Costs & tradeoffs
Expansion is a trade: more coverage and financial protection in exchange for public spending and new federal conditions. Here is the honest list.
What it costs
- Total medical spending rises, by about 35% per newly covered person in Oregon's randomized study.1
- Texas would pay 10% plus administrative costs. Old estimates ranged from about $600–650 million a year (2020, before offsets) to $4.0 billion over ten years (2013).2,3 No current official estimate exists.
- The federal bonus for newly expanding states ended January 1, 2026.4
Conditions that would come with it (2025 federal law)
- Work or community-engagement requirements of 80 hours a month for expansion adults, which states must implement by January 1, 2027. CBO projects about 5.3 million more uninsured nationally by 2034 because of them.5
- Eligibility renewals every six months and new cost-sharing for some enrollees.4
- Tighter limits on provider taxes and state-directed hospital payments for any state that expands.6
Policy options compared
| Option | Who gains coverage | Federal share | Main drawbacks |
|---|---|---|---|
| Status quo (plus rural grants and hospital pools) | No new coverage | n/a | Coverage gap remains. Rural grants are temporary, and the pool is shrinking.7,8 |
| Full expansion to 138% of poverty | ~1 million adults (older estimates) | 90% | State cost, work requirements, and hospital-financing limits.3,5,6 |
| Private-option waiver (e.g., 2025 "Live Well Texas" bill, HB 895) | Similar to full expansion | 90% | Needs federal approval. HB 895 did not pass in 2025.9 |
| Partial expansion to 100% of poverty | People below poverty only | Regular match (~58.5%) | Higher state share per person, and people at 100–138% stay on the Marketplace.10 |
| Restore enhanced Marketplace tax credits | People above poverty | Federal | Does not reach people below poverty, and it is up to Congress.11 |
The next regular legislative session begins January 12, 2027.9
Sources for this page
- Baicker et al. NEJM 2013 (Oregon) (2013). https://www.nejm.org/doi/full/10.1056/NEJMsa1212321 [evidence S1]
- Legislative Budget Board staff estimate (Mar 4, 2013); HB 3376 fiscal note (Apr 16, 2013) (2013). https://capitol.texas.gov/tlodocs/83R/fiscalnotes/html/HB03376I.htm [evidence P3]
- Fritz, Pitts & Pitts (Sept 2020); Dague & Hughes, Texas A&M Bush School (Sept 2020), both for Episcopal Health Foundation (2020-09). https://episcopalhealth.org/wp-content/uploads/2020/09/Fritz-Pitts-Pitts-Sept-2020-Impact-of-Medicaid-Expansion-on-State-Budget-1.pdf [evidence P4]
- KFF, 'Health Provisions in the 2025 Federal Budget Reconciliation Law' (P.L. 119-21) (2025-08-22). https://www.kff.org/medicaid/health-provisions-in-the-2025-federal-budget-reconciliation-law/ [evidence L6]
- CMS Interim Final Rule CMS-2454-IFC, 91 FR 33348 (FR Doc 2026-11094); CMS fact sheet (2026-06-03). https://www.govinfo.gov/content/pkg/FR-2026-06-03/html/2026-11094.htm [evidence L5]
- CMS Dear State Medicaid Director letter on OBBBA sections 71115/71117 (2025-11-14). https://www.medicaid.gov/medicaid/downloads/providertax_dcl_11142025.pdf [evidence L7]
- CMS press release 2025-12-29; Texas HHSC bulletin (Year 1 budget approved 2026-04-07) (2025-12-29). https://www.cms.gov/newsroom/press-releases/cms-announces-50-billion-awards-strengthen-rural-health-all-50-states [evidence L13]
- Texas HHSC 1115 waiver page; HHSC 'Future of the UC program' (rev. 05/2024, hosted by THA) (2024-05). https://www.tha.org/wp-content/uploads/2024/05/Future-of-UC-Program.pdf [evidence L14]
- Texas Legislature Online bill history; TLC Dates of Interest (accessed 2026-10-24). https://capitol.texas.gov/billlookup/History.aspx?Bill=HB895&LegSess=89R [evidence L9]
- Federal Register FMAP notice for Oct 1, 2026-Sep 30, 2027 (2025-11-28). https://www.federalregister.gov/documents/2025/11/28/2025-21332/federal-financial-participation-in-state-assistance-expenditures-federal-matching-shares-for [evidence L10]
- KFF, 'Midterm Election Update: The ACA Marketplaces'; AHA news 2026-01-09 (2026-10-06). https://www.kff.org/elections/midterm-election-update-the-affordable-care-act-marketplaces/ [evidence L8]
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