penalty that can very easily be avoided by minimizing overpayments to the IRS.[xix] For many “young invincibles” who value disposable income over insurance benefits they are unlikely to use, the decision to remain uninsured will be an easy and predictable one.

This has significant ramifications, because Rhode Island’s “young invincibles” comprise up to half of the uninsured.[xx] Of 124,000, approximately 31,000 to 63,500 are likely in this “young invincibles” demographic, most of whom will find it a more sensible decision to remain uninsured and pay a modest or negligible penalty.[xxi] This does not include any currently insured Rhode Islanders who might drop coverage as their premiums rise, which could add thousands or even tens of thousands to the number of uninsured.

Gamers

As discovered by the eight states that passed guaranteed issue and community rating laws in the 1990s,[xxii] individuals can “game” the system by waiting to purchase health insurance until such time as they need to obtain relatively expensive health care. This practice drives up the price of insurance, as insurers end up with a covered population that is less healthy than average, and begins another “death spiral” in premiums that actually increases the number of uninsured, significantly raises premiums, and drives insurers from the market.

ACA effectively imposes guaranteed issue and community rating on insurance markets throughout the country, requiring that insurers accept all who apply and that all insured receive the same premium, adjusted only for age, location, and possibly tobacco use. The law also prohibits limitations on the treatment of preexisting conditions.

In an attempt to ensure that “death spirals” do not occur in insurance markets, ACA contains two provisions designed to minimize the incentive to delay obtaining insurance until expensive care is required. The first is the individual mandate, which requires that most persons obtain health insurance or pay a tax penalty. The second permits states and insurers to limit “open enrollment” to a specific period of time, meaning that those opting to remain uninsured run the risk of not being able to immediately obtain health insurance after discovering they need expensive health care.

Despite these provisions, the guaranteed issue, community rating, and preexisting conditions components of ACA still create significant incentives for persons to avoid purchasing health insurance until they feel they need it.

As noted before, the difference between paying for health insurance and paying the tax penalty for remaining uninsured can be substantial. The difference is especially stark at higher income levels. For example, a married couple, both age 37, with two children and annual income of $82,000 (348% of federal poverty level) would face after-subsidy out-of-pocket premiums of approximately $7,788, while the tax penalty for remaining uninsured would be only $2,085 (again assuming it is collected), a difference of $5,703.[xxiii]

Remaining uninsured may represent an attractive option for this family, especially if either spouse is self-employed. Under ACA regulations proposed by the U.S. Department of Health & Human Services, self-employed persons would be eligible to purchase health insurance year-round with no enrollment period restrictions.[xxiv]

Past research on Rhode Island’s uninsured population found that 11.2% of Rhode Island’s non-elderly adult (18–64) uninsured are self-employed,[xxv] and several thousand more uninsured are likely dependents of these self-employed individuals.[xxvi] This suggests that between 12,000 and 17,000 self-employed individuals and dependents are currently uninsured in Rhode Island, possibly more.

For this population, limits on open enrollment would not be an obstacle to obtaining health insurance only when it is needed, and they and their dependents might find it advantageous to remain uninsured knowing that they could reap substantial savings while still having the ability to obtain insurance when they need it.

It should be noted that the self-employed category tends to generally be older. Nearly 69% of Rhode Island’s self-employed are between the ages of 35 and 64.[xxvii]

An additional population beyond the self-employed that may engage in some degree of gaming will be those Rhode Islanders whose employers drop coverage and raise wages and salaries with the expectation that employees can find coverage in the exchange, and who then elect not to purchase coverage until they feel they need it. This group is discussed below in the “At Risk” section.

Exempted

The previous two groups described were assumed to be subject to the penalty tax of ACA, and that this factor is likely to weigh in the decision-making process of uninsured individuals considering the purchase of health insurance. For the following two groups, however, this is not the case: They are effectively exempted from the law’s requirement to obtain coverage, and for them, the decision to remain uninsured is likely to be an easier one.

The first group are those earning less than 100% of the federal poverty level or who earn 138% or less of federal poverty level and do not have access to affordable employer-sponsored insurance. This population is eligible for Medicaid and can sign up at any time. Nearly half of Rhode Island’s uninsured population is under 139% of the federal poverty level,[xxviii] and most would be eligible for coverage under the Medicaid expansion in which the state has opted to participate. (RiteCare already extends eligibility beyond what current federal law requires, including to parents with children under 18 and family income of 175% of the federal poverty level.)[xxix] This group is exempt from the mandate, and those in it do not have to pay a penalty if they don’t enroll.

Not all Medicaid-eligible persons enroll. Analysis by the Urban Institute found that approximately 13,000 adults in Rhode Island are currently uninsured and eligible for Medicaid.[xxx] An additional 9,500 children are estimated to be uninsured but eligible for either Medicaid or Children’s Health Insurance Program (CHIP) under current eligibility standards.[xxxi] Some of these may enroll as a result of publicity surrounding implementation of ACA, or if the enrollment process becomes less complex. But many are likely to remain uninsured as they are now.

In addition, an estimated 38,000 adults[xxxii] in Rhode Island will become newly eligible for Medicaid under ACA,[xxxiii] many of whom are unlikely to enroll. The Congressional Budget Office estimates that only 57% of newly eligible persons will enroll in Medicaid,[xxxiv] which would leave more than 16,000 Rhode Island adults uninsured in addition to those currently eligible adults and children who are not enrolled in Medicaid.

The other group exempted from the mandate to purchase health insurance is individuals and families who would have to pay premiums in excess of 8% of their income.[xxxv] This group will largely be composed of those with incomes above 400% of the federal poverty level, who would have to pay the full, unsubsidized premium in order to purchase health insurance. According to U.S. Census data, approximately 391,000 Rhode Islanders (including dependents) have a household income of greater than 400% of the federal poverty level,[xxxvi] about $44,680 for an individual or $92,200 for a family of four.[xxxvii]

The rate of uninsured among this higher-income segment of the population is significantly better than for the rest of the population — approximately 5%, nationally.[xxxviii] This figure is generally consistent with Rhode Island’s past findings on the income levels of the uninsured, which found that 12.8% of the uninsured had incomes above 400% of the poverty level,[xxxix] and suggests about 19,500 uninsured Rhode Islanders have relatively high incomes.

Not all of these will be exempt from the mandate, particularly at younger ages. But assuming “Bronze” level premiums of $4,636 for a 55 year old,[xl] individuals between approximately $46,000 and $55,500 (400 and 483% of the poverty level) will be exempt from the mandate because their premiums would exceed 8% of income and be considered “unaffordable.”

The exempt range for couples and individuals is even greater by age and income. A couple aged 54 would be exempt if their combined income were between $62,000 and $111,000, while a family of four with 44-year old parents and incomes between $92,200 and $105,600 would be exempt from the mandate to purchase insurance.[xli], [xlii]

The effects of this exemption is likely to be concentrated among the older uninsured because they face higher premiums and are more likely to earn higher incomes. Because of this broad exemption, it is likely that very few of Rhode Island’s estimated 19,500 high-income uninsured will purchase insurance, and many more currently insured may in fact drop coverage knowing they can obtain it at a later date if faced with significant health care expenses.

Undocumented Immigrants

There is little dispute over the fact that the ACA does not meaningfully address the high number of uninsured among the community of undocumented immigrants. Various provisions of the law, as well as current Medicaid law, specifically prohibit most undocumented immigrants from obtaining any health benefits, such as by enrolling in Medicaid,[xliii] receiving tax credits through the exchange to lower out-of-pocket premium costs, or even purchasing unsubsidized insurance through the exchange.

While the exact number of undocumented immigrants in Rhode Island is not known, most estimates put the number at around 30,000.[xliv] Nationally undocumented immigrants have been estimated to have an uninsured rate of 57%,[xlv] while the combined population of legal noncitizens and undocumented immigrants have an estimated rate of 45%.[xlvi] Noncitizens (both legal and undocumented) are estimated nationally to comprise approximately 22% of the uninsured.[xlvii]

All told, these estimates suggest that at least 17,000 Rhode Island residents, and possibly more, are currently uninsured and will remain so after full implementation of the ACA in 2016.

At Risk

Another group that must also be considered includes those who are currently insured, but who may actually lose their coverage as a result of certain provisions embedded in the ACA.

