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Economy

Alabama missed out on full funding of Medicaid expansion. This bill would fix that.

Chip Brownlee | The Trace

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Alabama Sen. Doug Jones is partnering with Virginia Sen. Mark Warner to introduce a bill that would make up for federal funding lost to states that chose not to expand Medicaid in the first years of the Affordable Care Act.

The bill would allow states to take advantage of a similar match rate to those that expanded before federal matching rates — the amount of the bill paid by the federal government — began to decline in 2016.

“It essentially gives states that have not expanded Medicaid a second chance,” Jones said in an interview with the Alabama Political Reporter.

Fourteen states haven’t expanded Medicaid — Alabama among them.

Of the 36 states and the District of Columbia that have expanded Medicaid, many of them expanded after federal funding to cover expansion began to decline in 2016.

Regardless of the implementation date, for the first three years of expansion — if Jones’ bill passes — states wouldn’t have to pay any of the costs.

A number of the states that expanded after 2016 or plan to expand soon are heavily Republican. Voters in Nebraska, Utah and Idaho approved ballot referendums for Medicaid expansion during midterm elections last year. Virginia and Maine implemented expansion in January of this year.

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Two of Alabama’s neighboring states, Mississippi and Georgia, are reportedly considering some form of Medicaid expansion, though neither appears to be on track to fully expand the program this year.

States that have expanded after 2016 were never able to take full advantage of the federal government paying for all of the expansion costs.

States that expanded after 2014 haven’t received the same federal matching rates as those who expanded immediately. Those that expanded in the last two years are receiving even lower reimbursement rates.

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When Medicaid expansion became an option in 2014, the federal government covered the full cost. Beginning in 2016, funding began dropping from 100 percent. By 2020, the federal match rate will level out at 90 percent.

Federal funding still covers most of the costs for those who become newly insured through expansion.

Expanding the program allows states to provide healthcare coverage for all individuals up to 138 percent of the federal poverty rate, which is about $28,000 for a family of three.

If Alabama, for example, were to expand Medicaid this year, it would start with a 90 percent reimbursement rate in 2020. Several studies estimate that more than 300,000 people would be newly eligible for the health insurance program for lower-income individuals.

Jones’ and Warners’ bill would allow states — including Alabama — to take advantage of full funding for the first three years after the state chose to expand Medicaid — regardless of what year they chose to do so.

Instead of the same timeline for every state, reimbursement rates would depend on when that individual state chose to expand Medicaid.

Federal funding would phase down to a 95 percent federal match in the fourth year of expansion, 94 percent in year five, 93 percent in year six and 90 percent for each year thereafter — following a similar reduction timeline to that in the current law.

Other states that have expanded Medicaid since 2014 — among them Indiana, Alaska, Montana, Louisiana and Virginia — would also benefit.

The bill, if passed, could potentially assuage some concerns from Alabama lawmakers who worry the state won’t be able to pay even a tenth of the expansion cost.

“We’re leaving about $14 billion of our own money on the table that could come back to Alabama,” Jones said. “Our rural hospitals are closing, and this is a way to make sure that we keep our money in state, give good health care to folks and expand the economy.”

A 2012 economic analysis by the UAB School of Public Health found that expansion would cost the state about $770 million over the first seven years but could potentially result in $20 billion in economic growth over the same time period.

With better reimbursement rates, the cost would be even lower.

An updated version of the study found that Medicaid expansion would provide insurance to 346,000 more Alabamians. It would also spur $2.7 billion to $2.9 billion in annual economic activity, according to the updated study.

The increase in tax revenue caused by the expanding economy would help offset the state’s Medicaid costs.

“Every state that has expanded Medicaid has had better health outcomes for their people, but just as importantly, it’s kept hospitals open and has been an economic driver for rural areas in those states,” Jones said. “I think they should have incentive already to do it, but this should help.”

Small hospitals in Alabama continue to close — an issue that the Alabama Hospital Association says could be prevented by expanding Medicaid.

Butler County’s Georgiana Medical Center will close on March 31 of this year. That announcement renewed some calls for the state to expand Medicaid.

