Political Action Update

February 20, 2006

Health Savings Accounts: Bad Medicine for Working Families

Tax Breaks on Savings Fail to Lower Costs or Provide Coverage for the Uninsured

The crisis in U.S. health care is undeniable.  Costs are rising three times the rate of inflation, employers are shifting health care costs onto employees or dropping coverage altogether, and 46 million Americans have no health care coverage.

President Bush’s solution to these problems—health savings accounts.  Convinced that the U.S. health care crisis is the result of people having too much insurance and therefore failing to be “smart shoppers” for their health care needs, the president is calling for (surprise) tax breaks to encourage people to save money to pay for their own health care instead of using traditional insurance coverage.

Health care based on health savings accounts would be a disaster for working families, a giant step backward that would shift costs away from employers and onto employees and their families.  Many people would go without needed care.

More Harm than Good

Despite the administration’s rhetoric, health savings accounts will do nothing to control skyrocketing health care costs or to reduce the number of uninsured Americans.   For those who currently have health care coverage, health savings accounts will make matters worse.

·  Health savings accounts provide the most benefit to the healthy and the wealthy.  When the healthy and wealthy exit the traditional health insurance system, premiums for those left behind will go through the roof.

·  Since most uninsured Americans earn less than $25,000 per year, they are not able to set aside large amounts of money to put into health savings accounts.

For them, the tax subsidy that makes health savings accounts attractive would be of little or no benefit.

·  There is evidence that the quality of health care will decline in a system using health savings accounts.  An Employee Benefit Research Institute study has shown that patients earning less than $50,000 per year who face the choice of keeping money in their health savings account or spending it on health care are twice as likely to forgo needed medical treatment than are people in traditional health care plans.  When people skip needed medical treatment, they often need more expensive treatment later on, when they get sicker.  The resulting costs are greater than the costs for early treatment would have been.

So, if health savings accounts do little or nothing for uninsured Americans, if they do little or nothing for the poorest and sickest Americans, if they do little or nothing to control health care costs, and if the cost of the preferential tax treatment adds billions to the deficit, then who benefits from the accounts?  Answer: The same people who gave us the Medicare prescription drug disaster—the investment, insurance, and profit-driven drug industries—would all reap a financial bonanza.  Like President Bush’s proposal to privatize Social Security, which was a transfer of retirement risk onto individuals, his health savings account plan would transfer health care risk onto individuals.  Also like Bush’s Social Security privatization scheme, the political push for health savings accounts is being bankrolled by Big Business, the banking and insurance industries.

Republican legislators in Iowa are proposing schemes similar to Bush’s  to be offered at the state level.

Statement by AFL-CIO Secretary-Treasurer Richard L. Trumka on the 2005 Trade Deficit

America’s gargantuan trade deficit is a weight around American workers’ necks that is pulling them into a cycle of debt, bankruptcy and low-wage service jobs as America’s wealthy and CEOs keep flying high - - and it’s only getting worse. Today, the 2005 annual trade deficit came in at an astronomical $725.8 billion, up more than 15% since last year’s record-breaker. This trade deficit is unsustainable - - we cannot sit back as other nations produce the world’s goods and we continue to lose family-supporting, middle class jobs.
America’s workers are reeling from stagnant wages, attacks on their health and pension benefits, and the loss of almost 3 million manufacturing jobs and hundreds of thousands of outsourced white-collar jobs over the last five years. Yet the Bush Administration doesn’t have a plan to reverse this devastating trend and the policies that feed it.

Such a huge trade gap undercuts domestic manufacturing and destroys good U.S. jobs. Our trade deficit with China, the largest with any country, swelled to an all-time high of more than $200 billion. And, China continues to intervene in currency markets to make sure the yuan stays right where it is—about 40 percent undervalued compared to the dollar. Meanwhile, poorly conceived trade deals like NAFTA and its progeny have accelerated the steady stream of good American jobs being shipped overseas.

