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, covering 1 in 5 Americans and 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 at or below 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 age10 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 16% of the FPL in Texas to 100% of the FPL in Wisconsin.
In most states, Medicaid income eligibility thresholds are higher for pregnant people than other adults, but pregnancy Medicaid coverage only typically 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 after the postpartum period because their incomes are too high for traditional Medicaid, but not high enough (100% of the FPL) to receive subsidies on the Marketplace. Through options included in ARPA, as of September 2022, more than 30 states have moved to extend pregnancy Medicaid coverage to 12 months postpartum through state plans, Section 1115, or passing legislation.13
Expanding Medicaid Eligibility Allows More People to Access Necessary Care
In nonexpansion states, many parents with low incomes earn too much to qualify for Medicaid, and most childless adults are not eligible regardless of their income. Approximately 4.3 million uninsured adults would become newly eligible for Medicaid if all 12 nonexpansion states expanded the income eligibility for Medicaid to 138% of the FPL.14 Workers with low incomes in these states, including child care teachers, would be likely recipients of Medicaid coverage.15
Medicaid Expansion Can Help People Initiate Health Care Prior to Conception, a Critical First Step for Healthy Pregnancies and Births
Without expanded Medicaid eligibility, childless people with low incomes 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 people 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.16
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.17,18,19 Further, individuals who previously avoided medical care due to high costs are more likely to access necessary health care, which may lead to improved physical and mental health outcomes.20,21
WHAT IMPACT DOES MEDICAID EXPANSION HAVE?
Various studies have shown Medicaid expansion can help families access needed care and services, increase household resources, improve healthy and equitable birth outcomes, and improve child health and development. Medicaid expansion increases rates and the length of Medicaid coverage before and after pregnancy, decreases uninsurance rates, and increases the probability of timely and adequate prenatal care. Medicaid expansion also bolsters families’ economic security through reduced medical spending and debt. Furthermore, Medicaid expansion has been found to decrease family poverty rates, housing instability, and avoidance of health care due to cost barriers. Additional studies have found positive effects on healthy birth outcomes such as preterm births, low birthweight, and maternal mortality. Benefits for child health and development include decreased rates of child neglect.
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.22 Medicaid expansion decreases uninsurance rates among Hispanic and multiracial women,23 increases Medicaid coverage rates among Hispanic and Black women,24 and increases the receipt of prenatal care among Hispanic women.25 These positive outcomes have a stronger effect size relative to outcomes observed for White women, which may reduce disparities across racial and ethnic groups.
The evidence suggests that Medicaid expansion leads to better birth outcomes including reductions in maternal mortality rates for some women of color,26,27 but more research is needed to determine whether these results represent reductions in disparities in outcomes. Some studies show that Medicaid expansion reduces disparities in infant mortality rates between Hispanic infants28 and White infants,29 and reduces disparities in the rates of preterm births and very low birthweight among Black infants compared to White infants.30 Despite these positive findings, other studies find no evidence that Medicaid expansion reduces disparities in birth outcomes.31,32,33
Evidence does show, however, that the impact of Medicaid expansion on outcomes related to family financial stability, such as child support receipt, was more beneficial for people with higher educational levels and who identified as White.34 These results are important because they point to possibly exacerbated inequality rather than equity. 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?
In total, 39 states have adopted and fully implemented the Medicaid expansion under the ACA. In addition, with the exception of Texas which did not have a legislative session, all of the 12 states that have not yet expanded Medicaid introduced legislation to adopt the policy in the last year.
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 summarizes the legislative activity and progress states made toward adopting Medicaid expansion in the year since the October 2021 Roadmap release. We analyze state legislation and ballot initiatives, 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.
In subsequent sections, we describe how states vary in the generosity and implementation of their state Medicaid.
No New States Adopted and Fully Implemented Medicaid Expansion in the Last Year, but Most Nonexpansion States Took Steps Toward Medicaid Expansion
Currently, 12 states have not yet fully implemented the expansion of Medicaid under the ACA. Eleven of the 12 nonexpansion states considered, but did not pass legislation to adopt the policy. North Carolina was the only nonexpansion state in which legislation to expand Medicaid under the ACA passed at least one chamber in the last year. The North Carolina bill passed the Senate, but the House did not vote. However, the North Carolina House passed legislation to create a joint committee to provide recommendations for a Medicaid expansion plan by December of 2022.
South Dakota voters will decide whether to expand Medicaid this November. In June 2022, voters rejected a ballot initiative that would have required a supermajority to pass Medicaid expansion. South Dakota’s upcoming referendum came about through a citizen-led initiative. The state required 33,921 valid signatures (10% of the total votes cast for governor in the prior gubernatorial election) for the question to appear on the ballot. Proponents submitted 47,000 signatures on November 8, 2021. The question on the November 2022 ballot asks voters whether to expand Medicaid via constitutional amendment.
Two other nonexpansion states – Florida and Kansas – introduced legislation to allow voters to determine whether the state would expand Medicaid, but the legislation failed in both states. Texas, which did not hold a legislative session in the last year, is the only nonexpansion state that did not introduce legislation to expand Medicaid this year.
