The goal of the Affordable Care Act is in its name: to give every American an affordable option to buy health insurance.
Unfortunately, there are two groups of people who may find themselves left out, and stuck with no affordable option.
One group are the adults with household incomes of less than 100% of the poverty line. When the law was written, it included a massive, federally funded expansion of Medicaid, guaranteeing that all adults with poverty-level incomes would be enrolled automatically in Medicaid. In fact, under the expansion, the cutoff for adult eligibility for Medicaid rose to 138% of the poverty line.  (Children were already eligible through passage of earlier laws).
Because that group was guaranteed care through the government-run program, they would not need to pay for premiums on the exchange, nor would they need subsidies. So eligibility for subsidies was restricted to those with incomes between 100% and 400% of the poverty line.
However, in 2012, the United States Supreme Court ruled that the Medicaid expansion part of the ACA was unconstitutional. The problem was that Medicaid is administered separately by the states, and Congress had written the law as a take-it-or-leave-it proposition that punished the states who didn’t sign on. If the states agreed to the expansion, they received a massive influx of federal funding to support the new programs. But if they turned the federal government down, they would lose their already existing federal funding for the more limited Medicaid programs already in place.
Congress didn’t think this would be much of a problem because the deal they were offering the states seemed too good for anyone in their right mind to pass up. The federal government was going to fund 100% of the costs of the expansion for the first year, and committed to paying 90% of the costs in future years.
That’s a pretty big chunk of money, especially for the states with the highest poverty rates.
Unfortunately, politics meant that many of the states with the highest poverty rates and greatest number of uninsured were unwilling to accept this deal. They balked — and because of the carrot-and-stick approach of the legislation, the Supreme Court ruled that Congress could not punish the states who refused to go along.
So that means that in roughly 22 states, poor adults are left without a viable means to get health care or health care coverage. They won’t be able to get Medicaid, and they will be left out of the exchanges because they won’t be able to afford to pay the premiums.
An obvious solution would be for the people staffing the exchanges to simply let low income people sign up on the exchanges and receive the same subsidy that they would get if their income was exactly the same as the poverty line. That is, imagine a single parent of three children who earns $18,000 a year. The Federal Poverty line for a 3-person household is $19,350.
At that level, the kids are eligible for Medicaid and the parent should not have to pay more than 2% of household income for her own insurance., or $32 a month. So if you treat the under-earning family as being eligible to purchase insurance at that minimum payment level, then you have a situation where a person who should have been able to get free medical care via Medicaid instead will have to pay $32 on her state exchange.
That’s not really fair, but it probably wouldn’t break the bank either. That parent can probably find the $32 somewhere.
Unfortunately, the wording of the ACA doesn’t allow the exchanges to do that. If the person fills out an application form and their income is less than 100% of the poverty line, the person can still purchase an exchange policy, but it will be at full cost.
So just as there was a disparity at the high end of the scale for older individuals and families with earnings just above the 400% mark, there is an equally unfair and far more devastating consequence to anyone whose income falls below the 100% mark. And keep in mind that the larger the family, the higher that minimum income hurdle becomes. Four kids? Then it takes $23,330 to qualify.
Now imagine that the wage earner and head of household is a 62-year-old raising her grandkids. She’s going to be facing a very high premium with no chance of a subsidy. On her income, it’s impossible.
So there needs to be a fix. If the intent of the law is carried out, the fix for the poverty level and below families really should be a 100% subsidy — the law was written with the intent that they shouldn’t have to pay anything for health care, and so their monthly premium at any age should be -0-. But this requires Congress to step up to the plate and agree to pay a higher cost for covering people who should be covered under Medicaid, at a lower per-person cost to the federal government. So it costs money and it will likely be an uphill battle to get a legislative solution.
In the meantime, it is going to be very important for advocates who want to help these families to understand the ins and outs of the system so that they can offer good advice to people who fall in that category.
To learn more about Medicaid expansion under Obamacare, visit:
1. Technically, the Medicaid expansion is to 133% of the poverty line. However, there is another provision which provides that 5% of income is disregarded in calculating Medicaid eligibility; this results in the real level for eligibility being 138% of the poverty line in those states which have agreed to expand Medicaid.