How Alabama Roads Compare, 2017

PARCA’s latest report, How Alabama Roads Compare, provides an in-depth analysis of the conditions, funding and future of our state’s roads and bridges. Data presented in the report can also be viewed through interactive tables here.

Alabama Roads: Where are we now?

Alabama’s roads and bridges are in relatively good condition compared to other Southeastern states. The percentage of roads in good condition is higher than most other states and the percentage of roads in poor condition is lower than most other states. The percentage of bridges in need of replacement because of deficiency is about average for the Southeast.

However, those generally good conditions on existing roads have come at a cost.

The Alabama Department of Transportation has had to devote an increasingly large share of its budget to preserving the existing road system, with a shrinking pool of money available for new projects to address congestion or expand the road system to foster transportation improvements and economic development.

Currently, only $150 million per year is available for system enhancement and

expansion projects, a drop in the bucket considering the billions of dollars in projects needed to address existing congestion issues, much less the additional billions that would be needed to finance aspirational projects like Birmingham’s Northern Beltline, a new Mobile River bridge, and variety of other projects desired by communities large and small.

Alabama’s road spending in recent years has been supplemented by more than $1.3 billion in borrowing. That has allowed state and local governments to tackle needed improvements and perform in the present projects that will pay dividends in the future. However, that borrowing authority has been exhausted, and future road spending will be curtailed. The infusion of borrowed money is ending and the demands of paying back what has already been borrowed money will consume a greater share of road money.

This impending road revenue crunch is rooted in a fundamental problem in how we pay for roads: a set 18-cents per gallon motor fuels tax. Per-gallon motor fuels taxes were last raised in the early 1990s. The buying power of that 18 cents on each gallon has eroded due to inflation. On top of that, the greater fuel economy of cars and trucks on the road today means that less gas in being purchased to fuel more miles of travel.

The wear and tear of traffic on the roads continues to increase, but revenue from per-gallon taxes is not keeping pace. Per vehicle mile traveled, Alabama is collecting half what it did in the early 1990s, when adjusted for inflation.

In the immediate term, the 2018 transportation budget will contain about $200 million less in revenue than it has enjoyed for the past 5 years, revenue provided through the ATRIP borrowing program. The debt service required to pay that borrowing back has been steadily climbing. In 2018, it will leap to $114 million, almost $50 million more than the 2017 total, and remain locked in for the next 19 years. As a bottom line, in 2018, there will be about $250 million less to spend on roads than there was in 2017.

Where do we want to be in the future?

Alabama needs sufficient revenue to pay for the upkeep of its current system, plus an adequate pool of money available to add capacity to address congestion problems and to improve the transportation network. That revenue for roads also needs to cover the cost of paying back the money the state has already borrowed.

How do we get there?

Alabama hasn’t raised its per gallon gas tax in 25 years. Only 8 other states have gone as long without an increase. In recent years, most states have raised per gallon taxes and have also adopted mechanisms to address the drain on buying power created by inflation and greater fuel economy.

In the past several legislative sessions, Alabama lawmakers have introduced various proposals to address the impending shortfall in road funding but none of those proposals have gathered sufficient support.

As those proposals resurface in subsequent sessions, attention should be paid not only to preventing the immediate shortfall but to preventing the perpetual erosion of road dollars. Many of our Southeastern neighbors have crafted long-term approaches to road funding from which Alabama could learn.

Click here to read the full report, including information on traffic vs. capacity, construction and maintenance, road debt and more.

 

 


A New Prescription for Medicaid

Any attempt to address the perennial shortfalls faced by the state’s General Fund account has to start with attention to Medicaid, the program that pays for the healthcare and long-term care of the poor and disabled.

Total spending on Medicaid in Alabama is budgeted to reach $6.1 billion in 2015, with about 30 percent of funding coming from state sources and 70 percent from the federal government.

Medicaid’s draw on the state’s General Fund account has nearly quadrupled over the past 20 years, rising to $685 million for 2015. That’s 37 percent of the $1.8 billion Fund, the largest General Fund expenditure. Back in 1995, Medicaid accounted for just 16 percent of the General Fund, around $140 million. Medicaid costs have risen because of rising medical costs and a rise in the number of people covered (due to population growth, changing demographics and expansions in coverage). In 1995, around 600,000 people were covered by Medicaid; today more than 1 million Alabamians qualify.

The steep rise in the cost of Medicaid has been one of the central problems in balancing the General Fund budget, which in 2016 is expected to face a $200 million gap between expenditures and anticipated revenues.

In October 2012, recognizing that health costs were rising at an unsustainable rate, the Governor convened a Medicaid Advisory Commission and charged it with finding a way to curb the Medicaid Agency’s growth trajectory while also improving the quality and types of care provided to Medicaid beneficiaries.