Five Expansion States Introduced Legislation to Expand Medicaid Coverage to New Populations, and Two States Were Successful
Five expansion states – California, Colorado, Illinois, Rhode Island, and Utah – introduced legislation to expand eligibility for Medicaid coverage, and two states – California and Colorado successfully enacted new policies. California enacted legislation expanding coverage to lower-income Californians ages 26 to 49, who were previously ineligible due to their immigration status. Colorado similarly enacted legislation to expand Medicaid and CHIP to children and pregnant people who were previously ineligible due to immigration status (effective in 2025).
Although unsuccessful, Illinois and Rhode Island both introduced legislation to expand income eligibility for Medicaid (to 276% of the FPL for adults in Illinois and to 400% of the FPL for pregnant people in Rhode Island). Rhode Island introduced additional legislation mandating that incarceration would not impact an individual’s enrollment in Medicaid. Utah introduced a bill that would remove self-sufficiency requirements, including employment and training requirements, from Medicaid expansion provisions, but the bill failed in committee.
HOW DO STATES COMPARE TO ONE ANOTHER IN MAKING PROGRESS TOWARD FULL AND EQUITABLE IMPLEMENTATION OF THE MEDICAID EXPANSION UNDER THE ACA?
As of October 1, 2022, 39 states have fully implemented Medicaid expansion. Of these 39 states, three states (California, the District of Columbia, and Oregon) have implemented more generous policies to extend coverage beyond the ACA guidelines, including to adults with low incomes who were previously ineligible due to immigration status (California and Oregon), and to childless adults with incomes at or below 215% of FPL (District of Columbia). Colorado’s expansion to children and pregnant people who were previously ineligible due to immigration status will be effective in 2025.
A total of nine states have attempted to add work requirements to their Medicaid programs by submitting Section 1115 waivers to CMS for approval. Previously, six states (Arizona, Arkansas, Indiana, New Hampshire, Ohio, and Utah) had their waivers approved, but the Biden administration rescinded approved Section 1115 waivers that included a work requirement in 2021. Two states (Idaho and Montana) have pending applications that are not expected to be approved due to the Biden administration’s rescinding of other work requirement waivers. Georgia is currently challenging the Biden administration’s recission of the state’s 1115 waiver due to its work requirement.
Among the 12 states that have not fully implemented Medicaid expansion, six states have adopted regressive policies to limit the approaches available to implement expansion. Alabama, Georgia, Kansas, North Carolina, and Tennessee all require legislative approval before the state can adopt and implement expansion. In Wisconsin, former Governor Walker signed a law in 2018 that effectively prohibits the Wisconsin governor from expanding Medicaid without some involvement from the state legislature.
The figures below show how states compare to one another in adopting and fully implementing the Medicaid expansion under the ACA that includes coverage for most adults with incomes at or below 138% of the FPL.
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 at or below 100% of the FPL, or $13,590). In contrast, in all expansion states, childless adults with incomes at or below 138% of the FPL ($18,754) are eligible for Medicaid, and the District of Columbia is even more generous, granting coverage to childless adults with incomes at or below 215% of the FPL ($29,218). The income level to qualify for Medicaid coverage in 2022 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 16% of the FPL for a family of three in Texas ($3,685 annual income) to 100% of the FPL for a family of three in Wisconsin ($23,030). In contrast, in expansion states, parents with incomes at or below 138% of the FPL for a family of three are eligible, with Connecticut (160% of the FPL or $36,848) and the District of Columbia (221% of the FPL or $50,896) setting more generous income guidelines for parents.
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 threshold 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 at least 200% of the FPL, and in three of these states (the District of Columbia, Iowa, and Wisconsin), 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 (46%), which is a nonexpansion state.
Pregnancy Medicaid Coverage Lasts Only 60 Days Postpartum, But Most States Are Working to Extend It to 12 Months
Medicaid coverage for pregnant people typically only lasts through 60 days postpartum. Following the state option included in the American Rescue Plan Act (ARPA), states can extend pregnancy Medicaid coverage to 12 months postpartum through state plan amendments, Section 1115 waivers, or passing legislation. The option for states to extend through ARPA went into effect on April 1, 2022 and will be available for five years. If states provide postpartum coverage through the Children’s Health Insurance Program (CHIP), the state option would need to include coverage through CHIP as well.
To date, as of September 2022, 31 states, both expansion and nonexpansion states, have acted to extend the Medicaid postpartum coverage period to 12 months through state plan amendments or Section 1115 waivers. Most states have implemented the 12-month extension through the ARPA option, which expires in March 2027.
Among the 20 states that have not yet implemented or are not yet planning to extend Medicaid postpartum coverage to 12 months, 3 states have proposed extending postpartum coverage for a shorter period ranging from 90 days (Wisconsin) to 6 months (Texas) or a pilot program (Alabama).
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 below 138% of the FPL) 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. On average, across states, approximately 1 in 4 (23.4%) income-eligible women lacks health insurance.