Medicaid Expansion

In order to dramatically reduce the number of uninsured people in the United States, Obamacare provides substantial Medicaid expansion for qualified individuals. The Medicaid threshold before Obamacare was different for various groups. For example, for pregnant woman the Federal threshold was 133% of the Federal Poverty Level (FPL); but for working parents it was just 25% of the FPL. Obamacare sets an equal, common threshold 133% for all groups. Because the first 5% of income will be disregarded, this means that adult residents with a household income below 138% of the FPL will be eligible for the Medicaid expansion.

Medicaid Expansion: State by State

Before Obamacare, individual eligibility for Medicaid was very much dependent on the state. Some states (like Minnesota) had a very generous threshold largely exceeding the Federal requirements. Other states (like Alabama) were level with the Federal minimum. (See Table 1). Therefore, the impact of Medicaid expansion in states like Minnesota was quite different from states like Alabama (see Tables 2,3). (All tables below are taken from the ObamaCare Survival Guide. The latest data have been used, whenever available).

Table 1 – Pre-Obamacare Medicaid Threshold for Different States

State Jobless Parents  Working Parents Children’s Age Pregnant Women Adults w/o Children Avg Rank
0-1 2-5 6-19
Minnesota 275 275 280 275 275 275 Not Eligible 276 1
N. Mexico 30 69 235 235 235 235 Not Eligible 173 11
Tennessee 73 134 185 133 100 250 Not Eligible 146 21
Kentucky 36 62 185 150 150 185 Not Eligible 128 31
S. Dakota 54 54 140 140 140 133 Not Eligible 110 41
Alabama 11 25 133 133 100 133 Not Eligible 89 51

Table 2 – Impact of Medicaid Expansion on Minnesota

Jobless Parents Working Parents Children’s Age Pregnant Women Adults w/o Children
0-1 2-5 6-19
Before ObamaCare 275 275 280 275 275 275 Not Eligible
After ObamaCare 133 133 133 133 133 133 133
More Enrollees? Probably a Slight Increase YES


Table 3 – Impact of Medicaid Expansion on Alabama

  Jobless Parents Working Parents Children’s Age Pregnant Women Adults w/o Children
0-1 2-5 6-19
Before ObamaCare 11 25 133 133 100 133 Not Eligible
After ObamaCare 133 133 133 133 133 133 133
More Enrollees? Big Increase Slight Increase YES

Paying for the new Medicaid under Obamacare

Who will pay for Medicaid Expansion? During the first 3 years (2014-2016), the United States government will pay 100% of the cost. In subsequent years, the share of each state will increase – up to 10% in 2020 (see Table 4). Compare this with 57%; which is how much the U.S. Government pays for the cost of Medicaid to each state today. Obviously, individuals that are “newly eligible” for Medicaid (qualified after Jan. 1, 2014) will cost much less to states than the “old eligible”.

Table 4 – Paying for the new Medicaid

Year U.S. Government Each State Pays
2014 to 2016 100% 0%
2017 95% 5%
2018 94% 6%
2019 93% 7%
2020 90% 10%

According to the Supreme Court Ruling, U.S. States are allowed not to participate in the Medicaid expansion program; some states plan to do so.  In such states people with income 100-138% of the FPL will not be covered by Medicaid. They will also be exempt from the Obamacare mandate. They are free to purchase health insurance through the exchanges, but they are not legally required to do so.

The tax credits included in the Obamacare will be offered only to individuals with household incomes between 100% and 400% of the FPL. The individuals with household incomes below the FPL but above the Medicaid eligibility (usually well below the FPL) will not qualify either for the tax credits or Medicaid if they live in states not participating in the Medicaid expansion.

Update. As of January 1, 2015, there are 28 states that participate in Medicaid expansion. The latest of the states, Pennsylvania, joined the list in 2015.

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