The economy is booming: Employment is at record-breaking levels, and income and wages are finally rising again. Yet something is missing. Despite all the positive economic news, a significant percent of Georgians (and Americans broadly) have been left behind.
This group of the economically lost and destitute is the subject of a new book called The Once and Future Worker: A Vision for the Renewal of Work in America, written by Oren Cass, a think tanker and former advisor to Mitt Romney. Cass includes a number of viable solutions to America’s workforce woes in his book.
We know the unfortunate numbers: Even though gross domestic product tripled between 1975 and 2015, median wages haven’t budged. During that same time, government spending on the social safety net quadrupled. Even though our economy as a whole is more productive, many Americans haven’t seen a real rise in wages, while many others have fallen into the social-safety-net system.
This has created a type of society where many people have access to iPhones and other electronic devices once considered luxuries, but fewer and fewer have access to fruitful work, a good education, and a healthy family life. As Cass puts it, during the past few decades, “Cheap goods and plentiful transfer payments ensured that nearly all Americans could afford cable television and air conditioning, but not that they could build fulfilling lives around productive work, strong families, and healthy communities.”
Cass makes a number of recommendations to ameliorate the problem, several of which dovetail with policy prescriptions from the Georgia Center for Opportunity (GCO).
One of them is to emphasize alternative pathways to work aside from the traditional college route. The fact of the matter is that attempting universal college completion for all is an unrealistic goal—even though Millennials are the most college-educated generation in history, only 40 percent of them have college degrees. Looking across all generations now alive, the vast majority of Georgians lack a four-year (or higher) college degree. Doesn’t it make sense that we should tailor more training solutions to this majority?
For a solution, Cass suggests the reintroduction of “tracking” into our educational lexicon, where one pathway leads toward college enrollment and another “toward occupational training that leaves a twenty-year-old with serious work experience, a marketable skill, and $30,000 in a savings account.” That is a far more favorable outcome than the reality too often true for Millennials today: burdensome student loan debt with a college credential that increasingly lacks labor-market value. GCO invests in these types of pathways through our apprenticeships emphasis.
By Erik Randolph, Contributing Scholar
Expanding Medicaid to reduce the number of Georgians without health insurance is an idea continually being promoted. Here are three good reasons why it would be bad for Georgia.
Reason Number One: Expanding Medicaid without fixing the individual markets would trap people in the welfare system.
Nearly 60 percent of Georgia’s uninsured would be unaffected by Medicaid expansion because their family incomes are above the threshold established by the Affordable Care Act (ACA).
The greater proportion of the uninsured has incomes between 139 percent and 400 percent of the Federal Poverty Level. This is precisely the income range that the ACA health insurance exchanges are supposed to serve. Even with the premium tax credit and other subsides, affordability for average-income families was not achieved.
Affordability is extremely important. A study by the Institute of Medicine of the National Academies listed affordability first among reasons why people without health insurance don’t purchase some.
Consider the price increases on the ACA exchanges since their creation. Average prices in Georgia increased by roughly 70 percent since 2014, and in some Georgia counties, they have more than doubled. For 2019, a quarter of Georgia counties has only one insurance company offering policies, and half of the counties has only two insurers.
Most of the uninsured—more than 728,000—are employed. Now imagine you are a single person earning the equivalent of $8.30 per hour working full-time without health benefits. You would earn too much to qualify for Medicaid under an expansion. However, if you could reduce your income by less than five cents an hour, you would qualify for Medicaid.
What would you do if you were in this situation? Would you find a way to cut back just a little on earnings so you can get Medicaid? If you are like most persons, you would indeed.
Let’s reverse the situation. Suppose you earn $8.25 and have Medicaid under an expansion. You know that health insurance is unaffordable on the individual markets. Would you accept a pay raise of just five cents an hour knowing that you would lose Medicaid? Again, if you are like most people, you would find a way—such as working less hours or refusing a pay raise—so that your income would not exceed the threshold.
This scenario highlights the problem of transitioning off public assistance and onto the private system. The financial incentives are stacked against you, trapping you in the welfare system and its associated challenges of a low-income lifestyle.
Reason Number Two: Expansion is really, really expensive.
