The Legislature Could Save Alabama Hospitals with Medicaid Expansion

Mar 13, 2023 at 07:55 pm by kbarrettalley

By Steve Spencer

In 2014, the Affordable Care Act offered to fund states’ Medicaid expansion with the federal government paying 100 percent of the costs for the first three years and 90 percent after 2020.

Alabama chose not to participate. Since then, 10 Alabama hospitals have closed. And today, the situation is worse: Alabama Hospitals lost $1.5 billion in the last two years. Without help, much of our state will soon be without healthcare coverage.

Under the Families First Coronavirus Response Act, states were prevented from removing people from Medicaid during the COVID emergency. This means about 200,000 Alabamians kept their Medicaid throughout the pandemic with the federal government paying large share of the costs. Even with this, Alabama hospitals were pummeled with catastrophic losses. How long can they survive when this program ends in March?

Opponents say accepting the government’s help with Medicaid expansion will cost too much. But will it? The Public Affairs Research Council of Alabama estimates that expanding Medicaid would cost an average of $225.4 million per year. However, expansion would result in the federal government paying $397.88 million in annual expenses currently paid by the state. As a result, the state could expand coverage, and at the same time, reduce the amount paid to support healthcare for Alabamians by $172 million annually.

Likewise, a study conducted by David Becker, PhD at UAB found that after netting out the state’s share of the coverage with estimated new state and local tax revenue, expansion would have a net-positive impact on Alabama’s overall budget. His study estimated that expansion would have an annual economic impact on the state of more than $2 billion.

Pie in the sky? Not if you look at the results of other states that have expanded Medicaid. Since joining the program, Arkansas with an economy similar to ours, has not lost a single rural hospital. Arkansas’ benefits don’t end there. $1.7 billion federal dollars flowed into the Arkansas economy in the first year alone. The state’s uninsured rate was cut in half. Arkansas hospitals had a 55 percent reduction in losses from uncompensated care. “Our Medicaid expansion has had tangible, positive results,” said Joe Thompson, MD, MPH, who served as the Surgeon General of Arkansas from 2005 to 2015.

That sounds well and good, but maybe Arkansas’ success was an outlier. Nope, not at all. In Kentucky, Medicaid expansion added 12,000 new jobs, cut uncompensated care losses by 55 percent, and added $300 million to state coffers. Louisiana added 19,000 jobs and $103 million in new state tax dollars. The list goes on, but you get the idea.

Bottom line: the Federal Government is offering to pay 90 percent of our Medicaid costs. This will save hospitals, jobs, and actually add to our economy. Why won’t Alabama legislators take the win?


Steve Spencer is the Founder of the Birmingham Medical News.

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