Ups and Downs of Medicaid Expansion

When Medicaid officially went into effect in 1966, the eligibility categories were very limited: The elderly (over age 65), low-income children without parents and their caretaker relatives, the blind, and the disabled. However, the Affordable Care Act (ACA) expanded Medicaid’s coverage so it was based on enrollees’ income levels. Initially, Medicaid expansion was to be a nationwide measure, but a 2012 Supreme Court decision left it up to each state to decide whether or not to participate. Under the law, the federal government pays 100% of the costs of expansion the first three years for states expanding eligibility to those earning up to 138% of the federal poverty level (FPL), or about $16,242 for an individual in 2015.

Overall, the trend has been towards adopting Medicaid expansion, which currently includess 30 states plus the District of Columbia. A recent Kaiser Family Foundation (KFF) study showed states that expanded Medicaid did better financially in fiscal year 2015, which ended Sept. 30, versus states that didn’t expand the program. Medicaid spending growth in expansion states was 3.4% versus 6.9% for non-expansion states.