States that expanded Medicaid were initially enticed by the Federal government that promised to pay 100 percent of the expansion enrollment cost for calendar years 2014, 2015, and 2016. Since then, the federal reimbursement rate has been falling. It was 94 percent in 2018, is 93 percent for 2019, and will be 90 percent in 2020.
Because states must pay part of the bill, it is not surprising to learn that expansion states are doling out even more in state dollars to fund Medicaid than non-expansion states. Based on data from the National Association of State Budget Officers, the expansion states spent 95.2 percent more of their own state funds on Medicaid in 2018 than they did in 2010. As a matter of comparison, non-expansion states spent 81.5 percent more.
To put this in perspective, Georgia would have needed $562 million more in state revenue for its Medicaid program in 2018 had it expanded Medicaid along with the expansion states. This assumes that the cost of Medicaid would have grown consistent with the average experience of the expansion states. The actual cost could be less, or, more likely, it could be more considering Georgia’s population growth and poverty levels.
From a fiscal perspective, not expanding Medicaid saved Governor Deal and the General Assembly from having to increase taxes to raise $562 million in revenue in 2018, or alternatively, from the tough budgetary task of cutting more than half a billion dollars from other state programs, like education, to make room for Medicaid expansion.
When it comes to cost, we should not ignore also the impact on the federal government. According to the Peterson Foundation, health care is a key driver of the federal budget crisis and the national debt. Congress has been making promises it cannot afford, and Medicaid spending is among them.
In economics, there is no free lunch. Someday the rooster will come home to roost. We will pay for the cost one way or another, whether through inflation, cuts in needed services, eventual increases in federal taxes, or distortions in the economy.
Reason Number Three: Medicaid has the worst health care outcomes.
In his comprehensive report Transcending ObamaCare, Dr. Avik Roy correctly observes Medicaid has bad health care outcomes, the worst of any public or private health insurance coverage in America. In fact, and surprisingly, studies have showed those on Medicaid fare no better than those with no insurance coverage at all.
For example, a study published in the New England Journal of Medicineastoundingly showed persons on Medicaid for two years in Oregon did not fare better in measured physical health outcomes than comparable groups who were uninsured. A Columbia-Cornell study on patients with clogged blood vessels or clogged carotid arteries came to the same conclusion.
Considering the notorious bad health outcomes for Medicaid patients, it makes little sense expanding the program without at least reforming it. Or better yet, it should be replaced.
Our Hopes Reside with Governor Kemp and the General Assembly
Governor Kemp is doing the right thing in pursuing federal waivers to redesign the health insurance system and Medicaid. The waivers would give Georgia tremendous flexibility to do it right and even allow Georgia to capture dedicated federal revenue sources to underwrite the cost.
What Georgia needs is a market-based consumer-directed health insurance system with risk equalization coupled with real reform of medical assistance programs. Medicaid needs to be fundamentally changed and consolidated with other programs so poor people can access the same health insurance as everyone else, and so that no one gets trapped in the welfare system.
If done correctly, the redesign will solve the problem of pre-existing conditions, make insurance more affordable, achieve universal coverage, and not undermine the quality of care to which Americans have grown accustomed. Everyone will benefit, poor and rich alike.
* A contributing scholar to the Georgia Center for Opportunity, Erik Randolph researches and writes on welfare reform. Further research on this topic is available on the Center’s website: https://georgiaopportunity.org/employment/welfare-reform.
Committee on the Consequences of Uninsurance, Institute of Medicine of the National Academies,Insuring America’s Health: Principles and Recommendations,National Academies Press, 2004. http://www.nationalacademies.org/hmd/Reports/2004/Insuring-Americas-Health-Principles-and-Recommendations.aspx.
Reforming America’s Healthcare System Through Choice and Competition, U.S. Departments of Health and Human Services, Treasury, and Labor, Report to the U.S. President in response to Executive Order 13813, 2018, p. 4: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
Reforming America’s Healthcare System Through Choice and Competition, U.S. Departments of Health and Human Services, Treasury, and Labor, Report to the U.S. President in response to Executive Order 13813, 2018, p. 72: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
Calculations by author using State Expenditure Reports of the National Association of Budget Officers: https://www.nasbo.org.