Under ACA, employers with fewer than 50 full-time employees are exempt from the requirement to make health insurance available to their workers. For businesses with 50 workers or more, there is a $2,000-per-employee penalty for not providing insurance to workers. For most Rhode Island businesses with 50 or more employees, the requirement would not impose a new burden, as these firms already provide insurance to full-time and even some part-time workers.[xlviii]

However, in the face of continued rising health care costs and a relatively modest penalty (compared to health insurance premiums) of $2,000 per employee combined with generous subsidies through the exchange for low- and middle-income workers, it is likely that some employers will choose to stop offering health insurance, pay the penalty, and increase employee compensation directly to offset the loss of health benefits. Some estimates predict modest increases in employer-sponsored insurance coverage,[xlix] but most conclude that there will be a net decrease in the number of Americans receiving health insurance from their employer for these and other reasons.[l], [li]

One industry in which there may be pressure to eliminate or reduce eligibility for employer sponsored health insurance is the restaurant industry, especially if premiums continue to rise as expected even after full implementation of the ACA. Several national restaurant chains or their franchisees have announced in response to the employer mandate that they are likely to limit employees to part-time status in order to avoid the penalty, and others will likely follow.[lii] The restaurant industry has expressed considerable concern about implementation of ACA on behalf of both small and large employers in the industry.[liii]

Restaurants typically operate with a relatively slender 4–6% profit margin,[liv] and according to the National Restaurant Association between 54% and 79% of restaurant workers are uninsured.[lv] Because of such slim margins, considerable flexibility in being able to keep employees at part-time status, and the fact that most restaurant workers are relatively low-income and young, it is highly likely that few restaurant owners will add health benefits, and many that currently offer insurance will consider dropping coverage.

The retail industry faces a similar situation to restaurants. There are more than 87,000 Rhode Islanders in the restaurant and retail industries,[lvi] many of whom are currently uninsured and unlikely to gain employer coverage under ACA and some of whom are currently insured and at risk of losing their employer coverage. The average estimate for three major studies of the number of Americans likely to lose employer coverage is 3.3 million,[lvii] while the most recent Congressional Budget Office estimate pegs the number of persons losing employer-provided coverage at 7 million.[lviii] Using this range, between 11,000 and 24,000 Rhode Islanders will likely lose the employer coverage they currently have.[lix] Many are likely to obtain coverage through the exchange, but others are likely to “game” the system, delaying purchasing insurance until they fall ill or are injured, or as members of the “young invincibles” decide to take any extra compensation they receive upon the loss of employer-sponsored insurance and spend it on things other than health insurance.

Conclusion

It is difficult to predict with any certainty how many Rhode Islanders will remain uninsured after full implementation of the Affordable Care Act in 2016. It should be pointed out that there is substantial overlap among several of the groups described above: Some “young invincibles” are likely also undocumented aliens, and some of the self-employed are also likely exempt from the mandate to purchase insurance because their incomes fall in the range at which unsubsidized premiums exceed 8% of income.

An additional factor that prevents any firm estimate of the number of uninsured is that it is impossible to know how many Rhode Islanders will respond to the considerable disincentives embedded in the ACA to immediately purchase health insurance until an illness or injury makes it economically rational to obtain coverage, as well as provisions of the law that substantially increase premiums for younger policyholders.[lx]

Even with these limitations, a broad range of those likely to remain uninsured after full implementation can be estimated. Based on the information described in this report, and using relatively conservative estimates, between 70,500 and 97,000 Rhode Island residents are likely to remain uninsured after full implementation of ACA in 2016,[lxi] which would reduce the uninsured rate to between 7.9 and 10.5%, from the current 13.4%. The bulk of newly insured in Rhode Island are likely to be new participants in the RIte Care program, with relatively modest numbers of previously uninsured gaining coverage through the individual exchange.

Other Papers in This Series

The first paper in this series, published in June, was “Will Rhode Islanders Purchase Insurance Under ObamaCare?” That paper calculated the tax penalty and likely premiums for various age and income groups and concluded that many would have financial incentive not to purchase health insurance.

The Rhode Island Center for Freedom & Prosperity will continue to contribute to this important and highly personal public discussion by publishing one more related paper proposing free-market public policy solutions, as well as private strategies, that can be pursued to address this shortcoming, without requiring any additional taxpayer funding.

For more information, please contact our Center or visit us at www.RIFreedom.org or email info@rifreedom.org.

About the Author

Sean Parnell, an adjunct scholar to the RI Center for Freedom & Prosperity, is president of Impact Policy Management (IPM), a Washington, D.C., area full-service public policy firm, and manages political advocacy projects for free market and limited government causes. Before founding IPM he was president of the Center for Competitive Politics (CCP), a nonprofit advocacy organization focused on defending the First Amendment. Prior to joining IPM Parnell was Vice President of External Affairs at the Heartland Institute.

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[i] Comments by Christine Ferguson, Director, RI Department of Human Services, “Hindsight and Foresight: Lessons for Getting It RIte,” May 18, 2001 Conference Transcript: “Getting It RIte (Rhode Island)” page 62, available at: http://www.ihps.org/pubs/2001MayConf/RI.pdf

[ii] “Rhode Island’s RIte Share Premium Assistance Program: ESTIMATED SAVINGS, State Fiscal Year 2005” p. 2,

RI Department of Human Services, January 2006, available at: http://www.dhs.ri.gov/Portals/0/Uploads/Documents/Public/RCRS/RS_Savings_Report_06.pdf

[iii] Web site of the Office of the Health Insurance Commissioner, available at: http://www.ohic.ri.gov/AboutUs_Mission.php

[iv] Edward Alan Miller, et. al. “ Rhode Island’s HEALTHpact Plan: Lessons for Small-Group Reform,” p. 1, Robert Woods Johnson Foundation, March 2010. Available at: http://www.rwjf.org/content/dam/web-assets/2010/03/rhode-island-s-healthpact-plan

[v] Jane Griffin, MPH, ‘Profiles and Trends of the Uninsured in Rhode Island – 2005 Update,’ p. 3, Table 1,

RI Medicaid Research and Evaluation Project, October 2006. Available at: http://www.dhs.ri.gov/Portals/0/Uploads/ Documents/Public/Profiles%20and%20trends.pdf; see also Colleen Ryan, MPH, et. al., “Achieving Universal Health Care Coverage in Rhode Island: Where Are the Challenges?” Figure 1, Rhode Island Department of Public Health, March 2002, available at: http://www.health.ri.gov/publications/periodicals/healthbynumbers/0203.pdf

[vi] Based on 18–64 population estimate provided by U.S. Census Bureau, available at: http://www.planning.ri.gov/census/2010/demographic.pdf

[vii] Matthew Buettgens, Mark A. Hall, Who Will Be Uninsured After Health Insurance Reform, p. 8, Table 1, Robert Wood Johnson Foundation, March 2011. Available at: http://www.rwjf.org/content/rwjf/en/research-publications/find-rwjf-research/2011/03/who-will-be-uninsured-after-health-insurance-reform-.html

[viii] See Sara Rosenbaum, ‘The Patient Protection and Affordable Care Act: Implications for Public Health Policy and Practice,’ Public Health Reports, Jan-Feb 2011, “the Act establishes… a near-universal guarantee of access to affordable health insurance coverage,” available at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3001814/; see also ‘Health Reform and You: How the Affordable Care Act Expands Health Insurance Coverage,’ Commonwealth Fund, January 9 2013, “the Affordable Care Act will deliver near-universal health coverage to Americans,” available at: http://www.commonwealthfund.org/ Multimedia/Videos/2013/How-the-ACA-Expands-Health-Insurance-Coverage.aspx; see also “America’s Future,” The Lancet, Volume 380, Issue 9853, Page 1531, 3 November 2012, “Obama will continue to implement the landmark Patient Protection and Affordable Care Act (ACA), passed in 2010, which aims for near-universal health-care coverage,” available at: http://www.lancet.com/journals/lancet/article/PIIS0140-6736%2812%2961861-3/fulltext; see also testimony of Christine Ferguson, Director, Rhode Island Health Benefits Exchange, to the U.S. Senate Committee on Finance, February 14, 2013, “We are carrying out our work under five guiding goals. In Rhode Island, we will… Achieve near universal coverage,” available at http://www.finance.senate.gov/imo/media/doc/Director%20Christine%20Ferguson%20Testimony%20-%20U%20S%20%20Senate%20Finance%20-%202%2014%20131.pdf. In addition, Governor Lincoln Chafee’s executive order authorizing the creation of an exchange described the purpose of the act as “Providing near-universal health insurance coverage.” See following note.

[ix] Executive order 11-09 of Governor Lincoln Chafee, ‘Establishment of the Rhode Island Health Benefits Exchange,’ September 19, 2010, available at: http://www.governor.ri.gov/documents/executiveorders/2011/Executive_Order_11-09.pdf

[x] “A Guide to the Supreme Court’s Affordable Care Act Decision,” p. 5, Kaiser Family Foundation, July 2012, available at: http://www.kff.org/healthreform/upload/8332.pdf

[xi] The author considers 2016 to be the first year of “full implementation” for ACA because it is the first year the penalty tax for not obtaining health insurance is at its full level. The penalty tax is considered to be the key to getting many of the uninsured to purchase coverage.

