The Districts Dime

With more health plan offerings but bigger premiums likely ahead, consumers should consider weighing in

August 16th, 2017 | by Jodi Kwarciany

DC residents and small businesses who get health insurance through DC Health Link—our local health exchange—may face sticker shock when they go to purchase insurance this November. That’s because insurers have proposed large rate jumps for many of their plans, with some as high as 40 percent. But these rates are not final, and consumers have several opportunities this month to tell the DC Department of Insurance, Securities and Banking (DISB) to scale back the largest increases when they finalize the rates.Ins

First, the good: Unlike many states around the country, DC’s health exchange has a good number of insurers and a growing number of plan offerings. Aetna, CareFirst BlueCross BlueShield, Kaiser Permanente and United Healthcare together proposed 184 health plan offerings in the individual and small business markets for next year, an 8 percent increase. Generally, having more plans allows for greater choice and competition.

The not-so-good: The proposed rates reflect large increases due to a variety of factors—things like changes in the cost and utilization of health care services, changes in mandated or non-mandated plan offerings, or the end of the federal reinsurance program which has provided payments to plans that enroll higher-cost individuals. In the individual market, rate changes ranged from a 13 percent average increase for Kaiser plans, to a 39.6 percent average increase for CareFirst HMO plans. The small group market fared slightly better, ranging from a 5 percent average increase in rates for Kaiser plans, to a 15.3 percent average increase for CareFirst PPO plans.

These rates are not final – and in fact, consumers get a say. DISB reviews all proposed rates to determine whether increases are reasonable and can require insurers to adjust rates increases it considers unjustified (specifically, if they are “excessive, inadequate or unfairly discriminatory”).  Consumers can voice their opinions on proposed rate increases in two ways:

  • Submitting testimony or testifying in person at the DISB public hearing on 2018 proposed health insurance rates, Thursday August 17, 5pm, at the John A. Wilson Building. All interested members of the public are invited to attend the public hearing, and persons interested in testifying should contact the Department at 202-727-8000. Written testimony may besubmitted by email to Comments@dc.gov or by mail to District of Columbia Department of Insurance, Securities and Banking, 810 First Street, NE, #701, Washington, D.C. 20002, Attention Philip Barlow. All comments must be received by 5:00 p.m. on August 17, 2017.
  • Sending comments on proposed rates directly to DISB by sending an email to Comments@dc.gov by August 31, 2017.

The DC Fiscal Policy Institute will post its testimony on Twitter, and you can contact analyst Jodi Kwarciany (jKwarciany@dcfpi.org) if you have questions about submitting comments of your own.

A summary of the 2018 rates and the rate review process can be found here on DISB’s website.

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What You Need to Know about Opioid Use in DC: Part 1

August 11th, 2017 | by Jodi Kwarciany

The District of Columbia is not immune to the opioid epidemic gripping the nation. Opioid-related overdoses, hospital stays, and even deaths are on the rise in DC.

AmbulancePrescription opioids are strong pain-reducing medications—including oxycodone, hydrocodone, morphine, and fentanyl—that reduce feelings of physical pain and increase feelings of pleasure or relaxation. Opioids can help improve the quality of life for individuals with chronic pain or cancers, but they can also become addictive because of their potency. Likewise, heroin is an illegal opioid synthesized from morphine that people may turn to after becoming addicted to prescription opioids.

Drug overdoses have risen in DC all but Ward 3. At least 198 people in the District died of an opioid overdose in 2016, more than double the 84 overdose deaths in 2014, according to a report by the Office of the Chief Medical examiner. Overall, there was a 102 percent increase in fatal overdoses due to opioid use from 2014 to 2016, and methadone and oxycodone were the most common contributors.

The people falling victim to opioid-related deaths in DC tend to be men, aged 50-59, and Black. And opioid deaths have been highest in Wards 5, 7 and 8 in recent years.

