Total Medicaid Expansion Could Improve Uninsurance, Heath Equity

If the 12 states that have not yet expanded Medicaid eligibility adopted Medicaid expansion and the US achieved total Medicaid expansion, they could provide access to healthcare coverage for 3.7 million Americans, a Robert Wood Johnson Foundation and Urban Institute report found.

The report used Urban’s Health Insurance Policy Simulation Model (HIPSM) model to create a microsimulation of the healthcare system. The researchers used CMS Marketplace 2022 enrollment data and 2019 Medicaid enrollment data from the US Department of Health and Human Services (HHS) to estimate Marketplace and Medicaid coverage changes in 2023 if the 12 nonexpansion states expanded Medicaid.

If all 12 nonexpansion states adopted Medicaid expansion in 2023, overall Medicaid enrollment would surge by nearly 36 percent (6.4 million enrollees). Around 172,000 Americans who are currently in unregulated health plans might gain Medicaid coverage. Wyoming, Florida, and Kansas would see the biggest spikes in Medicaid enrollment.

“Enrollment could be higher than projected in states that conduct more effective outreach and application assistance. Conversely, it could be lower than projected if states impose premiums for Medicaid or additional restrictions such as work requirements,” the researchers noted.

Nonexpansion states’ uninsured populations would drop by nearly 30 percent altogether (3.7 million enrollees). Alabama, Mississippi, and South Carolina would see the biggest declines in uninsurance, dropping 45.0 percent, 42.0 percent, and 36.6 percent, respectively. Four states would still have uninsurance rates of 10 percent or above—Texas, Wyoming, Florida, and Georgia—but six nonexpansion states’ uninsurance rates would fall below the national median.

The policy could have a significant impact on insurance rates among young adults between the ages of 19 and 34, who would experience the biggest decline in uninsurance at 35.2 percent. Children would not gain Medicaid coverage due to new eligibility, but 10.8 percent more might gain coverage when their newly-eligible parents enroll.

Additionally, total Medicaid expansion could impact health equity. Uninsurance among Black individuals would drop by 46.1 percent from 13.2 percent to 7.1 percent with total Medicaid expansion. This decline, alongside declines in uninsurance among White individuals, would create equal uninsurance rates between Black and White enrollees.

Black women who are of reproductive age would see the biggest insurance gains from total Medicaid coverage. Researchers estimated that this population would experience a 53.7 percent increase in coverage.

In the Hispanic community, uninsurance would drop by 18.6 percent from 27.5 percent to 22.4 percent. In states like Texas and Florida, immigrants have a particularly challenging time accessing healthcare coverage, both legal and undocumented immigrants. While Medicaid expansion would decrease uninsurance in this population, the Hispanic community would still have the highest uninsurance rate.

Medicaid expansion would also decrease uninsurance among men by 26.2 percent and uninsurance among women by 32.6 percent.

The researchers also examined the costs associated with total Medicaid expansion.

At the federal level, total Medicaid expansion would boost spending by $34.5 billion in the 12 nonexpansion states. Kansas, Texas, Alabama, and South Carolina would see the biggest boosts in federal funding for Medicaid. This estimate excluded the American Rescue Plan Act’s temporary federal Medicaid matching rate bump.

The nonexpansion states would see $2.7 billion higher Medicaid spending, with the biggest increases in Mississippi, Alabama, and Wyoming. This estimate also excludes the temporary effects of the American Rescue Plan Act.

Uncompensated care would likely decline in volume, but it would not necessarily accompany a decline in government spending. Savings would offset state Medicaid spending increases by 60 percent.

“Financing by state and local governments is more complicated. We assume that half of the change in demand for uncompensated care will be realized as savings,” the report explained.

“We did not estimate these savings by state because considerable variation would be likely.”

Separate studies have found that states that had high uninsurance rates saw slight declines in administrative spending when they adopted Medicaid expansion. Additionally, Medicaid expansion has been tied to greater access to coverage.