The Protective Role of Medicaid Expansion for Low-Income People During the COVID-19 Pandemic

Abstract

During the first year of the COVID-19 pandemic, nearly 47.5 million Americans lost their employer-sponsored health insurance. While many were able to transition to plans from other family members, 56% became uninsured [1]—a deleterious result during the height of a pandemic. Lower-income workers are most likely to be laid off and lose coverage during economic downturns, exacerbating socioeconomic disparities in healthcare access [2, 3]. Medicaid served as an essential lifeline for individuals and families during the pandemic, and enrollment rose steadily throughout 2020, especially in states that expanded Medicaid as part of the Affordable Care Act (ACA) [4]. While health and income losses during the pandemic were widespread, a growing body of literature demonstrates that residents of Medicaid expansion states suffered less than their non-expansion peers. Thus, Medicaid may provide important protective benefits and increase the resiliency of our health system.

This commentary synthesizes the growing literature that examines the impacts of Medicaid expansion on low-income individuals during the pandemic. Many studies have found that state investments in public health, particularly through Medicaid expansion, helped protect low-income individuals from some of the negative impacts of the COVID-19 pandemic. We begin by describing the landscape of Medicaid policy at the onset of the pandemic. We then provide a synopsis of the emerging body of literature that studies the effects of Medicaid expansion during the pandemic. We conclude by discussing challenges and opportunities for Medicaid expansion as a vehicle to protect low-income people during future public health emergencies.

President Donald J. Trump declared the COVID-19 pandemic a nationwide emergency on March 13th, 2020 [5]. By this date, 35 states and the District of Columbia had expanded Medicaid under the ACA [6]. A voluminous literature generally demonstrates that, compared to non-expanders, residents of Medicaid expansion states experienced better access to care [7-9] and improved health outcomes [10-13] during the pre-pandemic period and that these benefits disproportionately accrued to low-income or minoritized populations [14-16].

When the pandemic struck, the Medicaid program stood ready to fill an essential role protecting low-income individuals and essential workers, who were most susceptible to the pandemic's adverse effects. Expansion states were better positioned to take advantage of federal policy changes that were implemented to strengthen Medicaid, such as the Families First Coronavirus Response Act of 2020 (FFCRA). As part of the FFCRA, all state Medicaid programs adopted maintenance of eligibility and continuous coverage provisions that essentially prohibited states from terminating most enrollees' coverage until after the end of the public health emergency. However, these provisions were expected to increase mandatory spending during an especially challenging time for state budgets due to declining income and sales tax revenues. The FFCRA provided states with an additional 6.2 percentage point increase in federal matching assistance percentage (FMAP) to offset these costs (from a baseline FMAP range of 56.20% to 83.18% across states).

The continuous coverage provision was associated with unprecedented increases in Medicaid enrollment, reducing churn and access disruptions among enrollees. Between February 2020 and January 2023, enrollment increased more than 30% or 21 million people nationwide [17]. As we describe below, residents of Medicaid expansion states benefitted most from the FFCRA during the pandemic.

A surge of new research is shedding light on the crucial role Medicaid expansions under the ACA had during the COVID-19 pandemic, especially for low-income Americans. Studies using quasi-experimental research designs show that compared to non-expansion states, Medicaid expansions improved access to care and boosted health outcomes for low-income populations. The key results of 11 such studies are summarized in Table 1. We restricted our focus to studies that examined the effects of state Medicaid expansions during the pandemic and employed rigorous quasi-experimental designs. Most of these studies applied either regression discontinuity or difference-in-differences approaches to compare outcomes in states that did and did not expand Medicaid, before and after the onset of the COVID-19 public health emergency. We excluded descriptive or cross-sectional studies from our summary.

The literature reviewed in this commentary underscores Medicaid expansion's critical role during the COVID-19 pandemic but has limitations. Unlike pre-pandemic studies, these analyses cannot leverage states' staggered Medicaid adoption decisions to control for potential confounding factors. Instead, this work relies on pre- and post-pandemic comparisons in expansion versus non-expansion states, making it harder to isolate the effects of Medicaid expansion from other correlated policies. Although most studies control for pandemic-related policies like mask mandates and stay-at-home orders, expansion states may have also implemented additional pre-pandemic safety net benefits. These could include more generous unemployment insurance, higher minimum wages, expanded housing assistance programs, or robust food assistance initiatives like Supplemental Nutrition Assistance Program (SNAP) enhancements. These correlated benefits complicate efforts to isolate the specific effects of Medicaid expansion during the pandemic. Additionally, the continuous coverage provision confounds analyses by making it challenging to disentangle the specific effects of Medicaid expansion from the broader impacts of this universal policy. Both may have contributed to increased access to care and financial stability for low-income populations during the pandemic, but their intertwined effects obscure a clear understanding of Medicaid expansion's unique role.

