In Florida, a single father of two earning $10,000 per year would not qualify for Medicaid or for assistance purchasing health insurance. He, like 5.6 million other Americans, would fall into the assistance gap: too rich for Medicaid, but too poor for discounted private insurance in the Affordable Care Act’s health insurance marketplaces.
Why is there an assistance gap?
The Affordable Care Act as it was originally passed offered two avenues for low-income adults to access health care. The ACA extended Medicaid to people earning less than 138 percent of the federal poverty level. While Medicaid and the Children’s Health Insurance Program were available to children at higher incomes, eligibility for adults was generally limited to those living significantly below the poverty line. In addition, those whose incomes were too high for Medicaid could be eligible for tax credits and cost sharing reductions that would make private health insurance more affordable.
But a June 2012 Supreme Court ruling on the Affordable Care Act allowed states to choose whether to expand Medicaid, and as of September 2015, 21 states have not. (Montana has submitted a proposed Medicaid expansion plan, but the Center for Medicare and Medicaid Services must approve it before expansion can take effect.)
Adult Medicaid eligibility thresholds in states that have not expanded Medicaid are generally much lower than the poverty level, yet few people with incomes below the poverty line can qualify for marketplace assistance (only legal immigrants who have lived in the country for less than five years). Thus, most people in non-expansion states living below the poverty line but above Medicaid eligibility thresholds are not eligible for any assistance affording health insurance coverage.
What does insurance coverage look like in states that haven’t expanded Medicaid?
Florida’s eligibility structure is provided as an illustration below. Currently, parents living with dependent children and earning up to 34 percent of the poverty level ($6,830 for a family of three) are eligible for Medicaid. Those who earn at least $20,090, the federal poverty level for a three-person household, are eligible for assistance purchasing health insurance on the marketplace. But for those families who earn more than $6,830 but less than $20,090, there are no options.
People with incomes between 100 and 138 percent of the federal poverty level could also fall into this assistance gap. The marketplace has an additional condition for eligibility that Medicaid does not have: if any family member is offered single coverage costing 9.56 percent of family income or less, all family members are ineligible for assistance with marketplace coverage. These people would be eligible for Medicaid if their state expanded coverage, but they have often been omitted from estimates of who would benefit from Medicaid expansion.
- If not eligible for another type of Medicaid program such as disability or assistance for pregnant women.
- If a family member has an offer of single coverage that is less than 9.56% of family income, then the entire family is barred from marketplace tax credits.
- There are differences in how income as a percent of poverty is calculated for Medicaid and for marketplace tax credits. In defining the eligibility gap, the 100% threshold was computed using the tax credit definition, while the 138 percent threshold used the Medicaid definition.
How many people are in the assistance gap?
According to our latest estimates , 5.6 million people are in the assistance gap. These people were uninsured before the major coverage provisions of the ACA took effect in 2014 and could become eligible for new assistance if the remaining 21 states were to expand Medicaid. Of these, 4.7 million are living below the poverty level. The other 1 million earn between 100 and 138 percent of the poverty level, but are not eligible for assistance with marketplace coverage because they have employer offers.
Who is in the assistance gap?
Almost half (48 percent) are young adults between the ages of 18 and 34. About 48 percent are non-Hispanic white, 27 percent non-Hispanic black, and 21 percent Hispanic. Only about 9 percent have a college degree.
Where is the gap the biggest?
Just over 40 percent of people in the assistance gap are in Texas or Florida (1.3 million and 1 million people, respectively). At the other extreme is Wisconsin, where only about 6,000 uninsured people would gain assistance if Medicaid were expanded. That’s in part because, in 2014, Wisconsin changed its Medicaid eligibility rules independently of the ACA to make all nonelderly adults (excluding certain immigrant groups) at or below the poverty line eligible for Medicaid. Although the decision to change eligibility requirements did help close the assistance gap, refusing to expand under the terms of the ACA had important implications for the state’s budget. Had they expanded Medicaid, the federal government would have paid a much higher share of the costs of newly eligible adults.