Medicaid coverage gap

The Medicaid coverage gap encompasses low-income adults in the ten U.S. states that have declined to expand Medicaid eligibility under the Affordable Care Act (ACA), whose household incomes exceed traditional state Medicaid thresholds—often limited to parents with children or specific income bands below 50% of the federal poverty level (FPL)—yet fall below 100% FPL, disqualifying them from both traditional Medicaid and ACA premium tax credits for marketplace plans.^[1][2] This gap emerged following the 2012 Supreme Court ruling in National Federation of Independent Business v. Sebelius, which deemed the ACA's Medicaid expansion optional for states rather than mandatory, allowing governors and legislatures to forgo extending coverage to adults up to 138% FPL with federal funding covering 90% of costs.^[3] As of 2025, non-expansion states include Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming, where an estimated 1.4 million individuals—primarily working-age adults without dependent children—remain uninsured due to this structural mismatch.^[1][3] Empirical data indicate that the coverage gap correlates with elevated uninsured rates among low-income populations in these states, contributing to increased uncompensated hospital care costs and deferred preventive services, though randomized evaluations like Oregon's Medicaid experiment reveal limited evidence of mortality reductions from expanded access alone.^[4][5] Controversies surrounding the gap center on state fiscal concerns, potential work disincentives from non-work-based eligibility, and debates over whether federal incentives adequately offset long-term costs, with some expansions approved via voter referendums in states like Oklahoma and South Dakota despite legislative resistance.^[3][6]

Definition and Background

Core Concept of the Coverage Gap

The Medicaid coverage gap refers to the population of low-income adults in non-expansion states who earn incomes above their state's traditional Medicaid eligibility thresholds but below 100% of the federal poverty level (FPL), rendering them ineligible for both Medicaid and subsidized coverage through the Affordable Care Act (ACA) marketplaces.^[1][7] In these states, traditional Medicaid programs, which predate the ACA, typically limit coverage for non-disabled, childless adults to very low income levels or exclude them entirely, with median eligibility for parents at just 35% of FPL as of 2024.^[8] Consequently, individuals with annual incomes between approximately $10,000 and $15,000 for a single adult—depending on state-specific cutoffs and family size—fall into this gap, unable to access affordable health insurance options.^[1] This gap emerged following the 2012 Supreme Court decision in NFIB v. Sebelius, which made Medicaid expansion optional for states, allowing them to forgo extending eligibility to adults up to 138% FPL without losing existing federal funding.^[3] In expansion states, the gap does not exist, as Medicaid covers adults up to 138% FPL, bridging the divide to ACA subsidies that begin at 100% FPL.^[2] Non-expansion states, however, maintain narrower eligibility, primarily targeting pregnant women, parents with dependent children at low incomes, the elderly, and disabled individuals, leaving a structural hole in coverage for working-age adults without qualifying dependents.^[4] As of February 2025, approximately 1.4 million uninsured adults reside in this coverage gap across the 10 non-expansion states: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.^[1][9] These individuals are disproportionately non-elderly, non-disabled adults, many of whom are employed in low-wage sectors, yet face unaffordable premiums on the individual market without subsidies.^[1] The gap persists due to state-level policy choices prioritizing fiscal concerns over broader coverage, despite federal incentives covering 90% of expansion costs post-2020.^[8]

Historical Medicaid Eligibility Prior to ACA

Medicaid was established on July 30, 1965, under Title XIX of the Social Security Amendments, as a joint federal-state program to provide medical assistance to low-income individuals. Federal law required states to cover specific "categorically needy" groups to receive matching funds: individuals aged 65 and older, the blind, the disabled, and families with dependent children who qualified under Aid to Families with Dependent Children (AFDC) criteria.^[10] States had discretion to set income and asset thresholds for these groups, often resulting in eligibility limits well below 100% of the federal poverty level (FPL); for example, by the early 2000s, the median income eligibility for parents in two-parent families was approximately 40% FPL, varying from as low as 12% FPL in some states to higher in others.^[11] Eligibility for non-elderly adults without dependent children—often termed childless adults—was not federally mandated and remained highly restricted prior to the ACA. Only a handful of states provided coverage to this group through optional state-funded programs or federal Section 1115 demonstration waivers, which required approval from the Department of Health and Human Services and capped enrollment in many cases.^[12] For instance, in 2009, just four states offered broad coverage to childless adults up to 100% FPL or higher via waivers, while nationwide, fewer than 5% of non-elderly childless adults below 100% FPL were enrolled in Medicaid, compared to about 62% of poor children and 33% of poor parents.^[8] This categorical exclusion stemmed from Medicaid's origins as a supplement to cash welfare programs like AFDC, which prioritized families, leaving many low-income working adults ineligible despite incomes insufficient for private insurance.^[13] States could also cover "medically needy" individuals who met categorical requirements but had incomes exceeding standard limits after incurring high medical expenses, though this pathway was unevenly implemented and often involved spend-down provisions.^[14] Overall, pre-ACA Medicaid enrollment emphasized children and the disabled, with non-elderly adult coverage totaling around 13 million in 2008, predominantly parents or those with disabilities, amid federal matching rates averaging 57% but varying by state per capita income.^[15] These constraints contributed to persistent uninsured rates among low-income adults, as eligibility did not extend to most able-bodied adults without children, regardless of income poverty.^[5]

