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“It is one of the happy incidents of the federal system, that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

Justice Louis D. Brandeis

The state of Alabama continues to deny its citizens access to expanded Medicaid. One of the arguments made by Alabama state Senator Tripp Pittman, a harsh critic of government in general and Medicaid in particular, is that the states are not given enough flexibility. He blamed the poor for the “excessive” cost of care, in fact, and suggested that if more control were given to the state the undeserving could be weeded out. Then, as one does with weeds, left in a pile on the side of the road to wilt I suppose.

An inside look of how the state of Alabama would REALLY handle this serious responsibility can be seen in the trial of our Speaker of the House, going on now. For those who don’t watch Rachel Maddow or read the New York Times, the state has its Governor under grand jury investigation and its Supreme Court Chief Justice under judicial review. These, however, are not the worst. Mike Hubbard, the Speaker, has been under indictment for 23 felony counts involving violations of the ethics laws he authored. It has taken two years for this to come to trial. In the interim he has been reelected to his seat and reelected as Speaker by his “peers.” Several of his peers have already pled guilty and are scheduled to testify. Others will likely plead the fifth.

It is an interesting set of charges. He is charged with taking money as a lobbyist (unregistered) from a gas company and then  passing laws to push business in their direction. He is also charged with using his position as head of the Republican party to push business towards his formerly failing company. These are all your typical corrupt politician charges and his defense is one of confusion about the illegality of the actions (“I don’t know what he was talking about,” says defense attorney Baxley, it’s all “mumbo jumbo and gobbledygook.”) combined with the good-old-boy defense (“What he didn’t show was the parts of the ethics law that offers exceptions for friendships in business dealings,” Baxley said). Makes for fun theater.

The most serious charges and the ones that likely have gotten the feds interested are the ones regarding Medicaid. As a program that costs the state under a billion dollars and brings six billion dollars into the state, a bunch of money is available for folks to use for “bidness.” Speaker Hubbard, as documented in the New Republic, saw a huge opportunity. As the revenue stream for the general fund (which funds Medicaid) is diminishing and folks like Senator Pittman have no compunction to raise taxes, controlling medication costs seemed to be the natural course of action. Speaker Hubbard called a meeting and:

So three legislators, two lobbyists, and a handful of staff privately decided, after the briefest of deliberations, to enact a policy that would give a $20 million monopoly over the state’s Medicaid drug business to a corporation that had no experience running such a program, a move that would impact the lives of the 600,000 poorest and least powerful people in Alabama—children, senior citizens, people with disabilities.

Afterwards the group discovered to their surprise that one of the Speaker’s clients was involved in this Medicaid medication management scheme and would have benefited significantly.

The former chief of staff also urged Hubbard not to vote on the budget bill because it “looked bad,” but Hubbard said it would send up “too many red flags.” The language was later stripped in committee.

His current defense? “No harm, no foul” and/or “we stuck it to them city slickers.”

So in this one laboratory of democracy, even with significant federal oversight, Medicaid money seeps out around the edges to enrich a small number of folks. Imagine what’ll happen when the oversight is less. My prediction: It’ll be HUGE for some people, very few of those being the poor and the sick.

 

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'I hate it when people vote with their feet'

‘I hate it when people vote with their feet’

About 10 years ago, Mobile County landed one of the last large pre-recession “smokestack” projects. Competing against multiple states, the state and the county ultimately gave a lot of money in anticipation of “29,000 jobs during construction, and 2,700 jobs paying an average of $50,000 to $65,000 annually once the plant is operational in 2010.” One of the more controversial aspects of the corporate welfare was the amount paid by Alabama and Mobile County ($1 BILLION) as compared to the benefit accrued. Many of the skilled construction jobs were filled not by locals but by a nomadic group of people who traveled from places like North Carolina and Virginia, lived in campers for several months, and left to go to the next big construction job. Our corporate welfare went not to Alabamians but to people from all over the south who sought employment by “voting with their feet.”

Our legislature is electing not to spend $85 MILLION on adequately funding Medicaid. They are going to begin holding hearings on the budget they just passed next week, focusing on finding out why healthcare is so expensive, where the waste and fraud is, and finding out how to “fix the program.”

State Rep. Paul Lee, R-Dothan, said he believed a part of the Medicaid issue might be that the system does more “handing out” than “handing up.”

“We have children in need and elderly in need. …We need to start encouraging those that are able and willing to go to work rather than sitting and waiting for a check to come in,” he said.

“We can fix Medicaid in 24 hours if we could make our own rules (versus federal regulations) and do it the way it should be done.”

The first person to suggest that states should be given much greater leeway to “fix programs” was Ronald Reagan. Pointing to the migration of blacks to the north during World War II and to the migration to the energy belt in the 1970s, he suggested that America was not composed of static folks tied to a community, but was instead a moveable army of workers and others who would move from their current state to another if services were inadequate. Like the construction workers were drawn to Alabama. Or perhaps like poor, sick folks might leave Alabama

Do poor, sick people move from a low-service local to a high-service one? Do wealthy folks move to areas with low taxes? Are we finally entering a Reaganesque utopia to which the Ayn Rand capitalists will move after we eliminate Medicaid funding, creating a little Somalia  right here?

