Ken Hare In Depth: Bentley bends on Medicaid; RSA looks at oversight rules

Ken Hare In Depth: Bentley bends on Medicaid; RSA looks at oversight rules

MONTGOMERY, AL (WSFA) - The election is over, Gov. Robert Bentley cannot run again in four years, and now he announces that he is open to an expansion of the state's Medicaid program, provided it is done with certain limitations. Is anyone really surprised?

Mind you, he didn't say he would push Medicaid expansion in Alabama, and he certainly didn't say that he would endorse doing it in a straightforward fashion under Obamacare.

But he did make it clear in remarks to lawmakers earlier this month that he would be open to taking federal money as a block grant under the Affordable Care Act and using it to purchase health insurance for low-income Alabamians through an exchange that involves the private sector.

That approach sounds a lot like one currently pursued by Arkansas and a handful of other states.

While some in the news media maintain that Bentley has been staunchly opposed to Medicaid expansion, his early comments on the issue left a lot of wiggle room. For instance, he once said he opposed expanding a "broken system," leaving the possibility for some sort of expansion once the reforms that he was proposing to Alabama's Medicaid program were in place. He announced details of some of those reforms in recent public remarks.

The Affordable Care Act originally would have required states to provide Medicaid coverage to those whose incomes were 138 percent or less of the federal poverty line — currently about $33,000 for a family of four.

The federal government would cover almost 100 percent of the full cost of the expansion through 2016. After that, the percentage that a state would have to provide would increase gradually until the state had to cover 10 percent of the cost. From that point on, the federal government would cover 90 percent of the cost.

Such an expansion would provide health coverage to an estimated additional 180,000 or more Alabamians.

According to news reports, Bentley also said any expansion should be limited to those who either have a job or are looking for a job.

But that should not be a major stumbling block, since many of the jobless in Alabama already qualify for Medicaid. Any expansion would largely cover the working poor anyway.

Bentley and others have said that Obamacare would push up the national debt, and that is a legitimate concern. But that's going to happen regardless of whether Alabama participates, and Alabamians are going to help pay for it whether or not the state takes part.

Studies have shown the likelihood that the infusion of billions of federal dollars into Alabama's economy from an expansion would create enough growth in the economy to cover much of the state's share of the cost of expansion. The problem is that the state's aggressive earmarking of tax revenues would target most of that revenue growth for education, making it difficult to use it to cover the state's share of expansion costs. But if the governor and Legislature could capture at least some of the growth in tax revenue, it could help cover the state's share.

But the bottom line is that Medicaid expansion could help 180,000 or more working Alabamians get health insurance coverage. The exact number would depend upon the details of how the state might handle a block grant approach. That's the reason that the Legislature and the governor should try to make this happen.

It boils down to this: Alabamians are going to help pay for Obamacare, regardless of what the state does. The question is whether -- in return for their investment -- Alabamians are going to get more health coverage for their fellow citizens and the jobs and economic benefits that come from huge amounts of federal money flowing to the state.


Are changes in retirement oversight good?

The Retirement Systems of Alabama controls about $30 billion in funds set aside to pay for future retirement costs of state employees, public school teachers and public higher education employees. Unlike many other states, Alabama has managed for decades to mostly keep politicians from getting their hands on those funds.

Two boards made up of retiree representatives and state officials oversee the RSA staff that is responsible for those investments. The Employee Retirement Systems board oversees the state employee portion, about $10 billion. The Teachers Retirement Systems board oversees about $20 billion that covers public education retiree costs.

(In the interest of disclosure, readers should note that the RSA is a principal investor in Raycom Media, the parent company of WSFA.)

Recently the ERS board, led by the state's elected treasurer, voted to create additional committees that would meet several times a year to focus in more detail of how the RSA staff invested funds.

Then earlier this month, Finance Director Bill Newton, who is appointed by Gov. Robert Bentley and who serves on both the ERS and TRS boards, discussed the ERS changes with the TRS board, suggesting that at some future date he and state Treasurer Young Boozer would ask the TRS board to adopt the same approach.

Clearly a majority of the TRS board reacted negatively to the proposal. Even though Newton had presented the issue only for discussion at this time, one member suggested voting on it at that meeting so it could be voted down. When another member said the committee should study the proposal and one suggested asking the staff for recommendations, another member simply made a motion to adjourn, which was approved by a strong voice vote. That slammed the door on any further discussion.

But the issue is not likely to go away. For one thing, the ERS already has had to back away from some of its proposals because of questions raised by the RSA staff. Newton also said that other questions raised by the staff are likely to result in further modifications to the ERS board approach. (Shouldn't the ERS board have given the staff time to raise these issues before adopting the new policy?)

As the two boards look at possible changes in investment oversight, I would suggest these basic principles be kept foremost in the minds of board members:

* Any changes should not eat up so much time of the investment staff that it handicaps the staff's abilities to concentrate on its primary role -- finding good investments.

Having to meet with multiple ERS investment committees multiple times a year, as well as the full ERS board, could mean a dozen or more meetings a year. The investment staff has to devote hours to preparing for each of those meetings. If the TRS did the same thing, it could double the impact.

* Any changes should not result in the boards' micromanaging investment decisions.

Board members are supposed to set policy, not make actual investment decisions. But board members are human. Some of them are going to feel compelled to justify all those meetings by getting too involved in the day-to-day decisions. That is something that could violate state law, probably result in bad decisions, and increase board members' personal liability for RSA actions.

* Board members need to be wary of their fellow board members attempting to divert investments to projects in which they have an interest or pushing for the hiring of consultants with which they have a relationship.

Again, Alabama has managed to avoid most of this, but that hasn't been the case in many states.

* Finally, and most importantly, both the ERS and TRS board should make it a priority to ensure that politicians don't get their hands on retirement funds -- even if they attempt to do it to address legitimate funding issues of state government.

RSA controls billions, and the state of Alabama has lots of funding problems. So there is always the temptation among elected officials to divert some of those billions to address financial crises. But RSA's money exists to cover future costs of retirement, and it is only adequate to meet that need.

As this debate goes forward, it is not just public employees who should be concerned. Every Alabama taxpayer has a dog in this fight.

The ERS and TRS essentially have three sources of funding -- taxpayers through legislative appropriations, public employees through deductions, and investments through the TRS and ERS. If new policies negatively impact investment revenues, it could increase pressure to further raise the cost of retirement on state employees and/or teachers or for the Legislature to increase the amount it appropriates for retirement programs from public revenues.


Ken Hare is a retired newspaper editorial page editor who writes a regular column for WSFA 12 News.

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