The initial news last week was that the Supreme Court upheld  the Affordable Care Act (ACA). And though that remains true, discussion has increasingly focused on the one limitation the Court put on the law. While the ACA required all states to expand Medicaid eligibility to 133% of the federal poverty level (FPL) – about $30,000 for a family of four – in order to receive any federal Medicaid funds, the Court ruled that only funds for the expansion itself could be withheld. The practical effect of the limitation was to make it optional for states to expand Medicaid to all Americans at or below 133% FPL.
Medicaid is an effective and efficient program that has been providing health coverage to millions of low-income families and children for decades. The trouble with Medicaid that the ACA sought to fix is that eligibility differs wildly from state to state. For example, Virginia covers working parents up to 26% FPL – less than $6,000 for a family of four. Across the border, the District of Columbia covers families up to 200% FPL – about $46,000 for a family of four. Before the ACA, for low-income families, which state you lived in determined whether you had health insurance. That hardly seems fair.
The federal government will pay for nearly all of the expansion, starting at 90-100% for the first 5 years and going no lower than 90% after that. The expansion of Medicaid also enjoys broad popular support – 51% of Republicans support it, along with 69% of Independents and 88% of Democrats, according to a recent Kaiser Family Foundation poll .
Policy-wise, expanding the Medicaid program is a no-brainer. Yet, for political reasons, several governors (from states such as Florida, Iowa, Louisiana, and South Carolina) have pledged not to expand the program. This would leave millions uninsured. And, once again, whether low-income families have access to coverage would depend on which state they happened to live in.
The other problem – even more unfair – is that states that refuse to expand Medicaid would create a Medicaid donut hole for the working poor. In 2014, health benefits exchanges will begin operation and people without affordable health insurance options can receive tax credits to help purchase coverage. But not everyone who would have been covered by the Medicaid expansion would be eligible for those tax credits. Opting out of the expansion would create a group of people who are “too rich” to be eligible for Medicaid but too poor to afford insurance or receive tax credits to help them buy insurance.
Most states are on track to expand Medicaid by 2014. In doing so, they will expand health coverage to millions of working individuals and families who are not able to afford health coverage and prevent their residents from falling into the donut hole. The infographic below shows just what is at stake for states that refuse to expand Medicaid, highlighting the number of people in each state who would be left uninsured, and explaining how a family of four could end up in a new Medicaid donut hole (click for full-size image):