Overview of the ACA Medicaid Expansion

Overview of the ACA Medicaid Expansion

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Updated June 9, 2021
Overview of the ACA Medicaid Expansion
The primary goals of the Patient Protection and Affordable
District of Columbia) implemented the ACA Medicaid
Care Act (ACA; P.L. 111-148, as amended) are to increase
expansion at that time. Since then, the following 12 states
access to affordable health insurance for the uninsured and
have implemented the expansion: Michigan (April 1, 2014),
to make health insurance more affordable for those already
New Hampshire (July 1, 2014), Pennsylvania (January 1,
covered. The ACA Medicaid expansion is one of the major
2015), Indiana (February 1, 2015), Alaska (September 1,
insurance coverage provisions included in the law.
2015), Montana (January 1, 2016), Louisiana (July 1,
2016), Virginia (January 1, 2019), Maine (January 10,
Supreme Court Decision
2019), Idaho (January 1, 2020), Utah (January 1, 2020), and
As enacted, the ACA Medicaid expansion was a mandatory
Nebraska (October 1, 2020). (See Figure 1.)
expansion of Medicaid eligibility to non-elderly adults with
incomes up to 133% of the federal poverty level (FPL).
Oklahoma and Missouri approved ballot initiatives in June
However, on June 28, 2012, in National Federation of
2020 and August 2020, respectively, to implement the
Independent Business v. Sebelius, the U.S. Supreme Court
expansion. Both states are supposed to begin coverage of
found that the federal government could not withhold
the ACA Medicaid expansion on July 1, 2021. However,
payment for a state’s entire Medicaid program for failure to
the Missouri implementation of the expansion is uncertain,
implement the ACA Medicaid expansion. Instead, the
because the General Assembly adopted an operating budget
federal government could withhold only funding for the
that does not include funding for the Medicaid expansion
ACA Medicaid expansion if a state did not implement the
and the governor has withdrawn a state plan amendment to
expansion, which effectively made the expansion optional.
implement the Medicaid expansion. Litigation about the
Medicaid expansion in Missouri is pending.
After the Supreme Court ruling, the Centers for Medicare &
Medicaid Services (CMS) issued guidance specifying that
ACA Medicaid Expansion Coverage
states have no deadline for deciding when to implement the
Most states implementing the ACA Medicaid expansion
ACA Medicaid expansion. The guidance also stated that
have done so through an expansion of their existing
states opting to implement the ACA Medicaid expansion
Medicaid programs. However, individuals covered under
may end the expansion at any time. In addition, CMS issued
the ACA Medicaid expansion are required to receive
guidance specifying that states were not able to receive the
alternative benefit plan (ABP) coverage, which is a
enhanced federal matching rates for the expansion with a
Medicaid benefit structure that has different requirements
partial Medicaid expansion (i.e., covering expansion adults
than the traditional Medicaid benefits. (See CRS Report
up to an income level lower than 133% of FPL).
R45412, Medicaid Alternative Benefit Plan Coverage:
Frequently Asked Questions.)
Figure 1. States Implementing the ACA Medicaid
Expansion, May 2021
Some states operate their expansions through Section 1115
waivers, under which the Secretary of Health and Human
Services may authorize a state to conduct experimental,
pilot, or demonstration projects that are likely to assist in
promoting the objectives of Medicaid. The waivers for
these states vary significantly. There are currently a few
common provisions in several states, such as (1) premiums
and/or monthly contributions on enrollees with income
above 100% of FPL; (2) healthy behavior incentives; (3)
waivers of the requirement to provide coverage of
nonemergency medical transportation; and (4)
disenrollment or lock-out provisions. Arkansas has a waiver
providing premium assistance for Medicaid enrollees to
purchase private health insurance through the health
insurance exchanges.

