The Districts Dime

DC Council: Support Funding DC Health Link In a Way That Keeps Plans Affordable for All District Residents

January 29th, 2015 | by Wes Rivers

Today, the DC Council will review a proposal to finance DC’s online health insurance exchange, www.dchealthlink.com, in a way that spreads costs among consumers and taxpayers broadly. The new revenue stream makes a lot of sense because all insurers and consumers will benefit from the success of DC’s exchange and because other financing options would result in very high costs for affected consumers.

Doctor

The DC Council passed a temporary version of the proposal to fund DC Health Link for fiscal year 2015, but needs to pass a permanent version to fund the exchange in future years. DCFPI testified in favor of the proposal.

The bill creates an assessment, or tax, on the premiums of all health insurance companies in the District, including companies operating inside and outside DC Health Link. The tax also will apply to Medicaid Managed Care Organizations and companies that sell supplemental products like disability or long-term care insurance. The broad-based assessment makes sense because:

  • A broad assessment will keep costs to individuals and small businesses as low as possible. Insurance carriers will pass on the assessment costs to consumers in the form of higher premiums, but if the assessment is broad, each individual premium will be affected minimally. 
  • Consumers and small business will benefit from a fully funded exchange – more community partners for in-person consumer assistance and improved technology.
  • All health insurers will benefit from more people getting health coverage through DC Health Link. As more residents have health insurance, their health will be likely to improve, and health providers will see a reduction in uncompensated care costs, which have to be spread among those with insurance. This means that DC Health Link should reduce average health costs, which helps all insurers.
  • Insurers that sell indemnity or supplemental products outside of the exchange will benefit, because those supplemental plans are mostly sold to people who already have major medical coverage. As more residents have basic coverage, demand for supplemental coverage should increase.

These benefits are possible only if DC Health Link has the resources needed to operate the complex site and provide assistance to help individuals and businesses sign up. A broad-based tax makes that possible. If the exchange had to be funded solely through fees on plans sold on the exchange, the costs to consumers could be very high or could leave the exchange without the resources it needs.

All insurers, businesses, and individual consumers benefit from a well-functioning health exchange. DC’s funding stream recognizes these benefits and effectively spreads the costs.

To read a copy of the full testimony, click here

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Left Behind: DC’s Economic Recovery is Not Reaching All Residents

January 28th, 2015 | by Ed Lazere

DC’s economy may be well on the road to recovery from the Great Recession, but a look beneath the surface shows that many residents are being left behind. Low-wage workers have seen their wages fall, while higher-wage workers have seen earnings grow by thousands of dollars per year. And workers without a college degree continue to experience levels of unemployment – and especially long-term unemployment – that are far higher than in 2007.

While DC has a number of strengths to build on, such as the increase in the minimum wage to $11.50 an hour, our new report finds that more needs to be done to strengthen literacy and training programs to help more residents earn a living wage.

Some important findings that DC should address include:Unemployment Rate

  •  Improving hourly wages for low-wage workers: Low-wage workers saw their already meager wages drop 1 percent drop between 2007 and 2013, to under $13 an hour. Meanwhile High-wage workers saw a 16 percent increase in hourly wages over the same period, to $45 an hour. The gap between low and high-wages in DC is now at a 35-year high.
  •  Reducing unemployment among residents without a college education:  Residents with some college experience, for example – including those with an associate’s degree – faced a jobless rate of almost 15 percent in 2013, nearly three times the their unemployment rate in 2007.
  •  Focusing on the long-term unemployed: Many workers are still struggling to get a foothold in the economy. Nearly six in 10 unemployed residents with just a high school diploma were out of work for more than six months in 2013. For Black residents, more than half of those who were unemployed were unemployed long-term. In 2007, by contrast, nearly all unemployed residents went back to work within six months.
  •  Getting back to full-time work: Many residents are having a hard time finding full-time jobs in DC’s recovering economy and are forced to work part-time. In 2013, more than 40 percent of part-time workers with only a high school diploma were working part-time for economic reasons.

The District has a number of strengths to build on. The city’s minimum wage will rise to $11.50 an hour in 2016, and all workers in the city earn paid sick leave starting with their first day on the job. Legislation adopted in 2014 will prohibit employers from asking about an applicant’s criminal record until a job offer has been made. And the District operates a number of training programs for adults and youth.

Yet, our report finds that the job challenges continue to be especially great for some residents, including the roughly 60,000 adults who lack a high school diploma or an equivalent, residents returning from prison, and others with limited job experience. Taking additional steps to help residents who are being left behind in this recovery is critical.

Enforcing the new wage and job benefits, raising the minimum wage for tipped workers, providing additional literacy and training programs and expanded access to quality childcare are just some of the steps DC can take to help all residents succeed.                 

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Mayor Bowser Is Moving Forward on Key Investments, But Other Approved Funding Remains Frozen

January 27th, 2015 | by Ed Lazere

As Mayor Bowser weighs the fate of additional investments in areas such as homeless services and child nutrition that have been put on hold, we hope that she will move forward with those that could make a big difference in the lives of DC residents.

Last week, Mayor Bowser gave a green light to several important housing, homeless services, and nutrition initiatives that had been put on hold by the outgoing Gray administration. Thanks to that move, more vulnerable families and youth will get help to get back on their feet and meet their basic needs. However, the mayor kept other critical investments on hold – or “frozen”– for now. The investments that remain on hold and have an uncertain future include:

  • MUntitledore case managers at the DC General shelter for homeless families;

  • The “Healthy Tots” initiative to provide more nutritious food at child development centers and to help centers do more to engage children in physical activities; and
  • Expansion of summer programs through the Department of Parks and Recreation.

