The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid – An Update
One of the major coverage provisions of the 2010 Affordable Care Act (ACA) is the expansion of Medicaid eligibility to nearly all low-income individuals with incomes at or below 138 percent of poverty ($27,724 for a family of three 1 ). This expansion fills in historical gaps in Medicaid eligibility for adults and was envisioned as the vehicle for extending insurance coverage to low-income individuals, with premium tax credits for Marketplace coverage serving as the vehicle for covering people with moderate incomes. While the Medicaid expansion was intended to be national, the June 2012 Supreme Court ruling essentially made it optional for states.
As of March 2015, 22 states were not expanding their programs. Medicaid eligibility for adults in states not expanding their programs is quite limited: the median income limit for parents in 2015 is just 44% of poverty, or an annual income of $8,840 a year for a family of three, and in nearly all states not expanding, childless adults will remain ineligible. 2 Further, because the ACA envisioned low-income people receiving coverage through Medicaid, it does not provide financial assistance to people below poverty for other coverage options. As a result, in states that do not expand Medicaid, many adults will fall into a “coverage gap” of having incomes above Medicaid eligibility limits but below the lower limit for Marketplace premium tax credits (Figure 1).
Figure 1: In states that do not expand Medicaid under the ACA, there will be large gaps in coverage available for adults
This brief presents estimates of the number of people who fall into the coverage gap, describes who they are, and discusses the implications of them being left out of ACA coverage expansions. An overview of the methodology underlying the analysis can be found in the Methods box at the end of the report, and more detail is available in the Technical Appendices.
How Many People Are in the Coverage Gap?
Nationally, nearly four million poor uninsured adults 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. These individuals would have been newly-eligible for Medicaid had their state chosen to expand coverage.
In the past year, the number of people falling into the coverage gap has declined as more states have taken up the Medicaid expansion. Since September 30, 2013, four states (Ohio, New Hampshire, Indiana and Pennsylvania) have opted to expand their Medicaid programs, extending ACA-related assistance to approximately 760,000 uninsured nonelderly adults.
Adults left in the coverage gap due to current state decisions not to expand Medicaid are spread across the states not expanding their Medicaid programs but are concentrated in states with the largest uninsured populations (Table 1). A quarter of people in the coverage gap reside in Texas, which has both a large uninsured population and very limited Medicaid eligibility (Figure 2). Eighteen percent live in Florida, ten percent North Carolina, and eight percent in Georgia. There are no uninsured adults in the coverage gap in Wisconsin because the state is providing Medicaid eligibility to adults up to the poverty level.
Figure 2: Distribution of Adults in the Coverage Gap, by State and Region
The geographic distribution of the population in the coverage gap reflects both population distribution and regional variation in state take-up of the ACA Medicaid expansion. As a whole, more people—and in particular more poor uninsured adults— reside in the South than in other regions. 3 Further, the South has higher uninsured rates and more limited Medicaid eligibility than other regions. Southern states also have disproportionately opted not to expand their programs, and half (11 out of 22) of the states not expanding Medicaid are in the South. These factors combined mean 89% of people in the coverage gap reside in the South (Figure 2).
What Are Characteristics of People in the Coverage Gap?
The characteristics of the population that falls into the coverage gap largely mirror those of poor uninsured adults. For example, because racial/ethnic minorities are more likely than White non-Hispanics to lack insurance coverage and are more likely to live in families with low incomes, they are disproportionately represented among poor uninsured adults and among people in the coverage gap. Nationally, 43% of uninsured adults in the coverage gap are White non-Hispanics, 24% are Hispanic, and 27% are Black (Figure 3). However, the race and ethnicity of people in the coverage gap also reflects differences in the racial/ethnic composition between states moving forward with the Medicaid expansion and states not planning to expand. Several states that have large Hispanic populations (e.g. California, New York, and Arizona) are moving forward with the expansion, while other states with large Black populations (e.g. Florida, Georgia, and Texas) are not. As a result, Blacks account for a slightly higher share of people in the coverage gap compared to the total poor adult uninsured population, while Hispanics account for a slightly lower share. The racial/ethnic characteristics of the population in the coverage gap vary widely by state, mirroring the underlying characteristics of the state population.
Figure 3: Demographic Characteristics of Adults in the Coverage Gap
Nonelderly adults of all ages fall into the coverage gap (Figure 3). Notably, over half are middle-aged (age 35 to 54) or near elderly (age 55 to 64). Adults of these ages are likely to have increasing health needs, and research has demonstrated that uninsured people in this age range may leave health needs untreated until they become eligible for Medicare at age 65. 4
While nearly half of people in the coverage gap report that their health is excellent or very good, nearly a fifth (18%) report that they are in fair or poor health (Figure 3). These individuals have known health problems that likely require medical attention. Studies repeatedly demonstrate that the uninsured are less likely than those with insurance to receive preventive care and services for major health conditions and chronic diseases. 5 When they do seek care, the uninsured often face unaffordable medical bills. 6
The characteristics of people in the coverage gap also reflect Medicaid program rules in states not expanding their programs. Because non-disabled adults without dependent children are ineligible for Medicaid coverage in most states not expanding Medicaid, regardless of their income, adults without dependent children account for a disproportionate share of people in the coverage gap
(76%) (Figure 4). Still, nearly a quarter (24%) of people in the coverage gap are poor parents whose income places them above Medicaid eligibility levels. The share of people in the coverage gap who are parents with dependent children varies by state (see Table 1) due to variation in current state eligibility. For example, Alaska, Maine, and Tennessee will cover parents up to at least poverty as of 2015, so all people in the coverage gap in those states are adults without dependent children.
