The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

The Kaiser Commission on Medicaid and the Uninsured, October 2013

The expansion of Medicaid, effective in January 2014, fills in historical gaps in Medicaid eligibility for low-income adults and has the potential to extend health coverage to millions of currently uninsured individuals. This expansion essentially sets a national Medicaid income eligibility level of 138% of poverty (about $27,000 for a family of three) for adults. The expansion was intended to be national and to be the vehicle for covering low-income individuals, with premium tax credits for Marketplace coverage serving as the vehicle for covering people with higher incomes. However, the June 2012 Supreme Court ruling made the expansion of Medicaid optional for states, and as of September 2013, 26 states did not plan to implement the expansion.

In states that do not expand Medicaid, over five million poor uninsured adults (5.2 million people) have incomes above Medicaid eligibility levels but below poverty and may fall into a “coverage gap” of earning too much to qualify for Medicaid but not enough to qualify for Marketplace premium tax credits. Most of these people have very limited coverage options and are likely to remain uninsured.

The ACA envisioned people below 138% of poverty receiving Medicaid and thus does not provide premium tax credits for the lowest income. As a result, individuals below poverty are not eligible for Marketplace tax credits, even if Medicaid coverage is not available to them. Individuals with incomes above 100% of poverty in states that do not expand may be eligible to purchase subsidized coverage through the Marketplaces; however, only about a third of uninsured adults (3.2 million people) who could have been eligible for Medicaid if their state expanded fall into this income range. Thus, there will be a large gap in coverage for adults in states that do not expand Medicaid.…

According to this report, “Nationally, over five million poor uninsured adults will fall into the ‘coverage gap’ that results from state decisions not to expand Medicaid, meaning their income is above current Medicaid eligibility but below the lower limit for Marketplace premium tax credits.” That is, they are not eligible for Medicaid, and at an income below 138% of the federal poverty level, they are not eligible for subsidies and therefore cannot possibly afford to purchase private plans. They will remain uninsured, even though they have the least ability to pay out-of-pocket for health care.

These individuals falling into the coverage gap represent about one-sixth of the total number of individuals who will remain uninsured (31 million). Supposedly the Affordable Care Act was designed to make health care affordable for everyone, with an emphasis on Medicaid or private plan subsidies for those who could least afford to pay for coverage. By this standard, ACA can be considered a dud.

Let’s do it right. Let’s enact a single payer national health program that provides health care for everyone while separating the funding by moving it to the tax system. That would eliminate any connection between receiving health care and having to pay for it. Needing health care is bad enough without being assessed charges (in essence financial penalties) for obtaining that care.