White House

The Affordable Care Act’s Medicaid Expansion

Through the Affordable Care Act (ACA), Congress sought to extend Medicaid benefits to previously uncovered adults by creating a new mandatory eligibility group that states must cover, beginning in 2014: non-elderly, non-disabled adults with incomes less than 133 percent FPL. To help states fund this expansion, the federal government agreed to pay 100 percent of the costs for this new population from 2014 through 2016, at which point the subsidy will gradually phase down until it reaches 90 percent in 2020, where it will remain. Using its Spending Power, which allows Congress to attach conditions on the receipt of federal funds, lawmakers attempted to make all of a state’s federal Medicaid funds, not just those associated with this newly-eligible population, contingent upon the state’s compliance with the Medicaid expansion.

Arguing that such an enforcement mechanism is unduly coercive, 26 states successfully challenged the constitutionality of this ACA provision. In June 2012, the Supreme Court found the application of the ACA’s Medicaid expansion as a mandate to be unconstitutional. To remedy this aspect of the law while leaving the rest intact, the Court essentially made state participation in the expansion optional by limiting the penalty for non-compliance to a loss of federal funding associated with the expansion only, rather than all of the state’s Medicaid funding.

With coverage of this new adult population now optional, state officials have spent the intervening months weighing participation in the expansion, with varying results. ADvancing States is monitoring state trends and progress around this issue, via the Medicaid Expansion Tracker.