How ARPA helps states pay for expanding Medicaid coverage

Introduction

The American Rescue Plan Act that President Biden signed in March 2021 incentivizes states to expand Medicaid coverage under the Affordable Care Act. All states that expand Medicaid receive 90% federal matching funds for the newly eligible adult population. But the Act offers the 12 non-expansion states a five-percentage point increase in their federal matching rate for two years after they expand. (The incentive is also available to Missouri and Oklahoma which implemented expansion this year.) The increase is projected to more than negate the increased state costs over the two-year period. (Source: Kaiser Family Foundation)