Inside the coverage gap

Tags: medicaid, affordable care act, health care reform, health insurance marketplace

Texas’ refusal to expand Medicaid leaves 1.5 million poor working-age adults without access to affordable health coverage

Almost two years after the Affordable Care Act took effect in October 2013, only one state still has a rate of uninsured greater than 20 percent: Texas. A recent Gallup survey shows that while the rate of uninsured in Texas dropped from 27 percent in 2013 to 21 percent in the first half of 2015, the rates in Arkansas and Kentucky have gone from above 20 percent down to 9 percent.

What’s the difference? Arkansas and Kentucky are among the 30 states that have expanded Medicaid to cover poor, working-age adults. Texas is not.

As the U.S. Supreme Court considered the question of whether the federal government could subsidize premiums offered by the federally-run health insurance exchange in states like Texas that refused to establish their own exchanges in the case King v Burwell, TAFP joined the Texas Association of Community Health Centers in commissioning a report to examine the existing effects and the potential future effects of these choices. A team of researchers at George Washington University wrote the report, entitled “How will Texas’ Affordable Care Act Implementation Decisions Affect the Population? A Closer Look,” which included a county-by-county breakdown of how many Texans can’t access affordable health care coverage today and how many would probably lose their coverage if the promise of federal premium subsidies had been struck down by the court.

Health policy advocates across the country breathed a sigh of relief when the court ruled in favor of the government, securing subsidies for plans in the federal exchange, as did the 1 million Texans who would have lost those subsidies had the decision been different. Still by exploring the effects of refusing Medicaid expansion, the report articulates the consequences to local communities, their citizens, and the 1.5 million working-age Texans “who but for the stubborn resistance of Texas’ political leadership could be covered by Medicaid.”

Consider these facts from the report’s executive summary:

“The Affordable Care Act gives states two key choices: Whether to expand Medicaid to cover poor uninsured adults; and whether to establish a state exchange. No population stands to gain more from these choices than residents of Texas, who experience the nation’s highest uninsured rate. National estimates show that by not expanding Medicaid, the state has foregone coverage for 1.5 million people. County-level estimates show that in 249 out of 254 counties, the proportion of uninsured adults exceeds 20 percent of the total adult county population. In 31 counties, the proportion of low income uninsured adults exceeds 60 percent of all low income adult county residents. …

“County-level estimates show that prior to implementation of the ACA, 38 counties experienced hospital annual uncompensated care levels of $50 million or greater, and four counties showed losses greater than $200 million.”

You can read the full report including the appendices of county-specific data on the TACHC website. Here at Texas Family Physician, we’ve chosen to present a redacted version of the report, including only the portion dealing with the decision to refuse Medicaid expansion.


How will Texas’ Affordable Care Act implementation decisions affect the population? A closer look

Redacted to include the ramifications of refusing to expand Medicaid

By Sara Rosenbaum, JD; Sara Rothenberg; Sara Ely
Geiger Gibson Program in Community Health Policy
Milken Institute School of Public Health at the George Washington University

The Affordable Care Act has the potential to cut the number of uninsured Americans by more than half, as a result of two basic reforms: (1) reforms that ensure access to private health insurance for all Americans coupled with tax subsidies to make coverage affordable; and (2) an expansion of Medicaid to cover poor nonelderly adults, including adults without minor dependent children who historically have been excluded as well as parents of minor children, whose incomes, although well below poverty, exceed Texas’ eligibility standards. According to the Kaiser Family Foundation, in 2015 the income limit for parents in Texas equals 18 percent of the federal poverty level, virtually eliminating access to coverage for parents who work.(1)

Health insurance market reforms, insurance subsidies, and the exchange

The ACA restructured the health insurance market in order to ensure that no person will be turned away or charged more because of a pre-existing condition, or have a policy cancelled because of illness. The ACA also improved insurance by limiting out-of-pocket payments for covered services, guaranteeing coverage of preventive benefits with zero cost-sharing, and guaranteeing that all health insurance policies sold in the individual and small group markets cover certain “essential health benefits” covering both physical and mental health conditions.

