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PARCA report makes financial case for Medicaid expansion

By MARY SELL, Alabama Daily News

MONTGOMERY, Ala. – Expanding Medicaid in Alabama to cover adults up to 138% of the federal poverty level would increase enrollment by as many as 283,636 people and have an economic impact of $1.89 billion per year over the next six years, a study released this week said.

Costs to the state would increase by an average of $225.4 million per year above current Medicaid expenditures over the next six years. However, the state would also see estimated average annual savings of $397.8 million over those same six years, according to the analysis from the Public Affairs Research Council of Alabama and the Center for Economic Development and Business Research at Jacksonville State University. 

The average annual savings of $172.4 million is more than enough to cover the cost of expansion, it said.

Medicaid expansion under the Affordable Care Act allows people with family incomes less than 138% of the federal poverty limit— or around $17,000 for an individual and $29,000 for a family of three to qualify for Medicaid. Currently, Alabama’s Medicaid program covers very few able-bodied adults.

The report claims expansion would create an average of 20,083 new jobs per year over the next six years.

PARCA says the study was intended to address the concerns of state leaders, including Gov. Kay Ivey, who have questioned the state’s ability to pay for expansion long term. Alabama is one of 12 states that has not expanded Medicaid under the 2010 Affordable Care Act.

House General Fund Budget Chairman Steve Clouse said he had not yet read the PARCA study as lawmakers have been in high level budget negotiations this week. He there are virtues to expanding Medicaid, but he remains concerned about the costs over the long term.

“It’s hard to say on Medicaid because the rules change so much,” Clouse said. “There are some good points to Medicaid expansion, particularly for the providers like the hospitals that have to take on so much uncompensated care from emergency room visits by those without insurance. But the main thing we have to look at is the recurring costs.”

Another problem leaders frequently point to is how much of the state’s tax revenue is earmarked toward specific funds. So, it could require changing the constitution for the state to put any additional revenue generated by Medicaid expansion toward the program.

Meanwhile, the state has some of the most restrictive eligibility requirements in the nation. Nearly half of the about 1 million Medicaid enrollees in the state are children. Others are elderly and disabled. Pregnant women are the only able-bodied adult enrollees allowed. 

Adding 283,636 people to the Alabama Medicaid rolls would increase annual Medicaid costs by an average of $225.4 million per year, according to PARCA.

The federal government pays for most of states’ Medicaid expenses and the American Rescue Plan Act incentivizes Alabama and other states to expand Medicaid by increasing the federal match rate by 5% for all current enrollees for two years. 

“If Alabama expanded Medicaid, the state would realize this enhanced (federal match) on its traditional Medicaid population for the first two years of expansion, thereby saving an estimated $619.4 million in those first two years, the report said.

Jane Adams, the Cover Alabama Campaign Director at Alabama Arise said the group has polling information showing support for expansion among voters.

“We are still reviewing all the details in the PARCA report. However, it is abundantly clear that it is time to move forward with Medicaid expansion in Alabama. Nearly 70% of Alabama voters support Medicaid expansion, including 63% of Republican voters,” Adams said.

“This report lays out a pathway for lawmakers to expand Medicaid and produce an annual savings of $397 million over six years, more than enough to cover the projected costs.”

Alabama Daily News publisher Todd Stacy contributed to this report. 

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