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We Know We Can Cut Child Poverty in Half, So Why Aren’t We?

| September 10, 2019 |

Today, the U.S. Census Bureau released its annual national data on poverty in America and it paints the picture that we know all too well: Our child poverty rate remains stubbornly high despite the fact that we have the solutions to address it.

The Numbers

According to the Census Bureau’s Official Poverty Measure (OPM), 16.2 percent of children (11.9 million) were living in poverty in 2018.  (The official poverty line for a family of four with two children is $25,465 a year.)

The new figure represents a 1.2 percent decrease from 2017.  While we are encouraged to see this small decrease in the child poverty rate, we know that children still have a 54.4 percent higher chance of living in poverty than adults and that the United States continues to have a significantly higher rate of child poverty than most of our peer countries.

And due to the continual racism and discrimination ingrained in our country’s institutions, children of color continue to experience rates of poverty three times that of white children.  29.5 percent of Black children and 23.7 percent of Hispanic children were living in poverty in 2018 compared to 8.9 percent of white children.

The figures also show a modest decrease in children living in deep poverty, with 6.9 percent of children living in deep poverty in 2018 ($12,732 a year for a family of four with two children).  This number remains particularly worrisome, since households living in deep poverty lack the income to meet their children’s basic needs. 

Despite the vulnerability of children living in households of deep poverty, they often lack access to assistance. Many anti-poverty programs are contingent on a household having some income, yet families in deep poverty have little to no earnings due to barriers such as disability, substance abuse, mental health or other complex and persistent issues that prevent them from working full time or at all.

The good news is that we are making more progress than the OPM indicates. The Supplemental Poverty Measure, also released today, tells us that when we take anti-poverty programs such as the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), the Supplemental Nutrition Assistance Program (SNAP), housing assistance and other programs into account (as well as other factors) the child poverty rate drops to 14.5 percent.

We Know How To End Child Poverty

However, no matter what measure you use to indicate child poverty in the United States, our rate remains high – an inexcusable trend considering that findings of a landmark study released earlier this year from the nonpartisan National Academy of Sciences show that we know how to make progress.  A Roadmap to Reducing Child Povertyputs forward a set of policy and program changes that, if implemented, would cut our national child poverty rate in half within a decade. While the study committee finds that no single policy can cut our child poverty rate in half within a decade, establishing a $3,000 annual child allowance would have the biggest impact by far and would cut our deep child poverty rate in half within a decade.  Structural improvements and funding increases to the EITC, SNAP and housing vouchers would also make a serious dent.

The study committee also finds that implementing these changes are cost-effective. Poverty costs our country upwards of $1 trillion a year due to reduced economic activity and output, yet cutting our child poverty rate in half within a decade would cost less than $110 billion a year.

Yet our country is going in the opposite direction. Today First Focus on Children released our annual Children’s Budget Book, which reports that the share of spending on children in the United States declined to an all-time low of just 7.21% in FY2019.

And recently, we have also seen a slew of harmful regulations from the Trump Administration that if implemented, would further increase our child poverty rate by restricting access to critical resources for millions of children.

For this reason, First Focus on Children, with our partners at the U.S. Child Poverty Action Group, launched the End Child Poverty campaign earlier this year and is calling upon the United States to establish a national target to cut our child poverty rate in half within a decade. Setting a target would provide advocates, the media and other stakeholders with a tool to hold our lawmakers accountable for reducing child poverty.  We have seen evidence of the effectiveness of targets in the United Kingdom, Canada and New Zealand as well as here in the United States. Bicameral legislation introduced in past sessions of Congress established a target and we hope to see this legislation reintroduced soon.

Please join us in this effort! You can start by participating in our upcoming Twitterstorm on Tuesday, September 24th at 2pm EST using the hashtag #EndChildPoverty. Please also attend our webinar on Wednesday, September 25th at 3pm EST. For additional details, sign-up for our listserv here and follow us on Twitter at @CPAG_USA.

For more information:

End Child Poverty Press Statement

Top Takeaways from A Roadmap to Reducing Child Poverty

Implementing a Roadmap to Reducing Child Poverty


New USDA Data shows that Children Cannot Afford to Lose SNAP Benefits

| September 5, 2019 |

The U.S. Department of Agriculture (USDA) released new data Sept. 4 showing a continued decline in food insecurity (uncertain access to enough healthy food.) Unfortunately, even with this progress, food insecurity continues to disproportionately impact households with children. In fact, as of 2018, 11.2 million children (nearly 1 in 7) lived in a household struggling to put food on the table.

