How States Stand to Gain or Lose Federal Funds by Opting In or Out of the Medicaid Expansion

Following the Supreme Court's decision in 2012, state officials are now deciding whether to expand their Medicaid programs under the Affordable Care Act. While the states' costs of participating in the Medicaid expansion have been at the forefront of this discussion, the expansion has much larger implications for the flow of federal funds going to the states. This issue brief examines how participating in the Medicaid expansion will affect the movement of federal funds to each state. States that choose to participate in the expansion will experience a more positive net flow of federal funds than will states that choose not to participate. In addition to providing valuable health insurance benefits to low-income state residents, and steady sources of financing to state health care providers, the Medicaid expansion will be an important source of new federal funds for states.