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Economic and Employment Effects of Expanding Medicaid in Arkansas

Arkansas will soon decide whether it will expand its Medicaid program, the publicly funded health insurance program for low-income residents. Under the Patient Protection and Affordable Care Act (ACA, sometimes known as Obamacare), states may decide whether to expand eligibility for their Medicaid programs to non-elderly adults whose family incomes are less than 133 percent of the federal poverty line (an annual income of about $31,000 for a family of four in 2013). To avoid creating undue financial burdens for states, the federal government will pay 100 percent of the medical costs of serving the newly eligible from 2014 to 2016, but its share will phase down to 90 percent for 2020 and the years thereafter. 1 The original intent of the ACA was that all states undertake this expansion, but the Supreme Court’s decision in National Federation of Independent Businesses v. Sebelius established that states effectively had the option of whether to expand Medicaid eligibility. States may decide whether and when to implement an expansion, but, if it is adopted, Medicaid eligibility must rise to the 133 percent level.