I want to highlight two very interesting little stories that are quite valuable in how we can conceptualize our interactions with government and the social safety net.
First, the Wall Street Journal reports on how the IRS will deal with the ARA’s tax exemption of the first $10,200 in unemployment income:
News: Today the IRS updated its guidance on the new tax break for $10,200 of unemployment-payments.
The agency says it will automatically redo the taxes of people who already filed and send refunds–if any–starting in May. https://t.co/cggl7F3NFy
— Laura Saunders (@Saunderswsj) March 31, 2021
Secondly, Maryland is looking to expand the reach of their health insurance data sharing for outreach and enrollment purposes:
Groundbreaking bill moving forward in MD! HB1002, w/lead sponsors @LCharkoudian & @SenRosapepe, just passed Senate unanimously, soon going to governor. Lets UI claimants check box, share info with health exchange to get free or low-cost health insurance. First in US! pic.twitter.com/9lOm6gQFg3
— Stan Dorn (@standorn) March 30, 2021
Multiple levels of government have a whole lot of data on us. Multiple levels of government share a whole lot of routine financial data on residents who are accessing one part or another of the social safety net. Government bureaucracies know the eligibiltiy rules of various programs usually far better than the typical American as the bureaucracy is the organization that drafts the implementation rules and then builds up the knowledge by repeated doing of how things work while an individual citizen is often facing an interaction with little to no lived experience.
Shifting administrative burden to the state as described by Herd et al in a 2013 Public Administration Review article massively lowers transaction and hassle costs of accessing benefits that individuals are legally eligible for but may not have been able to navigate through a thicket of complex regulations, varying definitions of income and different redetermination periods.
Instead, a state can use the data that it already has through a triggering event such as filing and being determined eligible for an unemployment claim to connect individuals to the services that they are eligible for. The IRS is taking on the administrative burden of revising tax returns and likely sending out revised refunds instead of asking taxpayers to figure out a potentially complex tax change that occurred in mid-filing season. Maryland currently allows people to opt-in to a data sharing program between the state insurance marketplace and state tax authorities to increase health insurance enrollment. The proposed unemployment tickler is, again, in response to a mid-year change where anyone who is UI eligible for a week or more will be deemed to be earning 138% federal poverty level and thus eligible for a zero premium CSR-94 silver plan for the rest of the year.
Over the next several years, quite a bit of the Biden Administration’s efforts could conceivably be made on reducing administrative burden by having the professionally staffed entities that have deep subject area expertise and the relevant data interconnections share that data to make reasonable assumptions about comprehensive program eligibility and respond to unusual and odd circumstances on a systemic basis. I think states will be more likely to engage in these types of behaviors when the parts of the social safety net are mostly if not entirely federally funded but again, I think reducing administrative burden in the ACA markets is likely to have larger impacts than adding modest subsidies.