Overview of the Affordable Care Act and Medicaid

Medicaid and the Affordable Care Act

The Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) made a number of changes to Medicaid. Perhaps the most widely discussed is the expansion of eligibility to adults with incomes up to 138 percent of the federal poverty level (FPL). Originally a requirement, the June 2012 Supreme Court ruling in National Federation of Independent Business v. Sebelius effectively made the Medicaid expansion an option. To date, more than half of states have opted to expand.

Beyond the Medicaid expansion, the ACA sought to increase the number of Americans with health insurance by providing new premium tax credits for the purchase of private health insurance and made a number of reforms to the private insurance market, such as eliminating preexisting condition exclusions and establishing annual limits on out-of-pocket costs. The law also allowed young adults to remain on their parents’ insurance plans up to age 26 and required most individuals to secure minimum essential coverage.[1]

Other Medicaid and CHIP provisions in the ACA include a maintenance-of-effort requirement that prevented states from reducing eligibility below that in place on the date the ACA was enacted. The provision was in effect until 2014 for adults and remains through fiscal year (FY) 2019 for children. The ACA also aligned states’ minimum Medicaid eligibility threshold for children at 138 percent FPL, requiring some states to shift older children from separate CHIP programs into Medicaid. Prior to the ACA, the mandatory eligibility levels for children in Medicaid differed by age: States were required to cover infants and children between the ages of 1 and 5 in Medicaid up to 133 percent FPL and children between the ages of 6 and 18 up to 100 percent FPL.[2]

The ACA also included provisions to streamline eligibility, enrollment, and renewal processes, for example, by requiring a single application for Medicaid, CHIP, and subsidized exchange coverage. In part due to these changes, enrollment and spending in Medicaid has increased in all states, regardless of whether the state expanded coverage to non-disabled adults.

The ACA also included reductions in federal funds for disproportionate share hospital (DSH) supplemental payments under the assumption that increased coverage would lead to a decline in uncompensated care. These reductions have been delayed a number of times and are currently scheduled to go into effect in FY 2020.

Learn more about how Medicaid interacts with the ACA

Featured publications

Expanding Medicaid to the New Adult Group through Section 1115 Waivers

Premium Assistance: Medicaid’s Expanding Role in the Private Insurance Market

Medicaid and CHIP in the context of the ACA

[1] The individual mandate was repealed, effective in 2019, by the Tax Cut and Jobs Act (P.L. 115-97).
[2] The ACA also set a single income eligibility disregard equal to 5 percentage points of the FPL. For this reason, eligibility is often referred to at its effective level of 138 percent FPL, even though the federal statute specifies 133 percent FPL.