The Coverage Gap: The Real Failure of Obamacare

Right now, the corporate media are focused like a laser on the “scandal” of the malfunctioning of the national health insurance exchange website. Although these glitches reflect negatively on the Obama administration, they are technical problems that will be fixed. They have nothing to do with the substance of the law. A more important failure is the number of people, particularly poor people, who will remain uninsured after the Affordable Care Act (ACA) is implemented. This is not the fault of the act as written, but is the result of the Supreme Court decision on its constitutionality and intractable opposition from Republican politicians.

An October study by the Kaiser Family Foundation (KFF) estimates that 5.2 million non-elderly adults living below the federal poverty level (FPL) will remain uninsured in 2014 because they live in the 26 states that—at the time of the study—had declined to participate in the Medicaid expansion. These states are concentrated in the South and West and are controlled largely by Republican governors and legislatures. About half of Americans, but 58% of America's uninsured working poor, live in those states. Pennsylvania is among them. Our Medicaid expansion status is uncertain, but even if the Corbett administration reaches agreement with the federal government on an expansion plan, it is unlikely to be implemented in 2014.

To review, of the approximately 30 million people who were expected to be insured for the first time under the ACA, fully half of them—the poorest half—were to be insured through Medicaid expansion. Traditional Medicaid is jointly administered by the state and federal governments. Federal law requires that all children be covered if their family makes less than the FPL. Children under six are covered up to 133% of FPL. The eligibility rules for adults are determined by the states. In most states, adults without children don't qualify no matter how poor they are. The income level at which parents with dependent children qualify for Medicaid varies from a low of about 20% of FPL in the least generous states to a high of 133% is the most generous states. (In Pennsylvania, it is 46%.)

The ACA expanded Medicaid by making everyone—children and adults—eligible for Medicaid if their family income is 138% of FPL or less. Since this is expensive, the feds agreed to pay most of the cost: 100% in 2014, dropping to 95% in 2017 and 90% in 2020. The ACA required states to implement Medicaid expansion. If they refused, the federal government threatened to withhold its contribution to traditional Medicare—about 57% of the cost. However, this clashed with the conservative majority of the Supreme Court's long-term goal of rolling back federal regulation of the states. In National Federation of Independent Business v. Sibelius, the Supremes decided that the Medicaid expansion rules were coercive and that states may opt out. This denies medical care to many of the Americans who need it most, people who fall into the coverage gap.

The ACA provides subsidies, on a sliding scale, for people individuals and families whose income is between 100% and 400% of FPL. The coverage gap consists of those people, living in states that do not expand Medicaid, who are not poor enough to qualify for Medicaid in their state, but whose income is below 100% of FPL, the level at which the subsidies kick in. This is illustrated in the chart below.

As noted, poor and uninsured Americans tend to be concentrated in the “red states” that are not expanding Medicaid. Twenty percent of the people in the coverage gap live in Texas, and another 15% live in Florida, followed by Georgia with 8% and North Carolina with 6%. At present, 6.8% of the residents of states that are participating Medicaid expansion are poor and uninsured, but 9.1% of the residents of the refusing states are poor and uninsured. The chart below shows the breakdown of the poor and uninsured by race, and shows that Medicaid expansion has a discriminatory impact.

	Live in States Expanding	Live in States Not Expanding
White	40%	60%
Black	32%	68%
Hispanic	51%	49%
Asian	70%	30%
Total	42%	58%

These are America's working poor. By occupation, the folks most likely to be poor and uninsured are (1) cashiers, (2) construction laborers, (3) housekeepers, (4) cooks, and (5) waiters and waitresses.

At the time the ACA was passed, single payer advocates noted that the ACA provided less than universal coverage. The largest excluded group is undocumented immigrants, but the ACA also excludes native Americans and people who are incarcerated, have a religious objection, or can prove financial hardship. To that we must now add 5.2 million working poor Americans, a target group that the ACA was clearly intended to help. These people are being left to die for lack of health care. It will be interesting to see whether they respond at the ballot box when they realize what their state politicians have done to them.

Single payer health insurance is needed now more than ever.

You may also be interested in reading:

A Clouded Vision, Part 1: The Stick  (See both parts)

Tom Corbett to PA's Working Poor: "Drop Dead!"  Part 1  (See all four parts)

The Friday Morning Quarterback