Explainer: Working Through the Details of Medicaid Expansion

Andrew Kitchenman | January 14, 2014 | Explainer, Health Care
One of the reasons Medicaid expansion is working so well is that the federal government is picking up the tab

explainer button shadow
What it is

Since 1965 Medicaid has been the primary federal program for delivering health coverage to mothers and children who receive public assistance. Not all states originally agreed to the program, with Arizona becoming the last to sign on in 1982. The Children’s Health Insurance Program greatly expanded coverage in 1997. In New Jersey, the state’s Medicaid-supported insurance program is New Jersey FamilyCare.

The 2010 Affordable Care Act expanded Medicaid as one of the two principal means of insuring more Americans. The second is the health insurance marketplace or exchange.

Under Medicaid expansion, all citizens who earn less than 138 percent of the poverty line, which is currently $15,856, are eligible for the program. While the ACA originally mandated the expansion, the U.S. Supreme Court struck down this provision in 2012, while upholding the rest of federal healthcare reform. Chief Justice John Roberts decided that each state would decide on expansion for itself.

Christie’s decision

In February 2013, Gov. Chris Christie became the eighth Republican governor to support expansion when he announced his decision in his budget address. Christie spent eight months mulling the merits of expansion, against a backdrop of conservative Republican governors opposing it and all other aspects of the ACA. The expansion went into effect on January 1, 2014.

The impact

The federal government will pay for 100 percent of the Medicaid costs for the newly eligible population from 2014 to 2016. This contribution will be scaled down to 90 percent by 2020, with the state government paying for 10 percent. A Rutgers Center of State Health Policy report estimates that this funding will now cover 234,000 more people in the state. This included 104,000 who are newly eligible for Medicaid and 60,000 who currently receive FamilyCare but will have a larger share of their costs picked up by the federal government.

In addition, Christie said the state would save $227 million in just the first six months of the expansion. This includes savings that will accrue thanks to the feds picking up more of the healthcare costs of inmates.


Advocates for expanding healthcare access have hailed the ACA, along with Christie’s decision to participate in Medicaid expansion. They say that many residents are eligible for health insurance for the first time in their lives.


Newly eligible individuals are expected to enroll through county human services agencies, as well as with the help of healthcare providers and “navigators.” The navigator organizations are funded through the ACA and are responsible for reaching out to groups that aren’t insured.

Early hitch

On the federal marketplace website, a single application is supposed to determine if residents are eligible for Medicaid or for receiving federal subsidies. The system got off to a rocky start, when the federal government provided files for more than 25,000 residents that weren’t compatible with the state’s software. However, state and federal officials said the problem was being resolved in early January 2014.