The Surprising Gap: Why The Affordable Care Act Will Not Provide Coverage To All Americans

We’ve all heard the numbers.  Approximately 44 million people in the United States lack health insurance, or about 15% of the U.S. population. [1] Another 38 million have inadequate health insurance. [2] Uninsured and underinsured Americans cause problems at both the individual and systemic level.

Individuals without insurance suffer by having to postpone both necessary and preventative care or by being forced into financial ruin when they obtain care and cannot pay for it.  Failure to obtain preventative care ultimately drives up systemic costs because people are more likely to require expensive hospitalizations and procedures that proper preventative care could have avoided.  In addition, the entire system suffers when uninsureds cannot pay because uncompensated care drives up costs for everyone.

Remedying the problems caused by America’s large numbers of uninsureds and under-insureds was the major motivating factor behind the Affordable Care Act. [3] Put another way, the Affordable Care Act was designed to provide quality, affordable health care for “all” Americans.

In theory, it will do so in two main ways.  First, it mandates that each state establish a health insurance exchange to help individuals and small employers obtain affordable coverage. [4] The exchanges allow qualified individuals to sign up for coverage and some will receive tax credits for coverage obtained pursuant to the exchange. [5] Qualified individuals are those who are ineligible for affordable, employer-sponsored insurance or any form of public insurance coverage. [6] Tax credits will apply for people with incomes between 100% and 400% of the federal poverty level. [7]

Second, the Act expands Medicaid coverage.  The Act initially required that states provide Medicaid coverage for adults between ages 18 and 65 with incomes up to 133% of the federal poverty level, regardless of their age, family status, or health. [8]  The Federal Government agreed to pay the cost for the newly Medicaid eligible for the first three years, and then no less than 90% of future costs.  But the U.S. Supreme Court ruled that the Federal Government cannot mandate the states to expand Medicaid coverage. [9] As a result, 26 states have so far decided not to extend Medicaid eligibility. [10] Most cite the economic hardship that even having to cover 10 percent of the cost of the additional covered population would entail. 

In those states, all of which have Republican governors or Republican-controlled legislatures, and which account for about 60 percent of the country’s uninsured working poor, there will be a gap in coverage. [11] Adults with incomes below 100% of the federal poverty level but above the level at which their states currently permit Medicaid coverage, will neither be able to obtain coverage under Medicaid nor obtain tax credits to purchase coverage on an exchange.  Put another way, millions of people making less than $11,500 per year ($23,500 for a family of four) will make too much to qualify for Medicaid but not enough to receive federal subsidies for obtaining coverage through an exchange. [12] Studies estimate that between five and eight million people fall into this coverage gap and will be left uninsured. [13]

A large part of that gap population lives in Texas (1 million), Florida (763,980) and Georgia (409,350). [14] Those states presently have the highest number of uninsureds nationally amidst already limited Medicaid eligibility. [15] Also hard hit will be Alabama, Mississippi and Louisiana, which will see more than a third of their uninsured adults falling into the coverage gap. [16] It is certainly problematic that states with the highest concentration of poverty and the lowest rates of health insurance have rejected Medicaid expansion.  Those populations put the greatest burden on the health care system in the first place.  Nationally, about 27 percent of uninsured adults in states not expanding Medicaid will be stuck in the gap and ineligible for coverage. [17]

The Federal Government is encouraging those who believe they fall into the gap to nonetheless apply for Medicaid coverage in their states to see if they may qualify. [18] In particular, those with children, who have a disability, or who are pregnant may be eligible. [19] Also, some states are looking into state-level solutions to the Medicaid gap problem. [20] Nonetheless, advocates in non- expansion states are frustrated that there are so many whose incomes, while higher than the $11/day ceiling for Medicaid in some states, are not high enough to get help on the exchanges – a great irony of the Affordable Care Act (as amended by the U.S. Supreme Court). [21]

If the Affordable Care Act succeeds in providing affordable health insurance coverage to a large number of the currently uninsured, it will still be a success by most measures.  But it won’t have succeeded in providing affordable health care to “all” Americans. 


References

[1] Nearly 44 Million in the United States Without Health Insurance in 2008, Center for Disease Control & Prevention (July 1, 2009), http://www.cdc.gov/media/pressrel/2009/r090701.htm.

[2] Id.

[3] The Patient Protection and Affordable Care Act, Democratic Policy & Communications Center (Oct. 2013), http://www.dpc.senate.gov/healthreformbill/healthbill52.pdf.

[4] The Patient Protection and Affordable Care Act, Pub. L. 111-148 (Subtitle D, Parts II and III) (2010).

[5] Id. at Subtitle E, Part I.

[6] Id.

[7] Id.

[8] Id. at Title II, Subtitle A.

[9] Nat'l Fed'n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2607-08 (2012).

[10] Status of State Action on Medicaid, Kaiser Family Foundation (Oct. 2013), http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/.

[11] Sabrina Tavernise & Robert Gebeloff, Millions of Poor are Left Uncovered by Health Law, New York Times (Oct. 2, 2013), http://www.nytimes.com/2013/10/03/health/millions-of-poor-are-left-uncovered-by-health-law.html?hp&_r=1&pagewanted=all&.

[12] Id.           

[13] Id.; see The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid, Kaiser Family Foundation (Oct. 2013), http://media.khi.org/news/documents/2013/10/16/coverage-gap.pdf.

[14] Tavernise & Gebeloff, supra.

[15] Id.

[16] Id.

[17] Id.

[18] What if my state is not expanding Medicaid?, Healthcare.gov (Oct. 2013), https://www.healthcare.gov/what-if-my-state-is-not-expanding-medicaid/#state=illinois.

[19] Id.

[20] See, e.g., Andrea Grimes, One Million Low-Income Texans Fall Into ACA ‘Coverage Gap,’ With No Help in Sight, RH Reality Check (Oct. 2013), http://rhrealitycheck.org/article/2013/10/14/one-million-low-income-texans-fall-into-aca-coverage-gap-with-no-help-in-sight/.

[21] See, e.g., Phil Cauthon, Nothing to be done about coverage gaps in states in not expanding Medicaid, feds say, Kansas health Institute(Apr. 29, 2013), http://www.khi.org/news/2013/apr/29/nothing-can-be-done-about-coverage-gap-states-not/.