Affordable Care Act Framework

Medicaid Expansion Provisions in the ACA

The Medicaid expansion provisions of the Patient Protection and Affordable Care Act (ACA), enacted on March 23, 2010, amended Title XIX of the Social Security Act through Section 2001 to broaden eligibility for adults lacking dependent children, a group historically excluded from coverage in most states. These provisions mandated states to extend Medicaid to all non-elderly individuals (under age 65) with modified adjusted gross income (MAGI) up to 133 percent of the federal poverty level (FPL), effective January 1, 2014, regardless of disability or parental status.^[16] A statutory 5 percent income disregard effectively raised the threshold to 138 percent FPL for eligibility determinations.^[2] Eligibility was to be determined using MAGI methodology, eliminating traditional asset tests and aligning with premium tax credit calculations for marketplace coverage.^[10] To incentivize compliance, the ACA established an enhanced federal medical assistance percentage (FMAP) for costs of newly eligible enrollees, with the federal government covering 100 percent from 2014 through 2016, decreasing to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and stabilizing at 90 percent from 2020 onward.^[8] States faced penalties for non-participation, including the potential loss of all federal Medicaid funding, though subsequent legal developments altered this coercion.^[5] The expansion targeted an estimated 11 to 16 million additional enrollees nationwide, primarily low-income childless adults ineligible under prior categorical requirements, while preserving states' flexibility for existing populations.^[10] Implementation required states to submit state plan amendments to the Centers for Medicare & Medicaid Services (CMS), with federal approval contingent on conformity to ACA standards, including retroactive coverage options and coordinated enrollment with health insurance marketplaces. These provisions sought to reduce the uninsured rate among the lowest-income non-elderly adults—those below 100 percent FPL—who would otherwise fall into a coverage gap without premium subsidies—by integrating them into a mandatory, federally subsidized safety net.^[5]

Supreme Court Ruling in NFIB v. Sebelius (2012)

In National Federation of Independent Business v. Sebelius, decided on June 28, 2012, the U.S. Supreme Court addressed challenges to the Patient Protection and Affordable Care Act (ACA), including its Medicaid expansion provisions.^[17] The ACA, enacted in 2010, mandated that states expand Medicaid eligibility to nearly all adults with incomes up to 133% of the federal poverty level (FPL), later adjusted to 138% FPL, with the federal government covering 100% of costs for the first three years and at least 90% thereafter.^[18] Challengers, including 26 states led by Florida and the National Federation of Independent Business, argued that this requirement violated the Tenth Amendment and anti-commandeering principles by coercing states into administering a federal program under threat of losing all existing federal Medicaid funding, which constituted over 10% of many states' budgets and funded coverage for vulnerable populations like children and the disabled.^[19][20] Chief Justice John Roberts, joined by Justices Breyer and Kagan, authored the plurality opinion holding the Medicaid expansion unconstitutional as a coercive exercise of Congress's Spending Clause power.^[18] The Court reasoned that while Congress may attach conditions to federal grants, the ACA's threat to withhold existing Medicaid funds—representing up to 40% of states' federal grants in some cases—left states with no genuine choice, akin to a "gun to the head" rather than voluntary participation.^[20][21] This marked the first time the Court invalidated a federal spending condition as unduly coercive, distinguishing it from prior cases like South Dakota v. Dole (1987), where conditions involved smaller funding stakes.^[22] Justices Ginsburg, Sotomayor, Breyer, and Kagan dissented on this point, arguing the expansion built incrementally on Medicaid's existing framework as a cooperative federal-state program and provided states with adequate notice and incentives.^[18] The Court severed the coercive provision from the ACA, rendering Medicaid expansion optional for states while preserving their existing federal funding and eligibility requirements.^[17] States opting out would not face penalties to their pre-expansion Medicaid programs, but they forfeited additional federal matching funds for the new adult coverage group.^[21] This ruling directly contributed to the emergence of the Medicaid coverage gap, as non-expansion states left approximately 2.2 million to 4 million low-income adults—typically childless adults with incomes between 100% and 138% FPL—ineligible for Medicaid and, in many cases, unable to access subsidized ACA Marketplace coverage due to income thresholds starting at 100% FPL.^[23][24] As of 2025, 10 states have not expanded, perpetuating the gap primarily in the South, where affected individuals face uncompensated care burdens and limited access to preventive services.^[4] The decision underscored federalism limits on conditional spending, influencing subsequent state ballot initiatives and legislative debates on expansion.^[25]