Source: Congressional Research Service.
Financing of the Expansion
Note: ACA = Patient Protection and Affordable Care Act.
The federal government’s share of most Medicaid
expenditures is determined according to the federal medical
States’ Decisions
assistance percentage (FMAP) rate; exceptions to the
Since January 1, 2014, states have had the option to extend
regular FMAP rate have been made for certain states,
Medicaid coverage to most non-elderly adults with income
situations, populations, providers, and services. There are
up to 133% of FPL. Twenty-five states (including the
two FMAP exceptions for the ACA Medicaid expansion:
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Overview of the ACA Medicaid Expansion
(1) the newly eligible matching rate for individuals newly
expansion effectively optional for states, not all low-income
eligible for Medicaid through the expansion and (2) the
individuals are eligible for Medicaid in the non-expansion
expansion state matching rate for individuals in the
states.
expansion population who were eligible for Medicaid at the
time the ACA was enacted.
In non-expansion states, Medicaid income eligibility for
parents varies by state, ranging from up to 18% of FPL in
Initially, these matching rates varied, and the newly eligible
Alabama to up to 100% of FPL in Wisconsin. In 11 of the
matching rate was higher than the expansion state matching
12 non-expansion states, adults without dependent children
rate. Since 2019, the two matching rates have been the same
are not eligible for Medicaid. Wisconsin is the one non-
(i.e., 93% in 2019 and 90% in 2020 and subsequent years).
expansion state that provides Medicaid coverage of adults
Under these matching rates, the federal government’s share
without dependent children; this coverage is provided up to
of Medicaid expenditures is significantly higher than under
100% of FPL.
states’ regular FMAP rates.
The Kaiser Family Foundation estimates that 2.2 million
Enrollment and Expenditures
uninsured individuals fell into the coverage gap in 2019
The ACA Medicaid expansion has significantly increased
(see Table 1). The individuals in the coverage gap from
Medicaid enrollment and federal Medicaid expenditures. In
Texas and Florida together accounted for more than half of
FY2018, an estimated 12.2 million individuals were newly
all the individuals in the coverage gap in 2019.
eligible for Medicaid through the ACA Medicaid expansion
(i.e., expansion adults) and total Medicaid expenditures for
Table 1. Uninsured Adults in Non-expansion States in
the expansion adults were an estimated $74.2 billion.
the Coverage Gap in 2019
Between FY2014 and FY2015, the average per enrollee
Percentage of Total
costs for expansion adults is projected to have increased
Number of
from $5,511 to $6,365 (see Figure 2). States originally
Number of
Individuals in the
included adjustments to expansion adult per enrollee costs
State
Individuals
Coverage Gap
to account for pent-up demand, adverse selection, and
Texas
771,000
35.2%
expected higher health care needs. Per enrollee costs are
projected to have dropped to $5,959 in FY2016 and to
Florida
415,000
19.0%
$5,669 in FY2017, as the effects of pent-up demand were
Georgia
269,000
12.3%
expected to end and evidence showed the actual average
costs for expansion enrollees were lower than anticipated.
North Carolina
212,000
9.7%
Figure 2. Projected ACA Medicaid Expansion and
Alabama
127,000
5.8%
Non-expansion Adult Per Enrollee Costs
Tennessee
118,000
5.4%
South Carolina
105,000
4.8%
Mississippi
102,000
4.7%
Kansas
45,000
2.1%
South Dakota
16,000
0.7%
Wyoming
7,000
0.3%
Wisconsin
0
0.0%
Source: Rachel Garfield, Kendal Orgera, and Anthony Damico, The

Source: Centers for Medicare & Medicaid Services (CMS), 2018
Coverage Gap: Uninsured Poor Adults in States That Do Not Expand
Actuarial Report on the Financial Outlook for Medicaid, 2019.
Medicaid, Kaiser Family Foundation, January 21, 2021.
Note: ACA = Patient Protection and Affordable Care Act.
Section 9814 of the American Rescue Plan Act (ARPA;
P.L. 117-2) provides an incentive to non-expansion states to
Figure 2 shows the projected per enrollee costs for
implement the ACA Medicaid expansion. The incentive is a
expansion adults initially were higher than the projected per
five-percentage-point increase to the regular FMAP rate for
enrollee costs for non-expansion adults. These costs were
states that implement the ACA Medicaid expansion after
projected to have been almost the same in FY2017.
March 11, 2021, for eight fiscal quarters.
Non-expansion States
Recent discussions focus on federal policy options for
There is a gap in federally subsidized health care coverage
closing the coverage gap. The President’s FY2022 budget
in states that have not implemented the ACA Medicaid
discusses extending federal “Medicaid-like” coverage for
expansion (i.e., non-expansion states). Subsidized coverage
individuals in the coverage gap in non-expansion states.
under the exchanges begins at 100% of FPL because the
ACA was structured with Medicaid coverage being
provided for adults with the lowest incomes. However, with
Alison Mitchell, Specialist in Health Care Financing
the Supreme Court decision making the Medicaid
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Overview of the ACA Medicaid Expansion

Disclaimer
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