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Market-Based Approaches to Medicaid Expansion

In this new policy brief, America’s Essential Hospitals examines Section 1115 waivers that use a market-based approach to expanding Medicaid.

The brief highlights recent waivers in states that take market-based approaches, such as incentives to promote healthful behaviors, job-training programs, and cost-sharing premiums paid into accounts that resemble health savings accounts.

States featured in this brief include Arizona, Arkansas, Indiana, Iowa, Michigan, Montana, and New Hampshire. Kentucky also has a waiver request pending with the Centers for Medicare & Medicaid Services that proposes some of these policy approaches. The new administration has signaled its interest in using Section 1115 waivers to help states achieve market-based reforms in Medicaid.

Policy Brief – Market-Based Approaches to Medicaid Expansion


  • Department of Health and Human Services and Centers for Medicare & Medicaid Services (CMS) leaders have expressed a desire to use Section 1115 waivers to incorporate market-based features into Medicaid.
  • Several existing or requested expansion waivers include market-based features, such as altered cost-sharing, healthy behavior incentives, and referral to job training programs.
  • Early findings suggest states implementing waivers have seen higher Medicaid enrollment and lower uncompensated care costs.
  • Challenges remain, including clearly communicating plan structure to beneficiaries and reducing the administrative burdens on states.


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