Keep Factually independent
Whether you agree or disagree with our analysis, these conversations matter for democracy. We don't take money from political groups - even a $5 donation helps us keep it that way.
How have state Medicaid expansions affected ACA marketplace premiums?
Executive summary
The available literature and government analyses show that states that adopted the ACA Medicaid expansion generally saw lower Marketplace (exchange) premiums compared with non‑expansion states, with one HHS analysis finding about a 7% reduction in premiums and multiple reviews concluding expansion “may help to lower” marketplace rates [1] [2]. More recent reporting and analyses also link state policy choices — including Medicaid expansion, reinsurance, and marketplace type — to wide state‑by‑state premium differences such as the 20% national premium increase from 2025 to 2026, where non‑expansion states tended to show larger increases [3] [4].
1. Why economists expected Medicaid expansion to lower Marketplace premiums
Theory and early empirical work link Medicaid expansion to lower Marketplace premiums because expansion shifts lower‑income, higher‑expected‑cost adults off the individual market and into Medicaid; removing these relatively sicker enrollees improves the Marketplace risk pool and reduces insurers’ expected claims, which puts downward pressure on premiums [1] [5].
2. What federal analyses and reviews found — a measurable but not enormous effect
The U.S. Department of Health and Human Services’ analysis cited by commentators and advocacy groups estimated that Medicaid expansion lowered Marketplace premiums by about 7 percent, controlling for state differences in demographics, pre‑ACA uninsured rates and other policies [1]. Broader literature reviews conclude that expansion “may help to lower Marketplace premiums,” indicating consensus on a direction of effect though not unanimity on magnitude [2].
3. State‑level variation: expansion is one of several moving parts
Recent 50‑state examinations attribute large interstate premium differences to a combination of factors: Medicaid expansion status, state reinsurance programs, and whether a state runs its own marketplace. For example, a 2026 rate‑filing analysis found population‑weighted gross premiums rose ~20% nationally from 2025 to 2026 and noted that southern, non‑expansion states experienced above‑average increases while expansion and reinsurance programs helped curb costs elsewhere [3]. KFF also highlights that enrollment and premium outcomes in non‑expansion states were shaped by enhanced subsidies through 2024–2025, which complicates direct attribution solely to expansion [4].
4. Timing, policy interactions, and short‑term shocks matter
Studies cited by CBPP and KFF warn that premium trajectories depend heavily on time‑limited federal policies (e.g., enhanced premium tax credits introduced in 2021 and extended through 2025) and on insurers’ rate filings that reflect current policy expectations. CBPP notes that if enhanced subsidies expire, marketplace premium payments could jump sharply, altering the relationship between state expansion decisions and premiums [6] [4]. Thus, estimates from early post‑2014 years (when the HHS 7% figure was derived) may not map neatly onto later years when subsidies, enrollment shifts, and insurer behavior changed.
5. Broader benefits and trade‑offs that feed into the premium story
Medicaid expansion produced large coverage gains and reduced uncompensated hospital care in expansion states — outcomes that indirectly affect market dynamics by changing care use patterns and provider finances [7] [8]. At the same time, Medicaid’s lower cost‑sharing and broader eligibility mean many low‑income people who otherwise would be on the individual market moved into Medicaid, which supports the premium‑lowering mechanism but also raises questions about care access differences between Medicaid and private plans [9] [10].
6. Limitations, disagreement, and what reporting does not settle
Available sources agree expansion reduces uninsured rates and that it likely reduces Marketplace premiums, but they differ on scale and on how persistent that effect is once other policies change [2] [1] [4]. Recent state‑by‑state premium spikes [11] show that non‑expansion status correlates with worse premium outcomes but do not prove causation in isolation because reinsurance, marketplace administration, and federal subsidy design also play large roles [3] [4]. Sources do not provide a single, definitive national estimate that fully accounts for post‑2020 subsidy changes; available sources do not mention a unified updated numeric consensus for 2024–2026 tying premiums exclusively to Medicaid expansion.
7. Bottom line for readers and policymakers
The preponderance of evidence and federal analysis conclude Medicaid expansion tends to lower ACA Marketplace premiums by improving risk pools, with HHS estimating roughly a 7% reduction in its 2015 analysis and literature reviews agreeing on a likely downward effect [1] [2]. However, the size and persistence of that effect depend on concurrent federal subsidies, state reinsurance programs, and other state policy choices — factors that recent reporting shows can swamp or amplify the expansion effect in particular years [3] [4].