Letter to Gov. Ivey on federal cuts to health care

Sent June 5, 2025

The Honorable Kay Ivey
Office of the Governor
600 Dexter Avenue
Montgomery, AL 36130

Cc: Members of the Alabama Legislature

Dear Governor Ivey and members of the Alabama Legislature,

Cover Alabama is a nonpartisan alliance of community partners, consumer groups, health care providers and faith groups advocating for Alabama to provide quality, affordable health coverage to its residents and implement a sustainable health care system. We are writing to raise serious concerns about the budget reconciliation bill under consideration in Congress. If passed, this legislation would undermine Alabama’s ability to manage its Medicaid program, limit our future options and increase barriers to coverage for families across our state.

Cuts that threaten access and undermine Alabama’s flexibility

Among the most harmful provisions:
● Loss of $619 million in extra federal funding set aside to help states like Alabama cover the first two years of Medicaid expansion. This funding was created to offset the fact that non-expansion states did not benefit from the original 100% federal match rate offered at the outset of the option to expand Medicaid.
● New work reporting requirements and paperwork-heavy eligibility redeterminations that could force eligible Alabamians off Medicaid in the future. Though work reporting requirements technically apply only to Medicaid expansion states, Alabama still would suffer from their ripple effects.
● Retroactive coverage reduced from three months to just one month, which would put many Alabamians at financial and medical risk — particularly pregnant women. This is especially concerning given Alabama’s recent step forward in establishing presumptive eligibility for pregnant women. Reducing retroactive Medicaid coverage would directly undermine the intent of that policy, creating unnecessary delays in prenatal care and risking poorer health outcomes for mothers and babies.

A direct hit to Alabama’s ability to fund its own program

The bill also includes sweeping restrictions on how Alabama can raise funds for Medicaid in the future:
● It would freeze provider taxes at current levels, effectively banning the state from increasing fees on nursing homes, ambulance providers and others — even if Alabama decides it’s necessary to fund Medicaid sustainably or expand coverage later.
● Alabama uses provider taxes as a legitimate and lawful financing tool, as do most other states. Preventing any increase limits our ability to respond to inflation, changes in service demand or new health care priorities.

Marketplace harm: Higher premiums, more uninsured

The bill also would allow the enhanced Affordable Care Act (ACA) subsidies to expire, making Marketplace plans less affordable for more than 400,000 Alabamians. This would result in coverage losses and higher uninsured rates, especially among working families who don’t qualify for Medicaid but can’t afford full-price private plans. Letting enhanced tax credits expire would cost the state an estimated $1.14 billion in lost GDP and 10,000 jobs by 2026. This would worsen economic distress in rural communities and stall local economic growth precisely where it is most needed.

In summary:

This legislation doesn’t just threaten health coverage for low-income families. It also would strip Alabama of the tools, flexibility and funding we need to manage our own Medicaid program in the way that works best for our state. We urge you to contact members of Congress and make clear your concerns about this bill and its impact on Alabama. Alabama needs solutions that expand access to care, support our health care providers and respect our state’s decision-making — not more red tape and bureaucratic constraints. Thank you for your time and continued service.

Sincerely,