Short Takes On News & Events

Those Left Out Of Medicaid Expansion Won’t Have To Buy Insurance

By Alvin Tran

June 27th, 2013, 3:03 PM

Low-income Americans who live in states that have decided not to expand Medicaid eligibility will not face penalties if they fail to buy insurance next year.

That’s according to a final rule on exemptions to the health law’s individual mandate – the law’s controversial requirement  that most Americans have health coverage or pay a penalty in 2014. That rule was published Wednesday.

The health law calls for an expansion of Medicaid, the federal-state insurance program for low-income Americans, by making it available to people up to 138 percent of the federal poverty level, which for individuals is $15,856 in 2013, and providing new federal funding to cover the costs for the first three years, and no less than 90 percent after that. But the Supreme Court ruled last year that states could not be forced to join in that program. About half the states so far have opted against the expansion, a concern for supporters of the law because it could leave millions of people without access to affordable coverage.

The law provides subsidies to help low-income people, but they are available only to those who earn between 100 and 400 percent of the poverty level. Individuals and families earning less than 100 percent who live in states not expanding Medicaid have few, if any, options for affordable insurance.

The final rule is similar to draft proposals from the U.S. Department of Health and Human Services and Treasury in January.

Those who do not have health coverage, and who do not meet the criteria for exemptions, must pay the penalty at the end of the tax year.  The penalty for the first year is $95 per adult and $47.50 per child, or 1 percent of family income, whichever is greater, and it increases over time.

This story has been corrected to reflect that 138 percent of the federal poverty level for single adults is $15,856.

17 Responses to “Those Left Out Of Medicaid Expansion Won’t Have To Buy Insurance”

  1. Kelly says:

    Those with just a little intelligence know where not expanding Medicaid leaves hospitals. Those hospitals are left behind the eight ball! Neanderthal Republican states that refuse to participate in the Medicaid Expansion have royally screwed their hospitals. Early on, hospitals agreed to participate in health care reform in return for help with their massive outlays for uncompensated care. Expanding Medicaid was intended to reduce the number of uninsured people that visit the emergency rooms. That will not happen in states like Texas and Pennsylvania because they have chosen to refuse Medicaid Expansion and will continue to have hundreds of thousands of their poor residents without any health insurance. Will these uninsured poor people continue to visit the emergency room for their health care? If you think they won’t, then you think like a caveman. You think exactly like a Republican.

  2. Dave says:

    @Kelly,

    I live in TN where the Governor has refused to expand medicaid. I am a low-income individual and I avoid going to the emergency room for care because of the huge effort required to have all of the medical charges waived. You have to provide a large packet of documents to the hospital to avoid the ridiculously large charges for ER treatment not to mention letters to other providers. And if you don’t comply with the requirements to provide the documents they take aggressive collection action including civil suits against minimum wager earners for the enter fee. Its pretty horrible but that’s the way it is in Tennessee.

  3. william k. fitzwater says:

    The real problem now is those people who are 138% of poverty on up. In case there is a program that will help up to 400%. The problem is where you go above 138%. In this situation are you dumped into private plan? This is a bad deal you go from 100% to 90% and 4000 out of pocket expenses. Something to hat wasn’t advertised as part of ACA

  4. Millan says:

    Kelly is spot on!!!!!!!!!

  5. Kelly says:

    Dear Dave,

    I understand that your governor, like Texas and Pennsylvania and many other GOP governors, is not participating in Medicaid Expansion. That’s an absolute pity. The only question that comes to mind is this. Why do you keep electing and re-electing Republicans? When will you learn that Republicans have absolutely no regard for the working poor. None whatsoever! They never have and they never will! Yet, you keep voting for these hateful and spiteful people. Why?

  6. Paul says:

    When the fed “medicaid matching” comes crashing down and states cannot meet the “benchmarks”, those who accept medicaid will find tough times. We did here in Oregon.

