The budget is a moral document: On healthcare and taxing the rich with Senator Meghan Kallman and the EPI's Nina Harrison

"...we have choices about how we make our budget more just and more whole because, and I say this all the time, a budget is a moral document. It is a statement of our values."

The Rhody Civics Club held an event at the Buttonwoods Brewery on Thursday to hear from the Economic Progress Institute’s policy director, Nina Harrison, and State Senator Meghan Kallman (Democrat, District 15, Pawtucket, Providence) about the state of Rhode Island’s healthcare system.

The discussion was about the catastrophic impact HR1 (President Donald Trump’s “big beautiful bill) will have on low- and middle-income Rhode Islanders, and the massive impacts of federal cuts to Medicaid, health insurance premiums, and food assistance. It wasn’t all doom and gloom. Senator Kallman and Nina Harrison have presented bills currently before the Rhode Island General Assembly that could help mitigate the impending catastrophe.

Nina Harrison

I’m the policy director at the Economic Progress Institute. The Economic Progress Institute is a nonprofit that does policy research and advocacy in Rhode Island. We try to get laws passed that benefit low- and modest-income Rhode Islanders, improve racial equity in the state, and give people a chance at economic opportunity. I am also the co-chair of the Protect Our Healthcare Coalition, which I co-lead with Shamus Durac from RIPIN, a huge resource in the state that advocates for children with disabilities.

I’m told that you all basically know how things work at the State House, that people like Senator Kallman are there in the evenings, at committee hearings, hearing testimony on bills. I’m often there giving testimony and saying, “Please pass this bill, or please don’t pass this other bill.”

I’m going to start by talking about what happened over the summer, which some of you may have heard Trump talking about: one big, beautiful bill, which is not beautiful, especially for Rhode Islanders, that essentially cut more than a trillion dollars in funding for Medicaid and SNAP over 10 years. And they did that to pay for tax breaks for the richest people in America. Because of the tax break Trump made permanent over the summer, the highest-income earners are getting an average tax break of $58, 000 this year.

We’re losing healthcare and food assistance, but the highest income earners are getting a $58, 000 a piece tax break this year.

What does that mean for Rhode Island? It means that unless the state takes action, 53, 000 people will lose healthcare. That’s not my stat; that’s a statistic from the state itself. About 33,000 people are expected to lose Medicaid coverage. Medicaid is for people who are low-income, typically 138% or less of the federal poverty line, which is already too low.

Low-income people will be losing healthcare, and many of them will also be newly subject to work requirements. Many of them are already working, and if you’ve been here for some of the mess-ups the state has made, you know how easy it is to mess things up when new administrative rules are in place. More frequent recertification means that instead of recertifying Medicaid once a year, you’ll now do it every six months. That’s more opportunities to make mistakes, which makes it easier for people who are eligible to lose benefits or give up dealing with the BS of trying to meet all these administrative hurdles.

20,000 people will lose health insurance through HealthSource RI. That is our state marketplace. If you are earning too much to qualify for Medicaid, but you work for yourself or a small business, and your employer doesn’t offer health insurance, you have to purchase it for yourself through HealthSource RI. There are only about 40-45,000 people purchasing insurance through HealthSource RI, and 20,000 will lose their health insurance through HealthSource RI. Remember when they shut down the government recently? That shutdown was because Affordable Care Act subsidies had been in place, helping people afford health insurance through HealthSource RI, and Congress allowed those to expire at the end of 2025. That government shutdown was about congressional Democrats saying, “We’re going to shut this down until you agree to extend those healthcare subsidies that were helping people buy health insurance.” It didn’t work, unfortunately. Those subsidies expired, resulting in everyone’s premiums going up this year, especially for people on HealthSource RI: those 40,000 Rhode Islanders saw their premiums double on average because they no longer had those subsidies.

HR1 also targets many lawfully present immigrants. People who are here with full legitimate status will no longer be eligible for Medicaid and SNAP in certain instances. We eliminated eligibility for full groups of lawfully present immigrants, and that is what makes up the 53,000 Rhode Islanders who are going to lose healthcare and rely on SNAP; up to 14,000 Rhode Islanders could lose SNAP benefits. 2,300 lawfully present immigrants will definitely lose SNAP benefits. What does that mean? Just the healthcare insurance issue alone could overwhelm our healthcare system because when people don’t have insurance, what happens if they get sick? They have to go to the emergency room.

