Last Wednesday, the Biden administration announced its infrastructure bill—the $2.3 trillion “American Jobs Plan” that includes $400 billion for home caregivers among its domestic spending programs.
As proposed, the American Jobs Plan will be implemented over the next 8 years and paid for by higher corporate taxes for the next 15 years. Specifically, it is funded through the companion Made in America Tax Plan that increases the corporate tax rate to 28% from 21%, imposes a 15% minimum tax on corporate book income levied on a firm’s financial profits instead of taxable income for firms with revenue over $100 million, raises the minimum tax on the global income of the multinationals from 10.5% to 21% and beefs-up enforcement efforts by the Internal Revenue Service against corporate tax evasion.
It’s timely. And it’s likely to pass in some form this spring. We know:
U.S. INFRASTRUCTURE NEEDS ATTENTION
In its 2021 Report, the American Society of Civil Engineers graded the current U.S infrastructure a C-:
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5 category grades — aviation, drinking water, energy, inland waterways, and ports — went up, while just one category — bridges — went down.
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Stormwater infrastructure received its first grade: D.
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11 category grades were stuck in the D range, a clear signal that our overdue bill on infrastructure is a long way from being paid off.
PUBLIC SUPPORT INFRASTRUCTURE IMPROVEMENT IS STRONG
Polling shows the majority of voters support infrastructure investments:
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54% of voters said they support making improvements to America’s infrastructure funded by taxes on those making more than $400,000 per year and increases to the corporate tax rate, 27% support improving the country’s infrastructure if made without higher taxes, and 6% say they don’t back infrastructure improvements. Among Democrats, support is 73%; among Independents, 52% and among Republicans, 32%. (Morning Consult/Politico).
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98% of local infrastructure ballot initiatives passed in November 2020. (Ballotpedia)
BUT EMPLOYERS WILL PUSH BACK
Justification that corporate America should pay its fair share to fund this plan will be a hot debate. According to the nonpartisan Tax Foundation, raising the rate to 28% combined with state taxes would increase the rate to 32.4%– the highest of the OECD countries vs. 25.8% today. They believe the estimated $2 trillion in additional corporate tax receipts it will produce will fall short of the actual costs of the spending plan and they’re skeptical.
And practically many companies don’t pay the full rate because the complexity of the tax code enables rebates, accelerated depreciation and allowable deductions that lower what they actually pay:
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Per the Institute on Taxation and Economic Policy, 55 of the Standard and Poor’s 500 paid no federal income taxes last year. They include FedEx, Nike, Dish, Duke Energy and Salesforce and others whose would have paid $8.5 billion in federal income taxes but instead received $3.5 billion in tax rebates.
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Last year (2020), Amazon’s effective rate was 9.4%; Netflix was 1% and so on.
Nonetheless, employers—large and small– are not keen to pay the tab for the American Jobs Act despite its potential to stimulate long-term economic growth. And it’s particularly unsettling to big companies.
Expecting big business to embrace higher taxes “as their fair share” is certain to spark added antipathy toward the healthcare system they consider complicit in government waste. Health benefits are a big deal to corporate America and costs a major concern. Notably, 89% of big companies provide health benefits to their employees vs. 48% of small and mid-sized organizations and these benefits, thus contributing disproportionately to the operating margins in hospitals and drug companies. That’s why 87% favor drug price regulation, 75% support regulation of hospital prices and 44% believe a public option might be helpful vs. 15% who oppose the concept.
MY TAKE
The American Jobs Plan is likely to become law despite pushback from deficit hawks and large employers. For healthcare, it’s a mixed bag.
Its investments in broadband, affordable housing and clean air and water, violence prevention, pandemic preparedness and scientific research are vital to addressing health disparities in rural and under-served populations is good news for healthcare.
Its investment of $18 billion to upgrade the VA’s 170 hospitals is a good start. Modernizing health services and resources for the 9 million vets who depend on it remains unaddressed.
Its investment in home and community-based care that lifts wages for the 3.5 million direct care workforce is good for the long-term care operators and their workers. Currently, 13% live in poverty, 56% depend on public assistance programs and their average hourly wage last year was $12.95 ranks at the bottom in healthcare workforce.
And its investments in infrastructure—roads, bridges and travel—are good for everyone.
But there’s nothing in it for hospitals brutalized by the pandemic nor a significant boost for expanding telehealth access which accounted for 30% of all outpatient visits last year.
There’s little in it to modernize the healthcare workforce though it’s the biggest source of job growth in the U.S. economy.