Georgiana Medical Center will become the 13th Alabama hospital to close in eight years, the seventh rural hospital to close. Other rural hospitals that have closed include those in Florala and Elba.

Jones said Alabama Republicans’ refusal to expand Medicaid had more to do with their opposition on ideological grounds to President Barack Obama than concerns about cost.

“It was as much as anything a political decision in response to the Affordable Care Act,” Jones said. “There was some concern, and rightly so, about the amount of money, but it was a political decision.”

Proponents of Medicaid expansion say it would significantly aid rural hospitals in paying their bills.

Rural hospitals across the country, particularly in non-expansion states, are closing at an alarmingly high rate — largely because the Affordable Care Act intended for an influx of money from more people covered by Medicaid. The new money was intended to offset cuts to Medicare reimbursements built into the Affordable Care Act.

Hospitals continue to lose money as Medicare reimbursement rates remain low and no offset in sight.

Should Medicaid expansion be on the 2019 legislative agenda? Experts say it has to be

Nearly 90 percent of the remaining rural hospitals in Alabama are operating at a loss and routinely cutting back on staff and services, according to the Alabama Hospital Association.

“We need to do this. We cannot afford to let folks go uninsured and we cannot afford to continue to have our rural hospitals closing,” Jones told APR. “And this is but one way that we can really help. There are so many hospitals operating in the red, and we need to at least get them up to where we’re breaking even.”

In states that didn’t expand Medicaid, more than 2 million low-income adults fall into a “coverage gap,” due to incomes that are too high to be eligible for Medicaid but too low to receive subsidies to purchase through the federal health care marketplace. In Alabama, that number is at least 75,000.

A similar bill was introduced last year, but it failed to pass. Jones hopes that the bill will get more support this year. It’s possible Republican senators from new expansion states like Idaho, Utah and Nebraska might support the bill to help their states.

There is a companion bill in the House.

“I’m urging all of my colleagues to get on board with this so states like Alabama can reap these benefits,” Jones said.

Jones said his office has been in contact with Gov. Kay Ivey’s office and with members of the Legislature.

“I know that there has been some discussions in the state Legislature about this,” Jones said.

Ivey has rejected discussion about Medicaid expansion, and Senate President Pro Tempore Del Marsh, R-Anniston, told APR in a December interview that expansion will not be on the 2019 legislative agenda.

“Among the Republican leadership and Republican caucus, when discussions have been made, there has been no initiative, if you will, to expand Medicaid,” he said. “In fact, the position has been to control the costs of Medicaid and to put pressure on the health care community to find ways to make it more efficient.”

Some Republicans have called for expansion, though. Former Sen. Gerald Dial, who left the Senate after the 2018 statewide elections, has publicly called for lawmakers to consider expansion or at least a partial expansion.

It’s already extremely difficult for anyone to qualify for Medicaid in Alabama, though the program still covers about 1 million people, most of whom are children or disabled. Virtually no childless adults are enrolled in the program.

Some states are considering work requirements and other Medicaid waivers to limit the scope of expansion. Lawmakers have said privately that they would consider expansion with work requirements or other limits.

“As long as the work requirements are such that they don’t get people out of the expansion, I would not be opposed to some work requirements,” Jones said. “Every body ought to get back to work if they’re able to work. But there’s a fine line that you have to do to make sure you’re not setting work requirements just to simply not have to pay for Medicaid because that would be defeating the purpose.”

Jones said overally the expansion of Medicaid with some work requirements would not be innappropriate.

Medicaid is by far the largest budget item in the state’s General Fund budget, which pays for all non-education-related programs. Last year, the costs surpassed $750 million, and it’s expected to grow as lawmakers prepare the FY2020 budget though enrollment has leveled out.

“I don’t think we can afford not to,” Jones said. “The fact is now we have the evidence to show that it is an economic driver. It will help the rural areas. It will help the state’s economy. It will bring in dollars, not just Medicaid dollars but other dollars around the health care system. In a lot of these areas, the hospitals are the biggest employers.”

Jones said Alabama shouldn’t pass up federal money to provide better health care.

“So much of this is our own money,” Jones said. “People don’t realize we’re paying into Medicaid but so much of our own money is going to other states, and we need to keep it at home.”

