The Alabama Legislature’s 2023 regular session has come to a close. Arise’s Akiesha Anderson takes us through some big wins – including reducing the state’s grocery tax! – and other highlights from the session. We want to thank you for speaking out to support good bills and oppose harmful bills. Please visit alarise.org and follow us on social media as we continue to bring you updates throughout the year on our work for a better Alabama.
Medicaid expansion: Alabama’s path to long-term health and financial security
With North Carolina having joined the list of Medicaid expansion states, Alabama remains part of a dwindling group of just 10 states that have not closed the health coverage gap. More states are starting to realize the benefits of Medicaid expansion and finally adopting this life-saving measure.
But Alabama unfortunately remains an outlier. By failing to expand Medicaid, our state continues to jeopardize the health of its people. This means nearly 300,000 hard-working Alabamians continue to struggle to afford health coverage. It means a weakened health care system as rural hospitals become vulnerable to closure. And it means lawmakers are forgoing substantial federal funding that could fortify state budgets.
There’s a better way. Alabama can and should expand Medicaid to save lives, create jobs and boost tax revenues across our state.
Expansion would be a lifeline to struggling Alabamians
The traditional Medicaid program in Alabama has notably one of the strictest eligibility requirements in the country. A parent in a family of three qualifies for Medicaid coverage if their annual income is below 18% of the federal poverty level (FPL), equating to $4,475 a year.
With expansion, Medicaid would cover all adults with incomes up to 138% FPL, or $34,307 for a family of three. This would include many adults who have no children and are frequently left in the health coverage gap. Most importantly, it also would provide financial relief to Alabamians struggling to afford health care.
Medicaid expansion would ensure health coverage for those who work low-wage jobs and can’t afford other forms of health insurance. It also would benefit workers switching jobs, adults staying home to care for other family members and people with disabilities awaiting SSI determinations. Expansion also would bring in additional federal revenue to invest in communities, rural hospitals and other health care support services.
Gov. Kay Ivey has the authority to begin Medicaid expansion administratively without legislation. Yet the governor’s spokesperson recently said, “The governor’s concern remains how the state would pay for it long-term.”
This blog post answers that question. It highlights how Medicaid expansion would keep hard-working Alabamians healthy and help rural hospitals remain open to serve their communities.
Fortifying the General Fund
Alabama’s budgeting structure is different from most states. However, this should not prevent the state from affording expansion in the long term.
Alabama is one of five states to have two separate budgets: the General Fund (GF) and Education Trust Fund (ETF). The ETF, created to prioritize education, receives state sales tax and individual income tax revenues, and is the state’s largest operating fund. The ETF makes up around 75% of the two combined budgets.
Under traditional Medicaid expansion, the federal government commits to paying 90% of the cost for new Medicaid members. States must cover only the remaining 10%. In other states, Medicaid expansion fueled more jobs and increased revenues that contributed to covering states’ share of expansion costs.
In Alabama, those increased revenues would be allocated to the ETF. This however, does not mean the GF, which finances non-education services (including Medicaid), would suffer due to expansion. Instead, because of increased incentives, Alabama would receive a federal signing bonus to cover expansion costs for several years.
Bringing federal tax dollars back home
Alabamians, like people across the country, contribute tax dollars each year that fund Medicaid expansion in states that already have adopted the program. However, Alabamians do not see those tax dollars coming back home. Ivey can bring those tax dollars back to Alabama as the federal government covers 90% of Medicaid expansion’s costs.
Without expansion, Alabama spent $7.7 billion in fiscal year 2020 on Medicaid. This money came from three main sources: the GF (10% of Medicaid’s funding), other state share sources (14%) and federal funds (76%).
These substantial federal funds result from the federal medical assistance percentage (FMAP) calculation. Alabama’s FMAP is projected to be 73.96% in 2024. That means the state will be responsible for funding 26.04% of the regular Medicaid program.
While federal funds already make up the vast majority of the state’s Medicaid funding, Alabama is leaving an estimated $619.4 million more in federal funding on the table by not expanding Medicaid. Under the American Rescue Plan Act (ARPA), states that finally adopt expansion will receive a signing bonus in the form of an additional 5% FMAP increase for the regular or already enrolled Medicaid population for two years.
