By Rachana Pradhan
The Affordable Care Act originally included Medicaid expansion in all states, but the Supreme Court, as part of the 2012 decision upholding the constitutionality of the individual mandate, made it optional. In those early years, only a handful of Republican-led states expanded the program, but several more signed on in subsequent years, in a few cases because of a change in political leadership or because of a voter referendum. That brings the number of expansion states to three dozen plus Washington, DC – but there are still 14 holdouts. (You can follow the updated count on this KFF tracker.)
Some of the non-expansion states are pitching a “partial expansion.” But none has yet achieved it. Here’s what you have to understand about the motivations and the barriers.
In many states where the idea of adopting a core part of “Obamacare” is still anathema to conservatives, Republicans who are feeling pressure to reduce their uninsured rates are pitching an alternative approach known as a “partial expansion.” The general idea is to expand Medicaid benefits to some – but not all – adults who are eligible for full Medicaid expansion under the Affordable Care Act, and the state would still get the huge infusion of federal dollars that the law sets aside for expanding coverage to low-income people. How would this idea work in practice? Who is asking for it? What effect would it have on the uninsured?
1. A major aim is to give states lots of federal money without fully adopting “Obamacare.”
Under the Affordable Care Act, states receive billions in enhanced federal funds if they expand Medicaid eligibility to low-income adults earning up to 138% of the federal poverty line – which amounts to about $17,200 annually for a single person. When the law was initially drafted, that Medicaid expansion program was mandatory for states. However, the Supreme Court in 2012 decided that the federal government could not force states to do it. Fourteen states (as of late 2019) still shun the program, in part due to budgetary concerns but also because of ongoing conservative disdain for “Obamacare.”
Yet, legislators in some of those holdout states have advocated for a middle path known as a “partial expansion” – letting states receive the Affordable Care Act’s significant Medicaid resources but not expanding fully up to 138% FPL. A true partial expansion would meet both criteria.
The money is the main incentive. Under the health care law, the federal government covers at least 90% of the costs of the newly eligible Medicaid enrollees, a much higher federal share than what states normally receive for covering low-income people under Medicaid. Typically, the federal government covers between 50% and 77% of costs.
2. Who has pushed this proposal?
Republican governors and other GOP state officials have been the main proponents. States that have recently urged the Trump administration for this permission include Arkansas, Georgia, Massachusetts and Utah.
Arkansas and Massachusetts have full Medicaid expansion, but want to roll it back and transfer people above the poverty line to the ACA’s private insurance exchanges with federal subsidies. Utah voters approved full expansion in a 2018 ballot initiative, but the Republican-controlled state government has been pushing a partial expansion alternative. It is covering individuals up to the poverty line under Medicaid, but without the full ACA funding.
Generally, the state legislators who support partial expansion want to expand Medicaid coverage to low-income adults in poverty, but leave individuals in the 100-138% FPL bracket out of the safety net program. Part of the reasoning is because people above the poverty line can obtain heavily subsidized private health insurance through the exchanges, and that’s a cost that the federal government fully covers. If those enrollees were moved onto expanded Medicaid, states would have to cover 10% of their costs rather than the federal government paying all costs.
This idea predates President Trump’s administration. States first asked the Obama administration in the aftermath of the Supreme Court’s 2012 ruling.
3. Has any state succeeded in doing a partial Medicaid expansion?
No. The Obama and Trump administrations both rejected partial expansions – albeit for different reasons. Democrats shunned partial expansions because they wanted states to fully expand their programs as the ACA intended. The Trump administration has rejected partial expansions because it creates the appearance of a broader state acceptance of the ACA.
Wisconsin and Utah are two states with a policy that most closely resembles a partial expansion. They cover low-income adults up to the poverty line under Medicaid while those above poverty obtain private ACA coverage. However, it is not a true partial expansion because Wisconsin and Utah receive their regular Medicaid match which is less than the enhanced funding under the ACA.
4. It’s possible partial expansions could result in fewer people covered overall compared to full expansion.
More than 17 million low-income adults have gained Medicaid coverage in the states that have adopted the ACA expansion. Partial expansions would cover more low-income people than not expanding at all. But there is a wrinkle because of how many people would stay on private Obamacare plans.
Medicaid coverage is largely free of premiums and other out-of-pocket costs and is cheaper than the law’s subsidized private insurance options, making it easier for enrollees at or near poverty to keep their health care benefits. A 2018 study published in Health Affairs comparing the effects of Medicaid coverage to private insurance for the 100-138% FPL population found that low-income adults would face higher cost burdens – and would be more likely to be uninsured if they had private ACA coverage over Medicaid benefits.
For that population, living in a Medicaid expansion state led to a 4.5 percentage point reduction in the likelihood of being uninsured and $344 less in out-of-pocket spending relative to living in a non-expansion state, researchers found.
Expanding Medicaid also correlates with higher coverage rates overall. According to the latest U.S. Census estimates on health insurance rates, the uninsured rate in 2018 for individuals earning between the poverty line and 399% FPL – a population that qualifies for subsidized private insurance under the ACA – was higher in states that haven’t expanded Medicaid compared with states that adopted the program. In Medicaid expansion states, roughly 12.7% of people in that income range were uninsured, compared to 21.2% in non-expansion states.
On a larger scale, allowing partial expansions could reduce coverage because states that have already adopted the full ACA expansion could pare back their programs so that they only grant Medicaid benefits to adults below the poverty line. Arkansas and Massachusetts are emblematic of this dynamic because both states adopted full expansion early on.
5. Is this partial expansion idea legal, anyway?
The answer appears to be yes, even though the Obama administration argued that the ACA did not allow for partial expansions. While the text of the law doesn’t envision it, the federal government has broad powers to alter or waive parts of federal Medicaid law as long as a proposal is likely to promote Medicaid’s underlying objective – providing health coverage to the poor.
A 2017 article in the New England Journal of Medicine by Adrianna McIntyre, Allan Joseph and Nicholas Bagley makes this point. “Courts are likely to defer if CMS concludes that shifting Medicaid beneficiaries to private coverage will give them better access to their preferred physicians and hospitals. Pre-existing waiver authority thus appears to allow states to tinker with the ACA’s eligibility rules,” the trio wrote.
So, in short, partial expansion rejections are not rooted in whether the idea is illegal, but more so related to the policy and political implications of allowing states to do them.
Rachana Pradhan is a health care reporter who has specialized in Medicaid. She has been at Politico for five years, and will soon join Kaiser Health News.
