Commentary, NC Budget and Tax Center, News

New Census data highlight rise in uninsured, the importance of Medicaid

The U.S. Census Bureau released new data Tuesday morning on income, poverty, and health coverage across the nation. The highlights include:

  • For the first time since 2009, the number of people in the U.S. with health care coverage has decreased.
  • While still far too many people are experiencing poverty, this is the first time the poverty rate has dropped below pre-Recession levels.
  • This data on income in the U.S. provide insight into a potential economic slowdown even while there have been modest improvements since the end of the Great Recession. Programs like Social Security, SNAP, and refundable tax credits such as the EITC lifted tens of millions of people in the U.S. out of poverty last year.

For the first time in three years, median household income remained unchanged from the previous year. At $63,179, the amount of income in a typical household has slowed. This indicates that despite job growth and people working harder to find jobs, many jobs are not paying wages that keep up with the rising costs of rent and child care, for example. Stagnation in median household income was experienced for Black, white and Latinx households over the period, while households with older Americans saw an increase in median income.

The overall poverty rate decreased by half a percentage point to 11.8 percent, representing 38.1 million people living on less than $25,100 for a family of four. This is the first time the poverty rate has dropped below pre-Recession levels.

From 2017 to 2018, the child poverty rate dropped from 17.4 percent to 16.2. Not everyone benefited equally from the reduction in poverty. White residents were the only racial group to experience a decrease in poverty while the rate among other racial groups was statistically unchanged from 2017. Additionally, every region in the U.S. saw a decrease in poverty except for the South, where the poverty rate remained at 13.6 percent.

A reduction in hardship without improvements to the financial position of Americans fails to boost our collective well-being.  One striking effect is that the rate of health insurance coverage decreased by 0.5 percent to 8.5 percent in the U.S. This marks the first time the number of people without health insurance has gone up since 2009. A portion of this loss of coverage was attributed to a 0.7 percent decrease in the number of people accessing Medicaid.

The Census report measures the impact of social programs on the poverty rate. Last year, Social Security benefits lifted 27.3 million people out of poverty. Refundable tax credits, like the EITC, and the Supplemental Nutritional Assistance Program (SNAP) lifted 7.9 million and 3.1 million people out of poverty, respectively. Meanwhile, medical expenses were responsible for pushing 8 million Americans into poverty.

Brian Kennedy II is a Senior Policy Analyst at the Budget & Tax Center, a project of the N.C. Justice Center.

NC Budget and Tax Center

NC’s flawed tax schemes fail to address state’s growing student debt crisis

North Carolina’s legislative leaders are pursuing a deeply flawed tax refund plan while leaving some of our state’s most important resources underfunded. Rather than investing the more than $600 million in things like school construction, hurricane rebuilding, or building healthier communities, legislators plan to issue checks of $125 per taxpayer. What’s worse is that those who would most benefit from an infusion of cash are likely to be left out. Nearly one-third of tax payers with the lowest incomes will not receive a refund check.

In addition to this bad idea, state leaders—in the middle of a self-imposed budget stalemate—are looking to piecemeal funding bills as a way to avoid coming to the table and creating a comprehensive budget that funds out state’s needs.

While our leaders continue to debate, very real needs continue to go un- and underfunded. Recommitting to a higher education system that is both high quality and affordable is just one of the many ways state leaders could better spend our money.

A recent report from the Center for Responsible Lending found that over 1.2 million North Carolinians hold $44 billion in student loan debt. Throughout the past decade, North Carolina has seen the second largest increase in student debt across the nation.

The student debt crisis is not only bad for individuals; it is bad for our state’s economy. The financial burden caused by this increase in debt forces would-be homeowners to forgo purchasing a house, delays would-be entrepreneurs from starting a business, and robs people of the freedom to make choices and decisions that contribute to a thriving economy.

The increase in student borrowing is not naturally occurring, but the result of policy choices. From 2008 to 2018, public funding for the University of North Carolina System decreased by 18.6 percent, after adjusting for inflation. Universities responded by increasing pressure on students to fill budget shortfalls. During the same 10-year period, tuition at North Carolina’s public universities increased by $2,293 or 45 percent.

Additionally, while student debt has increased among all borrowers, some people have been disproportionately impacted.

