Lawmakers show openness to Medicaid expansion

MONTGOMERY — A number of Alabama lawmakers expressed openness to expanding Medicaid Wednesday after hearing from several state lawmakers from North Carolina and Arkansas about how expansion had benefited their states.

Members of the Joint Health Committee were given a presentation from North Carolina Reps. Jim Burgin and Donny Lambeth, and Arkansas Sen. Missy Irvin, all of whom gave their presentations remotely.

Attending in person was former Arkansas Department of Human Services Secretary Cindy Gillespie, who oversaw Arkansas' Medicaid expansion in 2014.

North Carolina expanded its own Medicaid program last December, becoming the 40th state to do so.

Speaking to the 12 committee members, Lambeth said that prior to North Carolina's expansion, the state regularly ran over budget on Medicaid expenditures to the tune of $500 million to $600 million a year. Hospital closures were also a constant concern, he said.

While Lambeth said that Medicaid expansion had "greatly helped" North Carolina prevent hospital closures, improve health outcomes and cut costs, he noted that the state's path to improvement began years prior to expansion.

In 2019, North Carolina changed its Medicaid program from a fee-for-service reimbursement model, which pays health care providers for individual services, to a value-based capitation risk model, which instead pays providers a fixed amount per patient, transferring much of the financial risk away from the state and to the providers.

"This took us several years, but we went live in 2021, and we brought a broken system under control; we've managed it under our budget now year over year since then," Lambeth said.

"This was a key factor in closing the gap, because we were able to fix a system that was not functioning very well."

Also in 2019, Alabama Medicaid launched seven regional care networks to manage Medicaid recipients' health outcomes. The idea is that better-managed care is less expensive long term.

Rep. Paul Lee, R-Dothan, the chair of the committee, asked Lambeth how North Carolina had been faring with its hospitals both prior to and after expanding Medicaid.

"Since 2010, we have had 14 hospitals close, and most of those are rural hospitals, and you can just imagine the effect that has on a rural community when your hospital closes," Lee said.

"So, in North Carolina, have you seen hospitals close prior to you all making this decision?"

Lambeth said hospital closures were an issue in his state, but he described a program lawmakers created prior to expansion to provide loans for hospitals, a program that was "greatly helped" by expanding Medicaid.

"We created the Rural Hospital Stabilization Fund a few years back that they could use and borrow to help them get over the hump … it has been effective, so I think the expansion has greatly helped," he said.

"We have not seen even talk of closing rural hospitals in the last few years because we've been able to help them."

Burgin said expansion has helped North Carolina's mental health care.

"Out of all of the money — we're going to get about $7.5 billion a year in money, (and) we got $1.6 billion as a one-time payment — we dedicated $835 million of that to mental health," Burgin said. "We, like all states, are dealing with mental health and opioid issues."

Republican lawmakers have long opposed Medicaid expansion, with the 10 remaining states that have yet to expand Medicaid all having Republican majorities in their state legislatures. Speaking on the presumption that Republican voters may be opposed to such an expansion, Burgin shared his own personal experience with constituents.

"I live in a very rural and conservative area," he said.

"I have not had one person that has come up to me and told me 'you shouldn't have done that' or 'we're against you for doing it,' but I've had hundreds of people come up to me and thank me because their loved one is now getting help."

Burgin also noted that North Carolina lawmakers had included several "kill switches" in its own Medicaid expansion program, ensuring that if the federal government made any unfavorable changes in how it subsidizes states that expand Medicaid the program would die.

Alabama lawmakers were recently briefed on a public-private partnership Medicaid expansion plan, similar to how both Arkansas and North Carolina expanded their own programs.

Through this model, much of the federal funds that come with expanding Medicaid would be given to insurers in the private sector, as opposed to being used to cover additional people directly through a state's Medicaid agency as is done with a traditional Medicaid expansion.

Gillespie, the only guest appearing in person at the briefing, stressed to committee members that in pursuing a public-private model of expansion, Alabama could avoid disrupting the private insurance market, and in some cases, improve it.

"Medicaid does not regulate the plans, these are private plans on the market place," Gillespie said. "They are still regulated by the (Arkansas) Insurance Department; what we do in Medicaid is purchase them, but we do not get in there and mess in the private market, and that's very important."

Now 10 years into the Medicaid expansion, Gillespie said that the majority of Arkansas Medicaid recipients are "young, largely female and rural," a description that closely mirrors Alabama's Medicaid recipients.

When asked about its effect on labor participation, Gillespie said Arkansas lawmakers had not commissioned any detailed studies on the topic, but did note that the state saw a 19% drop in disability applications within the first year, a number of which she presumed would have entered the workforce.