Mayor Bowser indicated today that final decisions about whether to move forward with those initiatives will be made in late February or early March, after the next projection of the city’s revenue collections is released.

While there is some logic to that caution, because the city’s tax collections this year are running below initial projections, the mayor should move forward on the initiatives that would most help DC residents – particularly the new staffing at DC General Shelter and the nutrition and exercise supports for child care centers – while looking more broadly at the entire DC budget to identify efficiencies or other savings to keep the city’s finances in balance. Funding these two initiatives would cost less than $4 million and would not dramatically worsen the city’s budget challenges.

Here is the history of the frozen funding:  In late December, then-Mayor Gray froze $39 million for a variety of new initiatives to create affordable housing, improve nutrition, expand summer recreation options for DC children, and more. The mayor noted that because the city’s revenue collections were coming in lower than expected, he wanted to put new efforts on hold so that the new mayor could decide what to do.

Last week, Mayor Bowser made a smart move to release funding for three initiatives: $7 million for rental assistance, $1.3 million to serve homeless youth, and $1.3 million to ensure that all DC residents getting SNAP (formerly called food stamps) get at least $30 a month in benefits. These expansions address some of the most pressing needs of DC residents.

But other critical needs remain, and we hope Mayor Bowser will take further steps toward meeting them.

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Budget Season Is Nearly Here

January 23rd, 2015 | by Kate Coventry

Excitement is building around the DCFPI offices because DC budget season is nearly here. The season kicks off on Monday, February 2nd with the release of the Comprehensive Annual Financial Report (CAFR), the audit of revenues and spending in 2014. We will find out how much more money was collected than was spent in fiscal year 2014 – the surplus. Then on Thursday, the Chief Financial Officer, Jeff DeWitt, will answer questions about the CAFR during a DC Council hearing.City Budget Graphic

Hearings on the performance of DC government agencies begin the next week. These hearings give you the opportunity to testify before councilmembers about your interactions with DC government, your ideas to improve performance or fill gaps in services that matter to you, and ways the agency could save money. The full calendar and instructions on how to sign up to testify is here.

The CAFR and performance hearings are the beginning of a process that will stretch into June and lead to adoption of a new budget for next year.  DCFPI developed a guide to the entire budget process to help you out. Find it here.

A few performance hearings to highlight

Feb. 13                          Department of Behavioral Health

Feb. 18                          DC Public Charter School Board

Feb. 19                          DC Public Schools

Feb. 20                          Department of Consumer and Regulatory Affairs

                                        Department of Employment Services

Feb. 25                          Healthcare Benefit Exchange

Feb. 26                          Department of Housing and Community Development

                                        DC Housing Authority

March 5                         Deputy Mayor for Education                               

March 9                         Department of Healthcare Finance

March 10                      Office of the State Superintendent for Education

March 12                       Department of Human Services

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DC Leaders Deserve Credit for Keeping Taxes Down For Low-Income Residents

January 21st, 2015 | by Ed Lazere

The District has done a great job keeping taxes low for poor residents, according to a recently released study. DC’s leaders have put in place many tax provisions to help lower-income residents, who as a result pay a smaller share of their income in taxes than similar families in every state except Delaware. And if DC policymakers implement the remaining recommendations of the 2014 D.C. Tax Revision Commission, DC taxes on low-income families will be the lowest in the nation.

This is something to be proud of. Keeping taxes down helps struggling families keep more of their income and helps them make ends meet in a city with an incredibly high cost of living. The DC Fiscal Policy Institute and the Federal City Council issued a joint statement to trumpet these findings and to thank DC policymakers for making choices that make DC taxes more fair.

However, the study also found that middle-income DC residents, those with incomes around $50,000, face a higher tax rate than in more than two-thirds of states. Middle-income residents also pay a higher tax rate than DC’s wealthiest. This suggests that while the District has done a lot to keep taxes low for residents living on modest incomes, there is still more progress to be made.

DC families with incomes averaging $23,000 (the poorest 20 percent) pay 5.6 percent of income in DC property, income and sales taxes, according to Who Pays? A Distributional Analysis of the Tax Systems in all 50 States, by the Institute on Taxation and Economic Policy (ITEP). That is well below the 10.9 percent rate low-income families pay in the average state, and lower than every state except Delaware. That means $1,200 lower taxes than if the city’s taxes were at the national average rate.

Source: Institute on Taxation and Economic Policy

Source: Institute on Taxation and Economic Policy

 

The District uses a variety of tools to limit taxes paid by low-income families. These include an Earned Income Tax Credit (EITC) that reduces taxes by as much as $2,000 for working-poor families with children, and a tax credit to hold property taxes down for low-income households. Just last year, the DC Council implemented several recommendations of the D.C. Tax Revision Commission (on which I served) that make DC taxes fairer. These include an expansion of the EITC for workers who are not caring for children, and an increase in the standard deduction in the income tax.

The ITEP report also found that DC’s tax rate for low-income families would fall to 5.3 percent, the lowest among the states, if the remaining recommendations of the Tax Revision Commission are implemented. This means that with just a little more effort, DC can be the best in the nation for how low it taxes families with limited incomes.

The findings show that decisions made by DC’s leaders can and have improved our tax system.  They also show that through further actions, the city can move even closer to having a tax system that asks the least of residents with the least ability to pay.

To print a copy of today’s blog, click here.

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