Food insecurity takes a costly toll on children. Not only does it increase the likelihood of poor nutrition and hunger, it impacts their health, school performance and behavior. The harmful effects of child food insecurity can reverberate into adulthood.

If we truly want to eradicate childhood food insecurity, we must drastically strengthen the assistance programs that help children access the food they need to thrive. Unfortunately, rather than investing in the Supplemental Nutrition Assistance Program (SNAP), which serves as the first line of defense against child food insecurity, the Trump administration has taken actions to cut SNAP benefits and discourage vulnerable families from enrolling in the program. These measures include a proposed rule that would restrict state eligibility options for SNAP, causing 3.1 million individuals to lose their benefits — of whom 1.9 million are either living with children or are children themselves. Worse still, 500,000 impacted children would also lose access to free school meals. This “Categorical Eligibility” proposal comes on the heels of a separate proposed rule that sought to limit access to SNAP benefits for adults struggling to access employment, which would create harmful spillover effects for several groups of children and youth.

The Trump administration also recently issued a final rule that imposes sweeping changes on long-standing, bipartisan immigration policy by allowing government officials to consider the use of an applicant’s broad range of services — including SNAP — when determining eligibility for green cards and/or lawful admission to the United States. Individuals who are eligible for SNAP will now be punished for using those benefits, meaning parents and children will likely disenroll from the program in order to avoid a public charge determination.

The USDA’s food insecurity data serves as a stark reminder that our children cannot afford the Trump administration’s proposed cuts to SNAP. Congress must fight these proposals as well as take proactive steps to invest in complementary child nutrition programs so that more children can access the food they need to thrive.

Take Action: The Administration’s Proposed Rule for the Revision of Categorical Eligibility in the Supplemental Nutrition Assistance Program is open for comments until September 23rd. We encourage partner child advocacy organizations to submit comments by customizing our model comment template. Individuals may submit a personalized comment using Feeding America’s comment portal.


Model Comment: On Proposed Changes to Categorical Eligibility in SNAP

| August 16, 2019 |

A proposed rule would essentially eliminate Broad Based Categorical Eligibility (BBCE), a state option that allows states to streamline SNAP eligibility for families who are receiving a noncash benefit funded through Temporary Assistance for Needy Families (TANF). Along with cutting red tape so that families do not have complete duplicative application processes for multiple benefit programs, BBCE allows states to waive counterproductive asset limits for SNAP eligibility and relax income thresholds so that low-income families do not face a benefit cliff when their earnings exceed 130 percent (but no more than 200 percent) of the federal poverty line.

To learn more about the importance of BBCE for children, you can visit this fact sheet by First Focus on Children.

Please customize the template below to create a unique comment emphasizing the harm this rule will have on children and their families. Comments must be submitted here by September 23, 2019.

View the model comment.


Explainer: What to Know About the Final “Public Charge” Rule

| August 16, 2019 |

The Trump administration has finalized a rule that will expand the definition of a public charge when determining eligibility for individuals applying for admission to the U.S. or for adjustment of status to that of lawful permanent resident (green card). This expansion will allow for the consideration of an applicant’s use of services such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP), Federal, State and local cash assistance programs such as Temporary Assistance for Needy Families (TANF) and subsidized housing vouchers. To make this determination, DHS will look at the “totality of a person’s circumstances” including their age, health, assets, education, and financial status. A person may be deemed a public charge if he/she has used one or more public benefits for more than 12 months in the aggregate within any 36-month period (receipt of 2 benefits will count as 2 months). The rule is expected to go into effect on October 15, 2019.

The final rule included some changes from the proposed regulation. For instance, Medicaid will not be considered for those under the age of 21 and pregnant women through 60 days after giving birth. Additionally, the Children’s Health Insurance Program (CHIP), Headstart, WIC (Nutrition program for Women, Infants and Children), and Low-Income Home Energy Assistance Program (LIHEAP) will not be included in the list of services considered for a public charge determination. But the regulation directly targets family-based immigration and specifically singles out children. Here are some of the ways in which it will impact children.

Children are not exempt from the rule.

