State Government

Arise legislative update: Committees approve tax break bills, consider TANF drug tests

Alabama would offer state income tax credits for preserving historic buildings and make more farmers eligible for an existing credit for installing irrigation systems if bills approved by House and Senate committees Wednesday become law. This legislative update highlights those proposals and the Senate committee debate over a plan to require drug tests for certain TANF applicants.

Read ACPP policy analyst Chris Sanders' legislative update here.

Arise legislative update: Higher education requests more money amid tight revenues

Alabama's colleges and universities need sharp state funding increases next year to help regain ground lost since 2008, higher education leaders said Wednesday during education budget hearings in Montgomery. But those funds may be tough to come by as the state continues to emerge from the Great Recession. This legislative update highlights the FY 2014 education budget hearings and a proposal to cut Alabama's corporate income tax.

Read ACPP policy analyst Chris Sanders' legislative update here.

Arise members endorse 'Yes' vote on Sept. 18 referendum

Arise members voted Aug. 11 to support a 'Yes' vote on the Sept. 18 referendum to shore up the General Fund. For a review of the issues at stake and an explanation of the Arise position, see our updated fact sheet.

Read flyer here.

Read updated fact sheet here.

Arise Legislative Update

Alabama’s Medicaid program is on course for a “train wreck” next year, State Health Officer Don Williamson told legislators Tuesday, and a Sept. 18 vote will determine whether that wreck is controlled or uncontrolled. Williamson, who chairs Gov. Robert Bentley’s Medicaid transition team, said Medicaid risks numerous lawsuits and the loss of all federal funding if voters reject a proposed constitutional amendment in September. Even if it passes, the budget will remain tight, Williamson said.

Next year’s $1.7 billion General Fund budget assumes voter approval of the amendment, which would transfer $437.4 million over three years from the Alabama Trust Fund to the General Fund. A “no” vote would blow a huge hole in that budget and leave Medicaid with a $100 million shortfall less than two weeks before fiscal year (FY) 2013 begins, Williamson said. “If it fails, we will go into a 10-day ‘almost shutdown’ of Medicaid,” he said.

Alabama’s options to close that shortfall without new revenues would be limited, Williamson told lawmakers during Tuesday’s meeting of the Permanent Joint Legislative Committee on Medicaid Policy. Eliminating all optional services – those the federal government does not require the state’s Medicaid program to offer – would save only $83 million, he said. But $70 million of that amount would come from ending patients’ prescription drug coverage, which Williamson said is unlikely.

One of the state’s few remaining choices would be to change reimbursement payments to hospitals and nursing homes, Williamson said. But he warned that move could erode Alabama’s provider taxes, force closures of nursing homes and rural hospitals, and “melt down” the state’s Medicaid funding system entirely. “It needs to be a controlled redesign, not a cataclysmic redesign,” Williamson said.

The Medicaid expansion decision

Voters’ decision in September will be the prelude to an even bigger choice for Alabama in coming years: whether to accept or reject funds to expand Medicaid coverage for low-income adults under the Affordable Care Act (ACA) starting in 2014. The U.S. Supreme Court upheld the ACA’s constitutionality last month but ruled that states must have the option to reject the law’s Medicaid expansion without jeopardizing existing Medicaid funds.

The expansion would cover about 420,000 low-income Alabamians, Williamson said, with the federal government picking up the entire cost for the first three years. Alabama’s share of the cost then would increase gradually until it reached 10 percent starting in 2020. If Alabama agrees to expand Medicaid, Williamson said, the state’s total investment of $406 million to $440 million over the next six years would generate $10.1 billion to $10.8 billion in new money for the state economy. “That may turn over enough and generate enough tax dollars to pay for that expansion,” Williamson said.

If Alabama opts out of the Medicaid expansion, hundreds of thousands of low-income residents could be left out of the ACA’s efforts to make affordable health coverage available to everyone who wants it. The ACA’s expansion would offer Medicaid coverage to all adults with incomes up to 133 percent of the federal poverty level. People with incomes above 100 percent of the poverty level will qualify for federal subsidies to buy insurance through a health insurance exchange. 

Alabama now offers Medicaid coverage for parents with incomes up to only 11 percent of the poverty level, while childless adults are ineligible regardless of their incomes. Rejection of the Medicaid expansion would leave uninsured Alabama adults with incomes between 11 percent and 100 percent of the poverty level with few coverage options, Williamson said.

