Over 100,000 residents in Alabama risk losing their health insurance coverage if Congress does not extend key tax credits. These credits have significantly reduced healthcare costs and increased the number of insured individuals in the state. The potential expiration of these enhanced premium tax credits is a central point in ongoing federal government funding discussions.
Key Takeaways
- More than 100,000 Alabamians could lose health insurance.
- Premiums for Affordable Care Act (ACA) marketplace plans may increase by an average of 93% in Alabama.
- Alabama's uninsured rate decreased from 12% in 2020 to 8.8% in 2022 due to these credits.
- The state could lose 9,100 jobs, primarily in healthcare, if subsidies expire.
- Hospitals face increased financial strain from higher uncompensated care.
Impact of Expiring Tax Credits on Alabamians
The enhanced premium tax credits, introduced by the American Rescue Plan in 2021 and extended through 2025 by the Inflation Reduction Act, have played a critical role in Alabama's healthcare landscape. These credits made health insurance more affordable for a wider range of people by removing income caps and covering more costs.
According to KFF, a health policy research nonprofit, approximately 130,000 people in Alabama are expected to lose their health coverage if these credits are not renewed. This loss would reverse years of progress in reducing the state's uninsured population.
"I am extremely concerned," stated Debbie Smith, campaign director for Cover Alabama, a Medicaid-expansion advocacy group run by Alabama Arise. "Since we haven’t expanded Medicaid, we rely on these tax credits a lot. It’s really been holding up our health care system as a whole. And that system is not in the best shape, but I fear that it would get a lot worse if the tax credits go away."
Fact: Rising Premiums
If the enhanced tax credits expire, premiums for individuals enrolled in the ACA marketplace in Alabama could rise by an average of 93%.
Economic Consequences for Alabama
Beyond individual coverage, the expiration of these subsidies carries significant economic risks for Alabama. A report from the Commonwealth Fund estimates that Alabama could lose 9,100 jobs if the subsidies are not extended. The majority of these job losses would occur within the healthcare sector.
This potential job loss figure is the seventh highest among all states in the country. The economic ripple effect could also impact state and local tax revenues and the Gross Domestic Product (GDP).
Background: Growth in Coverage
In 2020, 160,429 Alabamians were enrolled in subsidized health insurance through the ACA. By 2025, this number grew to 477,838 people, representing nearly 10% of the state's population. This increase directly correlates with the availability of enhanced tax credits.
The state's uninsured rate has also seen a notable decline. In 2020, about 12% of Alabamians lacked health insurance. A United States Census Survey in 2022 found this rate fell to 8.8%.
"These enhanced credits have been crucial to lowering the amount of people that we have in the coverage gap," Smith added. "Our uninsured rate is absolutely better because of these enhanced premium tax credits."
Alabama has experienced the 10th fastest growing marketplace in the nation since the subsidies expanded. Many other states in the top 10 also did not expand Medicaid, highlighting the importance of these federal credits.
National Perspective and Political Divide
Nationwide, the Congressional Budget Office estimates that 4 million people could become uninsured if the enhanced tax credits expire. Extending these credits for 10 years would cost the federal government an estimated $350 billion.
The debate over these tax credits is part of broader federal funding discussions. Democrats in Congress have insisted on extending the credits, arguing they are vital for millions of Americans to afford healthcare. Republicans, however, have suggested that the debate can wait, viewing it as a "December 31 issue," the day the credits are scheduled to expire.
The political divide is also evident among Alabama's representatives.
- U.S. Rep. Shomari Figures (D-Mobile) expressed concern, stating, "Families in Alabama and across the country are at risk of losing their healthcare, and healthcare costs for millions of Americans will skyrocket if the Affordable Care Act premium subsidies are allowed to expire."
- U.S. Rep. Terri Sewell (D-Birmingham) noted that 53,000 people in her district would lose coverage. She urged Republicans to negotiate in good faith.
- Alabama Sen. Katie Britt argued that the ACA program was flawed from the beginning and that prices are set to increase regardless, questioning the extension of credits to higher-income individuals.
Rising Insurance Premiums
Health insurance companies covering ACA marketplace plans have already announced higher premiums for the upcoming year. This is partly due to the uncertainty surrounding the tax credits and the potential for a sicker population if coverage decreases.
According to the Alabama Department of Insurance, Blue Cross Blue Shield reported a 19.3% premium increase, UnitedHealthcare Insurance Company reported a 20% increase, and Celtic Insurance Company reported a 25% increase.
Sophie Martin, a spokesperson for Blue Cross and Blue Shield of Alabama, stated, "Blue Cross and Blue Shield of Alabama understands that rising premiums are difficult for our members…when we set rates, we’re also carefully estimating next year’s healthcare costs. Uncertainty around federal tax credits and marketplace policies makes this even harder."
Blue Cross, the state's largest insurance provider, supports the continuation of enhanced ACA premium tax credits.
Hospital Strain and Healthcare Access
The potential expiration of these tax credits would also significantly impact hospitals across Alabama. High uninsured rates and a corresponding increase in uncompensated care represent a major financial burden for these institutions.
Danne Howard, deputy director of the Alabama Hospital Association, highlighted the severe consequences. "If the ACA Enhanced Premium Tax Credits are not extended, we anticipate the state’s uninsured population could increase by more than 100,000, as working Alabamians will likely be unable to afford health coverage without premium assistance. Hospital emergency departments will become the only place they can turn for medical care."
Hospital Closures in Alabama
Since 2011, Alabama has seen 15 hospital closures, including seven rural hospitals. Currently, 27 of the state's 50 rural hospitals are at risk of closure, with 19 facing immediate risk.
An increase in uninsured patients would add immense financial stress to hospitals already operating on thin or negative margins. It would also lead to a loss of revenue for providers who previously received reimbursement for care provided to insured individuals.
A new study by the Urban Institute and Robert Wood Johnson Foundation indicates that if the enhanced premium tax credits expire, hospitals, physicians, and other providers nationwide could face over $32 billion in lost revenue by 2026. Hospitals specifically might incur $2.2 billion in uncompensated care costs.
Howard emphasized that the long-term impact would be negative for hospitals, doctors, Alabama’s economy, and its workforce, especially concerning the health and well-being of individuals who have relied on these credits for access to primary and preventive medical care.
