Alabama Medicaid cites inflation in search for budget increase • Alabama Reflector

Statewide Medicaid spending rose 19.2% in fiscal year 2024 as expanded federal funding expired, according to KFF, a national health policy research organization. KFF expects growth to stabilize at 7% in the 2025 financial year.

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While the decline in enrollment led to a decline in spending, Several factors increase cost pressure. These include greater health care needs among participants who remain insured; Rate increases for health care providers and the phasing out of enhanced federal funding for states.

An increase of just 4.7% last year, or just over $45 million, would put the agency’s state budget at over $1 billion, still only a fraction of the federal funding the state receives. For every dollar spent on Medicaid in Alabama, about 73 cents comes from the federal government.

Debbie Smith, Campaign Manager for Arise’s Cover Alabamawho advocates for Medicaid expansion, said if Alabama were to expand Medicaid, the federal government would pay about 90 cents for every dollar spent on Medicaid in Alabama, which she said is both a short- and long-term solution.

“Expanding Medicaid is part of the solution to addressing these costs, at least for our state in the short term, because we can shift some of the cost of the program to the federal government,” Smith said, adding that the state could do the same benefiting from a healthier population in the long term, she said.

“Overall, people are becoming healthier because they have long-term insurance and need to use fewer services,” Smith said.

The Medicaid agency’s fiscal year 2025 budget request has increased by more than 10%, but the agency’s needs have varied in recent years, particularly at the height of the pandemic. In fiscal year 2022, the agency reduced its application by more than 6% compared to the previous year due to increased federal funding. In 2023, it increased its application by just 3.2% even as the number of Medicaid enrollees rose to 1.375 million from 1.1 million before the pandemic as federal rules prevented the state from cutting people’s health insurance.

Azar said Medicaid eligibility is now under 1.1 million after federal restrictions on disenrollment expired earlier this year.

“The 90 days are now up for anyone who dropped out of the program to get back into the program, so technically we should be done winding down now,” Azar said.

Despite the financial outlook, Azar doesn’t expect any benefit cuts “or anything like that.”

“That’s not the case at all, I just want to make it easy for everyone,” she said.