 

Chip Brownlee is a former political reporter, online content manager and webmaster at the Alabama Political Reporter. He is now a reporter at The Trace, a non-profit newsroom covering guns in America.

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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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Economy

GDP fell by an unprecedented 9.5 percent in second quarter

Brandon Moseley

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The Bureau of Economic Analysis released its advance estimate of U.S. GDP for the second quarter of 2020 reflecting the months of April, May and June dropped 9.5 percent in the second quarter, According to the BEA report, real GDP contracted at an unprecedented annualized rate of 32.9 percent. This is the largest quarterly decline since the series began in 1947, though market expectations were so low the actual number was slightly better than what the market and official estimates had expected.

President Donald Trump’s Council of Economic Advisors said that despite this massive contraction, the resiliency of the U.S. economy and the swift fiscal response of the Federal Government can aid in a strong recovery.

The Council of Economic Advisors said that the U.S. economy entered this contraction on a healthier and more resilient footing than it did both prior to the Financial Crisis of 2008 to 09 and relative to other advanced economies. This was due in part, to the longest expansion in U.S. history. American households also had a smaller overall debt burden prior to this pandemic than prior to the Financial Crisis. Household liabilities as a percent of personal disposable income were 136 percent leading into the Financial Crisis but were below 100 percent prior to this pandemic.

The United States had the highest growth rate among the G7 countries prior to the pandemic, with growth roughly double the non-U.S. G7 average.

The second-quarter decline in GDP was widespread, touching nearly every facet of the economy. Consumer spending, which accounts for roughly 70 percent of the U.S. economy, contributed to most of the decline, accounting for 25.05 percentage points of the 32.9 percent decline. The report also showed sharp contractions in business fixed investment, residential investment, inventory investment, and state & local government spending which contributed to the decline.

A massive but uneven decline in consumer spending (-34.6 percent at an annualized rate) revealed how quarantines have driven spending patterns. Individuals increased consumption of recreational goods & vehicles and housing & utilities, but lessened consumption of gasoline & other energy goods, health care, transportation services, recreational services, and food services & accommodation. The decline in business fixed investment was also widely spread, though it was particularly sharp in transportation equipment investment and mining structures investment, the latter reflecting subdued oil and gas production activity responding to extraordinarily low prices.

The pandemic and the forced economic shutdowns caused a sharp drop in real personal income as many workers faced lower wages, fewer hours or loss of their jobs completely. The University of Pennsylvania estimates that the CARES Act reduced the GDP contraction in the second quarter by 7 percentage points.

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The Council of Economic Advisors are predicting strong real GDP growth in the third quarter. The current Blue Chip consensus forecast of 17.7 percent annualized growth in the third quarter would be the largest recorded quarterly growth rate and a 36 percent recovery of the second quarter contraction.

The Council of Economic Advisors claim that the pace of the recovery so far has exceeded expectations, providing a source of optimism as we look ahead. In fact, the majority of major economic data releases over the past month—reflecting May and June data—have surpassed market outlooks. Most notably, the record-breaking number of jobs added in both May and June beat market expectations by a combined 11.7 million. Furthermore, high-frequency data indicate that 80 percent of America’s small businesses are now open, up from a low in April of just 52 percent. Consumer credit & debit card spending has recovered roughly 80 percent from the pandemic low, with spending in low-income zip codes rebounding the furthest, now just 2 percent below pre-pandemic spending levels.

Another 1.43 million Americans filed initial unemployment claims last week, the nineteenth week the total has surpassed one million new claims.

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The recovery could be threatened by surging coronavirus cases, which could force a second shutdown in some states. Governors in Texas, Florida, and California have had to implement some social distancing restrictions and Alabama Gov. Kay Ivey has had to impose a mask requirement on all citizens and even on school children.

The uncertainty with the virus and the economy has put pressure on Congress to approve another coronavirus relief package.

“Our nation is going through a time of testing,” Vice President Mike Pence said. “And let me say from my heart that our prayers and our sympathies are with all of the more than 150,000 families that have lost loved ones in the midst of this pandemic. As we continue to contend with the coronavirus in various places across our country, President Trump and our team, and the task force will continue to marshal the full resources of the federal government and the full power of the American economy to meet this moment and put the health of America first.”