While there is a list of certain groups who are exempt from the public charge determination including victims of severe forms of trafficking or criminal activity (T and U-Visas), refugees and asylum applicants, Special Immigrant Juveniles, and others,[1] children are not exclusively exempt. In the rule, DHS recognizes that children are not making decisions to apply for benefits themselves, yet they make no exemption for those who fall under a head of household. Alarmingly, they go out of their way to argue that there is no need for a child to have the capacity to understand the consequences of these actions. While children are specifically exempt from Medicaid, other benefits such as the Supplemental Nutrition Assistance Program (SNAP) or federal, state and local cash assistance programs such as Temporary Assistance for Needy Families (TANF) will be used against children seeking when adjustment of immigration status.

Children are considered negative factors both for themselves and for the consideration of their parents in the totality of circumstances

The rule states that it will consider an age of less than 18 as a negative factor, as under 18 they are unable to be meaningfully employed. Additionally, household size will be viewed as a negative unless the household members are contributing to the household income. While the rule states it will not include the use of benefits by U.S. citizen children within the household, DHS may still count the U.S. citizen child as a negative factor in the totality of circumstances for the parent’s application. Therefore, the simple act of being a child within a home is weighed negatively on multiple accounts.

MILLIONS of children will lose access to health care, housing and nutrition services

While there are exclusions in Medicaid specifically for children, it is likely that the parents of these children will choose to forego health care coverage and services to avoid negative immigration consequences. According to a report by the Kaiser Family Foundation approximately 8 million children enrolled in CHIP and Medicaid live in a household with at least one noncitizen and may be at risk for disenrollment.[2] Research shows that when parents don’t have health insurance, their children are less likely to have health care coverage or seek health care services.[3]

When it comes to housing assistance, there is no way to separate benefits to parents and their children who live in the same home. You cannot divide up a home or an apartment based on who is eligible for assistance, so when parents lose assistance and housing becomes unaffordable, the entire family, including children, is put at risk of homelessness. In writing the rule, the Administration noted that it expects to see “Increased rates of poverty and housing instability…”

The rule threatens children’s access to food both at home and at school. Parents and children may disenroll from SNAP in order to avoid a public charge determination as approximately 3.4 million citizen kids who access SNAP[4] live with at least one non-citizen family member. Even if eligible children remain on the program, when parents drop out this means less food in the house. Additionally, kids enrolled in SNAP automatically receive free school meals. Once they forfeit SNAP enrollment, they would not have that automatic follow-through. They are unlikely to apply for free meals at school because of a host of issues including, language barriers, lack of enrollment information, and fear of negative immigration outcomes.

The impact will reach beyond the intended targets

Beyond those families directly subject to the rule, expanding the public charge determination will have a broad chilling effect and will deter all immigrant households from accessing any essential services out of fear it will negatively impact their immigration status. Parents may choose to also give up benefits not covered out of general fear of repercussions and an increase in distrust of government services. We have already seen the chilling effect responsible for a 10 percent decline in SNAP participation during the first half of 2018 by eligible families.

The rule disproportionately affects family-based immigration.

The public charge rule is a direct attempt to cut family-based immigration. In 2016, approximately 68 percent of the total persons who obtained Legal Permanent Resident (LPR) status were immediate relatives of U.S. citizens or had a family-based sponsor.[5] The rule would make it more difficult for families to stay together or reunify, as families both in the U.S. and abroad will be forced to meet the new requirements for a wide range of demands.

The Administration is knowingly subjecting children to these hardships. They acknowledge in the rule that children and other vulnerable populations will be impacted. It specifically states that disenrollment from public programs will result in declining child health, increased poverty and homelessness, reduced productivity and educational attainment.


[1] https://www.uscis.gov/greencard/public-charge

[2] https://www.kff.org/disparities-policy/fact-sheet/public-charge-policies-for-immigrants-implications-for-health-coverage/

[3] http://hrms.urban.org/quicktakes/health-insurance-coverage-children-parents-march-2017.html

[4] https://fns-prod.azureedge.net/sites/default/files/ops/Characteristics2016.pdf

[5] https://www.dhs.gov/immigration-statistics/yearbook/2016/table6


The Loss of the ACA Would Be Devastating for Children – Here’s Why

| July 24, 2019 |

When we talk about the Patient Protection and Affordable Care Act (ACA), we focus on the politics. Discussions of the law almost always lead to heated partisan debates, and health care has been a major issue for presidential hopefuls. Nevertheless, what we should question is how changing this law would affect millions of children.

