Marketplace Pulse: Let's Close the Coverage Gap
Estimated Medicaid Coverage Gap Population by Age
The Marketplace Pulse series provides expert insights on timely policy topics related to the health insurance marketplaces. The series, authored by RWJF Senior Policy Adviser Katherine Hempstead, analyzes changes in the individual market; shifting carrier trends; nationwide insurance data; and more to help states, researchers, and policymakers better understand the pulse of the marketplace.
Since the passage of the American Rescue Plan, there has been interest in the potential timeline for Medicaid expansion in the remaining states. The Rescue Plan sweetened what was already a generous offer for the non-expansion states—maintaining the 90 percent federal match for the expansion population, while increasing the Federal Medical Assistance Percentage (FMAP) on the remaining Medicaid program by five percentage points. The offer is on the table without any expiration date, and the increased FMAP will be in effect for two years after the state expands. The 90 percent federal match on the expansion population will remain.
Expansion is a no-brainer from a fiscal perspective, but the politics are complicated in the 12 remaining states. Promising signs have emerged in some, while others seem intransigent. The recent revocation of Medicaid waivers in a number of states, most recently Texas, added some pressure to an already dynamic environment, and it is not clear what might happen in the short to medium run. Due to the likelihood of continued inaction, especially in the larger states, the possibility of a federal solution has been considered.
While such a solution is feasible, it will not be simple. Policymakers will need to provide appropriate coverage to the eligible population, while being fair to the states that already expanded. Meanwhile, an increasing number of health and other policy priorities are crowding the table. Some members from expansion states may not want to prioritize actions that won’t benefit their constituents and may be tempted to let these 12 states sort it out for themselves.
The issue of Medicaid expansion was not mentioned in President Biden’s recent address to Congress, raising concern that the issue could slip off the agenda.
HERE ARE THE REASONS WHY IT SHOULD NOT:
There are an estimated 4.4 million people that would be eligible for Medicaid were the remaining states to expand. (These estimates include Oklahoma and Missouri as non-expansion states.) If expanding coverage is our primary goal, there is no other single action that would include so many people. Expansion will reduce the uninsurance rate by approximately 30 percent in the affected states, and by about 15 percent overall. Lowering the Medicare eligibility age to those aged 60–64 years old is an idea that is gaining popularity, but given the low rate of uninsurance in that age group, closing the coverage gap would accomplish much more toward achieving universal coverage. Closing the Medicaid gap can be combined with other policy changes to further reduce the number of uninsured.
Those in the coverage gap are disproportionately Black, Hispanic, American Indian, and Pacific Islander. The Center on Budget and Policy Priorities estimates that 60 percent of the expansion population are people of color.
An abundance of research demonstrates that coverage improves health and well-being, including a recent study finding significant reductions in disease-related deaths in expansion states versus non-expansion states. In non-expansion states, some mothers fall into the coverage gap where their incomes are too high for Medicaid parent eligibility yet too low for Marketplace subsidies. A new option from the American Rescue Plan Act extends Medicaid coverage for post-partum women from the current 60 days to one year.
Aside from the health benefits, coverage is financially important, especially for low-income people. Medicaid expansion states saw reductions in consumer debt and bankruptcies that are good for low-income families and their communities.
Medicaid expansion is not targeted at children, who are already eligible for Medicaid at higher income levels, even in non-expansion states. However, children are more likely to be covered when their parents are, and vice versa. The Urban Institute estimates that a quarter million children will gain coverage as a result of expansion, reducing the child uninsurance rate in non-expansion states by 15 percent.
Young adults have the highest uninsurance rate, and therefore the most to gain. In the non-expansion states, 27 percent of adults aged 19–24 years are uninsured. Expansion is estimated to cut this in half.
Medication Assisted Treatment is the most effective treatment for opioid use disorder. Expansion states are connecting a higher share of individuals involved with the criminal justice system with treatment, which can reduce overdoses and increase recovery.
Expansion reduces uncompensated care, benefiting hospitals and health care providers. The recently reported 33 percent decline in uncompensated care costs in Louisiana may be a good model for what other Southern states can expect. Expansion also contributes positively to the financial viability of rural hospitals.
Even before the increased incentive in the American Rescue Plan, Medicaid expansion was a fiscal win for states—reducing uncompensated care costs, taking pressure off other state programs, and increasing economic activity.
Finally, the current situation is absurdly unfair. Let us remember that those who are in the Medicaid coverage gap are too poor to be eligible for another means-tested program, the ACA Marketplace. Simply due to the state in which they live, they must go without coverage. This should strike us all as unacceptable.
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