Ken Hare In Depth: Not expanding Medicaid could cost state more - Montgomery Alabama news.

Ken Hare In Depth: Not expanding Medicaid could cost state more than expanding

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Opponents of expanding the Medicaid program in Alabama to take advantage of the federal dollars available under Obamacare have pointed out that it would be difficult to find the state dollars needed to match the program in future years.

But a new economic study by a respected independent research organization strongly suggests that it could cost Alabama state government more not to expand Medicaid than it would to expand it.

The study by the Rand Corporation looked at the 14 states -- including Alabama -- that have said to date they would not expand the Medicaid program to cover citizens up to 138 percent of the poverty level, despite the fact that the federal government would cover 100 percent of the cost in the first three years and 90 percent or more in the years after that.

Rand researchers found that the 14 states collectively will spend $1 billion more on uncompensated care in 2016 than they would if Medicaid is expanded. Those 14 state governments also would pass up $8.4 billion annually in federal payments and an additional 3.6 million people will be left uninsured.

In other words, if Alabama's political leaders choose not to take advantage of the federal money available to expand Medicaid, it does not mean that the status quo will remain in place for Medicaid funding in the state.

That's because the Affordable Care Act assumes that states will see a reduction in the number of uninsured patients because of Medicaid expansion. So the act reduces current payments made to the states -- largely to hospitals -- for uncompensated medical care for uninsured patients.

The report states that if a state chooses not to expand Medicaid, the changes "could shift the cost for uncompensated care from the federal government to states, localities, and hospitals."

"State policymakers should be aware that if they do not expand Medicaid, fewer people will have health insurance, and state and local governments will have to bear higher costs for uncompensated care," the authors of the report, Carter Price and Christine Eibner, write. "We estimated states' costs for expansion to be less than the reduction in their costs for uncompensated care."

Of course, other studies already have shown that expanding Medicaid in Alabama not only would increase health care access for some 300,000 Alabamians, it would spur job growth and generate additional state revenue that would more than pay for the state's share of the cost of expansion.

That's because economists estimate that an expansion, which would be paid for almost entirely with federal dollars, would have a $20 billion economic impact in Alabama.            

If Alabama went along with expanding Medicaid under the federal Affordable Care Act starting in 2014, the federal government would assume almost the full cost of the expansion through 2016. The state would have to start assuming a larger share of the cost after that, but the state's share would top out at 10 percent starting in 2020. 

The total cost to the state through 2020 is estimated at about $771 million. During that seven-year span, the federal government would pump an additional $11.7 billion into Alabama health care.    

If you look at the program over the next 10 years, the Kaiser Commission on Medicaid and the Uninsured estimates that Alabama would spend about $1 billion for the expanded Medicaid coverage while getting about $14 billion in additional federal support. After 10 years, the state would get $10 for every $1 invested.  

As I have noted several times before, any industry that promised to pump that much money into Alabama's economy -- money that could create 12,000 new jobs, according to one study -- would have the governor and legislators falling all over themselves trying to find the incentive money to make it happen.  

A study by two respected economists at the University of Alabama Birmingham estimates the  new economic activity from expanding Medicaid in Alabama would generate $1.7 billion in new tax revenue for the state from 2014 to 2020. So subtract the $771 million in state costs for the expansion from the $1.7 billion in new tax revenues, and state government revenues would come out ahead by almost a billion dollars, according to the study. 

(Much of that new revenue would be earmarked for public schools and public colleges in Alabama, so ironically expanding Medicaid could prove an economic boon for public education in the state.)

But despite the growing evidence of both the economic and health benefits of expanding Medicaid, the politics of expansion appear frozen in time in Alabama. On Thursday, Gov. Robert Bentley reiterated that he does not foresee an expansion at this time. And except for the politically inconsequential Democratic minority in the Legislature, there has been little discussion among legislators about an expansion.

Bentley has said that his focus will remain on reforming the delivery approach for Medicaid in Alabama to improve efficiencies and health outcomes. That certainly is crucial.

But unless Alabama moves soon to address the expansion issue, it stands to lose hundreds of millions of dollars for its economy during the first few years of the program.  And 300,000 Alabamians could remain without health insurance coverage.

It is not surprising that Republican elected officials in Alabama oppose Obamacare. But they should not let that blind them to the economic realities of taking advantage of the program now that it is the law of the land.

Average Alabamians seem to be able to draw that distinction. A recent poll showed that only 35 percent of Alabamians questioned view Obamacare favorably, but 64 percent favor expanding Medicaid under the act.

If so many everyday Alabamians can see the wisdom of looking beyond politics to do what is best for the state's economy and health, political leaders should be able to do so as well.


Ken Hare was a longtime Alabama newspaper editorial writer and editorial page editor who now writes a regular column for WSFA's web site. Email him at

Copyright 2013 WSFA 12 News.  All rights reserved.

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