Growing out of the Commission’s work is a strategy to move most Medicaid beneficiaries from the existing fee-for-service system, under which providers bill Medicaid for services rendered, into a delivery system in which Regional Care Organizations (RCOs) will coordinate medical benefits and be paid on a capitated, per-enrollee basis, bearing the risk of managing costs within the established caps.

To accomplish this, the state has been divided into five regions. Within each region, RCOs will be established. RCOs will consist of a coalition of hospitals, doctors, other care providers and community representatives. These RCOs will receive a capped amount of money based on the number of enrollees they are assigned to serve. With that money, the RCOs will pay for the care of their enrollees. Through a variety of mechanisms, the RCOs will attempt to encourage better health outcomes and more cost-effective medical practices, thus, decreasing medical expenses. It is hoped that this new approach, by replacing the traditional fee-for-service model, will contain and make more predictable for the state the cost of Medicaid for the portion of the Medicaid population covered by the changes.

By capping Medicaid spending to a set level of expenditure per enrollee, the agency estimates the new delivery system will reduce future increases in state funding by between $40 million and $85 million per year compared to the current fee-for-service arrangements. Considering state and federal spending together, estimates are that the approach could save between $750 million and $1.08 billion over five years compared to expected expenditures under fee-for-service. The new system is expected to be operating by 2016.

 

Overview of the Medicaid Program

Alabama’s Medicaid Program pays medical providers (doctors, hospitals, nursing homes, pharmacies, etc.) for the care of the poor and disabled. The program is a key component of Alabama’s health care sector. As of July 2014, the total number of individuals eligible for Medicaid was 1,041,588, or about 23 percent of the state’s population. Medicaid provides health care services to 43 percent of Alabama’s children and accounts for more than half of the births in the State.

In addition to state general fund sources, Medicaid is funded by an assortment of taxes on providers, intergovernmental transfers, certified expenditures that meet requirements for matching Medicaid dollars, and miscellaneous other revenues.

medspending

Medicaid enrollees are the unduplicated number of individuals who qualified for full or partial Medicaid coverage in each month of the fiscal year. Annual average is the arithmetic average of the twelve months. Average cost per enrollee is calculated by dividing total local, state, and federal expenditures by the number of enrollees.

Changing Medicaid from a fee-based to a managed care approach

The Governor’s Medicaid Commission brought together representatives from state agencies, State Senators and Representatives, insurance companies, consumer advocates, medical providers, and professional organizations representing hospitals, physicians, pharmacies, nurses, primary and rural health clinics, hospices, and nursing homes.

Based on the Commission’s recommendations, the Alabama Legislature passed legislation in May 2013, outlining a reform plan for Alabama Medicaid. In April 2014, the Alabama Legislature amended the RCO legislation to make some changes to the structure and operation of the RCOs. In May of 1014, the Medicaid Agency applied for a waiver from the federal Medicaid Agency seeking permission to implement the new delivery system. The federal Centers for Medicare & Medicaid Services has acknowledged receipt of the state’s application and is considering it.

Under the reforms, Medicaid reimbursement for the services included in the waiver will no longer be based on recipients’ use of medical services; instead, the health care of recipients will be paid for, coordinated and managed by Regional Care Organizations. The RCOs will be financed through a capitated model in which the RCOs receive a set payment from Medicaid based on the number of enrollees the RCO covers. The RCOs will operate within five regions that reflect existing medical referral patterns and care provider systems.

clip_image008Click on the map to Explore additional information on caseloads and statistics.

Under the current system, the state reimburses providers on the basis of utilization and volume, rather than value and quality. The state’s only tools for constraining costs have been to limit who is eligible, what it pays providers for services, and what services beneficiaries receive. Many of these decisions are constrained by federal law and rules.

The new system creates a limit to Medicaid expenditures for each region. As of October 2014, 12 organizations have applied to be certified as RCOs.

About two-thirds of Alabama’s Medicaid population will initially be covered by the RCOs. Included populations include Medicaid enrollees who are aged, blind and disabled, those in the breast and cervical cancer treatment program, those covered by Medicaid for Low Income Families, and those covered under SOBRA, the Medicaid program for children and pregnant women.

Not covered by the RCOs at this point are nursing home and institutional care recipients, foster children, recipients qualified for both Medicare and Medicaid, hospice patients, the mentally retarded, recipients of family planning services, and children in the custody of the Department of Youth Services. Dental services will also fall outside the RCO system and will continue to be provided on a fee for service basis.

The RCOs are designed to replicate the successes achieved by four existing primary care networks (PCN) established by the Alabama Medicaid Agency that are currently providing a level of managed care in 21 counties. The PCN model includes the assignment of each Medicaid beneficiary to a medical or health home. According to the Agency, that program has shown reductions in emergency department utilization, hospital admissions, and total cost, as well as increases in medical compliance and delivery system efficiency.

