Campaign Season! My family and several volunteers helped in the Sturgis Falls Parade.
Other Midwestern States Experiencing Slow Growth in FY 2016
With Iowa experiencing slow revenue growth in Fiscal Year 2016, some Iowans are asking how our conditions compare to neighboring states. While comparable figures are not available for all of Iowa’s neighbors, what is available shows that Iowa is not alone in seeing lower than desired growth.
In Minnesota, state revenues grew by 2.7 percent in Fiscal Year 2016. The growth figure amounts to an increase of $559 million to Minnesota’s general fund. The 2.7 percent growth is 1.1 percent higher than the state’s latest projection, set in February. Since the state does its budget and revenue forecast on a biennium basis, they have will not issue an updated forecast until November.
Missouri also saw positive revenue growth, in FY 2016, but not at the level experienced by Minnesota or Iowa. Revenue grew by 0.9 percent in the Show Me State, amounting to an $80 million increase in Missouri’s general fund. Missouri followed Iowa’s path with regard to the performance of the various tax streams. They had reasonable growth in personal income tax and sales tax collections, but much of the growth was offset by a significant drop in corporate tax collections and a major jump in tax refund payments. The drop in corporate tax revenue and increase in refunds were both larger than what Iowa had in FY 2016.
Nebraska’s revenue story is bleaker. That state saw FY 2016 revenue come in $95 million below projections. With revenue coming 2.2 percent short of expectations, Nebraska Governor Pete Ricketts instructed state officials to reduce the quarterly funding allocation to state agencies. Departments will receive 24 percent of their appropriation each quarter. According to the Associated Press, Ricketts sought to reassure Nebraskans about the situation, by stating; “This is not a crisis. This is what we get paid to do, to manage our budgets”.
In all three states, as in Iowa, the strength of the dollar and its impact on the ability to sell products overseas is having a negative impact on revenue. Creighton University’s Mid-America Business Conditions Index for June showed a slowing of economic activity in the Midwest, but still just remaining in positive territory. For Iowa, Creighton’s state index fell to 50.3 from the May figure of 53.2.
In Iowa and other parts of the Midwest, economic growth is still occurring. It is just not at the rate that is expected to produce significant revenue increases.
The (un)Affordable Care Act: 2017 Rate Increase Public Hearing Recap
At the end of July, the Insurance Commissioner, held a public meeting in Des Moines which was broadcasted via the ICN to various other parts of the State to discuss health insurance rate increases for 2017. This meeting comes per Iowa Code s. 505.19, which requires the Commissioner to hold a public meeting, to allow people to give input, for health insurance increases above a certain threshold prior to approving or disproving an insurance company’s proposed rates. This year, insurance companies most definitely met that threshold for members who purchased an individual ACA plan:
- Aetna Health, Inc: increases anywhere from 7.1-52.6%, with the average increase being 22.5% (the increase is based on the customer’s plan; bronze, silver or gold)
- Gunderson: 19.8 % increase
- Medica: 19% increase
- Wellmark: 35.2%-43.9%
Representatives from all of the insurance companies, except Wellmark who submitted its comments online and felt they could better serve customers individually rather than attending the meeting, provided rationale for the increase. And while the providers offer a wide variety of different policies to a wide range of different Iowans throughout the state, their rationale was all the same:
- Increased medical claim trends (medical inflation); drug prices, provider costs and increased use of medical cost services
- Elimination of the ACA reinsurance program
- Special enrollment periods: those who enroll during these times cost almost double the amount of others. Additionally, members cancelling coverage after receiving services drives up the cost.
- 80/20 principle in that a few members drive up the cost for the vast majority
*the Commissioner highlighted a Wellmark customer which submitted claims averaging $1 million per month
- All filed rates are necessary to better serve customers while still remaining competitive
- Administrative costs, although representatives made sure to include in both verbal and filed statements that they were actively trying to keep these costs low or work to lower them in the future.
When questioned as to whether these issues were Iowa-specific, it was stated these problems and increases were a national trend.
The public comments received, both prior to the meeting in written submissions and at the meeting, centered around the same themes: affordability both this year and increasing in the future, sustainability, frustration with the system and disagreements with the rate increases and rationale. A small business owner in West Des Moines spoke out at the meeting to express concern as his plan was going to increase from $17,000/year for him and his family to $24,000/year; he calculated that out to over $16/hour for his health insurance. He pleaded that this increase, coupled with the talk of raising the minimum wage, would cause him to seek employment elsewhere, or perhaps gamble with his family and pay the penalty as opposed to keeping health insurance. Another gentleman joked that we should reference Obamacare as the, “Unaffordable Don’t Care Act,” as it punishes those who do care about their health and the impact of the system yet rewards those who tend to not care about the cost of the program. The politics of healthcare were also brought up when another person stressed that this is a serious problem with growing consequences that people should consider when heading to the polls this November. Overall, the general consensus of the comments were to not approve the increases.
The Commissioner stated he was still waiting on his actuaries to finish their findings before making his decision, and will keep the record open for Iowans to continue submitting their public comments. He cautioned that denying these increases was dangerous and could cause insurers to leave the Iowa market. However, he strongly urged people to shop around when purchasing insurance, and to do their research before purchasing a plan. He also stated that most of the issues stem from federal legislation, which the Iowa Insurance Division does not draft, but simply responds to; the ACA itself is thousands of pages, with 40,000+ pages of regulation accompanying the Act. He also encouraged people to utilize the Iowa Insurance Consumer Advocate resources, to help in understanding the different waivers and exemptions available for people who cannot find affordable health insurance.
Highlights from the 86th General Assembly include:
- Responsible Budgeting
For the sixth year in a row, the Iowa Legislature made a serious commitment to Iowans to not spend more than the state takes in.
- Increased Investment in Education
House Republicans continued support for K-12 as our state's top priority by increasing funding by $135 million, which accounts for 77% of the state's new revenue. Under Republican leadership in the Iowa House, yearly funding for education has increased by $660 million.
- Certainty for Iowa taxpayers
House Republicans championed and insisted on legislation that gave taxpayers a seat at the table this session. House Republicans pushed to prevent an unexpected $95 million tax increase on 177,000 Iowans and eliminated the unfair double tax on Iowa manufacturers.
- Unprecedented Oversight for Medicaid
House Republicans supported significant oversight efforts to monitor the state's transition and ensure that consumers are protected, patient health and financial outcomes are monitored and transparent, and the integrity of our health care system remains.
- Continued efforts to combat human trafficking
House Republicans continued efforts to combat human trafficking in Iowa by establishing an office in the Department of Public Safety to oversee and coordinate efforts to combat human trafficking. Other efforts were passed that protect victims and penalize those who commit this horrific crime.
- Fighting Addiction and Preventing Overdoses
House Republicans took a stand to help those suffering from addiction by providing access to life-saving medication for victims of opioid overdoses.
- Criminal Justice Reforms
House Republicans worked to advance solutions that refocus criminal justice resources on dangerous criminals rather than nonviolent offenders. Legislation passed this session will allow judges discretion when sentencing non-violent offenders which hold these individuals accountable while they rejoin and become contributing members of society.
- Sustainable funding for water quality
House Republicans were able to find a long-term, dedicated source of funding for water quality projects across the state without raising taxes. While this did not become law, it has spurred an important conversation on how we can address improving our water and natural resources for future generations.
My brother-in-law and sister-in-law visited the capital last week. Their daughter is related to Representative Deborah Berry by marriage.
Dani Boal (my clerk) and I in the last week of session. Dani has worked hard this year to organize your emails and my schedule!