Federal Medicaid Expansion Incentives Offer Another Tool for States to Continue Coverage as Pandemic-Era Medicaid Rules End

Our new factsheet, “State Fiscal Incentives for Medicaid Expansion Continue after the End of Public Health Emergency” lays out the substantial federal financial incentives for Medicaid expansion remaining available to non-expansion states after April 1, 2023 when states begin the process of ending Medicaid continuous coverage pandemic protections, which allowed beneficiaries to remain enrolled for the duration of the COVID-19 public health emergency. As pandemic-era Medicaid coverage ends, non-Medicaid expansion states will face another barrier to helping parents and others losing coverage find an affordable option – exacerbating a persistent health coverage gap that doesn’t exist in the vast majority of states that have expanded Medicaid. However, states that do expand Medicaid to meet this challenge can count on significant federal financial assistance to do so.

This coming policy change is already having an effect in state discussions around Medicaid expansion. Discussion in the North Carolina House this month around passage of a bipartisan Medicaid expansion bill was notable for highlighting the challenge to the state of the end of pandemic-era Medicaid coverage and potential uses of the federal financial windfall from expansion in meeting state health workforce challenges.

Other states that haven’t expanded Medicaid are also debating this issue.  And helping drive the North Carolina debates are local county health workers and patients, especially in rural areas of the state who, “worry about the fallout” of increasing barriers to getting health care – a common theme across the country. Kansas, another state still refusing the Medicaid expansion, is seeing more interest from its Governor and Legislature about making the change given the potential drop in coverage. And debate about finally expanding has increased even in states that have long refused discussion around expansion like Alabama where the business community has stepped up pressure on lawmakers to find solutions.

These stories and discussions across Medicaid non-expansion states are previewing the much more intense discussions that will be happening in these states later this year as the continuous coverage requirement ends. The political debate around implementing Medicaid expansion in the 11 final non-expansion states has invariably been a discussion about hypotheticals and comparisons to other expansion states. How might life change for low-income parents and adults able to get regular preventive care for the first time? How much of a decrease in uninsured patients might hospitals see and how might that affect their ability to better serve patients? How much the state’s budget might save each year now that the federal government is paying for a majority of mental health care for thousands of low-income adults formerly only receiving needed care from underfunded state programs? How close can we expect our state to compare to Idaho or Montana where recent reports have shown tens of millions of dollars of state and hospital savings after Medicaid expansion?

However, the expiration of the continuous coverage provision turns this usual political hypothetical into a much more urgent and immediate dilemma for policymakers. Especially in non-expansion states, parents and adults will have had health coverage under Medicaid for several years already with regular doctor’s visits, treatment in progress and access to quality preventive care. Taking away that coverage without providing the option of Medicaid expansion will be much, much more difficult than debate over political hypotheticals. These are real people and real families who are going to be looking to policymakers for reasons why they are losing access to quality, affordable health coverage. And this fact will continue to bring the Medicaid expansion debate, especially its costs and consequences, into much sharper focus than ever.  Combine this with hundreds of millions of dollars in federal financial incentive bonuses still available for the final states to expand, on top of the federal government picking up 90 percent of expansion costs on a permanent basis, and Medicaid will continue to be a high-profile political issue for all 11 of the final states still refusing Medicaid expansion.