EXPANDED INCOME ELIGIBILITY FOR HEALTH INSURANCE
WHAT IS MEDICAID EXPANSION AND WHY IS IT IMPORTANT?
States can employ a number of strategies to increase health insurance coverage for their residents, and the most widely studied strategy is the expansion of Medicaid eligibility. Medicaid is a joint federal-state program that provides health insurance to low-income households. Medicaid provides health insurance for 1 in 5 Americans and covers 42.1% of all live births in the United States.1,2
The federal Patient Protection and Affordable Care Act, also known as the ACA, was signed into law in 2010. In addition to providing subsidies to purchase health insurance in the online Marketplace, the ACA expanded Medicaid eligibility for most adults with incomes up to 138% of the federal poverty level (FPL), to begin in 2014. In 2012, the Supreme Court ruled3 that the federal expansion was unconstitutional, which allowed states to determine their own income guidelines and eligibility criteria.4
For states that have expanded Medicaid, the federal government currently covers 90% of the state’s Medicaid costs for the expansion population.5 States are responsible for paying the remaining 10%, using general revenues, alcohol taxes, tobacco taxes, provider taxes, and other dedicated revenues and government contributions.6,7 As an incentive for nonexpansion states to expand Medicaid, the American Rescue Plan Act of 2021 (ARPA) currently offers a temporary additional 5 percentage point increase to the federal government’s share of a state’s Medicaid costs (the Federal Medical Assistance Percentage, or FMAP).8,9
Because Medicaid Eligibility Varies Widely Across States, Many Individuals Lack Coverage
The populations most affected by Medicaid expansion are previously ineligible childless adults, including childless women of reproductive age,10 and parents whose incomes fall between the pre-ACA income guidelines established in their state and 138% of the FPL. States that have not expanded Medicaid do not cover most childless, nonelderly adults,11 regardless of income level,12 and income eligibility thresholds for parents range from a low of 17% of the FPL to 100% of the FPL.
In most states, Medicaid income eligibility thresholds are higher for pregnant people than other adults, but Pregnancy Medicaid coverage only lasts for 60 days postpartum, and then the person must switch to traditional Medicaid or use a subsidy to purchase health coverage on the Marketplace. In nonexpansion states, many of these new parents lose health insurance coverage because their incomes are too high for traditional Medicaid, but not high enough (100% of the FPL) to receive subsidies on the Marketplace.
Expanding Medicaid Eligibility Allows More People to Access Necessary Care
In nonexpansion states, many low-income parents earn too much to qualify for Medicaid, and most childless adults are not eligible regardless of their income. Approximately 4 million uninsured adults would become newly eligible for Medicaid if all 12 nonexpansion states expanded the income eligibility for Medicaid up to 138% of the FPL.13 Workers with low incomes in these states, particularly those in the child care industry, would be likely recipients of Medicaid coverage.14
Medicaid Expansion Can Help Women Initiate Care Prior to Conception, a Critical First Step for Healthy Pregnancies and Births
Without expanded Medicaid eligibility, low-income women without children may have limited access to family planning services, preventative care before conception, and prenatal care in the earliest stages of pregnancy. Access to health insurance allows women of childbearing age to seek affordable medical care prior to becoming pregnant, and to begin prenatal care earlier once they become pregnant, which may lead to lower rates of maternal mortality and adverse birth outcomes, including infant mortality, low birthweight, and preterm birth.9,10,11,12
Expanding Medicaid Helps Keep Families Financially Stable
Families who have access to free or low-cost health services through Medicaid are less likely to be severely burdened by medical costs and less likely to incur medical debt, which may reduce families’ medical financial costs and free up resources to spend on other household needs.15,16,17 Further, individuals who previously avoided medical care due to cost are more likely to access necessary health care which may lead to improved physical and mental health outcomes.18,19
WHAT IMPACT DOES MEDICAID EXPANSION HAVE?
Medicaid expansion provides adults with low incomes with access to needed health care services during the perinatal period. Medicaid expansion also bolsters families’ economic security through reduced medical spending and debt. Limited evidence suggests Medicaid expansion can reduce racial disparities in key health outcomes, but more research is needed.
Medicaid Expansion Reduces Racial Disparities in Insurance Coverage, But More Research is Needed to Understand the Full Potential of Medicaid Expansion
Families of color are less likely to have access to affordable health insurance coverage.20 Medicaid expansion decreases uninsurance rates among Hispanic and multiracial women,21 increases Medicaid coverage rates among Hispanic and Black women,22 and increases the receipt of prenatal care among Hispanic women.23 The evidence suggests that Medicaid expansion leads to better birth outcomes for some women of color,24 but there is insufficient evidence to determine whether these results represent reductions in disparities in these outcomes.25,26,27 Evidence does show, however, that the impact of Medicaid expansion on outcomes related to family financial stability, such as child support receipt, were more beneficial for people with higher educational levels and who identified as White.28 More research is needed to understand the full potential of Medicaid expansion to reduce disparities beyond access to health insurance.
