Opposition to Medicaid expansion may be crumbling in Alabama

Nov. 15--Since the Affordable Care Act went into effect, Debra Foster has had to tell at least 200 Calhoun County residents they still can't get health insurance.

Some couldn't find work, but still weren't broke enough to meet Alabama's stringent criteria for adults on Medicaid. Others worked for minimum wage, but still fell short of the minimum income needed to get subsidies for private insurance under Obamacare.

All would have been covered if Alabama had expanded its Medicaid coverage to include more of the working poor, something states were intended to do under the Affordable Care Act.

"When I tell them they can't get covered, they tell me they have nowhere else to go, and it breaks my heart," said Debra Foster, an application counselor at Quality of Life Health Care in Anniston, where one of her jobs is to enroll people in health insurance under ACA.

The fight over Medicaid expansion has become one of this decade's great partisan divides in Alabama. Under the ACA, states were originally intended to expand Medicaid to people with income levels up to 138 percent of the federal poverty level, providing an out for people too poor to meet the law's requirement to buy health insurance. But Gov. Robert Bentley, like many red-state governors, declined to expand the program, citing opposition to Obamacare and concern about the state's ability to pay for expansion.

That wall of opposition may be crumbling. As recently as Thursday, Bentley told reporters that he was considering expansion, though he had yet to make a final decision on the issue.

"The governor did not say anything he hasn't said before," Bentley spokeswoman Jennifer Ardis said later that day. "He said it's something we're looking at."

A blue-ribbon task force, assembled by the governor earlier this year to study solutions to the state's most pressing health issues, may vote this week on a resolution recommending something similar.

"We are considering a recommendation that the governor expand coverage to include as many people as possible," said Ronald Franks, chairman of the Alabama Health Care Improvement Task Force. Franks said wider health care coverage would likely help the state deal with widespread issues such as diabetes.

Endorsing Medicaid expansion specifically is "beyond the scope" of the task force, Franks said, but is "one way to get there."

As Bentley ponders the possibility of expansion, he'll have several pros and cons to consider.

Pro: The other shoe. Since Bentley rejected Medicaid expansion in 2012, health care officials have warned of a coming crisis for hospitals in high-poverty areas. The federal government reimburses those hospitals for the emergency care they provide to uninsured patients through a payment known as Disproportionate Share Hospital, or DSH.

The Affordable Care Act was supposed to cut DSH payments. That may not be a problem for Medicaid-expansion states, because poor patients would be covered. But it's a big issue for non-expansion states like Alabama.

But despite much talk about the cuts, and the closure of a handful of rural hospitals in recent years, the DSH shoe hasn't actually dropped yet; Congress has pushed the deadline back. The cut is likely to come for real in 2017 -- and it's likely to be deeper than planned in the original health care law.

"It could mean the difference between staying open and closing for some hospitals," said Danne Howard, a vice president of the Alabama Hospital Association.

Howard said long-term pressures, including care for the uninsured, shuttered the already-closed rural hospitals. Pressure on remaining hospitals will likely be higher after DSH cuts, she said.

Con: Footing the bill. The state already has about 1 million people on Medicaid, and expansion would require Alabama to pick up the tab for as many as 300,000 more.

It won't be free. The federal government promised to pay 100 percent of the cost of expanded Medicaid in the first three years of Obamacare, but that window is passing. If Alabama expands now, it can expect to pay about 5 percent of the cost of new customers, rising to 10 percent by 2020. That's still better than the match the state now pays, around 30 percent for most patients.

Even so, by 2020 expansion could add about $220 million per year to the state's cost for Medicaid, according to the mid-range estimate by the Center for Business and Economic Research,or CBER, at the University of Alabama. Bentley last week estimated the price tag at $710 million over the next six years.

Finding that money seems like a political impossibility. Lawmakers argued for months this year -- entering two special legislative sessions -- about how to address a $200 million gap in the state budget. They came away with about $60 million in new cigarette taxes and sizable cuts to some programs. There's little appetite for another tax fight next year.

Pro: The economic boost. Advocates for expansion say it could actually give the state an economic leg up, in part by drawing in new medical workers who in turn spend money in the larger state economy. Critics have said that with health coverage expanding elsewhere, it's not clear Alabama will be able to attract those new health care professionals.

Samuel Addy, an economist for CBER, is in the economic-boost camp. He said the economic boomlet from Medicaid expansion should generate enough tax money to pay for the expansion itself.

"It will completely cover it," Addy said.

A recent study by the Kaiser Family Foundation found that Medicaid expansion states did in fact see a higher rate of economic growth in the past few years than non-expansion states.

Con: Two budgets. Alabama runs its government on two budgets. One is the General Fund, which pays for various state agencies including Medicaid. The other, the school-oriented Education Trust Fund, is the place any Medicaid-related tax windfall would likely land. Addy said Medicaid expansion would likely increase sales and income tax revenues, both of which go into the school budget.

"The only issue, in my opinion, is the separate budgets," Addy said. "We've needed a unified budget for a long time."

Bentley's had no luck with past efforts to merge the budgets. No one has, really, since the separate schools budget was founded in 1926.

Pro: Unexpected savings. Other states have enrolled prison inmates in Medicaid, shifting the cost of out-of-prison hospitalizations to the federal government. Low-income moms-to-be are covered by Medicaid during their pregnancies, even if they didn't qualify for Medicaid before. The state might be able to pay a lower share of their cost if they're enrolled under Medicaid expansion.

Con: Unexpected costs. Much of Alabama's recent trouble with Medicaid funding has come from the state's problems projecting its portion of the program's cost. Major calculation errors at the state level and changes in matching rates at the federal level have led to years in which the state has had to pay back tens of millions of dollars. An expanded program could make the cost of future miscalculations even higher.

Bentley's health care task force meets Wednesday to vote on its recommendations. The governor has set no timetable for a decision on the issue, his spokeswoman said.

"There's a portion of the population that would be served by it, but it is expensive," Ardis said.

For foster, the Quality of Life employee, that decision can't come soon enough. By the middle of next year, she said, free health care for claimants in the Tolbert case -- a lawsuit against PCB manufacturer Monsanto -- will end. Quality of Life will continue to serve them, on a sliding fee scale, but many of them will join the hundreds of Calhoun County patients already in the Medicaid gap.

Foster is already planning ahead.

"We're encouraging people, even when they don't qualify, to at least fill out an enrollment form," she said. "That way, we'll be ready."

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