Yet another court case attempting to demolish the ACA began oral arguments in early July. The case could potentially move to the Supreme Court in the thick of the 2020 presidential election. While you can bet that partisan politics will be at the forefront of the discussion, the implications of this direct attack on the ACA cannot be ignored.

Depending on the outcome of Texas v. US in either the judicial system, we could see a complete eradication of the ACA. Should that happen, 20 million Americans, many of them children, would lose access to quality, affordable health care.

Since its passage in March 2010, almost 3 million children have gained coverage and millions more have benefitted from the groundbreaking transformations the ACA made to our health care system.

While researching the impact of the ACA, I have learned about its life-saving effect on America’s children. Children born with pre-existing conditions, such as asthma, juvenile diabetes, cystic fibrosis, and many other diseases are no longer denied coverage. Lifetime and annual dollar limits on care were eradicated, meaning that children with health conditions that require extensive care will not exhaust their coverage amounts in their early years. Losing the ACA would be disastrous for these and other children.

It is important to remember what losing the ACA would actually mean for tens of millions of Americans, especially children. Before the ACA, a child born in the NICU could exhaust his or her entire health care coverage in those first few months of life because of the misfortune of being born with birth defects. A child with asthma may not have had access to medicine that helps him or her breath because it is too expensive, and insurance would not cover it. Too many times, parents were faced with an impossible decision: foregoing life-saving medical care or going bankrupt trying to do what is best for the health and well-being of their children. These scenarios were harsh realities for millions of families and their children before the ACA, and they could be the realities of our future, should it be rescinded.

If we believe that children are the future, we must prioritize upholding the Patient Protection and Affordable Care Act to protect the health and well-being of America’s children.

To learn more, check out our our full issue brief on the dire consequences for children if the ACA is dismantled.


Issue Brief: How Dismantling the Patient Protection and Affordable Care Act Will Harm Children

| July 23, 2019 |

Since its passage in 2010, the Affordable Care Act (ACA) has withstood many challenges at the state, local and federal levels in court and from within Congress. In the House, votes to repeal the ACA have been on the floor more than 60 times. During the summer of 2017, the ACA came within just a few votes of repeal in the Senate, but the vote failed after massive public outcry. As the law faces yet another court challenge, we are reminded what children stand to lose if the ACA is dismantled and all its benefits disappear.

Though not thought of as the principal beneficiaries of the ACA, the law has impacted the health and lives of children in dramatic and unanticipated ways. From coverage for pre-existing conditions to well-child visits without co-pays, Medicaid coverage for former foster youth, and reduced maternal and infant mortality rates, children have benefitted from the ACA and would suffer if the law were dismantled. The Affordable Care Act provides children with services and benefits that improve their lives and health outcomes. 

In this issue brief, we examine the potential consequences of dismantling the ACA–in taking away the provisions and services that children need to grow and develop, we would reverse positive trends in children’s health that have emerged since the law’s implementation.

See our full issue brief.


A Crisis of Compassion at the Border

| July 18, 2019 |

In anticipation of the House Oversight subcommittee hearing entitled “Kids in Cages,” I waited in the halls of the Rayburn House Office Building for more than two hours to secure a seat in the hearing room. Given the high-profile subject matter, many others from Capitol Hill and human rights organizations stood alongside me hoping for the chance to hear Yazmin Juárez’s emotional testimony about the loss of her daughter Mariee six weeks after being released from detention by U.S. Immigration and Customs Enforcement. The hallway was crowded and hot and the standing was uncomfortable.

In that moment, I thought about the children in Clint and Dilley and El Paso.

I pictured them separated from their parents, denied knowledge of their whereabouts, deprived of basic safe and sanitary conditions, and unsure about when the nightmare would end. As I walked out of the hearing room after hours of testimonies, tears and calls to action, I felt as though I had gotten a very small glimpse of the emotional and physical damage forced upon these immigrant children at the border.

Congress recently allocated more than $4 billion to assist with conditions at detention centers, but money cannot and will not solve this moral crisis. Children should not be separated from their families unless there is an immediate threat to the child and they should never be placed in cage-like facilities. Detention of children and families is utterly cruel and traumatic. Ms. Juárez testified that she immediately recognized sick children upon her arrival at the facility in Dilley, Texas and called the cells “ice boxes” due to the extreme cold. She vehemently emphasized that the conditions she faced failed to meet the definition of “safe and sanitary” as outlined by the Flores agreement. To her, the United States represented the land of opportunity, liberty, dreams, work and great doctors…the land in which she could do the things she was unable to do in Guatemala as a result of threats to her and her daughter’s safety. Yazmin’s experience in detention gave her a picture of America that will forever be tainted by the negligence and apathy that robbed her of her daughter.

