Unemployment is down, but enrollment in Alabama’s struggling Medicaid system continues to rise
by Tim Lockette
tlockette@annistonstar.com
Jan 26, 2014 | 4296 views |  0 comments | 39 39 recommendations | email to a friend | print
MONTGOMERY — A sharp drop in the state's unemployment rate hasn't decreased the number of people covered by Alabama Medicaid, a paradox that state officials didn't foresee.

"I made the assumption that if unemployment went down, enrollment would go down," said state health officer Don Williamson, the state's point man on Medicaid costs. "I was completely wrong."

For the past few years, state officials have been hoping an economic recovery would ride to the rescue of the Alabama Medicaid Agency. Before the 2008 recession, about 750,000 people were enrolled in Medicaid, the state-and-federal health care program for the poor. After the crash, the Medicaid rolls swelled by tens of thousands, and the state's cost to run the program grew accordingly. In 2010, with federal stimulus funds to pick up part of the cost of that growth, the state paid $307 million for the program. Medicaid got $615 million from the state this year; Williamson said the program needs $700 million next year.

State leaders have already tried emergency measures to pay for the program, including a $437 million raid on a state trust fund to fill the hole Medicaid left in the state budget. It's not clear what the state will do when that money runs out in 2016.

It wasn't supposed to be a problem. Buoyed by signs of a steady-but-slow recovery, state officials expected that when Alabamians returned to work post-recession, they'd get employer-provided insurance and leave the Medicaid rolls.

That hasn't happened. Unemployment in Alabama is at 6.1 percent, the Alabama Department of Labor reported Friday. In 2009, at the height of the recession, unemployment topped 10 percent.

The number of people enrolled in Medicaid has climbed steadily over that same time, from just more than 800,000 in 2009 to 970,000 in December. Counting everyone who was eligible for Medicaid at some point during 2013, the number tops 1 million.

The same thing is happening in states across the country, said Robin Rudowitz, associate director of the Kaiser Commission on Medicaid and the Uninsured.

"Since the economy has been improving, we've seen the rate of growth slow down," she said. "We haven't seen enrollment decrease."

Working and poor

As one of the state's chief Medicaid planners, Williamson needs to know why the rising tide isn't lifting people out of Medicaid. So far, he has only theories.

"I don't have enough data to support any of them," he said. "We need to seriously study what's happening here."

To understand those theories, it's helpful to understand who's on Medicaid, and why.

It's mostly children, and people over 65, and people with disabilities.

The one thing they have in common is that they're poor. But it's almost impossible for a non-disabled, non-elderly grownup without children to qualify for Alabama Medicaid based on poverty alone.

There's one exception: the women Williamson calls "SOBRA moms."

Any woman under the poverty line who gets pregnant is eligible for Medicaid. Coverage for the mom drops off after the child is born — but until the family income rises above the poverty line, any child under 18 is covered. That's all done courtesy of a 1986 federal law called the Sixth Omnibus Budget Reconciliation Act, or SOBRA, for short.

According to Medicaid statistics, four out of every 10 children on the program has a working parent.

"They're working in lots of places — in day care, in fast food, in convenience stores and gas stations," said Robin Rawls, spokeswoman for the Medicaid Agency. Rawls said a number of working parents on Medicaid seem to have one or more part-time jobs, but not enough work to bring them above the poverty line.

Planning ahead

SOBRA parents matter in the state's budget math because SOBRA is where the biggest chunk of growth in Medicaid enrollment is happening.

There were 355,000 kids and expectant mothers on SOBRA in August 2008, a month before the stock market crash. A year later, there were 385,000.

Today, despite declining unemployment, there are 443,000.

And, no, there aren't more SOBRA moms simply because there are more moms. Alabama's birth rate has declined in recent years, Williamson said.

Medicaid played a role in that, Williamson believes. Fifteen years ago, the state started offering free birth control coverage — the pill, intrauterine devices, or even tubal ligation — to any woman with an income low enough to be on SOBRA if she were to get pregnant.

"It's cheaper to pay for the pill than to pay for a pregnancy," Williamson said.

Women on that program, known as Plan First, also are counted toward total Medicaid enrollment, though their coverage isn't nearly as costly as coverage for other recipients. In fact, Williamson said, they save the state about $200 million per year.

Plan First is responsible for another big chunk of Medicaid's enrollment increase.

Before the 2008 crash, the program served roughly 68,000 women. Last month, 115,642 women were in Plan First.

Williamson said the increased participation may be due to better publicity by the Medicaid Agency. Or it may be due to women's heightened reluctance to risk pregnancy when the economy is bad.

Or there may simply be more women of child-bearing age living in poverty.

Obamacare vs. McJobs

Williamson’s first theory for the rise in SOBRA recipients? It could be Obamacare.

"It could be due to some as-yet-unknown aspect of the Affordable Care Act that we haven't considered," Williamson said.

With the deadline to implement the Affordable Care Act approaching, Williamson said, it's possible a number of low-wage employers are simply dropping the health plans they once provided, expecting the health care exchanges to pick up the slack.

Asked what evidence he had to support that theory, Williamson said he didn't have any. It's just a hunch, based on the fact that the ACA has interrupted a lot of other trends in health care.

Medicaid officials have been expecting an increase in enrollment due to the “woodwork effect” of Obamacare. As uninsured people go to the Affordable Care Act website to look at their options, some will discover they’re Medicaid-eligible — coming “out of the woodwork” to enroll. Still, Alabama’s rise in enrollees was happening long before the federal health exchanges went online.

Williamson's second theory is that the recovery is producing jobs, but it isn't producing jobs that pull people above the poverty line.

"If unemployment is going down and enrollment is going up, we may need to look at the kinds of jobs we're creating," Williamson said.

The jury is still out on whether Alabama's economy is trading high-paying, secure jobs for poverty-wage or part-time gigs.

Statistics from the Alabama Department of Labor show the state has clearly lost some high-wage jobs even as the recovery has progressed. Alabama had 9,000 fewer people working in government jobs last month — state, local and federal — than it had two years earlier. Construction lost 4,000 jobs over the same period.

Meanwhile, the "leisure and hospitality" sector, which includes fast-food workers and hotel maids in addition to higher-paying hospitality jobs, picked up 9,000 jobs.

But there was even bigger growth in manufacturing, where the workforce increased by 11,000. A full 7,000 of those jobs were at auto plants or auto suppliers — jobs that historically pay hourly wages well into the double digits.

"Manufacturing has been our salvation," said Tara Hutchinson, spokeswoman for the Department of Labor.

Discouraged

Williamson's grimmest theory is the one that's popped up with every jobs report since the recession. If unemployment is up and poverty isn't affected, maybe it's because the long-term unemployed are simply giving up on the workplace.

Keivan Deravi, the Auburn University at Montgomery economics professor who does the state's revenue forecasts, thinks that's the answer.

Much of the drop in unemployment is due to the fact that the labor force is shrinking, Deravi said.

The state Department of Labor announced on Friday that unemployment in December was down to 6.1 percent, its lowest point since October 2008, when the stock market crash was just taking effect. But the pace of job creation, Deravi said, can’t by itself account for the unemployment drop. That means thousands of people took themselves out of the job hunt and never came back.

“There are still new workers coming into the workforce,” he said. “The people who have been sitting on the sidelines have to compete with people whose skills have not become obsolete.”

If Deravi is right, Williamson said, the implications for Medicaid are troubling.

“What it says is that we have to prepare for a million enrollees for the foreseeable future,” he said.

Capitol & statewide reporter Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.

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