'Challenging choices': Amendment vote to be between robbing from state savings or doing without state services
by Tim Lockette
Aug 19, 2012 | 6308 views |  0 comments | 17 17 recommendations | email to a friend | print
Don Williamson doesn’t like hyperbole.

As Alabama’s chief public health officer, Williamson says he gets irked when people exaggerate public health crises — because the panic is usually more harmful than the disease. But Williamson can’t talk about Alabama’s Sept. 18 constitutional amendment vote without sounding a bit like Chicken Little.

“If the amendment doesn’t pass, on Sept. 19 we’re going to have to make some challenging choices,” he said.

Like ending dialysis for people on Medicaid. Or trimming state payments to rural hospitals and nursing homes, forcing some to close — and leaving whole communities without a doctor or elder care.

“When a hospital’s gone, it’s gone for everybody, no matter their income level,” he said.

One month from now, voters go to the polls to decide the fate of a constitutional amendment that would take $437 million dollars from a state trust fund to patch a sizable hole in the state budget produced by the growing cost of the state’s Medicaid program. The amendment authorizes the withdrawal of about $145.8 million per year for the next three years from the Alabama Trust Fund, set up years ago to help the state make money off the revenues from oil and gas drilling fees.

Opponents say raiding the Alabama Trust Fund is a cop-out that will cost hundreds of millions without addressing the state’s real budgeting problems. Proponents say it’s distasteful but necessary — necessary to avoid cuts that would keep prisons from releasing felons and hospitals from going broke.

There’s little polling data to suggest which way the vote will go. If the amendment fails, legislators would have twelve days to come up with a plan to fix the budget before the 2013 fiscal year begins, or begin the year with a budget hole.

Shell game

Keivan Deravi says the amendment could force Alabamians to ask a fundamental question about their approach to government.

“The question is, how much do Alabamians want from their state government, and how much are they willing to pay for it?” said Deravi, an economist at Auburn University at Montgomery and author of the revenue projections the state uses in its budget planning.

Medicaid — the joint state-and-federal program that provides health insurance to people under the poverty line — is at the heart of that debate. More than half the children in Calhoun County are Medicaid eligible, state figures show, and two-thirds of nursing home residents statewide use the program.

With an aging population and continued high unemployment, those numbers are growing. Approximately 750,000 people were on Medicaid in Alabama in 2008, according to the state Medicaid agency. By 2014, 1.1 million people are projected to be on the program.

But the real problem, Williamson said, has been the end of stimulus-related federal help for Medicaid. After the recession hit, the federal government started kicking in more help to states, but that help ran out last year, Williamson said.

For 2012, the state budgeted $400 million for Medicaid. For 2013, Williamson said, upwards of $600 million is needed. That left lawmakers with a choice. They could raise taxes, cut from other programs to fill the Medicaid hole, or cut back on Medicaid itself.

Legislators punted. They proposed an amendment that would take the money from the Alabama Trust Fund, and wrote a budget predicated on its passage.

That puts the decision in voters’ hands. If Alabama residents vote yes on Sept. 18, Medicaid will come up only about $25 million short of its original funding request. A “no” vote would leave a hole that would likely lead to across-the board cuts — cuts that would put Medicaid about $100 million in the hole, by Williamson’s estimates.

“It’s a cute way of passing the blame onto someone else,” Deravi said.

The economist said he doesn’t know where the state would come up with more money if the amendment doesn’t pass.

“It would be like a shell game, with no pea under any shell,” he said.

He said he thinks voters will approve the amendment — because they have to.

“We can’t let the bad guys go, and we can’t let the children go,” he said. “We’re not really being given a choice.”

Impossible to guess

Gerald Johnson has some of the best polling data in the state, and he can’t guarantee that the amendment will pass.

“It’s almost impossible to accurately survey an amendment like this,” said Johnson, head of the Capital Survey Research Survey Center. Johnson’s organization is an arm of the Alabama Education Association, which supports the amendment.

He said his current polling suggests support for the amendment — but he hasn’t released those polls officially, because so much is unknown. The amendment is the only thing on the Sept. 18 state ballot, and single-issue elections tend to have dismal turnout. It’s one thing to tell a pollster you intend to vote — and another thing entirely to cast a ballot.

“If turnout reaches 10 percent, that will be a surprise,” Johnson said.

That could be good news for the amendment, Johnson said. Past elections suggest that in low-turnout amendment votes, it’s amendment supporters who take the trouble to show up.

But with turnout possibly in the single digits, Johnson said, there’s the real possibility that a grassroots movement could emerge to tip the whole thing over.

‘A train wreck already’

Several organizations are coming out to support the amendment, if reluctantly. The Business Council of Alabama endorsed the measure, but on the condition that legislators commit to repaying the money to the Alabama Trust Fund. The anti-poverty group Alabama Arise is urging voters to approve the amendment, while noting that it doesn’t fix larger problems for poor Alabamians, such as the state’s tax code.

