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Democrats offer budget plan to prevent Medicaid death spiral

By Bill Britt and Brandon Moseley
Alabama Political Reporter

For many poor and elderly Alabamians a dire crisis sits over the horizon as funding for Medicaid is about to face a drastic reduction. Earlier this week Governor Robert Bentley and State Health Officer Dr. Don Williamson held a press conference to layout the devastating consciqeces if Medicaid funding is cut to $400 million dollars as proposed by the GOP budget.

Williamson said, If Medicaid only receives the $400 million dollars the whole of health care in Alabama faces, “What I am calling a positive death spiral.”

The republican governor and the republican controlled legislature seem to be in pitch battle over the future of the failing system.

On Wednesday the democratic leadership came forward with an alternative plan for saving Medicaid.

House Minority leader Craig Ford (D-Gadsden), and Senate Minority Leader Rodger Bedford (D-Russellville), took to the podium of the newly minted press briefing room on the third floor of the State House to offer a third way.

“It is 4 0‘clock on the 25th legislative day of this Alabama legislative session and still no general fund budget has been offered” said Bedford, “The time to act is now, we cannot wait any longer for the republicans to take the lead.”

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Ford, echoed Bedford’s remarks saying, “We have seen a lack of leadership among the House and Senate and Governors office,” said Ford, “Even though we are in the super minority we are not going to stand by and watch Medicaid fall apart.”

Sen. Bedford and Rep. Ford’s plan would raise the money the state needs to maintain the current level of Alabama Medicaid funding by changing the Canfield Rolling Reserve Act so that it does not go into effect until state revenues are back to what they were in 2008. Instead of $200 million of Education Trust Money going to replenish the reserve fund in the FY2013 budget, it would allocate that money to pay for the state’s Medicaid needs like Governor Bentley demanded on Tuesday.

Bedford said, “Representative Ford and I have come together and devised a plan that would solve the Medicaid crisis for years to come without raising tax and without imposing fees.”

The Bedford/Ford plan would go much further than the Governor’s and would forgive the debt that the Education Trust Fund (ETF) already owes to the Alabama Trust Fund (ATF) to replenish the ETF rainy day fund that was originally taken from the ATF to prop up state budgets when the economy tanked in 2009. The Democrats’ plan would then ask the voters to amend the Alabama Constitution so that future deposits to the ATF would be diverted to meet state needs giving the state legislature a plush new source of current income if and when President Obama (or President Romney if the election goes toward the Republicans) allows expanding oil and gas exploration off of the Alabama coasts.

“The fact is that 78 percent of the beds in nursing homes are paid for by Medicaid, 40 percent of Alabama’s children receive their health care through Medicaid. One in two live births are covered by Medicaid, the result of doing nothing will be disastrous” said Bedford, “We have the money it can be transferred now, there just needs to be a will to act.”

As of September 30, 2010 the Alabama Trust Fund had a balance of $2.44 billion. The ATF generates interest income for the state. Part of that income is given to Alabama Counties ($12.9 million in 2010), Alabama cities ($12.9 million in FY2010) and part of it goes to fund Forever Wild’s to purchase more rural real estate ($10.1 million in FY2010). Voters will have the option of continuing the Forever Wild program at the polls in November or not. In FY2010 –$65.5 million went directly from the interest off of the ATF to the General Fund to fund Alabama’s prisons, courts, Alabama Medicaid, and other government agencies.

“We have come together with a plan that will solve the state’s medicaid problem and to help education, by enacting this plan we can save Medicaid, better fund education and create more jobs in Alabama without taxing people or raising fees or cutting services,” said Ford.

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The danger with sending oil and gas royalties directly to the state legislature as suggested by the Bedford-Ford Plan is that that income can vary wildly with the amount of oil drilled and the market price of oil and gas. During years of high royalty income, the legislators would likely spend more, hire more state workers, give out more state contracts, raise salaries, pay overly generous benefits, etc. and then when that cyclical income decreased it would be painful for the legislature to make the cuts to those programs and the people affected. Rolling future deposits to the ATF, gives the general fund a smaller but more consistent and reliable revenue stream that will continue to grow to benefit future generations of Alabamians even when oil and gas royalties are small.

Bedford ended by saying, “It is the 11th hour, now is the time for everyone to come together, this is a plan that will work. It is one that can be accomplished in five legislative days and it will protect Medicaid.”

There is a hope among some democrats and republicans alike that a compromise between the competing plans can be accomplish to save the Medicaid system. The fear is that there is a dangerous game of political chicken being played with the poor and elderly caught in the middle.

Written By

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.


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