At present, 11 states have declined to expand Medicaid to all people with incomes below 138% of the federal poverty level (FPL), as permitted under the Affordable Care Act (ACA). In these states, adults with incomes below 100% of the FPL typically lack access to subsidized health insurance coverage.[1] Adults with incomes between 100 and 138% of the FPL are eligible for subsidized coverage through the ACA Marketplaces, but face higher cost-sharing and, prior to recent legislation, higher premiums than they would in Medicaid. These states’ decisions are estimated to have reduced coverage by 3.7 million people, while worsening financial security, access to health care, and health outcomes, including mortality.

In 2021 and 2022, Congress considered two ways of addressing these gaps in coverage but did not enact either. The first was for the Centers for Medicaid Services (CMS) to operate a “federal Medicaid program” in the non-expansion states that would, in effect, directly substitute for the missing state Medicaid expansion. The second, which was passed by the House of Representatives, was to extend eligibility for subsidized Marketplace coverage to people below the poverty line, while modifying how Marketplace coverage functions for people below 138% of the FPL to make it more “Medicaid-like.”

The analysis considers the relative merits of these two approaches, with the goal of helping policymakers choose between them if the Medicaid coverage gap returns to Congress’ agenda in the future. I compare the approaches along four dimensions that would be central to policymakers’ decisions: (1) number of people covered; (2) quality of coverage; (3) per enrollee fiscal cost; and (4) ease of implementation.

My overarching conclusion is that these two approaches are similar. Both would ensure that people with incomes below 138% of the FPL are eligible for zero- (or near-zero) premium coverage that covers a broad set of services with minimal cost-sharing; as such, either would largely or entirely fill the gaps left by state decisions not to expand Medicaid.[2] However, there are also differences worth considering along each of the four dimensions listed above. The nature of those differences would depend on the details of each legislative proposal and CMS’ implementation decisions, and it appears unlikely that either approach would outperform the other on all four dimensions.

Read the full article about expanding Medicaid coverage by Matthew Fiedler at Brookings.