For months, lawmakers in Washington have been at odds over taxes and now residents here in Michigan could soon be paying more. Nov. 17, 2011 — WNEM.COM

On Nov. 10 the Michigan Senate approved SB 693, legislation to establish the MiHealth Marketplace, the name given to Michigan’s health insurance exchange.

While the House intends to be deliberative in its approach and timeframe, there is some urgency for action if the state is to successfully develop, design, implement, and test an exchange that meets the needs of Michigan residents.

An exchange is an organized, regulated marketplace where individuals and small businesses (50 employees or fewer) can:

• shop and compare private coverage
• apply for private or public coverage through a single, simplified application, based on data matches rather than paper documents, in person, online or by phone
• receive advice from trained individuals or entities, called Navigators, on the plans/benefits that will be best for an individual family
• get federal subsidies for premiums and cost-sharing for those with incomes between 133 percent of poverty ($24,645 family of 3) and 400 percent (74,120 family of 3), or be determined eligible for Medicaid, those individuals and families with incomes below 133 percent of the federal poverty level
• have more control , quality choices, better protections when they purchase private coverage

Under the Affordable Care Act, states are required to have an operational exchange by Jan. 1, 2014. 

If states do not comply, the federal government will step in and create and operate a state’s exchange, and send the state the bill for its share. 

There is considerable latitude in the federal law in how an exchange can be created (public, private, or quasi-public entity), in the governance structure (who is or is not allowed to serve on the board of directors), and in the functions/activities the exchange performs. 

The ACA establishes the framework, and it is up to the states to complete the “structures” to meet the needs of their residents. The federal government is providing development funding through grants.

The legislation adopted by the Michigan Senate is a good first step. The bill includes components that are very consumer-friendly; however, it also includes components that are not consumer-friendly. 

Consumer-friendly provisions include:

• The governing board, composed of seven members, with a majority representing consumer interests
• Prohibition of current employees (or within the last 12 months) of the health insurance industry or health care providers from serving on the board
• Strong conflict of interest provisions
• A requirement that the board develop criteria for rating each qualified plan offered on the exchange for its value and quality

Provisions that need to be strengthened or improved for consumers include:

• Eliminating the provision that prohibits activities that could serve the best interests of consumers, including such activities as negotiating competitive rates, limiting the number/type of plans sold in the exchange, encouraging innovative products, etc.  (The legislation should be silent on these types of activities.  Don’t tie the exchange’s hands before it is even implemented.)
• Assessing fees on all insurers who sell inside and outside of the exchange to maintain a level playing field and not provide a competitive advantage to those selling outside the exchange
• Allowing all types of Navigators, not just agents, to assist with plan selection and enrollment

Due to the complexity of integrating public programs and commercial insurance as well as the major Medicaid expansion scheduled for January 2014, and the lead time required to make such significant computer changes, it makes little sense to delay action on this needed legislation. Inaction or delays also preclude the state from applying for additional, available federal funding for exchange development.

Gov. Rick Snyder has repeatedly reminded us that the ACA is the “law of the land,” and that so long as it is, the state needs to proceed with implementation. 

Wouldn’t it be too bad for our best Michigan minds to sit on the sidelines and watch as Michigan’s exchange is developed by the federal government due to inaction or late action by our Legislature?  Now is the time to encourage your House member to do his/her due diligence and craft and pass a consumer-friendly exchange bill.

 – Jan Hudson

The Michigan League for Human Services released a report today that calls Michigan’s unemployment insurance program “the weakest” in the Midwest. Nov. 21, 2011 — Mlive.com

Unemployed people in Michigan have a harder time getting jobless benefits than in other states in the Midwest. That’s according to a report from the Michigan League for Human Services. Nov. 21, 2011 — Michigan Radio

Michigan is among just a handful of states raising taxes on low-income working families while cutting taxes for other groups, the Center for Budget and Policy Priorities said in a report released Tuesday. Nov. 15, 2011 — Bloomberg Businessweek

For nearly two years, we’ve been blogging about the various policies governing Michigan’s Unemployment Insurance system and their effects on the unemployed workers who need the benefits as they look for work.

Some of the blog entries have focused on federal legislation, such as the game of chicken that Congress played more than once by renewing benefit extensions at the last minute before expiration. Others, however, have been about ill-advised decisions by the Michigan Legislature during the past year: 1) cutting the maximum number of state-funded UI weeks from 26 to 20, and 2) letting $139 million in federal dollars for the state UI trust fund float by rather than make modernizations that would expand UI eligibility to cover more workers.

