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Economy

CHIP program changes will cost Alabama an estimated $1 billion over the next decade

Brandon Moseley

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Recent changes to the Children’s Health Insurance Program (CHIP) means that the state of Alabama is going to have to shoulder substantially more of the cost for the program. An estimated 220,000 children receive their health insurance through the CHIP program, which is managed by Blue Cross Blue Shield of Alabama (BCBSAL) and marketed under the name: ALL Kids.

Wednesday state general fund (SGF) agencies made their 2020 budget request presentations in hearings to the joint House and Senate budget committees of the Alabama Legislature.

Alabama Department of Public Health Officer Scott Harris told the state budget committees that starting in 2020 the state of Alabama will have to pay a 20 percent match for the Children’s Health Insurance Program (CHIP). CHIP is presently 100 percent federally funded; but that is changing.

Harris told the legislature that the change in the program means that the Alabama Department of Public Health (ADPH) will need an additional line item in the budget for CHIP. The program will cost ADPH $23.4 million in the fiscal year 2020 general fund budget. Harris told the legislature that that cost will rise to $60.4 million in the fiscal year 2021 general fund budget and to $66 million in the fiscal year 2022 budget.

Alabama Medicaid Commissioner Stephanie Azar told the Alabama legislature that Alabama Medicaid will also have to pick up a portion of the state’s CHIP cost.

Azar told the Alabama Political Reporter that the change in the CHIP match will cost Alabama Medicaid $15 to $20 million of general fund dollars during fiscal year 2020 and an additional $35 to $40 million in the fiscal year 2021 general fund.

Combined the CHIP match will cost the two state agencies $38.4 million to $43.4 million in fiscal year 2020, $95.4 to $99.4 million in fiscal year 2021, and between $101 million and $106 million in fiscal year 2022.

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Factoring in inflation, rising medical costs and population growth the change in CHIP could cost the state general fund an estimated $1 billion over the next decade, assuming that the state has to continue to pay the twenty percent match going forward.

In 2010 Congress passed legislation changing the CHIP program from an 80 percent federal: 20 percent state program to one hundred percent federally funded. On January 22, 2018, Congress renewed CHIP for another six years; but when they did, they reverted to the previous 80:20 split, passing a fifth of the costs on to state budgets.

The Alabama Political Reporter reached out to Congresswoman Terri Sewell (D-Selma) about what her thoughts are on the present standing on the CHIP situation.

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“I am working to secure as much federal funding as possible to help ensure the over 220,000 children in Alabama who rely on CHIP get the health care they need,” Rep. Sewell said. “However, the Alabama legislature has actively chosen for years to leave federal funding on the table that could help cover the cost of insuring some children currently enrolled in CHIP.”

Rep. Sewell thinks that the state should expand Medicaid.

“I introduced legislation earlier this month to fully fund Medicaid expansion in Alabama for the first several years after the legislature acts, which would reduce the state’s immediate financial burden,” Rep. Sewell said.

Azar told the legislature that the Alabama Medicaid Agency cost $6.5 billion. Over seventy percent of the Medicaid money is federal dollars. Medicaid costs Alabama’s state general fund $755 million. Medicaid is by far the largest item in the state general fund budget.

Brandon Moseley is a senior reporter with eight and a half years at Alabama Political Reporter. You can email him at [email protected] or follow him on Facebook. Brandon is a native of Moody, Alabama, a graduate of Auburn University, and a seventh generation Alabamian.

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Economy

New unemployment claims continue to drop

Micah Danney

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(STOCK PHOTO)

There were 11,692 unemployment claims filed in Alabama last week, down from 17,439 the previous week, according to the Alabama Department of Labor.

Seventy-six percent of the claims from July 26 to Aug. 1 were related to COVID-19, according to the Alabama Department of Labor. That compares to 89 percent the week before.

New claims increased over the first half of July but declined in the second half.

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Economy

Alabama Power is returning $100 million to customers

Brandon Moseley

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The Alabama Public Service Commission approved a plan Tuesday to credit Alabama Power Company customers on their October bills. The move returns approximately $100 million to Alabama Power Company customers.

“Putting money back into the pockets of hard-working Alabamians is one of the ways we can help on the road to recovery,” Public Service Commission President Twinkle Andress Cavanaugh said on social media. “Alabama Power to refund $100 million to customers.”

