NASBO Releases Fall 2020 Fiscal Survey of States

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NASBO Releases Fall 2020 Fiscal Survey of States

On December 17, 2021, the National Association of State Budget Officers (NASBO) released its semi-annual report, Fall 2021 Fiscal Survey of States. The report updates information on the states’ fiscal conditions, including aggregate and individual state data on general fund receipts, expenditures, and balances. The survey was conducted by NASBO and completed by state budget officers in all 50 states.

The report highlights states’ enacted budgets for fiscal 2022. The survey shows state general fund spending in fiscal 2022 is projected to total over $1.0 trillion, increasing 9.3% over fiscal 2021 levels. The increase is due to several factors including: 1) one-time spending from surplus funds; 2) shift in reliance on federal funds to general funds for some programs; 3) lower baseline due to spending reductions for some states in fiscal 2021; 4) state funding for pandemic response efforts; and 5) inclusion of COVID-related federal aid. Also, compared to governors’ budgets proposed before the pandemic, states’ enacted budgets indicate a 4.3% growth in general funding spending in fiscal 2021 totaling $931.7 billion.

In fiscal 2021, general fund revenues totaled over $1.0 trillion, increasing 14.5% over fiscal 2020 levels. Revenues performed better than expected due to: 1) the impact of the tax deadline shift when revenues in some states were recognized; 2) low baseline in fiscal 2020 due to the impact of the pandemic on state revenues; and 3) inclusion of federal funds.

Before the pandemic, rainy day funds and total balances were at record highs. These amounts have been declining since some states have had to use their reserves to address budget shortfalls. However, rainy day funds reached a new record high of about $113 billion in fiscal 2021 due to stronger than anticipated revenue growth.

The full report and summary are available here.

CMS Office of the Actuary Releases 2020 National Health Expenditures Report

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CMS Office of the Actuary Releases 2020 National Health Expenditures Report

On December 16, 2021, the Centers for Medicare & Medicaid Services (CMS) released their report on the National Health Expenditure Accounts (NHEA). The NHEA measures annual U.S. expenditures for health care goods and services, public health activities, government administration, net cost of health insurance, and investments related to health care. According to the CMS, U.S. health care spending grew 9.7% in 2020 and reached $4.1 trillion or $12,530 per person. As a share of the gross domestic product (GDP), health care spending was 19.7% in 2020, up from 17.6% in 2019. 

In 2020, health care spending for the broad categories of services and products include:

  • Hospital care spending increased 6.4% to $1.3 trillion, up from 6.3% in 2019;
  • Physician and clinical services spending increased 5.4% to $809.5 billion, up from 4.2% in 2019; and
  • Retail prescription drug spending increased 3.0% to $348.4 billion, down from 4.3% in 2019.

In 2020, the growth in federal government spending increased 36.0%, up significantly from 5.9% in 2019. The federal government’s increased spending for health care is mainly due to faster growth in federal expenditures for health care in response to the COVID-19 pandemic. The spending growth was driven by federal financial assistance to health care providers through the Provider Relief Fund and Paycheck Protection Program Loans, increased federal public health activity, and increased federal Medicaid funding. Private businesses’ health care spending declined 3.1% in 2020, down from 3.8% in 2019 while household’s health care spending increased 1.1% in 2020, down from 4.4% in 2019.

Further information is available here.

SSA Releases Summary of the Impact of Policy Proposals on OASDI Combined Trust Fund

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SSA Releases Summary of the Impact of Policy Proposals on OASDI Combined Trust Fund

On December 13, 2021, the Office of the Chief Actuary of the Social Security Administration (SSA) released its Summary of Provisions that Would Change the Social Security Program. The summary describes the impact of certain policy proposals on Social Security Trust Fund solvency. It is based on the intermediate assumptions of the 2021 Social Security Trustees Report that estimated the exhaustion date of the Trust Fund to be 2034 under current law. The Annual Trustees Reports provide estimates of the financial status of Social Security’s Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds under current law. 

The report provides a wide range of policy options and cost estimates that address Trust Fund solvency and other issues related to Social Security benefits and financing. Many of these individual provisions were a part of comprehensive proposals and policy options developed by policymakers to address the long-range shortfall intended to restore Trust Fund solvency.

The summary is available here.

Kaiser Family Foundation Releases Brief on Expectations for No Surprises Act Implementation in 2022

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Kaiser Family Foundation Releases Brief on Expectations for No Surprises Act Implementation in 2022

On December 10, 2021, the Kaiser Family Foundation (KFF) released its issue brief, No Surprises Act Implementation: What to Expect in 2022. The No Surprises Act (NSA) establishes new federal protections against surprise medical bills that take effect in 2022. Surprise medical bills occur when insured consumers unintentionally receive care from out-of-network hospitals, doctors, or other providers.

The No Surprises Act prohibits providers from billing patients more than the applicable in-network cost sharing amount. Beginning in 2022, providers will need to determine the patient’s insurance status before submitting the surprise out-of-network bill directly to the health plan. However, patients can give written consent to waive their rights under the No Surprise Act and may be billed more by out-of-network providers.

The brief outlines what to expect in 2022 and summarizes key provisions that will be implemented. It also describes the procedures for payment amounts for surprise bills including the use of an independent dispute resolution (IDR) system. In addition to compliance, monitoring the impact of the NSA may be accomplished in various ways including: 1) data reporting by IDR entities will provide some information; 2) annual health plan audits conducted by federal agencies to provide information about prices charged and paid for surprise bills; and 3) state systems may provide important data on how the law is working. Overall, oversight and enforcement may rely on various complaints. 