State-Level Implementation

States That Adopted Expansion Promptly

Following the Supreme Court ruling in NFIB v. Sebelius on June 28, 2012, which upheld the Affordable Care Act but made Medicaid expansion optional for states, 23 states proceeded to adopt the expansion with implementation effective January 1, 2014.^[3][26] Michigan joined these efforts shortly thereafter, with coverage effective April 10, 2014, after legislative approval in December 2013.^[3] These early adoptions capitalized on the ACA's incentive of 100% federal funding for newly eligible adults from 2014 through 2016, declining to 90% by 2020, minimizing initial state fiscal burdens.^[8] The states implementing on January 1, 2014, were:

• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Hawaii
• Illinois
• Kentucky
• Maryland
• Massachusetts
• Minnesota
• Nevada
• New Jersey
• New Mexico
• New York
• North Dakota
• Ohio
• Oregon
• Rhode Island
• Vermont
• Washington
• West Virginia

along with the District of Columbia.^[3] These jurisdictions, predominantly those with Democratic governors or legislative majorities at the time, extended eligibility to adults with incomes up to 138% of the federal poverty level, covering an estimated 4.5 million additional individuals nationwide by the end of 2014.^[3][5] California's expansion, building on prior state initiatives, enrolled over 1 million in the first year, while Kentucky saw rapid uptake due to high pre-expansion uninsured rates.^[3] Implementation involved coordination with federal Centers for Medicare & Medicaid Services (CMS) approvals, though some states like Oregon faced initial enrollment system delays resolved by mid-2014.^[27] By adhering closely to the ACA's original timeline, these states avoided prolonged coverage gaps for low-income adults ineligible for subsidized Marketplace plans.^[8]

Persistent Non-Expansion States as of 2025

As of October 2025, ten states—Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming—have not adopted the full Medicaid expansion authorized by the Affordable Care Act.^[3] These predominantly Republican-controlled states account for approximately 20% of the U.S. population but host a disproportionate share of the coverage gap, affecting an estimated 1.6 million to 2 million low-income adults ineligible for both traditional Medicaid and subsidized marketplace coverage.^{[9] [1]} Opposition in these states stems from fiscal apprehensions regarding the long-term viability of the federal government's 90% funding match for expansion enrollees, alongside state-level costs for administration and potential future expansions of eligibility.^[3] State leaders, including governors and legislative majorities, have frequently argued that expansion could foster dependency among able-bodied adults by covering childless, non-disabled individuals up to 138% of the federal poverty level without mandatory work requirements, preferring alternatives like partial waivers or block grants.^[28] For instance, Texas Governor Greg Abbott and legislative Republicans have repeatedly blocked expansion bills, emphasizing that it would strain state budgets and duplicate existing safety-net programs.^[3] Efforts to achieve expansion via ballot initiatives or waivers have largely faltered. In Florida, a 2024 ballot measure for expansion was delayed to 2028 following regulatory changes affecting petition drives.^[3] Mississippi's 2022 ballot initiative was suspended amid legal challenges, and a 2024 House bill incorporating work requirements failed in conference committee.^[3] Georgia has implemented a limited "Pathways to Coverage" program under a Section 1115 waiver, providing partial coverage up to 100% of the federal poverty level with work or community engagement requirements, though enrollment remains below full expansion levels and requires temporary federal extensions.^[3] Similarly, South Carolina has proposed a "Palmetto Pathways" waiver targeting incomes from 67% to 100% of the federal poverty level with work stipulations, but full expansion legislation has not advanced.^[3] In Kansas and Wisconsin, Democratic governors have proposed expansions in annual budgets—Kansas Governor Laura Kelly for a January 2026 start and Wisconsin Governor Tony Evers in 2025—but Republican-dominated legislatures have rejected them since 2019, citing inadequate protections against federal funding cuts.^[3] Wyoming's 2021 expansion bills failed in the Senate, with no subsequent progress despite reintroductions.^[3] Alabama, Tennessee, and Mississippi exhibit staunch legislative resistance, with proponents attributing holdouts to ideological commitments against broadening welfare programs without reforms like time limits or premiums.^[4] These states' persistence contrasts with empirical data from expansion states showing reduced uninsurance rates, though non-adopters counter that such gains come at the expense of fiscal discipline and workforce participation.^[3][28]

