Photo: Peabody Energy/Wikimedia Commons

Black Lung Resurgence: Without Action, Taxpayers Will Foot the Medical Bills

, senior energy analyst | July 5, 2018, 10:23 am EDT
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I’ve written previously about my family’s experience with black lung and how the disease is making a frightening resurgence. A bit like a miner’s headlamp in the darkness, two recent federal reports and several federal scientific studies shine a light on the disease and its implications—and policymakers should take notice.

Critical benefits to miners and their families

Congress set up the Black Lung Disability Trust Fund in 1978 to provide benefits to coal miners that have become permanently disabled or terminally ill due to coal workers’ pneumoconiosis, or black lung, as well as their surviving dependents. The Trust Fund still protects miners and their families when no liable company could be identified or held responsible. This might happen if a miner had multiple employers, or if the responsible company went out of business. The U.S. Department of Labor, which manages the Trust Fund, estimates that in FY 2017, 64 percent of beneficiaries were paid from the Trust Fund, totaling $184 million in benefits. The Trust Fund provides critical benefits to miners and their families in cases where mining companies can’t or won’t pay.

The Trust Fund is financed primarily through a per-ton excise tax on coal produced and sold domestically. The original legislation set the tax at 50 cents per ton of underground-mined coal, and 25 cents per ton of surface-mined coal (but limited to 2 percent of the sales price). Unfortunately, Trust Fund expenditures have consistently exceeded revenues, despite several actions by Congress to put the Trust Fund on solid financial footing. In other words, to meet obligations in any given year, administrators are forced to borrow from the U.S. Treasury. Moreover, in 1986 Congress set the levels of the excise tax at $1.10 per ton of underground-mined coal and $0.55 per ton of surface mined coal (up to a limit of 4.4 percent of the sales price)—but at the end of this year, the tax levels will revert to their original 1978 values. For these reasons, Congress requested a review of the Trust Fund’s finances and future solvency from the General Accounting Office (GAO), an independent, nonpartisan agency that works for Congress to assess federal spending of taxpayer money.

GAO offers a wake-up call

The GAO concluded its report and released its findings last month—and the results should serve as a wake-up call to Congress. The chart below shows the impact on the Trust Fund of having to borrow year after year to make up for the shortfall in excise tax revenue relative to benefits payments, that is, the accumulation of outstanding debt.

This front-page chart of the GAO report shows that if the excise tax decreases to 1978 levels (according to current law) at the end of 2018, the Trust Fund’s debt will exceed $15 billion by mid-century.

GAO looked at the impact of a few different policy choices, including adjustments to the excise tax rate and debt forgiveness, both of which Congress has used in previous changes to the Trust Fund. In 2008, for example, about $6.5 billion in debt was forgiven (hence the large decrease in debt in the chart above). Unfortunately, that didn’t solve the Trust Fund’s solvency problem, because subsequent coal excise tax revenue was less than expected, thanks to the 2008 recession followed by declining coal production resulting primarily from increased competition with natural gas.

GAO calculated how much money would need to be appropriated by Congress to balance the Trust Fund by 2050 under various assumptions for the excise tax. The chart below summarizes the results succinctly: Increasing the current excise tax by 25 percent would require no debt forgiveness, but allowing the current tax to expire would require $7.8 billion of taxpayer money to balance the Trust Fund by 2050.

Figure 10 from the GAO report (p.30), showing the scale of the problem of outstanding debt in the Trust Fund. Analysts calculated the level of debt forgiveness needed to balance the Trust Fund by 2050, assuming that Congress makes a single lump sum payment in 2019 to pay down the debt. In other words, the bottom bar means that, if Congress allows the current tax rate to expire but also forgives $7.8 billion in existing debt in 2019, then by 2050 the Trust Fund would be balanced (meaning that the remaining debt would have been repaid and annual payments would equal annual revenues).

Assumptions matter

As with any projection of what might happen in the future, the results depend on the assumptions made by the analyst. GAO conducted a credible and sound analysis—based on reasonable, defensible, middle-of-the-road assumptions—to assess the solvency of the Trust Fund. Key drivers are projected revenues expected from future coal production and projected expenditures for future beneficiaries.

