Medicaid expansion could be only option for 40% of uninsured adults

Two of five adults who recently have been uninsured living in states that have not yet decided to expand Medicaid eligibility under the Patient Protection and Affordable Care Act (PPACA) would likely have no new affordable health insurance options if their states do not eventually expand the program, according to a new Commonwealth Fund report.

The U.S. Supreme Court, in upholding the law in 2012, ruled that the federal government cannot require states to expand Medicaid eligibility. Currently, 26 states have said they will not, or may not, expand their Medicaid programs in 2014. In these states, the lowest-income adults – those earning below the federal poverty level, or 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, according to the Commonwealth Fund.

Related story: Medicaid expansion to miss much of target market

“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 health care they need,” said Commonwealth Fund vice president and study coauthor Sara Collins, Ph.D. “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 yet decided to expand Medicaid, 72 percent of adults whose incomes fell below 133 percent 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 some time uninsured.

Low-income families remain at risk, report says

The Commonwealth Fund offers several ways that the lowest-income adults are especially at risk if states do not expand their Medicaid programs.

Under PPACA, starting in 2014, people earning less than 133 percent of the federal poverty level will qualify for Medicaid. But because of the way the law was written, people making between 100 percent and 133 percent of the federal poverty level are eligible to purchase subsidized insurance coverage through the state marketplaces if they are not eligible for Medicaid.

However, people making less than 100 percent of the poverty level are not eligible for marketplace subsidies, since it was assumed that they would be enrolled in Medicaid – lawmakers did not anticipate the Supreme Court decision. So, not only will the lowest-income people be left without the opportunity to enroll in the xpanded Medicaid program, they will have no option to purchase subsidized health insurance through the marketplaces.

The Commonwealth Fund report found that in the 26 states that currently are not expanding their programs or are undecided, an estimated two of five (42 percent) adults who were uninsured any time over the two-year survey period earned less than the federal poverty level in one or both years.

The report also found that low-income people in states that do not expand Medicaid are vulnerable to losing coverage if their income changes. 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 where 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 would likely become uninsured.

According to the report, 29 percent of people who would qualify to purchase subsidized coverage in the absence of Medicaid (those who earn between 100 percent and 133 percent of the federal poverty level) experienced an income change from 2011 to 2012 that lowered their income below 100 percent of the poverty level, meaning they would no longer qualify for subsidized coverage through the marketplaces. In addition, 12 percent of those earning between 133 percent and 249 percent of poverty in 2011 also experienced an income change that lowered their earnings to less than the poverty level in 2012. In contrast, 30 percent of people with incomes below 100 percent of poverty had an income gain that would have made them eligible for subsidized coverage.

Policy solutions proposed in the report

The authors propose policy solutions that state and federal policymakers could pursue to assure that the poorest Americans do not miss out on the benefits of the PPACA.

By choosing to expand Medicaid under PPACA, states would guarantee that everyone has access to the affordable health insurance coverage the law intended them to have.

In addition, Congress has the option to pass legislation that would allow those making less than 100 percent of the federal poverty level, who are not eligible for Medicaid, to be eligible for subsidized coverage through the state marketplaces.

“It’s clear that by declining to expand Medicaid, states will be putting their most vulnerable residents in jeopardy,” said Commonwealth Fund President David Blumenthal, M.D. “I am optimistic that many states will change course and accept the Medicaid expansion. However, for states that don’t, it will be crucial for federal policymakers to look into legislative fixes that will allow the lowest-income residents in those states to purchase subsidized health insurance through their state marketplaces so they can benefit, like their better-off neighbors, from the protections available through the Affordable Care Act.”

Originally published on FC&S Legal: The Insurance Coverage Law Information Center. FC&S Legal is theindustry's ONLY single-source, comprehensive portal developed specifically for insurance coverage law professionals.To find out more, visit www.fcandslegal.com. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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