Myths vs. Facts: Medicaid Expansion

The Patient Protection and Affordable Care Act passed in 2010 made a number of changes to Medicaid, but the biggest and most controversial change gave states the option of expanding their Medicaid programs to able bodied adults with income up to 133% of the federal poverty level (FPL). To date, only ten states have resisted this expansion of Medicaid. Looking at the data from states that have adopted expansion shows there are a lot of misconceptions about expansion and its proclaimed benefits.

Medicaid Expansion States

Source: KFF

Here are a few of the most common myths surrounding Medicaid expansion:

Myth:  Medicaid expansion improves access to health care for low-income individuals.

Fact Medicaid recipients in expansion states have a harder time accessing services, especially in the area of primary care providers. Physicians are less likely to accept new Medicaid patients than they are to take new private insurance patients. Increased enrollment in expansion states has exacerbated already strained resources. Often the original Medicaid population has an even more difficult time obtaining care. They also experience longer wait times for services. Increasing the number of Medicaid recipients has also led to higher emergency department usage by Medicaid patients.

Myth:  Medicaid expansion will help save rural hospitals.

Fact Rural hospitals are struggling across the country. Medicaid expansion is often touted as a solution for the financial woes many rural hospitals are facing. Medicaid expansion may be a very costly Band-Aid to the financial stability of rural hospitals in some cases, but it is not a long-term solution. In fact, it could do more harm than good. States that have expanded Medicaid have seen adults who previously had private insurance on the exchange shift to Medicaid coverage. That results in lower reimbursement rates for hospitals exacerbating their financial woes. One in four hospitals in expansion states are still at risk of closing, so Medicaid expansion isn’t the panacea it is claimed to be.

Myth:  Medicaid expansion leads to better health outcomes for residents.

Fact There is no evidence that Medicaid expansion leads to a healthier population. In fact, it may actually make things worse. A 2020 report looked at mortality rates among non-elderly adults in expansion vs. non-expansion states. They found mortality rates to be higher in expansion states. Extending Medicaid coverage to able-bodied adults necessarily reallocates resources away from the traditional Medicaid population. This can mean longer wait times, fewer services provided, and/or provider shortages.

Myth The federal government will cover most of the cost of Medicaid expansion.

Fact While it is true that the federal government currently funds 90% of the cost of expansion, there is no guarantee it will continue to do so. As the national debt continues to mount, lawmakers are going to be forced to make cuts. Cuts to Medicaid will almost certainly come before cuts to federal programs like Medicare or Social Security. Even small cuts could have catastrophic consequences for states who already spend almost a third of their state budgets on Medicaid. In addition to the risk of having to bear a larger share of the cost, states that have expanded their programs found the estimates for enrollment and cost to be far below reality.


Medicaid expansion is a very expensive proposition and one that doesn’t yield the benefits claimed. It isn’t saving rural hospitals or improving the health outcomes of the population. Given the current economic climate, it is unlikely the federal government will continue to bear ninety percent of the cost of expansion.  Expanding the Medicaid population comes at the expense of the most disadvantaged and needy among us and risks the financial stability of states.

In Depth: Health

There has never been a time when both federal and state jurisdictions have been more in control of American’s healthcare than it is today. Implementation of the Affordable Care Act is well in motion, and each state has considered how to address provisions of the federal law as it has…

+ Health In Depth