Cost of Living High in Ashland

Cost of Living High in Ashland

By Lana Bellamy

Making Ends Meet: Group’s Family Budget Calculator Breaks Down Monthly Costs for NKy, Other Regions

Cost for Ky. Family of Four? How About $57,763

Here’s How Much Money You Need To Earn To Get By In Louisville And Surrounding Cities

Do You Make Enough to “Get By” in Kentucky?

Family Budget Calculator Shows What it Takes to Get By Throughout Ky.

Today the Economic Policy Institute released an update to its signature Family Budget Calculator, which shows what’s required for families to attain a secure yet modest standard of living in 618 communities throughout the country, including seven across Kentucky.

The Family Budget Calculator is a stark reminder that many jobs in Kentucky do not pay workers enough to meet their family’s basic needs.

According to EPI, a two-parent, two-child family in Kentucky must earn at least $4,184 a month, or an annual total of $57,763, to make ends meet. Meanwhile, it costs at least $24,906 for a single person without children to meet his or her basic needs, which is well above what a minimum-wage worker earns in a year. For reference, a worker who earns $7.25 an hour earns $15,080 a year before taxes.

A breakdown of the monthly costs for a two-parent, two-child family by location in Kentucky (annual needs in parenthesis)

• Elizabethtown: $4,814 ($57,763)
• Rural areas: $4,834 ($58,005)
• Owensboro: $4,898 ($58,780)
• Bowling Green: $4,935 ($59,218)
• Ashland: $4,996 ($59,949)
• Louisville: $5,064 ($60,764)
• Lexington: $5,074 ($60,883)

While many policy changes are needed for more Kentuckians to achieve a decent standard of living, Kentucky Center for Economic Policy Communications Director Kenny Colston noted that one concrete step the state could make is to raise the outdated minimum wage.

“In no place in Kentucky, from Paducah to Pikeville, does the current minimum wage provide nearly enough income for people to get by,” Colston said. “We encourage our state leaders to recognize reality and pass a statewide minimum wage increase in the next legislative session, which will make a big difference in families’ ability to afford transportation, childcare or other essentials to a productive life.”

EPI’s Family Budget Calculator improves on traditional poverty thresholds by taking into account geographic differences in cost of living and factoring in a broader range of expenses. The federal poverty line, which was created to measure serious economic deprivation, is set at the national level and does not account for community-specific costs.

The Family Budget Calculator includes the cost of housing, food, transportation, child care, health care and other basic necessities such as clothing and household supplies. Costs vary widely by family type as well as geographic area. Notably, among two-parent, two-child families, child care costs exceed rent in the vast majority of family budget areas.

Three major changes were included in this family budget update. In addition to four new family types (single and married couples without children and families with four children), the new health cost calculation reflects premiums available in the health insurance exchanges established by the Affordable Care Act, and the “other necessities” category includes additional items previously excluded, such as housekeeping supplies and telephone services.

For more information on EPI’s family budget in Kentucky contact Kenny Colston at or 502-938-1817. You can view the calculator here.

Indiana Approach to Medicaid Expansion Limits Access to Needed Care

The “Indiana model” for Medicaid expansion has recently been held up as a possible alternative for Kentucky, with supporters arguing that Medicaid recipients should have more “skin in the game” by paying premiums and co-pays for services. However, such an approach could prevent low-income people from getting the care they need — making health problems costlier down the road and creating barriers to sustaining the health coverage gains Kentucky has made in recent years.

Kentucky’s Medicaid expansion has been very successful. It has provided health coverage for more than 400,000 low-income Kentuckians and contributed to the state’s dramatic drop in uninsured rates, from 20.4 percent in 2013 to an estimated 9 percent in the first half of 2015, according to Gallup. Many covered by Medicaid are utilizing preventive care services, which are expected to improve future health outcomes. For instance, in 2014 90,000 Medicaid expansion members received cholesterol screening and 80,000 expansion members had preventive dental care. This impressive uptake in preventive care is expected to help with Medicaid costs in the future as improvements in health occur due to problems being caught and treated early.