As it turns out, the great migration of poor sick people to blue states after Obamacare never happened. Folks it seems are content to stay put and use the Emergency Department near their family rather than move to an expansion state. The exception are the chronically homeless, as it turns out that up to 40% are rather nomadic  and identify service availability as a reason to relocate. This is about 40,000 people nationwide.

What about the converse? Are wealthy entrepreneurs leaving for the promise of lower state taxes? Despite what the moving company “data” reveals, the truth is nope. In a very well done study by the Center of Budget and Policy Priorities using IRS data which combined income and address change information, it turns out:

  • 70% of folks never leave the state in  which they were born
  • The income tax status of the state does not correlate with the movement of people in or out in general
  • If anything, poor people are MORE likely to move to a low tax state, which probably correlates with lower housing costs
  • Old people are more likely to move away from snow

People move for two reasons, jobs and family. Well, warm weather as well for old folks.

Reagan’s belief was based on a theory by Charles Tiebout, a rather obscure economist, as well as personal observations about blacks moving north and and Houston’s energy-sector driven growth. Tiebout’s theory was based on faulty assumptions, and Reagan’s observations were not really contextual (the reason for the black diaspora was a little more complex).

Folks that vote with their feet, it seems, are nomadic. They come to either work on large construction projects or to seek out services to substitute for their lack of a permanent residence. It is probably more realistic to fully fund services such as Medicaid rather than fight the federal government and hope for an influx of wealthy Ayn Rand followers. I do not think this will come out in the hearings.

 

 

From al.com, italicized  comments mine:

Lawmakers appropriated $700 million from the General Fund for Medicaid next year, $85 million short of the governor’s request.

From an Urban Institute paper about Alabama published in 2004:

An overarching issue is the defeat of the tax reform proposal, which implies that the vast majority of Alabamians prefer lower taxes to improved government services or possibly even maintenance of the current level of services.

In other words, we have been crying wolf for a long time and have always found a work-around. This crisis has been precipitated by past loans from other accounts, one-time payments such as the BP settlement, and other work-arounds coming due and not by Obamacare. 

 

But for the first time they said one option could be to eliminate prescription drug coverage for adults, which would save an estimated $50 million to $60 million in state dollars.

“If we have to live within our means, then we have to make some very tough decisions,” the governor said.

The estimated savings on the prescription program do not take into account increased medical costs that would result from people not getting their medicines.

Wow! Words fail me…

Azar also said Medicaid would not be able to proceed with the plan to begin providing managed care through regional organizations, a move intended to slow the growth in costs and improve health outcomes.

“Together with the Alabama Legislature, we have made significant progress in the way the Alabama Medicaid Agency operates, making it more effective and efficient,” Governor Robert Bentley said. (February 9, 2016)

What a difference a month makes!

The Centers for Medicare and Medicaid Services earlier this year approved a waiver to allow the change and could provide up to $747 million over five years to help with the transition.

Elimination of prescription coverage was one of 10 areas of potential savings mentioned by Bentley and Azar today.

Various combinations of the cuts could be considered and would have to be approved by the Centers for Medicare and Medicaid Services.

Another savings option Azar listed would be for Medicaid to consider a pharmacy preferred provider. That would save an estimated $19 million to $30 million in state dollars.

But would eliminate money we use for matching, I suspect, thus multiplying the  reduction of services

Other programs mentioned, and the estimated savings in state dollars:

— Eliminate eyeglasses for adults: $300,000 – Probably will limit employment opportunities

— Eliminate outpatient dialysis: $3.7 million – 500 people dead or sitting in the ED waiting to get close enough to death they quality for emergency dialysis

— Eliminate prosthetics and orthotics; $500,000 – Hard to work without a leg

— Eliminate Program of All Inclusive Care for the Elderly (PACE): $2 million – putting 150 people into nursing homes, resulting in a net cost to Alabama

— Eliminate Health Home and Physician case management fee: $16.6 million – Adding even more people to the nursing home

— Eliminate primary care bump (pays doctors at Medicare levels): $14.7 million – Reducing the docs taking Medicaid

— Reduce administrative costs: $3.5 million – Reducing efforts to reduce waste,, fraud, and abuse I suspect

— Reduce reimbursement rates for ambulatory surgical centers, doctors, dentists, optometry, hearing and other programs: Zero to $50 million. – Reducing access for these programs and furthering the reputation of Alabama as home of the halt, lame, blind, and toothless.

Please call your state Senator or Rep if you live in Alabama and demand that they revisit the Medicaid budget. Please retweet this under #CanYouHearUsNowAl and #alpolitics

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