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Medicaid and CHIP: Filling in the Gap of Children’s Health Insurance Coverage

By Lara Shore-Sheppard·January 22
Williams College

The Issue:

Together, Medicaid and the Children's Health Insurance Program (CHIP) have become an integral source of health insurance for children in the United States, providing coverage for more than one in three children in 2016. While there is bipartisan support for CHIP, the funding for the program must be renewed by Congress periodically for states to continue its provision, raising uncertainty.

The Facts:

  • Since Medicaid initially only covered children from the very poorest families, coverage rates across the income distribution had a “U” shape: the poorest children were eligible for Medicaid, and children in high-income families received coverage through a parent’s employer-sponsored coverage, while children in families with incomes between 50 and 200 percent of the poverty line had a considerably higher probability of being uninsured.
  • CHIP was an effort to fill in the gap of coverage for children from low-income families who are above the income threshold that would make them eligible for Medicaid. The clear improvement in coverage rates between 1997 and 2012 provides support for the argument that CHIP, along with expansions of Medicaid, increased the health insurance rates among children (see chart).
  • Research has found that children who become eligible for public insurance through expansions in Medicaid or CHIP are more likely to see a doctor at least once a year, are more likely to be in better health as teenagers and as adults if they were eligible for public insurance as young children, and have lower mortality as teens and adults.

What this Means:

CHIP is a key provider of health insurance for low-income children and has been an important contributor to the achievement of near-universal health insurance coverage for children in the United States. There has been a clear improvement in child well-being as result of Medicaid and CHIP. However, the renewable block-grant nature of CHIP funding leads to periods of uncertainty for families and states when the program comes due for renewal, threatening the health insurance coverage of large numbers of children. The threat of coverage losses for children arising from failure to address the program’s funding suggests that if recent policy proposals to make Medicaid a block-grant program were to be implemented, this could introduce additional periods of uncertainty and instability for children’s health care coverage.

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Automation and the Growing Importance of Social Skills in the Labor Market

By David Deming·January 16
Harvard Kennedy School and Harvard Graduate School of Education

The Issue:

Employment growth in high-paying jobs has slowed since the year 2000, and this has been particularly true for jobs in science, technology, engineering and mathematics (STEM). One possible explanation is that rapid advances in artificial intelligence and robotics are making it possible for a wider range of technically demanding jobs to get automated. High-paying jobs increasingly require skills that are more difficult to automate, such as those that involve significant interpersonal interaction.

The Facts:

  • In the 1990s, computers replaced and changed jobs requiring routine tasks such as bookkeeping and clerical work. Yet computers also made higher skilled workers more productive, leading to a “hollowing out” of the labor market and increased polarization and inequality.
  • Since 2000, growth in the share of workers employed in high-skill "cognitive" occupations slowed down. I find that the changing trend is driven by a decline in the share of jobs in science, technology, engineering and mathematics — the so-called STEM fields — which shrank by a total of 0.12 percentage points as a share of the U.S. labor force between 2000 and 2012, after growing by 1.33 percentage points over the previous two decades. While the share of workers employed in some STEM occupations such as computer science and programing rose, it declined in many others such as engineering, architects, and physical scientists (see chart).
  • Jobs requiring social skills have experienced strong relative employment and wage growth. Between 1980 and 2012, jobs requiring high levels of social interaction — those to the right of the vertical bar in the chart below — grew by nearly 12 percentage points as a share of the U.S. labor force. During the 1980-2012 period, wages for jobs requiring both high math and high social skills grew by 26 percent while those that required only high math skills grew only by about 5.9 percent.

What this Means:

Over the last three decades, jobs that combine both social and math-intensive skills have seen strong wage growth. They have also grown as a share of all U.S. jobs. In contrast, many STEM occupations that require high math skill but very little social skills have fared poorly. There is growing demand for workers who are flexible and adaptable and who are skilled at working in team-based settings. All of these skills are still difficult to automate.

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Employment and Poverty

By Ann Huff Stevens·January 7
UC Davis and Center for Poverty Research

The Issue:

For the past two decades, U.S. anti-poverty policy has coalesced around the idea that work should be at the center of anti-poverty programs. In this environment, it is important to understand how many of those who are poor are able to work, and to what extent working allows people to escape poverty.

The Facts:

  • Important shares of those living in poverty are children and elderly. Among the poor aged 18 to 64, 40.8 percent worked for some part of the year and many of those not working reported barriers to paid work, or reported engagement in other productive activities (see chart).
  • An estimated 8.6 million people had income below official poverty thresholds despite working (or looking for work) for more than half the year. Among families with children, the working poverty rate is substantially higher, reflecting the higher poverty thresholds associated with larger families.
  • The official poverty thresholds do not take into account some important factors, including childcare costs, which have a large impact on disposable family income.
  • Low wages at the bottom of the earnings distribution and the low probability of working full-time for a full year in low wage jobs increase the risk of poverty for workers. For the bottom 10 percent of wage earners, around 30 weeks of full-time work per year are needed to generate earnings equal to the poverty line for a single individual. For a family of three, 50 or more weeks of full time work would be required to reach the poverty line.