[xii] Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision, p. 20, Table 3, Congressional Budget Office, July 2012. Available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf

[xiii] Ibid.

[xiv] Matthew Buettgens, Mark A. Hall, Who Will Be Uninsured After Health Insurance Reform, p. 8, Table 1, Robert Wood Johnson Foundation, March 2011. Available at: http://www.rwjf.org/content/rwjf/en/research-publications/find-rwjf-research/2011/03/who-will-be-uninsured-after-health-insurance-reform-.html

[xv] Ibid.

[xvi] For a full account, see: Destroying Insurance Markets by Conrad Meier, published by the Council for Affordable Health Insurance and The Heartland Institute, 2005. Full text available at: http://www.cahi.org/cahi_contents/resources/pdf/destroyinginsmrkts05.pdf

[xvii] See Appendix B for an analysis of true out-of-pocket costs v. penalty

[xviii] ‘Technical Explanation of the Revenue Provisions of the “Reconciliation Act of 2010,” As Amended, In Combination With The Patient Protection and Affordable Care Act,’ p. 2 (errata correction), Joint Committee on Taxation, March 21, 2010, which reads: “Although assessable and collectible under the Code, the IRS authority to use certain collection methods is limited. Specifically, the filing of notices of liens and levies otherwise authorized for collection of taxes does not apply to the collection of this penalty. In addition, the statute waives criminal penalties for non-compliance with the requirement to maintain minimum essential coverage. However, the authority to offset refunds or credits is not limited by this provision.” Available at: https://www.jct.gov/publications.html?func=startdown&id=3673

[xix] Calculated using the UC Berkley Labor Center calculator, available at: http://laborcenter.berkeley.edu/healthpolicy/calculator/

[xx] Karen Bogen, Who Are The Uninsured in Rhode Island: Demographic Trends 1990 – 2004, Access to Care, and Health Status for the Under 65 Population, p. 50, Rhode Island Department of Human Services, 2006. According to Bogen, 44% of the uninsured in 2004 were between the ages of 18 – 34. Most young uninsured report themselves as being in “excellent,” “very good” or “good” health, see Ibid at note 8, p. 78, where only 6% of uninsured between age 18 – 39 reported their health status as only “fair” or “poor.” Previous work by Bogen (Who are the Uninsured in Rhode Island, p. 85, Rhode Island Department of Human Services, 2005) find that 57% of Rhode Island’s uninsured consider themselves in “excellent” or “very good” health, significantly below the 72.6% of insured. She notes however that “The uninsured’s self-perception of poorer health may not be based on actual illness prevalence. There are very small differences between the insured and uninsured on reports of asthma, arthritis, disability, depression, and diabetes.” p. 85.

[xxi] The low-end estimate of 31,000 relies on Bogen’s estimates (Ibid at note 23) that 44% of Rhode Island’s 124,000 uninsured are between the ages of 18 and 34, and that 57% of those consider themselves in “excellent” or “very good” health (124,000×0.44x.57). The high-end estimate of 63,500 assumes that Rhode Island’s currently uninsured population closely resembles the more recent national profile of the uninsured and relies on current Census Bureau data (available at: http://www.dlt.ri.gov/lmi/pdf/acs/rhodeisland.pdf) and Centers for Disease Control analysis (available at: http://www.cdc.gov/nchs/data/health_policy/HI_08_to_June11_YoungAdults.pdf), along with Pfizer’s report on the health status of the uninsured (see Ibid at note 19, p. 78). Based on these data the high-end number of uninsured between 18 and 35 in Rhode Island was determined as: (113,562×0.273)+(129,313×0.283)=67,600, which was then multiplied by 0.94 to remove those reporting their health status as “fair” or “poor.” Numbers have been rounded, and adjustments to source data have been made to reflect different reporting ranges in each report.

[xxii] Ibid at note 21.

[xxiii] See Ibid at note 24.

[xxiv] Patient Protection and Affordable Care Act; Health Insurance Market Rules; Rate Review; Proposed Rule, § 147.104 Guaranteed availability of coverage, p. 70612, Federal Register, Vol. 77, Number 227, November 26, 2012. Available at: http://www.regulations.gov/#!documentDetail;D=CMS-2012-0141-0001

[xxv] See Ibid at note 25, p. 57.

[xxvi] An Analysis of Rhode Island’s Uninsured: Trends, Demographics, and Regional and National Comparisons, Appendix, Office of the Health Insurance Commissioner, State of Rhode Island, September 2007. The appendix pages and tables in the appendix are not numbered, table titled “Uninsured < 65 by Labor Force Status” shows data from both the Rhode Island Health Interview Survey and U.S. Census Bureau Current Population Survey suggesting that 43% of self-employed uninsured are parents, meaning at least one dependent.

[xxvii] Rhode Island Indicators: Aging and Work, p. 8, Center on Aging and Work, Boston College, 2008. Available at: http://www.bc.edu/content/dam/files/research_sites/agingandwork/pdf/publications/states/RhodeIsland.pdf

[xxviii] Rhode Island: Health Insurance Coverage of the Nonelderly (0-64) with Incomes up to 139% Federal Poverty Level, available at: http://www.statehealthfacts.org/profileind.jsp?ind=849&cat=3&rgn=41 Although the law generally specifies expansion up to 133% of FPL, a 5% credit in the law effectively raises eligibility to all with less than 139% of FPL.

[xxix] Web site of the Rhode Island Department of Human Services, at: http://www.dhs.ri.gov/People/FamilieswithChildren/HealthCareCoverage/RIteCare/tabid/213/Default.aspx

[xxx] Genevieve M. Kenney, Lisa Dubay, Stephen Zuckerman, and Michael Huntress, Opting Out of the Medicaid Expansion under the ACA: How Many Uninsured Adults Would not Be Eligible for Medicaid? p. 3, Urban Institute, July 5, 2012. Available at: http://www.urban.org/UploadedPDF/412607-Opting-Out-of-the-Medicaid-Expansion-Under-the-ACA.pdf

[xxxi] “Medicaid Facts: Rhode Island” American Academy of Pediatricians, September 2012, available at: http://www.aap.org/en-us/advocacy-and-policy/federal-advocacy/access-to-care/Medicaid%20Fact%20Sheets/RhodeIsland.pdf

[xxxii] See ibid at note 35.

[xxxiii] Because Rhode Island currently extends Medicaid and CHIP eligibility for children up to 250% of FPL, there is no increase in the number of children eligible under ACA.

[xxxiv] John Holahan and Irene Headen, Medicaid Coverage and Spending in Health Reform: National and State?by?State Results for Adults at or Below 133% FPL, p. 36, Kaiser Family Foundation, May 2010. Available at: http://www.kff.org/healthreform/upload/medicaid-coverage-and-spending-in-health-reform-national-and-state-by-state-results-for-adults-at-or-below-133-fpl.pdf. See also Heidi Allen et. al. What The Oregon Health Study Can Tell Us About Expanding Medicaid, August 2010, available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3533495/, suggesting a 2008 expansion in Oregon’s Medicaid eligibility resulted in a take-up rate of between 39 and 50%.

[xxxv] Carol A. Pettit and Edward C. Liu, The PPACA Penalty Provision and the Internal Revenue Service, p. 3, Congressional Research Service, April 30, 2010.

[xxxvi] Rhode Island: Distribution of Total Population by Federal Poverty Level, Kaiser Family Foundation. Available at: http://www.statehealthfacts.org/profileind.jsp?ind=9&cat=1&rgn=41&cmprgn=1

[xxxvii] 2012 HHS Poverty Guidelines, U.S. Department of Health & Human Services, available at: http://aspe.hhs.gov/poverty/12poverty.shtml/12fedreg.shtml

[xxxviii] The Uninsured – A Primer: Key Facts About Americans Without Health Insurance, p. 3, figure 2, Kaiser Family Foundation, October 2011. Available at: http://www.kff.org/uninsured/upload/7451-07.pdf

[xxxix] See Ibid at note 25, p. 55.

[xl] See Appendix A for proposed premiums for Blue Cross & Blue Shield of Rhode Island, effective January 1, 2014.

[xli] Ibid.

[xlii] The Kaiser Family Foundation performed similar calculations based on national data and CBO estimated “Bronze” level premiums and determined that a family of four with income between $98,000 and $150,000 would be exempt from the mandate. See “The Individual Mandate: How Sweeping?” March 21, 2012, available at: http://policyinsights.kff.org/ 2012/march/the-individual-mandate-how-sweeping.aspx. Similarly, the Office of the Actuary at the Centers for Medicare & Medicaid Services estimated that individuals and families with incomes between 400% and 542%, about 16% of the population, would be exempt from the mandate to purchase insurance because of the affordability standard; see: Richard Foster, “Estimated Financial Effects of the ‘Patient Protection & Affordable Care Act,’ As Amended,” p. 7, Department of Health & Human Services, April 22, 2010.

