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Democrats Push for State Medicaid Expansions That Could Benefit Roughly 4 Million Americans

Amanda Caroline da Silva | E+ | Getty Images

Democrats are reviving efforts to expand Medicaid in the latest $1.9 trillion Covid-19 relief package, which could benefit about 4 million Americans at a time when health care is critical. 

Late on Tuesday, the House Energy and Commerce Committee released the details of the legislative recommendations for the budget reconciliation process that Democrats have undertaken to pass the latest relief package. 

Among the provisions is a new incentive for states that have not yet expanded their Medicaid programs, which provides health care to low-income Americans. The legislation would direct the federal government to pay an extra 5% of all Medicaid costs for up to two years for states that "newly expand Medicaid," according to the committee's memorandum. 

Currently there are 12 states — Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin and Wyoming — that have not expanded their Medicaid program to cover more low-income residents. Missouri and Oklahoma expanded their Medicaid programs, but plan to implement the changes in July this year. 

Typically, adults making less than 100% of the federal poverty level (about $12,760 for an individual) can qualify for Medicaid, although eligibility requirements vary by state. Yet there's a coverage gap between where Medicaid program coverage ends and available subsidies for the Affordable Care Act plans start to become available. 

Many states have opted to expand their Medicaid programs to cover those who make too much to be eligible for the previous Medicaid income limits, yet don't qualify for any additional ACA subsidies to make the Obamacare plans affordable.

Medicaid expansions typically increase the program's income cap from 100% of the federal poverty level to cover anyone making up to 138% of the poverty level. In 2020, that was $17,609 for individuals and $36,156 for a family of four. That said, some states have expanded their programs at different levels.

A single, 40-year-old non-smoker would spend about $436 per month for an unsubsidized silver plan through an ACA marketplace, according to Kaiser Family Foundation. If they're earning 138% of the poverty level threshold, that's equal to about a third of their income.

Meanwhile, Medicaid typically covers the costs of hospital and doctor's visits, as well as laboratory services and prescriptions, making out-of-pocket costs minimal for most participants.

If all 12 holdout states were to take advantage of the new incentives and expand their Medicaid programs, about 2.2 million U.S. adults currently stuck in this coverage gap would become eligible for Medicaid, according to KFF. Plus, about 1.8 million more people would benefit because they would get more comprehensive benefits and lower premiums through expanded Medicaid than they currently receive through an ACA health plan. 

About 77% of people that fall into this so-called coverage gap are American adults without children, according to Kaiser's estimates. Keep in mind that those age 65 and older can get Medicare, so those who would benefit through Medicaid expansion are generally younger than that.

Research has shown that Medicaid expansion has been linked to better health outcomes, including increased access to primary care, preventative health services and medication, as well lower out-of-pocket expenses.

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