Post‑H.R. 1, the Fiscal Case for Medicaid Expansion in Holdout States Remains Strong

Medicaid expansion under the Affordable Care Act (ACA) strengthens state economies, reduces the number of uninsured residents, lowers the risk of medical debt, stabilizes hospitals and providers, and improves families’ financial security. Despite new federal constraints and administrative hurdles imposed by H.R. 1, the fiscal case for Medicaid expansion in the 10 states that have yet to expand remains strong.

Even though H.R. 1 imposes new eligibility restrictions on Medicaid enrollees and limits states’ ability to raise revenue to fund their programs (see Despite Deep Federal Cuts, Medicaid Expansion Continues to Benefit States), one reality remains unchanged: nonexpansion states continue to forgo substantial economic benefits and budget savings by refusing to expand Medicaid to adults.

Savings and Gains: Spotlighting the Case for Medicaid Expansion in Alabama and Mississippi

Today, both Alabama and Mississippi (along with other nonexpansion states) fall far behind the 40 other states and Washington, D.C., whose health care systems receive additional federal dollars, generate more tax revenue, and reap the significant benefits of having more low-income residents covered by Medicaid. Recent Families USA analyses show how Medicaid expansion could unlock $181.6 million in state savings in Alabama and $73.8 million in Mississippi in 2026 by maximizing federal funding that is available to cover the cost of certain Medicaid services and capturing lost state tax revenue where applicable.

By refusing to expand Medicaid, Alabama and Mississippi shoulder higher costs in several areas.  For example, the federal government covers only 72% (in Alabama) and 77% (in Mississippi) of Medicaid costs for pregnant women and people with disabilities, rather than 90%, which the federal government covers for expansion states. In addition, many states pay for mental health and substance use disorder treatment through entirely state-funded programs; yet, with expansion, many people needing these services become eligible for Medicaid with the federal government paying 90% of the cost, allowing states to reduce spending on their mental health and substance use disorder programs.

A large portion of these total savings (40% in Alabama and 27% in Mississippi) would come from expansion coverage offsetting current uncompensated care costs, or money spent on health care that is provided but not paid for when people without access to Medicaid expansion cannot afford their care. Right now, taxpayers must bear this financial burden. 

Without Medicaid Expansion, Hundreds of Thousands of People Are Unable to Access Needed Health Care

Through Medicaid expansion, 67,000 Mississippians and 154,800 in Alabamians would become newly eligible in 2026 for comprehensive health care. However, these numbers are significantly lower than they would have been in the absence of H.R. 1, as new work reporting and community engagement requirements put in place by Congress will prevent thousands of otherwise eligible people from gaining coverage. Researchers estimate that at least 36% of Medicaid expansion enrollees will lose access to coverage when they cannot navigate new bureaucratic barriers and red tape to prove their work or exemption status.

In some nonexpansion states, like Mississippi, previous efforts toward Medicaid expansion have hinged on the inclusion of a work reporting requirement and debate over this issue is part of why expansion efforts have stalled. While H.R. 1 puts new onerous and unnecessary administrative hurdles in place that will keep eligible people from obtaining coverage, removing this issue from political consideration could make it easier to advance discussion in nonexpansion states.

Even with fewer people enrolled due to work reporting requirements and bureaucratic barriers, Medicaid expansion can still catalyze substantial economic activity, such as higher labor market participation, reduced medical debt, and lower health care costs for small business owners.

As some states continue to move through their legislative sessions in 2026 — and look ahead to 2027 and beyond — we will be paying attention to creative, sustainable, and proactive strategies to mitigate the impact of H.R. 1 on Medicaid budgets and states’ ability to continue to fund and invest in Medicaid. Despite debates in some states about rolling back Medicaid expansion programs, expansion remains a critical long-term solution that many lawmakers and the public are committed to preserving. Our new analyses demonstrate that expansion remains a fiscally responsible choice for nonexpansion states like Alabama and Mississippi.

Read our COMPANION BLOG. In addition, FUSA continues to monitor Medicaid expansion-related trends across states; please reach out to healthpolicy@familiesusa.org for more information or to discuss this topic further.