Even if you think, “I don’t have Medicaid” or ”I don’t purchase through HealthSource RI,“ do you ever need to go to the emergency room? Emergency rooms could see their wait times significantly increase due to our uninsured population. Essentially, our uninsured population in the state will double.

Many of you may know that our state already had some healthcare challenges before this one big, beautiful bill. One of the healthcare challenges we’re facing is a shortage of primary care doctors in the state. Anchor Medical just closed, and I lost my doctor. That is largely because one-third of the state’s residents access healthcare through Medicaid, and we don’t pay doctors who provide care to Medicaid patients at the same rates as Massachusetts or Connecticut do. If a doctor is deciding where to live, there are many financial reasons to choose to live and practice elsewhere. And that goes for pediatricians as well, especially those coming right out of school.

I’ve heard doctors testify, “I can’t advise anybody to come work here because I can’t afford to pay my loans.” That’s part of the issue with the primary care shortage. Last year, the General Assembly passed legislation to increase Medicaid reimbursement rates, hoping it would help attract more primary care doctors, but we need more than that. Another issue is that we only have one medical school. When people graduate from Brown Medical School, only a certain number want to be primary care doctors or pediatricians, and not all want to stay in Rhode Island, especially given the financial constraints. I’m not going to get into all of that, but there are proposals, and I know that people in the General Assembly are very concerned about addressing this.

You may have heard that Fatima and Roger Williams Hospital were just in danger of closing, and I couldn’t tell you what saved them, that’s not my expertise, but I can tell you that if hospitals have to provide more and more care for people without insurance, more and more hospitals will be at risk of closure because they can’t afford to provide that kind of care without getting reimbursed.

Additionally, we have a rapidly aging population, and as some of you may know, there’s a shortage of healthcare workers in home care, community care, and at nursing homes, able to meet the needs we have right now, never mind that our population is aging very rapidly.

These are all things that we need to address to make sure that our healthcare system doesn’t fall off the cliff. The solutions cost money, and unfortunately, we don’t have it right now. As I mentioned, the federal government cut funding for our state and all states. I want to put into perspective just how much money our state is going to miss. First, we are facing a $100 million budget gap. That’s not including HR1, one big, beautiful bill problems. That’s to do what we were already planning to do and run the programs that are already running. We are running a $100 million budget deficit. That’s up to people in the General Assembly to figure out how to do.

How can we rearrange the budget, or which programs will they cut, to bridge the budget gap? That’s one piece. That’s $100 million we need to make up. Then we get into what the federal government cut from Rhode Island. This is kind of confusing because many of the provisions in HR1 have different implementation timelines. SNAP cuts are starting now. Medicaid cuts and work requirements are starting later, like in January of 2027. The bottom line, once fully implemented by fiscal year 2028, is that we will lose almost $400 million in combined state and federal Medicaid funds. I’m including the state because the federal government provides funding for Medicaid, but the state has to pay some of it as well. If the federal government says you have to kick 30,000 people off Medicaid, then the state is technically saving money on the portion it would have paid for those 30,000 people who use Medicaid.

One solution we’re offering is, instead of thinking of that as savings, invest that money into the healthcare system, so that people can go to free clinics and hospitals and get care and not just emergency care. They need to create a system to continue prescriptions and dialysis because right now, uncompensated care is only required to be provided in the emergency room. That’s not sustainable without investment from the state. The federal government used to pay for all of SNAP (food assistance). They used to foot the whole bill, but now they’re saying the states have to pay some administrative costs, and depending on your error rate and how they distribute payments, you will have to pay a penalty. At the bare minimum, we’ll have to pay a $15 million in administrative fees, but more than likely we’ll have to pay the full penalty of $65 million to operate SNAP as it exists.

That’s roughly $450 million in costs from Medicaid and SNAP alone. That’s not even factoring in that they eliminated or let expire those subsidies that help people purchase insurance through HealthSource RI. That’s another $60 million. That’s what it will cost to replace those: Let’s say a total cost of about $500 million, and that’s a conservative estimate. It doesn’t include the $100 million budget deficit needed to keep the status quo.

Now, solutions: First, we need funding to pay for some of the solutions, and as I just mentioned, we don’t have it. The top solution that I’m pushing and a coalition is advocating for is, since the richest people in the state and in the country just got this huge tax break, and that tax break is permanently in our tax code, we should tax the top 1% of income earners in Rhode Island, which would raise $203 million a year.