To make coverage more affordable, the ACA offers premium tax subsidies and cost sharing assistance. People who buy private insurance through an exchange qualify for premium subsidies if their household incomes are between 139 percent and 400 percent of the federal poverty level. (In states that do not expand Medicaid, subsidy eligibility begins at 100 percent of poverty). Cost sharing assistance is available to people who receive premium tax subsidies and have incomes up to 250 percent of poverty. Subsidies are available through health insurance exchanges, online marketplaces in which people without public or employer-sponsored health insurance can purchase affordable health plans.

Together these reforms have significantly expanded coverage. As of March 2015, 10.2 million Americans had obtained exchange coverage.(2) Exchange enrollment alone has had a major impact on access to affordable coverage; subsidized coverage alone has reduced the uninsured by 37 percent nationwide.(3) Nationally 86 percent of all persons with exchange coverage receive premium subsidies.

Expanding Medicaid

The Medicaid expansion is designed to cover nonelderly low income adults with household incomes at or below 138 percent of the federal poverty level.(4) In National Federation of Independent Businesses v Sebelius,(5) the United States Supreme Court ruled that states could opt out of the adult expansion. As of June 2015, 29 states and the District of Columbia have implemented the expansion; Texas is not one of those states. Coupled with streamlined enrollment procedures—required of all states including those that do not expand coverage for adults—the ACA’s Medicaid reforms have increased adult coverage by 4.8 million Medicaid beneficiaries.(6)

The picture in Texas

Had Texas’ leaders chosen to expand Medicaid, approximately 1.5 million additional working-age adults—about one-quarter of the state’s uninsured population—would have qualified for coverage.(7) Furthermore, over the 2015-2024 time period, the state would have realized an estimated $128 billion in additional federal funding (a 42 percent increase in federal Medicaid financing). In order to qualify for this additional federal funding, the state would have had to increase its own Medicaid outlays by only 6 percent over the same time period ($13.5 billion). This additional outlay would be partially offset by reduced uncompensated care costs borne by state and local funds.(8)

Because Texas has opted not to expand Medicaid, its estimated uninsured population continues to exceed 4 million. With the expansion, its uninsured rate would have dipped below 3 million.(9)

In addition, Texas elected, along with 33 other states,(10) not to establish a state exchange. Instead the state chose to rely on the federal exchange, an option afforded states under the ACA.(11) Furthermore, unlike seven other states using the federal exchange, Texas has not entered into a state partnership relationship with the federal exchange, in order to carry out consumer assistance and/or plan management activities. In short, Texas has chosen to maintain no formal relationship with the exchange, either by establishing its own exchange or by partnering with the federal government.

As of February 2015, over 1.2 million Texas residents had selected an exchange plan, with a selection rate of nearly 40 percent of the qualified population, placing the state close to the U.S. average of 42 percent.(12) The vast majority of enrollees (86 percent) receive financial assistance in the form of premium subsidies.(13)

The size and characteristics of Texas’ uninsured population underscores the significance of the state’s decisions on its residents

The characteristics of Texas’ uninsured population underscore why the ACA reforms have such a great potential to change the lives of its residents, while infusing enormous resources into the state’s economy.

Compared to residents with insurance, uninsured residents are much more likely to have low incomes. Two in five uninsured Texans (40 percent) have incomes below the federal poverty level.(14) Because such a high proportion of the uninsured Texas population has poverty-level income, they fall into the coverage gap created by the state’s decision not to expand Medicaid because their household incomes are below the 100 percent threshold ($24,250 for a family of four) needed to qualify for premium subsidies.

Most uninsured Texans live in working families. Nearly seven in 10 (69 percent) is a member of a family in which they or a spouse work full time or part time.(15) Many are parents whose income from work would disqualify them from Texas’ extremely low eligibility standard for parents (18 percent of the federal poverty level). And yet their poverty-level wages are too low to enable them to qualify for premium tax subsidies in the Exchange.

