Healthcare economists David Becker and Michael Morrisey at the University of Alabama at Birmingham School of Public Health said across the first seven years of Medicaid expansion, the net budgetary effect is positive throughout.
"In a very real sense, the state makes money while expanding coverage to nearly 300,000 Alabamians, because the federal government would cover 100 percent of healthcare expenditures from the expanded Medicaid from 2014 through 2016," Becker said in a statement.
During these first years of the program, Alabama would be responsible for a share of the administrative costs of the expansion, but after 2016 the federal matching rate declines to 95 percent in 2017, 94 percent in 2018, 93 in 2019 and 90 percent in 2020.
As a result, the annual costs to the state would increase from $39 million in 2014 to $222 million in 2020 for a total of about $771 million, the study said.
However, during those same years, the federal government will spend an additional $11.7 billion more on Medicaid in Alabama -- a new source of income flowing into Alabama, Becker said.
Becker and Morrisey estimated from 2014 to 2020, new spending in Alabama due to the Medicaid funds would generate nearly $20 billion in new income, which would generate $1.7 billion -- $1 billion for the state -- in additional tax revenue in state and local governments across the state.