[xliii] Medicaid does allow for pregnant undocumented immigrants to receive care, including childbirth. Aside from this provision, however, they are effectively barred from receiving any benefits under ACA.

[xliv] Unauthorized Immigrant Population: National and State Trends, 2010, p. 23, Table A3, Pew Hispanic Center, 2011. Available at:  http://www.pewhispanic.org/files/reports/133.pdf

[xlv] Stephen Zuckerman, Timothy A. Waidmann and Emily Lawton, Undocumented Immigrants, Left Out of Health Reform, Likely to Continue to Grow as Share of the Uninsured, p. 2000, Exhibit 2, Health Affairs, 30, No. 10 (2011).

[xlvi] Margaret McDonald and Robin P. Hertz, A Profile of Uninsured Persons in the United States, p. 12, published by Pfizer, Inc., 2008.

[xlvii] Ibid at p. 11.

[xlviii] State-Level Trends in Employer-Sponsored Health Insurance: A State-By-State Analysis, p. 24, Table 10, “Trend in Private Sector Employers Offering ESI, by Firm Size and State,” Robert Wood Johnson Foundation/State Health Access Data Assistance Center (SHADAC), June 2011. The study found that 98.3% of RI firms with 50 or more employees offer health insurance, compared to only 51.5% of firms with fewer than 50 employees. Of firms that offer insurance, the percentage of eligible workers was roughly equal in Rhode Island, at 75.6% for small firms and 76.4% for larger firms (p. 26, table 12).

[xlix] According to a Congressional Budget Office review of studies, microsimulations from the Centers for Medicare & Medicaid Services, RAND Corporation, and Urban Institute showed increases in net employer sponsored insurance of  200,000, 4.2 million, and 4.1 million, respectively. Another analysis by the Employment Policies Institute projected a 4 million net increase in employees receiving insurance through employers. See Patient Protection and Affordable Care Act: Estimates of the Effect on the Prevalence of Employer-Sponsored Health Coverage, pp. 10–12, Congressional Budget Office, July 2012.

[l] Ibid, pp.10–14. Booz & Company projects 3–4 million Americans will lose employer health coverage, the Congressional Budget Office initially predicted a net decrease of 4 million persons, and the Lewin Group estimates 2 million people will lose employer-sponsored coverage. In February 2013, the Congressional Budget Office increased its estimate of the number of persons losing employer-sponsored insurance to 7 million, see note 56.

[li] See, McKinsey & Company – Benefits Package Decision Makers Study, p. 162, February  2011 available at: http://www.mckinsey.com/features/us_employer_healthcare_survey, which found that 26.4% of employers with 50 or more employees would “definitely” or “probably” drop coverage in response to the ACA; see also Douglas Holtz-Eakin and Cameron Smith, “Labor Markets and Health Care Reform: New Results,” p. 5, American Action Forum, May 27, 2010, available at: http://americanactionforum.org/files/LaborMktsHCRAAF5-27-10.pdf, which finds that up to 35 million Americans are at risk of losing employer-sponsored coverage under ACA; see also “HR Policy Association: 2011 Annual Chief Human Resource Officer Survey,” available at http://www.hrpolicy.org/downloads/2011/CHRO%20Report%20Draft_FINAL%20REORDERED_HC%20Only.pdf, in which 6% of HR department heads said their companies would “give serious consideration to discontinuing providing health care benefits.”

[lii] See Jessica Lipscomb, “John Schnatter Papa John’s CEO: Obamacare likely to raise costs, employee’s hours being cut,” NaplesNews.com, November 8, 2012, available at: http://www.wptv.com/dpp/news/state/john-schnatter-papa-johns-ceo-obamacare-likely-to-raise-costs-employees-hours-being-cut; see also “Applebee’s targeted after franchisee mulls hiring freeze in response to Obamacare,” Twitchy.com, November 9, 2012, available at: http://twitchy.com/2012/11/09/applebees-targeted-after-franchisee-mulls-hiring-freeze-in-response-to-obamacare/; see also Julie Jargon, “Chili’s Feels Heat to Pare Costs” Wall Street Journal, January 28, 2011, available at: http://online.wsj.com/article/SB10001424052748704307404576080340742759346.html#articleTabs%3Dcomments

[liii] “Regulatory comments of the National Restaurant Association,” p. 2, October 31 2011, available at http://www.restaurant.org/pdfs/advocacy/20111031_hcr_irs_hhs_nra_sra_comments.pdf

[liv] Ibid. See also “A Better Approach to Government Business Mandates,” p. 4, The Profit-Per-Employee Coalition, October 2011, available at: http://profitperemployee.com/yahoo_site_admin/assets/docs/PPE_OVERVIEW_OCT_2011.264154218.pdf, which found that the restaurant and hospitality association had average profits per employee of only $754 annually, well below the all-industry average of $10,252.

[lv] Information contained in news release from National Restaurant Association, May 21, 2010, available at: http://www.restaurant.org/pressroom/pressrelease/?id=1959

[lvi] U.S. Bureau of Labor Statistics, available at: http://www.bls.gov/oes/current/oes_77200.htm#35-0000. The numbers show nearly 53,000 employees in the restaurant industry and approximately 34,000 cashiers and retail sales workers.

[lvii] Ibid at note 49, pp. 10–12. The Congressional Budget Office originally estimated 4 million Americans would lose coverage, the Lewin Group estimated 2.4 million, and Booz & Company estimated 3–4 million. While other studies reviewed in this paper estimate increases in employer provided insurance (RAND, Urban Institute, Centers for Medicare & Medicaid Services), the author believes these studies do not account for the significant incentives that employers, particularly in low-wage industries with considerable scheduling flexibility such as restaurants and retail outlets, will face once ACA is implemented. In particular, the exemption of employers with fewer than 50 employees, the complex, temporary, and relatively modest subsidies available to small employers, and the fact that the penalty for not providing insurance is in many cases less than the cost of providing insurance, all combine to reduce the likelihood of employers’ being willing to offer coverage that was previously not provided, and increase the likelihood that employers will drop coverage. This view is also supported by the results of several surveys of employers (see Ibid at note 49), and numerous anecdotal accounts in the media of employers considering reducing or dropping the availability of health insurance for employees (see Ibid at note 50).

[lviii] The Budget and Economic Outlook: Fiscal Years 2013 to 2023, p. 60, Table A-2, Congressional Budget Office, February 2013, available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf

[lix] Author’s calculation, based on Rhode Island’s population comprising 0.341% of the U.S. population. Source: http://quickfacts.census.gov/qfd/states/44000.html. Numbers have been rounded to the nearest 1,000.

[lx] See Alex NussbaumAetna CEO Sees Obama Health Law Doubling Some Premiums,” Bloomberg, Dec 13, 2012, available at http://www.bloomberg.com/news/2012-12-12/aetna-ceo-sees-obama-health-law-doubling-some-premiums.html; see also Jonathan Block, ‘Young Americans Could Experience Shock When Exchanges Go Live,’ AISHealth.com, December 7, 2012, available at: http://aishealth.com/blog/health-reform/young-americans-could-experience-shock-when-exchanges-go-live; see also Miles Miller, ‘Obamacare architect: Expect steep increase in health care premiums,’ Daily Caller, February 11, 2012, available at
http://dailycaller.com/2012/02/11/obamacare-architect-expect-steep-increase-in-health-care-premiums/#ixzz2KoXv8dfh

[lxi] These are conservative estimates based on adding the total number of ‘Undocumented Immigrants’ persons to .5 of both the high and low estimates for the “Young Invincibles,” “Self Employed,” “Exempt – Medicaid,” “Exempt – 400%+ FPL” and taking the low end of the “At Risk” estimate.

Bryan Morillo Essay

Second Place Essay: 2013 “School Choice” Essay Contest – Bryan Morillo

See the Media Release here …

(July, 2013) Bryan Morillo is seventeen years old. He was born in Brooklyn, New York, and moved to Providence when he was three years old. Bryan graduated from Mount Pleasant High School, and is about to enroll at CCRI, where he wants to study political science and economics.

Bryan Morillo accepts his prizes as runner up in the 2013 Friedman Legacy Day School Choice Essay contest!

Bryan Morillo accepts his prizes as runner up in the 2013 Friedman Legacy Day School Choice Essay contest!

Bryan hopes to get involved in elected politics. He would like to see fewer policies that take away rights from the individual, and a return to the basic, limited principles of the Constitution. Bryan believes this will help people feel more empowered, rather than further empowering disconnected politicians and bureaucrats.

Bryan’s essay is below …

***

How school choice could have affected my life

As a graduate of the providence school system I understand, just as thousands of others understand, how lack of school choice can negatively affect an individual. Before I delve into what school choice means I first want to give insight into what I’ve experienced without it. Lack of school choice has far reaching effects as I have witnessed for myself. These effects range from: Higher dropout rates, lower test scores and a lack of motivation to succeed in life. These are all things that I personally can attest to.

