The Affordable Care Act could correct an imbalance in the tax code and improve working Mississippians' financial security... if the state's leaders would just get out of the way.
Most middle-class Mississippians consider health insurance to be an essential part of their salaries. Employers use generous health benefits to compete for qualified employees, while most professionals wouldn’t take a job without it.
When employers offer their employees a more expensive plan or pick up a higher share of their premiums, it generally counts as a raise. Less money comes out of the employees’ pockets for health care, leaving more money for everything else.
And since employer-sponsored health insurance is tax-exempt, beefing up health benefits makes good financial sense for businesses. Giving an employee a tax-free $12,000 insurance plan is cheaper than paying taxes on an extra $12,000 paycheck.
As it stands, however, fewer than half of Mississippi’s businesses offer health benefits, and only 52 percent of working-age Mississippians are covered by employer-sponsored plans.
So what about everyone else?
For starters, they’re not eligible for any tax breaks. If an individual took that $12,000 and tried to give it to an insurer directly, she would get a chunk taken out in taxes. Only plans paid for by employers are exempt.
Second, workers who don’t get insurance at work probably make less to begin with. In 2012, only 12 percent of Mississippians earning less than the poverty line received insurance on the job, compared to 85 percent of Mississippians with mid-range incomes and above.
That disparity is especially significant because Mississippi has the largest percentage of working poor in the country. More than 35 percent of Mississippi’s jobs don’t pay enough to lift a family of four out of poverty.
Most assume that Medicaid — that so-called “entitlement” for the poor — picks up the slack, but Mississippi’s eligibility requirements are as stringent as the federal government will allow. The majority of Mississippi’s Medicaid enrollees are children or adults with disabilities. Childless adults are not eligible for Medicaid, nor are parents of dependent children earning more than 29 percent of the federal poverty line — a bit less than $7,000 a year for a family of four. (By comparison, Mississippians spent $6,571 per capita on health care in 2011.)
Even in households with at least one full-time worker, one in six Mississippians lacked health insurance in 2012. Among adults below the poverty line, more than 40 percent were shut out from both employer-sponsored plans and Medicaid.
Health insurance raises the incomes of working Mississippians
Enter the Affordable Care Act, which creates near-universal health coverage by requiring large employers to offer insurance, subsidizing small business and individual plans purchased through new online markets, and — in states that cooperate — expanding Medicaid eligibility up to 138 percent of the poverty line.
In essence, the government has decided to extend the same health benefits to low-income workers that the middle class already receives. Before you call that a government takeover, consider this: the federal government spends $300 billion through the tax code every year on the employer health insurance exemption. That costs twice as much as the ACA’s tax credits and Medicaid expansion combined.
Therefore, I propose we start calling “Obamacare” what it really is: a raise for hundreds of thousands of working Mississippians who were previously shafted by the tax code.
It comes at a time when those families are especially vulnerable. Between 2007 and 2012, poverty in Mississippi — already the highest rate in the country — grew by four percentage points, and median income dropped by more than $3,000. That economic stagnation isn’t just a blip. Over the previous three decades, Mississippians’ income grew 5 points more slowly than the national average and 7 points slower than the rest of the South.
The majority of Mississippi’s families live paycheck to paycheck. More than 60 percent of the state’s households not have enough savings to withstand a medical emergency or other unforeseen disruption. Quality, dependable health insurance is an essential component of their financial stability. A widely-cited study of Oregon’s Medicaid expansion found that health coverage reduced financial hardship and nearly eliminated catastrophic out-of-pocket medical bills that are the leading cause of bankruptcy in America.
But thanks to the obstinance of the state’s leadership, the raise is on hold for most of the 454,000 uninsured Mississippians. Gov. Phil Bryant and his allies in the Legislature ceremoniously rejected the federally-funded Medicaid expansion, leaving 260,000 Mississippians under the federal poverty line in the untenable position of being too poor for assistance purchasing health insurance. The leadership’s opposition has also depressed enrollment for the private insurance plans, even though Mississippians qualify for an average tax credit of $4,370. (The uninsured of course still need health care, the cost of which will fall on hospitals that no longer receive reimbursements from the federal government. Without Medicaid expansion, many of Mississippi’s rural hospitals face dire fiscal straits.)
At last count, only 6 percent of uninsured Mississippians had received the coverage the ACA should offer them. The question becomes how much longer the state’s leaders can oppose something that helps the state’s working families so much.