Medicaid Expansion Explained

Let’s start with the most important fact–millions of Americans have health insurance because of Medicaid expansion. We can’t say how many people right now have coverage thanks to Medicaid expansion because the number of insured in America and how the insured get their insurance is always changing.

Until Obamacare, Medicaid was primarily a program that provided health insurance to children, pregnant women, and people with disabilities. Obamacare expanded Medicaid to allow adults earning up to 138 percent of the Federal Poverty Level (FPL) to qualify for Medicaid. In some places, the figure is quoted as 133 percent of the FPL, but the formula used to calculate qualification for Medicaid expansion actually allows people earning up to 138 percent of the FPL to qualify for Medicaid. In 2017, an individual earning $16,642.80 can qualify for health insurance under Medicaid expansion.

For those qualifying for health insurance under Medicaid expansion, the federal government agreed to pay 100 percent of the cost through 2016. After that, the federal government’s share of funding for Medicaid expansion gradually decreases to 90 percent of the cost of patient care by 2020. This means that under Medicaid expansion, state governments will never be responsible for more than 10 percent of the cost of health care.

Under traditional Medicaid, the federal government’s contribution is determined by the Federal Medical Assistance Percentage (FMAP). The FMAP varies by state with the most important factor being each state’s per capita income. The FMAP ranges from 50 percent of the cost of traditional Medicaid in wealthy states to 75 percent of the cost in poor states. The average FMAP contribution paid by the federal government is 57 percent. The FMAP for each state is published annually in the Federal Register.

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