Policy Review: Medicaid Expansion’s Impact on Mental Health

November 15, 2021 – Anushree Gade, LHC Student Assistant

Medical Insurance claim form with stethoscope and surgical face mask. There are also other pieces of paperwork on the desk including a patient form (Medical Insurance claim form with stethoscope and surgical face mask. There are also other pieces of p

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 Medicaid and Medicare are often used together, but the qualifications and operations for each are vastly different. Medicare is regulated by the federal government and is age-dependent (for people that are 65 years of age or older). Medicare is not income-based and functions as an insurance plan, providing coverage to seniors who no longer have access to private insurance through an employer. Medicaid, on the other hand, is managed at the state level, which independently creates its own qualification criteria. In Alabama, you must meet income qualifications and fall into one of these categories:

  • Pregnant
  • Blind
  • Have a disability or a family member in the household has a disability
  • Be responsible for someone 18 or younger
  • Be 65 years of age

The low-income designation is assigned depending on the annual household income and the number of people in the household. Medicaid Expansion under the Affordable Care Act (ACA) allowed for more people to be considered eligible for Medicaid. The expansion would ease some of the guidelines that would make Medicaid more inclusive and increase the number of people who qualify for Medicaid. However, Alabama remains one of twelve states who have yet to expand Medicaid even as most states in the northeast and west and adopted and implemented the expansion already.

In March of 2021, President Biden signed the American Rescue Plan into law which contained financial incentives for the remaining states to adopt Medicaid expansion. According to the Georgetown University Health Policy Institute, “the American Rescue Plan encourages states to finally take up the Medicaid expansion by offering even more favorable financial incentives than those already in place and allows states to provide longer postpartum health coverage for new mothers. Among its private insurance provisions, the American Rescue Plan provides full premium subsidies for COBRA coverage, substantially increases subsidies for the purchase of health plans offered through the Affordable Care Act’s marketplaces, and targets additional marketplace subsidies to those receiving unemployment benefits.”

Impact on Mental Health 

In a study conducted by researchers at Indiana University, it was identified that Medicaid expansion was responsible for increasing the use of preventative care visits, mental health services, and primary care. Furthermore, this study also observed that Medicaid expansion increased how people perceived their own health. There were lower rates of poor mental health days/psychological distress; moreover, there was increased reporting of better perceived physical health. Researchers suggested that the increase in better mental health perception could be an effect of increased access to medical services. The inability to access health care services could potentially place stress and impact the mental health of individuals. Medicaid expansion would allow more people to access health services; thereby, positively impacting mental health. 

Medicaid expansion would allow for more people who are diagnosed with mental health illness to qualify for Medicaid. The expansion would allow for people, despite disability status, to qualify depending on their income level. This would increase the number of people that can access health care services and mental health care. Medicaid would allow for people with mental illness to access services such as psychotherapy, inpatient psychiatric treatment, and prescription medications.

If a patient makes an appointment with a primary care physician for a checkup, the physician would be able to refer the patient to mental health services covered under Medicaid. However, there are challenges that come with Medicaid referrals including delays associated with processing the referral request and the lack of cooperation between services. These challenges significantly impact one’s ability to get access to health services in a timely manner. Furthermore, there are also challenges associated with continuous access to mental health services. In order to provide continuous care, the social workers are required to justify why the recipient is still in need of mental health services and requires a diagnosis and formalized treatment plan.


Medicaid expansion was initially suggested in 2015 by Governor Robert Bentley’s task force. These plans were put forth with intentions to transition to a managed care model. This type of insurance model would allow for contracts with medical professionals and facilities by which they would provide care at reduced costs for those who are covered by that health insurance (if implemented, it would be Alabama Medicaid). However, this would entail increased costs associated with financing it. Eventually, Gov. Bentley dropped the idea as it would promote strong opposition from the state legislature.