House Ways and Means Shifts Costs, Wipes Out Services Grants

May 7, 2012

I wouldn’t want to leave the impression that the House Agriculture Committee’s attack on the food stamp program was the only threat to low-income people spawned by the Republican majority’s effort to protect defense spending.

The Ways and Means Committee also had to find more savings — $53 billion over the next 10 years. And it too met its target by shifting costs to low-income people. But they’re not the only ones who’ll be harmed by what it’s come up with — far from it.

Here’s what the committee passed — and what the full Republican majority in the House almost surely will pass before week’s end.

Child Tax Credit Restriction

Ways and Means dusted off a proposal that earlier surfaced a way to offset some of the costs of extending the employee payroll tax cut and what remains of long-term unemployment insurance benefits.

Under the proposal, only parents with Social Security numbers could claim the Child Tax Credit. Immigrants who pay their income taxes using a number issued by the Internal Revenue Services would have to pay more because they’d lose the credit.

And those toward the bottom of the income scale would lose the partial reimbursement the tax credit provides.

First Focus reports that 5.5 million children would no longer benefit from the extra money their families have to spend on basic needs.

Elimination of Social Services Block Grant

Ways and Means would wipe out the Social Services Block Grant altogether. This also is a rerun, already revived in the current House budget plan.

SSBG is a relatively small program that provides states and the District of Columbia with funds they can use to meet a wide range of needs.

It’s commonly used for subsidized day care, services to protect both children and vulnerable adults from abuse and neglect, foster care and services that help seniors and people with disabilities live independently, e.g., Meals on Wheels, transportation.

Many states and the District also use SSBG funds for casework services that link people to programs that can help them.

The House Budget Committee calls the services “duplicative” because other pots of federal money fund them too.

This is misleading for two reasons. First, some states use the block grant for services that aren’t covered under other programs, e.g. protective services for elderly victims of abuse and neglect.

Second and more importantly, services aren’t duplicative just because states can draw on more than one program to fund them. Low-income parents who get child care subsidies funded by SSBG, for example, don’t also get subsidies funded by the Temporary Assistance for Needy Families program.

In other words, SSBG enables states to extend services they consider essential to more people who need them — over 22.6 million, according to the latest official figures.

Unlimited Health Care Subsidy Repayments

This is a bit technical, but it’s a big deal. So bear with me here.

Under the Affordable Care Act, people who aren’t poor enough to qualify for Medicaid can get subsidies to purchase health insurance through the exchanges, i.e., the upcoming state-level insurance markets, if they meet two conditions.

Their incomes must be at or below 400% of the federal poverty line. And they can’t get adequate, affordable health insurance through their employers.

The initial size of the subsidy is based — as it must be — on their income at the time they purchase or renew their health insurance. The lower their income, the bigger the subsidy.

What if their income rises substantially during the year? They’re unemployed at the beginning, but get a job, for example.

Under current law, they have to repay the excess they received, but only up to a fixed amount. Congress established a limit so that people wouldn’t choose to forgo health insurance because they might get stuck with a big repayment.

As the Center on Budget and Policy Priorities notes, Congress has twice raised the repayment cap to offset the costs of other health care legislation.

House Ways and Means would eliminate the cap altogether. The repayment some people could face would be more than five times the amount of the penalty they’d have to pay for not having health insurance.

An estimated 350,000 people — mostly the healthiest — would chose the penalty over the potential shock to their budgets later. Some, of course, would then be devastated by unexpected health care costs.

Meanwhile, people still in the insurance pool would, on average, have higher health care costs. So premiums would rise and, with them, the costs of subsidies.

The added stress on the exchanges would undermine the basic structure of the ACA — not an unintended consequence for the Republican majority. Nor is the outrage some people would feel when hit with a big repayment bill.

More support for the ACA repeal Republicans promise, if the Supreme Court doesn’t kill the law first.

Well, the House Ways and Means proposals, in their current form, won’t even get a vote in the Senate. But what we see here is that bad ideas don’t die just because they’re not enacted right away.

We should expect to see these and others resurface when House and Senate negotiators sit down to work out a way to avert the across-the-board cuts due to begin next January.

Lots of pressure. Lots of horse-trading then.

UPDATE: The House vote on these proposals, the food stamp cuts and some other nasty things I haven’t written about is now scheduled for Thursday, May 10. If you want to weigh in, the Coalition on Human Needs has an editable letter that will automatically go to your Representative.

CHN has also just posted a clever, informative video that shows what the proposals will mean in human terms. Well worth five minutes of your time.