Alabama Hospital Association Response to Medicaid Budget

 “The General Fund Budget passed by the legislature and recently vetoed by Gov. Bentley is $85 million short of the money needed to fund the current Medicaid program, a program that provides health care to almost 25 percent of the state’s population,” said Danne Howard, executive vice president and chief policy officer of the Alabama Hospital Association. “With this level of funding, Medicaid will have to make severe and unsustainable cuts that would limit access to care not only for Medicaid recipients, but for all Alabamians. In addition, delivery system reform in this environment would not be possible.”

“Most people don’t realize that Medicaid is the backbone of much of the state’s health care infrastructure, particularly in rural and inner city areas,” Howard said. “Significant cuts to Medicaid mean some doctors, hospitals and other providers that depend on the Medicaid volume to keep their doors open, might be forced to close, reducing access for everyone. Once providers leave an area, it’s not only a big blow to the local economy, but it’s very difficult to build back that health care presence in the future.  

“Alabama needs to find new revenue to support the General Fund and the critical programs it finances.”

Key facts:

• In the past year, three local communities overwhelmingly approved tax increases to support and preserve access to health care through local hospitals.
• Medicaid’s budget is not growing out of control. It simply is suffering from year after year of being patched together with one-time funding and federal matching dollars, not to mention the continued growth in enrollment. In fact, Alabama’s Medicaid budget has only increased at an annual average rate of a little more than two percent each year since 2010, well below the standard rate of medical inflation (almost six percent). The lack of growth in the state’s general fund budget is the real issue. 
• Not one dime of General Fund dollars is used to fund hospital services for Medicaid patients. These services are funded entirely by provider assessments, public hospital transfers and federal matching dollars.
• On average about 10 to 12 percent of hospital patients are covered by Medicaid. In some areas that number is much higher, and in the state’s two children’s hospitals, Medicaid insures about 2/3 of their patients.
• The health care sector is among the top employers in the state. In 2013, the payroll for Alabama’s health care and social assistance sector was more than $10 billion.
• Alabama’s hospitals alone provide $19.2B in economic activity to the state’s economy, directly employing 84,000 individuals and indirectly employing another 86,000.