“It’s amazing to think, at the lowest point in this pandemic, our economy lost 22 million jobs,” VP Pence said. “But thanks to that solid foundation that President Trump laid in our first three years, we’ve already gained back 8 million jobs just in May and June alone.”

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Economy

USDA says more than 50 million Farmers to Families Food Boxes have been distributed

Brandon Moseley

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U.S. Secretary of Agriculture Sonny Perdue on Wednesday said that the U.S. Department of Agriculture’s Farmers to Families Food Box Program has distributed over 50 million food boxes in support of American farmers and families affected by the COVID-19 pandemic.

“The delivery of 50 Million food boxes has helped an incredible number of Americans in need,” Perdue said. “I couldn’t be prouder of the great job done by the food box program staff and the many farmers, distributors and non-profits that helped to get this program off the ground for the American people. The Farmers to Families Food Box Program got off to a strong start, delivering over 35.5 million boxes in the first 45 days, and has now reached over 50 million boxes delivered – a testament to everyone’s hard work. I have been meeting with food banks and recipients across the country and it’s been heartening to hear all the positive feedback on how the program has saved businesses and fed Americans in need. We are well into the second round of deliveries and we’re working harder than ever to continue to build on the success of the program.”

“50 million Farmers to Families Food Boxes have brought fresh and nutritious food grown by great American farmers to those most in need during this pandemic,” said adviser to the president Ivanka Trump. “I am proud of the profound impact this program has had on strengthening our workforce and nourishing hungry families. We will continue to prioritize our Nation’s farmers, ranchers, workers and families through this robust new Farmers to Families Food Box Program.”

Economic developer Nicole Jones said, “USDA’s willingness to partner with farmers and food banks nationwide is an important community development action that has helped provide stability for families and save businesses. Thank you, Secretary Sonny Perdue and USDA, for taking significant steps to assist our farmers and ensure Americans do not go hungry amidst the pandemic.”

Flavor 1st owner Kirby Johnson said, “I was actually planting green beans when this happened. A good friend called me about this program. I was going down the row real slow planting green beans. I laughed to myself that by the time this program gets in motion, (the pandemic) will be over. Let me tell you, that was a Tuesday, the following Thursday I was packing in this packing house vegetables to go to the people. I’ve done a lot of government stuff. Nothing has ever been done this quick, especially produce. People that need it need it. They don’t need it two months from now, they need it now.”

Sabrina Tumey, with the Sitka Salvation Army, said, “The produce and the fruits are beautiful. And I literally have had people being so thankful and so grateful, almost to the verge of tears.”

Vince Winter, with AC Lakeside, said, “It feels good to be able to be an active part in getting food to those in need here in Sitka, being a part of the Sitka community. There is no better feeling in the world.”

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Marijo Martinec, the CEO and executive director of the Food Bank of Northern Indiana, said, “We get some very nice emails and phone calls. I mean, they can make you cry. People are really grateful for them. The fresh products have been wonderful.”

Sarah Ochoa, the community health services director for Community Action Partnership of Western Nebraska, “Definitely, there’s a need in the community. We’re not seeing the same people every week, which is a good thing, people are coming when they need it.”

Annie Forrest, who received a Food Box, said, “Being physically handicapped, this means a lot to me.”

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On April 17, 2020, Secretary Perdue announced the program as part of the Coronavirus Food Assistance Program developed to help farmers, ranchers, distributors and consumers in response to the COVID-19 national emergency.

Last week, USDA announced it would launch a third round of Farmers to Families Food Box Program purchases with distributions to occur beginning by September 1 with completion by October 31, 2020. The purchases will spend the balance of $3 billion authorized for the program. In this third round of purchases, USDA plans to purchase combination boxes to ensure all recipient organizations have access to fresh produce, dairy products, fluid milk, and meat products.

Eligibility in the third round will be open to entities who can meet the government’s requirements and specifications. Proposals will be expected to illustrate how coverage will be provided to areas identified as opportunity zones, detail subcontracting agreements, and address the “last mile” delivery of product into the hands of the food insecure population.

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