Delayed Expansions in Holdout States

In the decade following the 2012 Supreme Court ruling that made Medicaid expansion optional, several Republican-led holdout states adopted the provision after prolonged resistance, frequently via direct voter ballot initiatives that bypassed skeptical legislatures concerned about long-term costs and federal dependency. These measures typically extended eligibility to non-elderly adults with incomes up to 138% of the federal poverty level, filling the coverage gap for working-poor individuals ineligible for both traditional Medicaid and subsidized marketplace plans.^[3] Oklahoma exemplified this pattern when voters narrowly approved State Question 802 on June 30, 2020, with 50.5% support despite opposition from Governor Kevin Stitt and legislative leaders who argued it would strain state budgets without sufficient work requirements. Coverage began on July 1, 2021, after the state secured federal approval, ultimately enrolling over 220,000 residents by mid-2022 and generating net fiscal savings through enhanced federal matching funds.^{[29] [30][31]} Missouri followed suit with Amendment 2, passed on August 4, 2020, by 53.3% of voters amid similar gubernatorial and legislative pushback citing inadequate protections against dependency. Implementation stalled as lawmakers withheld appropriations, prompting a lawsuit resolved by the Missouri Supreme Court in July 2021, which affirmed the constitutional mandate; expansion launched on July 1, 2021, covering approximately 275,000 additional individuals within the first year.) ^[32][33] South Dakota voters approved Constitutional Amendment D on November 8, 2022, with 55.5% backing, overriding resistance from Governor Kristi Noem and a Republican supermajority legislature that viewed it as fiscally unsustainable without reforms like work mandates. Lawmakers subsequently passed a repeal measure (Amendment F) for the 2024 ballot, but it failed; expansion proceeded on July 1, 2023, targeting up to 50,000 low-income adults.^{[3] [34][35]} North Carolina, a long-time holdout due to partisan divides, achieved expansion through legislative compromise rather than ballot, with bipartisan bills signed into law on March 27, 2023, after budget negotiations tied it to hospital funding reforms. Unlike pure ballot-driven cases, this reflected pragmatic fiscal incentives, including federal incentives and uncompensated care burdens; coverage started December 1, 2023, projecting enrollment of 600,000 by 2025. Following Medicaid expansion, adults with MAGI up to 138% of the Federal Poverty Level (FPL) qualify for Medicaid; above 138% FPL, individuals are ineligible for Medicaid but may qualify for ACA premium tax credit subsidies through the Marketplace. Enrolling in such subsidies carries repayment risk for advance premium tax credits if actual income falls to ≤138% FPL, as Medicaid is considered minimum essential coverage that disqualifies subsidy eligibility.^{[36] [37] [38]} Utah's path involved a 2018 ballot approval (Proposition 3, 53.1% yes) followed by legislative modifications seeking block grants and work requirements, but federal waivers were denied, leading to standard ACA expansion effective January 1, 2020. This hybrid approach delayed full implementation by over a year, highlighting tensions between voter mandates and state preferences for customized terms.^{[39] [40]}

Affected Population

Scale and Geographic Distribution

As of April 2025, the Medicaid coverage gap leaves more than 1.5 million uninsured low-income adults without affordable health coverage options in the ten states that have not adopted the Affordable Care Act's Medicaid expansion.^[6] These individuals typically have incomes below the federal poverty level but exceed the eligibility thresholds for traditional Medicaid in their states, rendering them ineligible for subsidized marketplace plans.^[1] The gap persists despite federal incentives covering 90% of expansion costs, as states retain discretion following the 2012 Supreme Court ruling.^[3] The non-expansion states as of September 2025 are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.^[3] Geographically, the coverage gap is concentrated in the Southern United States, where eight of the ten states are located, reflecting regional political resistance to expansion often tied to fiscal conservatism and concerns over long-term state costs.^[9] Texas accounts for the largest share of affected individuals, with estimates exceeding 700,000 in the gap, followed by Florida and Georgia, which together represent over half of the national total due to their large populations.^[41] This distribution exacerbates disparities in health insurance access, as Southern states also tend to have higher baseline uninsured rates among low-income groups.^[42]

