“Partial” Medicaid Expansions Could Limit States’ Spending But Cover Fewer People at a Higher Federal Cost Compared to Traditional ACA Expansions

If states were able to receive enhanced Affordable Care Act matching funds for “partial” expansions of Medicaid, fewer people would get health coverage and the federal government would spend more, compared to a traditional expansion under the law, KFF explains in a new brief.

The explainer describes how a partial expansion would differ from a traditional ACA Medicaid expansion and summarizes some of the expected effects. It also documents which states have sought federal approval for a partial expansion, and the result.

Under a traditional ACA Medicaid expansion, states extend Medicaid coverage to individuals with incomes up to 138 percent of the federal poverty level. The federal government then covers the vast majority of the cost (93% in 2019, and 90% in 2020 and beyond), with the state paying the rest.

Some states are seeking to implement their Medicaid expansion with enhanced federal matching funds, but limit coverage to adults with incomes below the poverty line, leaving adults between 100 percent and 138 percent of poverty in the federal ACA marketplace. Covering those individuals in the ACA marketplace, which is subsidized wholly by the federal government, would limit Medicaid enrollment and save state dollars, but could result in limited coverage and increased federal costs relative to full expansion.

CMS has not approved previous waiver requests seeking enhanced matching funds for partial expansions in Arkansas and Massachusetts. Both states had already implemented full expansions but wanted to roll eligibility back to 100 percent of poverty. Utah, where full expansion was adopted via ballot initiative in November, has a waiver request pending with the Centers for Medicare and Medicaid Services (CMS) for a partial Medicaid expansion with enhanced ACA matching funds.

Also available is a new KFF brief providing an overview of the different approaches states have taken in adopting Medicaid expansion.