‘Medicaid’s going to expand even if we don’t expand’

Alabama’s Medicaid costs will increase in coming years even without the expansion, Williamson said. The state will spend an additional $64 million over the next six years to cover new enrollees who meet current eligibility standards, Williamson said. The ACA also requires Medicaid, which pays providers an average of about 79 percent of Medicare rates, to match Medicare’s payment schedule in 2013 and 2014, Williamson said. The federal government will cover the entire increase for those years, but states later may have to begin picking up a share. “Medicaid’s going to expand even if we don’t expand,” said Rep. Greg Wren, R-Montgomery, who chairs the Medicaid policy committee. 

Many lawmakers said they worry that Medicaid will unable to keep pace with growing costs in coming years. Even without the Medicaid expansion, the program’s total state and federal spending is expected to increase from $6 billion this year to $9 billion by FY 2019, the Legislative Fiscal Office estimates. Rep. Jim McClendon, R-Springville, who chairs the House Health Committee, said Medicaid needs to find a way to become financially sustainable. “If it weren’t for having to pay for it, we could have free health care for everybody,” McClendon said. 

Other legislators said the Medicaid expansion is too good of a deal for Alabama to pass up. Rep. Rod Scott, D-Fairfield, called the expansion “one of the biggest economic development tools that has been introduced in this country.” Sen. Billy Beasley, D-Clayton, argued that better health care access would keep Alabama workers healthier and more productive.

Sen. Hank Sanders, D-Selma, said the state’s Medicaid expansion decision is “a matter of priorities.” As a child, Sanders said, he went to the doctor only once, and he knew many children with serious illnesses whose families deferred treatment because it was too expensive. “There are many people without insurance risking their lives,” Sanders said. “Health care is more fundamental than education. Education improves lives. Health care sustains lives.”

Chris Sanders

Policy Analyst

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'On the Table': An overview of the Sept. 18 amendment

Should Alabama raid the state savings account or risk massive funding cuts for Medicaid, prisons and other public services? That is the uncomfortable choice facing Alabamians at a special referendum on Sept. 18, 2012. Voters will decide then on a proposed constitutional amendment to move $437.4 million over three years from the Alabama Trust Fund to the General Fund to help prop up the state's budget for non-education public services.

The amendment leaves ACPP members with another choice this summer: Should the organization support or oppose it? Members will determine the group's position at a called membership meeting on Aug. 11 in Birmingham. This fact sheet examines the historical background of the amendment, as well as the possible results of voters' acceptance or rejection of it.

Read fact sheet here.

Budget Policy Choices 2012

State budgets and taxes are tools that Alabamians use to support public services that benefit all of us. Education, Medicaid, public safety and public health are just a few of the functions that we as a people have decided are important to creating a better quality of life. Budgets are the documents that spell out our public priorities, and taxes are how we pay for them.

Read issue brief here.

Draconian General Fund cuts OK'd by House committee

Alabamians would face drastic service reductions in Medicaid, public health and other human services next year under a $1.4 billion General Fund budget proposal that the House's General Fund budget committee approved Wednesday. The full House could consider the budget for the state's non-education services as soon as Tuesday.

Read budget update here.

General Fund update 2-22-12 -- TANF, child support enforcement program could end amid budget cuts

Alabama could eliminate its child support enforcement program and end participation in the Temporary Assistance for Needy Families (TANF) program next year because of budget cuts, Department of Human Resources (DHR) commissioner Nancy Buckner told legislators today at a General Fund budget hearing in Montgomery. Reduced funding for the state's mental health and public health agencies could mean hundreds of job losses and drastic service cutbacks amid a potential 25 percent General Fund shortfall, lawmakers also heard today.

Read full article.

General Fund update 2-17-12 -- Big changes could be ahead for Medicaid, prisons

The Alabama Medicaid Agency is seeing progress in recent efforts to save money without denying care, commissioner Dr. Bob Mullins told legislators today at a General Fund budget hearing in Montgomery. But some legislators suggested the cuts are not enough in the face of a potential 25 percent General Fund shortfall and said Medicaid officials need to consider converting Medicaid services to a private managed care system.

Read article here.

AT ISSUE: Drug testing for TANF applicants

Republican lawmakers have announced their intention to propose mandatory drug testing for welfare applicants in the 2012 legislative session, which begins February 7. The proposal raises a number of troubling issues.

Read issue brief.

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