New York, NY, June 16, 2016—Low-income adults who qualify for expanded Medicaid under the Affordable Care Act (ACA) but live in states that have not expanded eligibility are at risk of paying higher out-of-pocket costs and receiving less comprehensive insurance coverage, according to a new Commonwealth Fund study. Currently, 19 states have opted to not expand their Medicaid programs. Under the law, people in these states with annual incomes between $11,770 and $16,243 are instead eligible for premium subsidies and reduced cost-sharing when buying silver-tier health plans in the marketplaces.
In How Much Financial Protection Do Marketplace Plans Provide in States Not Expanding Medicaid?, Commonwealth Fund researchers Sophie Beutel, Munira Gunja, and Sara Collins find that traditional Medicaid offers greater financial protection for low-income people than marketplace plans in three major areas: the cost of premiums, the number of benefits covered, and overall limits on out-of-pocket spending. This is particularly true for Medicaid-eligible adults who use the most services. Recent research shows that more than 70 percent of those newly insured through Medicaid who had used their plans got health care that they said they would not have been able to access or afford prior to getting their new coverage.
“Expanded eligibility for Medicaid was aimed at providing low-income Americans access to affordable health insurance that enables them to get the health care they need,” said Sara Collins, Vice President for Health Care Coverage and Access at The Commonwealth Fund and a coauthor of the report. “This report suggests that by expanding Medicaid, states can reduce financial burdens and improve access for their poorest residents.”
In the report, the authors compared out-of-pocket costs for a sample of silver-level health plans offered in the largest cities of 18 nonexpansion states with costs for Medicaid. They based their calculations on a hypothetical 40-year-old nonsmoking male earning $13,000 a year who enrolled in both sets of plans. The researchers found that total potential costs both for insurance and for health care in all 18 plans exceed the amounts he would spend if he were enrolled in traditional Medicaid coverage.
Additional key findings from the report include:
“The study demonstrates that relying on marketplace coverage, even with its subsidies, places financial strain on families who would qualify for Medicaid if their states expanded the program,” said Commonwealth Fund President David Blumenthal, M.D. “Expanding Medicaid would assure that those families could fully benefit from the ACA’s health and financial protections and get the health care they need.”
The authors note that a shift to traditional Medicaid expansion in the remaining 19 states would likely boost Medicaid enrollment even among people who are now eligible for marketplace subsidies. Previous Commonwealth Fund research shows that the primary reason people with low incomes do not enroll in marketplace plans is that they find the premiums to be unaffordable.