insurance

Obamacare coverage gap hits many of the poor

The Affordable Care Act was passed with the goal of expanding health insurance coverage, particularly among Americans with low to moderate incomes. But a twist of fate has left many of the poor shut out, with few or no affordable health care options. These people are falling into an Obamacare coverage gap.

Adults earning less than 100 percent of the federal poverty level -- currently $11,490 for an individual and $23,550 for a family of four -- don't make enough money to receive subsidies that cut the cost of health insurance in the Obamacare exchanges. But if they live in a state that hasn't expanded Medicaid the way the health care law intended, they may make too much money to qualify for that program, which provides health insurance for the poor.

Nearly 5 million poor, uninsured adults are expected to fall into the gap, according to a study from the Kaiser Family Foundation.

"(The situation) is very, very bleak in states that are not expanding Medicaid," says Deborah Chollet, a leader of health insurance research at Mathematica Policy Research in Washington, D.C. "It is very hard to explain to anybody."

Why is there a coverage gap?

Obamacare's Medicaid gap has resulted from the Supreme Court's decision in 2012 that upheld the Affordable Care Act. While allowing the law to stand, the court's majority said that forcing Medicaid expansion on states would be akin to an economic "gun to the head." So, the justices made expanding the program optional.

Medicaid expansion for the states that have opted in will be fully funded by the federal government for the first three years; federal funding will decrease to no less than 90 percent by the year 2020.

Despite that incentive, 25 states have opted out.

"There's a huge economic opportunity that's missed," Chollet says.

The Kaiser study estimates that more than half the people in the coverage gap live in five states:

  • Texas: 22 percent.
  • Florida: 16 percent.
  • Georgia: 8 percent.
  • North Carolina: 7 percent.
  • Pennsylvania: 6 percent.

In the gap, are there any options?

The Medicaid expansion is meant to pick up where the health insurance exchanges leave off, says Steven Culler, associate professor in the department of health policy and management at Emory University in Atlanta.

"The rules weren't written so that those low-income people had a choice other than Medicaid expansion," he says.

One of the main concerns for consumers in the coverage gap is figuring out what options they still have, if any, for receiving health insurance coverage and quality health care.

"They have the options that they've always had, which are limited and not very good," says Lynn Quincy, senior policy analyst for Consumers Union, the policy and advocacy arm of Consumer Reports.

Those meager options, she says, include community clinics, or, if they have to visit a hospital, programs for the financially needy.

In some cases, Quincy adds, there may be special, limited-coverage health care programs for adults with certain ailments or disabilities.

Public hospitals, funded by taxpayer dollars, are often the best option for the poor and uninsured because those facilities can't refuse to provide care. But the fear is that those hospitals will be overwhelmed in states not expanding Medicaid.

"I think you're going to start hearing a lot about how public hospitals and those safety-net hospitals are struggling financially, and I think that's going to put pressure on these states to do something because they really have hurt their own state hospitals," Culler says.

Not that it's much of a consolation for those in the Obamacare Medicaid gap, but they won't have to pay the "individual shared responsibility payment" -- the penalty associated with not having health coverage, which kicks in when 2014 taxes are filed -- because their incomes are too low.

Closing the coverage gap

Obviously, getting the 25 opt-out states to expand their Medicaid programs is the quickest way to close the gap, Quincy says.

"In the short run, expanding Medicaid to this population is probably the best bet and then we can look at what some breakout states are doing to see if that's going to work better over the long run," she says, referring to states that are looking for alternative ways to expand coverage options for their poor and uninsured.

For example, Vermont is working toward a single-payer system, in which the government would pay for health insurance on behalf of all its citizens, who would be taxed for their coverage based on their ability to pay. In September, the Centers for Medicare and Medicaid Services approved Arkansas' plan to use federal funds designated for Medicaid expansion to instead purchase private health insurance for more than 200,000 of its low-income residents.

There isn't a deadline states have to meet to decide whether to expand Medicaid, but Culler reiterates that there really is no cost for states to opt in now.

"Right now, it's essentially free for the states," he says. "When these governors are (saying) they can't afford it, what they are really saying is that three to five years from now they may not be able to afford it."

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