MONTGOMERY, Ala. — As health care access in Alabama’s rural communities continues to shrink, a bi-partisan group of five state lawmakers have signed onto a proposal that could potentially see up to $80 million a year directed toward the state’s rural hospitals.
Sponsored by Rep. Terri Collins, R-Decatur, House Bill 310 would establish the Rural Hospital Investment Program, a tax credit program that would allow for individuals and businesses to reduce their state income tax liability through donating to rural hospitals.
“I think it could potentially have a lot of impact in certain areas where there is good industry to support that hospital, and that is a good thing,” Collins told Alabama Daily News Monday.
“Will it help in every single area? I don’t know, we’ll just have to see, I don’t know what kind of individual participation we’ll have, but I do know that most people feel strongly that they want to keep their hospitals and their health care available.”
According to the bill, for every dollar an individual donates to a rural hospital, they could reduce what they owe in state income tax by that same amount, by up to $15,000 a year. That cap is doubled for married couples filing jointly, and up to $500,000 for corporations.
Capped at $80 million a year, the tax credit program would be phased in incrementally over a three-year period, and would be capped at $38 million for the first year and $60 million for the second. Hospitals would be limited to receiving no more than $2 million annually.
The proposal is just the latest effort to address Alabama’s declining access to health care in its rural areas, which some state health experts have said if not addressed soon, could produce ‘catastrophic outcomes.’
According to a new report from the Center for Healthcare Quality and Payment Reform, more than half of Alabama’s 52 rural hospitals are at risk of closing, 19 of which the center says are at an “immediate risk” of closure.
An increasing number of Alabamians now live in what are often called medical deserts, with the more than 20,000 residents of Pickens County, for instance, having to travel either out of state or to other counties for medical services in the absence of a hospital.
Some rural communities that have hospitals have also seen the loss of services like maternity services, with close to 28% of Alabama women having no birthing hospital within 30 minutes, compared to the national rate of 9.7%
Collins introduced a similar bill in 2023, though said that with the large number of other tax credit proposals that year, it got lost in the shuffle.
“We introduced this last year, but it seemed like every bill was a tax credit last year and we were working through different things,” she told ADN. “This year, we’ve listened to a lot of changes that they wanted, (and) I think it’s got a lot of bi-partisan support.”
Still, Collins said that like any proposal that could reduce the state’s tax revenue, she needs the support of the Legislature’s fiscal hawks.
“I’ve not had a chance yet to talk to the budget chairmen; I know that they will always want to be cautious and limit tax credit, but keeping our hospitals strong and viable is very, very important,” she said.
“So I’m hopeful that this one might be one of the ones that we choose to include this year.”
The bill has several Democratic co-sponsors this time around, including Reps. Curtis Travis, D-Tuscaloosa, and Ontario Tillman, D-Bessmer, with Tillman telling ADN he was happy to sign onto any bill that could potentially help rural hospitals.
“I think that our rural areas are being neglected, I think that we do need to put as many resources and different incentives to help out the rural areas,” Tillman told ADN.
Tillman said that while he was happy to have signed onto Collins’ bill, his ideal long-term solution to address the struggles of Alabama’s rural hospitals was to see the state’s Medicaid program expanded.
“The ultimate goal for me is the expansion of Medicaid, I think that would address every need that we have concerning health care,” he continued.
A pipe dream in Alabama for years due to Republican opposition, Medicaid expansion has gained some traction in recent months after Alabama House Speaker Nathaniel Ledbetter, R-Rainsville, floated the idea back in January, albeit through a less common private-public partnership model.
Tillman told ADN that he had heard of some appetite for expanding Medicaid among Republicans, particularly after many of them were briefed on an expansion proposal from Blue Cross in February, though conceded that an initiative was not likely in this year’s session, which has crossed the halfway mark.
Collins, when asked what her ideal long term solution was for Alabama’s struggling rural hospitals, did not mention Medicaid expansion, but rather, said she hoped to see a continuation and possible expansion of incentive programs targeting the state’s rural communities and their health care providers.
Established in 1994, one such incentive program awards physicians practicing in rural areas with up to $5,000 in tax credits.
“Some of the physician scholarships where we recruit and do residencies in those areas, a lot of times those physicians put down roots and they and their families stay in those rural areas,” Collins said.
“We continue to try to do things that incentivize hospitals and practitioners to have a good life but still participate and live in those rural areas, because so much of Alabama has rural areas.”
The bill is scheduled to be heard on Wednesday in the House Ways and Means Education Committee.