It raises the likelihood that large employers will become even more aggressive in managing their health costs vis a vis value-based contracts with providers and whole person care programs for employees is an unwelcome consequence.
And it raises the tax burden on virtually every private company in healthcare– those that operate globally and those that are local– ultimately passing these added costs through to taxpayers, consumers, patients and enrollees.
So, for the healthcare industry, the American Jobs Plan is a mixed bag. And it puts healthcare in the crosshairs for big business.
Paul
RESOURCES
“The American Jobs Plan”; March 31,2021; The White House
“A Comprehensive Assessment of America’s Infrastructure”; March 3, 2021; American Society of Civil Engineers
“Raising Taxes on Wealthy Americans and Corporations to Fund Biden’s Infrastructure Plan Is OK With Over 1 in 2 Voters”; March 31, 2021; Morning Consult
“Evaluating Proposals to Increase the Corporate Tax Rate and Levy and Minimum Tax on Corporate Book Income”; February 24th, 2021, Tax Foundation
“Pulse of the Purchaser 2021-2023: Directions in Workforce, Benefits, Health Equity”; March 31, 2021; National Alliance of Healthcare Purchasers Organizations
“2021 Large Employers’ Health Care Strategy and Plan Design Survey” Business Group on Health
“2020 Employer Health Benefits Survey” Kaiser Family Foundation
Jim Tankersley “Biden Details $2 Trillion Plan to Rebuild Infrastructure and Reshape the Economy”; March 31, 2021; New York Times
“Biden’s $2.3 Trillion Infrastructure Plan Takes Broad Aim”; April 1, 2021; Wall Street Journal
CORONAVIRUS NEWS
CDC Update
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The Centers for Disease Control and Prevention said on Friday about 101.8 million people have received at least one dose of a Covid-19 vaccine, including about 58 million people who have been fully vaccinated by Johnson & Johnson’s single-dose vaccine or the two-dose series made by Pfizer-BioNTech and Moderna.
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On March 29, the White House announced that by April 19, 90% of the adult U.S. population will be eligible for a COVID-19 vaccination and have a COVID-19 vaccination site within 5 miles of their home.
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The Covid-19 boosted the age-adjusted death rate by 16% in 2020–the first such increase since 2017. Covid-19 was the third leading cause of death last year among all Americans replacing suicide as one of the top 10 leading causes of death.
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There’s growing concern about a “fourth surge” resulting from the spread of variants that have been discovered in cases in CA, OR, MI, NY and FL. The CDC is monitoring five “variants of concern”: B.1.1.7 (unknown transmissibility from the U.K.), P.1 (50-70% more transmissible from Japan/Brazil), B.1.351 (50% more transmissible from South Africa), B.1.427 and B.1.429(20% more transmissible from California).
U.S. Centers for Disease Control and Prevention
Morning Consult: 1 in 4 Americans Knows Someone who Died of Covid-19
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24% of U.S. adults knows someone who’s died of COVID-19—up from 17% in December
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43% say a family member or close friend has had COVID-19–up from 30%.
Morning Consult survey of 2200 U.S. adults conducted December 10-12, 2020 and March 25-29, 2021
Pfizer Vaccine Effective for Adolescents
Last Wednesday, Pfizer and BioNTech announced that their coronavirus vaccine was found to be 100% effective at protecting against COVID-19 in a trial of more than 2,260 children between the ages of 12 and 15. The data will now be submitted to the FDA as an amendment to the vaccine’s emergency use authorization for people 16 and up, in addition to other regulators around the world. The companies also announced that the first doses were administered last week in a trial of children ages six months to 11 years.
“Pfizer-BioNTech Covid-19 Vaccine 100% Effective in Study of 12- to 15-Year-Olds, Companies Say”; March 31, 2021; Wall Street Journal
KFF Tracking Poll: 61% Vaccinated but 17% Hesitant
According to the latest Kaiser Family Foundation Tracking Poll conducted March 22-25:
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61% of Americans have either been vaccinated or intend to be as soon as they can.Republicans, white evangelical Christians and rural residents remain most likely to say that they won’t get the vaccine, while older Americans, Democrats and college graduates are most enthusiastic.
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17% of Americans are still taking a “wait and see” approach to the vaccine, down from 39% in December. The share of Americans who say they definitely won’t take the vaccine has remained about the same since December and was at 13% this month.