Our current immigration system not only lacks humanity, it revels in unnecessary institutional cruelty. Despite the necessity to always consider the best interest of the child, children are kept in conditions that blatantly contradict the safe and sanitary guidelines set by the Flores agreement. Since lawyers, pediatricians and politicians gained access to the centers, the truth has emerged regarding children in filthy conditions. Many children smell rank, lack access to clean toilets and showers, are unable to brush their teeth, cannot protect themselves from the extreme cold, face lice infestations, are exposed to flu outbreaks, and do not receive adequate nutrition, among other things. Above all else, many are forced to endure their lengthy detention without the comfort of their parents.

Detention is portrayed by the Trump Administration as a deterrent and a way to hold immigrants accountable for attending court proceedings. However, according to Syracuse University’s Transactional Records Access Clearinghouse, which obtained court records through the Freedom of Information Act, 99 percent of families who were released from detention with representation attended all of their hearings.[1] When the family is released from detention but not represented, 80 percent still attended all of their hearings.[2] When families do fail to appear, it is most often not because they want to skip the hearing, but because they could not read the English instructions, received incomplete information, or failed to receive any information at all. In fact, absentia rates have rarely ever been a problem. Department of Justice statistics report that between 2013 and 2017, 92 percent of asylum seekers appeared in court to receive a final decision on their claims.[3] Despite historically high attendance, the current system punishes children and their families under the pretense of an attendance problem that does not exist. In fact, the Administration has testified that the reason they ended the successful family case management program, which served as a cost-efficient alternative to detention, is because the number of removals wasn’t high enough. When children and families have representation, they are better equipped to navigate our broken immigration system, and therefore have more successful outcomes.

Children are being used as pawns to advance a political agenda when our priority should be the safety and well-being of these innocent lives. These children face incredible risk on the journey to the U.S.-Mexico border. They should not also have to fear for their safety once in the custody of American officials.

During the “Kids in Cages” hearing, one statement in particular stood out to me. Rep.Lacy Clay (D-Mo.) said: “We as Americans should be ashamed of what has transpired at these detention centers and if you are not, you have lost your soul and compassion for others.”

First Focus Campaign for Children urges the Administration and members of Congress to support legislation that protects immigrant children in our custody.

The Humanitarian Standards for Individuals in Customs and Border Protection Custody Act (H.R. 3239) offers much needed provisions to meet medical, nutritional and safety standards for children and families. We call on Congress to pass this bill and others like it that will assure clean, safe circumstances for children and mitigate the trauma they suffer at our border. We can and we must do better by the children.


[1] https://trac.syr.edu/immigration/reports/562/#f1

[2] https://trac.syr.edu/immigration/reports/562/#f1

[3] https://www.humanrightsfirst.org/resource/fact-check-asylum-seekers-regularly-attend-immigration-court-hearings


Comments in Response to Proposed Rulemaking — Housing and Community Development Act of 1980: Verification of Eligible Status

| July 8, 2019 |

First Focus on Children submitted the following comments to a proposed rule expressing our strong opposition to the changes regarding “verification of eligible status,” published in the Federal Register on May 10, 2019 (RIN 2501-AD89; HUD Docket No. FR-6124-P-01). We urge the rule to be withdrawn in its entirety, and that HUD’s long-standing regulations remain in effect.

Excerpt:

If enacted, this rule would force tens of thousands of families with children struggling to make ends meet to choose between accessing critical housing assistance that supports their children’s healthy development, and keeping their family together.

Denying children access to safe and stable housing is not only immoral, but economically foolish. The long-term viability of our economy is dependent on our children and youth. We urge HUD to immediately withdraw its current proposal, and dedicate its efforts to advancing policies that strengthen—rather than undermine—the ability of immigrants to support themselves and their families in the future.

Read the our full comments.


Child Nutrition Reauthorization Represents a Chance to End Summer Hunger

| June 26, 2019 |

Summer vacation is supposed to be the highlight of a child’s year. But for far too many children in the U.S., it is the hungriest time of the year. As Congress works this year to reauthorize our federal child nutrition programs, it is time to end summer hunger once and for all.

