Georgiana Mayor Jerome Antone remains perplexed over what will become of his small Alabama Black Belt community after the hospital closed in February.

Gone were 100 jobs, and the tax base that came with having a hospital operating in the city for 60 years. Only about a half-dozen businesses remain in the city where the median household income is below $20,000 a year.

“When you are city like Georgiana, we don’t have any tax dollars at all,” said Antone. “We really and truly hated that the hospital closed.”

The closure didn’t come as a huge surprise: The medical center was hemorrhaging red ink, and millions had been lost the previous year alone because of the number of uninsured patients arriving to the complex in search of care.

The Georgiana Medical Center became the 13th rural hospital casualty in Alabama since 2011, but most likely not the last. A whopping 88 percent of rural hospitals are operating in the red, meaning revenues received for patient care are not enough to cover the cost of providing care.

‘Advantages’

The main culprit for the closure, according to the state’s hospital association, is the inactivity in Montgomery when it comes to investing into an expansion of Medicaid. Estimates this year pegged the state’s costs at $168 million to expand Medicaid to cover more than 300,000 uninsured Alabamians who often rely upon a cash-strapped hospital to pay for their basic health needs.

The Legislature appears likely to, once again, forgo an investment into expanding Medicaid that has been possible since the Affordable Care Act, otherwise known as “Obamacare,” was adopted in 2011. Alabama remains one of 13 states – mostly concentrated in the South – declining to accept Medicaid expansion under the ACA.

The notion has long irked the Alabama Hospital Association, which estimates an expansion would provide an additional $11.4 billion in economic impact to Alabama over a four-year period. An influx of new funding, the association estimates, would more than make up for the initial $168 million investment and $25 million that would be required each year thereafter.

The group also draws a correlation between states opting not to expand Medicaid and rural hospital closures. The U.S. Government Accountability Office estimates about half the rural hospitals are located in states which chose not to expand Medicaid. Of the rural hospital closures between 2013-2017, 83 percent are located in non-expanding states, according to the GAO.

“So many states have taken advantage of this and seen the positives on health care,” said Danne Howard, executive vice president and chief policy officer with the Alabama Hospital Association, who believes the objections to expanding Medicaid are more financial than based on past concerns over politics stemming from Barack Obama’s presidency.

“Where do you get the $168 million for the first year?” said Howard. “Absent new revenue, we don’t have $168 million and there has not been a big appetite for revenue-raising measures since the gas tax passed. That was a hefty lift for the governor’s office, so the questions are now, ‘Where do we find the money?’”

‘Funding not there’

It’s a question that is going unanswered in Montgomery, and likely won’t be part of a negotiation involving prison reform. A special session is a possibility for the fall, but would likely focus on addressing the U.S. Department of Justice’s concerns over the horrific conditions of the state’s prisons.

State Sen. Cam Ward, R-Alabaster, and a leading proponent of prison reform, said in multiple meetings he’s had with Ivey’s administration, the issue of lumping Medicaid expansion with prison reform has not materialized.

“We’ve had Democrats, Republicans and everyone else solely focused on isolating the prison issue by itself so we don’t mix and match with something else,” said Ward.

He added, “Everyone comes back to where do you get the $168 million out of the General Fund to pay for the expansion?”

A spokesman for Alabama State Senate Pro Tem Del Marsh, R-Anniston, suggested the solution may have come through lottery proceeds. Lawmakers, however, have effectively killed legislation this session that would have created a paper-based lottery in Alabama. Estimates showed that a lottery would have generated an additional $125.5 million annually for the General Fund.

“If we approve a lottery, we can discuss starting conversations about that but as it stands now, the funding is just not there,” said William Califf, spokesman for Marsh.

Howard said a decision on whether to expand can also be backed by Ivey, who has also questioned ways to pay for it. She defeated Democrat Walt Maddox in November, who ran on a platform of expanding Medicaid.

Ivey assembled a three-member team that was working on producing a report recommending ways to improve rural health care woes. The working group spent a good part of 2018 traveling the state and meeting with health professionals to gather information.

But this year, so far, there hasn’t been any public initiative backed by Alabama political leaders to find the revenue needed to expand Medicaid. The 2019 session appears likely to end next week without one bill surfacing that aimed to address Medicaid expansion.

“If Alabama chose to pursue an expansion of Medicaid eligibility, it would be necessary to obtain federal approval from (Centers for Medicare and Medicaid Services) in order to receive federal matching funds,” said Melanie Cleveland, spokeswoman with the Alabama Medicaid Agency. “However, the Legislature would have to provide the necessary funding and/or support to underwrite the cost of that expansion.”

