Issue: Health

Legacies of recession, chronic shortfalls linger in Alabama’s budgets

By Chris Sanders

State support for education and other public services under the Education Trust Fund (ETF) and General Fund (GF) next year would not come close to its pre-recession level under the budgets that advanced in the Alabama Legislature on Wednesday. Both budgets are built on the assumption that the state will see no major revenue increases next year.

One-time teacher bonus, Alabama State funding cut in Senate committee’s ETF budget

Alabama would allocate $113.9 million, or 1.9 percent, less from the ETF next year under the $5.9 billion budget that won approval Wednesday in the Senate’s ETF budget committee. (By contrast, K-12 and higher education officials had requested $474 million more support next year.) If the budget becomes law, ETF funding in 2015 would be 18.5 percent less than it was in 2008, adjusted for inflation. The full Senate could consider the plan as soon as Thursday.

K-12 teachers would receive a one-time 1 percent bonus next year under the committee’s budget. Gov. Robert Bentley had recommended a 2 percent pay raise, but committee chairman Sen. Trip Pittman, R-Montrose, said he isn’t sure revenues will grow enough to sustain that pay increase. “You can’t spend optimism,” Pittman said. The committee rejected an attempt by Sen. Hank Sanders, D-Selma, to provide a 6 percent teacher raise.

K-12 schools and two-year colleges would receive slightly more ETF money next year under the committee’s budget, while universities would receive slightly less. The budget would include money to hire more middle school teachers and increase support for the Alabama Math, Science and Technology Initiative (AMSTI). Funding for the Alabama Reading Initiative would be flat.

Alabama State University (ASU) would lose about one-fourth, or $10.8 million, of its ETF support next year under the budget, accounting for almost the entire overall funding cut to universities. The budget would include $10 million for ASU as a “first-priority conditional,” meaning Bentley could release the money to the university if ETF revenue collections exceed budgeted spending next year.

Flat funding abounds for General Fund services

The House voted 80-20 Wednesday night to approve a GF budget that would be about the same size it was last year and is little different than the one that cleared a House committee last week. The $1.8 billion budget now goes to the Senate.

Medicaid, prisons, mental health care and other public services could struggle to maintain current services at the funding levels in the House’s GF budget. Overall GF support for those and other non-education services would be 8.3 percent lower next year than it was in 2008, adjusted for inflation, despite higher costs and population growth since then.

The House budget would cut GF support for Alabama’s prison system, which operates at nearly twice its designed capacity. Rep. Steve Clouse, R-Ozark, who chairs the House’s GF budget committee, said last week that he wants to work with House and Senate leaders to find more money for corrections.

Medicaid would see an 11.4 percent GF increase, though that amount still would fall short of what State Health Officer Don Williamson said the agency needs from the GF. Williamson said Medicaid could survive next year at the House’s proposed funding level by looking for more ways to trim costs in the prescription drug program and other areas.

Mental health services would receive the same amount of GF money next year, despite the increased demand for community-based mental health services following the closure of several state mental health hospitals. State courts, which have cut hundreds of jobs in recent years, would receive far less GF funding than they requested.

ALL Kids, which insures Alabama children whose low- and middle-income families do not qualify for Medicaid, would receive 28.3 percent more from the GF to help cover higher enrollment. A $13.9 million ETF boost for the Department of Human Resources (DHR) would help the agency offset an $11.8 million GF reduction. DHR provides child welfare, child support collection and elder abuse services. The agency also administers the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) program in Alabama.

Rep. Chris England, D-Tuscaloosa, said lawmakers have missed several opportunities to ease the burden on state budgets in recent years. Instead, England said, the Legislature has declined to increase the state cigarette tax, reform the state’s criminal sentencing system, or expand Medicaid eligibility under the Affordable Care Act.

The GF draws its revenues from a variety of sources that do not grow quickly enough to keep pace with cost increases. That leaves the budget with a structural deficit, meaning it often is strapped for cash even when the economy is doing well.

Rep. John Knight, D-Montgomery, said lawmakers eventually must solve Alabama’s perennial GF shortfalls. “At some point, we’re going to have to figure out how to say, ‘We’re going to do better,’” Knight said. “We can’t take care of the basic things we’re supposed to do.”

Time is getting shorter for the Legislature to finalize the budgets. Lawmakers will return Thursday for the 19th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Chris Sanders, communications director. Posted Feb. 26, 2014.

Medicaid, prison funding challenges remain as Alabama House committee OKs barebones General Fund budget

By Carol Gundlach

Medicaid, mental health and other human services in Alabama would face yet another year of tight funding under the General Fund (GF) budget that cleared a state House committee Wednesday. The committee’s version was virtually identical to the one that Gov. Robert Bentley recommended last month.