Of course, neither of these things is known with much certainty. Worse, there are compelling reasons to believe that the scale of the Trust Fund’s insolvency could be much worse:

  • For one thing, coal production could be lower than what GAO assumed, meaning less revenue from the excise tax. GAO used the U.S. Energy Information Administration’s reference case, which shows coal production essentially flat through 2050. But note that this is likely a conservative assumption: if natural gas prices remain low, or if more renewable sources of energy come online as expected thanks to continuing cost declines, coal production could continue its recent ten-year decline for the foreseeable future. And despite current federal politics, there is momentum for deep decarbonization to address the climate crisis.
  • Even more alarming, the emerging crisis of new black lung cases in Appalachia is not included in the analysis. GAO assumed that the growth rate in new black lung cases is -5.8 percent, based on historical data on the number new beneficiaries of the Trust Fund. That means that the number of beneficiaries will continue to grow, but at a slower pace than in the recent past. With the very recent surge in black lung cases combined with the fact that the disease can’t be detected in the lungs until after about a decade of exposure, this assumption is not likely to hold true.

NIOSH and NAS weigh in on science and solutions

Black lung is completely preventable, and as a result of federal standards limiting miners’ exposure to coal dust, by the late 1990s, the disease had become rare. However, as NPR has reported (here, here, here, here, and here), in just the last few years, Central Appalachia has seen a surge in new cases of complicated black lung, an advanced form of the disease. National Institute for Occupational Safety and Health (NIOSH) investigators found 60 new cases of the disease at a single radiology clinic in Kentucky in just 18 months alone. By comparison, NIOSH’s monitoring program detected only 31 cases nationally from 1990 to 1999. NIOSH researchers also identified 416 new cases in Central Appalachia from 2013 to 2017. NPR’s ongoing investigation puts the number of new cases in Appalachia since 2010 at around 2,000, roughly 20 times official government statistics.

What’s responsible for the spike in reported cases of black lung? For one thing, the national monitoring program historically has a low participation rate, and while the resurgence of the disease shows up in the national monitoring data, the cluster identified in Kentucky was discovered separately. And because it takes years for the disease to manifest in a miner’s lungs, it’s difficult to connect the disease to specific exposure or mining practices. NIOSH researchers suggest that changes in mining practices may be exposing miners to greater amounts of silica dust from cutting through rock formations to access thin or deep coal seams.

On the heels of the GAO report and the NIOSH investigations, the National Academies of Science, Engineering, and Medicine (NAS) released an independent report looking at coal industry approaches to monitoring and sampling the coal dust levels that miners are exposed to. The NAS report concludes that compliance with federal regulations limiting the exposure of miners to coal dust has reduced lung diseases over the last 30 years, but that compliance has failed to achieve “the ultimate goal of the Coal Mine Health and Safety Act of 1969”—eradicating coal dust exposure diseases such as black lung. The NAS goes on to say, “To continue progress toward reaching this goal, a fundamental shift is needed in the way that coal mine operators approach [coal dust] control, and thus sampling and monitoring.” The report recommends a systematic investigation of how changes in mining operations may have increased exposure to silica dust, the development of better monitoring devices, especially for silica, and increasing participation rates in the NIOSH monitoring program.

Congress must act—and fast

The good news is that there is the start of a solution to the funding of black lung benefits already in sight: the RECLAIM Act. If enacted, RECLAIM would free up $1 billion in existing money from the Abandoned Mine Lands (AML) fund to put people to work cleaning up degraded mine lands and spurring local economic development in communities that need it most. How is this separate fund and separate problem connected to black lung benefits?

In short, Congressional budgetary rules require that any time taxpayer money is spent, it must be offset by budget cuts or additional revenue elsewhere. RECLAIM’s champ, Rep. Hal Rogers (R-KY), identified the extension of the coal excise tax at current levels for an additional ten years to “offset” the $1 billion in spending from the AML fund. It doesn’t matter that these two initiatives are—and will remain—separate programs with their own funding streams.

But the two issues are intertwined—the surge in new cases of black lung is happening in the same region where communities are struggling to deal with the legacy of past mining operations and simultaneously trying to chart a new economic future. Addressing all these issues simultaneously is the sort of win-win-win policy solution that doesn’t come around too often.

The astute reader will notice, however, that the extension of the coal excise tax for ten years is insufficient to address the Trust Fund’s long-term solvency problem, as the charts above demonstrate. Passing the RECLAIM Act, therefore, is merely the first step to addressing the problem; but legislators must consider actually increasing the coal excise tax. This would ensure that the responsible parties—that is, coal companies—are forced to pay for the damages inflicted on real people, real families—instead of leaving taxpayers holding the bag. And with black lung set to reach epidemic levels in the coming years, Congress must act now to strengthen the fiscal health of the Trust Fund—to protect the health and well-being of miners and their families in the face of an uncertain future.

UPDATE (5 July 2018): The original version of this post misstated the year when the current coal excise tax was established. The current coal excise tax of $1.10/$0.55 per ton was established in 1986 and extended at current levels in 2008.

Photo: Peabody Energy
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