Alabama lawmakers weigh Medicaid expansion approaches in Southern states

Rep. Paul Lee, R-Dothan, stands on the floor of the Alabama House of Representatives prior to the start of the session on Tuesday, March 14, 2023. (Stew Milne for Alabama Reflector)

The Alabama House and Senate committees on health held a joint session Wednesday to learn more about Medicaid expansion in two southern states.

The meeting focused on Arkansas, which expanded Medicaid in 2014; North Carolina, which expanded Medicaid last year, and the challenges and benefits of the effort.

“What we’re looking at doing is trying to find something that’s unique, that uniquely fits the state of Alabama, and that will help our folks that are uninsured that are working and try to help them afford it,” said House Health Committee Chair Paul Lee, R-Dothan, at the start of the meeting.

Medicaid in Alabama is limited to children, the elderly and those with disabilities. Childless adults never qualify, and parents only qualify if they make 18% of the federal poverty level, about $4,678 a year for a three-person household.

Medicaid expansion would allow anyone making up to 138% of the poverty level – $20,783 a year for an individual; $35,632 for a family of three – to receive benefits. It would also extend coverage to approximately 100,000 Alabamians in the “coverage gap” — people who make too much money to qualify for Medicaid and too little to qualify for subsidies for Affordable Care Act plans.

Alabama is one of ten states that has not expanded Medicaid, despite years of calls from hospitals and advocacy groups. House members, including House Speaker Nathaniel Ledbetter, R-Rainsville, have floated the idea of expansion in the past year. A gambling bill passed by the House in February allowed the state to use gambling money to fund a “rural health care” program that had elements of Medicaid expansion.

But individual senators, including Senate Finance and Taxation General Fund Committee Chair Greg Albritton, R-Atmore, remain opposed. The Senate stripped the expansion-like language out of the gambling bill last month.

Republican state Rep. Donny Lambeth of North Carolina, a former hospital executive, said it took patience and education of educating fellow lawmakers before North Carolina opted to expand Medicaid. He said that lawmakers shared concerns about the cost of expansion and taking on a new program that could increase state spending, but they also wanted to fix the “broken” traditional Medicaid.

“We have been running over budget in traditional Medicaid $500 and $600 million year over year, and we needed to fix that traditional program. So a key factor in our journey was reforming the traditional Medicaid program,” Lambeth said.

The state moved from a fee-for-service model, like Alabama’s in which a provider is paid a fee for each service rendered, to value-based care, which ties how much health care providers earn to the results they deliver, such as the quality, equity, and cost of care.

“We’re managing under our budget now year over year since then. This was a key factor in moving the closing the gap to the forefront. Because we were able to fix a system that was not functioning very well,” Lambeth said.

Cindy Gillespie, former secretary of the Arkansas Department of Human Services, said to lawmakers that Arkansas was also under a fee-for-service model. Because reimbursement fees were low, she said, many providers didn’t serve Medicaid patients. That’s what led Arkansas to consider the current model of premium assistance, she said, which uses expansion dollars to buy private insurance for the uninsured population.

She said that by introducing premium assistance, the state managed to raise Medicaid reimbursement rates.

“It infused commercial rates into the market, and it infused a lot of healthy bodies into the market,” she said. “The goal being to both lift the healthcare infrastructure and stabilize it as well as to bring competition and stability into the marketplace.”

The federal government pays for 90% of Medicaid expansion and requires states to put up a 10% match. In North Carolina, hospitals agreed to cover the state’s match through increased assessment fees on the hospital’s net patient revenue. Having no cost to the state was “critical” for closing the coverage gap, Lambeth said.

Danne Howard, deputy director of Alabama Hospital Association, said Alabama hospitals already pay the maximum assessment fee of 6% to fund the hospitals’ Medicaid budget, the only state to do so. That is about $600 million that does not come out of the state’s General Fund budget.

The hospital assessment fee would continue to cover the state share of the hospital program through expansion, Howard said, and that according to their calculations, there wouldn’t be any cost to the state for at least 10 years.

“Other state hospital assessments are supplemental to the Medicaid budget- ours is fundamental,” Howard wrote in a text message.

Lambeth said early versions of Medicaid expansion proposals included work requirements, but he said that those did not gain support. There is currently no work requirement, but there is a non mandatory work program involving community colleges and the North Carolina Department of Commerce.

Rep. Susan DuBose, R-Hoover, asked about Arkansas’ experience in implementing work requirements, which was struck down by court order in 2019. She said that having a work requirement would encourage people “to move off the Medicaid rolls.”

“Of course, we want to help these people, give them a hand up rather than just a handout. And if there’s no work requirement- I mean, it seems to me that tying in work requirements for able bodied folks would be helping in that regard,” DuBose said.

Republican state Sen. Missy Irvin from Arkansas said that they would like to do that but the “hands are tied at the federal level.”

“[Centers for Medicare and Medicaid Services] won’t allow that. So, that’s your short answer,” Irvin said. “There’s a lot I’d love to do, but if it’s Medicaid related, CMS has the final say.”

About 60% of non-elderly, non-disabled people in Medicaid expansion programs are employed, according to KFF. Experts say work requirements create an administrative burden that can lead otherwise eligible people to lose coverage.

North Carolina Sen. Jim Burgin, a longtime opponent of Medicaid expansion, said that being from a conservative, rural district, he has not had one person tell him they made the wrong decision.

“But I’ve had hundreds of people come up to me and thank me because their loved one is getting help,” he said.

The post Alabama lawmakers weigh Medicaid expansion approaches in Southern states appeared first on Alabama Reflector.