Demographic and Socioeconomic Profile

The Medicaid coverage gap affects approximately 1.4 to 1.5 million uninsured adults aged 19 to 64 residing in the ten states that had not adopted Medicaid expansion as of 2023, with household incomes below 100% of the federal poverty level but exceeding traditional state Medicaid eligibility thresholds.^[6] These individuals are ineligible for premium tax credits in ACA marketplaces, leaving them without affordable coverage options. The population is concentrated geographically in the South, comprising 97% of the gap, with Texas (42%), Florida (19%), and Georgia (14%) accounting for nearly three-quarters. Demographically, the group skews toward younger working-age adults, with 47% aged 19-34, 29% aged 35-49, and 24% aged 50-64; adults aged 55-64 represent 17% overall but face higher health needs.^[6] Gender distribution is nearly even, with 51% male and 49% female. Racial and ethnic composition shows 60-64% people of color, exceeding the national average of 44%, including 30-34% Hispanic, 23-24% Black, 2% Asian, and 5% other or multiracial, alongside 36-40% White; these proportions mirror the demographics of non-expansion states, which have higher shares of minorities.^[6] About 80% are adults without dependent children, reflecting state Medicaid rules that often limit coverage to parents or disabled individuals below expansion income levels. Socioeconomically, most are in low-wage or unstable employment situations despite work ethic, with 46% personally employed and 61-68% living in families with at least one worker; among working adults, 17% are self-employed, and 53% labor in service, retail, or construction industries prone to lacking employer-sponsored insurance.^[6] Disability affects 15-16%, rising to 26% among those aged 55-64, often involving functional limitations that increase care needs without qualifying for traditional Medicaid in these states.^[6] Rural residence impacts 16%, amplifying access barriers in areas with fewer providers. Incomes hover near or below the poverty line—for an individual, under $15,060 in 2023—concentrating poverty and limiting options beyond public programs.^[6]

Consequences and Empirical Outcomes

Effects on Health Access and Outcomes

Individuals in the Medicaid coverage gap, primarily non-disabled childless adults with incomes below 100% of the federal poverty level in non-expansion states, face significantly higher uninsurance rates compared to similar populations in expansion states.^[4] This gap affects roughly 2 million people as of 2023, resulting in limited access to primary care, preventive services, and medications.^[4] Studies using difference-in-differences analyses indicate that non-expansion correlates with lower rates of routine check-ups, screenings for conditions like cancer and diabetes, and management of chronic diseases, exacerbating health disparities.^[43] Emergency department visits for preventable conditions remain elevated among this group, as financial barriers deter timely interventions.^[5] Empirical evidence links the coverage gap to adverse health outcomes, including higher all-cause mortality rates among low-income adults. Pre-ACA state expansions to similar populations were associated with 6-11% reductions in mortality, suggesting that persistent non-coverage in gap states contributes to excess deaths estimated at thousands annually.^[44] Post-ACA analyses show Medicaid expansion reduced adult mortality by approximately 2.5-4% per year in adopting states, with non-expansion states exhibiting slower declines or stagnation in life expectancy for affected demographics.^{[45] [46]} Variability exists across states, influenced by factors like baseline health infrastructure and socioeconomic conditions, though causal attribution to coverage status holds in quasi-experimental designs controlling for confounders.00252-8/fulltext) Conditions such as cardiovascular disease and cancer show worse progression in uninsured gap populations due to delayed diagnoses.^[47] While access improves self-reported health and utilization in expansion contexts, the gap's effects include heightened risks for mental health crises and substance use disorders, with limited evidence of offsetting private coverage uptake.^[48] Peer-reviewed syntheses confirm that non-expansion perpetuates financial toxicity from medical debt, correlating with avoided care and poorer quality-of-life metrics.^[49] However, some outcomes like short-term morbidity show inconsistent causality, as observational data may conflate insurance with underlying health selection.^[43] Overall, the empirical consensus from over 200 studies underscores that the coverage gap impedes equitable health access and elevates mortality risks through untreated or undertreated conditions.^[50]

