How States’ Decisions to Expand — or Not Expand — Medicaid Could Hurt Health Care Reform

September 18, 2013

A recent article in the Washington Post highlighted states that have opted not to expand Medicaid eligibility to previously ineligible populations under the ACA. While these states will have an increase in the number of uninsured people who have coverage starting in 2014, the numbers will not be nearly as high as they would be if they had chosen to expand Medicaid to more people.

This could have a huge impact on the perceived success or failure of the ACA. Here’s how.

Impact of states opting out

Simply put, the main goal of the ACA is to get millions more Americans covered by health insurance. A key provision for achieving this in the original law was to provide a continuum of affordable healthcare coverage by 1) providing federal funds to states to expand Medicaid to include people under 65 years of age living at 138% or below the poverty line and 2) offering private health plans for sale on public exchanges with federal subsidies available for people under 65 years of age living at 400% or below the poverty line.

Another provision of the ACA for meeting this goal was the “individual mandate,” which requires all individuals to have health insurance by 2014 or pay a penalty.

When the U.S. Supreme Court ruled on the constitutionality of the ACA in 2012, it upheld the individual mandate but allowed individual states to decide whether to expand Medicaid. According to data from the American Health Line, as of September 6, 2013, 16 states have opted out and another 7 are leaning toward opting out.

According to an Urban Institute report, 7 million adults ages 19 to 64 would have qualified for Medicaid in the states that have opted out, had they chosen to expand the program.

Recognizing that individuals who qualified for Medicaid in the opt-out states would not be able to afford the private plans that will be offered on the public exchanges even with federal subsidies, the federal government exempted them from the individual mandate.

So even though the individual mandate was left intact by the Supreme Court ruling , the net effect of states being able to opt out of Medicaid expansion is that fewer uninsured people will end up getting insurance as a result of the ACA.

Magnitude — and locations — of the problem

The two maps below illustrate the magnitude of the impact. The first map shows the percentage of people under 65 living at or below 138% the poverty line who do not have health insurance. These individuals would benefit most from Medicaid expansion.

The second map shows the percentage of people under 65 living at or below 400% the poverty line who do not have health insurance. This individuals would qualify for either Medicaid or for federal subsidies they could use to purchase private health plans on public exchanges.

F11-SAHIE-2011-County-Uninsured-138-and-400-percent-IPR

[click on image to expand]

With both supporters and critics of the ACA eager to point to its success or failure, the number of uninsured people who get coverage under the ACA will no doubt be a talking point for both sides on cable news shows starting in January 2014.

Stay tuned.

2 Responses to “How States’ Decisions to Expand — or Not Expand — Medicaid Could Hurt Health Care Reform”

  1. […] 2013, we discussed in this blog the implications of states opting to expand or not expand Medicaid coverage. Since the […]

  2. […] 2013, we discussed in this blog the implications of states opting to expand or not expand Medicaid coverage. Since the […]

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