Erik McGregor/Sipa via AP Images
States could be doing far more to encourage Medicaid enrollment, and probably would, if federal support were commensurate with the current crisis.
In this season of unchecked pandemic, high unemployment, and a presidential election, the Affordable Care Act looms large, both as a safety net for millions of people losing employer-sponsored health insurance and as a political battleground. Yet a flawed sense of the law’s accomplishments and disappointments impairs the response to the current crisis, and distorts political debate about the law. With the death of Ruth Bader Ginsburg and the suddenly real possibility that the Supreme Court will strike down the ACA in its entirety, it’s time to have a grounded debate about the ACA’s strengths, and how to capitalize on them.
At the time of the ACA’s enactment, 50 million Americans were uninsured, according to a March 2010 analysis by the Congressional Budget Office (CBO). Aside from granting the ability for young people under age 26 to stay on their parents’ insurance, two programs were designed to reduce the ranks of the uninsured. The first was a marketplace of private plans, offered to buyers without regard to their health status, and subsidized on a sliding income scale for enrollees with incomes up to 400 percent of the federal poverty level (FPL)—currently $49,960 per year for an individual. The second was an expansion of Medicaid eligibility to all adult citizens and some noncitizens with incomes up to 138 percent of FPL ($1,464 per month for an individual).
Medicaid Is the Mainstay
While the Medicaid expansion has exceeded expectations, the marketplace has underperformed them. In its March 2010 report, CBO projected that from 2013 (the year prior to full ACA enactment) to 2019, total Medicaid enrollment would increase by 14 million, and enrollment in the individual market would increase by 19 million. As of May 2020, Medicaid enrollment had increased by 17 million since 2013. Individual-market enrollment had increased by about three million in the same period, with about two-thirds of some 13.7 million enrollees receiving federal subsidies.
The core problem with the marketplace is simple: It’s undersubsidized. Fewer than half of those who qualify for subsidies and need insurance enroll, according to Kaiser Family Foundation estimates. Millions more who don’t qualify for subsidies have been priced out: Unsubsidized enrollment is half what it was in 2016, before steep premium increases in 2017 and 2018. The program would be more cost-effective if it were structured more like Medicaid or Medicare, which both pay far lower rates to medical providers than commercial insurers do. But from a usage point of view, the problem is simply that premiums and out-of-pocket costs are higher than many prospective enrollees feel they can bear.
In the 35 states (including Washington, D.C.) that have so far enacted the Medicaid expansion (rendered optional to states by the Supreme Court in 2012), Medicaid enrollees who fit the ACA’s expansion enrollment criteria outnumber marketplace enrollees by a 3-to-1 margin—15.3 million versus 5.2 million as of February 2020. Yet the marketplace still sucks up all the oxygen in the public perception of the ACA.
The Proxy War Over Pre-Existing Conditions
This myopia has at least two important immediate consequences. First, political warfare over the marketplace’s “protections for people with pre-existing conditions” (its guarantee that an applicant’s health will have no effect on product or pricing) masks a more fundamental battle over money.
As in 2018, Republicans are promising to protect people with pre-existing conditions. But such protections are meaningless when coverage is unaffordable, as it will be for some 20 million beneficiaries if Republicans succeed in their lawsuit now before the Supreme Court, which would strike down the ACA in its entirety. The death last week of Supreme Court Justice Ruth Bader Ginsburg and the prospect of a 6-3 conservative Court majority increases the possibility of that happening.
The chief impact of full nullification would fall not in the voiding of the ACA’s protections for people with pre-existing conditions, which pertain almost entirely to the private-plan marketplace, or even in the defunding of that subsidized marketplace, but in the voiding and defunding of the Medicaid expansion. In other words, the pre-existing condition that matters most is low income. Yet the political warfare now likely to escalate over Republican intentions on the health care front will likely focus primarily on the pre-existing condition proxy fight.