Food insecurity is a devastating reality for 12.5 million—or 1 in 6—children across the country. For these children, many of whom are already exposed to the harmful effects of poverty, this inconsistent access to enough healthy food creates yet another obstacle to their ability to learn, grow and thrive. That is why the National School Lunch and School Breakfast Programs, which provide millions of low-income children with free or reduced-price meals at school, are critically important. These supports are proven to reduce child food insecurity and boost healthy eating

Unfortunately, a striking 83 percent of participating children lose access to that support when school breaks for summer. This means that more than 17 million children who participate in reduced-price school lunch do not participate in the Summer Food Service Program (SFSP), which reimburses program operators who serve free healthy meals and snacks to children in low-income areas. In addition to nutritious meals, many SFSP sites offer programming and educational enrichment, making them an ideal place for children to safely play and stay ready to learn. However, there are administrative, logistical and funding challenges that make it difficult for sponsors to participate SFSP. Many children also face barriers to accessing program sites when they are available, such as a lack of transportation.

Given the scope of the problem, it will take a multi-pronged approach to ensure that all U.S. children have enough to eat during the summer months. This includes:

  • Strengthening and expanding summer meal sites so that they are accessible to more children. The bipartisan Summer Meals Act of 2019, from Senators Murkowski (R-AK) and Gillibrand (D-NY) and Representatives Young (R-AK) and Larsen (D-WA), would make investments that streamline and expand the program. Critically, it would lower from 50 percent to 40 percent the share of income-eligible children a region requires for a congregate site to qualify for SFSP, called the “area-eligibility threshold.”
  • Establishing alternative, non-congregate models that fill any remaining gaps and provide additional pathways for children to safely access nutritious food. The bipartisan Hunger Free Summer for Kids Act of 2019 from Sens. Boozman (R-AR) and Leahy (D-VT) offers a helpful framework by which states can prioritize summer meal sites but also deploy the Summer EBT and non-congregate options in those areas where the congregate sites are not feasible.

Child Nutrition Reauthorization in the 116th is an important opportunity for Congress to end summer hunger. Thankfully, several lawmakers are leading the way, and their legislative efforts provide an excellent starting point for developing a comprehensive package to make summer hunger a thing of the past. 


Junk the Cadillac Tax

| June 24, 2019 |

Our nation is not suffering from a condition of having too much insurance coverage. A recent series by Noah Levey in the Los Angeles Times highlights how the rapid move to high deductible plans and greater imposition of cost sharing upon consumers by insurers is making health care increasingly unaffordable, causing families to delay critically necessary care, and driving a growing number of people toward bankruptcy.

The private health care crisis is increasingly one of underinsurance.

As Drew Altman, president of the Kaiser Family Foundation (KFF), told the Los Angeles Times:

There has been a quiet revolution in what health insurance means in this country. This happened under the radar while everyone was focused on the Affordable Care Act.

Altman adds:

We forgot that most people get their insurance through an employer, and for them, the issue is medical bills that they increasingly cannot afford.

Levey highlights these disturbing facts from a survey that the Los Angeles Times conducted with KFF:

Nearly half of those in a plan with at least a $3,000 individual deductible or a $5,000 family deductible reported problems affording healthcare.

One in six Americans who get insurance through their jobs say they’ve had to make “difficult sacrifices” to pay for healthcare in the last year, including cutting back on food, moving in with friends or family, or taking extra jobs. And one in five say healthcare costs have eaten up all or most of their savings.

Half said costs had forced them or a close family member to delay a doctor’s appointment, not fill a prescription or postpone some other medical care in the previous year.

Hardest hit in the cost shift are lower-income workers and those with serious medical conditions such as diabetes, heart disease and cancer — who are more than twice as likely as healthier workers. . .to report problems paying medical bills and to say they’ve cut back on spending for food, clothing and other household items.

The “Cadillac Tax” Is a Solution in Search of a Problem

The Affordable Care Act (ACA) played a critically important role in helping millions of previously uninsured Americans find health care coverage through its combination of a Medicaid expansion for lower-income families and premium tax credits and exchanges to purchase more affordable private insurance for people with income above 138 percent of poverty.

Unfortunately, there is one provision in the ACA that, if allowed to go into effect, could be potentially harmful to people enrolled in private health plans, including children. That provision is referred to as the “Cadillac Tax” and it would worsen the underinsurance problem, as insurers and employers would be incentivized to shift more costs to employees and families to avoid the tax.