It wouldn’t raise $500 million, but we could essentially plug some of the holes left by this deep pocket of federal funding that’s going to be missing. I want to be clear that the top 1% are people earning more than $640,000 a year. We don’t want to change anything about how the first 640,000 is taxed. Leave it alone, that’s fine. This would only be a new tax on income above $640,000. Somebody making $750,000 a year would pay $3,300 in additional taxes if this proposal were to pass. They’d still be getting a $58,000 tax break from the federal government. They’d still be better off than they were before.

That’s the pitch. It would affect 6,100 tax filers or households, and it would again raise $203 million every year. That would likely go up as people’s incomes go up.

Now, on to what I hope the money will be used for: plugging these holes and preventing our healthcare system from falling off a cliff. The first is the Rhode Island Marketplace Affordability Act, which would replace subsidies for the 40,000 Rhode Islanders who purchase health insurance through Health Source RI. It would cost $60 million and bring everybody’s premiums down. I mentioned that those premiums doubled. It would bring at least 13,000 people back into insurance coverage, since that’s the number we anticipate leaving due to unaffordability. You might think that’s not a huge impact, but when healthy people leave the insurance pool, the people who are left paying for insurance are sicker, and sicker people cost more to insure. That’s why health insurance rises for all of us when people leave the health insurance pool.

The second healthcare solution is the Protect Our Healthcare Act, which takes those Medicaid “savings” and invests in uncompensated care; in fact, it doubles it. We’re saying to invest $109 million in uncompensated care, not only to support existing uncompensated care but to expand it so people can get prescriptions, dialysis, and other services beyond emergency services, so our hospitals and community health clinics can keep their doors open.

Those are my solutions and top priorities this year: raise revenue, replace the healthcare subsidies that Congress allowed to expire by creating our own state program, and invest in uncompensated care, that is, don’t think of this as Medicaid savings, double it and invest it in uncompensated care.

We have a better chance than we’ve ever had before for the tax the rich bill. For the two healthcare bills, they’re both new because these are new problems. We didn’t have this big, beautiful bill two years ago. There’s a chance that there will be a partial replacement of healthcare dollars, and I’m optimistic because that is in the governor’s proposed budget. It is much less expensive than the full $60 million cost of replacing it for just the lowest-income half of people, because the subsidies they receive are much smaller. I’m more optimistic about that. For the uncompensated care bill, we’re asking for a lot of money. Asking for $109 million a year in this kind of budget climate is the kind of thing that some legislators would balk at and say, “You must be crazy. Don’t you know what we’re dealing with?” But again, I know they’re concerned about healthcare. I have seen a smaller proposal from the governor of about maybe $10 million for uncompensated care, but that’s a drop in the bucket.

I hope that, at a minimum, the state will invest what they would normally spend on Medicaid anyway, even though we’re asking them to double it, and think that still wouldn’t be enough.

Senator Meghan Kallman:

One of the things that we need to get used to is the idea that government exists to help people thrive. Saving money for its own sake does not serve anyone. It doesn’t serve anyone in the community. And we have to wisely steward our resources, especially when the federal government is taking a lot of them to give to billionaires, but I fundamentally take issue with this idea, which seems to be like a very common framing in parts of the state, that saving money equals a better outcome. Spending money on people’s well-being is why we exist. We’re facing a very aggressive environment, and we need to use our resources wisely and nimbly, but there’s no point in saving money. We exist to help Rhode Islanders thrive.

I don’t tend to carry a lot of the healthcare bills that are specifically designated for healthcare. I tend to carry the wealth tax and housing bills because health is, in large part, dependent on having a safe and affordable place to live. But I’m going to talk about some additional revenue-generating ideas, because in my view, it’s like both/and. Very rich people should be paying more than they are currently paying. That is absolutely true, but you know who else should be paying taxes? Corporations, and especially tech corporations.

I’m talking here like the Metas of the world. I’m carrying a bill this year called the Digital Ads Tax, which is designed to tax digital ad revenue because it lives in this funny place where it’s not a good or a service and has somehow evaded taxation in the tax code. Facebook, Meta, and X, or whatever, have a lot of money, and they have been beneficiaries of some lopsided federal policy-making that privileges tech industries. This bill is modeled on something they did in Maryland. It is still ensnared in some legal challenges, but we are confident those challenges will be resolved in our favor, which is why I felt comfortable introducing the bill this year.