In other words, once Alabama expands Medicaid, its federal match would increase to around 78.96% for two years. Alabama’s costs for the current program would fall to 21.04% for those years. On top of this, the federal government would pay 90 cents of every $1 of the cost to cover people newly covered by Medicaid expansion. And that 90% federal match would be permanent. This is a deal Alabama simply cannot afford to pass up.
Additional state savings that support the General Fund
Expansion also would help Alabama realize significant GF savings through a more generous federal match rate for services that the state already funds. Alabama pays for anywhere from 26% to 100% of the cost of these services now. These services include coverage for pregnant women, the Breast and Cervical Cancer Treatment Program, family planning services, mental health and substance use programs, and inpatient care for incarcerated people.
But after expansion, the federal government would cover 90% of the cost of these services for the expansion population. This would reduce the state share to 10% for those Medicaid members. For example, if Alabama expanded Medicaid, the state could reduce its cost to provide Medicaid coverage for pregnant people by an average of $30.5 million per year over the next six years.
Alongside a reduction in uncompensated care, these savings are projected to save the state $266 million over the next six years after expansion. These substantial savings would help support the GF for years, offsetting costs after the two-year FMAP bump ends.
As a result, Alabama would have a net $41 million extra per year after paying for the cost of Medicaid expansion.
Keeping rural hospitals open
Rural hospitals and providers are facing a funding crisis right now. This is especially true in states that have not yet adopted Medicaid expansion, which would provide financial relief to Alabama’s rural hospitals at risk of closing. North Carolina’s Republican lawmakers emphasized rural hospital closures as one reason they expanded Medicaid now after 10 years of resistance.
Between 2011 and 2020, eight Alabama hospitals closed, leaving many communities stranded without adequate health care access nearby. Following the onset of the COVID-19 pandemic, Congress passed legislation to provide temporary funding relief and a provider relief fund to support rural hospitals and keep them open.
These funds slowed the rate of rural hospital closures to its lowest point since 2010. They also enabled rural hospitals to continue operating during a time when communities needed them most. However, this temporary funding has ended, putting rural hospitals at risk of negative operating margins and closures once again.
Medicaid expansion is an important step to keep hospitals open. Being in an expansion state decreases the likelihood of hospital closure by 62%. Expansion also sharply reduces uncompensated care, or services for which hospitals or health care providers are not reimbursed by some type of health insurance. Uncompensated care is a primary reason for hospitals having worse operating margins and closing.
In a year when uncompensated care could skyrocket as the pandemic’s continuous coverage requirement ends, expansion is the solution Alabama needs to protect rural hospitals and communities. With at least 15 rural hospitals at imminent risk of closing in Alabama, it’s crucial for state lawmakers to consider the importance of expansion to keep rural hospital doors open and provide critical care to rural communities.
Supporting hard-working Alabamians
Medicaid expansion is designed to support hard-working Alabamians who have no other opportunities for health coverage. Single parents working multiple jobs to make ends meet for their family are often who benefit the most from expansion.
Alabama has a total of 79,000 uninsured adults in the labor force. Additionally, 40,000 people in Alabama are parents with children at home, including one-third who have a child under 5. Many of these individuals may serve as unpaid caregivers, needing Medicaid coverage to keep themselves and their families healthy, while also being unable to meet stringent work reporting requirements.
Medicaid expansion would be a valuable tool to help people find work or stay employed. Medicaid coverage has proved helpful to unemployed individuals as they look for work. And Medicaid coverage has helped employed people keep working and perform better at work.
Additionally, a survey found that 81% of non-disabled people with young children worked in the past year. Proposals to add work reporting requirements to Medicaid have one main effect: causing people who already are working or who should be exempt from the requirements to lose their critical Medicaid coverage due to burdensome paperwork and administrative barriers. Thousands of Alabamians are working hard and in desperate need of the health coverage Medicaid expansion would provide.
Medicaid expansion is a vitally needed policy that would keep Alabamians with low incomes healthier. It would help rural hospitals and providers remain open to serve their communities. And it would fortify the GF due to increased federal investment. Ivey and Alabama lawmakers should put the people of Alabama first by expanding Medicaid.
Arise legislative update: May 30, 2023
As the Alabama Legislature’s 2023 regular session begins to wind down, Arise’s Carol Gundlach looks at the House passage of HB 479, a major breakthrough on our longtime goal of reducing the state sales tax on groceries. She also discusses four major budget bills headed to the governor’s desk.