Women account for just under half (49%) of adults in the coverage gap (Figure 4). Women actually make up the majority of poor uninsured adults in states not expanding their program but are more likely than men to qualify for Medicaid under current rules. As a result, the gender split actually indicates a disproportionate share of men falling into the coverage gap. Of poor adults in non-expansion states who would have been eligible for Medicaid had their state expanded, 85 percent of males land in the gap, compared to 78 percent of females (data not shown). This disproportionate gender pattern occurs because men are much less likely than women to meet current Medicaid eligibility in states not expanding their programs.
Figure 4: Parent Status and Gender of Adults in the Coverage Gap
The work status of people in the coverage gap indicates that there are limited coverage options available for people in this situation. Two-thirds (66%) of people in the coverage gap are in a family with a worker, and 54% are working themselves (Figure 5). While workers could potentially have an offer of coverage through their employer, the majority of workers in the coverage gap (52%) work for small firms (<50 employees) that will not be subject to ACA penalties for not offering coverage. Further, many firms do not offer coverage to part-time workers. A majority of workers in the coverage gap also work in industries with historically low insurance rates, such as the agriculture and service industries.
Figure 5: Work Status of Adults in the Coverage Gap
More than a third (34%) of adults in the coverage gap are in a family with no workers. Since the Medicaid expansion was designed to reach those left out of the employer-based system, and because people in the coverage gap by definition are poor, it is not surprising that most are unlikely to have access to health coverage through a job.
The ACA Medicaid expansion was designed to address the high uninsured rates among adults living below poverty, providing a coverage option for people who had limited access to employer coverage and limited income to purchase coverage on their own. However, with many states opting not to implement the Medicaid expansion, millions of adults will remain outside the reach of the ACA and continue to have limited, if any, options for health coverage: they are ineligible for publicly-financed coverage in their state, most do not have access to employer-based coverage through a job, and all have limited income available to purchase coverage on their own.
The majority of people in the coverage gap are working poor—that is, employed either part-time or full-time but still living below the poverty line. Given the characteristics of their employment, it is likely that many will continue to lack access to coverage through their job even after the ACA provisions for employer responsibility for coverage are effective in 2015. 7 Further, even if they do receive an offer from their employer that meets ACA requirements, many will find their share of the cost to be unaffordable. Because this population is generally exempt from the individual mandate, and because firms will not face a penalty for these workers remaining uninsured, they will continue to fall between the cracks in the employer-based system.
It is unlikely that people who fall into the coverage gap will be able to afford ACA coverage without financial assistance: in 2015, the national average premium for a 40-year-old individual purchasing coverage through the Marketplace was $276 per month for a silver plan and $213 per month for a bronze plan, 8 which equates to about half of income for those at the lower income range of people in the gap and about a quarter of income for those at the higher income range of people in the gap. Further, people in the coverage gap are ineligible for cost-sharing subsidies for Marketplace plans and could face additional out-of-pocket costs up to $6,600 a year if they were to purchase Marketplace coverage. Given the limited budgets of people in the coverage gap, these costs are likely prohibitively expensive. Thus, it is most likely that adults in the coverage gap will remain uninsured, even after the ACA is fully implemented.
If they remain uninsured, adults in the coverage gap are likely to face barriers to needed health services or, if they do require medical care, potentially serious financial consequences. Many are in fair or poor health or are in the age range when health problems start to arise, but lack of coverage may lead them to postpone needed care due to the cost. While the safety net of clinics and hospitals that has traditionally served the uninsured population will continue to be an important source of care for the remaining uninsured under the ACA, this system has been stretched in recent years due to increasing demand and limited resources.
Further, the racial and ethnic composition of the population that falls into the coverage gap indicates that state decisions not to expand their programs disproportionately affect people of color, particularly Black Americans. This disproportionate effect occurs because the racial and ethnic composition of states not expanding their Medicaid programs differs from the ones that are expanding. As a result, state decisions about whether to expand Medicaid have implications for efforts to address disparities in health coverage, access, and outcomes among people of color.
Last, the population in the coverage gap shows that, as a result of state decisions not to expand their Medicaid programs, many remaining uninsured under the ACA will reflect the legacy of the system linking Medicaid coverage to only certain categories of people. Many people who fall outside these categories—specifically men and adults without dependent children—still have a need for health coverage. The ACA Medicaid expansion was designed to end categorical eligibility for Medicaid, but in states not implementing the expansion, the vestiges of categorical eligibility will remain.
Table 1: Number and Characteristics of Poor Uninsured Nonelderly Adults in the ACA Coverage Gap, by State