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April 1st, 2014:

And the first open enrollment period comes to an end

Lots of people signed up in the last few days of enrollment. Some tried but came away empty.

It's constitutional - deal with it

It’s constitutional – deal with it

Some of the hundreds of Houstonians who sought last-minute help enrolling for the Affordable Care Act on Sunday left thrilled to have health insurance for the first time in their lives, while others walked away frustrated by high prices, long waits and computer glitches.

“The lowest price plan for me was $387 per month and included a $6,000 deductible. Is this what they think people can afford who are unemployed? This is outrageous,” said Lupe Escalante, 63, a recently laid-off office administrator who attended an enrollment event Sunday at Community of Faith church in north Houston, one of a bevy of events held to help people meet the Monday deadline.

Under the law, uninsured people will be subject to fines of $95 per adult and $47.50 per child – a $285 family maximum – on next year’s income taxes. However, individuals who earn less than $10,150 and married couples earning less than $20,300 will be exempt from the penalty.

Extensions can also be granted for people who started, but did not finish enrollment, by the deadline.

For reasons unclear, the story fails to explain why Ms. Escalante did not get a quote for a policy she could afford. The simple answer is that she almost certainly falls into the coverage gap, earning too much money to qualify for Medicaid but not enough to receive a subsidy. The reason for the existence of the gap is that Texas was one of many states to not expand Medicaid, for which Ms. Escalante would surely now qualify if Rick Perry and the Legislature had done so. Alec MacGillis spells it out.

In Texas, parents can only qualify for Medicaid if they earn less than 19 percent of the poverty level—that is, below $4,531. In Alabama, it’s even lower—16 percent of the poverty level. It’s barely higher than that in Louisiana, Georgia, Missouri, and Mississippi and Florida, all of which have their eligibbility threshold set below 40 percent of the poverty level—that is, below $9,540 for a family of four. In other words, one must be subsistence-level indigent in these states to even think about qualifying. And that’s only if one has kids—if one is a non-disabled adult without dependent children, forget it: no matter how poor you are, you don’t qualify for Medicaid.

So: right now, we have passed a law meant to expand coverage to all Americans, and yet it does not reach the poorest of our fellow citizens in nearly half the states in the country. That, on its face, is a major policy failure. No one really wanted to say this during the law’s drafting, but its underlying goal was to get coverage to people in red states where there was no local political will to address the problem. It’s generally preferable to let states address their own needs, but in this realm, only Massachusetts and a few others had even attempted to bring about near-universal coverage. The only way people in Birmingham or Brownsville were going to get covered was if the federal government saw to it that they did.

We know how that worked out. Despite all the obstacles here and in other states, many people tried to enroll over the weekend and on Monday, pushing the total signup number up towards 7 million, the number that had been originally floated around before the healthcare.gov site took the month of October off. Even more people than that now have insurance because of Obamacare, and there may be many more that are not being counted by current metrics. We’ll know what the final Texas number is soon, but we won’t really know what the national numbers are for months. Whatever they wind up being, the reality is that they could and should have been a lot more. All we needed was state leaders who cared about solving a problem more than they cared about making fools of themselves on Facebook. You wouldn’t think that would be so hard to do. Wonkblog and Jonathan Bernstein have more.

Always going backwards

That’s the Republican Party of Texas.

When the Texas Republican Party made a guest worker program part of its 2012 platform, it was hailed as an important step forward for the party. The GOP needed to adjust itself, people said, to appeal to a new generation of Texas voters, and reorient itself toward some kind of immigration reform package. The acknowledgement of the need for a guest worker program was a small move in that direction, but it was significant. So naturally, two years later, some Republicans want to strip it back out of the platform ahead of this year’s state convention in June.

As reported by the Quorum Report’s Scott Braddock [last] Monday, the Texas Eagle Forum’s Cathie Adams has been floating language that would strip the guest worker plank out of the party’s platform. Cathie Adams, as Phyllis Schlafly’s top lieutenant in the state, may seem like a marginal figure to some—she’s spent much of the last several years attempting to persuade tea party groups that major figures in the national Republican party and U.S. government are secret Muslims—but she’s also a former chairwoman of the Texas Republican Party, and she holds a lot of sway with tea party groups around the state.

Adams told Quorum Report that it’s a mistake for the GOP to have anything other than a hard-line position going into the 2014 midterms and 2015 legislative session. Her proposed language unambiguously rejects any congressional moves to address immigration:

THEREFORE BE IT IS RESOLVED that we reject any and all calls for blanket or incremental amnesty and encourage the enforcement of existing state and federal laws regarding border security, national security, immigration and employment.

[…]

Land Commissioner Jerry Patterson, who became prominently identified with the platform change, told Bloomberg Businessweek he was less than certain about his side’s success as he rose to speak in favor of the change. “Well, here’s the end of a political career,” he remembers thinking. But the platform did change. Supporters hailed it as a “bold step toward leadership” on immigration.

But it’s debatable how much that small shift is evidence of a larger one in the GOP. For one thing, it’s never presented as a humanitarian issue—it’s a business issue. The important thing is ensuring a steady supply of labor, not the welfare and well-being of the countless documented and undocumented migrants in the state. “I’m no bleeding heart; I oppose birthright citizenship,” Patterson said later. “But we need the labor.”

Scott Braddock has a copy of the QR story on his site; the Chronicle is now reporting on it as well. That story was published a day before the one-year anniversary of the national GOP autopsy that detailed what they needed to do to deal with demography and shifts in public attitudes going forward. So much for that. This is likely to be a good year for the GOP nationally, with an extremely favorable Senate landscape and turnout patterns that still favor them in non-Presidential years. But 2016 looms as the polar opposite for them, with a brutal Senate scene and the potential Hillary juggernaut. One way or another, they’re going to have to face up to reality. I suspect it’ll take more than one electoral thrashing for that to truly sink in.

