In 2010, Congress created a work-around for recently arrived legal immigrants who are barred from Medicaid coverage. In doing so, lawmakers set an important precedent for overcoming the limitations of Medicaid coverage and finding an alternative pathway to coverage. Although the circumstances differ, the underlying principle — the importance of providing affordable insurance for all Americans — should apply equally to 2.2 million residents who are caught in a coverage gap because their states have not yet expanded Medicaid. As with immigrants, Congress can create a separate health insurance pathway for these people that ensures coverage without violating the 2012 Supreme Court decision that bars Congress from penalizing states that refuse to implement expansion.

Legal Immigrants in the U.S. and Health Insurance Coverage

Legal immigrants are a diverse group. They include people recently arrived from war-torn nations seeking refugee status, as well as long-term U.S. residents who have attained permanent legal residency status. As a group, legal immigrants are more likely to be uninsured than either native-born or naturalized citizens. Indeed, one notable study conducted before the Affordable Care Act (ACA) examined insurance coverage and found that permanent legal residents are significantly more likely to be uninsured (32%) than either naturalized (17%) or native-born (11%) citizens. Numerous factors contribute to this situation; among the most important may be that although immigrants contribute enormously to the U.S. economy, they also are more likely to work at lower-wage jobs without health benefits.

The Affordable Care Act’s Challenge in Insuring Legal Immigrants

When Congress enacted the ACA, it faced a challenge in the case of legal immigrants. As part of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, lawmakers had decided to bar access to certain public benefits (including Medicaid) for eligible legal immigrants entering the U.S. until they satisfied a five-year waiting period. Although there are exceptions, the general rule is that otherwise-eligible legal immigrants, including permanent residents, must wait five years before they can receive Medicaid and Children’s Health Insurance Program (CHIP) coverage. Federal law permits states to waive the five-year waiting period for children and pregnant women. As of 2017, 31 states had waived the waiting period for children; 23 had waived it for pregnant women. No state waiver option exists for otherwise eligible nonpregnant adults.

Pathways to Medicaid, Children’s Health Insurance Program, and Subsidized Marketplace Coverage for Legal Immigrants After the ACA

Legal immigrant category

Medicaid and CHIP

Subsidized marketplace plans

Immigrants who 1) are long-term legal U.S. residents (i.e., green card holders) and 2) have resided in the U.S. at least five years after attaining green-card status Can receive Medicaid as “qualified noncitizens,” assuming they meet program eligibility rules Can enroll in marketplace plans as “lawfully present” immigrants and, if financially eligible, receive premium subsidies and cost-sharing assistance
Legal immigrants exempt from the five-year waiting period (e.g., asylees, refugees, and others, and, where applicable, legal immigrants who are pregnant women or children) Can receive Medicaid and CHIP as “qualified noncitizens,” assuming they meet program eligibility rules Can enroll in marketplace plans as “lawfully present” and receive premium subsidies and cost-sharing assistance
Legal immigrants (including green-card holders) who have not yet satisfied the five-year waiting period and are not exempt Ineligible for Medicaid or CHIP Can enroll in marketplace plans as “lawfully present” and receive premium subsidies and cost-sharing assistance

Data: HealthCare.gov, “Coverage for Lawfully Present Immigrants,” n.d.

Providing a Pathway to Affordable Coverage

As the table shows, instead of expanding the five-year waiver option for children and pregnant women, Congress devised a nationwide solution: recently arrived legal immigrants can qualify for a fully subsidized marketplace plan during the waiting period, before reaching Medicaid eligibility.

Research suggests that this two-pronged ACA solution — subsidized marketplace coverage for recently arrived legal immigrants and either Medicaid or marketplace coverage once the five-year wait is satisfied — has substantially reduced the uninsured rate for legal adult immigrants, both recent arrivals and long-term residents. The evidence shows an 8-percentage-point decline in the mean uninsured rate for long-term legal residents and a 9-percentage-point decline for recent arrivals between 2011 and 2016.

Using the Lessons to Insure Eligible People in Medicaid Nonexpansion States

This experience can be applied to the issue of uninsured residents in states that have not expanded Medicaid under the ACA. In the case of legal immigrants, Congress had to overcome a barrier created by PRWORA. In the case of the Medicaid expansion, the barrier is constitutional, created by the U.S. Supreme Court in 2012 in National Federation of Independent Business v. Sebelius, which upheld the ACA while also striking down the law’s national Medicaid expansion as an unconstitutional coercion. Nonetheless, as with immigrants, there is a nationwide solution: recognize the eligibility of all individuals, regardless of state of residence; pay 100 percent of the cost of coverage (as in other Medicaid situations, including payments to Indian Health Service facilities); and cover people by enrolling them into specially designated plans operating in the marketplace and configured to include special benefit and cost-sharing rules. This approach is consistent with the Supreme Court’s decision. The Court did not say that Medicaid expansion is a state option, as it is often characterized, but that expansion is an unenforceable federal mandate. Recognizing the Medicaid entitlement, paying the full cost in nonexpansion states, and effectuating enrollment through a free marketplace plan would resolve the issue. Such a solution is constitutional and the just thing to do.