Peter G. Person Foundation, Key Drivers of the Debt, https://www.pgpf.org/the-fiscal-and-economic-challenge/drivers, accessed February 26, 2019.
Avik S. A. Roy, Transcending ObamaCare: A Patient-Centered plan for Near-Universal Coverage and Permanent Fiscal Solvency, Second Edition, The Foundation for Research on Equal Opportunity, 2016, pages 43 – 45: https://www.manhattan-institute.org/html/transcending-obamacare-patient-centered-plan-near-universal-coverage-and-permanent-fiscal
Baicker K et al., The Oregon experiment—effects of Medicaid on clinical outcomes. New England Journal of Medicine. 2013 May 2; 368(18): 1713–22. https://www.nejm.org/doi/full/10.1056/NEJMsa1212321
Giacovelli JK et al., Insurance status predicts access to care and outcomes of vascular disease.
Journal of Vascular Surgery. 2008 Oct; 48(4): 905–11. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2582051/
We know that people do better in life when they experience the benefits of meaningful work and healthy relationships. But we also know that so many cultural forces are stacked against success in these two areas. One of the biggest is the American welfare system, which keeps people trapped in cycles of dependence while reducing incentives to climb the economic ladder or form stable relationships.
That’s why the Georgia Center for Opportunity has been on the vanguard of work-focused welfare reform that gives a hand-up to struggling people while preserving the social safety net for those who truly need it. The great news is that we’re seeing growing momentum—both at the state and national level—to make these reforms a reality.
Georgia lawmakers are poised to consider legislation in the General Assembly to take significant steps on welfare reform—what we call the “right to strive”—while nationally we are seeking waivers to expedite the reform package at the state level. In recent months, we’ve presented our welfare research to Georgia’s Rural Economic Development Committee, created by former Gov. Nathan Deal and the legislature to help rural Georgia communities become more competitive economically. The committee was already well aware of the damage caused by welfare cliffs in the lives of individuals and businesses, so they were very welcoming of our input. We’ve also met with policymakers in Washington, D.C., on our welfare reform proposals.
The changes can’t come soon enough. Although the Georgia economy is booming with a historic 3.6% unemployment rate, these trendlines obscure a hidden workforce crisis: Millions of Americans aren’t counted in the official unemployment rate because they’ve simply given up looking for work. A crucial step in the right direction for these non-working individuals is to create a welfare system that helps—rather than hinders—their connection to meaningful work.
The most important changes in our proposal are to reduce welfare “cliffs,” a scenario where benefit drop-offs unfairly punish workers for earning more and moving up the economic ladder. Secondly, our proposals eliminate the marriage penalty that encourages single parenthood.
A big step to accomplish this is by consolidating the major 15 welfare programs hosted by federal, state, and local agencies into five coordinated programs, headed by a sole lead agency. In the end, our reforms stabilize the safety net for those who truly need it, adopt a “work first” approach for those who are able, and create incentives to form marriages and households.
We’re optimistic that we will soon see work- and family-focused “right-to-strive” reforms in Georgia. Interested in learning more? Don’t miss our three-part series of reports on welfare reform: Part 1, part 2, and part 3.
By Contributing Scholar: Jonathan Butcher
As a teacher, Julie Young knew her grandson was going to need help outside of the classroom. He had been diagnosed with dyslexia, and he struggled to “retain anything he saw on paper,” Julie said.
Julie and her family live in Arizona, where students with special needs are among the children eligible for education savings accounts. Julie applied for an account and saw results almost immediately.
She used the account to enroll him in occupational therapy, and “within a matter of weeks, I noticed a huge improvement,” Julie says. “His OT helped him memorize his multiplication tables by using silly songs. Every day he made gains in areas that never seemed to stick before,” she says.
With an education savings account, the state deposits a portion of a child’s funds from the state education formula into a private account that parents use to buy education products and services for their children. Lawmakers in six states have enacted such laws, including Georgia’s neighbors: Florida, Tennessee, and Mississippi (Nevada and North Carolina legislators have also passed legislation).
