Georgia’s seasonally adjusted unemployment rate in November fell below 10 percent for the first time since June and the state is celebrating the largest one-month rate decline in 34 years. Flip the coin and Georgia has exceeded the national rate for 52 consecutive months. Almost one-half million Georgians are officially counted as unemployed.
The state reported 9.9 percent official unemployment in November, down three-tenths of one percent from October. Some but not all improvement is related to holiday season temporary hiring. “We had the best November since 2007 for retail hiring, while seeing gains in the financial and business sectors,” said state labor commissioner Mark Butler.
Georgia reported 467,722 official unemployed in November, down from 486,609 one year earlier. State and local governments trimmed 22,500 jobs during the twelve-month period. Improvement within the private sector was evident in manufacturing and service-related industries.
The economic recovery remains fragile and Georgia still has a huge challenge with long-term unemployed who have been out of work 27 weeks or longer. Their numbers declined slightly from 252,500 twelve months ago to 248,900 last month. Long-term unemployed are 53.2 percent of the state’s 467,722 jobless.
Georgia also reported a 3.1 percent increase from October to November in the number of first – time claims for unemployment insurance. More than 55,700 filed initial claims last month, some because of temporary layoffs. Initial claims declined 15 percent compared to November 2010. Link to Department of Labor video interview with Commissioner Butler.
(Mike Klein is Editor at the Georgia Public Policy Foundation)
Georgia ranked 48th — third from the bottom nationally – beating out just Utah and Arizona – in a federal analysis of personal health care spending per capita, according to the Centers for Medicare and Medicaid Services (CMMS) at the U.S. Department of Health & Human Services. The report analyzed all spending, not just government budget expenses.
Georgia personal health care spending at $5,467 per capita in 2009 was well below the $6,815 national average. Ten-of-twelve southern states were below the national average. Alabama ($6,272) joined Georgia in the bottom ten states as did two of the most populous states — Texas ($5,924) and California ($6,238). Most New England states were above average.
Personal health care spending annual growth rates have declined, measured at 6.4 percent during the 1998 to 2004 period and 4.7 percent during the 2005 to 2009 period. CMMS said annual growth rate is not the only measure of health care cost impact on the overall economy.
“Despite the slower overall spending growth during the recession, health care consumed an incrementally larger share of the nation’s resources at a historic pace,” CMMS said. Personal health care spending reached 14.8 percent of national GDP in 2009. Between 2007 and 2009 every region’s health care spending share grew faster than during the 2001 recession.
The Southeast took a hard hit. “In the most recent recession, the Southeast and Southwest regions experienced the largest increase in the share of state GDP accounted for by personal health care spending. These two regions have the lowest per capita income and experienced some of the largest declines in per capita state GDP of any region over this period.”
CMMS defined the category as “the total amount spent to treat individuals with specific medical conditions, but excludes expenditures resulting from government administration, net costs of health insurance, government public health activity, non-commercial research, and investment in structures and equipment.” Aspirin counts. Bricks and bureaucrats do not count.
The Centers for Medicare and Medicaid Services said states near the bottom generally have high numbers of uninsured and low per capita incomes. The analysis noted, “Income appears to have an important and positive relationship with health spending.” Massachusetts reported the highest personal health care spending per capita — $9,278, well above the $6,815 national average – but it also has one of the highest income levels per capita.
The Kaiser Family Foundation State Health Facts project says one-in-five Georgians – more than 1.8 million – have no health insurance. Georgia income per capita is about 15 percent below the national average. Georgia has high official unemployment– 9.9 percent vs. 9.0 percent nationally – which matters because employers still provide most health insurance.
Poverty is also associated with low personal health care spending and the report described a link between “larger shares of Hispanic residents, who are more likely to be uninsured compared to other Americans,” according to the Centers for Disease Control.
States including Georgia are on edge about their health care policies and investments as they await next year’s U.S. Supreme Court opinion on the validity of 2010 federal health care reform, the Patient Protection and Affordable Care Act, sometimes known as ObamaCare.
Thursday the Georgia Health Insurance Exchange Advisory Committee is expected to report its findings to Governor Nathan Deal. Federal health care reform requires that states must have an exchange in place by 2014. States that do not start an exchange will be forced to swallow a federally run exchange. Georgia accepted a $1 million planning grant but it also is among 26 states that sued the federal government to overturn the health care reform law.
Back to the CMMS report: Georgia ranked 49th in Medicaid personal health care spending. The national average was $6,826 per enrollee; Georgia reported $4,835 per enrollee, down from five years earlier when the state average was $5,532. Medicare personal health care spending per capita averaged $10,365 nationally two years ago; Georgia reported $9,836 per capita.
Annual spending growth in physician and clinical services in the Southeast grew by 7 percent between 1998 and 2004 when the region led the nation but slowed to 3.2 percent from 2004 to 2009. That was the slowest regional growth rate and one full percentage point below the national average.