Even though I was not born in Providence this is the city I was raised in. As I grew up in the Providence school system I have seen a great number of my peers drop out of school. Although they were not all similar in character or personality, nearly all of them had the same reason for leaving school. It was not relevant to what they wanted to do in life. The goals they had set up in life didn’t seem to be achievable through continuing school.

For the longest time I too did not see the relevance of school in my life. The reality was that as I left middle school I was presented with 4 public schools as a choice. Any private school was either too far or too expensive for me to attend. So I resigned myself to Mount Pleasant High School. I felt no urge to push myself to do better in anything academically. I knew I could simply do just enough to get by and so I did.

All public schools in Providence have pretty much the same curriculum and thus do not have much difference except in faculty and location. Furthermore the curriculum presented no serious challenge, making it easy to simply go through the motions of showing and filling whatever sheet you were handed. The classes were either not necessary or inconsequential. Not to mention the variety in classes to choose from was nonexistent. You got the classes the guidance office gave you, end of story. In hindsight it was quite easy for me to want to drop out of school because school didn’t anything like what the real world would offer.

In the end I graduated high school unprepared for the real world and with no sense of accomplishment. It had become apparent to me that anything useful I picked up came from outside of school. It seemed that the school system made education more difficult to receive by failing to provide the student with what they need instead of what the curriculum desired. So it was the lack of availability in schools that condemned the students of providence to an attitude of “sit at home and collect a check.”.

However when you introduce true school choice to the situation you can deal with a plethora of problems. People wouldn’t have to resign themselves to the status quo if they knew they could achieve more. Not just more out of their school but in life in general. The ability to go to a school that better suited the student not only would reduce the dropout rate, because they are doing what they want to do, but also give them the motivation to push harder because there would be other students there striving to be the best. Students wouldn’t see testing as an annoyance but rather as a gauge of their abilities. The school system would succeed where it has previously failed for years and all it would take is to simply give students a say in where they want to go.

This would also carry well into college because now, a fresh batch of high school graduates, all of whom are well trained in their skill of choice would be entering into the halls of universities and colleges with an entirely different mindset than the previous generation. A larger percent now having an idea of what they want to do in life or what their career of choice will be. Colleges will be able to better perform their jobs because the high schools did theirs. In turn producing a generation of motivated individuals who have a sense of not only identity but purpose.

All of this does not have to remain speculation. The truth is that if this could be implemented the youth of Providence would be changed forever but for that to happen people must for first care for the youth of Providence. As a member of People United For Change I can speak for everyone by saying we care. It’s simply a matter of others caring too. Caring for the community and caring for the future as well. This is what school choice means to me. 

Tiffany Rezendes Essay

Winning Essay: 2013 “School Choice” Essay Contest – Tiffany Rezendes

See the Media Release here …

(July, 2013) Tiffany Rezendes is twenty years old. Tiffany was born and raised in Providence and educated in the Providence public school system. Unlike many of her friends, who dropped out under-performing schools, Tiffany was accepted to and graduated from Classical High School.

Tiffany Rezendes poses with her IPad prize as winner of Friedman Legacy Day 2013 School Choice Essay Contest winner!

Tiffany Rezendes poses with her IPad prize as winner of Friedman Legacy Day 2013 School Choice Essay Contest winner!

She now studies liberal arts and psychology at CCRI. After college, she wants to do whatever will do the most to help people in her community. She is considering ministry because she believes that empowering people religiously will make the biggest, most positive impact on all other areas of people’s lives.

Her winning essay is below …

***

School choice

School choice was never really an issue of interest to me for two reasons. One reason was that I had no idea what school choice even meant. I was never taught that the possibility existed for students to choose the school they wanted to go to regardless of where they live or of their family’s economic status. I was always taught that when it came to school you either found a way to come up with the money to pay for the good schools (Moses Brown, LaSalle Academy), was smart enough to get into the charter schools and college prep schools or to just settle for the public school closest to your house. The second reason why school choice was never important to me was that I had the opportunity to attend Classical High school, so I didn’t have to worry about being sent to just any public school in my area, I was already at one of the best schools in Rhode Island. However, to my dismay this wasn’t the reality for many of my friends, who had no other choice but to choose one of the below average public schools.

It isn’t surprising that on the list of the top schools in Rhode Island not one Providence public school (Mt. Pleasant, Hope, Central) is listed (U.S.News & World Report LP.). The top school on the list is Classical high school, which you take a test to get into, and the only other school on the list from Providence is Times2 Academy, which is a charter school, which you have to be chosen from a lottery to get into. This leaves the “choice” for students to be really no choice at all. You either get into one of the “smart” schools, pay to go to the good schools, or settle for the many below average public schools. A choice would mean that all students regardless of geographical location, economic status, or level of intelligence would have the opportunity to attend an institution where they know they can receive top-notch instruction from teachers who truly care about their educational success.

Many of my friends and fellow junior high classmates were there with me on the day of the Classical test. And sadly I can say that many of them were not accepted and because there is no school choice in Rhode Island they were forced to choose one of the local public schools in their district. And to further this point it pains me to say that I found out that two of them that I knew of dropped out of high school because they lost interest and motivation. I’m going to focus on one of these people for this essay.

My best friend Jess attended three Providence public schools within just the time span of her freshman year of high school. She went to these schools because they were the only options presented to her. I can imagine how demoralizing it must have been for her to not be able to attend the school she wanted (Classical) and then have to settle for one of the low standard public schools which everyone knows have horrible ratings when it comes to test scores and graduation rates. I strongly believe that if Jess had the opportunity to choose one of the top schools like Moses Brown or LaSalle, she would have graduated and would have been in college now. Jess was willing to work hard if she was put in an environment that would challenge her, but I think she just gave up once she found out she wasn’t accepted into Classical because all her hopes of having a great education had to be lowered to settle for a below average school experience.

In Providence the mindset of the youth is pretty much that, if you want a good education you have to get into Classical and if you can’t do that than your next best option is one of the charter schools because no one can afford the private schools. Everyday students are making decisions to drop out because of the lack of excitement to learn in their classes, the lack of creativity with which classes are taught, the outdated information being fed to them, and teachers who don’t care enough.

School choice solves these problems not only by giving students the opportunity to attend high achieving institutions and an equal chance at a good education, but it also causes competition among the local schools which will cause them to improve. If those low scoring schools have no students they will be forced to improve their curriculum, making it more relevant and interesting to the students and also to only hire and keep teachers who are well qualified and who really care about the education of their students.

I strongly believe that school choice plays a pivotal role in changing our broken school system into one that will thrive and become more relevant, inspiring, encouraging, challenging, and one that will better prepare its students for whatever they decide to pursue after high school whether that means entering the workforce, becoming an entrepreneur or entering a post secondary institution. There is no excuse that can explain why statistics show that so many Providence public school students score below average in math, reading and writing and upon entering college have to retake basic remedial classes, which they should have already been taught in high school. I know a lot of people, myself included, who have no idea why we must take these basic math, english, and history classes again if this is material that we were expected to master in high school. Year and year again students are taught the same information, yet still do not understand it. Why? Perhaps the answer lies in the fact that information is not being taught, its being crammed in, rushed through and passed over. Students aren’t being challenged to learn through application and critical thinking, but rather being taught to simply memorize facts in order to pass tests and then forget the information. And even though I attended Classical high school, “the best school in Rhode Island” I still rarely had the experience of being able to critically think and apply what I was learning.

The question before us now is not whether school choice could change people’s lives but rather when will we allow this change to take place? It is clear that school choice will make a difference, but are we going to give it a chance? Obviously it is clear that I believe we should, and I know many people who also agree. Will you join me in giving every student an equal opportunity to pursue an educational experience that will actually do what it is supposed to? High schools that will turn students into informed citizens, equipped with the necessary knowledge to make them capable of walking their path to success regardless of where that path may lead. 

Rhode Island Employment Snapshot, June 2013: Still Steady, Now Down-Leaning

Rhode Island’s unemployment held at 8.9%, despite a decrease in employment and the size of the labor force. In other words, the state is still stuck in its rut.  The federal Bureau of Labor Statistics (BLS) has not yet updated its quarterly release of “alternative” state-to-state unemployment levels, but if Rhode Island’s U-6 rate increased at the same rate as the national U-6 rate, it will be over 17%.  That’s the measure that includes not just those who’ve said they’ve looked for work in the past month, but also those who haven’t looked for work for a longer period plus those who say they are only working part time, while wanting full-time employment.

The first chart below shows that the employment situation’s mild gyrations are pretty much sticking to a horizontal line of no improvement.

The second chart shows that the Ocean State still has a long way to go to reach its January 2007 level of employment, and once again remains well behind Massachusetts and Connecticut.

