Question

One mechanism in the Affordable Care Act intended to extend health insurance to the uninsured is expansion of Medicaid. What is the economic incentive for states to expand their Medicaid program to cover more low-income people?

If a state expands its Medicaid program, the federal government will pay 90% or more of the cost of the additional people that are now eligible for Medicaid.

If a state does not expand its Medicaid program, the federal government requires it to pay 100% of the cost of Medicaid.

If a state does not expand its Medicaid program, the federal government eliminates the money it provides to the state to repair highways, roads, and bridges.

If a state expands its Medicaid program, the federal government provides the state with more money for schools and universities.

Answer 1

If the state expands its Medicaid program, the federal government will pay 90% or more cost of the additional people that are now eligible for Medicaid.

The Affordable Care Act was enacted on March 23, 2010 under which the law was passed and it provided that the state will be given 100% funding for the expansion of covering more people under Medicaid through 2016 and gradually it will be decreased to 90% till 2020. Thus, the states will be now given 90% of the cost by the federal government of the cost to cover the low income people.