Medicaid Expansion: Why It Benefits Low-Income Americans

Medicaid is a federal and state-funded health care program offering plans to low-income individuals. In 2021, more than 82 million Americans had a Medicaid plan, according to the U.S. Centers for Medicare and Medicaid Services.

Despite Medicaid being aimed at low-income Americans, in some states, it can be more difficult to find a plan. Ten states are yet to pass the Medicaid expansion, which increases the coverage for adults under 65 with incomes up to 138% of the federal poverty level (FPL). In 2023, the FPL for an individual was $20,120.

Medicaid expansion was made possible through the Affordable Care Act’s passage in 2010 under the Obama Administration. The Medicaid Expansion became officially effective on Jan. 1, 2014. Center on Budget and Policy Priorities Policy Analyst, Breanna Sharer, said the Medicaid expansion has positively impacted the lives of lower socio-economic groups.

"Coverage through Medicaid expansion is linked to earlier detection, diagnosis, and treatment of serious medical conditions," Sharer told Healthnews. "Medicaid expansion increases people’s use of preventive care and significantly reduces the use of emergency care, resulting in earlier detection of cancers and more effective treatment of chronic illnesses. Medicaid expansion saves lives and is specifically associated with better survival rates for infants and people who give birth."

Sharer notes that the Medicaid expansion has helped reduce high out-of-pocket medical costs. In its first two years, it led to a $3.4 billion reduction in medical debt sent to collections and also contributed to 50,000 fewer bankruptcies across the country.

Also, the expansion has led to a reduction in Americans living without health insurance. In 2022 alone, 21 million people accessed health care coverage through the Affordable Care Act’s Medicaid expansion for low-income adults.

"The uninsured rate among expansion states is nearly half that of non-expansion states," Sharer said. "In the ten states that haven’t adopted expansion, nearly two million uninsured adults who live in or near poverty have no coverage options because their incomes are too high to qualify for their state’s Medicaid coverage but too low to qualify for marketplace subsidies."

Medicaid expansion eligibility

Adults living in eligible states for the service will qualify if their income falls below 138% of the FPL, which is $20,120 for an individual in 2023. Forty-one states, including the District of Columbia, have adopted expansions. North Carolina was the most recent state to adopt the Medicaid expansion and will see its program go into effect on Dec. 1.

In states that have not agreed to expansions, income eligibility for Medicaid programs is strict. The median value for parents in non-expansion states is around $9,944 in yearly income for a single caregiver of two children. Most adults without children are not eligible for Medicaid in non-expansion states despite having low incomes.

States that have not agreed to Medicaid expansion:

  • Alabama
  • Florida
  • Georgia
  • Kansas
  • Mississippi
  • South Carolina
  • Tennessee
  • Texas
  • Wisconsin
  • Wyoming

For individuals who live in states that have not adopted the Medicaid expansion, you may scan the Affordable Care Act (ACA) Marketplace for health insurance plans. However, your income can be too low to apply for plans available on the marketplace.

If someone is living in a state that hasn't expanded Medicaid, they will typically fall into the Medicaid coverage gap if their income is too low to qualify for Affordable Care Act (ACA) marketplace assistance because they have incomes below the poverty line ($14,580 for an individual in 2023), yet they are ineligible for Medicaid because their state hasn’t enacted ACA Medicaid expansion. In states that have not expanded Medicaid, income limits can be as low as 16% of FPL or $3,978 annually for a family of 3 with dependent children.

- Sharer

States without Medicaid expansion

In 2022, 27.6 million Americans of all ages did not have health insurance, according to the U.S. Centers for Disease Control and Prevention. Dean of the Robert F. Wagner Graduate School of Public Service at New York University, Sherry A. Glied, Ph.D., highlights the effects of those without health insurance

"People in the gap (who are not eligible for health insurance) have lower rates of utilization of healthcare services, are more likely to have medical debt and to go bankrupt, and are less likely to receive preventive care," Glied said. "Moreover, hospitals and other providers in these states are also harmed by the failure to expand coverage, including being more likely to close, and this has downstream impacts even on higher-income people."

All 10 states' legislatures that have not granted Medicaid expansions currently hold Republican majorities. Sharer notes that some red states like North Carolina have followed through with the Medicaid expansions, but admits some conservative lawmakers are still hesitant to take action. A 2022 survey from the KFF found 42% of respondents believed expanding Medicaid was a top priority.

"Some conservative political leaders have been hesitant to align themselves with a policy associated with the Affordable Care Act, despite the fiscal benefits to their state and the health benefits to their constituents. However, in the 13 years since the passage of the ACA, many conservative leaders have supported expansion and pushed to enact it in their states," Sharer said. "Even in states that have not yet adopted expansion, there is usually significant bi-partisan support to do so."

The open enrollment period for health care plans on the Affordable Care Act Marketplace runs from November 1 to January 15, which is the same for most states’ Medicaid open enrollment. Those who live in a non-expansion state and are above the FPL($14,580) could qualify for financial assistance in the Affordable Care Act Marketplace for more affordable coverage.

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