Under the Affordable Care Act (ACA), states have the option to expand Medicaid eligibility to nonelderly people with incomes up to 138 percent of the federal poverty level. As of September 2023, only 10 states had not agreed to do so: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. A 2022 voter referendum approved Medicaid expansion in South Carolina, which took effect in July 2023. In March 2023, the governor of North Carolina signed Medicaid expansion into law. This brief examines coverage in 2024, hence, we consider North Carolina and South Dakota as Medicaid expansion states. Governors, legislators, and other stakeholders in many of the nonexpansion states are actively debating Medicaid expansion.
WHY THIS MATTERS
Medicaid expansion has been the primary cause of increased health coverage after the implementation of the ACA. Research has documented that this additional health coverage has decreased mortality and increased the financial security of beneficiaries while benefitting hospital finances. When additional sources of revenue and savings are considered, many expansion states have found that they saved money on net.
WHAT WE FOUND
We estimated the effect on health coverage and costs if these 10 nonexpansion states were to fully implement a Medicaid expansion in 2024, and all else stayed the same. We find the following:
- Medicaid enrollment would increase by 5 million people if all 10 remaining states were to expand eligibility, an increase of nearly 32 percent.
- 2.3 million fewer people in current nonexpansion states would be uninsured, a reduction of 25 percent.
- An additional 2.3 million people with incomes up to 138 percent of the federal poverty level will switch from the Marketplaces to Medicaid coverage, which will have lower cost sharing without deductibles.
- Groups with the highest gains in coverage because of Medicaid expansion include non-Hispanic Blacks, young adults, and women, particularly women of reproductive age.
- Federal spending on Medicaid and the Marketplaces in these states would increase by about $24 billion, a 17.5 percent increase. This would be partially offset by $731 million in federal government savings on uncompensated care.
- State spending on Medicaid in those states would increase by $1.5 billion, or 3 percent. This would be partially offset by $457 million in state and local government savings on uncompensated care.
- The remaining state spending would be fully or largely offset by savings in other areas and potential new revenue. Several comprehensive analyses of current expansion states have found that Medicaid expansion had a net positive impact on many state budgets.
- In addition, for the first two years after a new Medicaid expansion, the federal government would pay a higher share of the costs of currently eligible Medicaid enrollees.
HOW WE DID IT
This report updates a series of reports using the Urban Institute’s Health Insurance Policy Simulation Model to estimate the recent impact of Medicaid expansion on health coverage and costs.