The committee approved next year’s proposed $1.8 billion operating budget for Medicaid, public safety and other non-education services after little discussion or debate. The budget now goes to the full House, which could consider it as soon as next week.

Big challenges ahead for Medicaid, prisons

Medicaid and state prisons would get nearly half of the GF’s money next year under the House GF budget committee’s plan, continuing the recent trend of those agencies consuming an increasingly larger share of the budget’s dollars. Medicaid would receive a $70 million, or 11.4 percent, increase, while the Department of Corrections would face a cut of $6.8 million, or 1.7 percent.

The committee’s proposed funding level could make it a challenge for Medicaid to maintain current services. Medicaid would remain $15 million short of the $700 million that State Health Officer Don Williamson said last month that it needs from the GF. The agency, which insures about one in five Alabamians, already has cut reimbursements for dental services, dialysis and services from non-primary care doctors. Williamson said the agency could survive next year by looking for more ways to trim costs in the prescription drug program and other areas.

Funding challenges also would remain for the state’s prison system. The corrections cut would come even as state prisons face a shortage of guards and run at nearly twice their designed capacity. Alabama also faces growing demands to hire more female guards, install more cameras and make other prison infrastructure improvements. Rep. Steve Clouse, R-Ozark, who chairs the House’s GF budget committee, said he wants to work with lawmakers to find more money for corrections.

Flat funding the norm for many other services

Other critical social services would receive essentially the same amount of GF money next year under the committee’s plan. The Department of Mental Health would be funded at the 2014 level despite the increased demand for community-based mental health services following the closing of several state mental health hospitals.

The Department of Senior Services, which provides Meals on Wheels nutritional assistance to the homebound elderly, was similarly level-funded. State courts, which have cut hundreds of jobs in recent years, also would get much less money than they requested.

The Department of Human Resources (DHR) would receive 16.8 percent, or $11.8 million, less from the GF next year. DHR’s allocation in Bentley’s recommended Education Trust Fund (ETF) budget would nearly double to offset that loss. Between the two budgets, Bentley recommended about a 2 percent increase for DHR. Because the ETF budget has not yet won committee approval, it remains to be seen whether the Legislature will support this increase. DHR provides child welfare, child support collection and elder abuse services. The agency also administers the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance for Needy Families (TANF) program in Alabama.

A children’s health insurance program would get a substantial funding boost next year to help cover higher enrollment. ALL Kids, which insures Alabama children whose low- and middle-income families do not qualify for Medicaid, would receive 28.3 percent more from the GF.

General Fund’s long-term structural deficit remains

Alabama is one of the only states with two major state operating budgets. The ETF budget funds K-12 schools, two-year colleges and public universities, as well as other state and local services related to education. The General Fund budget provides support for all other state services, including public health, public safety and child welfare.

Alabama has the highest rate of “earmarked” revenue in the nation. That earmarking forces lawmakers to spend certain tax proceeds only for very limited purposes. For example, individual income taxes and sales taxes are set aside for the ETF and can be spent only on education. Revenues from sales taxes and income taxes tend to rise and fall with the economy, allowing the education budget to make up for bad years during good years and to save some money for years when the economy is not doing as well.

The GF budget lacks this flexibility because it is funded from a variety of revenues that are not as responsive to economic changes and that do not grow quickly enough to keep pace with cost increases. That leaves the GF with a structural deficit, meaning it often is strapped for cash even when the economy is doing well. Next year’s proposed budget once again illustrates Alabama’s chronically inadequate funding for core services, ACPP executive director Kimble Forrister said.

Time is getting shorter for the Legislature to pass GF and ETF budgets for next year. Lawmakers will return Tuesday for the 17th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Carol Gundlach, policy analyst. Communications director Chris Sanders contributed to this report. Posted Feb. 20, 2014.

Anti-ACA bill clears Alabama Senate committee

By M.J. Ellington

A bill that purports to nullify parts of the Affordable Care Act (ACA) sailed through an Alabama Senate committee Wednesday with few questions. The bill now goes to the full Senate for consideration.

SB 220’s sponsor, Sen. Jerry Fielding, R-Sylacauga, told members of the Senate Judiciary Committee that he needed to pass the bill out of the committee Wednesday but said there would be a chance to make changes. “I have some changes myself,” Fielding said. “There will be opportunity for adjustments.”

The bill cites the Tenth Amendment to the U.S. Constitution in seeking to refuse to enforce sections of the ACA that “exceed the authority of Congress.” The measure does not specify all the parts of the ACA that are believed to exceed that authority. The U.S. Supreme Court upheld the ACA’s constitutionality in 2012.

Depending on how state officials would interpret the broadly worded SB 220 if it became law, enforcement might halt Alabama’s compliance with numerous technical provisions of the ACA, including new Medicaid eligibility requirements, information system upgrades and interagency data sharing. Disrupting such activities could jeopardize current federal Medicaid funding, ACPP policy director Jim Carnes said.

