A rallying cry among Alabama conservatives has for years been that increasing revenue to state government merely encourages waste and inefficiency. It’s the argument that has been used to shoot down every tax proposal for decades, with the not-so-incidental result that Alabama’s most wealthy and most politically powerful individuals enjoy taxes far lower than their peers in other states.
The argument is not inherently wrong. Certainly the converse is true, that excess revenue promotes inefficiency and waste. But neither is the argument inherently true. The accuracy of the proposition that low revenue breeds efficiency depends on the context. And in today’s Alabama, the proposition is clearly inaccurate.
The fallacy is demonstrated in numerous areas of state government, but most recently in the areas of Medicaid and prisons.
Last week, Alabama Medicaid Commissioner Stephanie Azar announced that a plan to overhaul the delivery of health care to the poor would be abandoned. The innovative managed-care program would have used regional care organizations to replace the conventional Medicaid fee-for-service model. It was created by the Legislature in 2013, and its main selling point then was that it would save money. But it also had the potential of helping people.
Huntsville Hospital System was developing an RCO that focused on aggressively providing preventive care to the poor in its region, which included much of north Alabama. This strategy would have created financial benefits for the hospital’s regional care organization by reducing…
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