Passage of the Affordable Care Act has positioned the United States to establish a national floor of insurance coverage for nearly all Americans, using an approach that combines employer coverage with Medicaid for the poor and a subsidized health insurance marketplace (exchanges) for people who have neither. Several unexpected twists threaten to derail this effort. The question is how to devise a solution.
The first twist was the Supreme Court’s 2012 decision in National Federation of Independent Business v. Sebelius. Previously, it made complete sense to rely exclusively on Medicaid’s long-standing operational mechanics, which allow Congress to institute national reforms by tying mandatory program changes to federal funding. But despite the ACA’s exceeding generosity (100 percent funding in the first three years, dropping to 90 percent by 2020), the court held on constitutional grounds that the Medicaid expansion for poor adults was a bridge too far and that states had to be given a chance to opt out. As of summer 2013, over half the states appear to be doing just that, which will affect millions of impoverished adults, most of whom work. (In Texas alone about one-third of the state’s 6 million uninsured adults have below-poverty income.) But because eligibility for exchange subsidies does not start until family income reaches the poverty level, these people will be turned away — because they are too poor!
The second twist is the administration’s decision to delay the law’s requirement that larger employers either cover workers employed 30 hours per week or more or pay a penalty. The administration has stressed that exchanges will be available for people left without coverage because of this delay. But there is no pathway to coverage through exchanges for workers with below-poverty incomes in states that do not expand Medicaid, a point lost in the ongoing debate.
These twists threaten to unravel the act’s fundamental goal of near-universal coverage. The health consequences for poor adults are enormous, particularly since Medicaid has been shown to be highly effective in improving health and health care. Furthermore, without coverage, the health system reforms the nation so urgently needs effectively become impossible, since improving the way health care is delivered hinges on paying for the right care, in the right place, at the right time.
Is there a solution? With a relatively modest legislative fix — whose cost could be largely funded with savings realized from the states that have opted out of Medicaid — Congress could amend the law so that the exchanges could be opened up to all Americans regardless of family income. Implementing this change would be relatively simple, particularly since exchange premium subsidies already will be available to poor legal U.S. residents whose recent arrival prevents their Medicaid eligibility. (Ironically, in other words, the exchanges exclude only poor citizens.)