The Affordable Care Act represented a promise that all U.S. citizens would receive health care coverage.
This changed in 2012 when the Supreme Court ruled in NFIB v. Sebelius that states could opt out of expanding coverage for low-income uninsured adults under their Medicaid programs. Many poor adults, especially those without children, were ineligible for Medicaid before the Affordable Care Act came into effect.
As a result, many low-income Americans — about 4 million — still do not have access to health care coverage. Today, 23 states, including Maine, refuse federal money to pay for the cost of expanding coverage to many of their uninsured residents.
They earn too much to qualify for Medicaid, but too little to be eligible for tax credits to subsidize private plans in the health care marketplace.
So what would have been a substantial redistribution of funding from the federal government to our poorest states has instead meant that many of our most vulnerable Americans are completely left out of the benefits of the ACA.
Resistant states
In many states adoption of the Medicaid expansion would mean a sizable proportion of the state’s population, up to a third, would be covered by Medicaid. This is because most states refusing to adopt the Medicaid expansion tend to be poorer states and have a history of setting very stringent eligibility levels for Medicaid.
To qualify for expanded Medicaid a family or individual can earn up to 138 percent of the FPL – which isn’t very much money. In the past many poor states set their Medicaid eligibility levels very low. For example, Arkansas set its level at just 17 percent of the federal poverty level. The Medicaid expansion therefore represents a sizable increase in enrollment.
People are often surprised by how many Americans are eligible for Medicaid — surprised because the federal poverty level for a family of four is just $23,850. The sad truth is that Americans are poorer than we are willing to admit, and that means a large proportion of people do need to rely on Medicaid for health-care coverage. And sadder still, the leaders in our poorest and reddest states do not want a third of their state residents relying on Medicaid.
Federal Medicaid funding
Despite political resistance to the Medicaid expansion, there are enormous financial pressures pulling these states toward adoption. Put simply, they are giving up a lot of federal money when they do not expand.
Many governors in resistant states argue that the federal government is untrustworthy and cannot be counted on to maintain their funding promise. And, not surprisingly, these governors do not want to invest state funds (10 percent of the cost of the expansion from 2019) to expand a program they don’t support.
The federal government has never reneged on its financial contribution in Medicaid’s 50-year history. In fact, since these states opted out of expanding Medicaid they have ended up spending more of their own money to cover the costs associated with medical care for the uninsured.
So, the pull toward adoption is strong and real, which helps explain why some Republican-controlled states, like Arkansas, have now adopted the Medicaid expansion. The irony is that the key to their adoption of the Medicaid expansion is a steadfast rejection of Medicaid.
The Arkansas model: an exercise in irony
Arkansas was the first and best example. The state adopted the “Private Option” or what is also called “Premium Assistance.” Under this model, the state allows all newly eligible Medicaid enrollees, an estimated 200,000 people, to choose a private health plan through the federally-run marketplace. The goal, as stated by the key designer of the Arkansas plan, Andrew Allison, is to expand private coverage and downsize Medicaid.
Under a waiver, the federal government allows Arkansas to pursue this approach and still receive federal matching funds. Similar “private” approaches are being pursued in Iowa, Ohio, Pennsylvania and New Hampshire. In Maine, Democratic House Speaker Mark Eves earlier this year proposed an Arkansas-style Medicaid expansion in an effort to swing some Republican votes. The effort was unsuccessful.
While the rhetoric about private approaches to health coverage allows designers to convince their Republican-dominated state legislatures to move forward with the Medicaid expansion, it’s strange that in these same states marketplace contracting with private plans is considered a “government takeover.” This truly shows the power of political framing in real time.
There are other profound ironies. The Arkansas plan may end up being one of the more generous and costly programs in the country. Costly because paying the cost of private insurance premiums is much higher than the equivalent of what the state paid Medicaid providers. But generous because Medicaid enrollees in Arkansas may have access to the same private plans, and their network of providers, as other middle-class Arkansans — something no other state has ever achieved.
Although Medicaid coverage has proven to be crucially important for providing access, it has also been considered a lower tiered program because access is often restricted to a relatively small set of providers who primarily take care of low-income, uninsured and publicly insured populations.
The Arkansas approach could break down that two-tiered system. If so, the private sector will be lauded, while the substantial amount of public federal funding, which fuels this new “private option” will remain hidden from view.
Of course, that’s all contingent on Arkansas’ expansion having a chance to work. Republican Gov.-elect Asa Hutchinson — who will replace Democratic Gov. Mike Beebe — hasn’t exactly embraced the expansion. He says he’ll make a decision on its reauthorization in January.
Colleen M. Grogan is a professor in the School of Social Service Administration at the University of Chicago. This article was originally published on The Conversation, a nonprofit website that highlights academic research for a general-interest audience.