To our list of questionable state policies, we can add keeping the maximum benefit at a flat $362 per week instead of pegging it to the average wage, and maintaining high earnings requirements for eligibility that prevent low-wage workers from accessing benefits.

Such state policies have resulted in Michigan being last in the Midwest on four indicators of worker-friendly UI systems, according to a new paper by the League. Of eight Midwestern states, Michigan pays the lowest maximum benefit (leading to a comparatively low average weekly benefit), has the lowest level of UI coverage (making Michigan workers the least likely in the Midwest to qualify for UI), spends the least amount per unemployed worker, and allows the fewest weeks of state-funded benefits. All this while its unemployment rate is highest among the Midwestern states.

The paper recommends that the Michigan Legislature reverse its new law cutting state benefits to 20 weeks and refrain from passing further UI legislation that is anti-worker. It also recommends making the maximum benefit a percentage of the state average weekly wage rather than keeping it at a flat rate, and adjusting the earnings requirements so that more low-wage workers can be eligible.

Finally, the paper encourages Michigan to implement the modernizations that would expand eligibility, even though the federal money is no longer available. It also encourages Michigan to explore the idea of adopting a work-sharing program, in which qualifying businesses could arrange with the state to cut hours of many employees rather than laying off a few, and have UI make up a portion of the lost wages.

Michigan is not going to be out of this economic hole anytime soon, and in the meantime it would do well to strengthen its worker safety net to at least be on par with its Midwestern neighbors.

– Peter Ruark

Michigan’s jobless benefit system falls short of other Midwest states even though the state’s unemployment rate has been the highest in the Midwest for the past five years.

A new report, Falling Short: Michigan’s Unemployment Insurance Compares Poorly with Other Midwestern States, was released today by the Michigan League for Human Services.

“As we climb our way out of this troubled economy, we must look toward improving our Unemployment Insurance system as part of that recovery,’’ said Gilda Z. Jacobs, president & CEO of the Michigan League for Human Services. “As this report makes clear, the jobless benefits not only help families, they also are an engine that keeps the economy humming during tough times.’’

According to the report, Michigan:

• Pays the lowest maximum benefit among the states
• Is least likely to insure an unemployed worker
• Offers the lowest UI benefits relative to unemployment
• Provides the fewest weeks of basic UI

One of the major reasons for the shortfall is that Michigan’s weekly benefit has eroded over time. Until 1993, the maximum weekly benefit was pegged at 58 percent of the average weekly wage. In 1994, the benefit was decoupled and set at $293 per week instead. It has been increased only twice since then: to $300 in 1995 and $362 in 2002.
“This report shows that Michigan’s system has been unresponsive at a time when we really need it,’’ said Karen Holcomb-Merrill, the League’s policy director. “We have some catching up to do to make the system work for all of us.’’

Among recommendations:

• Don’t further weaken the system
• Restore the basic period of unemployment from 20 weeks back to 26 weeks
• Peg the maximum benefit to the average weekly wage
• Make it easier for workers to qualify for benefits
• Implement a work sharing system in Michigan, allowing reduction of hours or wages for a group of workers rather than layoffs

The Michigan League for Human Services is a statewide, nonprofit and nonpartisan research and advocacy organization, dedicated to achieving economic security for all in Michigan.

By 2020, the majority of children in the United States under the age of 18 will be children of color. By 2050, the country will be a majority minority nation, with people of color representing slightly over half of the population.

In Michigan, children of color make up over 31 percent of the state’s child population. Over the last 10 years, the population of children of Asian descent grew by more than 29 percent and Hispanic and Latino children by close to 40 percent. The population of white children  declined by more than 14 percent.

PolicyLink’s annual Equity Summit highlights this very trend, and was held in Detroit this year. With over 2,500 in attendance, professionals from all over the country gathered to share ideas, best practices and data on how equity is a superior growth model. Policymakers need to be educated on the importance of this shift in demographics because without initiatives to advance equity, our economies will continue to falter.

So what does equity mean exactly? How is it different from equality?

Take for example two individuals facing the Capitol steps. One is able-bodied and the other is in a wheelchair. They both have equal access to the entrance, but it’s not equitable. Equity means providing opportunities that meet people where they are, versus equality, which implies everyone receives the same opportunities the same way.

Historically, communities of color have faced barriers to opportunity through structural inequities. This means that these communities have not had equitable access to quality education, affordable healthcare, living wage employment and home ownership compared to their white counterparts. This is proven by their disproportionate representation in educational attainment, the uninsured, infant mortality rates, lower wages, and unemployment.

