Twenty million Americans live at or below the federal poverty line and are uninsured. The Supreme Court ruling on the Affordable Care Act (ACA) could leave many without access to affordable health insurance — but only if we let ideological warfare triumph over practical policy solutions.
The court upheld the Medicaid expansion under the ACA as constitutional but stated that the federal government cannot punish states that opt out of this provision by taking away existing Medicaid funding for current enrollees. Some state officials now say that they plan to opt out of the Medicaid expansion. In the ongoing theatrics and shrill debates over health reform, it is hard but necessary to declare a ceasefire and develop a "peace plan."
Under the ACA, people with incomes between the federal poverty line and four times that amount (about $92,000 for a family of four) can obtain federal premium subsidies and limits on out-of-pocket spending in state-based health insurance exchanges. But Congress wrote the subsidy provision assuming that individuals at the very lowest income levels would be eligible for the Medicaid expansion.
After the Court ruling, if states with large numbers of uninsured poor residents (e.g. Texas and Alabama) opt out of the Medicaid expansion, a family of four with an income of $8,000 a year or even less, will be deemed to have too much income for Medicaid but too little income for a federal subsidy in an exchange. Yet, a family of four making $80,000 a year does get a subsidy in the exchange. In fact, another family with an income of $800,000 a year continues to receive tax-based subsidies by excluding from taxable income their employer's contribution to health insurance. This reads like a scene from a Dickens novel!
States fear the fiscal impact of covering newly eligible people (they would be responsible for 5 percent of the cost starting in 2017, rising to 10 percent in 2020) and the cost of covering already-eligible uninsured people drawn into Medicaid.
Here is the basis for a compromise. To address states' fiscal stress, the feds could first allow states to phase in their expansion rather than enact it all at once in 2014 as the ACA specifies. For example, a state that now covers parents under Medicaid only if their incomes are less than 25 percent of poverty could commit to covering parents up to the poverty line in 2014. This state might commit to cover childless adults up to 50 percent of poverty in 2015, rising to 100 percent in 2016. In later years, these thresholds could be raised in stages to 133 percent of the poverty line, as called for by the ACA. This strategy would ease the financial burden on states while ensuring the neediest get access to affordable coverage.
Second, the federal government could permit states to offer a benefit package that looks more like good employer coverage for the expansion population instead of the more comprehensive Medicaid benefits. Third, states might be permitted to start with pilot projects to expand Medicaid coverage in certain counties, with a commitment to move statewide in future years, designing in lessons learned. States have a strong incentive to consider the Medicaid expansion, as the ACA includes scheduled decreases in payments to hospitals serving large numbers of indigent patients.
Federal flexibility on phase-ins and benefits have worked successfully over the past 15 years, both under the optional Medicaid expansions that many states have implemented, and under theChildren's HealthInsurance Program (CHIP), which has widespread and bipartisan support.
Through federal-state negotiations, flexibility, and compromise, we could avoid subjecting our neediest people to the frightening health outcomes associated with foregone prevention, unmanaged chronic illness, no financial protection, and premature deaths that result from remaining uninsured. Such problems have long plagued our poorest people, who have been screened out of public coverage and priced out of private health insurance. Covering these people is both good public health and good economics, as we all pay the price of health care neglected.
Jack Meyer (jmeyer@healthmanagement.com) is a professor in the schools of Public Policy and Public Health at the University of Maryland and a managing principal with Health Management Associates. Karoline Mortensen (Karoline@umd.edu) is an assistant professor in the School of Public Health at the University of Maryland.