The Medicaid Expansion that Never Was: How the Supreme Court’s Obamacare Decision Hurt Healthcare Reform and Left Millions of Americans Uninsured

Obama signs his healthcare reform into law | March 23, 2010In January 2014, 30 million more people will suddenly have health insurance – at least, that was the plan. Most of the provisions of President Obama’s signature legislation, the Affordable Care Act, will kick in on January 1, and regardless of what happens, millions of Americans will have access to something that 77% of us say is necessary.

In semi-short form (what, you didn’t want to read 906 pages?), if you earn below 400% of the federal poverty level and your employer does not offer health insurance (or it would cost more than around 9% of your income), you are eligible for a subsidy to pay for the plan of your choice through a state-based health insurance “exchange.” The Kaiser Family Foundation has a subsidy calculator  if you want to see what you’ll get (or if you want to be even more grateful for your employer’s health insurance plan, which you’ll likely get to keep).

In addition, a massive expansion to Medicaid is underway. In the law as originally passed, all 50 states (plus DC) were required to expand their programs to all adults who earn up to 133% of the federal poverty level. The first three years are 100% funded by the federal government, and the next ten years are also mostly funded by…the federal government.  And the states all went, “woo, money to help our most vulnerable populations!”

Or, alternatively, they all sued the federal government.

Yeah, it was that second one.

Originally, the Medicaid expansion was a requirement: all the states would have to accept it as a condition of getting the rest of their federal Medicaid dollars. But when a bunch of Republican Attorney Generals decided that helping poor people was so 1933, the Supreme Court determined that this was unconstitutionally coercive of states, and the requirement was struck down. States would now be able to keep their current Medicaid plans while making their own decisions about whether or not to accept the expansion.

Sound good? Unfortunately, it may have completely destroyed the Affordable Care Act.

Take a look at this chart, put together by the American Public Health Association:

Medicaid income eligibility thresholds before and after the ACA Medicaid expansion

Categorical group U.S. minimum threshold pre-ACA, 2009*      State thresholds,  2009:medians, (ranges)   U.S. minimum thresholds under ACA, 2014**     
Children 0-5 133% FPL 235% FPL
(133-300% FPL )
133% FPL
Children 6-19 100% FPL 235% FPL
(100-300% FPL)
133% FPL (note traditional vs new)
Pregnant women 133% FPL 185% FPL
(133-300% FPL)
133% FPL
Working parents State’s July 1996 AFDC eligibility level^ 64% FPL
(17-200% FPL)
133% FPL (note traditional vs new)
Non-working parents State’s July 1996 AFDC eligibility level^ 38% FPL
(11-200% FPL)
133% FPL (note traditional vs new)
Childless adults Eligibility not mandated. State must apply for waiver to cover this group. 0% FPL
(0% FPL in 46 states; 100-160% FPL in 5 states)
133% FPL (note traditional vs new
Elderly, blind, disabled Receipt of SSI^ 75% FPL
(65-133% FPL)
Receipt of SSI

Sources: Kaiser Family Foundation 123
*State threshold must be at or above the U.S. minimum threshold.
**In states that choose to expand Medicaid, the threshold will be at or above the new U.S. minimum threshold starting in 2014. If a state’s threshold was already higher, it may remain so.
^AFDC was Aid to Families with Dependent Children, the cash welfare program replaced by TANF (Temporary Assistance to Needy Families) in the 1996 welfare reform bill. SSI is the Supplemental Security Income program that provides cash assistance to low-income disabled, blind, and elderly persons.

Notice anything? If you make $15,080 a year as a childless adult (that’s minimum wage, 40 hours a week, 52 weeks a year), you’d be below 133% of the FPL and eligible for Medicaid under the expansion. But what about the states that don’t have the expansion? There’s no subsidy built in here for you because originally, the expansion was mandatory.

Thanks to the Supreme Court decision, a single, childless adult who makes minimum wage will get no assistance in purchasing health insurance.

This gap will exist in at least 15 states; likely many more. What happens to their residents? What happens to these people who won’t be given access to any health insurance? We certainly wouldn’t want to “encourage dependency” among those who barely make enough to cover rent in several major cities, but Medicaid effectively functions like other health insurance by “protecting the financial stability of the people purchasing it.” There is no doubt that Medicaid isn’t perfect, but we can’t pretend it doesn’t have benefits, and we can’t act like the health insurance system is working well when millions are prevented from participating because they need to purchase other mildly important items.

Congress could easily fix this by voting to lower the threshold of eligibility for subsidies to a state’s Medicaid maximum, but the current Republican House (and frankly, the general unpopularity of the law) will prevent any sort of expansion from occurring. Instead, the Supreme Court, despite its best intentions, may be responsible for damaging the legacy of this bill and bringing great harm to the millions of Americans who still can’t afford to visit a doctor.

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One thought on “The Medicaid Expansion that Never Was: How the Supreme Court’s Obamacare Decision Hurt Healthcare Reform and Left Millions of Americans Uninsured

  1. Pingback: Differing hospital rates prove, once again, that we don’t have this “healthcare” thing figured out just yet | What's for Lunch?

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