Fiscal and Economic Ramifications

Non-expansion states face elevated uncompensated care burdens from the coverage gap, where approximately 2 million low-income adults remain uninsured as of 2024, ineligible for both traditional Medicaid and subsidized marketplace coverage. Hospitals in these states, especially rural ones, reported rising uncompensated care costs between 2014 and 2019, contrasting with sharp declines in expansion states following implementation. A 2025 analysis of hospital utilization data confirmed that Medicaid expansion shifted patient visits from uninsured to insured categories, reducing uncompensated care expenses and potentially averting closures, with non-expansion facilities absorbing higher financial strain from untreated or delayed care among gap populations.^[51][52] State budgets in non-expansion jurisdictions incur indirect fiscal costs through sustained funding for safety-net programs and charity care, forgoing the 90% federal matching rate for expansion enrollees that offsets such expenditures in adopting states. Empirical reviews indicate that expansions have yielded net state savings by lowering indigent care outlays, with early adopters like those from 2014 onward recouping administrative and provider tax revenues alongside federal inflows exceeding 100% of baseline Medicaid spending in some cases. Non-expansion states, by contrast, miss these offsets, leading to persistent strains on general funds; for instance, aggregate uncompensated care reductions in expansion states totaled billions from 2013 to 2015, a benefit absent in holdouts.^[8][53] Economically, the coverage gap correlates with higher medical debt levels and forgone productivity among affected workers, who often labor in low-wage sectors like construction and retail without employer-sponsored insurance. Research attributes reduced uninsured rates in expansion states to improved financial stability, with gap populations facing elevated bankruptcy risks from uncovered emergencies; closing the gap could mitigate these by enabling preventive care and workforce continuity, though estimates vary by state demographics. Broader multipliers from federal expansion dollars—covering provider payments and stimulating local healthcare employment—yield GDP uplifts in adopting states, estimated at 0.5-1% annually in some models, while non-expansion areas lag due to untapped inflows exceeding $20 billion yearly nationwide. Critics of expansion note potential offsets from displaced private coverage, but longitudinal data show minimal net employment displacement, with gains in health-driven labor participation outweighing such effects in peer-reviewed assessments.^[54][55]

Debates and Criticisms

Pro-Expansion Perspectives

Proponents of Medicaid expansion under the Affordable Care Act argue that it has substantially increased health insurance coverage among low-income adults, with studies documenting coverage gains of up to 12 percentage points in expansion states compared to non-expansion states.^{[53] [56]} These gains are attributed to extending eligibility to adults with incomes up to 138% of the federal poverty level, leading to reductions in uninsured rates particularly among those aged 45-64 and low-income parents.^{[57] [58]} Advocates cite evidence of enhanced access to preventive and routine care following expansion, including higher rates of physician visits, dental care, and cancer screenings, which they claim contribute to earlier detection and management of health conditions.^[59] Expansion is also linked to improved affordability of care and self-reported mental health among beneficiaries, with reduced cost-related barriers to treatment.^{[58] [60]} In perinatal contexts, coverage increases preconception and postpartum have been observed, potentially lowering uninsurance during critical periods.^[61] On health outcomes, supporters point to reductions in mortality rates as a key benefit, with one analysis estimating a 3.6% decrease in all-cause mortality for ages 20-64, equivalent to 11.36 fewer deaths per 100,000 individuals, driven largely by amenable causes.^[62] Other research associates expansion with lower maternal mortality by 7.01 deaths per 100,000 live births and greater declines in infant mortality, especially among African American infants.^{[63] [64]} These effects vary by state but are presented as evidence that expanded access averts preventable deaths, with net decreases of up to 31.8 deaths per 100,000 person-years in some evaluations.^{[48] [65]} Economically, pro-expansion arguments emphasize fiscal advantages for states, including federal matching funds covering over 90% of costs post-2020, which generate revenue inflows exceeding state expenditures and support job creation in healthcare.^[8] Expansion has bolstered provider finances, improving hospital performance and reducing uncompensated care burdens, while enabling better affordability of essentials like food for enrollees.^{[66] [67]} Advocates from organizations like the Center on Budget and Policy Priorities contend these dynamics yield net state budget savings and stimulate local economies through increased healthcare activity.^[8]

Anti-Expansion Arguments and Evidence

Opponents of Medicaid expansion contend that it creates substantial long-term fiscal pressures on state budgets, as the federal matching rate declines from 100% in the initial years to a permanent 90% after 2020, obligating states to cover the remaining 10% share—estimated at billions annually across expansion states—while enrollment often exceeds projections due to induced demand and economic fluctuations. This has led to Medicaid consuming a growing portion of state general funds, with national data showing state Medicaid expenditures rising to 15.1% of budgets in fiscal year 2023, up from prior levels, and evidence indicating that such growth crowds out investments in education, infrastructure, and corrections.^[68][69][70] Critics highlight work disincentives inherent in the program's income-based eligibility thresholds, which can impose "benefit cliffs" where modest earnings gains result in loss of coverage and higher effective marginal tax rates exceeding 100% when combining reduced benefits with taxes. Empirical analyses of the ACA expansions have found small but statistically significant reductions in employment, including a 1.3% decrease in overall employment rates one year post-expansion among targeted populations, and more pronounced effects—up to a 37% drop in employment probability for newly eligible enrollees under certain model assumptions—particularly among childless adults.^[71][72] Expansion has been linked to crowding out of private insurance, substituting public for employer-sponsored or individually purchased coverage rather than netting new insureds. Studies estimate that for every 100 new Medicaid enrollees, private insurance rates decline by approximately 1.5 percentage points, with effects peaking four years after implementation, implying that 15-20% or more of coverage gains represent shifts from private markets, increasing public costs without proportional expansions in overall insured populations.^[73][74] Skeptics question the program's efficacy in improving health outcomes, citing randomized evidence from the Oregon Health Insurance Experiment, which found no statistically significant effects on physical health measures—such as blood pressure, cholesterol, or diabetes control—after one to two years of coverage, despite increased utilization and self-reported improvements. Longer-term evaluations reinforce this, showing limited durable impacts on mortality, chronic disease management, or overall health status among low-income adults even nine years post-expansion, suggesting that access gains do not reliably translate to better clinical results and may reflect underlying issues like provider shortages or program design limitations.^[75][76][77]

