Supreme Court Medicaid Ruling Worst for Very Poor People

Analysts and pundits have dug into the Supreme Court’s ruling on the Affordable Care Act, including the part that addresses Medicaid.

What we’re learning is very bad news for very poor people because millions — especially the poorest — are likely to remain uninsured.

Here’s why.

As I earlier wrote, the ruling essentially lets states retain their current Medicaid eligibility restrictions.

They’d forfeit the extra federal funding they’d get if they expanded their programs to include all residents (except some immigrants) with incomes at or below 133% of the federal poverty line.

But they wouldn’t lose the funding they get under the regular formula — 50% up to 73.4% of costs in the upcoming fiscal year.

We’ve had a lot of speculation about what state governors will do, especially those heading up the 26 states that challenged the law.

Some say it will be hard for them to turn down so much extra money, especially when their constituents see how other states are benefiting — and from their federal tax dollars too.

Governors will also be under pressure from their in-state hospitals — a powerful lobbying force, as the final shape of the ACA shows.

Others point out that some right-wing governors have already rejected extra federal money, e.g., some of the stimulus grants created by the Recovery Act.

And some of their states would incur quite large additional Medicaid costs — not initially, but as 2020 approaches and thereafter. A big reason is that, at this point, their programs exclude so many people an expansion would cover.

In Texas, for example, non-working parents qualify for Medicaid only if their incomes are below 12% of the federal poverty line. The cut-off for working parents is 26% of the FPL — just over $4,960 a year for a family of three.

Not surprisingly then, the combined caseloads for Medicaid and the Children’s Health Insurance Program* would initially increase by an estimated 1.2 million if the state adopts the ACA expansion criteria.

This alone, says the state’s Health and Human Services Commission, would cost the state $2 million, increasing to $1.4 billion by 2020.

What it would get from the federal government would be exponentially larger, however — total of $52.5 billion through 2019.

Florida Governor Rick Scott claims that it would cost his state about $1.9 billion to “implement a massive entitlement expansion of the Medicaid program.”

In this case too, though he doesn’t say it, the cost in part reflects the state’s very low income eligibility cut-off — 58% of the FPL for parents.

Think Progress reports that Scott and nine other governors have said they’ll definitely not accept the expansion funding. Twenty-two are still on the fence, including 15 whose states signed on to the lawsuit.

So it seems we’ll indeed see a goodly number of states with no Medicaid expansion — at least initially. We’ll thus still have millions of people with no health insurance. And they’ll be among the poorest.

The problem, as the Center on Budget and Policy Priorities explains, is the way the ACA structures tax credits to subsidize health insurance purchased on the exchanges states will establish — or the federal government establish for them.

The most generous subsidies are for people at 100% to 133% of the federal poverty line. I infer that Congress included this income bracket to extend assistance with health care coverage to documented immigrants who aren’t eligible for Medicaid.

Other people in this income bracket could purchase health insurance if their state decides not to expand its Medicaid program.

The coverage would cost them more than Medicaid would have, but the premiums would be fairly modest — at most 2% of annual income.

No subsidies, however, for people below the federal poverty line — people who can’t possible afford to buy insurance at market rates. They’re about 80% of all uninsured people who’d have become eligible for Medicaid before the Supreme Court ruled.

Congress could, of course, fix the ACA to make health insurance for these people affordable if their states won’t open Medicaid to them.

Lot of luck. Republican Congressional leaders insist that the law must, as the House Majority Leader John Boehner put it, “be ripped out by its roots” and replaced with …. Well, they’re still not saying.

This much we know. Senate Minority Leader Mitch McConnell thinks that coverage for the well over 30 million people uninsured now “is not the issue.”

As the New York Times explains, Republicans may have difficulty dismantling the ACA in its entirety. But this is cold comfort to the poor people whose only hope for health care is Medicaid.

* CHIP is part of the calculation because Texas had planned to shift some children out of the program and into Medicaid in 2014.

UPDATE: PolitiFact has just awarded a False rating to Governor Scott’s claim that expanding Florida’s Medicaid program would cost $1.9 billion. Estimates from the state’s health care agency, it says, indicate that costs for new patients added under the expansion would be about $500 million, but not until 2020.  At least, one advocacy organization has called the estimates “hyper-inflated.”

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