The average annual per capita growth for prescription drugs was down significantly during the 1998 to 2004 and 2005 to 2009 reporting periods, averaging 12.5 percent and 4.6 percent. The decline was linked in part to the recession and increased use of generic drugs. Medicare Part D implementation in 2006 increased prescription drug spending by seniors.
The report said states with higher personal health care spending per capita generally had higher per capita income and larger elderly populations. States on the lower end of the health care spending curve had younger populations, lower incomes and less access to health insurance.
“If these trends persist, these states would be most likely to have the greatest potential number of people eligible for the Medicaid expansion or exchange coverage,” CMMS concluded. Georgia estimates federal health care reform could force 650,000 more people into the Medicaid system which already is the fastest growing segment of annual state expense.
(Mike Klein is Editor at the Georgia Public Policy Foundation)
Next month the Georgia legislature will begin to consider whether substance abusers who are not a public safety risk should receive a stay out of jail card. How lawmakers decide the question could slow down runaway costs and impact state corrections policy for decades.
Last month the Special Council on Criminal Justice Reform said options – notably, more drug courts and treatment plus more day reporting centers — could reduce state prison population growth. Drug courts are part of an accountability sentencing movement that includes mental health courts and veterans’ courts. Here is what the council said about substance abuse:
“In 2010, Georgia courts sent more than 5,000 lower-risk drug and property offenders to prison who have never been to prison before, accounting for 25 percent of all admissions last year. Looking more closely at drug admissions, more than 3,200 offenders are admitted to prison each year on a drug possession conviction (as opposed to a sales or trafficking conviction), and two-thirds of these inmates are assessed as being a lower-risk to re-offend.”
Harder-on-crime ideas took hold in the early 1990s. The number of Georgia inmates doubled over 20 years and grew 35 percent since 2000 to 56,000 today. As incarceration soared so did budgets; Georgia spends above $1 billion per year on adult corrections, up from $490 million in 1990. Including pardons and parole and probation and the annual cost is closer to $1.5 billion.
Georgia’s inmate population grows 6-to-8 percent annually. Special council member and state Rep. Mary Margaret Oliver said that is “simply not sustainable.” Oliver added, “We spend $13 per day on drug court offenders and approximately $48 per day on individuals in prison. We have better recidivism rates on drug court offenders. That is compelling to me.”
In August, the National Conference of State Legislatures said inmates incarcerated for drug offenses are 20 percent of state prison populations nationwide and more than half of all inmates are abusers or drug dependents. The NCSL report was compiled in a partnership with the Pew Center on the States Public Safety Performance Project. Pew is also consulting with Georgia.
Governor Nathan Deal named Atlanta Superior Court Judge Todd Markle, his former executive counsel, to chair the special council. Recently the Policy Foundation asked Markle about prison time vs. drug courts and treatment for drug offenders who are not considered a safety risk.
“You have to consider whether what we’ve done for 20-to-30 years — locking people up for drug offenses — is the best way to treat those folks. We know a lot more about addictions and behavior issues than we did years ago. We know a lot of these addiction best practices can work. People philosophically have to get over the idea that people who have drug addictions are criminals. In a lot of cases, we’re going to need to address these as health issues.”
The special council reported Georgia has 33 drug courts that cover less than 50 percent of the state’s counties and serve fewer than 3,000 offenders. The state operates 13 day reporting centers and just three probation substance treatment centers. That suggests a big opportunity exists to catch up with states that already expanded drug courts and other treatment options.
Texas increased alternative program funds in 2007. Kentucky and South Carolina approved probation and treatment for low-risk substance abusers last year. California’s successful San Francisco pilot program started in 2005 was expanded statewide in 2009. The Kansas plan adopted in 2003 includes residential treatment settings and stiff sanctions for new violations.
“This is an opportunity to address the demand side of drug addiction and for those who have an addiction, to really get themselves sober and not continue to offend,” said Georgia Supreme Court Chief Justice Carol Hunstein, who served on the criminal justice special council.
Georgia judicial circuits can expand drug courts without legislation. The special council model would re-direct dollars saved in the penitentiary system to provide for courts and treatment. Legislation would be needed to change criminality levels based on the weight of illegal drugs.
“You cannot build drug courts from the top down,” said Waycross Superior Court Judge Michael Boggs, who also is a council member. “You have to build from the bottom up. It is meaningless for me to go to the southwestern judicial circuit and advocate that their judges start a drug court if they have no meaningful way to deliver the services.”
The special council estimated that $264 million might be saved if the state can avoid new prison construction for at least four years. This thought from special council chair Judge Markle: “If we try to kick this down the road where would we come up with that money? Even we were in better economic times, I’m not sure we could come up with the money.”