A digital ads tax has a couple of benefits. One, it does not tax people; it taxes corporations. Two, it has the potential to generate a lot of money because you’re taxing the global revenues of these companies. It’s a proposal I am excited about because it also begins to balance some of the policies that have privileged large corporate entities over our local entities.

The other is the Fair Share Agenda, a [wealth] tax on financial instruments, things like capital gains, stock trading, et cetera. People who earn more than a certain amount of money from sources like capital gains pay a slightly higher tax rate on that income. The idea is that those sources of income tend to be the purview of people who have more resources, and if we put a threshold on it, it’s not going to affect somebody who put their pension into investments or put some of their retirement savings into investments and then pulled it back out again. It is again aimed at the folks at the top of the income scale who generate a lot of money by trading that way.

Those are two economic justice proposals that I would say are designed, among other things, to plug some gaps in the healthcare system.

One success story: For several years, I carried a bill called the Taylor Swift Tax, which finally passed last year as part of the budget. The idea with the Taylor Swift tax is that people like Taylor Swift, who own like seven homes, would pay an additional tax on second homes - not your primary residence - but second homes that are valued at more than a million dollars. who is rich enough to have not one but two homes valued at more than a million dollars. Just rich people, like Taylor Swift, among others. Everybody was, “Oh, the sky’s going to fall, and people are going to leave Rhode Island.” Of course, that didn’t happen. I got three cranky phone calls from one guy in California who was like, “How dare you? “ And I was like, “You know what? You’re in California. I’m not going to bother.” That has been bringing money in.

Imagine if we had a top 1% tax, coupled with the Taylor Swift tax, coupled with a digital ads tax. Together, those are different ways to address some of the inequities in what’s going on federally.

Rhode Island is not going to be able to, over the long term, balance out a lopsided federal tax code by itself. We’re not going to. We’re going to have to fix that, which will involve changing how things are at the federal level, so Federal elections remain important. But in the short term, we can take care of ourselves. We have to sort of find the oomph to do it. Nina said the 1% tax would affect 6,300 people. In my district, I represent about 48,000 people, which means that no single person could lose an election based on the number of top 1% earners. Even if all of those people in the state were angry and were going to vote against somebody, you still couldn’t lose an election over it. It’s not that many people.

I kept hoping Taylor Swift would call me and say, “I’ll do a press conference with you.” Didn’t get there. I know people did call her office asking for comment, but we never heard a complaint from her. I want to think that that’s a tacit endorsement because she knows she has more than enough money to pay Rhode Island. It was something like $38,000 on her property, chump change for her.

Anyway, the point is that we have done this before. We did it last year. The world didn’t end, and we’ve been making some more Rhode Islanders whole with a more equitable tax code. I believe we can do not just this, but a series of these things this year. Seven or eight proposals are floating around, some of which are interlocking, some of which are simultaneous, some of which are slightly different. But the point is we have choices about how we make our budget more just and more whole because, and I say this all the time, a budget is a moral document. It is a statement of our values. And when our budget does not include support for people who are the lowest-income earners or the most medically vulnerable, that is a reflection of the values that we collectively are holding as a state.

I want to briefly detour into the political advocacy process because each of you has a senator and a representative. One of the many wonderful things about Rhode Island is that we are teeny tiny, which means that you are probably no more than a 10-minute drive from your local elected official. And while I certainly endorse sending them emails, asking for a meeting is way better. We are a part-time legislature, as I think most of you know. I’m a professor for my day job, a sociologist, but when I meet people in the community who show up caring about something, you can’t help but pay extra attention. I am out in the community most nights of the week. I think many of my colleagues are out and about quite a lot, too, but your senator and representative should get right back to you, and they should offer you a time to meet if that’s what you ask for.

There’s no reason to accept representation from someone who does not make themselves available. We’re a small community. I often wind up consulting experts in the community because I don’t have a full-time staff. I frequently call my friends who are researchers or experts in it about this. Knowing who is in the community, you all can become a source of information. A couple of years ago, I met a woman when I was door-knocking, a primary care physician in the Providence part of my district. I represent about half the city of Patuckett and a chunk of Providence near Miriam Hospital on the East Side.