RI-laborforceandemp-0107-0613

RIMACT-laborforceandemp-0613perc0107

Political Class in Rhode Island: Living in a Land of Make Believe

Commentary (amended 7/15) 

See TV discussion on WJAR-10

What are we to make of recent legislative sessions and of our state’s political leadership? After all the talk from the Executive and Legislative about economic development, and comparing that with the virtual inaction we all witnessed, I have reached my own fanciful conclusion:

the Political Class in Rhode Island is living in a “land of make believe”

landofmakebelieveThe rest of us, taxpayers and business owners, are left to deal with real life.

Where are the jobs and the plan for economic growth we were promised? Consider …

In the land of make believe, the fact that over 50,000 of us are out of work does not inspire a need for bold public policy reform. In reality, Rhode Island is in the midst a severe Death Spiral, as fewer and fewer people are calling our state home, and those that remain and forced to support an ever-increasing budget burden … only perpetuating the downward spiral.

In the land of make believe, simply talking about economic development suffices as progress, while in the real world, we saw no major policy changes that gets onerous tax and regulatory burdens off our backs.

In the land of make believe, preservation of the status-quo budget is the top priority. In the real world, it is indeed this failed budget that has caused the Ocean State to be ranked so poorly in so many categories.

In the land of make believe, the myriad window-dressing bills and re-shuffling of the deck gives cover for legislators to hail that they helped our state. In reality, the 2013 legislative session further weakened the competitiveness of our already last-place state.

In the land of make believe, our generous social services spending provides critical support to the needy. In reality, ranking number one in terms of redistribution of wealth policies, Rhode Island is the most anti-family, anti-jobs state in the entire nation, depriving the needy of the opportunity for upward mobility and the financial self-security that they really desire.

In the land of make believe, providing a municipality with a statutory hammer to bully its local University into making payments in lieu of taxes is simply helping each side get together to work things out. In the real world, the state has stuck its nose into a place that it doesn’t belong and has created an non-level playing field that will make Rhode Island even a less attractive place for other non-profits.

In the land of make believe, raising the minimum wages helps low-income workers earn a few more dollars. In real life, this deprives jobs to others, particularly youth and families in need of additional income.

In the land of make believe, levying tolls and raising fees are just harmless means of finding revenues to pay for pet spending programs. In the real world, each of these money grabs results in yet another disincentive to some kind of productive economic activity.

In the land of make believe, a little bloodletting here and there in the form of new taxes and fees is healthy because it pays for some perceived good. In the real world, Rhode Island is suffering death by a thousand cuts.

In the land of make believe, it is considered a win-win to pay people NOT to work, via an expanded TDI family leave program. In the real world, actual businesses, workers and families know that this is a lose-lose scenario, forcing even further costs and loss of productivity onto an already strained private sector.

In the land of make believe, unionizing daycare workers will improve the quality of care. In real Rhode Island, unions will siphon off more dues from more workers and will increase their political power in the state.

In the land of make believe, state and local government officials hide behind assumed rates of returns for defined benefit public employee pension funds that are significantly higher than those assumed in the real, private sector world.

In the land of make believe, Obamacare and state exchanges were to lower the cost of health insurance. In the real Rhode Island, rates will rise by 12%.

In the land of make believe, a special session of the General Assembly is warranted to address a critical pension issue with a politically sensitive class of workers. Conversely, the fact that real world, average, everyday would-be workers face one of worst employment outlooks in the nation is not a cause for action, or even apparent concern … should be of concern to all of us.

In the land of make believe, passing National Popular Vote now makes ‘every vote count’ for Rhode Islanders in presidential elections. In the real world, our esteemed Political Class has voted to reduce our state’s collective clout in electing our nation’s leader by over 57%!

In the land of make believe, tolerance is a catalyst for economic growth. In the real world of economics, tolerance is not a variable in any economic formula that I have ever studied.

In the land of make believe, the political class believes that it is their responsibility to right every perceived wrong. In the real world, the unintended consequences of their policies are strangling us: We are more than capable of fending for ourselves if government would just get out of the way!

In the land of make believe, big government, with all its insider deals, special interest favoritism, and cronyism provides valuable services to certain citizens and businesses. In reality, we simply want a government that works for all of us, including the average little guy, not just for the special few.

There is one area, however, where the make believe land of the political class overlaps with the real world.

In the land of make believe, public officials are fearless that they will ever be held accountable for their actions or, this year, for their inactions. And, sadly, it is also true that in the real world Ocean State voters are not likely to ever hold their elected officials accountable.

On second thought, maybe it is we, ourselves, who are living in a land of make believe; by daring to hope that our elected representatives will someday have the vision and courage to make our dream of an economic recovery a reality; or alternatively, that if legislators continue to fail in this regard, that we will apply some measure of chronic political unemployment to them.

Every Rhode Island vote should count

By Mike Stenhouse – as appeared in Providence Journal June 28th, 2013

‘Every vote should count.”

That was the mantra that echoed through the chambers of the Rhode Island General Assembly this month as our legislators debated, then passed, the National Popular Vote bill, which would change the way states elect the president of the United States.

The legislators were referring to votes by citizens in national elections. What about votes by legislators on local bills? Shouldn’t every legislator be held accountable for each vote they take? Shouldn’t those votes count too?

Would you be surprised to know that, in passing the NPV bill, our General Assembly just voted to diminish our voice in national elections, as Rhode Islanders, by over 50 percent?

And why should we be surprised? After all, over the past few years, even with the Ocean State floundering near last place in an alarmingly high number of categories, our elected officials continue to pursue policies that further diminish our state’s competitiveness, that encroach more severely upon our individual freedoms, that reduce our opportunities for increased prosperity, and now that would take away over half of what voice we have when it comes to electing our president.

Under the current Electoral College system, thanks to the wisdom of the Founding Fathers to protect small states like ours, Rhode Island enjoys a greater proportion of electors than our population level would otherwise dictate. However, under the NPV compact, Rhode Island’s popular vote impact would be lessened to be directly proportional to its national share of the population.

Here’s the math: The Ocean State’s population of 1 million represents just 0.316 percent of the nation’s 316 million people. Our state’s electoral weight of 4 electors represents 0.743 percent of the 538 national electors.

So, our General Assembly just voted to reduce our state’s collective clout from one-in-134 to one-in-316 — a loss of over 57 percent of our voice!

This same sort of illogic is how our state government has continually voted to keep Rhode Islanders from realizing their fullest potential. Recently, the Rhode Island Center for Freedom and Prosperity released snapshots of our General Assembly Freedom Index that scores both bills and legislator votes in terms of how they preserve or infringe upon our freedoms, which we believe have a direct effect on our chances of achieving prosperity.

To date, we are tracking 551 bills in the 2013 session. Over two-thirds of those bills we marked as “red,” in that they diminish our liberties; with a total negative score of minus 285. Clearly, the wrong direction.

As for individual legislators, not a single state representative or senator scored in the “green,” or with an overall positive score, on our Legislator Scorecard as of the posting of the snapshot.

Think about that. Not one elected official so far in 2013 has an overall voting record that works to your advantage. Your legislature as a whole has put forth a collection of 551 bills that will further diminish your chance to succeed — death by 551 cuts, if you will.

And now, to top it all off, they have just voted to diminish our state’s political standing when it comes to electing the leader of our nation.

Indeed, it appears that the more government tries to do, the more it harms our freedom and prosperity, as well as our ability to determine our own futures and to pursue our own paths to happiness — whether we are individuals, businesses, municipalities or, now, as a state. Once upon a time we called this tyranny. What do we call it today?

When will we learn that as citizens it is our civic responsibility to ensure that every legislator’s vote counts, too, and hold them accountable for their actions?

Mike Stenhouse is a lifelong Rhode Island resident and chief executive officer of the Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think-tank.

Rhode Island Employment Snapshot, May 2013: Steady Lack of Motion

Rhode Island’s unemployment rate notched back up a tenth of a percent, to 8.9%. As the charts below illustrate, it’s mainly an indication of stagnation. Some slight encouragement can be taken from the fact that it was a larger increase in the labor force than in employment that spurred the change, possibly meaning that people are a little more optimistic than they were.

The first chart below shows that the employment situation’s mild gyrations are pretty much sticking to a horizontal line of no improvement.

The second chart shows that the Ocean State still has a long way to go to reach its January 2007 level of employment, and once again remains well behind Massachusetts and Connecticut.  Connecticut has paused its free fall, however, and has at least secured a one-month reprieve from its plummet to a Rhode Island-like condition.

