Noteworthy News

Gap in Reform Law Could Leave Many Low-Income People Uninsured

When the Supreme Court gave states discretion over whether to expand their Medicaid programs under the Affordable Care Act, it unintentionally created a gap in potential coverage options for many low-income people that may leave many of those people without affordable health insurance.

According to a new report from the Commonwealth Fund, the 2010 reform law anticipated that everyone with incomes below 133 percent of the federal poverty level would be covered by Medicaid.  Individuals and families with incomes between 133 percent and 399 percent of the federal poverty level could use new federal subsidies to help purchase private health insurance.

In states that are not expanding their Medicaid programs, people with incomes between 133 percent and 399 percent of the federal poverty level will still be able to take advantage of federal premium subsidies.  People with incomes less than 133 percent of the federal poverty level but who do not qualify for their state’s Medicaid program – qualification criteria vary from state to state – will not be eligible for the same subsidies as many who earn more than them because the reform law assumed that all such individuals would be covered by Medicaid.

According to the Commonwealth Fund, this unanticipated gap in the reform law means that as many as 42 percent of people who suffer from periodic or chronic lack of insurance and who live in states that are not expanding their Medicaid programs will not benefit in any way from Affordable Care Act insurance reforms.

This could pose a real challenge for urban safety-net hospitals located in states that do not expand their Medicaid programs because reform law reductions in future Medicare disproportionate share (Medicare DSH) and Medicaid disproportionate share (Medicaid DSH) payments were based on the belief that these people would almost all have health insurance and hospitals’ uncompensated care costs would decline as a result.  Because of this coverage gaps, urban safety-net hospitals, which serve large numbers of low-income patients, will undoubtedly continue to serve – without reimbursement – many patients who fall into this new gap in reform law insurance coverage.

Read more about the unintended consequences of the Supreme Court’s decision and the choice by some states not to expand their Medicaid programs in In States’ Hands:  How the Decision to Expand Medicaid Will Affect the Most Financially Vulnerable Americans, a new reportHealth Care Reform/Flag from the Commonwealth Fund.

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