As the 2026 Legislative Session evolves, it is apparent that this year’s annual session will be short and sweet. That is par for the course in an election year session. This is election year and all 105 House Seats, and all 35 Senate Seats are up for election. Therefore, it is an inherent historical reality that nothing consequential or controversial is addressed in a quadrennium ending election year.

However, it is a constitutional requirement that the legislature enact a budget – in fact, both budgets. Indeed, Alabama has two state budgets. We have a Special Education Trust Fund Budget, which encompasses two-thirds of Alabama’s tax revenues, and of course, we have our General Fund Budget, which has one-third of all revenues. Even though crafting the state’s budgets is difficult and mundane work, it is the most important chore of a legislature.

Fortunately, Alabama has some outstanding and experienced leaders, who chair the Budget Committees, do yeoman’s work, and primarily write the budgets. The Chairmen of the Education Budget Committees are Senator Arthur Orr (R-Decatur) and Representative Danny Garrett (R-Trussville). The General Fund Budget Chairmen are Senator Greg Albritton (R-Escambia) and Representative Rex Reynolds (R-Huntsville). They do an excellent job.

The larger Education Budget will be a much tougher task this year because of the rising cost of healthcare, thus health insurance. The teachers’ health insurance fund was founded by and is managed by Dr. David Bonner’s well run Teachers Retirement System. This Public Education Health Insurance Plan (PEEHIP) has provided health insurance coverage to Alabama’s education employees, retirees, and their dependents since its creation in 1983.

PEEHIP has kept their costs in line for nearly a decade without asking the legislature or members for more money. However, PEEHIP is facing a shortfall for fiscal year 2026, due to a significant decline in federal funding for educators and education retirees. It is a nationwide problem.

There are three main reasons for this national problem: cuts to federal funding for Medicare retirees, general inflation that is driving up the cost of everything, and higher utilization by current members and retirees. Folks are living longer, and those who are living longer expend a lot of healthcare dollars. State revenues probably will not be able to keep up with these rapidly rising costs. It will be a heavy lift for the legislature.

The cost of healthcare is not just an Alabama problem. It is a national problem and probably the paramount problem facing American consumers. The cost of health insurance has risen sharply for the third year in a row, reaching just under $27,000 for a family plan. That is a 6% increase from the year before and builds on two prior years of 7% gains.

These figures are confirmed by the most trusted and largest health insurance analyst KFF. The latest KFF survey suggests that half the U.S. population gets health coverage through a job.

Hospital prices have also grown significantly in recent years for numerous reasons. There is an alarming increase of cancer in the working-age population. Employers are also seeing increased outlays on new and costly therapies, particularly the popular drugs known as GLP-1s, a category that includes the weight loss treatments Wegovy and Zepbound.

A good many private companies are shifting the increased cost of health insurance onto workers in the form of out-of-pocketcharges such as deductibles and copayments. Legislators are struggling mightily with these problems as they craft the budgets.

This increased healthcare and health insurance cost will be a major issue in the upcoming midterm congressional elections. Millions of Americans who were covered under the Affordable Care Act have seen a significant increase in their health insurance premiums beginning this month. There will be political repercussions from voters come November. Who will be hurt politically remains to be seen but, generally, voters blame the party who is in the White House.

See you next week.