Balancing budget is issue No. 1

Published 11:00 pm Thursday, April 18, 2013

As the 2013 regular legislative session winds down, the continuing saga of balancing the beleaguered General Fund Budget will be issue number one.

As legislators wrestle to finalize the General Fund Budget the obvious complementary dilemma that confronts lawmakers is what to do about Medicaid. The growth and expansion of Medicaid is the number one problem facing the General Fund and state government. One thing is for certain, Medicaid will continue to be problem number one when it comes to crafting and balancing Alabama’s budget.

There is an inevitable crossroads that Alabama is facing when it comes to Medicaid. It will only become more acute as our population continues to age. Today, Medicaid accounts for an amazing 35% of the state’s General Fund Budget. Most state lawmakers point to this joint state/federal program as the obvious elephant in the room when it comes to making ends meet. It is a money eating monster.

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However, what do you do when this monster is being fed by a carrot from our good old Uncle Sam who does not worry about deficits? The state receives over a two dollar match from the federal government for every dollar spent. Medicaid pays for half of all childbirths in the state as well as healthcare for every four out of 10 children.

In case you think that this program is a total welfare program think again. Chances are your Aunt Susie’s nursing home expenses are being paid by the Alabama Medicaid program. Currently, 70% of all nursing home patients in Alabama are on Medicaid.

This nursing home care cost is one of the components that will be scrutinized by the legislature as they examine and dissect the Medicaid program. Our Republican legislature has shown that they are bold and hold no cows sacred when it comes to cutting state government. This conservative group will probably take a scalpel to cutting this state agency to the bone and will explore any and all cost savings measures.

Alabama nursing homes carved out a unique reimbursement process several years ago with a Democratic legislature. Speaker Mike Hubbard has recently stated that the present practice is unsustainable. It is uncertain whether cuts to services or implementation of logical costs savings measures like home health care in lieu of nursing home care will be enough.

It is not enough that legislators are desperately searching for a solution to fund our current Medicaid program, they will have to face a looming major decision regarding further expansion of Medicaid. Alabama legislators are facing a choice of whether to participate in a new expansion offered by the federal government. The Affordable Care Act, nicknamed Obama Care, could open the door for the government to cover most of the state’s uninsured residents.

Obama Care offers a free lunch for three years, then the state has to begin paying. For the first three years, beginning in 2014, the federal government would pay 100% of the cost. After that the state would have to begin to shoulder some of the costs starting at five percent in 2017 and capping at ten percent in 2020.

Even at its capping level of state contribution, Alabama would reap a nine to one federal match. According to the Urban Institute, Alabama is one of five states where more than 60% of our uninsured population could become eligible for Medicaid. It is estimated that 400,000 uninsured Alabamians would join Medicaid.

The Henry Kaiser Family Foundation estimates the expansion would bring $10 billion in new federal health care money to Alabama from 2014 to 2019. The state’s cost to get these dollars would be approximately $582 million. That is like investing $500 and getting back $10,000. However, Gov. Bentley has stated unequivocally that he is adamantly opposed to the Obama Medicaid expansion. Bentley says that Alabama cannot afford what we have now, much less an expansion. Speaker Mike Hubbard says, “My first impression is we can’t afford what we have now. We certainly can’t afford to add 400,000 people to the rolls.

It will be interesting to see how legislators address the Medicaid dilemma. It is not a fun time to be a legislator.


Steve Flowers served 16 years in the state legislature. He may be reached at