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Reading: Not Poor Enough for Medicaid? Meet the ‘New’ Medicaid Doughnut-Hole
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Health Works Collective > Policy & Law > Health Reform > Not Poor Enough for Medicaid? Meet the ‘New’ Medicaid Doughnut-Hole
Health Reform

Not Poor Enough for Medicaid? Meet the ‘New’ Medicaid Doughnut-Hole

Chris Hoffmann
Chris Hoffmann
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The U.S. House had yet another symbolic vote yesterday to repeal the health reform legislation.  While previous efforts to undo the law have been unsuccessful and the Senate will no doubt ignore the House action, GOP leaders are digging in on their opposition in advance of the fall elections.

The U.S. House had yet another symbolic vote yesterday to repeal the health reform legislation.  While previous efforts to undo the law have been unsuccessful and the Senate will no doubt ignore the House action, GOP leaders are digging in on their opposition in advance of the fall elections.

Amid the rancor, we have been evaluating the political and economic impacts of the June 28 SCOTUS ruling that gives states the option of whether or not to comply with ACA’s Medicaid expansion provisions that extends eligibility to individuals with income at or below 133% of the federal poverty level (FPL). With this flexibility, many states are contemplating setting eligibility at 100% FPL or below.

While the SCOTUS ruling maintains States’ rights granted by the Constitution, the potential outcome for up to 24 million individuals Americans is a “doughnut hole” – not poor enough for Medicaid and too poor for ACA’s federal tax subsidies (to offset the cost of insurance since subsidies will only be available to those with household income between 133% and 400% of the federal poverty level).

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Below 133% of FPL no subsidy is available via the exchanges because the legislation assumed that those individuals would be Medicaid eligible. Said differently, the SCOTUS ruling could leave millions of low income individuals without insurance.

  • Some of these individuals will likely get a hardship waiver so as not to be charged the tax for “no-insurance”, but they could still remain uninsured.
  • Other consumers who are just below the FPL requirement of subsidy eligibility may find themselves without insurance, and resort to “gaming the system” by over reporting income to get within the subsidy eligibility band.  It’s important to note that subsidies are only available for people purchasing coverage through the state Exchange (not through an employer).

While calculations are still early, states like Nevada estimate (that if they expanded to federal guidelines) they would have to pay an additional $567 million in Medicaid costs between 2014 and 2019 to provide health insurance to people who earn up to 133 percent of the federal poverty level.  This kind of thinking among states will influence whether they will refuse the fed’s funding offer of 93% of expansion costs through 2022…a lot of calculus, a lot of confusion.

Look for us to continue assessing and reporting on the impact of the Medicaid decision on Managed Medicaid, the dual eligible population and insurance exchanges. Until then, let us know what you think.

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