Analysis | Alabama’s Medicaid expansion: Dispelling API’s myths and fears

By Bill Britt

The Alabama Policy Institute (API) has once again published its objections to Medicaid expansion in Alabama, framing it as a fiscal and economic disaster waiting to happen. They paint a picture of ballooning costs and shrinking labor participation, but behind all that, they’re really just telling Alabama’s working poor to fend for themselves. Let’s break down their claims, piece by piece, and expose the truth about why Medicaid expansion is not only viable but necessary for Alabama.

“Medicaid expansion would require hundreds of millions of dollars in new spending from the state General Fund, creating the potential for a revenue shortfall that would mean cuts to non-Medicaid related agencies or higher taxes for Alabamians.”

API would have you believe that expanding Medicaid would drain Alabama’s budget, but they’re ignoring one key fact: the federal government covers 90 percent of the cost of expansion. Alabama is left to cover only 10 percent, a cost that’s more than offset by the $4 billion in federal funding we’ve already forfeited by refusing expansion. That’s money that could have kept rural hospitals open, provided life-saving care for families, and helped people like the single mother working two jobs just to survive. Suggesting that cuts or higher taxes are the only outcomes is simply fear-mongering, not fiscal reality.

Many states have expanded Medicaid without raising taxes or cutting other services, often through hospital assessment fees or similar creative solutions. API’s argument completely ignores these proven approaches, opting instead for a false narrative of financial doom.

“In addition to the fiscal cost of Medicaid expansion, it could also have other unintended consequences, such as negatively impacting the state’s already lagging labor participation rate.”

API’s claim that Medicaid expansion would discourage people from working is not just false, it’s misleading. Workforce participation is influenced by multiple factors — economic conditions, education, job availability — but healthcare access plays a crucial role in keeping people healthy enough to stay employed. Medicaid expansion can help alleviate one major barrier: untreated health conditions that prevent people from working.

Study after study has shown that access to healthcare increases workforce participation because healthier people are more likely to stay productive in their jobs. While Medicaid expansion won’t solve all the issues tied to Alabama’s low labor participation rate, it would provide a much-needed lifeline for workers who are currently unable to manage chronic conditions or access necessary treatments. Denying healthcare access only exacerbates these challenges.

“Post expansion, Arkansas decided to additionally expand their Medicaid program with a public-private partnership; it has been a failure. Costs ballooned and Arkansas’ state government is now spending one out of four dollars of the state budget on Medicaid.”

Here, API brings up Arkansas, but what they’re really highlighting is a flawed public-private model, not traditional Medicaid expansion. Kentucky, for example, cut its uninsured rate by 50 percent, and rural hospitals in Louisiana have stayed open thanks to federal funds. Arkansas, Iowa, and New Hampshire may have had challenges, but they don’t represent the broader success of traditional Medicaid expansion.

These selective examples don’t reflect the reality in states where traditional Medicaid expansion has worked. API uses these outliers to scare the public, but they are ignoring the many success stories across the country.

“The Biden Administration has not allowed states to attach work requirements to Medicaid expansion plans under either the private-public or traditional expansion models.”

The work requirement argument is a distraction. The majority of people who would benefit from Medicaid expansion are already working or are caregivers, students, or disabled. Imposing a work requirement on healthcare access is just another barrier designed to keep people from getting the help they need. Work requirements don’t improve labor participation, they only kick vulnerable people off healthcare for arbitrary reasons.

“Medicaid expansion has led to increased costs and diminished labor participation rates in expansion states.”

This claim is categorically false. Studies from reputable sources, including the Kaiser Family Foundation and the New England Journal of Medicine, show that Medicaid expansion has led to improved health outcomes, lower uninsured rates, and strengthened state economies. Healthier people are more productive workers, and the states that have expanded Medicaid have only seen positive outcomes.

“Conclusion: Ensuring that all Alabamians have access to high-quality healthcare is important, but yielding to pressure to expand Medicaid could pose significant risks to state budgets and Alabama’s overall economy in the long run.”

API ends by pretending to care about healthcare access, but their entire argument is designed to block that access for the people who need it most. Medicaid expansion is not a risk — it’s an opportunity. It’s an opportunity to save lives, create jobs, and stabilize rural hospitals. Alabama is losing billions of federal dollars by refusing to act, and the people of this state are paying the price.

By continuing to reject Medicaid expansion, Alabama isn’t just turning down federal funds — it’s turning its back on its own people. It’s time to stop listening to the scare tactics and selective data that API is pushing and focus on what really matters — getting healthcare to the people who need it.