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Millions of adults are accidentally uninsured, which will disrupt the individual insurance market

Millions of adults are accidentally uninsured, which will disrupt the individual insurance market
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The Affordable Care Act was written with the expectation that all states would cover their citizens in poverty through their Medicaid program. And those above poverty would receive subsidized private insurance through the state or federal health insurance exchanges or marketplaces.

A combination of legislative language and a Supreme Court decision, however, has created a situation where one dollar of income can now make the difference between being eligible for affordable health insurance or having no option at all.

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This large group of “accidentally uninsured” adults have been virtually ignored in policy discussions. However, a viable policy option now exists and could be passed in the next two weeks if there is congressional will.

 

As an example, an adult with income at the poverty level in both Ohio and Florida ($12,140 per year) are eligible for free private health insurance through the health insurance marketplace.

An adult making one dollar less ($12,139) in Ohio (with the Medicaid expansion), is eligible for Medicaid coverage, while the same adult in Florida (without the Medicaid expansion), is not eligible for any public or private coverage.

The Kaiser Family Foundation estimates there are 2.5 million adults in states like Florida that did not expand their Medicaid program, who have no options for affordable health insurance. Seventy five percent are employed or have a full-time worker in their household.

This unintended gap in coverage for the working poor resulted from a weird twist of policy fate.

The original, legislative intent of the ACA was that all uninsured Americans would have an affordable public or private health insurance option.

Uninsured adults up to 138 percent of poverty would receive health coverage through the expansion of Medicaid while adults from 100-400 percent of the federal poverty level (FPL) would be able to purchase affordable, subsidized private insurance through health insurance marketplaces. Adults just above the poverty level (100-138 percent FPL) would have a choice of public or private insurance.

The Supreme Court upset this balanced formula when they ruled against the constitutionality of the Medicaid expansion in June 2012. The Medicaid expansion was one of four aspects of the ACA that the court had agreed to review.

Legal experts expected the most significant constitutional challenge would be to the ACA’s requirement that everyone have health insurance or pay a penalty-ultimately ruled constitutional on a 5-4 vote. The issue that caught many by surprise was the court’s acceptance to review, and ultimately rule in favor of, a state’s ability to opt out of the Medicaid expansion.

While many aspects of Medicaid are under the control of the states, the federal government had previously exerted control over which populations must be covered by a state’s Medicaid program.

Additionally, the federal government was going to pay for 100 percent of the cost of the expansion population for the first three years, phasing to 90 percent over the following 10 years.

This gap in coverage could be closed by allowing adults below the poverty level in states that declined the Medicaid expansion to receive subsidized private insurance through the health insurance marketplace-the same as those just over the poverty level.

A mechanism for this change would be to add this approach to a package of other efforts to stabilize the individual and small business insurance market that are being considered as part of this year’s final temporary spending bill, due in late March. These changes would likely be based on the Alexander-Murray and Collins-Nelson bills in the Senate.

There are many benefits of this legislative approach:

1) The size of the pool purchasing private insurance would increase — helping to stabilize the individual insurance market in these states.

2) Coverage would be provided through private insurance, which is a manner consistent with the conservative philosophy of many of the states that declined the Medicaid expansion

3) These “accidentally uninsured” citizens would receive similar access to health insurance as those in states that expanded Medicaid.

4) Other citizens in these states would benefit as the overall uncompensated care costs, which are typically passed on to insured individuals through increased premiums, would decrease.

An intentional solution for these accidentally uninsured would reverse the irony of a potentially life-threatening problem resulting from one dollar of income and help millions of Americans afford the care they need. It will also assist with mitigating the disruption to the individual insurance market that will be caused next year by the elimination of the individual mandate that was included in the recent tax reform legislation.

Peter Damiano is the director of  public policy and health policy research at the University of Iowa.