With New Subsidies, Holdout States May Expand Medicaid

With the passage of the American Rescue Plan (ARP), states that haven’t expanded Medicaid have an extra reason to do so: the COVID-19 relief bill offers financial incentives to states that increase Medicaid eligibility under the Affordable Care Act (ACA). Some states where Medicaid expansion has historically been a nonstarter to conservative elected officials are reconsidering their status — and the biggest states that haven’t yet expanded Medicaid, Florida and Texas, may even change their tune in coming years.

The ARP gives states that expand Medicaid a 5 percentage-point increase in their Federal Medical Assistance Percentage (FMAP) for the first two years of expansion. That’s in addition to the 6.2 percentage-point FMAP increase that all states are getting for the duration of the COVID-19 public health emergency, and the 90% federal funding match rate that Medicaid expansion states receive under the ACA.

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