Other solutions

State lawmakers are hopeful about a federal effort to change the Medicare Wage Index to boost Medicare reimbursement rates for low-wage hospitals. The move would likely come at the expense of decreasing reimbursements for higher-wage hospitals, but it’s viewed as a much-needed boost for the rural facilities. A comment period on the change runs until next month, at which time CMS plans to roll out the new rule.

The change is expected to boost Alabama’s hospitals, which are some of the lowest reimbursed facilities in the country, by around $34 million next fiscal year starting in October.

Thank you, @CMSGov & @SeemaCMS! Grateful that you are taking the necessary steps to solve this dire issue. https://t.co/NCgQnplTxA — Richard Shelby (@SenShelby) April 24, 2019

Lawmakers in smaller-sized districts believe the wage index change represents a “big positive” on Alabama hospitals.

“That would be a big help for the rural hospitals if it happens,” said state Rep. David Standridge, R-Hayden, and chairman of the Alabama House Rural Caucus. “I’m not saying that it cures the issues, but it’s a big step. This is something we’ve been working on for several years.”

The wage index tweak, alone, won’t resolve the struggles of rural hospitals, said U.S. Rep. Terri Sewell, D-Birmingham.

“Fixing the wage index is just a first step – expanding Medicaid is the number one most effective action the state can and should take to ensure our rural hospitals can continue to keep their doors open," she said.

Other solutions are being floated while Medicaid expansion is on the shelf.

Alabama Arise, for instance, is pushing for a repeal of Alabama’s income tax deduction for FICA taxes, which go to Medicare and Society Security. Removing the FICA tax deduction would raise an estimated $261 million annually, according to Arise.

“It doesn’t take much arithmetic to figure out that the tax deduction is tilted toward the upper income brackets,” said Jim Carnes, policy director at Alabama Arise.

Carnes said if Alabama removed the state income tax deduction for federal income taxes paid, it would raise around $719 million a year. He said the state could then offset the revenue losses from a repeal of the state sales tax on groceries, which would save taxpayers around $400 million annually. In addition, removing the deduction would cover the state’s Medicaid costs.

“We think that this plan is the one that makes a lot of sense,” said Carnes.

Howard, with the Hospital Association, said a tax on vape products could also funnel in millions of dollars annually, but would not generate enough revenue to cover the $168 million.

Another possibility, she said, could be a look at adding a tax on sugary substances that are used in soft drinks and candy. A number of states have placed taxes on soda, but few are located in the South. In Arkansas, lawmakers removed soft drinks and candy from being considered “groceries,” effectively raising the sales tax on the items from 1.5 percent to 6.5 percent.

The idea, Howard said, is to save rural hospitals from further calamity.

“The sense of urgency is huge,” she said.

‘Healthy Alabama Plan’

The Hospital Association is calling its push for Medicaid expansion, “A Healthy Alabama Plan,” and is utilizing the website alhealthmatters.com, to provide information about the benefits of expansion.

The group’s analysis breaks down the effect in regions throughout the state: Jefferson County would realize a $298.6 million economic boost by expanding Medicaid, and would allow an additional 37,351 adults to be eligible for health care.

In Mobile County, the effect would be an extra $260.5 million, and an estimated 30,785 adults eligible for health insurance.

The statistics stood out to Mobile City Council Vice-President Levon Manzie, who recently urged his council colleagues to back a resolution in support for the hospital association’s plan. Mobile became the first city in the state to pass a resolution effectively encouraging the expansion of Medicaid under Obamacare.

“It will have a drastic impact on the quality of care that will be received by citizens, and wait times and availability of rural hospitals and the residents of the Mobile region,” said Manzie. “We recognize that this is a step we needed to take and probably should’ve done this a few years back.”

Alabama Arise and the Southern Poverty Law Center have taken note, and are praising Mobile forits actions. Mobile is the first city to pass a resolution urging its legislative delegation to support the hospital association’s efforts for Medicaid expansion.

“The Mobile City Council should be commended for its statewide leadership in passing this resolution, which signals to Mobile’s legislative delegation the importance of promoting a healthy Mobile and Alabama,” said Sam Brooke, deputy legal director with the Montgomery-based SPLC.

Carnes, at Alabama Arise, said he hopes other cities are taking note and follow in similar fashion since many of their own hospitals are facing financial difficulties that could come back to haunt city halls.

“If the health care crisis in Alabama continues, which is reflected in being at or near the bottom of every health care indicator, I would imagine local governments will have to take a more active role in addressing this issue,” said Maddox, the mayor of Tuscaloosa.

Glenn Sisk, CEO of Coosa River Medical Center in Sylacauga, said that more cities and counties following Mobile’s lead will elevate the urgency about the issue in Montgomery.

“It will assist the legislative leaders in understanding that people who provide local leadership see the value of a healthy health care system,” said Sisk. “I haven’t heard of anyone else doing that, but it’s given me the idea locally to pursue the same.”