Additionally, most studies used data from 2020 to 2021 due to lags in availability, despite the public health emergency extending into 2023. Surveys collected early in the pandemic faced challenges like low response rates and potential non-response bias, although post-stratification weighting may ameliorate some of these issues. More research is needed to evaluate Medicaid expansion's role across the full pandemic, particularly for outcomes like COVID-19 morbidity, mortality, and prevention.

A growing literature, summarized above, suggests that Medicaid expansion was associated with increased insurance coverage, improved access to care, improved some health-related behaviors, and eased financial strain among low-income people during the COVID-19 pandemic. We observed during the pandemic that reliance on employer-sponsored insurance makes us less resilient during times of economic downturn. Nearly 14.6 million workers and their dependents lost employer-sponsored insurance coverage during the first four months of the COVID-19 public health emergency [35].

By ensuring the health and protection of low-income populations, Medicaid expansion can help offset losses during public health emergencies and economic downturns. However, a lack of public awareness may have diminished Medicaid's effectiveness. Survey evidence suggests that millions of enrollees were unaware their coverage was maintained during the pandemic and mistakenly self-identified as uninsured [36]. States may not have effectively communicated that individuals were automatically retained on Medicaid during the pandemic, and many beneficiaries misunderstood the continuous coverage provision or its impact on their eligibility. This “Medicaid undercount” weakens the program's ability to improve access, increase health services utilization, and enhance health outcomes [37].

Despite these benefits, the Medicaid program faces several challenges ahead. First, there has been a surge in disenrollment starting in 2023. Over 25 million people lost their Medicaid coverage since the end of the COVID-19 public health emergency, as states resume the pre-pandemic process of periodically redetermining eligibility for Medicaid [38]. A survey found that roughly half of those who lost Medicaid coverage became uninsured, and even those who moved to new insurance experienced coverage gaps and reported challenges accessing care [39].

Additionally, not all states expanded Medicaid to cover their low-income populations. Five states expanded during the pandemic including Nebraska, Oklahoma, Missouri, South Dakota, and North Carolina. The remaining 10 holdout states lack feasible options for expansion via executive order or ballot initiative; endorsement from their state legislatures is paramount. The next administration should support creative Section 1115 waivers that encourage the remaining non-expansion states to adopt Medicaid in ways that work for them. For instance, Arkansas received approval for a market-based approach, allowing Medicaid enrollees to buy private health plans through the state's individual insurance exchange. Providing states with similar flexibility and incentives could expand Medicaid in the remaining 10 states, benefiting low-income populations and strengthening our resilience in future public health emergencies and recessions.

Significant gaps in our understanding of Medicaid expansion's protective effects remain, and future research must address these to provide a clearer picture. Researchers need to disentangle the effects of Medicaid expansion from other public program benefits and the continuous coverage provision by leveraging detailed policy variation across states and over time. Comparative studies that incorporate granular data on state-level policy generosity and timing, as well as natural experiments or simulation models, could help isolate the distinct contributions of Medicaid expansion. Current studies relying on 2020 and 2021 data offer valuable insights into the immediate impacts during the pandemic, but longer term analyses are crucial as more recent data become available. These studies will be essential to fully understanding how Medicaid expansion's effects evolved, particularly as pandemic era policies like the continuous coverage provision phase out and states adapt their public programs.

The human cost of COVID-19 has been enormous, and the pandemic's economic fallout sharply reduced access to care as layoffs ended employer-sponsored health insurance. These pains were disproportionately experienced by low-income individuals and their families. A growing empirical literature suggests that enhanced access to Medicaid offset some of the negative financial and health impacts. Holdout states should view Medicaid expansion as a way to strengthen health system resilience, safeguard low-income populations, and reduce the risk of worsening socioeconomic disparities in future pandemics.

The authors declare no conflicts of interest.