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John Dunnam of Warrior works 12 to 20 hours a week as a janitor. He collects a small salary that barely covers rent, food and other bills.
It certainly wouldn't cover the monthly cost of health insurance on the federal exchange. The 32-year-old Dunnam doesn't earn enough to qualify for a tax credit that would offset the cost of health insurance, and he also doesn't qualify for Medicaid.
Dunnam falls into the Medicaid gap, a group of patients who were supposed to be covered by an expansion of Medicaid - the health care program for low-income adults under Obamacare. The U.S. Supreme Court ruled in 2012 that states could opt out of Medicaid expansion, and Alabama did, along with several other states led by Republican governors.
"I can't even afford my bills on what I make," Dunnam said. "If I was on the marketplace, I would pay between $300 and $400 a month. On a limited income, it's not possible."
On Wednesday, the Health Care Improvement Task Force unanimously recommended that the governor and legislature reverse their earlier decision and close the coverage gap for nearly 300,000 patients like Dunnam.
About half of those who fall in the Medicaid gap work, according to research from Enroll America. About 14 percent of the state's population remains uninsured, and about a third of the uninsured fall into the coverage gap.
"After thorough study and deliberation, we find that the most serious obstacle to achieving your stated goals is the coverage gap that makes health insurance inaccessible to hundreds of thousands of Alabamians and places our entire health care infrastructure in financial jeopardy," wrote several task force members in a white paper explaining their position.
Thirty states and the District of Columbia have expanded Medicaid since 2013, and in those states the program covers adults who earn up to 138 percent of the federal poverty level, or about $16,000 a year for an individual.
With the unanimous support of the task force, it looks increasingly likely that Governor Robert Bentley might try to push the state in the same direction. The move would financially benefit Dunnam and others who cannot afford health insurance, but what are the costs to the state?
David Becker, a health care economist at UAB and co-author of a report about Medicaid expansion, said the costs are not difficult to predict. In the first three years, when the federal government picks up almost the entire tab, the costs would run about $40 million a year. That would go up to about $100 million a year when the state starts to pay 5 percent of the costs in 2018 and top out at $222 million per year starting in 2020.
"Those are real numbers," he said. "And it's not an insignificant amount."
Meanwhile, the federal government would contribute more than $1 billion a year to cover low-income Alabamians, Becker said. The additional economic activity generated by newly insured patients who will seek out medical care could generate significant tax revenue, according to his study.
The financial benefits of expansion are biggest in the early years, when the federal government pays almost all of the costs.
"The first three years are the golden years of this policy," Becker said. "It's much easier to make the sales pitch in 2013 than in 2018."
Medicaid expansion vs. private option
Members of the Health Care Improvement Task Force have been careful not to use the term "Medicaid expansion." It could be semantic, or it could indicate that Bentley and others are considering a non-traditional type of expansion.
Instead of expanding the state's Medicaid system, Arkansas state leaders took federal funds and used them to help pay the premiums for private insurance among low-income adults. Participants in the program who earn more than the federal poverty limit must contribute a small amount every month to a health independence account, similar to a health savings account.
Officials in Arkansas call it the "private option," and similar plans have gained support in other conservative states. However, critics have said the plans are just Medicaid expansion by another name.
The task force's white paper encourages the governor to "develop a plan that reflects Alabama's values and meets Alabama's needs."
Jim Carnes, a task force member and policy director for Alabama Arise, co-authored the white paper. If the governor follows the task force's recommendation and proposes a plan to close the coverage gap, it may not look like traditional expansion.
"I think the governor is likely to put together a plan that has an Alabama stamp on it," he said.
However, a private option may not be the best route for Alabama, Becker said. The state is in the process of reforming Medicaid, and the organizations that will manage care for low-income patients in the state will probably benefit from the infusion of new business. Giving all of those patients private insurance could undermine the state's efforts to control Medicaid costs, Carnes said.
Who will pay?
The Health Care Improvement Task Force will meet again in December to discuss how to pay for Medicaid expansion. Members are considering proposing a 75-cent tax increase on cigarettes.
Robin Rudowitz, associate director of the Kaiser Commission on Medicaid and the Uninsured, said it's still a good deal despite the costs, even for states that expand Medicaid after the federal government decreases its support.
"A 95 percent match is a pretty considerable match," Rudowitz said. "No other state program brings down 95 cents on the dollar."
The state will probably save money in other areas, which may offset the costs of expansion. Right now, for instance, the state pays the costs of treatment for all prisoners who receive treatment in hospitals. If the state expanded Medicaid, then that program would pick up hospitalization costs for eligible prisoners, which could reduce spending in the Department of Corrections.
Medicaid could also pick up some of the costs for substance abuse and behavioral health which are currently borne by the state, Rudowitz said.
A study of eight Medicaid expansion states by the Robert Wood Johnson Foundation found that all experienced some budget savings from Medicaid expansion.
That is an issue that concerns Dunnam. Even though he falls into the coverage gap, he does have insurance through the state's AIDS Drug Assistance Program. However, his copays for counseling sessions are set to go up, and he may not be able to afford them. If he had Medicaid coverage, he said his options for counseling would increase, and his costs would decrease.
Beyond funding, there are other challenges to Medicaid expansion. The state has a shortage of medical professionals, and it's unclear how the current medical system would handle a large increase in newly insured patients.
A study by economists at Troy University found that the influx of patients could drive up health care costs.
The Health Care Improvement Task Force also has a subcommittee dedicated to examining issues with the health care workforce. That committee determined that expansion of health insurance coverage would attract and retain doctors and other health workers.
Becker said he has been frustrated that it has taken so many years for Gov. Bentley to consider Medicaid expansion, but he is glad it is happening now.
"He's beginning to sound like a pragmatist and a leader," he said.