Marketplace Pulse: Let’s Close the Coverage Gap


The Marketplace Pulse series provides expert insights on timely policy topics related to the health insurance marketplaces. The series, authored by RWJF Senior Policy Adviser Katherine Hempstead, analyzes changes in the individual market; shifting carrier trends; nationwide insurance data; and more to help states, researchers, and policymakers better understand the pulse of the marketplace.

Since the passage of the American Rescue Plan, there has been interest in the potential timeline for Medicaid expansion in the remaining states. The Rescue Plan sweetened what was already a generous offer for the non-expansion states—maintaining the 90 percent federal match for the expansion population, while increasing the Federal Medical Assistance Percentage (FMAP) on the remaining Medicaid program by five percentage points. The offer is on the table without any expiration date, and the increased FMAP will be in effect for two years after the state expands. The 90 percent federal match on the expansion population will remain.

Expansion is a no-brainer from a fiscal perspective, but the politics are complicated in the 12 remaining states. Promising signs have emerged in some, while others seem intransigent. The recent revocation of Medicaid waivers in a number of states, most recently Texas, added some pressure to an already dynamic environment, and it is not clear what might happen in the short to medium run. Due to the likelihood of continued inaction, especially in the larger states, the possibility of a federal solution has been considered. 

While such a solution is feasible, it will not be simple. Policymakers will need to provide appropriate coverage to the eligible population, while being fair to the states that already expanded. Meanwhile, an increasing number of health and other policy priorities are crowding the table. Some members from expansion states may not want to prioritize actions that won’t benefit their constituents and may be tempted to let these 12 states sort it out for themselves.

The issue of Medicaid expansion was not mentioned in President Biden’s recent address to Congress, raising concern that the issue could slip off the agenda.

Here are the reasons why it should not:

Center on Budget and Policy Priorities

Closing Medicaid Coverage Gap Would Help Diverse Group and Narrow Racial Disparities

Extending health insurance to people in the coverage gap60 percent of whom are people of colorwill improve access to care, provide financial security and improve health outcomes.

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