Burnam election challenge update

Moving along, but no timeline as yet.

Rep. Lon Burnam

A state district judge from Denton County will oversee a case involving long-time state Rep. Lon Burnam‘s accusations that votes were cast illegally in the Democratic Party primary last month.

State District Judge Robert McFarling was appointed Friday by state District Judge David Evans, the administrative judge for the Eighth Judicial Region. McFarling will replace state District Judge R.H. Wallace.

The Texas Election Code dictates that a judge from outside the county hear a case involving an election challenge.

[…]

Burnam has also filed motions to subpoena former Elections Administrator Steve Raborn and interim Elections Administrator Stephen Vickers.

Raborn announced his resignation in December and will become president of Votec, a company based in San Diego, Calif., that focuses on voter registration and election management software.

Raborn’s motion stated that the elections administrator is neutral, but is required to protect records from unauthorized release and that the elections office is compiling records that can be released publicly.

“Because the documents sought involve the privacy rights of hundreds of people, they cannot be released to the litigants merely to satisfy their curiosity if there is no reason to believe votes were cast by persons who were not entitled to vote, or to believe that persons who were entitled to vote were denied the right to vote,” the motion stated.

His motion went on to say that no mail ballots from District 90 were denied, and that the question is whether there may be persons who voted who may not be entitled to vote.

See here for the background. As I said before, the question Burnam is raising is pretty straightforward – does the elections code as it exists allow for mobile computers to process vote by mail applications? – though obviously open to interpretation. I’ll be surprised if this one doesn’t wind up before the Supreme Court eventually, however it gets decided initially. Again, I think the law should allow what Ramon Romero’s campaign team did, and I think someone should write a bill to clarify the laws in question regardless of how this case is decided. It would be fitting if whoever wins this lawsuit is the one that files the bill.

The CFPB is almost ready to roll out payday lending regulations

I can’t wait to see what they come up with.

Whenever governments start thinking about cracking down on small-dollar, high-interest financial products like payday loans and check cashing services, a shrill cry goes up from the businesses that offer them: You’re just going to hurt the poor folks who need the money! What do you want them to do, start bouncing checks? 

A field hearing held by the Consumer Financial Protection Bureau today was no exception. The young agency has been studying how the industry functions for a couple years and is now very close to issuing new rules to govern it. To start setting the scene, CFPB Director Richard Cordray came to Nashville — the locus of intense payday lending activity recently — to release a report and take testimony from the public.

The report, building on a previous white paper, is fairly damning: It makes the case that “short term” loans are usually not short term at all, but more often renewed again and again as consumers dig themselves into deeper sinkholes of debt. Half of all loans, for example, come as part of sequences of 10 or more renewed loans — and in one out of five loans, borrowers end up paying more in fees than the initial amount they borrowed.

[…]

Passing a rate cap, however, is not the only remedy. In fact, it’s not even possible: The CFPB is barred by statute from doing so.* And actually, the Pew Charitable Trusts — which has been tracking payday lending for years — doesn’t even think it’s the best approach.

“The core problem here is this lump-sum payday loan that takes 36 percent of their paycheck,” says Pew’s Nick Bourke, referring to the average $430 loan size. “The policy response now has to be either eliminate that product altogether, or require it to be a more affordable installment loans.”

Bourke favors the latter option: Require lenders to take into account a borrower’s ability to repay the loan over a longer period of time, with monthly payments not to exceed 5 percent of a customer’s income. That, along with other fixes like making sure that fees are assessed across the life of the loan rather than up front, would decrease the likelihood that borrowers would need to take out new loans just to pay off the old ones.

See here for the background. It’s fine by me if the CFPB takes a different approach than usury caps. States and localities can still do that themselves if they wish, with the CFPB’s rules serving as a regulatory floor. It’s a step forward any way you look at it, with the potential to do a lot more if needed.

Now, the installment loan plan wouldn’t leave the industry untouched. When Colorado mandated something similar, Pew found that half of the storefront payday lenders closed up shop. But actual lending didn’t decrease that much, since most people found alternative locations. That illustrates a really important point about the small dollar loan industry: As a Fed study last year showed, barriers to entry have been so low that new shops have flooded the market, scraping by issuing an average of 15 loans per day. They have to charge high interest rates because they have to maintain the high fixed costs of brick and mortar locations — according to Pew, 60 percent of their revenue goes into overhead, and only 16 percent to profit (still quite a healthy margin). If they were forced to consolidate, they could offer safer products and still make tons of money.

Meanwhile, there’s another player in the mix here: Regular banks, which got out of the payday lending business a few months ago in response to guidance from other regulators. With the benefits of diversification and scale, they’re able to offer small-dollar loans at lower rates, and so are better equipped to compete in the market under whatever conditions the CFPB might impose.

Actually, there are two other potential players here as well: Post offices and WalMart stores, both of which could do a lot to streamline this industry by aggressively competing on price. If that happens to drive a lot of small, inefficient players out of the market, too bad for them. These options would unfortunately require an act of Congress to become reality, and the odds of that are vanishingly small. But the point is that those options exist, and if the regs that the CFPB does put forth winds up squeezing a lot of the existing players, the demand will be there for bigger dogs to come in. In most cases that would be bad, but this is the exception. We’ll see how it goes. And whatever does eventually happen, let’s not forget that if we had less poverty, we’d have less demand for payday lending. Consider that yet another argument for raising the minimum wage.