Without equitable access to the same opportunities as other communities, people of color have significant barriers to overcome. The state can remedy this by working toward advancing equity through targeted policy changes that level the playing field and close opportunity gaps among communities of color.

So how does equity help the economy?

Barriers to a quality education, economic security and affordable health care leave children of color behind. Impediments to success at an early age lead to poorer outcomes as adults. Good health, education, and financial security are the backbone of a strong workforce. Why not give everyone the chance to be successful, contributing community members from the very beginning?

By understanding the role equitable opportunities play in the future of the economy, the state could prosper by providing its residents with the ability to succeed.

As the demographics of our state change, Michigan could better position itself to pave the way for the next generation of leaders. Supporting and implementing equitable opportunities not only leads to a stronger economy, it leads to stronger communities.

– Anika Fassia

Michigan isn’t in group of states taxing families in poverty
but will likely join as reduced income tax credit kicks in

Michigan is better than average among the states in taxing the working poor in Tax Year 2010, a new report concludes, but the status will be short-lived because of new tax changes slated to take effect in January.
 
“The Impact of State Income Taxes on Low-Income Families in 2010,’’ by the Washington D.C.-based Center on Budget and Policy Priorities, found that only 15 states tax a working poor family of four living at or below the poverty line.
 
Michigan is not in that group of 15 states but will likely join it as a dramatic reduction in the Michigan Earned Income Tax Credit kicks in next year. The change will mean Michigan will once again tax families living around the poverty level, starting in 2012.
 
“Michigan had made a lot of progress from the days when we used to literally tax working families into poverty,’’ said Michigan League for Human Services Policy Director Karen Holcomb-Merrill. “Unfortunately, we’re once again moving in the wrong direction on this issue.’’
 
Michigan was once among the 10 worst states for taxing people living in poverty. It improved with the Michigan Earned Income Tax Credit, which began in Tax Year 2008.
 
In 2010, Michigan taxed a family of four only when its income reached 136 percent of poverty – about $30,300. Twenty-seven other states taxed families living deeper in poverty than Michigan.  And the refundable state EITC helped make Michigan among the best states for supporting the working poor – refunding $679 to a two-parent family of four earning poverty level wages. Only six states offered higher refunds than Michigan out of the 42 states with income taxes.
 
The new Michigan EITC changes, however, will reverse the gains made in Michigan. The state EITC, now at 20 percent of the federal EITC, will drop to just 6 percent for Tax Year 2012. That means a family of four living just below poverty will pay income taxes.

“Taxing the incomes of working-poor families runs counter to decades of efforts by policymakers across the political spectrum to help families work their way out of poverty. The federal government has exempted such families from the income tax since the mid-1980s, and a majority of states now do so as well,” the report concluded.

A new report out today says Michigan is above average in taxing the working poor in Tax Year 2010. That’s the good news.

Now for the bad news. Michigan’s above-average status will be short-lived because of a dramatic reduction in the Michigan Earned Income Tax Credit in 2012. The reduction is part of Gov. Rick Snyder’s restructuring of the state tax system approved by lawmakers this spring. The change will mean Michigan will once again tax families living below the poverty level  starting in 2012.

Michigan was cited as one of the back-sliding states in the report, The Impact of State Income Taxes on Low-Income Families in 2010, by the Washington D.C.-based Center on Budget and Policy Priorities. The report found that only 15 states tax a working poor family of four living at or below the poverty line. Michigan is not in that group of 15 states but will likely join it as new tax changes kick in.

In 2010, Michigan taxed a family of four only when family income reached 136 percent of poverty – about $30,300.  Twenty-seven other states taxed families living deeper in poverty than Michigan.  And the refundable state EITC helped make Michigan among the best states for supporting the working poor – refunding $679 to a  two-parent family of four earning poverty level wages. Only six states offered higher refunds than Michigan out of the 42 states with income taxes.

The new Michigan EITC changes, however, will reverse the gains made in Michigan. The state EITC, now at 20 percent of the federal EITC, will drop to just 6 percent for Tax Year 2012. That means a family of four living just below poverty will pay income taxes.

Michigan was once among the 10 worst states for taxing people living in poverty. It improved with the Michigan Earned Income Tax Credit, which began in Tax Year 2008. Now, the Great Lakes state is slated to fall again as the reduced EITC takes effect.

“Increasing taxes on the working poor increases poverty and reduces the after-tax incomes of working families already hit hard by the recession,’’  the report concludes.

For many, those are just words on paper. But when taxes are due in April 2013, the reality will hit for thousands of Michigan families scraping by on poverty-level wages and literally being taxed into poverty.

 – Judy Putnam