Alabama is one of 10 states that have not expanded Medicaid coverage. The other nine are Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming. Most people know that expanding Medicaid is a controversial political football, but very few know why.
To understand the issue, we need to go back to 2010, when the Affordable Care Act (ACA), aka “Obamacare,” was introduced. Sir Alec Issigonis, the designer of the British Mini automobile, once said that a camel is a horse designed by a committee. Well, we can think of the ACA as a sort of camel. In order to bring all the stakeholders to the table – none of whom wanted to play with each other – concessions had to be made with the health insurance industry, the health care interest groups, such as the American Medical Association and the American Hospital Association, and other interested parties like AARP.
The result was a cobbling together of government and private sector elements to absorb the expense of expanding healthcare access to more Americans. Despite its unwieldiness, the program works. The camel can run. Whatever criticisms one might have of Obamacare, it has succeeded in providing an additional 45 million previously uninsured Americans with access to healthcare.
The backbone of coverage is employer-sponsored health insurance, supplemented by a marketplace for individual plans, Medicare for the elderly and disabled, and Medicaid for the poor. To balance the risk assumed by health insurance companies, the plan called for expanding Medicaid coverage beyond the traditional population of low-income disabled individuals, pregnant women and children, and making the program available to anyone who earned less than 139 percent of the federal poverty level, which in 2024 tops out at $35,632 for a family of three.
If you made more than that, you would qualify to purchase individual coverage in the marketplace.
In 2012, two years before Medicaid expansion was scheduled for implementation, the U.S. Supreme Court broke the camel’s back. SCOTUS ruled that the federal government could not force states to participate in Medicaid expansion. The effect of this ruling was to create a coverage gap in the states that refused to expand. The gap engulfed people who made too much money to qualify for regular Medicaid coverage – in Alabama that’s an annual income of $4,475 for a family of three – but did not make enough to participate in the ACA exchange. That leaves somewhere between 100,000 and 175,000 Alabamians without affordable healthcare. Some 3,100 of those uninsured persons live in Tallapoosa County, and 574 live in Coosa.
More than half of the folks caught in the coverage gap work in jobs that do not offer employer-provided coverage. In Alabama, this includes 28,000 fast-food workers, 20,000 construction workers and 18,000 landscapers, janitors and environmental service workers.
Alabama Gov. Kay Ivey has the power to implement Medicaid expansion; however, there is stiff opposition in the legislature, including local representative Ed Oliver, even though surveys show nearly 72 percent of Alabama voters favor it. The governor’s spokeswoman, Gina Maiola, stated, “Ensuring Alabamians all across the state have access to quality health care is important to the governor; however, on the question of expanding Medicaid, she remains concerned for how the state would pay for it long-term.”
Currently, Alabama covers about 26 percent of the cost of its Medicaid program, with the federal government footing the bill for the other 74 percent. If the governor were to expand Medicaid, the state would pay only 10 percent of the additional cost; 90 percent would be paid for by the federal government. That additional cost to the state is estimated to be around $225 million annually.
To answer the governor’s question of how the state would pay for Medicaid expansion, the Public Affairs Research Council of Alabama commissioned Jacksonville State University’s Center for Economic Development and Business Research to perform an economic analysis of the impact of an expansion for a six-year period.
The analysis concluded that expanding Medicaid would cost the state an average of $225.4 million per year but would also generate annual savings of $397.8 million, for a net annual savings of $172.4 million. Much of those savings come from reducing the state’s cost for folks currently covered by Medicaid, who would now be covered by the expansion. In other words, Alabama’s portion of the cost of their medical care would drop from 24 percent to 10 percent.
In addition, the Jacksonville State analysis found that Medicaid expansion would create 20,000 new jobs each year and generate an annual economic impact of $1.89 billion.
More importantly, Medicaid expansion would provide health care for 283,686 Alabamians, most of whom are the working poor. It means access to primary care from a physician rather than the emergency room. It means detecting cancer early on when it’s curable. It means lower maternal and infant mortality rates, as well as a reduction in the disparity between Black and White mothers dying in childbirth. It means fewer people with medical debt. Currently, 17 percent of Coosa County residents have medical debt in collections.
Medicaid expansion will not only help the working poor; it also will help financially strapped hospitals across the state.
There is a billboard on Interstate 85, approaching Montgomery, with the message: “Save Jackson Hospital. Expand Medicaid now.” It’s paid for by Cover Alabama, a consortium of nonprofit groups, healthcare providers and the American Cancer Society’s Cancer Action Network.
Jackson Hospital recently defaulted on $60 million in long-term debt. Proponents claim that Medicaid expansion would help keep safety-net hospitals like Jackson, as well as rural ones, afloat.
Thomasville Regional Medical Center recently closed its doors due to financial challenges and staffing shortages. In the last four years, other hospitals that have closed or reduced their services include Monroe County, Princeton Baptist in Birmingham, Shelby Baptist in Alabaster, Randolph Medical in Roanoke and Georgiana Medical Center in Greenville.
Cover Alabama reports that 15 of the state’s 52 rural hospitals are at imminent risk of closure. When a hospital closes, the community doesn’t just lose access to health care; it loses a major employer and an economic engine for the community.
Last year, the hospitals that serve Tallapoosa and Coosa counties provided $33.8 million in uncompensated care. While Medicaid reimbursement typically does not cover the total cost of care provided to its recipients, if these uninsured patients had been covered by Medicaid, it would have reduced these losses by 75 percent.
A study by the Chartis Consulting Group found that hospitals in Medicaid expansion states were 62 percent more likely to avoid closure than hospitals in states that have not expanded Medicaid. The American Hospital Association reported that 74 percent of rural hospital closures between 2010 and 2021 were in states that did not expand Medicaid.
The governor is understandably concerned about the increased cost that comes with Medicaid expansion. But the preponderance of analyses supports the financial benefit to the state. And while the taxpayer (you and me) ultimately pays for Medicaid expansion –because nothing in this life is free – consider that Alabama taxpayers are already paying for it. We’re just paying for the 40 states that have already expanded Medicaid.
~ George Miranda is the director of the UAB Medicine – Russell Medical Cancer Center.