Opioid-related inpatient hospital stays and emergency department visits also increased, according to the national Agency for Healthcare Research and Quality. In DC, this amounted to about 318 hospital stays per 100,000 people, and rates were highest among men, individuals ages 45-64, and those in the bottom income quartile. Income tends to be a driving factor nationally, as places where the rate of opioid-related emergency room visits increased the most among patients was in communities with the lowest income. DC’s opioid-related inpatient stays are in line or lower than those of many other large central metro areas, including nearby Baltimore (1,541 hospital stays).

Thankfully, not all overdoses end in death, and EMS teams now administer drugs like naloxone that can reverse the effects of an overdose. Use of naloxone by DC’s EMS jumped 25 percent in 2014, and a further 77 percent in the last two years. This comes at a price that is rapidly escalating. The District now pays $30 for a prefilled syringe of naloxone, compared with $6 per dose in 2010, and has spent about $170,000 on naloxone in the last 10 months. Rates of naloxone use continue to rise in the area – DC averages 260 cases per month, while Fairfax and Montgomery Counties average between 60-70 cases per month, and Prince George’s County averages roughly 100 cases.

Amidst this national epidemic, what is the District doing to combat it? Check in for next week’s blog on District and regional responses to tackle this devastating and deadly problem.

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Where Do You Think DC Should Put Its Affordable Housing Dollars? Try This Interactive Tool to See

August 10th, 2017 | by Addison Larson

The neighborhood you call home has the potential to help your economic mobility and your health and well-being. That’s why it’s important to create more chances for families with low incomes to live in areas that are close to jobs and transit, with low poverty and crime, and high-performing schools.

Yet these neighborhoods are the very areas where it’s most expensive to build affordable housing. The District’s housing resources, while substantial, are nowhere near enough to reach the tens of thousands of families in the city overburdened by high rents.

How do you think DC should prioritize its spending to expand low-income families’ access to a wider range of neighborhoods—and create as much affordable housing as possible?

We’ve created an interactive tool that lets you explore the balance between neighborhood opportunity measures and the cost of subsidizing housing there. The tool allows you to assign a priority to five measures—neighborhood poverty, violent crime, jobs proximity, racial diversity, and residential land cost—to consider which areas of DC you’d prioritize for affordable housing development. Click here to give the tool a try. Want more information on how the tool works? Scroll down to the bottom of this post.

Not surprisingly, this tool shows that some neighborhoods that rank highly on things like job access also rank poorly on cost because they are in parts of DC with the highest land values. But it also shows that the District has a number of neighborhoods with a good balance of high opportunity measures and more moderate land costs.

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Indicators of Neighborhood Opportunity

In this tool, we’ve included four indicators that are related to economic opportunity and well-being.

  • Poverty rate: Moving to neighborhoods with a lower poverty rate can improve educational attainment, health, and economic well-being. In addition, residents with low incomes who live in low-poverty neighborhoods report less stress.
  • Proximity to jobs: Living close to public transit and jobs is especially important to people with low incomes, who tend to rely on public transit and often work service-sector jobs that don’t offer traditional nine-to-five schedule.
  • Violent crime: Children who live in neighborhoods with a high rate of violence can face toxic levels of stress that affect their development, including their ability to succeed in school. Living in areas with little exposure to violence can reduce stress and improve school performance.
  • Racial diversity: Living in racially diverse neighborhoods provides opportunity for children and adults alike. On the other hand, segregation tends to perpetuate racial inequality.

These variables certainly don’t tell the whole story of a neighborhood—its history, social fabric, or cultural resources—but research shows they are related to economic mobility and well-being.

To be clear, it is just as important to invest in creating opportunities in less advantaged neighborhoods as it is to locate more affordable housing in neighborhoods that already have these opportunities. Historically, low-income and Black neighborhoods have been systematically denied investments such as services, amenities, and wealth-building opportunities through discriminatory policies such as redlining and urban renewal. Rectifying racial and economic inequality requires both expanding the ability of low-income residents and people of color to access the neighborhoods that wealthy and white residents already have access to, and also rebalancing public investment to support lower income areas.

