Your zip code might be the difference between having healthcare coverage and going without. As of 2025, 40 states plus Washington, D.C., have expanded Medicaid under the Affordable Care Act, while 10 states continue to refuse federal funding that would provide health coverage to their lowest-income residents. This creates what experts call a “coverage gap” that leaves 1.4 million Americans without affordable healthcare options.

What Is Medicaid Expansion?

Under the Affordable Care Act’s Medicaid expansion, states can extend coverage to adults with incomes up to 138% of the Federal Poverty Level ($21,597 for an individual in 2025). This helps people who earn too much to qualify for traditional Medicaid but too little to get subsidies on the health insurance marketplace.

The federal government sweetens the deal significantly. Washington pays 90% of the cost for expansion coverage, leaving states to cover just 10%. For comparison, the federal government only pays between 50% and 77% for other Medicaid enrollees, depending on the state.

The Design Flaw That Created the Coverage Gap

Here’s where things get complicated, and it wasn’t supposed to be this way. When the ACA was written, lawmakers assumed all states would expand Medicaid, so they designed marketplace subsidies to start at 100% of the federal poverty level ($15,060 for an individual in 2025). People below that threshold were supposed to have Medicaid coverage instead.

But in 2012, the Supreme Court ruled that states couldn’t be forced to expand Medicaid. This created an unintended loophole: in non-expansion states, adults earning below the poverty level are too poor for marketplace subsidies but often still don’t qualify for their state’s restrictive Medicaid program. It’s a gap that exists purely because of state political decisions, not because the law was designed to exclude anyone.

The 10 Holdout States

The states that haven’t expanded Medicaid are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming. Texas, Florida, Georgia, and Alabama account for the lion’s share of people stuck in the coverage gap, with these four states representing nearly three-quarters of affected individuals.

Wisconsin is unique among non-expansion states. The state has implemented what essentially amounts to a partial expansion and has no coverage gap because Medicaid is available to low-income adults with income below the poverty level. However, Wisconsin doesn’t receive the enhanced federal funding because it hasn’t fully expanded to 138% of the poverty level.

Who Falls Into the Coverage Gap?

An estimated 1.4 million individuals remain in the coverage gap in the ten non-expansion states. These adults have incomes above their state’s Medicaid eligibility threshold but below the poverty level, making them ineligible for ACA Marketplace subsidies.

Here’s what this looks like in real numbers: In the median non-expansion state, Medicaid eligibility for parents is just 35% of the federal poverty level, or $9,037 in annual income for a family of three. Adults without children are generally ineligible for Medicaid no matter how low their incomes are.

Who’s Most Affected?

About 80% of individuals in the coverage gap are adults without dependent children, and most adults in the coverage gap are in working families, though about one in six have a disability that requires ongoing health care. People in the coverage gap are racially and ethnically diverse, with 65% being people of color.

The Real-World Impact

The coverage gap creates stark differences in health outcomes between states. Uninsured rates in states without Medicaid expansion are nearly twice as high as those in expansion states (14.1% vs. 7.6%).

This isn’t just about numbers on paper. Almost one in four uninsured adults in 2023 didn’t receive needed medical treatment due to cost. Uninsured individuals are also less likely than those with insurance to receive preventive care and treatment for major health conditions and chronic diseases.

What Expansion States Gain

States that have expanded Medicaid see measurable benefits. Between 2013 and 2022, the gap in uninsured rates between white and Black adults under age 65 shrank by 67% in expansion states (versus 47% in non-expansion states), while the gap between white and Latino adults shrank by 48% in expansion states (versus 30% in non-expansion states).

Research consistently shows that expansion has produced net savings for many states because the federal government pays the vast majority of the cost while expansion generates offsetting savings in other areas. Hospitals see reduced uncompensated care costs, and states spend less on mental health and substance abuse programs since federal Medicaid funds can now help cover treatment.

What to Watch Out For

If you’re in a non-expansion state and your income falls below the poverty level, you might think you have no options. That’s not necessarily true. Even if your state hasn’t expanded Medicaid and it looks like your income is below the level to qualify for financial help with a Marketplace plan, you should still fill out a Marketplace application. Each state has coverage options that could work for you, particularly if you have children, are pregnant, or have a disability.

You can also look into community health centers, which provide services on a sliding scale based on your income, or catastrophic health plans if you’re under 30.

The Political Reality

Passage of expansion legislation faces an uphill battle as all remaining non-expansion states have Republican-controlled legislatures opposed to expansion. However, there are signs of movement. In December, North Carolina became the latest state to expand Medicaid, and now GOP power brokers in Mississippi, Alabama, and Georgia suggest there might be an opening to join them eventually.

The politics are shifting as economic arguments gain traction. Some Republican legislators worry it could become harder to compete for jobs with states like North Carolina that have expanded Medicaid, noting “We need workers. We need healthy workers”.

Bottom line: Your healthcare options shouldn’t depend on which state you live in, but right now they do. If you’re in a non-expansion state and struggling with healthcare costs, explore all available options and consider that political winds might eventually change. Meanwhile, if you’re considering a move for work or retirement, factor in healthcare access as part of your decision-making process.