Whatever emerges from the General Assembly will likely be a first step. Governor Deal said the special council will remain in place and he described its work as just a starting point.
“Will a majority of what the Council recommended pass this legislative session? Probably not but I think the discussion will begin and I hope it will be an educational process for legislators,” said Chief Justice Hunstein. “We want our communities to be safer. We want to reduce recidivism.”
(Mike Klein is Editor at the Georgia Public Policy Foundation)
Georgia appears prepared to make significant changes to its unemployment benefits program, changes that could have an impact on Georgians without jobs. Options under review at the State Capitol include a waiting period that would delay the first check, fewer total state benefit weeks and reducing the maximum weekly benefit dollars.
Some combination of these three ideas or others is possible. Governor Nathan Deal’s chief spokesman Brian Robinson said, “The governor is looking at several options that we’ll discuss with legislators once the 2012 session begins.” Lawmakers return in January but the real work to get key issues ready for the General Assembly has been underway for months.
Georgia’s “official” unemployment rate is 10.2 percent, well above the 8.6 percent national rate reported for November by the U.S. Department of Labor. “Official” does not try to estimate those who became so discouraged that they quit looking for work.
Georgia has written $777 million in state-funded benefit checks this year. “We have to find a way to control the outflow,” said state labor department commissioner Mark Butler. “What we are bringing in is barely enough to meet the demands we have to pay out.” Federal benefits paid out are $1.16 billion. Three options under review include:
** First, implement a “Waiting Week” before the first state paid benefit to save an estimated $35 million per year. The current average recipient receives benefits for about 14 weeks.
** Second, reduce the number of state paid unemployment benefit weeks from 26 weeks now to between 20-to-26 weeks to save $163 million per year.
** Third, reduce the maximum weekly benefit from $330 to $300 per week to save $58 million. The current average benefit check is $259.
Butler described these options as “like coming up with the best (of the) worst solutions” but the first-year state labor commissioner also acknowledged, “Those are the best ideas.”
Unemployment compensation is a state and federal shared responsibility. States manage their programs and assume the benefit costs for an initial period — in Georgia that is currently 26 weeks — before federal funds pay additional benefits for up to 99 total weeks. Thirty-five states including Georgia quickly depleted available state funds during the recession. Georgia began to borrow federal funds in December 2009.
Federal loan repayment is a different challenge. The $721 million that Georgia owes must be repaid with federal unemployment insurance taxes levied on employers statewide. This year the federal tax amount was an annual $21 per employee; next year the cost to employers will be $42 per employee and it will go up another $21 every year until Georgia’s loan is repaid.
“I’m going to be as aggressive as possible paying this back so we can reduce the amount of the increase from the feds,” Butler said. “The longer you (have outstanding loans) the higher the federal tax gets” on statewide employers.
An already compound problem became more complex this year when President Barack Obama’s administration sent conflicting signals about waiving state interest payments. The White House budget submitted to Congress in February contained such a proposal, but then the administration backed away from the idea and states began to pay interest this fall.
Georgia repaid $27 million in October: $6 million principal and $21 million for interest. Butler said the interest payment was financed with $15 million in redirected Medicaid funds and the remainder came from the labor department budget. Employer dollars financed the $6 million.
One year ago Texas faced the long-term prospect of a much larger repayment, $2.1 billion in principal plus interest. The Lone Star state sold bonds, repaid the debt owed to Washington and replenished the Texas state account. Texas estimated that it avoided $110 million in federal interest by financing the debt with state bonds. Last month the Illinois General Assembly approved a similar bonds sale.
Georgia bonds are not on Butler’s short list. DOL conferred with Attorney General Sam Olens’ office. “The structure they showed us is extremely complicated almost to the point where it would be very hard to pull it off” without a constitutional amendment, Butler said. The federal loan interest rate is about 4 percent; state bonds could be sold at a considerably lower rate.
Anything that changes will require General Assembly approval because nearly everything that governs unemployment benefits is contained within law. The option – doing nothing – would make this situation much worse next year and require new borrowing. “We cannot get out of this by putting this onto business,” Butler said. “You cannot tax your way out of this.”
Georgia Employment Data:
Georgia Unemployment Rate: 10.2%
National Unemployment Rate: 8.6%
October 2010 Long-Term Unemployed: 240,600
October 2011 Long-Term Unemployed: 259,300
October 2010 Statewide Payroll Jobs: 3,851,400
October 2011 Statewide Payroll Jobs: 3,818,800
October 2010 Initial Claims: 57,494
October 2011 Initial Claims: 55,865
2011 State First-Time Payments: 223,319 People
2011 Federal First-Time Payments: 460,149 People
2011 State Payment Dollars: $777 Million
2011 Federal Payment Dollars: $1.16 Billion
(Data Source: Georgia Department of Labor)
(Mike Klein is Editor at the Georgia Public Policy Foundation)
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