Arise legislative update: May 22, 2023
Arise’s Akiesha Anderson shares some good news from last week’s action at the Alabama Legislature. Those breakthroughs include the introduction of a House bill to reduce the state grocery tax, with nearly every representative joining as a co-sponsor. We also saw progress on several criminal justice reform bills, including the passage of SB 154, which will ensure far fewer Alabamians will have their driver’s licenses suspended due to inability to pay fines or fees.
What Medicaid members need to know about Alabama Medicaid’s ‘unwinding’
After a continuous enrollment period brought about by the COVID-19 pandemic, Alabama Medicaid has begun an unwinding process. This “unwinding” will end Medicaid coverage for Medicaid members who don’t meet certain criteria. Read below to find out more about this process, including when and how Medicaid members will need to certify their eligibility. Click here for more about the unwinding and what state officials can do to help protect health coverage in Alabama.
(1) What is the unwinding? The unwinding is a reevaluation of Medicaid eligibility for all Medicaid members. Under federal law, all Medicaid members have been continuously enrolled since March 2020 unless they requested in writing to be removed, moved out of state or died. Enrollment was continuous due to the public health emergency (PHE) prompted by the pandemic. However, after the federal government announced the PHE’s end, the unwinding process began.
(2) Why is Medicaid unwinding? To help prevent health coverage losses during the pandemic, Medicaid members received continuous coverage. Continuous coverage meant that once someone was on the Medicaid rolls, they could remain even if they failed to maintain traditional eligibility requirements. However, the PHE ended May 11, 2023, and continuous eligibility enrollment ended before that on March 31, 2023.
(3) How is Medicaid unwinding? Beginning April 1, 2023, Alabama Medicaid began requiring all Medicaid members to verify eligibility requirements in their renewal month. Alabama Medicaid will notify members via mail prior to their enrollment month.
Medicaid members may verify their enrollment month via the Medicaid recipient portal. Alabama Medicaid also encourages members to update contact information and opt in to receive text or email updates.
(4) How can Medicaid members keep their Medicaid benefits? First, Medicaid members should ensure Medicaid has their current mailing address. People can update their contact information in the recipient portal or by calling 800-362-1504. Second, Medicaid members should be sure to respond to any mailing request from Alabama Medicaid with the information needed to verify eligibility. This response should occur within 60 days of the date listed on the mailing. It is important for Medicaid members to know that Medicaid will only initiate information requests via postal mail. People can contact their local Medicaid office or call 800-362-1504 for more information.
(5) How will Medicaid determine eligibility? Medicaid will determine eligibility based on each Medicaid program and eligibility category. More information about those programs and categories is available here. Each has specific requirements that must be met. Medicaid will verify eligibility for each person now enrolled and for new applicants in each program or category.
(6) What if a person is no longer eligible for Medicaid benefits? Current Medicaid members who lose their health coverage during the unwinding period will receive a determination letter stating a loss of eligibility and providing a termination date for coverage. Medicaid members may appeal this determination if they believe they are in fact still eligible for Medicaid coverage. Anyone who is no longer eligible for Medicaid benefits can learn about other insurance options that may be available by visiting Enroll Alabama’s website or dialing 211 from their phone.
Arise legislative update: May 15, 2023
Arise’s Akiesha Anderson breaks down recent developments at the Alabama Legislature, including the committee approval of a troubling bill that could redirect a large amount of public school funding to private schools. She also discusses legislation we’re excited about, including the continuing progress of a bill that would greatly reduce the number of driver’s license suspensions due to unpaid fines or fees.
Arise legislative update: May 8, 2023
Arise’s Robyn Hyden provides an update on recent action at the Alabama Legislature, including why we support the latest proposal to reduce the state grocery tax. She also discusses how lawmakers made positive changes to the Education Trust Fund budget and why we oppose bills that would limit voting rights and make life harder for unhoused Alabamians.
Arise legislative update: May 1, 2023
Arise’s Mike Nicholson provides an update on a few criminal justice bills in the Alabama Legislature’s 2023 regular session, including one to end many debt-based driver’s license suspensions. He also explains ways Arise is providing up-to-date information on bills we’re watching and how you can get involved with our movement for change.
Arise legislative update: April 24, 2023
Arise’s Carol Gundlach discusses what we’re watching for as the 2024 General Fund budget advances to the House floor. She also reviews the package of business tax breaks that the Alabama Legislature enacted last week.