The federal government has the choice to subsidize health coverage for those who lack access to employer-sponsored insurance or Medicare, and target that funding at low-income people. The House passed a bill that would have expanded marketplace subsidies and subsidy eligibility earlier this year, but it didn’t cut through the noise about pre-existing condition protections.
Medicaid Inadequately Supported
The second consequence of our marketplace fixation is failure to financially support, promote, and facilitate enrollment in Medicaid—our primary defense against a massive increase in the uninsured population through mass, pandemic-triggered unemployment.
Of the millions who have lost or will lose access to employer-sponsored insurance during this crisis, subsidized insurance is available to 70 to 80 percent, according to estimates by the Urban Institute and Kaiser Family Foundation. In the 35 states (including D.C.) that have so far enacted the Medicaid expansion, more than twice as many of the newly uninsured will be eligible for Medicaid as for subsidized marketplace coverage, according to both Urban and Kaiser.
Medicaid is meeting these expectations. In its more conservative of two estimates, the Urban Institute forecast that if 15 percent unemployment persisted “for several months to a year,” Medicaid enrollment would increase by 8.2 million nationally. Through July, with unemployment at about 10 percent, enrollment had increased by about six million, and shows no signs of slowing as August tallies come in. New marketplace enrollment triggered by the pandemic, meanwhile, is almost certainly under a million.
Yet states could be doing far more to encourage Medicaid enrollment, and probably would, if federal support were commensurate with the current crisis. In response to the Great Recession of 2007-2009, the Democratic Congress increased the federal contribution to state Medicaid costs (which ranges from 50 percent to 78 percent, with poor states getting higher shares) by 12 percentage points. In the current crisis, which has states in much more acute fiscal straits, Congress has so far raised the federal match rate (FMAP) by only six percentage points, via the Families First Coronavirus Response Act, which passed in March (states do get a 90 percent match rate for enrollees who meet ACA expansion eligibility criteria). Democrats have called for a further FMAP increase to 14 percentage points, but probably lost their chance when the largest COVID-19 relief bill, the CARES Act, passed with no further boost to Medicaid funding.
Whether because of fiscal constraints, overwhelmed public-benefits systems, or, in some Republican-governed states, outright hostility to Medicaid, most state governments are failing to broadcast information about Medicaid enrollment, or target information to the newly uninsured. One exception is Kentucky, where the state Medicaid department contacts every applicant for unemployment insurance, and where Gov. Andy Beshear mentions Medicaid in every COVID-19 briefing, which until recently he held daily. Kentucky Medicaid enrollment is up 20 percent since March.
One underused venue for promoting Medicaid awareness and enrollment is the ACA exchanges—the federal exchange, HealthCare.gov, used by 37 states, and the 14 state-based marketplaces (including D.C.’s). These flagship ACA tools will route a completed application to Medicaid where appropriate. But a visitor has to be induced to fill out an application in the first place.
About half of the newly uninsured who find their way to the exchanges can obtain free coverage if they sign up for Medicaid.
The exchanges were conceived as marketplaces for private plans, and almost all of their messaging is focused on that private market. Home page visitors are invited to shop and compare plans, told that open enrollment begins November 1, and, in the COVID-19 era, bombarded with information about “special enrollment periods” for those who lose coverage. Those special periods are irrelevant to those who qualify for Medicaid, which is available year-round.
While marketplace plans involve substantial premiums and out-of-pocket costs, even for the subsidized, Medicaid is free (or very close to it) on both counts. About half of the newly uninsured who find their way to the exchanges can obtain free coverage if they sign up for Medicaid. But you’d never know that by scanning most exchange home pages. People who are used to employer-based coverage are often unaware that they’re likely to be eligible for Medicaid if their income falls off a cliff. The exchanges don’t do enough to make that clear.
Medicaid has been the ugly duckling of ACA enactment—its chief engine for reducing the ranks of the uninsured and so improving public health and low-income Americans’ finances. It may cover 20 percent of the country before the current crisis abates. But it’s not getting much love from candidates, or help from public officials.