Indiana expanded Medicaid through a federal waiver that allows it to implement the expansion differently than other states. For instance, unlike most other states, Indiana’s waiver requires enrollees to pay a monthly premium and some co-pays. The program, called the Healthy Indiana Plan (HIP) 2.0, is unique to Indiana and has not been tried in other states. It builds on a waiver the state used to offer coverage to a small number of low-income residents prior to federal health reform.

HIP 2.0 functions as two different programs for Medicaid-eligible adults who are not elderly or disabled: HIP Plus, a program with few co-pays and more comprehensive benefits but a monthly premium, and HIP Basic, a program for those with incomes below the poverty line who are unable to afford HIP Plus’s premium payments. HIP Basic requires co-payments and provides more limited coverage.

HIP Plan 2.0 comparisonIndiana MedicaidSource: Indiana Family & Social Services Administration, “Healthy Indiana Plan 2.0,” presentation to state budget committee, June 20, 2014.

In order to enroll in the comprehensive coverage offered in HIP Plus, enrollees must pay a monthly premium ranging from $3 to $20 for those with incomes below the poverty line (below $11,670 a year in 2015 for an individual) and set at $25 for people with incomes between 100 and 138 percent of poverty (between $11,670 and $16,105 for an individual in 2015). This means parents in a family of four with incomes just above the poverty line, which is $23,850 for a family of four, would pay $50 a month ($25 for each adult) or $600 a year. Those with no income at all pay $1 a month for Medicaid coverage.

Unlike Kentucky’s Medicaid expansion, Indiana’s:

Locks people out of coverage if they are unable to pay. Those with incomes at or below the poverty line are locked out of HIP Plus if they miss a payment and don’t make it up within 60 days. For the period they are locked out, they are automatically enrolled in HIP Basic, a program with co-payments and fewer benefits (i.e., no vision and dental coverage). If they do not pay the initial premium, they will also be enrolled in HIP Basic, but they must wait 60 days.

Those with incomes between 100 and 138 percent of poverty who miss a payment and don’t make it up within 60 days are also locked out of the program for six months, but they do not qualify for HIP Basic and lose health coverage entirely for that period of time.

HIP Plus members from both income categories may also be responsible for medical debts if they are dropped from the program for failing to make a premium payment.

Does not provide retroactive health care coverage as traditional Medicaid does (for three months prior to application). Such coverage can prevent low-income persons with health problems from becoming buried in medical bills prior to enrollment in Medicaid. That component along with the potential loss of coverage mentioned previously threatens one of the most clearly measured benefits of expanding access to Medicaid: the reduction in catastrophic medical bills. This not only helps with medical bills for those who are uninsured — but has been beneficial for hospitals that have experienced significant drops in uncompensated care.

Does not cover non-emergency transportation to doctor’s appointments, which is covered by traditional Medicaid. Despite having health coverage, transportation is a barrier for many low-income persons who need medical care — especially if public transportation is not available or if a provider is not located close by. In most states, transportation assistance is provided through the Medicaid program for little to no cost to recipients.

Perhaps most importantly, the added cost in the form of premiums and co-pays for very low-income Kentuckians is likely to inhibit access to health care that is the main goal of Medicaid expansion.

In Indiana, those unable to afford monthly premiums are likely not able to afford co-pays they would then have to pay at doctors’ visits. Some will respond by making fewer preventive care appointments and waiting longer to seek care for potentially serious conditions, leading to poorer health outcomes. The more limited coverage of those who can’t afford premiums includes the loss of vision and dental coverage, which means additional health problems can go untreated. Having to provide transportation for doctors’ appointments would also be a significant challenge for some.

According to an extensive body of research, premiums create a barrier for health coverage for many low-income individuals — especially those below the poverty line. For instance, Oregon received approval in 2003 to increase the premiums it charged participants in its Medicaid waiver program and also impose a six month lock-out period for non-payment of premiums; a study found that following these changes, enrollment in the program dropped by almost half. Similar effects occurred with programs in Utah, Washington and Wisconsin.

