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A Tale of Two Countries, Medicaid Non-Expansion States Increase Disparities-The HSB Blog 8/16/21

Our Take:

Health disparities are even more dominant in the 18 states that did not expand Medicaid under the Affordable Care Act (ACA), leading to greater unnecessary drains on state budgets. For example, in West Virginia which did expand Medicaid, the uninsured rate among Blacks and Hispanics dropped by over 60%, while the decline was under 20% in states that did not expand Medicaid. Similarly, as noted in a study by the Commonwealth Fund, while Medicaid expansion increases total Medicaid spending by approximately 23% and federal Medicaid spending by 38%, it has not increased state Medicaid spending, at least in the period between 2015-2019. As noted in the report, this is because “states can save from 15 cents to 40 cents on every dollar of care it can shift to expansion (assuming 2020 expansion match rates).” Given the emerging disparities in healthcare access and affordability amongst Americans, the expansion of Medicaid by the states is crucial to help reduce the differences in health outcomes, the prevalence of chronic diseases, and other health disparities.

Key Takeaways:

  • During 2014–17, Medicaid expansion was associated with a 4.4 percent to 4.7 percent reduction in state spending on traditional Medicaid.

  • Although the ACA improved healthcare access and reduced the rate of the uninsured, it did not close the racial gap in healthcare coverage (Health Equity)

  • According to the Commonwealth Fund, “states can save from 15-40 cents on every dollar of care it can shift to expansion (assuming 2020 Federal fund matching rates).”

  • Over 500K Louisianans have enrolled in Medicaid since expansion in 2016, including those seeking care for hypertension (59K), colon cancer (53K), and diabetes (22K) all conditions that disproportionately impact the underserved.

The Problem:

Enacted in 1965, Medicaid, is a joint federal and state healthcare program that is financed jointly by funds provided by the federal government and state governments. Under the program, the federal government matches each dollar of state spending on its Medicaid program. The federal match rate varies by state and is based on what is referred to as a federal “matching formula”. The percentage match ranges from a minimum of 50% to nearly 79% in the poorest state (Alabama) and averages just over 56% nationwide for FY 2022. Under the ACA Medicaid coverage was expanded to nonelderly adults with income up to 138% FPL (~ $17,000 for an individual in 2019) with enhanced federal matching funds. Prior to enactment of the law, individuals typically had to meet very strict state eligibility standards to qualify with many low-income adults failing to qualify and thereby lacking coverage. Moreover, most states and federal laws also excluded adults without dependent children from Medicaid no matter what their income level (or lack of it). The ACA effectively eliminated many of these burdensome eligibility criteria and extended coverage to adults that did not have dependent children.

However, as part of the ACA, states were required to expand Medicaid coverage or face a penalty. Arguing that States should have a choice in expansion, in 2012 the National Federation of Independent Business (NFIB) backed by a number of states sued to block the implementation of the ACA in the National Federation of Independent Business v. Sebelius (“Sebelius”). In this case, the states argued against the constitutionality of Medicaid expansion since it compelled states to follow federal regulations, among other things. In 2012, the Supreme Court ruled letting the bulk of the ACA stand but held that penalizing states for not expanding Medicaid was an unconstitutional exercise of Executive branch power, thereby leaving it to the states to decide whether to expand Medicaid. Following the Supreme Court’s ruling in Sebelius expansion of Medicaid became largely a political litmus test with states run by Democratic governors largely expanding Medicaid and states run by Republican governors largely opposing the expansion of Medicaid. This resulted in a patchwork of policies and coverage for the underserved and low-income individuals.

The Backdrop:

Due to the polarizing nature of the ACA and the political environment in the U.S. at the time, many states chose not to expand Medicaid for their residents. Since, as noted by the Kaiser Family Foundation, “Medicaid is the nation’s public health insurance program for people with low income and covers 1 in 5 Americans. With the vast majority of Medicaid enrollees lacking access to other affordable health insurance. including many with complex and costly needs for care”, many were left without care or substandard care. However, it was not until recently that studies look at the disparity of care among the underserved between expansion and non-expansion states. Not surprisingly these studies have found distinct differences in care for low-income and minority populations in Medicaid expansion and non-expansion states.

For example, a November 2020 article in Health Affairs found that “by comparing changes in outcomes for low-income women in expansion and non-expansion states, [they] document greater pre-conception health counseling, pregnancy folic acid intake (which reduces the likelihood certain birth defects in newborns), and postpartum use of effective birth control methods among low-income women (reducing the likelihood of unplanned pregnancies) all associated with Medicaid expansion. This is particularly important as according to the March of Dimes, Medicaid covers roughly half of all births in the United States, including many high-risk pregnancies. In addition, a study entitled “Medicaid and Mortality: New Evidence from Linked Survey and Administrative Data” (“Medicaid and Mortality”) found that failure to expand Medicaid in states likely resulted in 15,600 additional deaths over this four-year period that could have been avoided had these states elected to expand coverage.” The study stated that individuals aged 55 to 64 in low-income households have four times higher mortality rate compared to 0.4 mortality rate for higher-income individuals in the same age group. Similarly, according to the Center for Budget on Budget and Policy Priorities (CBBP), “the share of opioid-related hospitalizations in which the patient was uninsured has plummeted 79 percent in expansion states, compared to just 5 percent in non-expansion states.” The CBBP also notes that more than 550,000 Louisianans have enrolled in expansion coverage since the state expanded Medicaid in 2016, including those seeking treatment for hypertension (59,000), colon cancer (53,000), and diabetes (22,000) all conditions that disproportionately impact the underserved and low-income communities.


While the ACA was successful in helping to reduce racial and ethnic disparities in healthcare coverage, particularly among the uninsured, the results were uneven due to the differences in coverage for expansion and non-expansion states. As demonstrated above additional disparities in access and quality care can be mitigated by further expanding Medicaid to those states that have chosen not to do so. For example, according to the Kaiser Family Foundation, if all states that are currently eligible to expand Medicaid were to do so 2.2 million people would gain coverage as would an additional 1.8 million people with incomes of between 100% and 138% of the federal poverty level. This is particularly important as KFF points out more than 30.2% of nonelderly adults without coverage said that they went without needed care in the past year because of the cost compared to 5.3% of adults with private coverage and 9.5% of adults with public coverage. Moreover, as noted earlier, this expansion would come at savings to the states of between 15-40 cents of any dollar the state spends on care. In addition, an analysis by the CBBP finds that costs for uncompensated hospital care, which was provided by hospitals but never paid, would actually decline by approximately $18B (using 2016 dollars) if Medicaid expansion were broadened. As demonstrated by the Coronavirus Pandemic, the underserved and low-income are most at risk in healthcare. As highlighted in Medicaid and Mortality above, Medicaid is the largest insurance provider for 72 million low-income Americans who often face higher rates of “diabetes (by 787%), cardiovascular disease (552%), and respiratory disease (813%) relative to those in higher-income households” with the authors concluding that Medicaid expansion can dramatically reduce mortality rates for low-income individuals. Clearly underserved communities stand to receive greater health benefits, lower prevalence of chronic conditions, and a reduction in the rate of uninsured by expanding coverage.

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