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Series Part 3: How Can Alabama Address Its Medicaid Crisis?

Henry Mabry

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By Henry C. Mabry

This is the final in a three-part series focusing on Alabama’s Medicaid issues.

More funds are available without raising taxes

Besides utilization, the other major issue concerns funding and this does not mean nickeling and diming taxpayers year end and year out to bandaid the system.  Funding can be addressed in two manners: one dealing with the short term and the other in dealing with the long term.  In the short term, various programs could be altered to optimize Medicaid funding.  This could save the state $250 million per year and prop up Medicaid needs for a number of years to come with limited additional General Fund contributions.

For years, we have all heard that Alabama gets $3 for every $1 it sends to Washington, D.C., and Alabamians are proud of that fact.  Alabamians, though, would not be proud to know that states like Tennessee, Louisiana, Texas, Oklahoma, and Kentucky get more federal funding as compared to state revenues than we do.  Why would states richer than Alabama get more relative federal aid?  One answer is that Alabama has not maximized federal dollars as these other states have done, and we are not talking about Medicaid Expansion, either, in such comparison.

In the long term, a funding stream is needed to generate more money for Medicaid that more suitably matches Medicaid growth needs.  This is not about raising revenue or unearmarking, but rather this is about taking realized savings or rededicating existing assets to maximize those assets.

As mentioned, the state General Fund grows two or three percent.  Medicaid’s state General Fund need grows nine percent and this percentage may be in the double digits soon.  Just recently, lawmakers like Sen. Del Marsh, Speaker Mike Hubbard, Sen. Trip Pittman, and Sen. Greg Reed said how Medicaid funding is unsustainable at the same state General Fund need level of growth.  These lawmakers are right.  Again, if the state General Fund grows at two percent and Medicaid’s need grows at nine or ten percent then something has to give.  In other words, if the General Fund grows at two percent and Medicaid needs another five percent out of the General Fund’s flesh on an annual basis, then somebody is going to lose.

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Old playbook tool can help in the long-run

In 2000, Gov. Don Siegelman proposed a constitutional amendment to the Alabama Trust Fund to address this particular problem, and that amendment was ratified by the voters.  Besides providing a way to fund economic development projects, the amendment was designed to generate more money for the state General Fund more in line with the costs of health care.  Medical inflation has been higher than other forms of inflation and Medicaid was a concern then as it is a concern now.  The state General Fund had the same growth pattern then as it does now.  Comparing revenue to spending, the General Fund during that period was at most $1.4 billion versus being $1.8 billion now.  Medicaid spending was approximately $200 million then and it is $700 million now.  This snapshot tells the tale.

Before the constitutional amendment, the Alabama Trust Fund was invested in bonds to generate income because there was little incentive to invest in equities from a cash flow perspective.  Basically, only annual interest income could be spent for the benefit of the state General Fund, cities, counties, and Forever Wild, so investments were income-based.  What we did was say a portion of equity capital gains could be spent every year for the state’s benefit.

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The idea was this: if income-based securities earn three or five percent a year and stocks earn eight or twelve percent a year, then more income could be generated by investing a portion of the Alabama Trust Fund in stocks to boost the return and produce more money for cost cows like Medicaid and other health-related services that grow more than the low single digits.  Subsequently, this strategy produced over $700 million in extra cash over a number of years to help prop up the state General Fund and the new money needs like Medicaid in particular.  The authorization of the use of capital gains was later changed in another constitutional amendment, but the idea worked for some time, and the state General Fund and Medicaid benefitted from this approach.  Is this a panacea?  No, it is not, because it would take much, much savings to offset the magnitude of the Medicaid need, but it would help if the goal is to keep the program going in a compliant manner for a long time without raising revenue.

Alabama has no revenue sources (other than maybe one and a portion of another) that grow, on average, seven, eight, or nine percent per year.  Medicaid needs a trust fund of sorts, similar to the Alabama Trust Fund, that can generate additional revenue at a higher rate of return than the book of revenue sources that presently supports the state General Fund and Medicaid.

More changes needed or taxes coming

The Alabama Medicaid Agency has done well over the years containing costs relative to other states in the country.  Additional strategies exist to further contain costs, and other strategies exist that could generate additional dollars to support the future of Medicaid.  Long term, policy makers could further address future Medicaid needs that outstrip state General Fund growth.  Without taking proactive approaches in each of these areas there will either be losers in Medicaid or other state government service delivery areas, pressure to raise revenue, or both.

 

Dr. Henry C. Mabry served as State Finance Director from 1999-2003. He currently heads Mabry & Co., and can be reached at [email protected]

 

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Opinion | Changing lanes on the Alabama Workforce Superhighway

As we come out of the pandemic we have a new view of the world and with our innovative hats on, we now look at workforce issues through a new and different lens.

