Medicaid Expansion: The Unfinished Promise of the Affordable Care Act

More than a decade after the Affordable Care Act (ACA) was signed into law, its core promise—guaranteeing health coverage for the poorest Americans in all states—remains to be realized.

MEDICAID EXPANSION LANDSCAPE

The ACA intended to expand Medicaid to the lowest-income individuals across the country, but in 2012 the Supreme Court ruled mandatory expansion unconstitutional and instead left the decision to each individual state. This was a straightforward choice for most states. Medicaid expansion improves access to care, offers financial security for families, and reduces mortality for some conditions.¹ It also draws billions of dollars in revenue to states because the federal government subsidizes 90% of the cost of expansion.

However, as of winter 2023, 11 states continue to refuse Medicaid expansion. In many of these states, traditional Medicaid eligibility standards are extremely restrictive. In Alabama, for instance, parents can only qualify for Medicaid if household incomes are less than 18% of the federal poverty level (less than $4145 annually for a family of three). In 10 states that have refused expansion, working-age adults who are not parents of minor children, not pregnant, and not living with a major disability are locked out of the program completely.

More than 2 million Americans currently live in this “coverage gap”: too poor to qualify for subsidized private health insurance but not poor enough to qualify for Medicaid. Because nonexpansion states are disproportionately located in the South, the burden of this decision falls most heavily on people of color; nearly 60% of those in the coverage gap identify as Black or Latino.²

The federal government has tried incremental interventions. The American Rescue Plan increased the ACA’s already-generous financial incentives to support state expansion, but this further sweetener produced no result. While the House of Representatives passed Build Back Better legislation that extended the private health insurance subsidy system to all people in the coverage gap, this was ultimately scrapped from the Inflation Reduction Act over concerns of cost and rewarding states who chose not to expand Medicaid.

STATUS OF STATE ACTION

Without a federal remedy, what are the prospects for state action? Broadly, change could come either from state governments or ballot referendums. Among state governments, there appears to be legislative momentum in North Carolina.

The two chambers of the North Carolina legislature each passed separate Medicaid expansion bills before adjourning for the summer. A barrier to reconciliation of these bills has been the support of state hospitals; some lawmakers had been calling for reform to the certificate of need policies, which determine which medical services can be offered at certain facilities. Hospitals have been opposed to reforms that might increase competition and decrease revenue, but recently have agreed to these reforms and to help subsidize the state expenses associated with Medicaid expansion. It appears a compromise bill is in sight, a surprising reversal for the Republican-controlled branch where leaders had adamantly opposed expansion, seemingly spurred by the stimulus of federal funds.

In Georgia, Medicaid expansion was a key topic in the gubernatorial race, with Democratic candidate Stacey Abrams arguing that recent hospital closures are attributable to the failure of incumbent Republican Governor Brian Kemp to expand Medicaid, but legislative action is not clear.

The addition of work requirements is a complicating factor. North Carolina’s legislation initially but no longer included a compulsory work rule to be eligible for Medicaid; the Centers for Medicare and Medicaid Services (CMS) withdrew previously granted waivers to states like South Carolina and Georgia that allowed work requirements within Medicaid. This action signals that CMS is not willing to allow states to tether Medicaid expansion to a harmful policy, as demonstrated by a landmark study that showed that work requirements in Arkansas’s Medicaid program were associated with losses in health coverage without any significant gains in employment, mostly because of confusion about reporting requirements.³ The prospects for significant legislative progress on Medicaid expansion among holdout states may be dependent on the federal government’s tolerance of work requirements.

The majority of states that have adopted Medicaid expansion after 2019 have done so by ballot referendums; these include Idaho, Maine, Missouri, Nebraska, and Oklahoma. Many of these ballot measures include explicit language prohibiting the addition of other restrictions on eligibility (such as work requirements). South Dakota most recently approved a constitutional amendment guaranteeing Medicaid expansion via ballot referendum in November 2022.⁴

However, among the remaining holdout states, only Florida and Wyoming have broad policies that allow voter referendums. The status of initiatives in these states is unclear; in Florida, an effort to put Medicaid expansion on the ballot was held back by its organizing committee in 2020 after the state legislature raised the number of signatures needed for review. Organizers in Mississippi did successfully petition for a Medicaid expansion ballot initiative that was approved by the Secretary of State in 2021; however, the state Supreme Court later ruled that the state’s ballot process was unworkable and inoperative, thereby halting the effort. Alabama, Georgia, Kansas, Tennessee, Texas, and Wisconsin lack a voter-driven ballot initiative process.⁵

The Affordable Care Act was designed to expand access to care to the poorest Americans. However, 12 years later, the refusal to expand Medicaid remains the most potent symbol of political resistance to government’s role in health policy and the effort to promote health equity. While there is some momentum around expansion within state governments, this seems to be tied to eligibility restrictions that will compromise access to care. At the same time, many holdout states lack a mechanism for voter-driven referendums to guarantee expansion without these burdens. While there are important opportunities to make progress at the state level, it is likely that congressional action will be necessary to secure universal health coverage for the poorest Americans.