The Medicaid gap is a situation where people earn too much to qualify for Medicaid in their state but too little to get financial help buying insurance on the marketplace. In 10 states that haven’t expanded Medicaid under the Affordable Care Act, roughly 2.4 million adults are stuck in this no-coverage zone with essentially no affordable path to health insurance.
How the Gap Was Created
When the Affordable Care Act passed in 2010, it was designed as a seamless system. Medicaid would cover everyone earning up to 138% of the federal poverty level (about $20,800 a year for an individual in 2024), and marketplace subsidies would pick up from there for people earning more. There was never supposed to be a gap between the two programs.
That changed on June 28, 2012, when the Supreme Court ruled in NFIB v. Sebelius that the federal government couldn’t force states to expand Medicaid. The court found the law’s original enforcement mechanism, which threatened to pull all of a state’s existing Medicaid funding for noncompliance, was unconstitutionally coercive. The ruling left the expansion intact as an option but gave each state the choice of whether to adopt it. The marketplace subsidy structure, however, stayed the same: financial assistance for insurance starts at 100% of the federal poverty level, assuming Medicaid would catch everyone below that line.
In states that declined to expand, the old Medicaid rules remained. Those rules were never designed to be a comprehensive safety net for all low-income adults. They typically covered only specific groups like pregnant women, children, people with disabilities, and in some cases parents with very low incomes. Adults without dependent children were often excluded entirely, regardless of how little they earned.
Who Falls Into the Gap
The gap catches adults who earn some income but fall below the poverty line. A single adult earning $10,000 a year in a non-expansion state, for example, might earn too much for their state’s narrow Medicaid program but not enough to qualify for marketplace subsidies. The result is that the poorest working-age adults in these states are the ones left without options, while people earning slightly more can get subsidized marketplace plans.
The population in the gap skews young and employed. About 28% work full time, and many others work part time or have irregular employment. Over half are younger than 35. Only about 11% have a college degree. The gap disproportionately affects people of color: in non-expansion states, roughly 60% of poor, uninsured Black adults and 70% of poor, uninsured Native American adults who would otherwise qualify for expanded Medicaid are concentrated in states that opted out.
Which States Still Have a Gap
Ten states have not adopted Medicaid expansion: Florida, Georgia, Kansas, Mississippi, South Carolina, Texas, Alabama, Tennessee, Wisconsin, and Wyoming. Together, these states account for the bulk of the 2.4 million people in the coverage gap.
Eligibility rules vary even among these holdout states, which means the gap hits some residents harder than others. Wisconsin, for instance, covers adults up to 100% of the poverty level through its own Medicaid program even without formally adopting the ACA expansion, which effectively closes the gap for its residents. Georgia offers coverage up to 100% of the poverty level through a federal waiver, but only for people who meet a work requirement. Tennessee recently expanded its parent eligibility to 105% of the poverty level. In most of the remaining states, parents qualify only at very low income thresholds, and childless adults often don’t qualify at all.
The Financial Toll of Being Uninsured
People in the Medicaid gap face the same health risks as anyone else but absorb the full financial blow of medical care without insurance. The average annual cost of all types of care for a working-age adult who needs hospitalization is around $25,000, with inpatient care alone averaging about $15,000. For someone earning below the poverty line, a single hospital stay can be financially devastating.
Research on what happens when uninsured people get hospitalized paints a grim picture: over the following four years, they experience a 170% increase in unpaid medical bills and more than double their likelihood of filing for bankruptcy. They become delinquent on medical and non-medical bills alike and are far more likely to be contacted by collection agencies. In states that did expand Medicaid, the opposite pattern emerged. Expansion significantly reduced unpaid bills and third-party collections, with newly covered individuals seeing roughly $1,140 less in debt sent to collections. The reductions were driven largely by the elimination of catastrophic medical bills, exactly the kind that push families into long-term financial distress.
Beyond finances, the lack of coverage means people in the gap are less likely to manage chronic conditions like diabetes or hypertension, less likely to get preventive screenings, and more likely to use emergency rooms as their primary source of care. Low-income individuals already have higher rates of chronic disease, making consistent access to treatment especially critical.
Why the Gap Persists
Medicaid expansion is largely a political decision. The federal government covers 90% of the cost of covering the expansion population, a significantly higher match rate than for traditional Medicaid enrollees. Despite this, the remaining non-expansion states have resisted for a mix of reasons: concerns about long-term state budget obligations, ideological opposition to expanding government-funded health care, and skepticism that the federal match rate will hold over time.
Several states that initially refused have eventually adopted expansion, sometimes through voter-approved ballot initiatives rather than legislative action. Over the past decade, the number of holdout states has dropped from 24 to 10. But the remaining states have shown little movement, and there are no active ballot initiatives or legislative proposals likely to change the landscape in the near term.
What It Means in Practical Terms
If you live in a non-expansion state and your income is below the poverty line, checking your state’s specific Medicaid eligibility rules is the first step. Some states have partial expansions or waiver programs that cover more people than the standard rules suggest. Georgia’s work-requirement waiver and Wisconsin’s coverage up to 100% of the poverty level are examples of states that have created their own workarounds, even without full expansion.
If your income rises above 100% of the poverty level, you become eligible for marketplace subsidies regardless of your state’s Medicaid status. For some people in the gap, a small increase in reported income can be the difference between having no options and qualifying for a heavily subsidized marketplace plan. Community health centers, which serve patients on a sliding fee scale based on income, are often the primary source of care for people caught in the gap who have no other coverage.