WHAT PROGRESS HAVE STATES MADE IN THE LAST YEAR TO ADOPT AND IMPLEMENT MEDICAID EXPANSION?
Two new states – Missouri and Oklahoma – adopted and fully implemented the Medicaid expansion under the ACA this year, bringing the total number of states to implement this effective policy to 39. In addition, with the exception of Tennessee, all of the 12 states that have not yet expanded Medicaid considered legislation or moved forward with a ballot initiative process to adopt the policy.
Tracking State Policy Progress
Policy adoption does not typically happen quickly. States may introduce legislation several times before adopting a policy and take even more time to fully implement it. Every year we track states’ efforts toward adopting and fully implementing each of the five effective policies in this State Policy Roadmap. The figure below illustrates the change in each state’s policy status between 2020 and 2021. This change in status toward full policy implementation may mask the legislative and regulatory activity that states engage in throughout the year. Therefore, we also analyze state legislation, pending and approved Section 1115 waivers with the Centers for Medicare & Medicaid Services (CMS), and Medicaid state plan amendments (SPAs) to document and summarize the progress states are making toward fully implementing Medicaid expansion. In subsequent sections, we describe how states vary in the generosity and implementation of their state Medicaid.
2 New States Adopted and Fully Implemented Medicaid Expansion in 2021, Extending Health Insurance Coverage to Approximately 465,000 Additional People
This year, Missouri and Oklahoma joined 37 other states and fully implemented Medicaid expansion that will now provide health insurance coverage to most adults with incomes up to 138% of the FPL. Missouri voters passed a ballot initiative in August 2020 to expand Medicaid, and after months of uncertainty as to whether the state would fund the expansion, the state Supreme Court ruled that the state must fund and implement the expansion of Medicaid. Prior to the expansion of Medicaid, no childless adults were eligible for Medicaid, and the income eligibility threshold for parents in Missouri was up to only 21% of the FPL, one of the lowest in the country. The court’s ruling makes an estimated 275,000 people newly eligible for public health insurance in the state.29
Oklahoma also used a ballot initiative to expand Medicaid, making it one of six states, including Missouri, to use this approach. Prior to the expansion of Medicaid, the income eligibility threshold for parents in Oklahoma was up to only 41% of the FPL. The expansion of Medicaid now extends health insurance coverage to 190,000 newly eligible childless adults and parents with incomes up to 138% of the FPL.30
Most Other Nonexpansion States Acted to Expand Medicaid This Year, Although None Was Successful
Currently, 12 states have not yet fully implemented the expansion of Medicaid under the ACA. Three of these states – Florida, Mississippi, and South Dakota – considered launching ballot initiatives to allow voters to determine whether the state would expand Medicaid. Mississippi’s state Supreme Court ruled that the ballot initiative process could not be used, but the other two states are continuing to work toward this approach. Eight of the other nonexpansion states considered, but did not pass legislation to adopt the policy. Tennessee is the only nonexpansion state that did not introduce legislation to expand Medicaid this year.
How Does Indiana Compare to Other States in Making Progress Toward Adopting and Fully Implementing the Medicaid Expansion Under the ACA?
The figures below show how states compare to one another in making progress toward adopting and fully implementing the Medicaid expansion under the ACA that includes coverage for most adults with incomes up to 138% of the FPL.
As of October 1, 2021, 39 states have fully implemented Medicaid expansion. Of these 39 states, three states (California, the District of Columbia, and New Jersey) have implemented more generous policies to extend coverage beyond the ACA guidelines, and five states (Arizona, Arkansas, Montana, New Hampshire, and Utah) have implemented policies that could limit participation or allow the Medicaid expansion to be temporary.
Among the 12 states that have not fully implemented Medicaid expansion, seven states have adopted regressive policies or made no real attempt to implement expansion.
HOW DO STATES VARY IN ELIGIBILITY AND ACCESS TO HEALTH INSURANCE?
In Nonexpansion States, Childless Adults and Many Low-Income Parents are Not Eligible for Medicaid Coverage
In nonexpansion states, childless adults are not eligible for coverage through Medicaid (with the exception of Wisconsin, which provides coverage to adults with incomes up to 100% of the FPL, or $12,880). In contrast, in all expansion states, childless adults are eligible with incomes up to 138% of the FPL ($17,774), and the District of Columbia is even more generous, granting coverage to childless adults with incomes up to 215% of the FPL ($27,695). The income level to qualify for Medicaid coverage in 2021 is based on the federal poverty level for the 48 contiguous states and the District of Columbia. Hawaii and Alaska have slightly higher federal poverty levels.
