Facts About Medicaid Expansion

In 2023, Alabama’s state government budgeted $793 million in funding for the state Medicaid Agency. Medicaid spending accounts for the largest portion of the State General Fund budget.

Medicaid expansion proponents continue to push lawmakers towards fully expanding Alabama’s Medicaid program. While those in favor of expansion note that the state would receive additional federal funding and could realize increased tax receipts, there would be an estimated average annual cost of $225 million per year to the State General Fund in the first six years of implementation, with those costs projected to grow substantially beyond that period of time.

Federal Medicaid costs are projected to rise by 61% over the next decade, meaning that Alabama’s expansion costs will almost certainly increase. Much of the revenue that proponents are depending on to pay the costs of expansion, sales and income taxes, are earmarked to the Education Trust Fund, meaning that a funding gap would be left in the general fund. Alabamians would likely be left to bear the cost of expansion, in the form of higher taxes.

Beyond higher taxes, Medicaid expansion could create a disincentive to work for some citizens, further degrading Alabama’s labor participation rate. Having fewer Alabamians who are willing to work could put Alabama at a disadvantage in attracting new businesses to the state.

Medicaid expansion would also mean that Alabama becomes more reliant on the federal government, which is already more than $34.5 trillion in debt and on an unsustainable fiscal path. The state would also have less autonomy in running its Medicaid program.