How the Cost to Develop Housing Squares with Opportunity Measures

The last variable we’ve included in the tool is the residential land cost index, a measure of how expensive it is to buy land and develop housing in different DC neighborhoods.

The tool allows users to choose their level of priority for each of the four opportunity-related indicators and the land cost index, which then creates an “affordable housing priority score” for each neighborhood based on the selected priorities. You could use the tool, for example, to focus only on land costs, or access to jobs, or on a mix of factors. Adding, removing, or changing the weight of an index changes a neighborhood’s priority score. Whatever you choose, the higher a neighborhood’s score indicates the higher priority the District should place on creating affordable housing there according to your criteria.

There is an obvious tension between a neighborhood’s opportunity indicators and the cost of subsidizing housing there. For example, without considering land cost, areas north of downtown and Capitol Hill look like great places to develop affordable housing. When land cost is taken into account, many neighborhoods in these areas completely drop off the map.

Yet plenty of DC’s neighborhoods retain a high affordable housing priority score once land costs are considered. In particular, there are a number of areas of Ward 5, in Northeast DC, that have a good balance of access to jobs or transit, relatively low rates of poverty and violent crime, a high level of racial diversity—and relatively low land costs.

This means that by making careful choices, the District can achieve a successful balance, reaching as many households as possible and expanding low-income families’ access to opportunity areas.

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How the Tool Works

When you visit the online tool, you’ll see a map on the left-hand side and five variables with input boxes on the right. Enter a weight in the boxes between 0 and 100 indicating how important each variable is to you. The sum of the five weights should equal 100, but the tool will still return valid results even if you don’t. The weights you select will directly affect the final affordable housing priority index, which dynamically updates with your input and ranges from 0 to 100. You’ll see the colors of the map change with the affordable housing priority index. The highest-scoring neighborhoods are dark blue—these are where affordable housing development should be prioritized according to your criteria. If you’d like, click download on the bottom right to save your results. Want more details? Follow this link to view technical documentation on the project.

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Improvements to Shelters for Individuals Are a Step in Right Direction

August 3rd, 2017 | by Kate Coventry

The District just took important steps to improve services at shelters that serve 1,000 single adults experiencing homelessness. DC expanded shelter hours and case management services at four shelters, as well as transportation from the shelters to other services. These improvements will help residents escape the weather, get needed rest, and access other services. While other needed changesshelter improvements called for in the District’s strategic plan to end homelessness will require these shelters ultimately to be replaced, DCFPI applauds these efforts to make things better in the meantime.

The four shelters are Harriet Tubman, 801 East, New York Avenue, and Adams Place. The changes are the result of a collaboration among The Department of Human Services (DHS); The Community Partnership for the Prevention of Homelessness (TCP), DHS’s primary contractor; and Catholic Charities, the subcontractor that operates the shelters.

Prior to this change, the four shelters opened at 7 pm and closed at 7 am. This gave individuals little time to eat, access case management, and sleep. It also meant having to find places to go during the 12 hours the shelters were closed. Now the shelters open at 5 pm and close at 9 am, and case management hours will be expanded to match. DHS, TCP and Catholic Charities intend to add case managers to reach a target of one case manager for every 30 residents. Van service that transports shelter residents to meal programs, daytime service centers, and Metro also has been expanded to match these hours.

Homeward DC, the city’s strategic plan on addressing homelessness, calls for three of the shelters to be redeveloped. Two of them are simply too large to be managed effectively, and they all are very old with failing infrastructure and constant maintenance needs. Although the shelters stay open 24 hours during extreme weather, they do not have space to allow for all residents to stay comfortably all day. The strategic plan calls for the shelters to be replaced by smaller facilities, serving 80 to 100 individuals, that operate 24 hours per day. Smaller shelters will allow specialized programming to meet the unique needs of certain groups, such as services in languages other than English or more intensive services for people being discharged from hospitals and nursing homes. DCFPI looks forward to these new shelters and encourages DHS, TCP, and Catholic Charities to continue to implement positive changes in the meantime.