Ed Castile

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(STOCK PHOTO)

Hello friends and welcome back to the Alabama Workforce Superhighway! Our last stop was the AlabamaWorks Virtual Workforce Conference in September. The conference gave us a lot to think about on the drive ahead. It was great to be among workforce professionals again to share and discuss where we are as a state and, just from a mental perspective, I needed it!

We have so many opportunities staring us in the face that we did not have pre-COVID. The work we have all been doing is more important now than ever before. Did our previous challenges go away due to COVID? Absolutely not!

Our workforce issues may have been “timed out,” or perhaps they were on a break, but those issues continue to be our challenges. So, not only should we remain focused on our Success Plus goal of adding 500,000 workers in our workforce with credentials of value by 2025, we must also help our companies get back to work and work with their current and future employees.

We need to make sure they are technically ready for the impending automated world and assist them with all the tech-savvy tools that are being developed as part of Industry 4.0 and the ever developing “Smart Factory” concepts.

Alabama is rapidly moving in this direction, and we must have the workforce to meet the demands. This is one of the foundations for Gov. Kay Ivey’s Success Plus plan. In almost every speech and presentation Ivey delivers, she mentions how absolutely critical our workforce is and that they must be ready for the work we are recruiting into Alabama.

To say 2020 has been strange, would be a colossal understatement and it keeps on giving! 2020 started as a typical year when many were planning and working with high hopes for a productive legislative session, school year or university semester, or simply hoping for a beautiful spring. Little did we know COVID-19 would turn us all inside out and literally stop the world in its tracks.

But, not in Alabama. Yes, it was a kick in the gut and our hearts go out to the many who have suffered or lost loved ones due to the pandemic. But as Alabama usually does, we are fighting back. With good solid leadership by Ivey, an extraordinary Governor’s Office staff, a host of very smart cabinet officers and their respective department staffs, and most importantly, some very focused business leaders making good and sound business decisions, we are leading the nation in many aspects of our recovery.

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In addition, as we come out of the pandemic we have a new view of the world and with our innovative hats on, we now look at workforce issues through a new and different lens. Yes, the drivers on the Alabama Workforce Superhighway are focused and determined with many great examples of courageous initiatives to assist our customers, overcome the issues and not only get back to pre-COVID productivity, but be even stronger.

So, what new opportunities has 2020 brought us when it comes to our workforce? Although the pandemic has brought many challenges it has also given us access to many people we did not have access to before. Who are these people? There are thousands who lost jobs that were vulnerable to the pandemic. Retail employees, hospitality and restaurant workers who in some cases were working two and three jobs to make ends meet, now have an opportunity to be trained for a less vulnerable job. Alabama has many jobs available as the world wakes back up. We NEED these people and our Alabama Workforce Stabilization Program is laser focused on these folks.

In the recent AlabamaWorks Virtual Workforce Conference we discussed the need for flexibility in order to adapt to change. To be successful in this “new normal” we must prepare our workforce by:

  • Creating new digital models for education and training
  • Upskilling (expand capabilities)
  • Re-skilling (acquire a new or improved skill)
  • Strengthening and enforcing safety measures
  • Reinforcing partnerships and pooling resources
  • Focusing on higher wage jobs
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Yes, the world has changed, but we in Alabama were already moving in the right direction.

There are many people to thank for our progress and to name just a few: Governor Ivey and her staff set us on a course to meet those needs with the “Strong Start, Strong Finish” education initiative and gave us a strategy for success through the Success Plus plan. Lt. Governor Will Ainsworth, his staff and the Senate Leadership are very engaged as is the House Leadership with Speaker Mac McCutcheon, budget chairs and other many strong Representatives and Senators across the state. They get it!

Yes, we got this! But, we are nowhere near done and as you already know this work can never stop. To borrow some words from a great song, “we can check out anytime, but we can never leave.” We can want to exit the highway, but we can never stop our drive on the Alabama Workforce Superhighway!

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Opinion | Former Sen. Brewbaker supports Montgomery tax referendum 

If we want Montgomery to change for the better, we are all going to have to start living in our community rather than off of it.

Dick L. Brewbaker

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(STOCK PHOTO)

I am in full support of the property tax referendum on the ballot this November. That may surprise some people because I have been critical of the performance of the Montgomery County Public School System in the past.

Until recently, student performance has generally been poor, financial management has been historically problematic, and there have been real and persistent problems with transparency. New Board leadership has worked hard to address these issues in a real way, but there is still work to be done.

However, whether we are talking about cars or public education, there is such a thing as trying to buy too cheap. Montgomery has been paying the legal minimum in property tax support for decades. It shouldn’t come as a huge surprise to anyone that our schools’ quality reflects our financial commitment to them.

