Gov. Robert Bentley is standing firm in his decision not to expand Medicaid in Alabama according to new federal guidelines. That’s in spite of a study by his alma mater, UAB, pointing out the economic benefits of doing so; in spite of a campaign by the state Retirement Systems CEO David Bronner to change the governor’s mind; and in spite of the fact that a number of other governors who had been opposed to the expansion have changed their minds and decided to accept more federal Medicaid funds. The governors of Texas, Arizona, Florida, Ohio, Michigan, and New Jersey have changed course.
But Bentley remains steadfast in his refusal, standing behind an alternative plan to create regional bureaus around the state to cap and contain the costs of medical services provided to the poorest people in the state.
He’s right to be concerned. In a state of about 4.8 million people, Medicaid has covered medical services for about 940,000 of them in recent years. In 2011, 22 percent of Alabama residents qualified for state services. According to a state report, Medicaid in Alabama covers 53 percent of births, 47 percent of children and almost two thirds of nursing home residents. In fiscal year 2012, the bill came to $5.63 billion. Two thirds of that was covered by the federal government, with Alabama providing matching funds from the general fund, tobacco tax, and a variety of assessments on health care providers.
From 2008 to 2013, the match from the state’s general fund grew from 25 percent to 35 percent.
And if the state agrees to the proposed expansion, an estimated 300,000 more Alabamians will qualify for Medicaid coverage.
A study by the Kaiser Family Foundation lists Alabama as one of a dozen states whose Medicaid spending will increase from four to seven percent under the new federal standards.
Not only are Alabama’s standards more restrictive—for instance, childless adults in Alabama aren’t eligible for coverage regardless of income—but the state’s spending per eligible person is already the third lowest in the country.
The expansion would be expensive.
But here’s where Alabama may be missing the boat.
Under the federal proposal, the federal government is to pay 100 percent of the cost of the expansion for the first three years—about $4.5 billion in federal tax dollars that would flow into our state. That amount would decrease to 95 percent for three years, and 90 percent after that. According to Bronner’s argument, that’s like getting back $15 billion for a $771 million investment--not a bad rate of return.
As eager as politicians in the state have been to spend money and grant tax breaks as incentives to bring new industry to the state, Bentley appears to be disregarding the opportunities for creating employment by expanding Medicaid.
Bronner argues that Medicaid expansion could generate 35,000 new jobs in Alabama, but even if it’s half that number, it would still be the largest influx of new jobs in state history.
A better argument against the expansion might be made at the federal level. That’s where the bulk of the money to run the program will be coming from, and there are serious concerns about its impact on the federal debt. But as much as Gov. Bentley may oppose the expansion of Medicaid and other aspects of the Affordable Care Act on principle, his first duty is to the people of Alabama. He cannot stop Obamacare, but he can do something to help our state.
The additional $1.5 billion per year in federal spending and thousands of new jobs would certainly be a boon to our state’s economy. That’s $4.5 billion the first three years at no cost to the state, followed by five cents on the dollar for three years, and a dime for a dollar after that. That’s money that not only provides an economic impact in the state, but gives a helping hand to lower-income Alabamians. From that perspective, it’s an offer too good to turn down.