Generically, the RCOs are known as “accountable care organizations.” A recent article in Governing Magazine describes how these organizations operate: “At a basic level, an ACO gives doctors, hospitals, and clinics the responsibility to provide care for a group of patients within a specified budget. If health-care providers better coordinate care to provide good quality for less money, they can share in the savings.”

The new approach provides a financial incentive to keep clients healthy. By providing consistent and coordinated care for Medicaid beneficiaries, many of whom have chronic conditions like asthma or mental illness, RCOs have the potential to increase health outcomes and reduce unnecessary emergency room visits and hospitalizations.

Currently, some, but not all of Medicaid’s most costly care recipients, will be covered under the new system. The aged, blind, and disabled make up 31 percent of the Medicaid population, but account for 66 percent of program spending. About 17 percent of those covered under the new RCO system would fall into this most expensive category. Those in nursing home care won’t be part of the current reform effort. The Medicaid Agency is exploring further reforms that would reach the rest of its beneficiaries.

According to the Medicaid Agency’s waiver application, “the anticipated growth of the aged, blind, and disabled population in the current system threatens the State’s ability to maintain even a modest benefit package and eligibility criteria for Medicaid beneficiaries, and highlights the necessity for Medicaid reform in Alabama.”

Approaches similar to the one Alabama is trying have shown promise elsewhere. The New York Times recently reported on the reduction of costs in the Rio Grande Valley in Texas. Based on an analysis of patient data, providers in the Rio Grande Valley Accountable Care Organization (ACO) in McAllen, Texas offered quick follow-ups from hospital visits, provided cell phones for patients who had trouble communicating with their doctors, and visited patients at home who could not get to offices. By focusing on high-risk patients, and shifting to preventative care for many others, the ACO was able to reduce costs and improve a variety of health indicators, such as the number of patients in control of diabetes and those receiving vaccinations.

Alabama hopes to have similar success in improving care and decreasing costs.

pdf version of med speding

Critical Dates for Implementing Medicaid Reforms in Alabama as Required by Law:

  • October 1, 2013 Medicaid establishes RCO regions (Complete)
  • October 1, 2014 Governing boards for each region approved (Awaiting Announcement)
  • April 1, 2015 RCOs must prove their ability to establish an adequate network
  • October 1, 2015 RCOs must meet solvency requirements
  • October 1, 2016 RCOs must demonstrate ability to provide services under a risk contract (RCOs start bearing risk) no later than this date

Roundtable Alumni Make an Impact

Impact Alabama, a statewide service organization that harnesses the energy of college students, deployed more than 570 IRS-certified students and volunteersduring this spring’s tax season to provide free tax preparation assistance to 8,200 families.

The returns they filed brought home $14.9 million in refunds. They also saved families over $2.5 million they would otherwise have spent on commercial tax preparation services. Impact Alabama was founded by PARCA Roundtable alumnus Stephen Black, who now serves as the director of the University of Alabama’s Center for Ethics and Social Responsibility. Impact’s executive director, Sarah Louise Smith, is the immediate past chairman of the Roundtable.

IMPACT’s tax preparation initiative, SaveFirst, targets those who qualify for the Earned Income Tax Credit, the federal government’s largest anti-poverty program supporting low- to moderate-income working individuals and families. Students from sixteen college campuses participated in SaveFirst in 2014. The number of families served increased by 31 percent.

The effort, which helps families avoid the sometimes predatory fees charged by tax preparation companies that set up shop in low-income communities, drew attention from several national news outlets.  The New York Times, National Public Radio, MSNBC and NBC all produced feature stories on the initiative and issues surrounding tax preparation.

 


Challenges Facing Children

Alabama children face steeper obstacles to opportunity than children in the rest of the nation, and that is particularly the case for black and Hispanic children, according to Race for Results, a new report from the Annie E. Casey Foundation.

Race for Results focuses on 12 conditions that either create advantage or disadvantage for children on the journey to success and prosperity. Those include the percent of children born at normal birthweight, the percent of children in two parent homes, the education and economic conditions of the surrounding neighborhood, and academic and employment levels at various stages in life.

On virtually all the indicators, Alabama children face an uphill climb compared to children in the country at large. That is particularly true of minority children in Alabama.

Race for Results is a new publication for the Annie E. Casey Foundation, the child advocacy organization that publishes the Kids Count Databook and also maintains an online data center that tracks a host of statistics on child well-being. In Alabama, VOICES for Alabama’s Children is Casey’s partner in the collection and distribution of information.

Economic and educational disparities between blacks, whites, and Hispanics are a stubborn public policy challenge. The online version of the Race for Results report allows you to explore the data and build your own charts and graphs. Here is a PDF document that contains results on the indicators comparing Alabama to the U.S. Those charts can also be viewed online at the link below. Click on the bottom right hand corner of the chart below for a full screen version.