Alabama lawmakers allocated the state’s final $1 billion of ARPA funds. What comes next?
As the Alabama Legislature begins to craft the 2024 General Fund budget, decisions made during last month’s special session should provide lawmakers with more flexibility to meet ongoing needs for our state. With additional near-term funding already in place for key priorities, legislators should seize the opportunity to improve the quality of life for every Alabamian. Investments that would further this goal include providing funds for public infrastructure like Medicaid expansion and public transportation.
On March 16, Gov. Kay Ivey signed HB 1 to end the special session she called to distribute the remaining federal funds that Alabama received under the American Rescue Plan Act (ARPA). This act provided states with federal funding to help cover losses and expenses incurred because of the COVID-19 pandemic. Lawmakers previously distributed the majority of the funds, leaving $1.06 billion to be allocated in this year’s special session.
Arise priorities eligible for funding
The Department of Finance received $55 million in ARPA funding for direct services for people likely to face economic hardship. These categories include older Alabamians and victims of domestic violence. Service providers will receive this money through departmental grants.
Further available categories for this funding include food banks, long-term housing security and mental health care. Summer education programs for schoolchildren and services to families involved in child welfare also are eligible for this funding.
Arise has advocated for using a portion of Alabama’s ARPA aid for affordable housing. While the ideal path would have been a specific allocation to housing, this funding pool provides a path for that important investment. Direct food assistance is likewise a vital public good. And increased mental health funding could help improve the well-being of Alabamians of all demographics.
Health care receives significant funding
Lawmakers allocated $339 million for direct health care expenses and related services. The largest portion will be used for hospital and nursing home reimbursements at $100 million each. Increased expenses for state employees’ health insurance will account for $80 million of the remaining $139 million.
The remaining $59 million will go toward several programs to expand health care availability and efficacy for Alabamians. These funds include:
- $9 million for telemedicine infrastructure expansion, particularly focused on specialist coverage for Alabamians in rural communities.
- $20 million for research into increasing access to personalized health care.
- $175,000 in cost reimbursement for COVID-19 vaccinations provided to college and university students.
Also notable is a $25 million line item for mental health care investment. This expenditure can help bring state programs up to the requisite standard of care. This amount is in addition to the permissible use of a portion of the Finance Department’s $55 million in funding.
Infrastructure improvements receive lion’s share of ARPA aid
Lawmakers allocated the largest share of this round of funds, $660 million, to infrastructure improvements in water and sewer systems. Of that amount, $260 million will go toward broadband internet access.
This decision is consistent with the state’s emphasis on increasing internet connectivity during recent legislative sessions. These funds are also available for use by state agencies to modernize and improve access to state computer infrastructure. This has been another recent priority for the Legislature.
The remaining $400 million in this category will go toward water and sewer infrastructure improvements. This includes $195 million for high-need water and sewer projects. A further $100 million will be available for water projects in growing communities. And an additional $100 million will be designated for grants that require 35% funding matches by local governments.
The Alabama Department of Public Health has designated $5 million to conduct wastewater system improvements in areas with high poverty rates, low populations and difficult soil conditions for septic systems. This expenditure aims to improve longstanding sewage disposal issues in the Black Belt.
In several Black Belt counties, recent major sewage problems due to inadequate investment in public sewage disposal have drawn international condemnation. This ARPA allocation will help mitigate the problems, though further investment will be necessary to fix them fully.
Overall, state lawmakers used this final round of ARPA funds as generally intended: to improve Alabamians’ lives and mitigate shortfalls due to the COVID-19 pandemic. The relative flexibility of the appropriations bill still leaves open the possibility that some funds could be used in counterproductive ways. But the Legislature performed much better in allocating ARPA funds equitably this session than with the first round, when they devoted $400 million of relief funding to prison construction.
Thankfully, this special session created numerous pathways to help Alabamians by directly providing important public goods. The opportunity to make significant improvements in vital areas includes funding adequate housing and providing food for people who need it. It includes investments in mental health care and improvements in state agency reliability. And it includes mitigation of some harms resulting from decades of state disinvestment in Black Belt communities with mostly Black populations.
Make no mistake: Many urgent and vital needs remain unmet after the special session. But ARPA funding nonetheless will provide a generational opportunity to make substantial improvements to the lives of all Alabamians. Lawmakers should build on that momentum by expanding Medicaid, funding public transportation and making other investments in a brighter, more inclusive future for Alabama.