As costs spiral, healthcare must change
By Staff
Johnny Mack Morrow
Health care is on the minds of just about everyone in Alabama and across the country.
Health spending has spiraled upward in recent years and the trend will not slow down. Experts say that without a major overhaul it will only get worse.
Federal estimates are that health spending will hit $2.5 trillion this year, forecasting that the share of the economy going to healthcare will jump a full percentage point from 2008, going from a little over 16 percent to 17.6 percent of the entire economy, an enormous sum.
Our country spends more on healthcare than any other country, and the rate of increase in health spending far exceeds the rate of inflation. It is simply unsustainable.
Alabama is not immune to healthcare worries. As a matter of fact, they seem to dominate much of the concern and work around state budgets.
Alabama Medicaid is a critical part of maintaining the state health system. It literally keeps many hospitals open and private practices functioning, especially in rural counties across the state. Medicaid is the largest non-education expense each year in state government, and in recent years it has been a flashpoint of controversy between Montgomery and Washington.
Our state has one of the most bare bones Medicaid programs in the country, and yet we still have a difficult time meeting its budget requirements.
The majority of funding comes from the federal government, but Alabama has to match those funds, and that is where the controversy comes in. The feds didn't like the way we were getting our match together through public hospitals, and told us to change it.
The fix was a bill unanimously passed in the recent legislative session that will have private hospitals help bolster the state Medicaid match, thereby bringing more federal health dollars to Alabama. The new law makes an assessment on private hospitals for 5.38 percent of net patient revenues.
The assessment had the full support of the Alabama Hospital Association because they know the state had to draw down more federal funds and make Medicaid sustainable. Again, without Medicaid most hospitals would be threatened or simply go under, such is the importance of this program. We have put Medicaid on much better footing, but costs and demand continue to go up.
Healthcare costs are now a problem in places that you normally wouldn't think about. Take education as an example.
The teachers' health insurance program is known as PEEHIP. It is run through the Retirement Systems of Alabama, the state pension fund. PEEHIP has a trust fund set up to defer future costs, but it mainly relies on education revenue each year.
The program is seeing claims increase at a rate greater than 10 percent per year. They have instituted cost saving measures like a generic drug policy and a tobacco surcharge, but something larger will have to be done.
It is the same for private industry, where healthcare costs have been a major cause of problems, and even bankruptcy.
That is why the upcoming health care debate in Washington is so important. Regardless of what side of the issue you are on, or what party you belong to, who doesn't see that the system is unsustainable and things must change?
The federal government, between Medicare for seniors and Medicaid for those who are indigent or cannot get healthcare at work, is the single largest payer of healthcare.
The healthcare debate often focuses on numbers and costs, but it is really about people. We may talk about the cost of prescriptions, but that is also grandma's high blood pressure medicine and your cholesterol reducer. We may talk about long term care, but what we are really talking about is caring for seniors in the best manner possible.
We must find a way to get more efficient care, reduce costs, while protecting the services vital for life. A monumental task, but a task we have no choice but to tackle and solve.
Johnny Mack Morrow is a state representative for Franklin County. His column appears each Wednesday.