Proposed Alternatives to Expansion

One prominent alternative involves implementing Medicaid waivers for partial expansions conditioned on work or community engagement requirements, aiming to promote self-sufficiency while providing targeted coverage. In Georgia, the Pathways to Coverage program, launched on July 1, 2023, extends eligibility to adults aged 19-64 with household incomes up to 100% of the federal poverty level (FPL), but requires participants to engage in at least 80 hours per month of qualifying activities such as employment, education, job training, or volunteering.^[78][79] This model, approved via Section 1115 waiver, limits benefits to those meeting the criteria and excludes traditional Medicaid pathways, with state data indicating administrative costs exceeded direct coverage expenditures in its initial years due to reporting burdens and low enrollment of approximately 4,000 individuals by mid-2024.^[80] Proponents, including Republican lawmakers, argue it avoids the perceived fiscal traps of full expansion by tying benefits to productive activity, though critics note exemptions for certain groups like pregnant women and implementation challenges have limited uptake.^[80] Another approach uses premium assistance models, where Medicaid funds subsidize private insurance purchases rather than direct fee-for-service coverage, potentially improving provider access through commercial networks. Arkansas pioneered this via a 2013 waiver, enrolling expansion-eligible adults in qualified health plans on the marketplace with Medicaid paying premiums and cost-sharing, though subsequent issues like plan disruptions led to its replacement with traditional expansion in 2018.^[81] Similar designs have been proposed for non-expansion states, incorporating features like health savings accounts (HSAs) to encourage cost-conscious behavior, with advocates claiming better alignment with market incentives compared to Medicaid's administrative structure.^[81] Iowa briefly tested a variant before shifting, highlighting potential for narrower targeting to the coverage gap without broad entitlement growth.^[82] Federal-level proposals include lowering the eligibility threshold for premium tax credits (PTCs) to cover individuals below 100% FPL, enabling marketplace enrollment with subsidies in non-expansion states and avoiding Medicaid's state-level political hurdles. The Progressive Policy Institute has advocated permanently preserving zero-premium plans for those at or below 100% FPL, estimating it could extend affordable private coverage without new entitlements.^[83] This builds on temporary enhancements under the American Rescue Plan Act of 2021, which eliminated the subsidy cliff above 400% FPL but left the sub-100% gap intact; extending PTCs downward would require congressional action, potentially costing billions but offering flexibility for states resistant to expansion.^[84] Broader structural reforms, such as converting Medicaid to block grants or per capita allotments, have been advanced by conservative organizations to grant states greater flexibility in addressing the gap through customized programs rather than uniform expansion. The Paragon Health Institute proposes gradually reducing the enhanced federal matching rate (FMAP) for expansion populations from 90% to regular levels, freeing resources for targeted aid like safety-net enhancements or work-focused initiatives while curbing long-term federal spending growth projected at over $1 trillion through 2030.^[85] These options prioritize fiscal discipline and state innovation, though empirical evidence from prior waiver experiments shows mixed results in sustaining coverage gains without reverting to traditional models.^[86]

