How do state Medicaid expansion decisions affect access to coverage for adults near 138% FPL in 2026?
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Executive summary
State decisions on Medicaid expansion continue to be the single biggest determinant of whether adults around 138% of the federal poverty level (FPL) have direct access to Medicaid in 2026: in expansion states those adults are eligible for Medicaid based on income alone, while in non‑expansion states they are generally routed to the ACA Marketplace and premium subsidies instead [1] [2]. That divergence shapes coverage rates, out‑of‑pocket costs, administrative friction, and state fiscal exposure — and it is being reshaped in 2026 by shifts in federal funding incentives and lingering marketplace subsidy questions [3] [4].
1. Expansion states: near‑certainty of Medicaid coverage at 138% FPL
Where states adopted the ACA expansion, adults under age 65 with incomes up to the effective 138% FPL threshold qualify for Medicaid on the basis of income alone (133% statutory rate plus a 5% MAGI disregard), meaning people near that cutoff in expansion states can enroll in Medicaid rather than relying on subsidies for private plans [1] [5] [2].
2. Non‑expansion states: Marketplace as the default but with practical gaps
In states that have not adopted full expansion, adults with incomes in the 100–138% FPL band typically become eligible for premium tax credits and Marketplace plans rather than Medicaid; this creates a firewall where access depends on Marketplace rules, plan networks, and subsidy calculations instead of automatic Medicaid coverage [3] [2].
3. Real‑world differences in coverage and financial protection
Empirical studies show expansion produced larger coverage gains and greater reductions in out‑of‑pocket medical spending for people around 100–138% FPL than in non‑expansion states, with research using threshold designs finding better access and lower spending just below the 138% cutoff inside expansion states [6] [7]. Practically, that means adults just under 138% FPL in expansion states typically face fewer uninsured spells and lower medical bills than similar-income adults in non‑expansion states [8] [7].
4. Transition frictions and higher costs when routed to the Marketplace
Even when Marketplace subsidies are available, individuals transitioning from Medicaid or who would otherwise qualify for expansion can face administrative barriers, narrower provider networks, higher cost sharing, and timing gaps between eligibility systems that increase the risk of being uninsured or underinsured — a dynamic emphasized in policy analyses noting marketplace coverage can impose higher out‑of‑pocket costs compared with Medicaid for the 100–138% group [3] [4].
5. Federal match changes alter state incentives and beneficiary risk in 2026
Federal financial incentives have shifted: temporary boosts that encouraged expansion uptake have been wound down, and analyses warn that eliminating or reducing the enhanced 90% expansion match could prompt coverage losses and fiscal pressure if states respond by rolling back expansion or scaling back eligibility supports; such a change could put millions at risk and would make state expansion choices even more consequential for those near 138% FPL [4] [9].
6. State policy choices create stark geographic inequality
Because eligibility rules and program designs remain state‑specific, a person at 138% FPL in one state often has fundamentally different access than a person with identical income in another: expansion states channel those adults to Medicaid with its low cost sharing and broad coverage, while non‑expansion states push them toward subsidized private plans, producing measurable differences in uninsured rates and financial strain across states [9] [7].
7. Political and interest‑group dynamics that shape access
The decision to expand remains political and fiscal: states weighing expansion factor in long‑term budget tradeoffs, health system capacity, and differing ideological views about public coverage, while analyses from advocacy and neutral policy shops highlight both the public‑health gains of expansion and the fiscal consequences if enhanced federal matches are altered — stakeholders on all sides use data about coverage and costs to press their agendas [8] [4].
8. Bottom line and outstanding uncertainties for 2026
For adults near 138% FPL in 2026, the clearest determinant of access is whether their state expanded Medicaid — expansion yields more direct, lower‑cost coverage and demonstrably better financial protection, whereas non‑expansion leaves people reliant on Marketplace subsidies and exposed to transition barriers and higher out‑of‑pocket costs; however, future federal match changes and state policy shifts could change the calculus and increase volatility in coverage availability [1] [6] [4].