The accounts are distinct from private school scholarships because parents and students can select multiple learning options simultaneously. It’s not unusual for account holders to find a personal tutor for their child, enroll their student in education therapy services, and pay for instructional materials to be used at home. Research from Arizona finds that approximately one-third of account holders use education savings accounts for a set of learning options. More than 40 percent of Florida account holders do so.
Parents want to be able to challenge their students and are prepared to customize their child’s learning experience. One Arizona mom explained that doctors had diagnosed her son as being on the autism spectrum, and despite special services in a district school, he had not learned to talk. After using an account to select a speech therapist of their choosing, “Nathan has learned to talk and he loves learning to spell and even reading books… He’s using complete sentences and even asking and answering questions on a regular basis.”
In Florida, a mom of three adopted children and two biological children uses an account (called Gardiner Scholarships) for her adopted daughter, Elizabeth, to buy instructional materials for use in the home. In an interview, the mom said, “I could reinforce what was and wasn’t happening in the classroom.” Today, Elizabeth has returned to a district school, and her mom says she “wouldn’t be where we are without the intense therapies that I was able to do because of the Gardiner scholarship.”
Now Georgia lawmakers are considering a proposal that would make accounts available to children with special needs, students from low income families, adopted children, students in active duty military families, and children who have been bullied in school.
Experiences from other states demonstrate that students from all walks of life can benefit from the accounts. Arizona lawmakers enacted the nation’s first law in 2011 for children with special needs but have expanded student eligibility since. By the 2015-2016 school year, approximately 40 percent of account holders were children that met other eligibility criteria: 15 percent of account holders were students previously assigned to failing schools; 11 percent were children from military families; 8 percent were adopted students; and 6 percent were Native American students living on tribal lands.
As for Julie, an education savings account has allowed her to set new goals for her grandson. “My grandson understands his limitations,” she says. “He has a long road to go before all of his basic skills are mastered, but I feel confident that so long as we can… [meet] his individual needs, he will succeed in anything he chooses to do.”
Every Georgia parent or loved one wants to have the same vision for success for their child. The education savings account proposal puts these aspirations within reach for thousands of students across the state. Every family wants to have an opportunity like this.
There’s no doubt about it: Marriage is in crisis today, both in Georgia and across the United States. But even as we grieve declining marriage rates among young people—many of whom choose to cohabit rather than tie the knot—and spiking divorce rates among Baby Boomers, we’re reminded that we have so much to celebrate. And we have plenty of reasons to be optimistic about what the future holds.
Why? Because we know that healthy marriages are a cornerstone of our society. And they’ll always be. We know that married people tend to be happier, healthier, wealthier, and enjoy more stability in their lives. Those benefits also extend to kids, who perform better in school and have a far slimmer chance of being in poverty.
In the spirit of celebrating all that’s great about marriage, we’re thrilled to recognize National Marriage Week (February 7-14) leading up to Valentine’s Day. National Marriage Week seeks to foster collaboration around the country to “strengthen individual marriages, reduce the divorce rate, and build a culture that fosters strong marriages.”
One of our core goals here at Georgia Center for Opportunity (GCO) is to give couples the tools they need to not just survive, but thrive in their marriages. Empirical research clearly tells us that marriage is a crucial step toward achieving economic and relational stability. In fact, it’s one part of the three-part “success sequence”: Those who get a good education, work full-time, and marry before having children are nearly guaranteed a place in the middle class.
This National Marriage Week, if you’re looking for ways to strengthen your own relationship or help others strengthen theirs, here are several practical ways to get started:
- Sign up for a “Build my Relationship” web conference: GCO’s Healthy Families Initiativeis now offering a new way to connect with licensed professionals via a series of live web conferences. You’ll have the opportunity to engage in conversation with our experts and gain insight into other resources and tools available to build your best relationship. Register Now.
- Attend a “Prepping for Romance” workshop: A “best of the best” relationship training workshop. Prepping for Romance helps build communication skills and provides the tools to create a solid marriage foundation. Register Now.
- Help a teen with our “How to Avoid Falling for a Jerk or Jerkette” workshop: Want to help your teens navigate the challenging waters of dating and relationships and build a strong foundation for marriage? This interactive workshop is designed specifically for high school students and teaches them how to effectively date with long-term, healthy relationships in mind. Register Now.