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Governor Bentley Demands That Legislature Raid Education Reserve Fund to Fund Alabama Medicaid

By Brandon Moseley and Bill Britt
Alabama Political Reporter

MONTGOMERY-Alabama Governor Robert Bentley held a press conference Tuesday to discuss the General Fund Budget and the budget challenges facing the Alabama Medicaid Agency.

Governor Bentley said, “We have more than $200 million sitting in a savings account in the Education Trust Fund.  Rather than let that money sit in a savings account, we can use that funding to sustain Medicaid.”

In his state-of-the-state speech to open the legislative session Gov. Bentley asked legislators to raid the Education Trust Fund to fund Alabama’s struggling General Fund.  Gov. Bentley renewed that request (which has been largely ignored by legislators) today.  The Governor said, “Think about your personal finances.  If you have two bank accounts, and one of them is in dire need while the other has a large amount of money in savings, you would transfer that money from one account to the other to meet the need.  State government must do the same.  We have money available to meet the need.  This is simply a matter of allocating the money we have available in a way that sustains essential services.”

The Governor has threatened to veto a budget without the Medicaid money that he demands and will call a special session to force the legislature to deal with the General Fund budget.  Alabama State Representative Jay Love (R-Montgomery) Chairman of the House Ways and Means Education said, “I don’t think it is a veiled threat. I think he will veto the budget if it doesn’t have the $200 million transfer in it. It is not going to have that money in it.”

Gov. Bentley said, “Hospitals, doctors’ offices, and nursing homes depend on Medicaid to provide funding that sustains the services they offer to all patients.  Without proper Medicaid funding, the strain on the health care system would be severe.  We must provide Medicaid the state funding it needs in order to ensure that health care providers are in a financial position to serve the public and save lives.”

State Health Officer Dr. Donald Williamson said, “The budget decisions that will be made over the next few weeks will be the most crucial I have ever seen.  The $600 million figure is a bare minimum funding level, and even at that funding level, Medicaid will still be a lean program.  Any cuts below $600 million would seriously impact people’s health.  We would start to see hospitals and nursing homes reducing beds, eliminating services, or even closing, leaving patients with nowhere else to turn for critical care.”

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Dr. Williamson said that Medicaid pays the delivery costs of 51 percent of the babies that are born in Alabama. Some 42 percent of Alabama children are insured by Medicaid and two-thirds of the nursing home bills in Alabama are paid by Medicaid.  “If we eliminate every optional program in Medicaid– they are not optional to the patient–no drugs for adults, no dialysis, no hospice, we will provide no glasses for adults and we go in and cut physicians, dentists and labs by 50 percent we still only save $153 million. That still doesn’t balance the budget.”

Rep. Love said, “I don’t disagree that the situation with the Medicaid budget is dire and there needs to be solutions addressed.” Rep. Love said however that he doesn’t support the Governor’s proposed raid of the Education Trust Fund rolling reserve. “He says in a press release that it is from a savings fund but it is not.  That money is going to be used to pay back the Rainy Day Account, which is a constitutionally mandated burden that we have (or responsibility that we have). I don’t think that is the solution and I don’t think my colleagues in the House think that is a solution.”

The doomsday scenario is if Alabama were to be denied federal funds because state budget cuts would prevent the program from achieving the minimum standards allowed by the federal government.  In that scenario, the state would be left with a $400 million indigent care fund instead of the massive $1.8 billion Alabama Medicaid Program, which is 68 percent federally funded, and which effectively subsidizes the Alabama healthcare industry.  Alabama would be the first state to drop out of the Medicaid Program and could possibly face an exodus of doctors and healthcare workers.  Some hospitals in Alabama could close if that were to happen.

The FY 2013 General Fund Budget, that passed the Alabama House, cuts Alabama Medicaid much more than the Governor would like and has no plans for raiding the Education Trust Fund or raising taxes to prop up Alabama Medicaid.  Rep. Joe Hubbard (D) from Montgomery and Rep. Patricia Todd (D) from Birmingham have both proposed raising the cigarette tax to pay for the Medicaid shortfall.  Raising the state taxes on a pack of cigarettes to $2.42 would raise an estimated $220 million for the Alabama Medicaid program, but Gov. Bentley has also promised to veto any tax increase proposal.

Governor Bentley’s proposed $200 million raid of the state’s rainy day fund would leave Alabama’s schools with no reserves for the next economic downturn.  It also does nothing to prop up Medicaid in the FY 2014 budget if there is not a spectacular economic turn around in the next twelve months since there would likely be no rainy day fund to plunder next year.

To read Gov. Bentley’s proposal in its entirety:

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Brandon Moseley is a former reporter at the Alabama Political Reporter.

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