Issue Briefs | Apr 16, 2021

Assessing the Fiscal Impact of Medicaid Expansion Following the Enactment of the American Rescue Plan Act of 2021

Adam Striar, Patricia Boozang and Cindy Mann, Manatt Health

A substantial body of evidence indicates that adopting the Medicaid expansion delivers myriad benefits to states and Medicaid enrollees at a modest cost to states. Currently, 12 states have not yet taken up the ACA Medicaid expansion, leaving approximately 2.2 million adults in the so-called “coverage gap” without an affordable source of coverage. While the fiscal benefits of Medicaid expansion to states are strong and well documented, the recent enactment of the American Rescue Plan Act of 2021 (ARP) makes the fiscal case even stronger by providing states that implement expansion after the enactment of ARP with a significant increase in Medicaid funding. This issue brief describes the ARP matching rate provision and also assesses its fiscal impact for each of the states that have not yet expanded Medicaid, while comparing the available new federal dollars to the cost of expansion.