The bottom line is that our nation’s dismal trade policies are leading us on a dangerous and unsustainable path, one that encourages and rewards irresponsible corporate behavior, while leaving workers, family farmers, domestic producers, and entire middle class communities behind.

Now, more than ever, we need an urgent and aggressive policy response, starting with trade, tax and currency policies that will allow American businesses and workers to compete and survive in the global economy. Congress can start by giving serious consideration to invoking the WTO’s import surcharge emergency provision to help bring our trade deficit under control. The second step is for Congress to reject the flawed trade agreements like NAFTA and CAFTA. These deals reflect precisely the wrong model for trade: excessive protection of corporate rights and a flimsy fig leaf for workers, farmers and the environment. The Bush administration and Congress must stop giving tax and financial incentives to corporations to ship jobs offshore. Finally, we must take action on currency manipulation by China, Japan and other nations.

How many more jobs and industries must we lose before this Administration wakes up and gets our economy off this devastating path?

Bills of Interest….

HF 2261 DENTIST TAX DEDUCTION*  Establishes an income tax deduction of 50% of the difference between the reimbursement rate and the normal fee rate for dentists who provide services reimbursed by Medicaid.  IFL opposes.

HF 2281 LEAVE FROM WORK  Includes members of the National Disaster Medical System called to service under provisions which protect the jobs of military personnel who are called to active duty.  IFL supports.

HF 2328 REQUIRED WORK MEETINGS  Prohibits an employer from requiring employees to attend meetings if the primary purpose of the meeting is to tell employees about the employer’s opinion on religious or political matters.  IFL supports.

HF 2348 PRISON RECOMMENDATIONS  Relates to developing a plan from the governor’s task force on the overrepresentation of African-Americans in prison.  IFL supports.

HSB 623 VOTER ID  Requires all voters to show a drivers license or a state ID; requires a photocopy of a voter’s ID when voting by absentee ballot.  IFL opposes.

HSB 642 SALES TAX REBATES*  Allows the Department of Revenue to rebate the sales tax collected at a significant destination project for the first ten years of the project, up to $2.5 million.  IFL opposes.

HSB 651 CAPITAL GAINS ELIMINATION*  Eliminates the taxation (state income tax) of an individual’s net capital gain.  IFL opposes.

HSB 652 LONG TERM CAPITAL GAINS*  Exempts from state income tax a capital gain from the sale of tangible personal property that has been held for three years or longer.  IFL opposes.

HSB 653 CAPITAL GAINS DEDUCTION*  Creates a state income tax deduction of 50% of an individual’s net capital gain.  IFL opposes.

HSB 654 CAPITAL GAINS HOLDING PERIOD*  Requires that the computation of the holding period for the purposes of the capital gains deduction under Iowa Code section 422.7, subsection 21, be determined in the same manner as the holding period of assets is determined for federal tax purposes under Internal Revenue Code section 1223.  IFL opposes.

HSB 655 SALES TAX ON EQUIPMENT*  Exempts from sales and use taxes central office equipment and transmission equipment sold or rented for use in transporting communications services by local exchange carriers, competitive local exchange service providers, certain franchised cable television operators, mutual companies, cooperatives, municipal utilities and other entities not subject to rate regulation, long distance companies, and commercial mobile radio services.  IFL opposes.

SF 2152 CAR TITLE LOANS  Limits the interest rate for a loan secured by a car title at 21%.  IFL supports.

SF 2198 SAFETY STANDARDS Establishes safety standards for contractors wishing to bid on state contracts.  IFL supports.

SSB 3112 ALLOWABLE GROWTH Establishes a state percent of allowable growth of 6% for purposes of the state school foundation program for the budget year beginning July 1, 2007.  IFL supports.

SSB 3123 PREVAILING WAGE Provides for the establishment and payment of area wage standards for construction contractors.  IFL supports.