For low-income parents in nonexpansion states, income eligibility varies from a low of up to 17% of the FPL for a family of three in Texas ($3,734) to 100% of the FPL for a family of three in Wisconsin ($21,960). In contrast, in expansion states, parents are eligible with incomes up to 138% of the FPL for a family of three, with Connecticut (160% of the FPL or $35,135) and the District of Columbia (221% of the FPL or $48,532) setting more generous income guidelines.
In Most States, Regardless of Expansion Status, Income Eligibility Guidelines are Typically Higher for Pregnant People
Medicaid coverage for pregnant people is typically set at a higher income eligibility guideline than for childless adults or parents, regardless of the expansion status of the state. However, the income eligibility thresholds vary considerably across states. In 28 states, the income eligibility threshold for pregnant people is up to at least 200% of the FPL, and in three of these states, the threshold is higher than 300% of the FPL. Iowa has the most generous threshold for pregnant people at 380% of the FPL. In four states (Idaho, Louisiana, Oklahoma, and South Dakota) the income eligibility threshold for pregnant people is only 138% of the FPL. This value is similar to the threshold for parents in the expansion states of Idaho, Louisiana, and Oklahoma, but it is substantially higher than the eligibility threshold for parents in South Dakota (48%), which is a nonexpansion state.
Pregnant Medicaid Coverage Lasts Only 60 Days Postpartum, But Several States Are Working to Extend It to 12 Months
Medicaid coverage for pregnant people typically only lasts through 60 days postpartum. However, a provision in the American Rescue Plan Act of 2021 (ARPA) allows states a new option to extend the postpartum coverage period to 12 months. The new provision allows states to file a SPA to their Medicaid program and request a coverage extension.31 This extension in coverage goes into effect on April 1, 2022, and is available to states for 5 years before the option sunsets. States that pursue this option must provide full Medicaid benefits to all who qualify and for a full 12 months postpartum.
In the past year, 25 states, both expansion and nonexpansion, have acted to extend the postpartum coverage period, through either the new provision in ARPA, a Section 1115 waiver request, and/or with state funds.32 As of August 2021, 11 states (Colorado, Connecticut, Florida, Indiana, Maine, Maryland, Minnesota, Ohio, Tennessee, Washington, and West Virginia) have passed legislation that directs the state Medicaid office to submit a SPA to extend postpartum coverage to 12 months and allocates state funding to finance the coverage extension.33 As of August 2021, two states (New York34 and North Carolina35) were still in session and had legislation pending to extend coverage via the new ARPA option.
Currently, three states (Illinois, Missouri, and Georgia) have received approval from CMS on Section 1115 waiver requests to extend postpartum coverage. Each of these states submitted waiver requests that varied in duration and benefits. Illinois36 received approval to provide 12 months of postpartum coverage for all pregnant people eligible for Medicaid, Georgia37 received approval to provide 6 months of postpartum coverage for all pregnant people eligible for Medicaid, and Missouri38 received approval to provide 12 months of limited benefits to postpartum people with a diagnosed substance use disorder.
Additionally, two states (Massachusetts39 and Virginia40) have submitted a Section 1115 waiver request to CMS to extend postpartum coverage to 12 months. Both are currently awaiting approval. Several other states have passed legislation that directs the state Medicaid office to submit a Section 1115 waiver request to extend postpartum coverage beyond 60 days but not to 12 months. For example, both Wisconsin41 and Texas42 plan to submit a waiver request that extends the postpartum coverage to 90 days and 6 months, respectively.
Lack of Health Insurance Prevents Women of Childbearing Age from Accessing Health Care That Can Lead to Healthier Perinatal Outcomes and Stronger Financial Security
Access to health insurance allows women of childbearing age to seek affordable medical care prior to becoming pregnant and to begin prenatal care earlier once they become pregnant. Both of these behaviors are linked to healthier birth outcomes. In each state, the percentage of low-income women (incomes at 138% of the FPL and below) who lack health insurance indicates the proportion of women in that state who could be served by expanding eligibility and access to Medicaid. Currently, nearly half of income-eligible women lack health insurance in Texas, which has the highest uninsurance rate in the country; however, only 3.8% of income-eligible women lack health insurance in the District of Columbia, a state that has expanded Medicaid coverage and has the lowest uninsurance rate in the country. The US average uninsurance rate among income-eligible women is 23.4%.