The ACA required states to expand Medicaid eligibility to citizens and certain non-citizen legal residents with incomes below 138% of the federal poverty level (about $27,000/year for a 3-person household in 2013). In June 2012, the U.S. Supreme Court ruled in a case challenging the constitutionality of various provisions of the ACA that the Medicaid eligibility expansion had to be optional for the states. In other words, the federal government could not compel states to expand in the way that it had expected, and only about half the states appear poised to expand in 2014 as the ACA envisioned.

As a result of the Supreme Court's decision, state officials who are reluctant to expand have greater leverage to request waivers from CMS to experiment with alternative Medicaid expansion plans. Arkansas was one of the first to propose an alternative, which would allow the state to use Medicaid dollars to purchase private insurance for Medicaid beneficiaries on the state's health insurance exchange. Iowa has proposed a similar model, and Pennsylvania's Republican governor became the most recent to do so just yesterday. Part of the motivation for reluctant state officials to seek politically acceptable Medicaid expansion options is that the federal government will pay for almost 100% of the costs associated with expansion for the first 3 years, at which point federal funding will gradually drop and be maintained at 90%.

For all states that elect to expand Medicaid, the essential health benefits will have to be covered for new beneficiaries. That includes rehabilitative and habilitative services, which in virtually all cases is expected to include coverage of occupational therapy services. Therefore, as with the expanded access to health insurance that comes with the creation of health insurance exchanges, occupational therapy practitioners in states that expand Medicaid eligibility will see an increase in the pool of potential occupational therapy consumers.