SB 220 would authorize the attorney general to file lawsuits on behalf of certain individuals or businesses “being harmed by implementation” of the ACA. The measure also would prohibit Alabama or any of its cities or counties from establishing a health insurance exchange under the ACA.

In addition, the bill would forbid state agencies and employees from conducting “involuntary” home visits under certain maternal, infant and early childhood programs referenced in the ACA. The ACA already requires that all such visits be voluntary. If SB 220 bars all in-home visits under that section of the ACA, the Department of Children’s Affairs could lose $6.3 million a year in federal grants, according to the Legislative Fiscal Office.

Committee member Sen. Phil Williams, R-Rainbow City, asked whether the bill’s passage could void certain insurance contracts already in force. Fielding said he would welcome a floor amendment to address that concern.

Identical legislation – HB 147, sponsored by Rep. Barry Moore, R-Enterprise – awaits action in the House Health Committee. The Legislature will return Thursday for the 16th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By M.J. Ellington, health policy analyst. Posted Feb. 19, 2014.

Bill to allow some pharmacies to redispense HIV drugs goes to Alabama House

By M.J. Ellington

Pharmacies that dispense HIV medications for or in HIV clinics would be able to redistribute certain unopened drugs under a bill that the House Health Committee approved unanimously Wednesday. HB 138, sponsored by Rep. Patricia Todd, D-Birmingham, now moves to the full House.

Current regulations prohibit HIV clinics from sending back medications, Todd said, even if patients do not show up for treatment. Clinic doctors say there are ample opportunities to use unclaimed, unopened drugs for other patients, but state regulations do not permit unauthorized redistribution of such drugs. Without the changes proposed in HB 138, pharmacies must continue to destroy those drugs.

Todd’s bill would allow pharmacies to redispense the medications to other patientsand would set strict control measures on handling and oversight of the drugs. State law already allowscounty jails and prisons to redispense unused prescription drugs and gives oncologists theauthority to use unclaimed cancer drugs for other patients.

Arise and other consumer advocates last year urged Gov. Robert Bentley to support this policy change as his Medicaid Pharmacy Study Commission met to look at ways to reduce costs in the state’s Medicaid drug assistance programs. Advocates said the change would reduce waste and improve cost-effectiveness. Funding for most HIV medications comes from federal sources to the AIDS Drug Assistance Program at the state Department of Public Health.

The Legislature will return Thursday for the 14th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By M.J. Ellington, health policy analyst. Posted Feb. 12, 2014.

Legislation would end Alabama Health Insurance Plan

By M.J. Ellington

An Alabama law that guarantees health insurance coverage for some people without regard to their health status is on the fast track to obsolescence in the Legislature.

Sponsors of identical House and Senate bills that would end the Alabama Health Insurance Plan (AHIP) say the program no longer will be needed because the Affordable Care Act (ACA) requires insurers to offer coverage regardless of a person’s health history.

HB 66, sponsored by Rep. Steve Clouse, R-Ozark, passed in the House last month and cleared a Senate committee Wednesday. The bill now awaits Senate approval. Meanwhile, a House committee Wednesday approved SB 123, sponsored by Sen. Slade Blackwell, R-Mountain Brook, putting the bill in line for a House floor vote.

The bills would reactivate AHIP if federal law ever again requires Alabama to offer so-called “guaranteed-issue” coverage. The measures would transfer any unobligated plan funds to the General Fund. They also could eliminate the need for the AHIP assessment on insurers, which raised $10.6 million last year, according to the Legislative Fiscal Office.

Before the ACA, insurers often refused to cover applicants with pre-existing conditions like cancer. Alabama created AHIP as a high-risk pool to cover certain residents who were turned down by other insurers after Congress passed the Health Insurance Portability and Accountability Act (HIPAA).

State Insurance Department figures show that AHIP enrollment has dropped significantly since the ACA took effect, Clouse said. AHIP’s highest enrollment was 1,800 people, but the most recent count of the plan’s participants was 640, he said.

By M.J. Ellington, health policy analyst. Posted Feb. 5, 2014.

No-frills Alabama Medicaid brings health care, jobs

By M.J. Ellington

Alabamians often are surprised to learn that Medicaid is a major engine for the state’s economy. Medicaid creates thousands of jobs, supports rural hospitals and the state’s only children’s hospital, pays for medical equipment that all patients use, boosts tax revenue in local communities and enhances our quality of life. Medicaid touches the lives of average Alabamians who never need the agency’s services themselves.

Alabama Medicaid is in the bull’s-eye for cuts as the Legislature looks to balance the FY 2013 General Fund budget in the face of a revenue shortfall. This fact sheet examines what’s at stake in the Medicaid budget challenge.