Louisiana is woefully unprepared for the imminent pandemic-induced recession, and there is reason to believe the economic damage will be worse here than in other states. LBP’s executive director, Jan Moller, in a guest column for the Advocate, explains why many Louisiana workers are so vulnerable to the economic devastation caused by the coronavirus pandemic and why the state should move quickly to address the holes in its public safety net:
To be sure, even the best-prepared states are poorly equipped to deal with a sudden economic downturn. State governments, unlike the federal government, must balance their budgets. When recessions take hold, the need for state services goes up, while the tax revenue to pay for them goes down. For this reason, it is essential that Congress include substantial direct aid to state governments in its continuing coronavirus response.
Louisiana’s shamefully inadequate unemployment system
Laid off workers throughout the state are coming to terms with a haunting realization – Louisiana has arguably the weakest unemployment insurance system in the nation. The state only pays out 23% – $216 on average per week in unemployment benefits – of what the average worker earns. To make matters worse, only 11% of unemployed workers actually receive these benefits because of restrictions on who qualifies. This inadequate unemployment system will hurt Louisiana during the coming recession. The Advocate’s Tyler Bridges reports:
“People lose their jobs,” (Michael Leachman of the Center on Budget and Policy Priorities) said. “They need some kind of support to get by. The economy also needs those families to have some income so they can keep spending, otherwise the recession just gets worse. Louisiana’s choice to have an unemployment system that barely functions is going to mean that the emerging recession will hit the state and its people much harder than if Louisiana had more foresight in that area.”
After the pandemic: higher health insurance prices
America’s patchwork health insurance system is ill-suited to a nationwide health crisis. As a result, the high costs of fighting the coronavirus pandemic are likely to drive up health insurance premiums for millions of Americans, according to Peter Lee, director of California’s individual insurance marketplace. Lee estimates that nationally, hospitals could incur between $29 billion and $216 billion in costs for treating patients on employer-sponsored or individual market coverage. The Washington Post’s Paige Winfield Cunningham explains the price shock that many Americans could feel.
A majority of these patients will be over age 65, so the federal Medicare program will pay their bills, which are typically around half or two-thirds of what commercial insurers pay. Low-income people on Medicaid will have coverage, too. But the outlook is troubling for other Americans. If they are insured, they’ll mostly be covered after meeting their annual deductible, but they’ll still cause a boost in health-care spending that will make future premiums more expensive for everyone else. And uninsured patients who require hospitalization will incur tens of thousands of dollars in costs.
Stimulus bill nearing completion?
A deal appears imminent on a $2 trillion economic rescue plan that stalled over the weekend amid partisan disputes. The Wall Street Journal’s Andrew Duehren reports:
The two sides were approaching an agreement on one of the primary remaining sticking points: oversight on $500 billion that Republicans had proposed to allocate to aid distressed businesses. Democrats had sought controls on those funds, which include loans made directly by the Treasury Department and a backstop for losses in Federal Reserve lending facilities. While details were still subject to negotiation, Mr. Mnuchin and Mr. Schumer had agreed on additional oversight of the funds, according to a person familiar with the negotiations.
Number of the Day
70,601 – Number of unemployment benefit claims Louisiana received from March 15 – 22. The state receives an average of 1,500 claims per week during normal times. (Source: Louisiana Workforce Commission via The Advocate)