RI-laborforceandemp-0107-0513

RIMACT-laborforceandemp-0513perc0107

General Assembly Freedom Index – Bill Watchlist (Updated 6/21)

The RI Center for Freedom & Prosperity reviewed all legislation submitted this session (as of June 21), scoring each one with regard to its effect on freedom and, particularly, whether it would further contribute to or would begin to alleviate Rhode Island’s state of decline. In total, we are tracking 592 bills, with a total weighted score of -323, meaning that if all of the legislation were to pass, the overall effect on the state would be a negative one.

Note that this is a preliminary list. Upon the end of the legislative session, the Center will review all of the legislation for the accuracy of the descriptions (with and without amendments). We will also present all bills that receive floor votes to a review panel for final judgment concerning whether each bill is positive, negative, or neutral and what its weighting ought to be.

After opening the PDF, press ctrl-F to search for a bill. For vote tallies and bill travel, see RhodeIslandVotes.org.

Download: General Assembly Freedom Index 2013 Preliminary Scored Bills (06/21)

Click here to see how legislators were scoring on floor votes as of May 22.

Will Rhode Islanders Purchase Insurance Under Obamacare?

June 10, 2013

Download: PDF version of this report

Read the Part-3 report, Moving Forward with Healthcare in RI

Summary

There will be a broad financial disincentive in Rhode Island for a significant number of individuals and families to obtain private health insurance coverage under the President’s Affordable Care Act. As a result, Rhode Island should be prepared to see enrollment through the Rhode Island Health Benefits Exchange that is significantly below current expectations.

Based on proposed insurance rates in the Ocean State, and given the individual mandate penalties specified in the national law, for most income and age categories earning more than 200% of the federal poverty level for individuals, and 250% for families and couples, there are often substantial pocket-book reasons not to purchase insurance, even when subsidized via the state’s pending health benefits exchange.

This perverse economic incentive runs contrary to the stated goal of Obamacare to significantly decrease the number of uninsured Americans and will likely leave tens of thousands of Ocean State residents without adequate insurance coverage. This financial disincentive could also lead some people actually to drop insurance altogether, resulting in an increased number of uninsured as well as a rise in uncompensated hospital and emergency room costs.

At Issue

On October 1, 2013, Rhode Island’s health benefits exchange will open to the public, allowing residents to purchase health insurance that becomes effective January 1, 2014. The purpose of the exchanges, and the federal Patient Protection and Affordable Care Act (PPACA) that created them, is to expand health insurance coverage and substantially decrease the number of uninsured.

For many Rhode Islanders the premiums for insurance will be capped under PPACA and the federal government will pay the premiums in excess of the capped amount. Subsidized coverage will be available to those between 100 and 400% of the federal poverty level (FPL) who do not have access to “affordable” coverage through work.

The subsidies are supposed to work in tandem with the so-called “individual mandate,” which requires most citizens to obtain health insurance or pay a tax as a penalty. By offering subsides to low- and moderate-income individuals and families while imposing a penalty for failure to buy insurance, PPACA is essentially trying a “carrot and stick” strategy to expanding coverage.

Key to the success of this strategy will be how individuals and families perceive the pocketbook tradeoffs between obtaining coverage or paying a tax. The question boils down to: Will the stick be large enough and swung hard enough to get most people to buy the carrot? This healthcare brief attempts to provide insights into the economic incentives that may serve as the basis for the answer to that question.

The Data

The following table depicts the financial tradeoff between the expected after-subsidy out-of-pocket cost of obtaining insurance through the exchange and the cost of not purchasing insurance and instead paying the tax. Positive numbers (in green bold) indicate that, from a strictly financial perspective, individuals and families can save money by paying the tax penalty rather than purchasing insurance. Negative numbers (in blue italics) indicate that it would be less expensive to purchase insurance than pay the tax.[1]

Healthcare Premiums vs. Individual Mandate Penalty Tax in RI

Proposed insurance rates in RI will generally increase by 18% over last year, with younger individuals seeing increases of up to 50% in their premiums while older persons see lower premiums as a result of the implementation of the Affordable Care Act’s requirements and the operation of the exchange.

Discussion

As the table demonstrates, at most income levels and ages the financial incentive is to avoid purchasing insurance and to instead pay the penalty. This suggests that the Rhode Island Health Benefits Exchange may have substantial difficulty in attracting a significant number of customers.

That said, the age groups and income levels for which the incentive is to purchase insurance (or at least the disincentive is not large), the young and those with low incomes, are the populations most likely to be uninsured.[3] Many of these are likely to be eligible for Medicaid, however, reducing the number that might decide to purchase insurance through the Exchange.

Additionally, the table only looks at the financial incentives and does not consider two other factors that might lead an individual or family to purchase health insurance despite these incentives. In the first instance, Rhode Islanders who tend to be risk-averse and concerned about the possible need to pay for expensive and unexpected health care needs might overlook the pure financial incentives and obtain insurance. In the second instance, Rhode Islanders who already have substantial health needs such as diabetics, heart disease sufferers, or other chronically ill persons will generally find it to their financial advantage to buy insurance because the after-tax savings for not buying insurance are still less than their out-of-pocket costs for needed care.

Unfortunately, if individuals with greater health needs than average are more inclined to purchase insurance, it will lead to adverse selection in the health insurance market and set off a “death spiral” causing premiums for non-subsidized (and some subsidized) individuals to rise, leading even more individuals and families to drop coverage, until only those with extremely high medical bills are left paying extremely high premiums.[4]

Another factor not included in the financial analysis is the impact that social expectations might have. It is possible that even though it may not be seen to make financial sense to purchase insurance through the exchange, the fact that there is a penalty for not doing so will lead some to decide that purchasing insurance is the responsible thing to do, and that not purchasing insurance is an act of poor citizenship.

On the negative side, the disincentive to purchase insurance may be even greater in many people’s view because of the nature of the insurance. The Blue Solutions for HSA Direct 5000 plan, which is the plan used here for most of the analysis, features a $5,000 deductible for an individual and $10,000 for a family.

The least expensive Silver plan, Blue Solutions for HSA 2600, features a $2,600 deductible for an individual and $5,200 for a family, and costs nearly 30 percent more than the Blue Solutions for HSA Direct 5000 policy.

This means individuals and families considering whether to purchase insurance or pay the tax will also be looking at the benefits they might get from being insured. In the case of a family of four with two adults age 34 earning $82,425 (350% of FPL), they would not only consider whether it’s worthwhile to spend about $3,000 more on insurance than they would pay in taxes for being uninsured but also recognize that they would still need to pay $10,000 out of their own pockets before getting benefits from their policy in the event of a catastrophic illness or injury.

Because very few individuals and families will see medical expenses approaching $13,000 (adding the $3,000 difference between the tax and out-of-pocket premiums to the $10,000 deductible),[5] it is highly likely that many individuals and families will see little value in insurance that is expensive while still exposing them to substantial financial risk, and will choose to remain uninsured, paying for their relatively few medical expenses out-of-pocket and saving a substantial amount of money.

An additional factor to consider is the “moral hazard” created by requiring that insurers accept all applicants at standard rates, with no exclusions or limits on care for pre-existing medical conditions. This effectively tells Rhode Islanders weighing whether to buy costly insurance or pay a relatively modest tax if they choose to remain uninsured that they can delay purchasing insurance and still be able to obtain coverage at a later date to pay future medical expenses in the unlikely event of a catastrophic injury or illness.

This has the potential to further tip the decision towards remaining uninsured, although the limited open-enrollment period may mitigate this impact somewhat (the rate filings by Blue Cross/Blue Shield of Rhode Island indicates an annual open enrollment period between October 15 and December 7).

This “moral hazard” could also manifest itself if many of the currently insured in the individual market as well as some receiving insurance through their employer respond to the incentives embedded in PPACA and the exchange and elect to drop coverage.

Finally, the analysis here uses the tax amounts for 2016, and assumes the tax will be collectable by the IRS. In 2014, the tax for remaining uninsured will be the larger of $95 per person or 1% of taxable income, rising in 2015 to $395 or 2%, making the incentive to remain uninsured for at least these two years substantially more than the table above indicates.

There is also some doubt about the ability of the IRS to actually collect the tax, given that they are prohibited from pursuing civil or criminal charges for nonpayment, and are not able to garnish wages, seize assets, or levy additional penalties or interest for nonpayment. The only mechanism available to the IRS for collecting the tax for being uninsured is to take it out of tax refunds, which can be easily avoided by adjusting how much tax is withheld.

Methodology & Sources

The financial incentives to obtain health insurance coverage (subsidized or unsubsidized) or be uninsured and pay the tax depend on several factors: age and how much an individual or family earns as a percentage of the federal poverty level (FPL) in adjusted gross income; what the Bronze and Silver level premium for their age/family composition would be; what their premium subsidy would be; and what their tax for being uninsured would be. Once this information is known, it is fairly easy to calculate how much any particular individual or family would have to pay to obtain health insurance as well as what their tax would be for being uninsured.