  7. Johnathan says:

    William, I wouldn’t personally choose to use the word “dumped” – individuals and families with incomes above 138% will have a choice of private exchange plans. In every state, at least one plan must be non-profit and one must not offer abortion coverage. No matter which plan someone chooses, they will receive substantial advanced premium tax credits, on a sliding scale. For a single non-tobacco-user at the 138% line, they would be obligated to pay roughly $516/year in premiums for the second lowest cost Silver plan. That’s about $43/month. In addition, the individual would receive cost sharing assistance as well, meaning that their copays, deductibles, and other out of pocket expenses would be capped to ensure an overall 94% actuarial value. (Insurance + tax credits pay for 94% of expected annual health care costs.) In today’s dollars, an estimated out of pocket dollar limit (including all copays and deductibles but not including premiums) would be $1,983.

    This individual also has a choice of electing a Bronze plan, which could have much higher out of pocket costs (copays, deductibles, etc) as the cost sharing assistance is not offered at the Bronze level. However, the premium cost in this case is fully covered by the tax credit, and the individual would pay $0/year in premiums. The actuarial value of this plan would be 60%. Out of pocket costs could be as much as $5,950.

    All numbers based on http://kff.org/interactive/subsidy-calculator/ data.

  8. Quincy says:

    Here in Pennsylvania, the governor and the GOP members of the state legislature have betrayed their hospitals. Hospitals agreed to cooperate with healthcare reform in exchange for getting more Pennsylvania residents access to health insurance. A huge part of their agreement was based upon Medicaid Expansion. With Medicaid Expansion, hospitals would see a reduction in uncompensated care in their emergency rooms. Little did the hospitals know that Republicans never intended to expand Medicaid. Republicans do not like when poor people receive subsidized health insurance. Republicans would sooner see poor people go without any healthcare whatsoever rather than give them any subsidized healthcare. Hence, poor people will continue to go to the emergency room to get uncompensated healthcare and, as a result, some Pennsylvania hospitals will go broke! Who pays? We all do! In higher and higher premiums as a result of higher and higher levels of uncompensated healthcare. Republicans! Morons!

  9. Joe Steel says:

    I’d like to see HHS waive the health care exchange lower income limit for persons living in states refusing to expand Medicaid. Low income persons would be able to buy private health insurance and take advantage of the subsidies available, maybe even up to 100% of the premium. The money intended for Medicaid expansion in their states could be used to fund the subsidies.

  10. Brent says:

    I don’t care what political party you are Kelly or Quincy. When you broadly paint all members of a vast and diverse group in a certain light you sound like an insipid twit. Additionally you display a pure and unadulterated failure to grasp basic economic principles and an understanding of the current US or hospital budgeting at even an elementary level. Accepting the increased medicaid subsidies will not “keep hospitals afloat” because medicaid compensation rates are too low for most healthcare practicioners to remain in business. Additionally, as the US population ages our expenditures in Social Security, Medicare, and Medicaid have vastly outclipped the rate of our economic growth and at the state and federal level other programs are sacrificed on the altar of these healthcare entitlements. Programs like funding for schools, roads, and other services that it is actually the government’s responsibility to provide. So you’re poor and you don’t have healthcare? That sucks and I feel really bad for you but life isn’t fair bucko. Acknowledging that and attempting to balance a budget in a totally unfair world so that your organization or government can continue to function and provide other services which are related to more basic human rights isn’t heartless; it’s smart. Something which the two of you seem to know literally nothing about.

  11. Will says:

    So tell us Brent, if expanding Medicaid is so bad for hospitals and if Medicaid compensation rates are far too low to keep hospitals afloat, then why are hospitals all across America lobbying so hard for Medicaid Expansion, huh? Bucko!

  12. Geri says:

    Hey Brent,

    You are a Republican, right?

  13. Carol says:

    Hey Brent – you said, “So you’re poor and you don’t have healthcare? That sucks and I feel really bad for you but life isn’t fair bucko.”

