Bills
| 3.23.22

Do States Need More Federal Funds to Expand Medicaid? (H.R. 584)

Do you support or oppose this bill?

What is H.R. 584?

(Updated March 26, 2020)

This bill — the Incentivizing Medicaid Expansion Act — would amend Medicaid to give states that expand their Medicaid coverage for individuals who are newly eligible under the Affordable Care Act (aka Obamacare) the enhanced Federal Medical Assistance Percentage (FMAP) when the expansion occurs. In essence, it would mean that those states would get more matching funds for their Medicaid program by expanding their coverage.

Currently, the enhanced FMAP equates to 100 percent in 2014-2016, 95 percent in 2017, 94 percent in 2019, and 90 percent thereafter. This bill would retain the enhanced FMAP but base it on a term of years rather than specific dates, so states would get three years of full federal funding when they expand Medicaid.

The bill would also apply retroactively, so states that have already expanded their Medicaid programs would receive the FMAP based on when their expansion occurred.

Argument in favor

States that haven’t expanded Medicaid for people who are newly eligible under the Affordable Care Act should receive extra federal funds if they do so.

Argument opposed

The federal government shouldn’t be bribing states with taxpayer dollars to expand Medicaid. If they want to, they will make their own decision to expand it.

Impact

States that have already, or are yet to expand their Medicaid program; and the federal government.

Cost of H.R. 584

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Rep. Marc Veasey (D-TX) reintroduced this bill from the 115th Congress to encourage the 14 states that have yet to expand Medicaid under the Affordable Care Act (ACA) to do so by giving them extra funds for the expansion:

“The bill will create an incentive for all eligible States to provide affordable health care coverage for all of their citizens. In Texas, approximately 638,000 people would gain coverage if Medicaid were expanded. This is a no-brainer for the state of Texas and for the fourteen states across the country who haven’t adopted this program.” 

Original cosponsoring Rep. Terri Sewell (D-AL) adds that the "writing is on the wall" for states that have yet to expand Medicaid: 

"The writing is on the wall and the facts are clear: premiums and health care costs are higher in states that have not expanded Medicaid. And over 90% of rural hospital closures have been in states that did not expand Medicaid before the closure. In my state, approximately 314,000 more Alabamians would be covered under Medicaid expansion. Not doing so is a poor decision. And while I can’t force Alabama’s governor to expand Medicaid, I can continue to promote legislation that provides more incentives for her to do so. T[his] legislation is a step in the right direction."

Last Congress — and in the years before it — Rep. Gene Green (D-TX) introduced this bill to incentivize states that haven’t yet expanded Medicaid to do so:

“Expanding Medicaid is as much of a good deal for states as it is for patients. In our District alone, 55,000 residents would gain coverage if Texas expanded Medicaid, and 1 million people would gain coverage statewide. Under the ACA, this would happen at minimal cost to the state with the federal government financing 100 percent of expansion costs for the first three years and after that, no less than 90 percent on a permanent basis. Rather than letting the 90 percent match rate take effect in 2017 as originally written into the ACA, this bill would allow all states who expand now or in the future to receive 100 percent backing for 3 years from the date of expansion.”

Those who oppose states expanding their Medicaid programs argue that federal assistance will decline over time and that even without the expansion, many states struggle to balance their budget each year. Not only that, but Medicaid is the largest expenditure for most states and its costs increase faster than tax revenue can be brought in to keep pace.

In the current session of Congress, there are 18 Democratic cosponsors of this bill. Last Congress, this bill had four Democratic cosponsors and didn't receive a subcommittee vote. In the 114th Congress, it had 18 Democratic cosponsors in the House and didn't receive a subcommittee vote.


Of Note: Following a 2012 ruling by the U.S. Supreme Court that states weren’t required to expand their Medicaid programs to accommodate the Affordable Care Act, 19 states opted not to expand their program. As of this bill's reintroduction in mid-January 2019, 14 states — Alabama, Georgia, Florida, Kansas Mississippi, Missouri, North Carolina, Oklahoma, Tennessee, Texas, South Carolina, South Dakota, Wisconsin, and Wyoming — had yet to expand their Medicaid programs under the ACA.

Rep. Veasey's office estimates that states that opt out of the Medicaid expansion are missing out on $305 billion over the 2013-2022 period. Medicaid expansion under the ACA allows states to receive 100 percent Federal Medical Assistance Percentages for the first three years a newly-eligible individual is enrolled in the Medicaid program, 95 percent for the fourth year, 94 percent for the fifth year, 93 percent for the sixth year, and 90 percent each year thereafter — in short, a significant cost reduction for states.


Media:

Summary by Eric Revell

(Photo Credit: Ragesoss / Creative Commons)