Most of Texas’ uninsured residents are uninsured on a long term basis. In a survey of state residents, conducted as part of a nationwide survey of the uninsured, 53 percent reported going without health insurance for five years or longer.(16) Thirty-one percent reported never having had insurance in their lives.

For a variety of reasons, the overwhelming majority of uninsured Texans (84 percent) have no access to employer-sponsored coverage. When only poor Texans are considered, this figure rises to 90 percent.(17) Forty-four percent of poor uninsured Texans without access to employer coverage report that their employers offer no coverage. Eighty percent of poor Texans whose employers do offer coverage report that they are unable to afford premiums.(18)

Certain important conclusions can be drawn from these estimates. First, the great majority of poor uninsured adults who would be helped by a Medicaid expansion live in working families. Second, poor workers are almost never likely to have access to employer-sponsored coverage; even when it is offered poor workers are overwhelmingly unable to afford it.

The human impact of Texas’ high uninsured rate

The impact of Texas’ decision not to expand Medicaid can be measured not only in health care access and cost terms, but in population health terms as well. In an amicus brief to the court in King, deans of schools of public health as well as the American Public Health Association presented evidence regarding the impact of being uninsured on mortality among adults.(19) Because having health insurance is so closely associated with access to health care, gains in coverage reduce preventable adult deaths, with one death prevented for every 830 adults insured.

The Affordable Care Act gives Texas basic choices about how to help its uninsured residents. First, the state can expand Medicaid for poor uninsured working-age adults, with costs almost entirely borne by the federal government and with a return of nearly $10 for every $1 the state lays out in new expenditures over the 2015-2024 time period. By factoring in the savings the state could realize from reduced uncompensated care costs, the savings grow still further. One-and-a-half million Texans, most residing in working families, and nearly all without access to employer coverage for one reason or another, would benefit, bringing enormous additional resources to the state’s health care system. Texas can implement the Medicaid expansion at any time.


2. Robert Pear, 13 percent Left Health Care Rolls, U.S. Finds, New York Times (June 2, 2015)
3. Matthew Buettgens, John Holahan, and Hannah Recht, Medicaid Expansion, Health Coverage, and Spending: An Update for the 21 States that have not Expanded Eligibility (Kaiser Family Foundation, April 2015)
4. Medicaid figures include data for all individuals at or below 138 percent of the Federal Poverty Level, not all of whom may meet eligibility requirements.
5. 132 S. Ct. 2566 (2012)
6. Vikki Wachino, Samantha Artiga, and Robin Rudowitz, How is the ACA Impacting Medicaid Enrollment? (Kaiser Family Foundation, May 2015)
7. Matthew Buettgens, John Holahan, and Hannah Recht, Medicaid Expansion, Health Coverage, and Spending: An Update for the 21 States that have not Expanded Eligibility; Table 3 (Kaiser Family Foundation, April 2015) Note: A 2013 presentation by the Texas Health and Human Services Commission estimated the same number of newly eligible Medicaid beneficiaries, approximately 23 percent of the state’s uninsured. Kyle Janek, Presentation to the House Appropriations Committee (March 2013)
8. Id.
9. Id.
11. Patient Protection and Affordable Care Act, §1321
12. Kaiser State Health Facts Online
13. Kaiser State Health Facts Online
14. Katherine Young and Rachel Garfield, The Uninsured Population in Texas: Understanding Coverage Needs and the Potential Impact of the Affordable Care Act (Kaiser Family Foundation, July 2014) (Figure 1)
15. Id. Figure 2.
16. Id. Figure 3
17. Id. Table 2
18. Id.
19. Amicus Brief of Deans of Schools of Public Health and the American Public Health Association to the United States Supreme Court, King v Burwell. The brief reviews a landmark study by Benjamin Sommers and colleagues on the impact of Massachusetts’ Medicaid expansion under its health reform law on mortality among low income working-age adults. Benjamin D. Sommers, Katherine Baicker, and Arnold Epstein, Mortality and Access to Care Among Adults after State Medicaid Expansion, New Eng. Jour. Med. 367: 1025-1034 (2012)