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The Mortgage Interest Deduction Mostly Benefits DC’s Highest-Income Residents

August 1st, 2017 | by Claire Zippel

MID Fig 1The federal mortgage interest deduction—a tax benefit for homeowners with a mortgage— largely benefits the District’s wealthiest neighborhoods and highest-income residents, and costs the city $68 million in foregone local revenue every year.[1] The mortgage interest deduction has come under renewed scrutiny at the federal level, because it is expensive, doesn’t effectively boost homeownership rates, and mostly benefits high-income households. The District should take a close look at the mortgage interest deduction, too, as one of the many hidden policies that benefit higher-income residents and shore up economic inequality.

The mortgage interest deduction (MID) is one of many federal tax breaks that is also included in the District’s local tax code. In 2014, the most recent year for which data are available, 333,000 tax filers in DC claimed the MID.[2]

  • MID Fig 2Nearly 70 percent of the mortgage interest deducted was by tax filers with incomes above $100,000. More than a third of the mortgage interest deducted in the District was deducted by tax filers with incomes above $200,000 (Figure 1). [3]
  • About 40 percent of tax filers in the zip codes west of Rock Creek Park—DC’s wealthiest communities—claimed the MID, compared to fewer than 17 percent of tax filers living east of the Anacostia River claimed it (Figure 2). The average amount of mortgage interest deducted by filers who claimed the MID varied substantially across the city, from $17,000 to $8,000 (Figure 3). These differences reflect higher homeownership rates and higher home values in higher-incomes areas.
  • Putting the two metrics above —share of filers claiming the deduction, and average deduction—together yields the amount of mortgage interest deducted per tax filer (whether claiming the MID or not). This ranges from $8,000 in northernmost Ward 3, to less than $1,000 in the southern part of Ward 8 (Figure 4). By benefiting wealthier, whiter neighborhoods more than lower-income, Black communities, the MID exacerbates both economic and racial inequality.

MID Fig 3The mortgage interest deduction has such skewed benefits for three reasons. First, it benefits only those who can afford to own a home. Second, the more expensive the home, the larger the mortgage—and the value of the MID. Third, itemized tax deductions such as the MID are more valuable to high-income people, who have higher federal tax rates and who are more likely to itemize their deductions.[4]

MID Fig 4There’s little evidence that the MID has any positive effects. It’s not effective in boosting homeownership, and may even inflate housing prices. The federal mortgage interest deduction is the nation’s seventh-largest tax expenditure, and costs more than every federal affordable housing program combined. For these reasons, the MID has drawn the ire of tax wonks, poverty scholars, affordable housing advocates, and fiscal conservatives alike.

As the District continues to pursue new and expanded policies to increase economic opportunity, the city should also take a critical look at existing policies like the MID that exacerbate economic and racial inequality.

 

 

 

 

 

 

 

 

 

[1] Office of the Chief Financial Officer, Office of Revenue Analysis, Tax Expenditure Report, 2016.

The estimated cost of federal conformity estimates, according to the Office of Revenue Analysis (ORA), represent DC’s portion of the nationwide tax expenditure estimates, using two fractions: “(1) a ratio representing the D.C. share of the relevant activity or population, such as D.C. taxable income divided by national taxable income, and (2) a ratio representing the D.C. average tax rate divided by the U.S. average tax rate.”

ORA also notes that “because of the methodological challenges and data issues, it is important to view the revenue estimates as indicating orders of magnitude rather than providing precise point estimates.”

[2] Tax filing units often, but not always, correspond to households. See Jayron Lashgari, Office of Revenue Analysis, “A Comparative Analysis of Income Statistics for the District of Columbia,” 2015.

[3] All figures in this blog are from the Internal Revenue Service’s Statistics of Income by State and by Zip Code (available here), unless otherwise specified. Throughout this blog, income refers to adjusted gross income (AGI).

[4] In fact, the higher value of the MID to high-income filers is one of the reasons why higher-income filers are more likely to itemize deductions than low-income filers. Even without the MID, however, high-income filers would still be more likely to itemize, according to estimates by the Urban-Brookings Tax Policy Center.

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