The typical Alabama Power customer will receive a $25 credit on their October bill. The newly approved credit is on top of a 3 percent rate reduction that customers are already enjoying in 2020. This previous rate cuts and the October credit amount to about $300 million in savings for Alabama Power customers this year.

“We appreciate the commission voting today to expedite this credit for our customers,” said Richard Hutto, Alabama Power’s vice president of regulatory affairs.

The global economic collapse due to the COVID-19 pandemic has hurt people across Alabama. It has also dramatically lowered fuel costs for Alabama Power Company’s plants.

A typical residential customer using 1,000 kilowatt-hours of electricity per month is expected to receive a credit of $25. Customers who use more energy will receive a larger credit. Customers who use less power receive a smaller credit but had a smaller bill to begin with. Adjustments to fuel costs are typically calculated at the end of the year, with savings passed to customers beginning in January, but due to the economic downturn and pandemic-related job losses, Alabama Power and the PSC are rushing that money to Alabama families and businesses.

“Many of our customers have been hurt by COVID-19. We hope this credit will provide some additional relief at this difficult time,” Hutto explained.

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The 3 percent rate reduction, that took effect in January, was based on earlier estimates of lower costs for fuel and other expenses for 2020. The rate reduction alone equates to about a $4.50-per-month reduction for the typical residential customer.

“Our employees are working every day to keep costs low while providing industry-leading reliability for our customers,” Hutto added.

Alabama Power said in a statement that their total retail price is below the national average and has been for decades. When adjusted for inflation, the price customers pay for electricity is lower today than it was 30 years ago.

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Alabama Power has been assisting customers in other ways during the COVID-19 outbreak. Since the start of the pandemic, the company has suspended disconnects and late payment fees for customers hurt by the coronavirus.

Cavanaugh is seeking another term as president of the Commission.

“It is crucial that we have strong pro-jobs conservatives supporting President Trump’s agenda at all levels of government,” Cavanaugh said on social media.

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Economy

Payroll Protection Program deadline has been extended to Saturday

Brandon Moseley

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Congresswoman Martha Roby, R-Montgomery, this week reminded business owners that the deadline to apply for the Payroll Protection Program, knowns as the PPP, has been extended to Saturday.

“The Small Business Administration’s Paycheck Protection Program (PPP) application deadline was recently extended to Saturday, August 8,” Roby wrote in an email to constituents. “Do not forget to fill out your application if you are a small business that has been impacted by the Coronavirus pandemic.“

The PPP was a loan program administered by the Small Business Administration. It was part of the bipartisan CARES Act to address the economic collapse caused by the COVID-19 global pandemic and the forced economic shutdowns, which were implemented in the early months of the public health emergency in an attempt to slow the spread of the novel strain of the coronavirus and allow public health agencies and health care systems time to build up testing, contact-tracing and hospital bed capacity.

The PPP loans are 1 percent interest loans available through the SBA. If the business uses the money to make payroll and pay standard operating expenses then the loans will be forgiven. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers.

The PPP has been very popular, so much so that that program ran out of money just weeks after Congress passed it. Congress had to go back and provide more funding for the PPP.

Businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.

Senate Democrats are meeting with the Trump Administration, Senate Republicans and House leadership on a compromise plan for a fifth coronavirus relief package. A big point of contention has been the size of the total package. Speaker of the House Nancy Pelosi, D-California, supports a $3.2 trillion coronavirus relief bill while Republicans prefer a more modest $1 trillion relief bill. The two sides are expected to continue to negotiate through Friday in an attempt to reach a compromise before the August recess.

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Roby is serving in her fifth term representing Alabama’s 2nd congressional district. She is not seeking re-election.

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Economy

State’s unemployment claims slowed last week

Last week saw the lowest number of new claims since the week-to-week number first spiked from 1,824 to 10,982 when the lockdown started in mid-March.

Micah Danney

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The number of unemployment claims in Alabama slipped last week after increasing through the first half of July.

There were 17,439 claims filed from July 19 to 25, according to the Alabama Department of Labor. Of those, 15,461, or 89 percent, were COVID-19 related.

Claims soared at the start of the pandemic in late March, hitting a weekly high of 106,739 in the first week of April. The rate of new claims declined sharply in May, with each week counting under 30,000 claims.

Since then, the number has decreased somewhat steadily. Claims rose several thousand over the course of this month, from 19,058 in the week ending July 4 to 23,678 in the week ending July 18.

Last week saw the lowest number of new claims since the week-to-week number first spiked from 1,824 to 10,982 when the lockdown started in mid-March.

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