Williamson and other state department heads have touted the measure as well.

A political action committee, Keep Alabama Working, was formed last month to push for the bill, funded with money from a statewide association of nursing home operators.

But not all state leaders are for the bill. Bradley Byrne, former community college chancellor and Gov. Robert Bentley’s opponent for the GOP nomination in 2010, said he can’t bring himself to vote for the measure.

Byrne said he doesn’t want to see the state taking a total of $437 million out of what he calls “our savings account” with no intention of paying it back.

“We should be attending to the underlying problem,” he said.

Byrne points to state projections that show Medicaid costs ballooning over the next decade. One state estimate has the program swallowing up 92 percent of the General Fund budget by 2020.

Byrne wants the system overhauled. He has advocated for a system in which a private company would process Medicaid claims, with oversight from an outside agency.

He said he’d like to see a change in how malpractice claims are handled — essentially, tort reform. And he said he’d like to see an overhaul of other agencies within the General Fund, merging duplicated agencies to reduce overhead.

“Otherwise, we’re just going end up spending this money, and in three years we’re back in the same situation,” he said. He agrees with amendment supporters who say the state will face serious budget hardship if the measure fails. He says he’d rather get the pain over with.

“It’s a train wreck already,” he said.

Buying time

“Medicaid and prisons are a lot alike,” Williamson said. “The people in charge of them have no control over who they’ll serve or when.”

Williamson said he was appointed with a mandate to bring those costs under control. The amendment, Williamson said, would buy the state time to make changes. Without it, he said, the state would have to make drastic changes with potentially ruinous results for individual patients.

Williamson said the state’s options for cutting Medicaid are fairly narrow. The state can’t kick people off the Medicaid rolls because the state’s standards for enrollment are already the strictest allowable by the federal government, he said. And there are a number of services — hospital visits, pregnancy-related health care and so on — that the state couldn’t cut if it wanted to, because federal law forbids it.

That leaves other services, like dialysis, eyeglass purchases and drug prescriptions and others, that the state provides, and can cut.

“Even if we cut all dialysis and prescriptions, it wouldn’t get us to the savings we need,” Williamson said.


What the state can do, he said, is cut the amount it pays to hospitals for Medicaid care. A cut of about 13 percent would be necessary, he said. And that would push a lot of hospitals over the edge.

“A lot of these hospitals are teetering on the balance as it is,” he said. “It’s not just a lack of profit. They’re struggling to balance the books.”

Williamson predicts that if those cuts are made, hospitals with large Medicaid populations — many of them rural hospitals — will go out of business. That would leave huge swaths of the Alabama landscape without a nearby hospital.

“If the amendment doesn’t pass we’re going to survive, but it’s going to force us to look at things differently,” said Burt Arthur, finance director for Sarrell Dental Center, an Anniston-based nonprofit clinic for kids on Medicaid. For years, Sarrell has been building new clinics around the state, filling in the gap in communities that don’t have a dentist who takes Medicaid. The center has also won praise from policymakers for cutting per-patient its per-patient costs.

Arthur said Sarrell will find still more ways to cut if it has to. But failure of the amendment would probably halt any expansion plans the clinic has. And it would probably hurt dental care coverage in other parts of the state, leaving more kids without a dentist.

“Sixty-six out of 67 counties already have a shortage of dentists who serve this population,” he said. “If the amendment fails, it will only get worse.”

Another option

Voters on Sept. 18 will have two choices: take money from the Alabama Trust Fund, or don’t, and accept the consequences.

But there was another option, one the Legislature didn’t take.

Two Democratic lawmakers, Rep. Joe Hubbard of Montgomery and Rep. Patricia Todd of Birmingham, filed bills earlier this year to raise the state’s tax on cigarettes.

Hubbard’s bill would have boosted the tax by $1 per pack, raising $230 million a year, according to state estimates.

“That would have taken care of the problem,” said Deravi, the AUM economist. It’s easy, Deravi said, to see the argument for asking smokers to fill the gap.

“If the average Joe smokes, he’s going to put a burden on Medicaid down the road,” he said.

Two-hundred thirty million packs of cigarettes might seem might seem like a lot for a state Alabama’s size. But according to the Centers for Disease Control, 783,000 Alabamians smoke. Each would have to smoke 293 packs a year — less than a pack a day — to hit the 230 million mark. The tobacco tax bills never made it out of committee. It’s not clear whether they’d be brought up again if the amendment fails.

Williamson said that as the state’s health officer, he has more than one reason to support a cigarette tax.

“These taxes discourage smoking, so it would be hard for me to say no,” he said.

Star Assistant Metro Editor Tim Lockette: 256-235-3560. On Twitter: @TLockette_Star.

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