Millions of Low-Income Americans Could Get Medicaid Under the ARPA – If Politics Don’t Get in the Way

Medicaid could get better for millions of Americans thanks to the American Rescue Plan Act of 2021. Not since the Affordable Care Act (ACA, or Obamacare, as it’s more commonly known) passed in 2010 has there been as big an opportunity to improve coverage for low-income people.

But unlike the $1,400 stimulus checks already making their way to 159 million households, expansion of Medicaid benefits and eligibility faces numerous hurdles. Especially in red states with Republican leadership, those hurdles may be insurmountable.

Medicaid is the single largest insurance program in the United States, covering 77 million low-income Americans, including nearly 40 percent of children under 18. During the pandemic, more than six million people newly enrolled. The $600 billion budget comes from a mix of state and federal funding, but Medicaid is administered by the states.

Under the $1.9 trillion American Rescue Plan, Medicaid could get a major, though temporary, boost.

The new law increases federal funding for home- and community-based services and for mental health and substance use disorder treatment. It fully funds Covid-19 vaccination and treatment for Medicaid members, and allows states to cover postpartum women for up to 12 months after they give birth, far surpassing the current 60-day limit.

As Dr. SreyRam Kuy, a Houston-based surgeon and former chief medical officer for Louisiana Medicaid, put it, “This is a huge deal.”

The longer coverage would give low-income women mental health care, treatment for chronic conditions, and contraception—services that can reduce the risk of premature births and infant or maternal mortality in subsequent pregnancies.

For all of the potential benefits, however, it may be a while before low-income consumers feel a direct impact—if they benefit from them at all.

Implementing the law requires interpreting Congress’ intent, agreeing on state-specific approaches, and finding the money for the state’s share of the costs. Just clarifying the rules is difficult because of top leadership vacancies at key agencies. The incoming Medicaid administrator hasn’t even been named by President Joe Biden, let alone confirmed by the Senate.

“These are really, really complicated issues and the bill was just passed,” said Matt Salo, executive director of the National Association of Medicaid Directors. “It’s practically very challenging for the career staff to come out and say, ‘Here is the Administration’s policy.’ ”

The clock is already ticking on the year-long funding increases, which may deter states from doing anything too ambitious, especially if they’re already struggling economically.

“If you've got a huge budget deficit, you're probably not looking to spend new money anywhere, let alone something that has to be sustained in perpetuity,” Salo said.

The greatest casualty of a cautious approach may be Medicaid expansion in 12 states that did not adopt the portion of the ACA that allowed for similar expansion. Four million uninsured residents could get covered if states accept financial incentives to expand Medicaid eligibility. Currently, a Texas parent in a family of three only qualifies if they earn 17 percent of the federal poverty level or less. That’s less than $4,000 per year.

“There are a variety of complex reasons why states have not adopted the expansion seven years after the ACA went live, but nine of the top ten are political or ideological,” Salo said. “The tenth is financial.”

Though the Kaiser Family Foundation estimates that federal matching funds would offset states’ investment by nearly $10 billion, the money may not be enough to overcome political and ideological objections to an expanded Medicaid program.

Republicans spent years arguing against the ACA, trying to overturn it through Congress and the courts. Pivoting now could be political suicide for elected state officials, or at least an invitation for primary challenges not just from Democrats but also their fellow Republicans.

“The enhanced match, I think it gets people to the table because that’s a lot of money,” Salo said. “But I don’t think it’s enough to seal the deal in most of these states because they’re still going to need some kind of secretly or legitimate ideological compromise to be able to show that it’s not just Obamacare.”

Texas, for instance, stands to receive up to $5 billion in increased federal funding; after kicking in $3 billion for the state’s portion, they would net $1.9 billion. In Florida, the federal funds would be worth nearly $3.1 billion, $1.8 billion after the state’s portion.

Compromise could be one way to overcome political resistance, according to Salo. Prior administrations negotiated unique approaches in certain states to cover more people while accommodating local political realities. For example, the Obama Administration allowed Indiana to require Medicaid enrollees to contribute to health savings accounts and Michigan to charge Medicaid members monthly premiums.

When Louisiana expanded Medicaid in 2016, the rate of uninsured low-income adults dropped six percentage points within a year, according to the Commonwealth Fund. The share of low-income adults who went without medical care dropped to 28 percent from 37 percent.

Bambi Bland, who lives outside Baton Rouge, thanks Medicaid for her access to treatment for severe digestive issues. Diagnosed with multiple chronic conditions, she says she lost 80 pounds in three months. Unable to work, Bland also lost her full-time job with insurance benefits. One of her medications, an injection called Cimiva, costs $4,500 every two weeks. Without Medicaid, she’d have had to discontinue the treatment. But then she qualified for the federal insurance program.

Bland now works part-time and has to keep her monthly earnings below $2,000 to maintain Medicaid eligibility -- a political Catch-22 that keeps her healthier but also stuck financially.  

“It definitely was a little bit of a challenge trying to pick and choose career versus health,” she said. “But to me, being able to have any kind of care is extremely important.”

Kuy saw countless people like Bland as she traveled across Louisiana during the state’s original Medicaid expansion. One patient had gotten emergency care for sickle cell disease, but couldn’t get ongoing treatment for other conditions. As soon as he was eligible for Medicaid, he got a primary care doctor and eye surgery to reattach his retina.

“That's just one of the many, many stories I heard from patients about how access to healthcare impacted their lives in real ways,” Kuy said.

It may fall to patients in need to apply public pressure and change the political equation. Voters in four red states took matters into their own hands with ballot initiatives on whether their states should expand Medicaid. But voters can also contact their local representatives to push them to take advantage of new federal funding opportunities.

“This is basic civics,” Salo said. “The democratic process is: If you want your government to do something, you’ve got to engage with your elected officials.”

Deborah D. Gordon, a former health insurance executive, is author of The Health Care Consumer’s Manifesto: How to Get the Most for Your Money (Praeger, 2020).