Few Options for Working Poor in States that Block Medicaid Expansion

Adults earning below the federal poverty level who live in the 26 states that have either rejected Medicaid expansion or have yet to commit to it will be ineligible for a federal subsidy to help them buy coverage on the health insurance exchanges.

Many working poor who live in states that won't expand Medicaid also won't be eligible for federal subsidies that would make private health insurance affordable.

A Commonwealth Fund study released this week estimates that a glitch in the implementation of the Patient Protection and Affordable Care Act was created when the U.S. Supreme Court ruled last year that the Medicaid expansion was optional for states. Even with the ruling, no one foresaw that some state would actually reject the billions of federal dollars to prop up the expansion.

However, 42% of adults who've been recently uninsured and who live in the 26 states that have either rejected Medicaid expansion or have yet to commit to it will be ineligible for a federal subsidy to help them buy coverage on the health insurance exchanges.

In those states, the study says, 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.

"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," Commonwealth Fund Vice President and study coauthor Sara Collins said in prepared remarks. "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, In States' Hands: How the Decision to Expand Medicaid Will Affect the Most Financially Vulnerable Americans [PDF] , is based on a survey of U.S. adults ages 19 to 64 that estimated that 55 million Americans were uninsured at least part of the time from June 2010 to September 2012. In the 26 states, 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 were uninsured at some point.

In a perverse twist of the ACA, Collins says that some of the lowest income adults, the very people for whom the programs are designed, will be especially at risk in the states that don't expand their Medicaid programs.

It's understood that people earning less than 133% of the federal poverty level in 2014 will qualify for Medicaid, while people making between 100% to 133% of the federal poverty level are eligible to purchase subsidized insurance coverage through the state marketplaces if they are not eligible for Medicaid.

Here is where it gets skewed: People making less than 100% of the poverty level in the 26 states are not eligible for marketplace subsidies because it was assumed that they would be enrolled in Medicaid.

As a result, Collins says, not only will the lowest-income people be unable to enroll in expanded Medicaid, but they won't be able to purchase subsidized health insurance through the marketplaces.

The Commonwealth Fund estimates that the glitch will affect two-in-five adults who live in the 26 states and 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 finds that low-income people in the 26 states could lose 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. With no expanded Medicaid and no option for subsidized coverage through the marketplaces, they would likely become uninsured.

Collins says that 29% of people who would qualify for subsidized coverage saw an income change from 2011 to 2012 that dropped their income below 100% of the poverty level, meaning they would no longer qualify for subsidized coverage through the marketplaces. Another 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.

The study calls on states to accept the Medicaid expansion. In the likely event that they do not, at least in the near term, Collins says Congress could pass legislation that would allow those making less than 100% of the federal poverty level, who are not eligible for Medicaid, to be eligible for subsidized coverage through the state marketplaces.

Such legislation would be unlikely to clear the Republican-controlled U.S. House, which has voted 40 times to repeal the PPACA.