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Medicaid Adoption and Expansion: Current coverage, COVID, & future considerations

Updated: Oct 27, 2020

(October 26, 2020) This month HaydenCG discusses the current and future state of Medicaid’s expansion and coverage. As of summer 2020, Oklahoma and Missouri are the most recent states to adopt coverage expansion, placing increased pressure on the remaining 12 non-expanded states.


ACA Mandate & Individual State Expansion:

Under the Affordable Care Act, the federal government created an incentive for states to expand Medicaid coverage to at least 138% of the federal poverty level (FPL) for qualifying individuals, thus, extending coverage for low-income Americans who exceeded the state-level requirements. However, in 2012, the Supreme Court voided the mandate which required states to expand Medicaid, granting states the power to decide whether to implement Medicaid Expansion. Consequentially, this disenfranchised millions of people from affordable healthcare depending on the state. Figure 1 highlights the adoption of Medicaid expansion by date with green indicating states that expanded immediately on January 1, 2014 and blue representing those that expanded between 2014 and summer 2020. Of the 12 states who have not expanded Medicaid (orange), the average income eligibility is capped at just ~47% of the FPL per KFF – although the eligibility requirements differ widely by state; this creates a gap in coverage for those above this threshold. It will be important for drug manufacturers to continue monitoring the Medicaid landscape – including new state referenda and ballot initiatives – especially given the reinvigorated push from the recent expansion in Oklahoma and Missouri and rising unemployment & economic instability due to COVID-19.


Figure 1: Medicaid State Expansion by Adoption Date

Coverage Gaps & Future Enrollment:

According to KFF, ~4.4 Million individuals face restricted access to health insurance among non-expanded states today.

  1. 2.3 million uninsured adults are in a gap of coverage – where their income is above the state Medicaid eligibility threshold (e.g., 47%) but below the FPL. (This cohort also does not qualify for a Health Exchange (HIX) plan (i.e., 100% FPL)

  2. Another 2.1 million adults fall between the FPL and 138% FPL

In addition to program expansion from state initiatives, rising unemployment and job insecurity will likely increase the program in the coming months and years. KFF estimates that since March 2020, 13 million adults have become eligible for Medicaid due to a loss of employment. The Bureau of Labor estimates that at least 25% will apply for Medicaid – however, this number may be muted by adults who retained insurance during furlough periods and short-term COBRA health coverage.


Figure 2: 2020-2025 Medicaid Enrollment Forecast (Millions)


HaydenCG Considerations:

During this period of healthcare insecurity, Medicaid has and will continue to play a significant role in drug and medical care delivery for millions of Americans. Florida and Mississippi could act as dominoes for the coverage landscape, as both have ballot-initiative processes that could more easily push Medicaid expansion forward. (Today, 18% and 25% of Florida and Mississippi’s population, respectively, are covered by their State Medicaid program; an additional 975,000 adults would qualify if both states expanded.)

Critics of Medicaid expansion remain skeptical about how the program will be funded, however, a recent NEJM report on Medicaid Expansion during Coronavirus, identified that program growth is typically associated with federal and not state funding. Moreover, the Center for Budget and Policy Priorities released a study that posited states with Medicaid expansion have been better positioned to address COVID-19 and recession.

Ultimately, if (or when) the program expands due to state initiatives and/or COVID, drug manufacturers should be prepared for patient populations shifting across different insurance types. Manufacturers should be cognizant of:

  1. the continuum of care – while an increased number of uninsured patients pay qualify for coverage, many adults may remain unaware of their coverage status. It will be important to help connect patients with coverage & care.

  2. the impact to statutory Medicaid rebates & best price calculations. On top of federal statutory rebates under the Medicaid Drug Rebate Program (MDRP), supplementary rebates, (which are excluded in best price) are usually offered to Medicaid for preferred formulary placement and coverage.


Special thanks to Alex Curran for his work on this piece


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