She said, “ I’m a primary care physician. What do you know about the availability of FDA-approved contraception?” And I said, “I know that it’s available.” And she said, “Right, but here’s what I want to do. I want to change it so it’s not just doctors who can prescribe this. I want to change it so pharmacists can prescribe it too. I have such a backlog of patients right now, so frequently, when someone makes an appointment to see me to get contraception, I can’t see them for six months. They’re already pregnant by the time they get there; they don’t want to be. We should have other people in the community with prescribing authority for something that’s already approved federally. This isn’t experimental stuff. This is just your pharmacist who knows their stuff about medicine.”

And I said, “Great idea.” She connected me with a local public health pharmacist advocacy group, and I carried that bill. Now, in Rhode Island, pharmacists can not only prescribe contraception, but they can also prescribe PEP and PrEP, which are the HIV prophylactics. That’s just an example of knocking on the doors, and somebody saying, “You could do this better.” And I was like: “Turns out you’re right, tell me what you know.” When we hook up together like that, things can change. And again, that’s one of the benefits of being a small state here. Her name is Dr. Mindy Sobota. Through that, I met a bunch of folks who are involved in public health pharmacy.

The point is that we are a well-networked, well-connected state, and these problems are solvable with the resources we have. Yes, we should raise a lot of money, and our healthcare system is really not in very good shape. About three years ago, I joined a conversation at a conference with several other state legislators from mostly up and down the East Coast, and everyone was like, “Oh my God, this healthcare system is a disaster.” And we were like, “We’ve been meeting on and off for about three years to talk about the possibility of single payer, but there are a couple of problems with single payer as it’s been envisioned.

One is that the federal government is not going to do that anytime soon. That’s the biggest problem. It’s a considerable one. But the other one is that individual states adopting single payer is not particularly realistic because you need a large enough pool of insured people to spread the risk. The economics don’t work, and especially not in a place like Rhode Island, where there’s like a million and change of us. We’re too small, and half of us work in other states. It’s a whole thing. At this conference, the idea emerged: What would happen if we had a regional single payer consortium, a couple of different states linking up together to try to figure out how many of us we would need, what sort of population threshold you would need to create a single payer system that is regional and would be the building blocks towards a national system?

This year, I have a bill that would do that, a regional single-payer bill. To be totally clear, I don’t expect this bill to pass. We’re not equipped to have it pass. It is designed to start a conversation amongst colleagues in different parts of New England about what it would take to put together a system like this. There are several challenges this would face. One is the possible preemption laws. If we tried to do this, what would the federal response be? Could we preempt that? Could we figure out what they would say and what our legal structures should be? Second, we have private equity in healthcare. To the extent that we have private equity in healthcare, we are going to run into some real challenges in regionalizing a public system. The idea of bringing a bill forward is to have some of those conversations in a more systematic way.

Shortly before I came in, I had a call with a colleague in Massachusetts who is also carrying a single-payer bill there. We’re convening some conversations. We’re going to try to do a New England study commission to get some actual data about what this would look like. I think this is worth doing, even though there will be big hurdles, but there will be big hurdles if we do it nationally. And the question of private equity is one we also need to address, not just in healthcare but in everything.

Steve was asking me right before I got on stage here about a bill I just released that would prevent private equity from owning any real estate above the $25 million threshold, and I already had the landlords jumping down my throat about that. The irony there is that I don’t think any of them would ever reach $25 million. This is aimed at large corporate landlords who tend not to be very good actors. Boston and Massachusetts have seen a lot of this: you often have foreign investors buying property, and sometimes they’ll sit on empty properties to drive prices up. You have people living on the streets, a massive housing crisis, and investors sitting on whole empty buildings. When you have the parallel version of that in the health insurance industry, that is the problem we’re also going to have to tackle head-on.

What I’m trying to communicate is that this is a time when we need to consider many different solutions. A necessary, foundational step to any solution is figuring out how to raise money in a just way, because it has been the bottom and middle classes that get squeezed... We’re not going to be able to fix our healthcare system unless we are at least taking some of the inequities out of the taxation system. And the benefit of a better tax system is that we can actually fund a lot of things, like public transit, and, I don’t know, housing and healthy school meals for everybody.

Again, the point of government is to help people thrive. Saving money is not a virtue unto itself. Helping people thrive is what we’re here to do - at least, it’s what I’m here to do, and I’m privileged and pleased to be able to do it in conversation with folks at the EPI, like Nina. We have a really small but mighty crew of excellent organizers in this state.