Age levels for the purposes of this analysis were set at 24, 34, 44, 54, and 64 years old. Income levels for this analysis were selected to be 150, 200, 250, 300, 350, 400, 401, 600, and 800 percent of FPL, using 2013 poverty guidelines.[6]

Bronze level premiums were assumed to be the lowest-cost Bronze plan submitted to the Rhode Island Office of Health Insurance Commissioner on April 15, 2013, in this case the Blue Solutions for HSA Direct 5000.[7] The Silver premium cost used was VantageBlue Direct 3000. Premiums for a couple of the same age are calculated to be two times the individual premium, and the family premium assumes two adults of the same age and two children under age 21.

The premium subsidy was determined by subtracting the maximum out-of-pocket amount (as determined by PPACA’s guidelines)[8] from the Silver premium. This amount was then subtracted from the Bronze level premium, with the remainder being what individuals, couples, and families are expected to pay for coverage through the exchange. In some cases, the result was negative, in which case “zero” was substituted for the subsidy.

The premium for the Catastrophic plan was used where it was less than the subsidized Bronze premium for those eligible to purchase it, defined in PPACA as those age 30 and under and those for whom out-of-pocket premium costs would exceed 8% of income.

The tax levied on being uninsured was calculated using the 2016 tax rate, the time at which penalties under PPACA for being uninsured will first be in full force. Income subject to the tax equals income minus the tax filing threshold ($9,750 for an individual in 2012, $19,500 for a married couple) multiplied by 0.025 in 2016, or $695 per uninsured adult and half that amount for each uninsured child, whichever is larger.[9] Individuals and families for whom purchasing insurance would cost more than 8% of income are exempt from the tax if they elect not to purchase insurance.

Once this information was obtained and calculated, a simple analysis was performed subtracting the tax for being uninsured from the out-of-pocket premium. The difference represents the financial incentive or disincentive for purchasing insurance under PPACA.

Conclusion

While advocates of the Rhode Island Health Benefits Exchange are optimistic about its ability to substantially reduce the unacceptably high number of uninsured in the state (along with the Medicaid expansion), there is substantial reason to be concerned that it will not attract large numbers of individuals and families.

As demonstrated here, for many age and income levels, the clear financial incentive is to not buy insurance and instead pay (or possibly avoid altogether) the tax. In some instances this incentive is relatively weak, only several hundred dollars. But for many more the incentive is thousands of dollars in difference between buying insurance or remaining uninsured, and more than $10,000 for many who are older, have children, and are in higher income brackets.

This strongly suggests that public officials and community leaders in Rhode Island should be prepared to see enrollment through the Rhode Island Health Benefits Exchange that is significantly below current expectations, leaving a substantial number of Ocean State residents uninsured.

Future Related Papers

The Rhode Island Center for Freedom & Prosperity will continue to contribute to this important and highly personal public discussion by publishing two related papers in the coming months.

First, identifying and quantifying the groups of people who are likely to remain uninsured after the PPACA takes effect.

Second, to propose free-market public policy solutions, as well as private strategies, that can be pursued to address this shortcoming, without requiring any additional taxpayer funding.

About the Author

Sean Parnell, an adjunct scholar to the RI Center for Freedom & Prosperity, is president of Impact Policy Management (IPM), a Washington, D.C., area full-service public policy firm, and manages political advocacy projects for free market and limited government causes. Before founding IPM he was president of the Center for Competitive Politics (CCP), a nonprofit advocacy organization focused on defending the First Amendment. Prior to joining IPM Parnell was Vice President of External Affairs at the Heartland Institute.

 


[1] Technically the penalty for being uninsured cannot exceed the cost of the national average for a Bronze plan, meaning that in cases where the tax is greater than the Bronze premium (a negative number), the actual difference between the maximum out-of-pocket premium and the tax is close to zero. In order to demonstrate how close or far each income level is from this point, we have kept the originally calculated number.

[2] The table here presents only final findings, based on the data and calculations described in the Methodology and Sources section. The full spreadsheet including all data and formulas used is available to anyone who requests it, please contact info@rifreedom.org

[3] For a more complete discussion of the composition and characteristics of the uninsured in Rhode Island, see Karen Bogen’s Who Are The Uninsured in Rhode Island: Demographic Trends 1990 – 2004, Access to Care, and Health Status for the Under 65 Population prepared for the Rhode Island Department of Human Services in 2006, available at: http://www.dhs.ri.gov/Portals/0/Uploads/Documents/Public/Who%20are%20the%20uninsured.pdf

[4] For a full discussion of the ‘death spiral’ phenomenon, see: Destroying Insurance Markets by Conrad Meier, published by the Council for Affordable Health Insurance and The Heartland Institute, 2005. Full text available at: http://www.cahi.org/cahi_contents/resources/pdf/destroyinginsmrkts05.pdf.

[5] A review of data available from the results of the Medical Expenditure Panel Survey (MEPS) conducted by the Agency for Healthcare Research & Quality shows that in 2010 the median healthcare expense was $875 for persons age 18 – 44 and $2,124 for those age 45 – 64. Mean expenditure for these age groups were $3,230 and $6,429, respectively. MEPS has repeatedly found that medical expenditures are highly concentrated among a small percentage of the population, typically older and Medicare-enrolled. See reports available at: http://www.ahrq.gov/research/data/meps/index.html

[6] 2013 Poverty Guidelines, U.S Department of Health & Human Services, available at: http://aspe.hhs.gov/poverty/13poverty.cfm

[7] BCBSRI Individual Market Submission to Rhode Island Office of Health Insurance Commissioner, p. 93 4/15/2013, available at: http://www.ohic.ri.gov/documents/2013%20Rate%20Review%20Process/2013%20Rate%20Review%20Submissions/1_2013%20BCBSRI%20Individual%20Market%20Submission%2041513%20Final.pdf

[8] Health Reform Subsidy Calculator, Henry J. Kaiser Family Foundation, available at: http://healthreform.kff.org/subsidycalculator.aspx

[9] “Payments of Penalties for Being Uninsured Under the Affordable Care Act,” Congressional Budget Office, September 2012, available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/09-19-12-Indiv_Mandate_Penalty.pdf

House Economic Development Bills and the General Assembly Freedom Index

In light of the RI Center for Freedom & Prosperity’s release of its 2013 General Assembly Freedom Index Snapshot the day after the Rhode Island House of Representatives passed its leadership’s economic development package, a note joining the two may edify the public.

In short, we believe that the six bills that passed the House (now to proceed to the Senate) will have an overall negative effect on Rhode Island’s economic and civic well-being. The three negative bills are:

  • 6063-SubA: to create an Executive Office of Economic Development to oversee multiple state governments, including Business Regulation, Labor and Training, and others, and coordinate all government activities affecting the state’s economy. The office would be run by a new Secretary of Economic Development appointed by the governor.
  • 6071: to change the Economic Development Corp. into the Commerce Corp. and increase its reporting requirements to the General Assembly. The legislation would also add a layer of supervision, with a new Secretary of Commerce appointed by the governor having final authority and a chief operating officer running the day-to-day operations.
  • 6068-SubA: to create a “Rapid Rhody lending program” within the proposed commerce corporation to offer fast financing to small businesses that have been operating in the state for a year and promise to remain for another two years.

All of these bills would consolidate economic authority — increasing power to dictate the direction of the state’s economic activity — within the hands of a small group of largely unelected government officials. The third of the bills would do so by providing taxpayer resources to government agents to hand out to select businesses, which would both socialize the risk of those businesses’ not succeeding and interfere with the market forces that allow an economy to move its resources where they can do the most good.

The three other bills in the package, we view as likely to be inconsequential:

  • 6069-SubA: to require each new gubernatorial administration to create an Economic Development Planning Council with at least 15 members chosen from inside and outside of government to plan economic policy for the state.
  • 6070-SubAaa: to create a Council of Economic Advisors with nine members appointed by the governor to advise him or her on matters related to economic policy and to publish reports and analysis.
  • 6067: to create a state business development center within the proposed commerce corporation that would “provide a concierge-level of call service” to walk businesses through government requirements and possibly offer business-to-business services.

A handful of legislators did vote against some of these six bills, and it did have an effect on their rankings, with the top and bottom 10 now as follows:

House
Top 10 Bottom 10
1 Chippendale -19.4 75 Edwards -83.1
2 Trillo -29.0 74 Williams -80.7
3 Newberry -29.0 73 Valencia -80.7
4 Costa -41.9 72 Slater -80.7
5 Giarrusso -41.9 71 Silva -80.7
6 O’Neill -42.7 70 Shekarchi -80.7
7 Dickinson -47.6 69 Serpa -80.7
8 Morgan -50.0 68 Palangio -80.7
9 San Bento -52.4 67 O’Grady -80.7
10 Nunes -54.8 66 Messier -80.7

 

For bill tracking and descriptions, see Rhode Island Votes.