What this Means:

Calls to increase work requirements among those receiving government assistance should recognize that most poor adults are already working, looking for work, or are disabled or ill. Increasing work among the poor may require addressing barriers to work including work-limiting disability or illness. While work may be a policy goal on its own, requiring work will not necessarily raise families above the poverty line. Given the level of wages in the lower fifth of the wage distribution, many workers, especially those who are parents, will need 50 weeks or more of full-time work to reach the poverty line.

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Tax Reform Threatens Infrastructure Investment

By Daniel Bergstresser·December 26
Brandeis University

The Issue:

Infrastructure is essential for economic activity and growth, but our nation has accumulated an infrastructure “debt”. In February 2017, President Trump announced that he would ask Congress to approve programs designed to stimulate $1 Trillion in infrastructure investment. The recently passed tax bill may create some challenges for the municipal bond market and the infrastructure sector.

The Facts:

  • The municipal bond market has been an important source of financing for infrastructure investment. Proceeds from bond issuance paid for about 32 percent of infrastructure investment in 2015, with the rest of the funding for infrastructure coming directly from a mix of sources that includes the federal government, state and local governments, and dedicated fees.
  • The tax-exemption for the interest of municipal bonds means that issuers of municipal bonds can pay lower yields than can issuers of otherwise equivalent taxable bonds. The fact that marginal tax rates have fallen both for individuals and especially for corporations will mean that the relative yield on municipal bonds will have to rise in order for the bonds to remain competitive as an investment choice, making financing more expensive for infrastructure projects.
  • In addition, the tax legislation eliminated the tax deduction for “advance refunding” municipal bonds. The loss of the advance refunding provision raises the potential cost of issuing municipal bonds by limiting the ability to refinance debt in response to decreasing interest rates.
  • Deliberations regarding the tax bill raised uncertainty with respect to the tax-exempt status of Private Activity Bonds (PABs) going forward. PABs are tax-exempt bonds issued to finance the construction of private-sector facilities that have a significant public purpose and are a particularly important tool for financing low-income housing. Even though PABs survived in the new tax law signed by President Trump, there have already been signals from Congressional Republicans that the question of tax exemption for PABs may be revisited very soon.

What this Means:

The new tax law will create some immediate challenges for the municipal bond market. A medium-to-longer term impact will come through its impact on our federal fiscal position. The overwhelming balance of opinion among economists outside the administration is that the new tax bill will significantly increase the federal debt. If one begins with the presumption that this debt must be repaid, then the resources will eventually have to come from somewhere. The need to raise additional funds means that the tax exemption for important municipal bond market sectors remains very credibly threatened in the future. This drain in resources to repay the federal debt does not augur well for future investment in infrastructure and for our ability to close our existing infrastructure gap.

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Catch-22? Mass Shootings and Gun Control Legislation

By Phillip Levine and Robin McKnight·December 14
Wellesley College

The Issue:

It has become conventional wisdom that gun sales spike every time an all-too-common mass shooting occurs in the United States. However, while gun sales do spike after certain mass shooting events, they do not seem to respond in the same way to others. Our research shows that the political discussion that sometimes follows these events appears to play a contributing role in higher-than-expected gun sales. Moreover, this greater exposure to guns can have the unintended consequence of increasing the incidence of accidental gun deaths.

The Facts:

  • The Sandy Hook school shooting in Newtown, CT, on December 14, 2012 and the San Bernardino terrorist attack on December 2, 2015 are the only two mass shootings that generated large spikes in gun sales, over and above the gun sales you would normally expect (see chart). Those two shootings led to short-term increases in firearm sales of 3 million and 1.7 million guns, respectively.
  • One notable feature of the increase in gun sales following the Sandy Hook and San Bernardino tragedies is the length of time over which gun sales remained elevated. The duration of the sales response coincided with the duration of the political debates regarding gun control legislation that took place at those times.
  • A similar pattern is present in Google search terms reflecting interest in purchasing guns. The Pulse Nightclub shooting in Orlando and the recent shooting in Las Vegas generated short-term spikes compared with those associated with Sandy Hook and San Bernardino (see chart below). Moreover, they did not translate into a noticeable increases in sales. These data make clear that the aftermaths of Sandy Hook and San Bernardino were unique insofar as they each led to a longer duration of interest in purchasing guns and to a substantial spike in gun sales.
  • The increase in gun exposure that followed from the Sandy Hook event and the associated political attempts to restrict access to guns, had the unfortunate and unintended consequence of increasing the number of accidental gun deaths, particularly among children. In our recent research we find that the aftermath of the Sandy Hook school shooting led to the accidental firearm deaths of 60 individuals, including 20 children, over a four-month period. That represents the same number of children and considerably more adults than died in the shooting itself.

What this Means:

All of these findings generate a troubling catch-22 in gun policy. Attempts to prevent firearm tragedies by restricting gun access can potentially lead to additional firearm tragedies if they lead to increased gun exposure through increased sales and increased handling of guns. The presence of those costs complicates the policy goals of gun control legislation.

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