Fortunately, bipartisan bills, the “Middle Class Health Benefits Tax Repeal Act of 2019” (S. 684 by Sens. Martin Heinrich (D-NM) and Mike Rounds (R-SD) and H.R. 748 by Reps. Joe Courtney (D-CT) and Mike Kelly (R-PA)), have been introduced that would eliminate this unfortunate tax.

As background, the ACA’s “Cadillac Tax” language that would impose a 40 percent excise tax on employer-sponsored health benefits if the value of the employer plan, which is the premium costs for both the employer and employee, exceeds an arbitrarily set $11,200 for individual coverage and $30,150 for family coverage in 2022.

The “Cadillac Tax” was originally set to take effect in 2018 but has been delayed on two occasions, including most recently in the Extension of Continuing Appropriations Act passed by Congress in January 2018.

Support for the provision’s underlying premises are deeply flawed. First, a recent Washington Post editorial claims, “. . . the tax exclusion also incentivizes consumption, because — other things being equal — the more services a plan covers, the bigger the tax benefit.”

That is nonsense. In a series of tweets in support of eliminating the Cadillac Tax, Ben Speilberg correctly points out that health care is not a consumer or luxury good.

For children, comprehensive insurance coverage translates to getting chemotherapy for cancer treatment, wheelchairs and leg braces for children with disabilities, immunizations, and glasses so children can read. Gaining access to a doctor to get medical treatment, an immunization, or chemotherapy is nothing like buying a Mercedes Benz or a Cadillac. As Jonathan Cohn reiterates, “Medicine is not a consumer good.”

Second, supporters assume that private health coverage is overly generous, particularly with respect to family coverage. The vast majority of employer coverage plans share significant costs with employees. It is a myth that private plans are overly generous today.

According to an annual survey of employers by KFF, “On average, covered workers contribute 18% of the premium (or $1,186, on average) for single coverage and 29% of the premium (or $5,547, on average) for family coverage.”

On average, workers contribute 4.68 times more toward premiums for family plans than individual plans, even though the average overall premium cost is 2.84 times more expensive ($19,616 for family plans to $6,896 for individual plans).

These consumer costs are on top of the expenses that an individual or family bears for deductibles, copayments, and benefit limitations. Families USA’s Stan Dorn points out in a Health Affairs piece entitled “The Cadillac Tax: It’s Time to Kill This Health Care Zombie” that the average deductible for family coverage increased from $638 in 2008 to $2,426 in 2018, “nearly four times the average family deductible in 2008.”

First Focus Campaign for Children is particularly concerned that, even though families already pay a much higher share of the costs of coverage than individuals, the “Cadillac Tax” would exacerbate the problem. If allowed to go into effect, the threshold for the excise tax to take effect is set at just 2.69 times the expense of that for individual plans ($11,200 for single coverage and $30,150 for family coverage in 2022), which is below the current 2.84 ratio between individual and family coverage. In other words, the tax would disproportionately hit family coverage plans.

More likely, employers would seek to avoid the tax, but that creates an added incentive to impose higher deductibles and copayments and limit or eliminate certain benefits, particularly for family coverage. This would be most troubling for families with children with disabilities and children with special health care needs.

Dorn explains:

Once it activates, the tax is likely to spur further cuts to health benefits. A recent analysis in Health Affairs found that, by 2025, the Cadillac tax would affect roughly one out of every four workers receiving ESI — 23.5 percent of those with single coverage and 27.9 percent of people enrolled in family plans. . .

The Cadillac tax will incentivize a large and ever-growing share of employers to reduce the generosity of health insurance, further raising deductibles and other out-of-pocket costs. The non-partisan Congressional Research Service thus found that the Cadillac tax “could lead to an overall decline in the quality of health services financed by private insurance,” with businesses cutting their spending on employee health benefits by $47.6 billion to $69.2 billion in 2025 alone.

One disturbing trend in employer-sponsored coverage has been to impose a per person deductible on top of the premium differential for families. Consequently, a $1,500 deductible for an individual becomes a potential $6,000 deductible for a two-parent family with two children. Children’s health coverage is far less expensive than adult coverage but that fact is typically not adjusted for by per person deductibles.

To protect families from having these trends further incentivized, First Focus Campaign for Children has endorsed the Middle Class Health Benefits Tax Repeal Act of 2019,” as it would fully repeal the “Cadillac Tax.”