The issue brief is available here.

CRR Publishes Brief on the Effect of COVID-19 on Older Workers’ Labor Force Participation

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CRR Publishes Brief on the Effect of COVID-19 on Older Workers’ Labor Force Participation

On December 7, 2021, the Center for Retirement Research at Boston College (CRR) published its brief, “How Has COVID-19 Affected Older Workers’ Labor Force Participation?” Before the COVID-19 pandemic, more Americans were working longer and claiming Social Security later to help improve their prospects for a secure retirement.

Some of the key findings include:

  • The results indicate that COVID-19 increased job exits by forcing many older adults out of work, especially for those with no college degree, women, Asian Americans, and those less able to work remotely.
  • In contrast, the pandemic had little impact on retirement and Social Security claiming, which suggests that many older adults may return to work if COVID-19 continues to recede.

CRR’s analysis is based on the Current Population Survey (CPS) to compare job exits and retirements pre- and post-pandemic for workers 55 and over.

The brief is available here.

EBRI Releases Survey Report on Consumer Engagement in Health Care

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EBRI Releases Survey Report on Consumer Engagement in Health Care

On December 2, 2021, the Employee Benefit Research Institute (EBRI) released its survey report, Consumer Engagement in Health Care Survey. According to the annual survey, the interest in telemedicine has increased to 17% for adults in 2021 from 7% in 2017 with high satisfaction ratings for telemedicine visits while growth in high-deductible health plans (HDHP) has decreased to 18% in 2021 from a record high of 19% in 2020.

Other key findings include:

  • Traditional plan enrollees are more satisfied with health coverage with 63% being extremely or very satisfied;
  • Fewer HDHP enrollees have been in their health plans for 10 or more years;
  • HDHP enrollee satisfaction increases over time with 54% of those being on their health plans for three or more years in 2021 reporting being extremely or very satisfied up from 30% in 2020;
  • Enrollment in HDHP & consumer-directed health plans (CDHP) fell to 13% in 2021 from 15% in 2020;
  • HDHP enrollees demonstrate more cost-conscious behavior than traditional plan enrollees; and
  • Certain features of health plans are more important than others (such as the network of health care providers, ease of access to health care, prescription drug coverage, low out-of-pocket costs and low premiums).

The survey was conducted by EBRI and Greenwald Research of national data on privately insured adults on the growth of consumer-driven health plans and high-deductible health plans and the effects on the behavior and attitudes of health care consumers.

The report is available here.

NASRA Publishes Public Fund Survey Summary of Findings for FY 2020

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NASRA Publishes Public Fund Survey Summary of Findings for FY 2020

On December 1, 2021, the National Association of State Retirement Administrators (NASRA) released its Public Fund Survey Summary of Findings for FY 2020. The survey presents key data from 98 public defined benefit (DB) retirement systems with 119 plans, covering 12.9 million active members, 9.9 million retirees and other annuitants, and holding $3.86 trillion in assets.

Overall, the retirement systems surveyed represent approximately 85% of state and local DB plan membership and assets as of Fiscal Year (FY) 2020. The Summary of Findings presents information regarding plan funding, membership, benefits, contribution rates, cash flows, and actuarial assumptions.

The NASRA analysis notes that, due to the COVID-19 pandemic, there was an unusual level of economic and investment market volatility in 2020. In the first quarter of 2021, annualized state and local revenue growth exceeded 9.0% which indicated that state and local governments avoided the catastrophic revenue outcomes predicted in the beginning of the pandemic. In addition, state and local government employment levels remain far below their pre-pandemic levels which will affect public pension payroll growth and may have other actuarial effects on public pension plans. Adding, “The COVID-19 pandemic produced a sudden stop and reversal to recent growth in state and local employment and wages, with employment (declining) and wage growth (improving) trending in opposite directions at the time of this publication.” 

According to the report:  

  • The average actuarial funded ratio for the surveyed plans was 72.8% in FY 2020, up slightly from the prior year. Between FY 2019 and FY 2020, the aggregate actuarial value of assets increased 5.2% and the actuarial value of liabilities increased 4.3%. Many state and local plans smooth investment gains and losses into the actuarial value of assets over time (typically five years and sometimes longer). 
  • Growth in pension liabilities remains at a median rate below 4.0% for the third consecutive year, as a result of low salary growth and employment levels among states and local governments and the effects of many pension benefit reforms (mainly reductions) enacted in recent years.
  • The average allocation of plan assets to public equities has declined steadily since the major decrease in global capital markets in 2008-2009. In FY 2020, the allocation to fixed income securities declined slightly to 23.4% and equities at about 45.6%. In recent years, allocations to real estate has steadily increased to 7.6 % (the highest level historically) and allocations to alternative investments (such as private equity and hedge funds) has continued to grow reaching the 20.0% threshold for the first time.
  • For most of the Public Fund Survey’s measurement period, the median investment return assumption used by public pension plans was 8.0%. However, in FY 2020, the median actuarial assumption for investment return was 7.25%. Notably, since 2009, many plans have reduced their investment return assumptions.
  • Since the inception of the survey, employer contribution rates have increased significantly mainly due to larger unfunded pension liabilities and often include lower investment return assumptions. For some plans, higher employer contribution rates are the result of a disciplined approach to contribute all or more of their actuarially determined contributions.

The survey data is available for each individual retirement system and plan in Appendices A and B. The data includes: plan membership, plan assets and liabilities, and actuarial funding levels.  

The summary is available here.