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Medicaid in crisis?
Published 11:57am Monday, August 13, 2012Voter approval of a Sept. 18 statewide constitutional amendment is critical for maintaining the state’s health care system, according to Russell Medical Center CEO Jim Peace.
The vote will transfer $145 million a year for three years from the Alabama Trust Fund to the floundering General Fund. The Trust Fund was established in 1982 to set aside royalties from oil and gas recovered from Alabama’s Gulf Coast as a savings account for the state.
“Due to the tough economic times, our state leaders were not able to find enough revenue to meet the budget needs of key state agencies, so they opted to go into the state’s savings account to allow time for long-term solutions,” Peace said. “Is this the perfect solution? No. It’s not the end-all solution to the problem we’ve got in our General Fund, but failure to pass this amendment on the 18th will result in a catastrophic impact to health care in our state.”
If the amendment doesn’t pass, the state will be forced to make deep cuts across the board, potentially leaving the state unable to meet federal regulations for Medicaid and likely causing its collapse, leaving the state unable to provide health care coverage for more than 900,000 Alabamians.
“It is estimated that without the transfers, the state might have to cut up to 17 percent out of state budgets on top of the 10 to 30 percent proration made during this fiscal year,” said Peace. “Cuts that significant are clearly going to have an impact, not just on the hospitals and doctors that treat Medicaid patients, but also on other vital services such as nursing homes and pharmacies.”
Alabama hospitals already contribute 32 cents up front for every dollar spent on the Medicaid hospital program, with the federal government funding the remaining 68 cents. No General Fund dollars are used to pay hospitals for caring for Medicaid patients.
“At Russell Medical Center, we receive about 71 cents (in reimbursement from the state) for every dollar of our cost to provide care to Medicaid patients,” Peace said. “Alabama is the only state in the nation whose General Fund budget does not put one penny into hospital services, meaning hospitals annually put up $233 million in Medicaid funds to be able to draw down federal funds that, together, represent $733 million of this state’s Medicaid program. Without those (matching federal) funds, the state would truly be in a mess.”
Peace said that approximately 15 percent of his outpatient services and 21 percent of inpatient services are covered by Medicaid, and while the hospital would be facing cuts if the amendment fails, other hospitals and physicians with a significantly higher Medicaid patient load would be devastated.
“Hospitals like Children’s Hospital in Birmigham where 65 to 70 percent of their patients are covered by Medicaid would be crushed if the amendment fails, and it could affect services for all children,” said Peace. “People need to understand that Medicaid is really a health insurance program that supports the fabric of the state’s health care system. I think at the end of the day that if this thing doesn’t pass, there may be hospitals with high volumes of Medicaid patients that may not be here to be able to put up the matching money.”
RMC will still feel the pain of a “no” vote, however.
“If this amendment doesn’t pass, obviously RMC will be faced with the possibilities of staff cuts and cuts in services. But would we close our doors? No,” Peace said. “It would change the landscape of who we are and potentially result in the loss of much-needed physicians in our area because they won’t be able to afford to continue to do what they do. None of us want to be faced with these types of choices.”
Peace estimated that hospitals around the state employ close to 80,000 people.
“If you add to that the other health care services that are in this state, you’ve got almost another 80,000 employees – that’s 160,000 employees in this state that could be affected in some way by the failure of this amendment,” Peace said. “That’s a little over $4 billion in this state’s economy just in salaries to those employees, and it’s a huge economic engine for this state – huge.”
Peace said RMC and other hospitals in the state are working to educate their employees about the amendment and encouraging them to vote “yes” on Sept. 18.
“We are communicating with our employees and trying to explain it because it’s a complicated issue,” Peace said. “We’re explaining what the issue means to our staff, our patients and to all Alabamians. This doesn’t just affect Medicaid recipients. It doesn’t just affect hospitals and doctors. It affects everyone in this state.”
“I don’t profess to know anything about how the transfer of funds all works out,” Peace added. “All I know … is it was set up for ‘rainy’ days like this, those days when, as (Fob James) said, the clouds were dark.”
Peace encouraged everyone in the county to both register to vote and to vote “yes” in September.
“Today we’re in need as a state – our economy is struggling. Everybody in the state is struggling,” Peace said. “There are only a couple of avenues available to the legislature, and one is to draw from the rainy day funds. The other is to impose a tax, and we as citizens can’t afford that. The key is to get our folks out to vote. We have to get people in this county to go out … and vote to save our health care system.”