  • Due to existing racial wealth gaps, Black North Carolinians are borrowing at a rate higher than whites. Across the state, communities of color hold higher amounts of debt than predominantly white communities.
  • Because rural communities continue to see higher levels of unemployment and lower wages, loan default rates in rural communities are much higher than the rest of the state.
  • Although women make up 59 percent of the student body at universities in the state, they account for 68 percent of students that borrow more than $26,500 for an undergraduate degree. When women graduate with an average of $2,700 more in debt than men and face a labor market where they earn 26 percent less, they are more likely to default on loans and take longer to repay. Women of color often face even greater challenges than white women.
  • Older Americans are one of the fasted growing grounds of student loan borrowers. Eighteen percent of adults over 60 are delinquent on loans, due to either being forced to go back to school to stay in the labor force, or serving as co-signers for their children or grandchildren.

For-profit colleges serve as another driving force in North Carolina’s student debt crisis. These colleges require students to take out higher levels of loans while offering significantly lower graduation rates. In North Carolina, only 17.7 percent of students at for-profit universities graduated within six years while 75 percent took out loans. Within five years, more than 1 in 4 students default on their loans. These universities have come under fire for targeting students and communities with low incomes, using the promise of higher education to turn a profit for stakeholders.

Although the outlook may seem grim, the Center for Responsible Lending report outlines multiple steps the state can take, such as fully investing in higher education and protecting students from the predatory practices of for-profits.

Education is a public good and for a long time, our higher education system has been a point of pride for North Carolinians. It’s time to restore our commitment to ensuring that our students have access to an educational system that values them and helps them to succeed.

NC Budget and Tax Center

Trump Administration aims to take food assistance away from 106,000 low-income North Carolinians

This week, the Trump administration announced a proposed rule change in the way the Supplemental Nutritional Assistance Program (SNAP, formally known as Food Stamps) is administered. This change would take food assistance away from 3.1 million people and threaten the school meals of more than 500,000 children. This includes 106,000 North Carolinians, nearly 38,000 of whom are children.[i]

The administration wants to dramatically change a provision known as “broad-based categorical eligibility” (BBCE). While a majority of SNAP qualifications are set at the federal level, BBCE provides states with more flexibility in who can apply to receive food assistance. North Carolina has been a model on how to use BBCE to reduce hunger and hardship among struggling North Carolinians. This provision has allowed our state to slightly increase the income-eligibility limits so that low-income working families with children who have difficulty paying for necessities like child care or rent can still apply for food assistance. Additionally, the provision allows the state to modify the assets limits so that families, seniors, and people with a disability can have modest savings without losing SNAP.

Broad-based categorical eligibility is so effective because it actually builds the stepping stones families need to move out of poverty. Without this tool, many families find themselves in situations where saving for a car or receiving a raise at work actually makes them worse off, financially when they lose food benefits. According to a Fact Sheet from the Budget & Tax Center:

BBCE is an important tool in reducing the “benefit cliff”
Without BBCE, families who earn a raise at work or see a small increase in income are at risk of losing their SNAP benefits. Often times, the loss in benefits may be greater than the increase in income, effectively reducing the amount of resources in the household despite working hard to earn more. BBCE allows North Carolina to “phase down” benefits as families earn more, ensuring workers aren’t punished for doing well.

BBCE encourages savings and financial planning
Under regular SNAP regulations, most households are not allowed to have assets or savings that exceed $2,250. Under BBCE, North Carolina has eliminated those limits, allowing low-income families to save money in order to avoid debt, weather financial emergencies, and save to better support themselves during retirement.

BBCE reduces the state costs of administering SNAP
In North Carolina, case workers and county DSS offices are often overwhelmed with caseloads. BBCE simplifies the SNAP application process by eliminating the need for case workers to investigate household assets and often reduces the number of documents required to confirm eligibility. Just last month, the Mississippi Department of Human Services estimated eliminating BBCE would cost the state $1.5 million to implement.

In last year’s Farm Bill debate, Congress voted, on bi-partisan lines, to keep categorical eligibility as a part of the SNAP program. Two years ago leaders in North Carolina floated the idea of eliminating BBCE, but the idea was quickly rejected by legislators and constituents. Research has shown that broad-based categorical eligibility does not significantly increase program cost or participation, but rather gives states the tools they need to better implement and deliver food assistance.

To submit public comment and to tell the Trump Administration why categorical eligibility is so important, visit www.HandsOffSNAP.org

Brian Kennedy II is a Public Policy Analyst with the Budget & Tax Center, a project of the North Carolina Justice Center.