Recent and Ongoing Developments

Post-COVID Enrollment Unwinding Effects

The end of the Medicaid continuous enrollment requirement, mandated by the Families First Coronavirus Response Act of March 2020, concluded on March 31, 2023, initiating a nationwide "unwinding" process where states resumed periodic eligibility redeterminations for enrollees.^[87] This reversal of pandemic-era protections, which had suspended redeterminations in exchange for enhanced federal funding, resulted in significant disenrollments, with approximately 27 million individuals—about one-third of those subject to review—losing coverage by June 2024.^[88] Disenrollments peaked in 2023, with a median state termination rate of 26.6% relative to pre-unwinding enrollment, though rates ranged from 8.3% to 55.3% across states.^[89] A substantial portion stemmed from procedural issues, such as failure to respond to renewal notices or incomplete documentation, rather than confirmed ineligibility.^[90] Disenrollment impacts differed markedly by Medicaid expansion status under the Affordable Care Act. Non-expansion states recorded higher relative disenrollments, at 27.6% of enrollees compared to 12.1% in expansion states, reflecting tighter pre-pandemic eligibility criteria and potentially higher rates of outdated contact information among low-income populations.^[87] In expansion states, many disenrolled individuals transitioned to subsidized ACA marketplace plans, as incomes up to 138% of the federal poverty level qualified for premium tax credits; however, in the 10 non-expansion states, those with incomes between traditional Medicaid thresholds (typically below 40-100% FPL) and the ACA subsidy minimum (100% FPL) fell into the coverage gap, exacerbating uninsured rates.^[91] Surveys indicated that 17% of pre-unwinding Medicaid enrollees in non-expansion states became uninsured post-disenrollment, versus 6% in expansion states, with roughly half of all coverage losses nationwide leading to uninsurance rather than alternative coverage.^[91][92] By April 2025, the coverage gap persisted with over 1.5 million uninsured adults nationwide, concentrated in non-expansion states like Texas, Florida, and Georgia, where unwinding contributed to stagnant or rising low-income uninsurance rates despite overall national declines in uninsured numbers from pandemic highs.^[6] Medicaid enrollment stabilized at around 83-84 million by fiscal year 2024, down from a 2023 peak of 91.7 million but still elevated above 2019 levels in most states.^[93][90] However, the process highlighted administrative barriers, with one in eight enrollees exiting coverage within six months of unwinding's start, and state-level variations in renewal efficiency influencing outcomes—states with robust outreach and simplified processes, often expansion states, retained higher proportions of eligible individuals.^[92] These effects underscored the coverage gap's resilience in non-expansion contexts, where procedural disenrollments amplified structural eligibility mismatches without seamless pathways to alternatives.^[4]

Potential Policy Shifts and State Ballot Initiatives

In response to escalating federal Medicaid expenditures exceeding $600 billion annually, Republican policymakers in 2025 advanced reforms through budget reconciliation legislation, including proposals to convert the open-ended federal matching funds for ACA Medicaid expansion populations into per capita caps or block grants, potentially reducing the enhanced 90% federal medical assistance percentage (FMAP) to baseline levels around 50-80% depending on state policies.^{[94] [95]} These shifts aim to incentivize states to implement work requirements, eligibility verifications, and cost-sharing mechanisms, which could narrow the coverage gap in non-expansion states by promoting employment-linked coverage or private alternatives rather than uncapped entitlements, though critics argue such caps risk coverage losses without empirical evidence of improved health outcomes from prior work requirement experiments in Arkansas and Kentucky, where administrative burdens led to disenrollments without sustained employment gains. ^[96] At the state level, ballot initiatives remain a key mechanism for bypassing legislative resistance in the 10 holdout states—Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming—where approximately 2 million individuals fall into the coverage gap ineligible for traditional Medicaid or ACA subsidies.^[3] Voters have approved expansion via ballot in seven instances since 2018, including Oklahoma's Question 802 in 2020, which passed with 50.5% support and subsequently enrolled over 200,000 residents, demonstrating direct democracy's potential to override gubernatorial vetoes.^[97] However, failures persist, as evidenced by South Dakota's Amendment D in 2022, rejected by 52% of voters amid concerns over fiscal dependency and insufficient work incentives.) Ongoing campaigns target 2026 ballots, with Kansas organizers launching a signature drive in February 2024 to propose expansion for adults up to 138% of the federal poverty level, potentially closing a gap affecting 150,000 Kansans if approved, though opposition highlights projected state costs of $100 million annually post-federal ramp-up.^[3] Similarly, Mississippi advocates are gathering signatures for a 2026 measure following failed legislative bids in 2024, where bills stalled despite estimates of $1.2 billion in federal funds over a decade.^[98] These initiatives face headwinds from federal reforms, as reduced FMAP incentives could deter adoption, prompting some states like Georgia to pursue hybrid models such as its 2023 Pathways program, which conditions limited expansion on premiums and provider taxes to mitigate the gap without full ACA compliance.^[99] Empirical data from expansion states show coverage gains but mixed fiscal impacts, with non-federal spending rising 10-15% in some cases, informing debates over ballot viability.^[70]