SSB 3126 ANTI-BULLYING Requires school boards to adopt and annually review a policy prohibiting bullying and harassment of all students.  IFL supports.

 *Iowa Federation of Labor, AFL-CIO tax policy is based on three principles: fairness, equity, and adequacy.  Due to funding shortages bills offering tax cuts, credits and/or exemptions fail the adequacy test.  Some may be unfair or inequitable as well.

 Capital Income More Concentrated at the Top Than Ever Before

Republicans in Congress are currently considering whether to extend reductions in the tax rates on capital gains and dividends beyond their scheduled expiration date at the end of 2008.

Proponents of extending the cuts argue that because stock ownership in the U.S. is widespread, the benefits of extending tax cuts on capital gains and dividends will be widespread as well.

Those claims are disputed by studies which show that the large majority of the benefits from such an extension would go to very high-income households, the top one percent whose incomes average over $701,500 after taxes.

The Congressional Budget Office released data in December 2005 that showed that capital income—income from interest, dividends, rents, and capital gains—has become considerably more concentrated in recent years among the top one percent of the population. 

In 2003, the top one-percent of the population earned 57.5 percent of all capital income. As recently as 2001 the number was below 50 percent.  So, the very wealthy have gone from earning less than half of the nation’s capital income in 2001, to earning 57 percent in 2003.

This huge gain by the wealthy is, of course, not without a flip side.  In 2003 the bottom 80 percent of the population received only 12.6 percent of the capital income earned in the nation, compared with the 23.5 percent that had been earned by the bottom 80 percent as recently as 1989.

The bottom line—extending the tax cuts on capital gains and dividend income will make the rich richer and the vast majority, 80 percent of all Americans, poorer.

 Source: Center for Budget  and Policy Priorities

The Late Night Comics Get It…

From Jay Leno: “The Pentagon announced plans to build new long-range weapons as a deterrent to China.  Unfortunately we don’t have any factories left in this country so the weapons will be built in China.”

Workers’ Compensation

The Labor Center’s three-day workers’ compensation program covers the basics of Iowa’s workers’ compensation system and is intended for union officers, stewards, representatives, and interested union members.  Topics include:

• Detailed review of Iowa’s workers’ compensation law

• The union’s role in a workers’ compensation claim: advice to injured workers, handling grievances and advocating for injured workers

• Industrial disability (I.D.) benefits: building a case for I.D. and how “functional impairment ratings” relate to I.D. benefits

• Apportionment: how recent changes in the law will affect injured workers

• Occupational diseases: how to recognize them and how to pursue workers’ compensation claims

• Legislative Update

• Bargaining workers’ compensation language

WHEN:	Monday - Wednesday, April 17 - 19, 2006
WHERE:	Sheraton Hotel & Conference Center - downtown Iowa City, Iowa  (210 South Dubuque Street)
TIME:	Sign-in from 8:30 a.m. to 9:00 a.m. on April 17.  Program ends at 3:45 p.m. on April 19
COST:	$200 per person (does not include meals or housing, see below)
DEADLINE:	Please Register by March 17, 2006

Register: by phone (319) 335-4146, by FAX (319) 335-4464

or by e-mail at  www.continuetolearn.uiowa.edu/laborctr

Housing Policy: You will need to reserve and pay for your own housing directly with the Sheraton Hotel at (319) 337-4058.  A block of rooms is being held under “Workers’ Compensation School” until March 17, at a rate of $83 per night, plus taxes.

NOTICE

Due to the Iowa Federation of Labor, AFL-CIO Annual Legislative Conference on February 27 - March 1

 Meeting Cancelled

There will not be a  Monday Morning Lobbyist Meeting on February 27

Location Note

February 27

Hospitality

will be held at Adventureland Inn

5:30 - 8 p.m.

Iowa Federation of Labor, AFL-CIO

  C.O.P.E. Convention

March 25

 USW Local 310 Hall

 125 NW Broadway

Des Moines, Iowa