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 while phasing down to 90 percent by 2020 where it will stay.
Alabama chose not to participate. Since then, eight rural Alabama hospitals have closed. Arkansas, on the other hand, joined the program and the result: not one single Arkansas rural hospital has closed in that time.
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.
As of today, with 39 states, including Georgia, having adopted Medicaid expansion, the Biden administration has decided to offer an additional bonus to the handful of states that remain uninsured. Before we delve into this, however let's gain a better understanding of Alabama's program.
"Alabama pays the least in the nation," said Dane Howard of the Alabama Hospital Association. "A family of three has to earn less than 18 percent of the Federal Poverty Level (FPL) in order to qualify." This means that in 2021 the family can't earn more than $3,953. Per year. In Mississippi, this family qualifies at income below $29,207. That's right - Mississippi. On people who fall within these state guidelines, the federal government pays 70 percent and the state pays 30 percent. The ACA would pay 90 percent on an expanded group that includes everyone between age 18 and 64, whether or not they have kids, who earn less than 138 percent of the FPL.
Now, the Biden administration offers to pay an extra five percent on the existing Medicaid costs for the non-insured states for the next two years in addition to the payment for expanded insured citizens. "A national study found that this would mean about $740 million additional money for Alabama in the first two years, which is far more than we need to cover our part of the expanded group," Howard said. So Alabama could expand Medicaid without any cost for the first two years.
What does this mean for Alabama? A study that was conducted by David Becker, PhD of 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 of $31 million over the initial four-year period. It is important to note that this study was conducted BEFORE the Biden administration's new offer of an additional five percent, meaning that the budget benefits to the state should be even greater. Overall, Becker's study found an expansion could have an annual economic impact on the state of more than $2 billion.
Health care is important to our state. Alabama hospitals employ over 90,000 people and support an additional 96,000 jobs with a $20 billion economic impact. 88 percent of rural Alabama hospitals are losing money. Without Medicaid expansion, more rural hospitals will close, meaning a loss of jobs. Unemployed people don't spend money and don't pay taxes.
Medicaid expansion would cover over 340,000 Alabama citizens, 70 percent of whom are working in jobs that don't pay health insurance with incomes too low to qualify under the current state Medicaid program. So far, in every state that has taken the expansion benefit, credit scores have risen. People who aren't stuck with thousands of dollars in hospital bills have money to spend. They buy shoes, cars, appliances and the shoe store, car dealer and appliance store have money to spend. In fact, according to the Alabama Hospital Association, expansion would generate $11.4 billion in new economic activity.
Good healthcare means economic development. Very few companies want to locate in a community without a hospital, which is quickly becoming the majority of rural Alabama counties. And of course, healthy citizens are productive.
With all this in mind, why wouldn't the legislature jump on this? "When we speak with them, they ask us what happens after the first two years, after the five percent addition ends. What kind of sustainable funding will we need," Howard said. "We're working with them on that. But I know that if someone offers me $10 for every $1 I spend, I'll take that every day."