Yes, it’s true that more money isn’t always the answer, but it’s also true that money is part of the answer. Sometimes the bare minimum isn’t enough, and this is one of those times.

Most people who vote on this referendum will not have children currently attending MPS. If you are one of those people, vote yes anyway.

Our public school population is declining because many young couples with children are leaving our city because they know their children can get a better education elsewhere.

This loss of young parents will eventually kill this city. We have got to turn the schools around before Montgomery’s tax base is eroded beyond repair. Whether you have kids in the system or not, if you care about your local tax burden or the value of your property, it’s time to vote ‘yes.’

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Need another reason to vote yes? Ok, here’s one:  Montgomery will eventually lose both our USAF bases if we don’t show the Air Force we are serious about improving our failing schools. Already less than half of the airmen stationed in Montgomery bring their families with them.

Many military families view MPS as so low quality that they won’t subject their children to them. If we don’t fix our schools, sooner or later we will lose Maxwell and Gunter. If you don’t believe that would be an economic nightmare for our city, ask around.

At the end of the day, passing this referendum is not only a vote to help children succeed, but also a vote to save the city in which we all live. It’s ok to be hopeful, it’s ok to be optimistic even about the future of Montgomery and its schools.

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If we want Montgomery to change for the better, we are all going to have to start living in our community rather than off of it.

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Opinion | FEMA’s Hurricane Sally response

So, how has FEMA performed in responding to Hurricane Sally? So far, pretty darn well.

Bradley Byrne

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Gov. Kay Ivey took a tour of the damage from Hurricane Sally on the gulf coast Friday September 18, 2020. (Governor's Office/Hal Yeager)

Most people in Alabama have heard of FEMA, the Federal Emergency Management Administration. Its name is a little misleading because emergencies by their nature aren’t so much managed as responded to, often after the fact. You can’t manage a tornado or an earthquake, for example, but you can and should respond to it.

Hurricanes are facts of life down here and nearly every part of our state, not just the coast, have been affected in some way by at least one. We can prepare for hurricanes and guard against the worst consequences and that starts with each of us as individuals, family members and citizens doing our part to be prepared to protect and take care of ourselves, family members and neighbors. Alabamians are actually pretty good at doing that.

But, there is also a role for governments at all levels. Local governments actually play the most important public role because they are closest to the people of their areas and have the first responders already employed and trained to take care of the needs of local residents during the period running up to, during, and in the immediate aftermath of the storm. State governments manage the preparations before the storm and provide the support local governments need afterward to do their jobs. The federal government supports the state and local efforts, which typically means providing the lion’s share of the money needed, anywhere from 75 percent to 90 percent of the costs. So there’s not one emergency management agency involved in responding to hurricanes but three, corresponding to each level of government.

The day before Hurricane Sally hit, I was individually briefed by the Director of the National Hurricane Center Ken Graham, FEMA Administrator Pete Gaynor and Coast Guard officials. That same day I went to the White House and made sure we had a good line of communication in case we needed help, which looked likely at the time. I have to say, the White House was immediately responsive and has continued to be so.

How has FEMA handled the federal response to Hurricane Sally? When the state of Alabama requested a pre-storm disaster declaration, which triggers federal financial support for preparations and response during the storm, FEMA and the White House gave the okay in just a few hours. On that day before when I spoke with the White House, I asked them to send FEMA Administrator Gaynor to my district as soon as possible once the storm cleared to see the damage and meet with local officials. He came three days after the storm and spent several hours touring the damage with me and meeting with local leaders. When the state of Alabama requested a post-storm declaration, triggering federal financial support for public and individual assistance, FEMA and the White House responded affirmatively in less than 48 hours – record time.

Public assistance is federal financial support for the costs to state and local governments as a result of a storm. This includes water bottles and meals ready to eat for locally requested points of distribution, debris removal and cleanup costs (think of the large tandem trucks picking up debris piled up on the right of way), as well as the costs to repair damage to public buildings and infrastructure like roads and bridges, and in the case of Sally damage to the Port of Mobile.

Individual assistance, as the label states, goes to individuals affected by the storm. Private assistance won’t pay something you have insurance for, but it does pay for a variety of losses, particularly having to do with an individual’s home. So far 60,000 Alabamans have applied for individual assistance and already FEMA has approved $42 million. If you haven’t applied for individual assistance there’s still time for you to do so online at DisasterAssistance.gov, or if you need help in applying call FEMA’s Helpline at 1-800-621-3362. If you have applied for individual assistance and have been denied, appeal the decision because frequently the denial is simply because the applicant didn’t include all the needed information.