Kaiser Family Foundation Tracking Poll
INDUSTRY NEWS
Study: Government-Funded Biomedical Research not Shared Among Major Universities
Universities Allied for Essential Medicines analyzed the ethics policies and business practices of 60 prominent biomedical research universities. Highlights:
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22% (13 schools) committed to specific global access licensing strategies and 12% adopted licensing that places a priority on generic production of medicines for lower-income countries,
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80% do not devote 2% or more of their research funding to neglected diseases.
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24 of the 60 received an F grade.
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93% have policies or mechanisms in place to disclose some or all portions of their clinical trials funding. And while most universities did not report committing to non-exclusive licensing agreements, a few signed some.
U.S. University Report Card- Global Health Grades
Morning Consult: American Rescue Plan Improves Household Finances
American Rescue Plan stimulus checks released last month improved household finances:
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In March 2021, 17% of adults lacked adequate savings to pay their basic expenses for a full month, down from 22% in February and 25% in November. The March value is the lowest reading since Morning Consult began tracking this metric May 2020.
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The number of financially vulnerable Americans is at a 12-month low. In March, 17% of adults lacked adequate savings to pay their basic expenses for a full month, down from 22% in February.
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Job insecurity is also at a post-pandemic low. Among employed workers in March, 15% expect to experience a loss of pay or income over the next four weeks, down from 17%in February.
“The Stimulus-Fueled Economic Boom Is Upon Us, Strengthening U.S. Consumers’ Finances”; March 31, 2021; Morning Consult
Gallup: 18% Unable to Afford Care, Caps on Healthcare Spending Popular
In the West Health-Gallup survey conducted prior to the American Rescue Plan’s passage:
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18%, (46 million) report that if they needed access to quality healthcare today, they would be unable to pay for it.
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35% of low-income earners (household income under $24,000) were unable to pay for care in prior 12 months vs. 7% in high income households ($180,000).
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80% of Americans — including over 70% of Republicans — favor caps on out-of-pocket costs for both prescription drugs and general healthcare services for those who are insured by Medicare. And lowering the age of Medicare eligibility to 60 is supported by 65% of adults, including 60% of political independents and 42% of Republicans.
“In U.S., An Estimated 46 Million Cannot Afford Needed Care”; March 31,2021; Gallup
Study: Healthcare Workforce Less Diverse than Population
The George Washington University researchers analyzed data from the 2019 American Community Survey (ACS) to compare the diversity of 10 health care occupations (advanced practice registered nurses, dentists, occupational therapists, pharmacists, physical therapists, physician assistants, physicians, registered nurses, respiratory therapists, and speech-language pathologists) with the diversity of the US working-age population. Findings:
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Among the 10 professions assessed, the mean diversity index for Black people was 0.54 in the current workforce and in the educational pipeline.
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In 5 of 10 health care professions, representation of Black graduates was lower than representation in the current workforce.
Salsberg et al “Estimation and Comparison of Current and Future Racial/Ethnic Representation in the US Health Care Workforce”; March 31, 2021; JAMA Network
Study: 13% of Scripts Include Out-of-Pocket Offset for Consumers
Johns Hopkins researchers analyzed pharmacy transactions for 631, 249 individuals who used at least 1 offset between October 1, 2017, and September 30, 2019 using IQVIA’s Formulary Impact Analyzer. Highlights:
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12.8% of prescriptions had an offset used. Of these, 50.2% originated from a pharmaceutical manufacturer, 47.2% originated from a pharmacy or pharmacy benefit manager (PBM), and 2.6% originated from a state assistance program.
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Most manufacturer offsets (88.2%) were for branded products, while most pharmacy-PBM offsets were for generic products (90.5%).
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The median manufacturer offset was $51.00, covering 87.1% of out-of-pocket costs; the median pharmacy-PBM offset was $16.30, covering 39.3% of out-of-pocket costs.
Sen et al “Characteristics of Copayment Offsets for Prescription Drugs in the United States”; March 29, 2021; JAMA Network
Study: Food Vouchers Increase Fruit and Vegetable Access in Low-Income Populations
Harvard Chen School of Public Health-led researchers analyzed 671 adult users of community-based produce voucher programs ($20 per month in produce vouchers for 6 months). Findings:
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An increase in fruit and vegetable intake of 0.22 cup-equivalents per day overall was observed.
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Use of vouchers was associated with less of an improvement in fruit and vegetable intake and a lower composite nutrition index.
Basu et al “Comparison of Fruit and Vegetable Intake Among Urban Low-Income US Adults Receiving a Produce Voucher in 2 Cities”; March 22, 2021; JAMA Network
