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.

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.

A notice from Alabama Medicaid to check your mail for important information beginning April 1.

(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.

Walker County Medicaid town hall 2023

Alabama Arise and Cover Alabama co-hosted a Medicaid town hall in Jasper on April 10, 2023. Speakers discussed the importance of Medicaid expansion and how our state can afford it, as well as the cruelty of the Medicaid coverage gap. To learn more and join our movement to expand Medicaid in Alabama, visit

Alabama Arise Action Legislative Day 2023

Arise held our 2023 Legislative Day on Tuesday, April 11. More than 100 supporters joined us in Montgomery to hear updates on our policy priorities and urge their lawmakers to untax groceries, expand Medicaid and end debt-based driver’s license suspensions. Thank you to everyone who spoke out for a better Alabama for all!

It’s time to expand Medicaid and close Alabama’s coverage gap

Here are five reasons it’s time to expand Medicaid and close Alabama’s coverage gap:

  1. Nearly 300,000 Alabamians with low incomes would benefit from Medicaid expansion.

    • People in the coverage gap earn too much to qualify for Medicaid, but not enough for an affordable private health insurance plan on the Marketplace. This leaves them in the health coverage gap.
    • The vast majority of people who would gain coverage through Medicaid expansion are working. More than 100,000 Alabamians in the coverage gap hold jobs that are important but pay low wages. Thousands more are self-employed, serve as caregivers or attend school.
    • People who work low-wage jobs and can’t afford private coverage are among the Alabamians who would benefit from closing the coverage gap. So are workers who are between jobs, uninsured veterans, adults who are caring for children or older family members and people who are awaiting SSI determinations.
  2. We can afford it now. Medicaid expansion comes with a $619 million signing bonus.

    • States that close their coverage gap will receive a 5-percentage-point increase in the federal match rate for Medicaid for two years. This is thanks to an incentive in the American Rescue Plan Act.
    • An increased federal match rate would bring $619 million to Alabama over the next two years.
    • The state’s cost to close the gap in the first two years would be roughly $423 million. That means nearly $200 million in additional federal funding would come to our state above and beyond the cost to extend Medicaid coverage up to hard-working Alabamians. And that doesn’t even count other budgetary savings for the state and the revenue generated by thousands of new jobs across Alabama.
  3. Closing the coverage gap helps workers stay employed.

    • States that have closed the coverage gap have seen a greater increase in labor force participation among people with low incomes than in non-expansion states. One in three Alabama adults have a disability.
    • Injuries or manageable illnesses like diabetes can get so severe for those without health coverage that they prevent people from working or leading healthy lives. 
    • People with disabilities are more likely to be employed in states that have expanded Medicaid than in states that haven’t.
  4. Sixteen rural hospitals are at immediate risk of closing. Medicaid expansion can keep them operating.

    • Expanding Medicaid will help more rural residents afford health care services and reduce the financial losses experienced at hospitals from serving uninsured patients or providing uncompensated care.
    • Research shows that a rural hospital being located in a Medicaid expansion state decreases the likelihood it will close by an average of 62%.
    • Rural hospitals in states that have expanded Medicaid coverage have more sustainable median operating margins compared with rural hospitals in non-expansion states.
  5. Medicaid expansion can help strengthen mental health care services in Alabama.

    • We need more coverage and better care for Alabamians with mental health conditions. Medicaid expansion would allow more people with these conditions to access the vital care they need.
    • Alabama’s mental health care and substance use treatment providers deliver nearly $50 million worth of uncompensated services each year. Closing the coverage gap could drastically reduce this amount and allow more mental health services to be provided to people in need.

It’s time to expand Medicaid and close Alabama’s coverage gap

  • Nearly 300,000 Alabamians would benefit from Medicaid expansion.
  • We can afford it now. Medicaid expansion now comes with a $619 million signing bonus.
  • Closing the coverage gap helps workers stay employed.
  • Sixteen rural hospitals are at immediate risk of closing. Medicaid expansion can keep them operating.
  • Medicaid expansion can help strengthen mental health care services in Alabama.

Advocates visit Alabama lawmakers to urge support for Medicaid expansion

Kenneth King speaks from behind a lectern outside the Alabama State House in Montgomery. He is a Black man wearing a gray suit, a gray toboggan cap and a scarf that is white and black. Standing behind him are numerous supporters of Medicaid expansion, including a white man wearing a black jacket and glasses who holds a sign reading "Save Our Rural Hospitals," and a white woman with red hair and glasses who holds a sign reading "Help the Working Poor: Expand Medicaid."
Alabama Arise board member Kenneth King speaks at Cover Alabama’s advocacy event outside the State House in Montgomery on March 21, 2023. King shared his story of living in Alabama’s health coverage gap and urged lawmakers to support Medicaid expansion.

More than 80 Alabamians gathered outside the State House in Montgomery on Tuesday to urge state lawmakers to expand Medicaid to cover adults with low incomes. The Cover Alabama coalition sponsored the event as part of its advocacy day for Medicaid expansion. Alabama Arise is a founding member of Cover Alabama.

Some advocates shared stories of how Medicaid expansion would help their families and communities. Others highlighted how expansion would benefit Alabama’s economy and health care system. All sought to show the human faces of the state’s health coverage gap and the suffering it causes.

Video footage from the event is available here. Photos from the events are available here.

“I lost my job because of a chronic health condition. I’m the primary provider for my family, but I could not stay well enough to do my job,” said Jesse Odland, a Huntsville line cook. “Now, I worry my medical debt will affect how my family can thrive. The working class drives our economy, and we’re hit the hardest by the coverage gap.”