The Alliance to Fight the 40, a coalition of businesses, patient advocates, private sector and public sector employer organizations, consumer groups, and other stakeholders that support employer-provided health coverage, also wrote a support letter for the legislation to the U.S. Senate:

Contrary to the notion that only “gold-plated” high-value plans would be affected, the tax will eventually have an impact on virtually all employer plans. The first plans to be hit will not be “Cadillac” plans that have the most extensive benefits — they will be plans that are expensive because they cover older Americans, retirees, women, families and other individuals with chronic health conditions, those who have suffered catastrophic health events, and those living in higher-cost geographic areas.

The letter cites Mercer’s National Survey of Employer-Sponsored Health Plans, which estimates that “[t]wenty-three percent of the plans that trigger the tax in the first two years will have actuarial values in the lowest (i.e. 60–70 percent) allowable range.”

Making health care more unaffordable for families is not a solution to any of the failures of our health care system.

Third, proponents argue that the “Cadillac Tax” is needed to raise revenue. The Washington Post editorial goes so far to make the ridiculous argument that it would be “raising revenue for expanded care for lower-income people.”

That simply is not true. The federal budget does not work that way, as there is no Medicaid Trust Fund for any revenue generated by the imposition of the excise tax. Any money raised simply goes into the Treasury and not to lower-income people or even health care more generally.

Even worse, as employers shift more costs to employees in response to the excise tax, the health care safety net and government programs will likely bear an increased burden as individuals and families attempt to shift their coverage to more affordable options, such Medicaid, the Children’s Health Insurance Program (CHIP), and the ACA exchanges, or use these programs to supplement their increasingly unaffordable private coverage.

Fourth, proponents of the excise tax argue that its repeal would harm efforts to slow the growth of health care costs. However, the vast majority of employers, including our organization, have little ability or way to control health care costs. The consequence is that employers use what little tools they have to simply reduce their own costs by shifting a growing share of the health burden to employees and their families.

Taxing the health benefits of employees does not reduce the health care costs of consumers — it just makes care more expensive and threatens their health.

The Growing Support for Repeal of the “Cadillac Tax”

In fact, the real health care cost issue facing families is the growing crisis of underinsurance. Levey explains:

The explosion in cost-sharing is endangering patients’ health as millions, including those with serious illnesses, skip care, independent research and the Times/KFF poll show.

The shift in costs has also driven growing numbers of Americans with health coverage to charities and crowd-funding sites like GoFundMe in order to defray costs.

Our nation needs to address the growing problem of underinsurance rather than incentivize the expansion of this trend through imposition of the “Cadillac Tax.” Recognizing this, over 650 national, state, and local organizations that represent business, insurers, and consumers that have some together to support repeal of the “Cadillac Tax.”

If there are holdouts on the Democratic side of the aisle, they should recognize that the “Cadillac Tax” is an arbitrary limit on health care spending that is set to grow at a slower rate than expected medical inflation. This should be a familiar concern because it is one of the top reasons why progressive groups strongly oppose arbitrary caps on spending like Medicaid block grants or per capita caps. Arbitrary limits on health care spending would lead to the rationing of care and that will have a disproportionately impact on vulnerable populations, such as people with disabilities and children.

As for any holdouts on the Republican side of the aisle, they should recognize that the “Cadillac Tax” undermines private health coverage helps fuel arguments for single payer, government-run health coverage. If private health coverage cannot be counted on to truly protect people when then need health care coverage, the alternative is an expansion of public coverage, which conservatives oppose.

To find better solutions that will eliminate “economic distortions that drive high costs and inadequate health outcomes in the US health care system,” First Focus on Children has joined Families USA, the American Academy of Family Physicians, the American Benefits Council, the American Federation of State, County and Municipal Employees, the American Federation of Teachers, and the Pacific Business Group on Health as a member of “Consumers First: The Alliance to Make the Health Care System Work for Everyone.”

Consumers First will be focused on six issues for action:

· High and rising health care prices

· Distortions created by provider payments systems

· Increased health care industry consolidation

· Insufficient oversight over nonprofit institutions

· Flawed workforce policy

· Inadequate access to data and transparency

Consumers First believes the “health care system should work for families to ensure the best health possible without threatening their economic independence and vitality.”

Rather than supporting arbitrary caps represented by the “Cadillac Tax” that undermines private health coverage or Medicaid block grants that would harm millions of Americans, it would be far better working to get to the important work of transforming our health care system so that it better serves us all.