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With no Medicaid expansion, some will lack affordable insurance

Friday September 6, 2013
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Among adults who recently have been uninsured and live in states that have not decided to expand Medicaid eligibility under the Affordable Care Act, two in five likely would have no new affordable health insurance options if their states do not eventually expand the program.

That is the key finding in a report by the Commonwealth Fund, which noted that 26 states either have announced they will not expand Medicaid in 2014 or are considering whether to do so. The federal government will cover 100% of states’ cost of expansion in the early years of the ACA, with the portion incrementally dropping to 90% by 2020. As part of its June 2012 decision on the constitutionality of the ACA, the Supreme Court ruled the federal government could not force states to accept the funding and expand Medicaid.

In the 26 states, adults with incomes below the federal poverty level (less than $11,170 for an individual and $23,050 for a family of four in 2012) will not have access to either the Medicaid expansion or subsidized private insurance through the new state insurance marketplaces, and are likely to remain uninsured.

“A primary goal of the Affordable Care Act is to provide health insurance coverage to the millions of uninsured people in the U.S., the majority of whom have low and moderate incomes and struggle to afford the health insurance and healthcare they need,” Sara Collins, PhD, Commonwealth Fund vice president and study co-author, said in a news release.

“However, if states don’t expand their Medicaid programs, adults with the lowest incomes will continue to live without the health and financial security provided by the Affordable Care Act.”

The report, based on a survey of U.S. adults ages 19 to 64, found that an estimated 55 million Americans were uninsured for all or part of the time from June 2010 to September 2012. In the 26 states that have not decided to expand Medicaid, 72% of adults whose incomes fell below 133% of the federal poverty level ($14,856 for an individual and $30,657 for a family of four in 2012) during the two-year period had spent time uninsured.

Coverage gaps

Under the Affordable Care Act, people earning less than 133% of the federal poverty level will qualify for Medicaid starting in 2014, the report authors noted. Because of the way the law was written, people making between 100% and 133% of the federal poverty level are among those eligible to purchase subsidized insurance coverage through the state marketplaces if they do not have access to Medicaid.

However, people making less than 100% of the poverty level are not eligible for marketplace subsidies because before the Supreme Court ruling, lawmakers assumed they would be enrolled in Medicaid. Therefore, not only will the lowest-income people be left without the opportunity to enroll in the expanded Medicaid program, they will have no option to purchase subsidized health insurance through the marketplaces.

In the 26 states that are not expanding their programs or are undecided, an estimated 42% of adults who were uninsured at any time during the two-year survey period earned less than the federal poverty level in one or both years.

In addition, low-income people in states that do not expand Medicaid are vulnerable to losing coverage if their income changes, according to the report. For example, one year a family’s income level could qualify them for subsidized coverage through the marketplaces. However, an income loss, such as that resulting from the loss of or change in a job, could drop them into the category in which they no longer qualify to purchase subsidized coverage through the marketplaces. Therefore, with no expanded Medicaid and no option for subsidized coverage through the marketplaces, they likely would become uninsured.

According to the report, 29% of people who would qualify to purchase subsidized coverage in the absence of Medicaid (those who earn between 100% and 133% of the federal poverty level) experienced an income change from 2011 to 2012 that lowered their income below 100% of the poverty level, meaning they no longer would qualify for subsidized coverage through the marketplaces.

In addition, 12% of those earning between 133% and 249% of poverty in 2011 also experienced an income change that lowered their earnings to less than the poverty level in 2012. In contrast, 30% of people with incomes below 100% of poverty had an income gain that would have made them eligible for subsidized coverage.

Policy solutions

The authors propose policy solutions that state and federal policymakers could pursue to ensure the poorest Americans do not miss out on the benefits of healthcare reform. By choosing to expand Medicaid under the Affordable Care Act, states would guarantee that everyone has access to the affordable health insurance coverage the law intended.

In addition, Congress has the option to pass legislation that would allow those who make less than 100% of the federal poverty level and do not have access to Medicaid to be eligible for subsidized coverage through the state marketplaces.

Report: www.commonwealthfund.org/Publications/Issue-Briefs/2013/Sep/In-States-Hands.aspx.


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