Closing the coverage gap would help nearly 300,000 Alabamians access potentially life-saving care. It also would create thousands of new jobs and invigorate the state’s economy, research shows. Medicaid expansion could create more than 20,000 new jobs and save the state almost $400 million each year for the next six years, according to a recent report by the Public Affairs Research Council of Alabama. And in rural areas, expansion would have the added benefit of reinforcing rural hospitals.

“Alabama’s rural hospitals are in trouble. More than a dozen are at immediate risk of closing this year,” said Dr. Marsha Raulerson, who has been a pediatrician in Brewton for more than 40 years. “When a rural hospital closes, that community loses not only their access to health care but also a primary economic engine and the jobs that come with that. Medicaid expansion is a win-win for patients and providers alike.”

Rev. Carolyn Foster, the faith in community coordinator at Greater Birmingham Ministries, argued that expanding Medicaid is just the right thing to do.

“No matter our creed, we can all agree that we are called to love our neighbors as ourselves,” Foster said. “So long as we allow our neighbors to fall into the health care coverage gap, we are failing to answer that calling. It is an affront to people of faith and people of good will.”

Thirty-nine states and the District of Columbia have expanded Medicaid, and North Carolina likely will join that list next week. Debbie Smith, Alabama Arise’s Cover Alabama campaign director, said advocates hope this is the year Alabama will expand, too.

“Research shows Medicaid expansion is favorable on both sides of the political aisle,” Smith said. “We are hopeful Alabama lawmakers will do the smart, compassionate and fiscally responsible thing and expand Medicaid now. How can our state not afford to save money?”

Click here for video from the event. And click here for photos from the event.

Cover Alabama Lobby Day 2023

The Cover Alabama coalition held its first Lobby Day on March 21 on the steps of the State House in Montgomery. Faith leaders, community advocates and people living in Alabama’s health coverage gap spoke about the importance of Medicaid expansion for their families and communities. Advocates then met with lawmakers to urge them to save lives and create jobs by expanding Medicaid.

PARCA presentation on Medicaid expansion in Brewton

Medicaid expansion would save lives, create jobs and strengthen the health care system across Alabama. Ryan Hankins, executive director of the Public Affairs Research Council of Alabama (PARCA), gave a presentation on Medicaid expansion’s benefits at a public event that Alabama Arise co-hosted on Feb. 27, 2023, at DW McMillan Memorial Hospital in Brewton.

Brewton community event on Medicaid expansion in Alabama

“Our rural hospital is the first line of care for the people in our community. If someone’s really sick, they need to be stabilized. They can be stabilized here quickly and efficiently. If our hospital closed … people will die.”
That was the blunt reality that Dr. Marsha Raulerson shared at a health care panel that Alabama Arise co-hosted Feb. 27 in Brewton. As we heard from her and many other people that night, Medicaid expansion is a crucial step to save lives and protect health care access in Escambia County and throughout Alabama.

Expand Medicaid and close Alabama’s health coverage gap

For years, Gov. Kay Ivey and legislators have said cost is the barrier to covering Alabamians with low incomes through Medicaid. However, thanks to new federal incentives for Medicaid expansion, any concerns about that barrier are gone. Now more than ever before, we have the opportunity to ensure no Alabamian has to choose between going to the doctor and putting food on the table.

More than 70% of Alabamians support Medicaid expansion, including 66% of Republican voters, according to a January 2022 poll, and opening up Medicaid coverage to adults with low incomes is the single biggest step Alabama can take to restore health, save our rural hospitals and boost our state’s economic recovery.

Who would gain coverage under Medicaid expansion?

Medicaid expansion would ensure coverage for nearly 300,000 Alabamians, including:

  • People who work low-wage jobs and can’t afford private coverage
  • Workers who are between jobs
  • Adults who are caring for children or older family members at home
  • People who have disabilities and are awaiting SSI determinations
  • Adult college students
  • Uninsured veterans

How would Medicaid expansion boost the economy?

Medicaid expansion would bring our federal tax dollars home to support:

  • Healthier families, workers and communities
  • Stronger rural hospitals and clinics
  • Stronger community mental health and substance use disorder services
  • A needed boost in jobs and revenue for state and local economies

How would Medicaid expansion keep people healthier?

Medicaid expansion would help Alabamians stay healthy by ensuring pathways to:

  • Regular primary care and preventive checkups
  • Earlier detection and treatment of serious health problems
  • Regular OB/GYN visits without referral
  • Less dependence on costly emergency care
  • Better health and greater financial peace of mind

How would Medicaid expansion reduce health disparities?

Medicaid expansion would promote health equity in Alabama by:

  • Reducing the racial/ethnic disparities in health coverage
  • Lowering the high rate of Black infant deaths
  • Lowering the high rate of Black maternal deaths
  • Covering chronic health conditions that disproportionately affect people of color and make them more vulnerable to COVID-19 complications

Bottom line

Medicaid expansion would save lives, create jobs and strengthen Alabama’s health care system. Closing the health coverage gap is one of the biggest policy changes available to move our state forward. The governor and the Legislature should embrace this opportunity to build a brighter, healthier future for Alabama.

Join our Cover Alabama campaign!

An end to Alabama’s coverage gap is within reach. Through our Cover Alabama campaign, Alabama Arise is working to ensure that every Alabamian can afford to get the health care they need when they need it. Visit to learn more and add your name to our ever-growing list of supporters.