    Speaking of unfairness, exclusion of the cost of employer-paid health insurance cost the government $246 billion in lost revenue in 2007. $246B / 156 million people with private insurance = $1576 subsidy, while the $57 billion in uncompensated costs / 50 million uninsured people = $1140 each. And, “Although the tax exclusion provides a big boost to employer-sponsored health coverage, it is poorly targeted. It gives the greatest benefit to those with the highest incomes, although they are the group that least needs help paying for health insurance. The 24 per­cent of tax units with incomes over $75,000 in 2004 received almost half of the benefits of the exclusion, while the 27 per­cent of tax units with incomes under $20,000 received just 6 percent of the benefits.” (Limiting the Tax Exclusion for Employer-Sponsored Insurance Can Help Pay for Health Reform. By Paul N. Van de Water. Center on Budget and Policy Priorities, Jun. 4, 2009.) In 2011, among adults aged 18 and older, 70.4% of those earning over $90,000 per year had employer-based health insurance, while only 23.6% of those earning less than $36,000 did. (Fewer Americans Have Employer-Based Health Insurance. By Elizabeth Mendes. Gallup Wellbeing, Feb. 14, 2012.)

    http://www.cbpp.org/cms/index.cfm?fa=view&id=2832
    http://www.gallup.com/poll/152621/fewer-americans-employer-based-health-insurance.aspx

    Eliminating that tax exclusion would supply plenty of money for health care for people who can’t afford it. On top of that, under ObamaCare you will be paying for subsidies of $3000 or more for people to buy health insurance, rather than just $1140 to pick up the unpaid tab.

  14. Brent says:

    Actually, Will, that’s a rather complex issue but I’ll try to answer it as simply as possible. Essentially Medicaid compensation rates are far too low to keep hospitals running if all (or even most) of their patients had medicare as their primary insurer. The federal government recognized this and implemented the Disproportionate Share Hospital act (DSH). The DSH mandates that states are required to, from their own budgets, reimburse hospitals who treat a disproportionate amount of low-income and medicaid patients. Now some of this expense is subsidized by the federal government but that amount is capped yearly and states must cover all amounts over the capped amounts.

    The original thought was that the ACA would decrease the total number of uninsured by allowing them into the exchanges where they could purchase affordable insurance which was partly subsidized by the federal government and partly by their employers. Gaming of the system by employers or the healthy/wealthy worker who didn’t want to be forced to subsidize the healthcare cost of their sicker compatriots was to be discouraged by the payment of penalties if either party refused to participate. However, exceptions were implemented that allow employers to dodge the penalties by shifting workers from full to part-time which can take place at the small business and mega-business level.

    It is to employers advantage to do this so I find it very unlikely that many if not all will do anything different in the near to mid-range future. This will force the employees to go to the federal and state subsidized exchanges or (and pay attention because this is where it comes full circle) they will find that the medicare/medicaid expansion combined with their income drop due to part-time employment now causes many of them to become eligible for medicare/medicaid increasing that pool even more than originally expected.

    So at this point, the states who participate in medicaid (all of them) will be forced to make these DHS payments to the hospitals that are now having a greater and greater bulk of their patient base come from these entitlement programs. Therefore it is to the hospital’s advantage to expand medicaid coverage under these systems because they then become DHS eligible. However it is to the state’s disadvantage because the federal government has announced a reduced budget for DHS expenditures meaning states will have to foot an even greater percentage of the bill. UNLESS the state manages to maintain a high percentage of uninsured individuals (like say by not implementing the expansion?) in which case their DHS compensation will be cut by a lesser amount than the states that do participate.

    Geri: Lets leave political party out of it. Attack my ideas on their merit if you must, but not by your preconceived opinions about who I voted for in the last election. Please google strawman fallacy.

  15. J. says:

    Brent: Well put.

  16. Kelly says:

    Such a long winded reply for such a simple little question and yet, I see no credible answer in the post. Either Medicaid Expansion is good for hospitals and their patients, or it’s not.

    So, I’ll repeat Will’s question…

    If expanding Medicaid is so bad for hospitals and if Medicaid compensation rates are far too low to keep hospitals afloat, then why are hospitals all across America lobbying so hard for Medicaid Expansion?

  17. Geri says:

    Just more typical tea party spin…

    Boring! Will someone please wake me up for breakfast?

    zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

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