[i] Special data request to NC Department of Health and Human Services. Data accessed June 7, 2019.

NC Budget and Tax Center

Governor Cooper’s budget compromise is a reasonable way forward

This morning, Governor Cooper released a proposal seeking a compromise between the budget his office released earlier this year and the conference budget he vetoed last month. The compromise keeps nearly every major component of the General Assembly’s conference bill but includes a clean Medicaid expansion and eliminates tax cuts to corporations, using that revenue to invest in teachers and schools.

Here are some of the major provisions:

Expand Medicaid without reservations

The Governor’s proposal would provide health care for hundreds of thousands of North Carolinians through Medicaid expansion. Cooper has noted that, unlike proposals in the NC House, this proposal is free of harmful provisions like work requirements and premiums that could restrict access for those who need care the most. 

Increase teacher pay and restore Master’s Pay

The compromise proposes an average 8.5 percent increase in teacher pay over two years. This falls between the Governor’s original recommendation of 9.1 percent and the General Assembly’s proposal of 3.8 percent. In addition to increasing base pay, the Governor’s compromise will restore Master’s Pay for teachers, a long-time bonus eliminated by the General Assembly in 2013.

State employees

The Governor’s compromise includes pay raises for state employees at a level significantly higher than the conference budget. Additionally, the compromise doubles the cost-of-living adjustment for state employee retirees to 2 percent. 

Funding for school infrastructure projects

The Governor proposes a compromise on how to pay for needed school construction and repairs across North Carolina, while also supporting state capital infrastructure needs on an ongoing basis. Legislative leaders in the Senate have resisted the Governor’s call for a bond and pushed instead for a pay-as-you-go model using General Fund revenues each year. Analysis of proposals made earlier this year show that the bond would be a larger net positive for education funding, and a bond would also allow schools to plan for large, multi-year projects, without worrying that future legislatures would cut the funds available. The Governor’s proposal today would reduce the overall size of the bond from $3.9 to $3.5 billion, keeping all of the capital projects currently funded in the Legislature’s budget. At the end of the day, the Governor’s proposal would devote $2 billion for school construction and repairs, more than the amount projected in the Legislature’s Conference Budget.  Read more

NC Budget and Tax Center

Under flawed House health bill, hundreds of thousands will remain without health care

The NC General Assembly has scheduled House Bill 655 known as NC Health Care for Working Families for a committee hearing this morning. This extremely flawed attempt at closing the coverage gap contains harmful provisions such as work reporting requirements and premiums that have been proven to be ineffective in other states. In the case of work requirements a federal court has deemed this provision illegal. Rather than pursuing a proposal that contains these provisions, the full benefits of Medicaid expansion could be achieved immediately and improve the health and well-being of those North Carolinians currently without affordable, quality health insurance.

Here is what the research tells us:

A recent study on Arkansas work requirements found that work reporting requirements prevented people from accessing health care while doing nothing to boost employment.

  • The percentage of uninsured adults ages 30 to 49 increased from 10.5 percent to 15 percent. During roughly that same time period employment for that same group declined from 42.4 percent to 38.9 percent.
  • Due to massive amounts of red tape and administrative burdens, many working Arkansans were unjustly denied health insurance.
  • Although 97 percent of people subject to the requirements were already meeting the work and community engagement requirements prior to the policy taking effect. Meanwhile, 100 percent of people who failed to report because they thought they had not satisfied the requirements had, in fact, satisfied the requirements.

A study by The Kaiser Family Foundation found that premiums in Medicaid created barriers for low-income families accessing care, especially those living below the poverty line who need help the most.

Estimates of the impact of these two provisions in North Carolina demonstrate that they will block efforts to close the coverage gap.  Specifically, our report released earlier this year conservatively estimated that 88,000 North Carolinians would not be able to meet the work reporting requirements while 145,000 would either lose access to health care coverage or not enroll due to the premiums.  These losses would hold back the health, fiscal and economic benefits of expansion for the state as a whole.

From fiscal policy to administrative efficiency, there are a plethora of reasons why work requirements and premiums are a bad idea. But ultimately, these provisions undermine the goal of closing the coverage gap and creating healthy communities.

Brian Kennedy II is a Public Policy Analyst for the Budget & Tax Center at the N.C. Justice Center.