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Many people were flooded by Sally and over 3,000 of them have made claims to the National Flood Insurance Program. Over $16 million has already been paid out on those claims. The Small Business Administration has approved over a thousand home loans to people with storm losses, totaling over $40 million, and many more loan applications are still pending.

So, how has FEMA performed in responding to Hurricane Sally? So far, pretty darn well. I want to thank FEMA Administrator Gaynor for coming down here so quickly after the storm and for FEMA’s quick and positive responses to all our requests. And I want to thank President Trump for his concern and quick response to Alabama’s requests for disaster declarations. Hurricane Sally was a brutal experience for us in Alabama, but FEMA’s response shows that government can do good things, helping people and communities when they really need it.

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Opinion | An inspirational pick

Many progressives, it seems, claim to believe in the power of women, but only for women who think and talk like they do.

Govs. Kay Ivey, Kristi Noem and Kim Reynolds

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President Donald Trump, left, and his Supreme Court nominee, Judge Amy Coney Barrett. (WHITE HOUSE PHOTO)

A century ago, the Suffragettes finally succeeded in winning the right to vote for women. They would be thrilled to see the nomination of a woman so uniquely qualified to serve on the U.S. Supreme Court as Judge Amy Coney Barrett, were they alive today. It’s easy to imagine them storming the streets of America and urging that Judge Barrett be confirmed, and by a wide margin.

After all, the four female justices nominated before her were confirmed with lopsided votes by the U.S. Senate: 99-0 for Justice Sandra Day O’Connor, 68-31 for Justice Sonia Sotomayor, 63-37 for Justice Elena Kagan and 96-3 for the late Justice Ruth Bader Ginsburg.

Sadly, it speaks to the times in which we are living that Judge Barrett’s vote by the Senate will most likely come down to a tight vote, with nearly every Democrat opposing her nomination.

As governors who are either the first or second females to be elected in our respective states, we are rightfully proud to see diversity expand among the highest levels of government. Notably, however, our support for Judge Barrett hinges not on her being a female, but rather her superior intellect, unflappable composure and impeccable integrity, all which combine to make her eminently qualified in every way. 

Regretfully, we know – as do many others – that the climb for women into the upper echelon of American leadership has always been a bit steeper. After all, when was the last time a man’s haircut, the color of his tie or suit or the number of children in his family were scrutinized as part of the public discourse?

It is bittersweet that Judge Barrett followed her father’s advice that she could do anything her male counterparts could do, only better, and yet, sadly, millions of women appear to oppose her nomination simply because she interprets the law as-written, rather than siding with them on every issue. Is this the new standard for qualification?  

Many progressives, it seems, claim to believe in the power of women, but only for women who think and talk like they do.

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We applaud President Trump for choosing Judge Amy Coney Barrett for service on our nation’s highest court; she may well be one of the most qualified, extraordinary picks during the past century, and we urge the United States Senate to confirm her nomination in short order.

We especially like the direct answers Judge Barrett provided to two of the Senate Judiciary Committee members who questioned her last week. 

When Sen. Chris Coons, D-Delaware, suggested that Judge Barrett would vote in the same manner as the late Justice Antonin Scalia, a conservative for whom she had clerked earlier in her career, she calmly responded, “I assure you I have my own mind.” 

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And when the Committee’s ranking Democrat, Sen. Dianne Feinstein, D-California, asked her whether she believed that Medicare was unconstitutional, she cited the “Ginsburg Rule,” so named for the late justice she will be following, of providing “no hints, no previews, no forecasts.”

Perhaps one of the most powerful witnesses to speak in support of Judge Barrett was her former law student at Notre Dame, Laura Wolk. 

Ms. Wolk is totally blind, but before pursuing the “impossible dream” of becoming the first blind law clerk at the Supreme Court last year, she was struggling with her classwork as a first-year law student, fearful of failing. 

Laura recalled, “Judge Barrett leaned forward and looked at me intently. ‘Laura,’ she said, with the same measured conviction that we have seen displayed throughout her entire nomination process, ‘this is no longer your problem. It’s my problem.’”

Ms. Wolk went on to say that Judge Barrett helped her see a pathway to success.  She said the Judge will “serve this country with distinction not only because of her intellectual prowess, but also because of her compassionate heart and her years of treating others as equals deserving of complete respect.”

When Judge Barrett raises her right hand to take the oath to “administer justice without respect to persons” and to “support and defend the Constitution of the United States,” it will be a win-win for every female – young and old alike during the past 100 years – who has dreamed of seeing women advance to the top positions of our government. 

Moreover, it will be a signal to every little girl – and boy – that the most qualified individual will get the job.

Governors Kay Ivey of Alabama, Kristi Noem of South Dakota and Kim Reynolds of Iowa authored this column.

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