It is likely that imposing premiums on beneficiaries would lead to fewer low-income Kentuckians enrolling in health coverage at all. The HIP 2.0 model may be even more expensive for some than buying health insurance coverage with the help of tax credits through Kynect, the health insurance marketplace. Meanwhile, given the modest cost-sharing amounts involved, the administrative cost of collecting premiums and co-payments may end up approaching or exceeding the amount collected. Additionally, if drops in preventive care occurred the state would miss out on related health care cost savings due to unmanaged health conditions.

Through the Medicaid expansion and Kynect, Kentucky has made tremendous progress in reducing the number of uninsured and providing greater access to preventive care that can improve health outcomes down the road while providing economic benefits to the state. Before seriously considering an alternative model for Medicaid expansion, Kentucky should closely watch the impact in states like Indiana. Given Kentucky’s success so far, a new model would have a lot to prove.

Pension Needs Far Exceed Likely Revenue Growth in 2017

The state needs to find $580 million more to make its actuarially required General Fund contributions to pension plans in the first year of the next budget, according to information shared with the Public Pension Oversight Board yesterday. But the state is currently expecting only $278 million in new General Fund revenue that same year — or less than half of what it needs for pensions alone — according to a recent draft estimate from the state’s Consensus Forecasting Group.

Presentations from the state budget director and retirement system officials show Kentucky will need $520 million more in order to fully fund the annual contribution to the teachers’ retirement system in 2017. The state stopped making the full required contributions in 2009 and the amount owed has since ballooned as payments were skipped and investment losses from the recession were fully felt.

In addition, the state will need to find $60 million more from the General Fund (and $108 million in total state dollars) in 2017 to make the full contribution to the Kentucky Employees’ Retirement System (KERS), according to the budget director (slightly different numbers were shared by legislative staff and KERS). That amount has increased in part because the system recently lowered its investment return assumption from 7.75 percent to 7.5 percent. A recent analysis of the system actually predicted an even lower rate of return (6.9 percent), meaning the $60 million extra contribution may not be enough. It’s certainly not enough to keep the funded ratio of the system from declining over the next ten years.

As shown in the graph below, the preliminary forecast for revenue growth shows only $278 million in new revenue for 2017. The state currently also expects to have some money in the rainy day fund — roughly $400 million by the end of this budget year if the forecast holds — though that makes for a still-small rainy day fund according to what experts say is needed to prepare for recessions.

Given the size of Kentucky’s pension liability, the problems with our tax system and the needs in other areas of the budget, we won’t be able to grow our way out of this problem. We need tax reform that fairly raises more revenue in order to meet our obligations to teachers and employees while also better funding our schools, health and other critical services.

general fund revenue

Source: KCEP analysis of Office of the State Budget Director data.

Don’t Trust the Unemployment Rate: Coal Counties Edition

Kentucky is celebrating its drop in unemployment rate, which at 5.2 percent as of July is hovering at a level not seen since 2004.

But since the unemployment rate doesn’t count as unemployed those who aren’t currently seeking work, it overstates how good things are. This problem can be seen by looking at Kentucky’s coal counties, which have had among the state’s biggest declines in unemployment rates the last two years, even while facing a major economic crisis in the loss of coal jobs.

As seen in the table below, the 17 counties with the biggest decline in unemployment rate in the two years prior to June 2015 (the latest month available at the local level) are all in eastern Kentucky. The biggest drop was in Harlan County, which saw its unemployment rate drop from 19.2 percent to 11.1 percent, for an 8.1 percentage point drop.

But as the second column in the table shows, every one of those counties has fewer people employed than two years ago. Counties like Harlan and Letcher have seen among the biggest percentage decline in the number of people with jobs across Kentucky counties.

The reason is obvious: a big loss in coal jobs with few other local employment options for dislocated coal miners to move into.

Kentucky should be glad of the economic progress it has made in certain regions and sectors and continue to build on those successes. But we should temper that with a serious conversation about doing much more to create more jobs in rural areas, especially coal counties. Support for the Power+ Plan, which is gaining the endorsement of local governments in eastern Kentucky, is a great place to start.

coal counties table

Source: KCEP analysis of Bureau of Labor Statistics data.

Taxpayers Foot the Bill for Low Wages, Lack of Opportunity

Taxpayers Foot the Bill for Low Wages, Lack of Opportunity

By Herald-Leader editorial staff