Medicaid expansion was expected to be one of the main topics heading into Alabama's 2024 regular legislative session, but the session ended without any action, leaving Alabama one of 10 states that have not opted to expand Medicaid, a measure first put in place by the federal Patient Protection and Affordable Care Act of 2010 (Obamacare).

Put plainly, the Alabama Legislature made the right decision not to move forward with Medicaid expansion this session. Expansion advocates argue that the state is missing out on potentially hundreds of millions of dollars in “free” federal funding, but each of that money comes with its own strings and conditions. And the dollar amount alone doesn't take into account the other social and economic impacts of expansion.

While the Legislature has refused to make a decision on Medicaid expansion this year, some groups have called on Gov. Kay Ivey to act. The governor could expand Medicaid through executive order, but would need money from the Legislature to cover the costs of the expansion. Some groups have suggested the state increase health insurance enrollment through a public-private partnership option, the outcome of which would be similar to Medicaid expansion.

A spokesman for Governor Ivey said: Recently said Ivey's position hasn't changed, saying she remains concerned about how the state will pay for it in the long term.

Recent letter In a report submitted to the governor, groups that support increasing Medicaid enrollment argued that doing so would boost the state's stagnant labor force participation rate, stimulating worker productivity and economic growth. The groups also said it would relieve some of the financial strain facing rural hospitals.

But there is no evidence that expansion will achieve any of these things.

First, there are the impacts to the state's General Fund budget: The cost of the expansion is estimated to average $225 million over the first six years, increasing from $208 million in year 1 to more than $243 million in year 6. All of this money will be new General Fund expenditures.

While it is true that the state would gain federal funding from the expansion decision, all of that money would go to the state’s Medicaid agency, creating a potential shortfall in other General Fund agencies. That shortfall would have to be made up either through cuts to non-Medicaid agencies’ budgets or perhaps through direct tax increases or pass-through tax increases by health care providers. The $225 million represents more than 8% of the state’s General Fund spending for fiscal year 2023.

And that's just the beginning. Over the next decade, the Congressional Budget Office project Annual spending on the federal Medicaid program is projected to increase by nearly 63 percent. If state spending increases at a similar rate, Medicaid expansion could cost Alabama taxpayers nearly $350 million a year within a decade. By 2023 report A study by Paragon Health Institute found that expansion costs nationwide were 33% higher than expected.

The potential impact on Alabama's labor force participation rate also needs to be considered. As of the end of April, the state's labor force participation rate was 57.5%, Although this is a slight improvement from the previous month, it is still the worst in the country.

There is no evidence that Medicaid expansion will encourage Alabamians to work. In fact, it is more likely that the opposite will happen. Several states, including Alabama, have attempted to impose work requirements as a condition of receiving Medicaid benefits, but the Biden Administration has rejected all such attempts. Without strong work requirements, the expansion could act as a disincentive for Alabamians to seek full-time employment. For people who currently work primarily to secure health benefits, the expansion could act as a deterrent to continuing to work.

Plans to improve workforce development programs and increase Alabama's workforce participation rate were key parts of the state's 2024 legislative session. Among other initiatives,Work for Alabama†The package was developed to help with the rising costs of child care and housing and to encourage workers to stay or return to Alabama's workforce — and the Medicaid expansion could erode those efforts before they have a chance to gain traction.

There is also little evidence that expanding Medicaid would help hospitals, especially rural hospitals. 2023 Survey According to a Government Accountability Foundation study, between 2014 and 2022, approximately 50 hospitals will close in Medicaid expansion states, losing 5,400 beds. The loss of approximately 500 beds affected rural areas. In non-expansion states, only 5% of hospital closures reported that the lack of Medicaid expansion was the cause. A better way to ensure the financial viability of all health care providers in Alabama and increase access to health care for its citizens would be to ease or eliminate the state's burdensome regulations. Required Certificates Requirements.

The long-term costs of Medicaid expansion outweigh the short-term benefits to the state. API supports Governor Ivey's reluctance to shackle the state to federal burdens and encourages her to continue to reject outside pressure to expand Medicaid. Alabama should pursue commonsense health policy reforms to improve access to and affordability of health care.

Stephanie Holden Smith is president and CEO of the Alabama Policy Institute.