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The Impact of the Coverage Gap in States not Expanding Medicaid by Race and Ethnicity

SUMMARY

One of the major vehicles in the Affordable Care Act (ACA) to increase health insurance coverage is an expansion of Medicaid to adults with incomes at or below 138% of the federal poverty level (FPL). While this expansion was intended to occur nationwide, it was effectively made a state option by the Supreme Court decision on the ACA. In states that do not expand Medicaid, many poor uninsured adults will not gain a new coverage option and will likely remain uninsured. This brief examines the impact of this coverage gap by race and ethnicity. In sum it finds:

  • Today, there are significant racial and ethnic disparities in health coverage among adults. Overall, among adults, people of color are more likely to be uninsured than Whites (27% vs. 15%), with Hispanics at the highest risk of lacking coverage (33%).
  • Given these high uninsured rates, the Medicaid expansion offers a particularly important opportunity to increase health coverage among people of color. Overall, more than half (53%) of uninsured adult people of color have incomes at or below the Medicaid expansion limit.
  • However, in states that do not expand Medicaid, millions of poor adults will be left without a new coverage option, particularly poor uninsured Black adults residing in the South, where most states are not moving forward with the expansion. Four in ten uninsured Blacks with incomes low enough to qualify for the Medicaid expansion fall into the gap, compared to 24% of uninsured Hispanics and 29% of uninsured Whites. These continued coverage gaps will likely lead to widening racial and ethnic as well as geographic disparities in coverage and access.

BACKGROUND

To date, all states have significantly expanded health coverage to children through Medicaid and CHIP, building on federal requirements for all states to cover children up to certain minimum levels, which as of January 1, 2014 will be 138% FPL for children of all ages. As such, today, Medicaid and CHIP play a key role in providing health coverage to low-income children, particularly children of color who are more likely to live in low-income families and lack access to private health coverage. In contrast, Medicaid eligibility for adults is very limited. Many states limit Medicaid eligibility for parents to below poverty, and adults without dependent children have historically been excluded from the program. The ACA’s Medicaid expansion to adults with incomes at or below 138% FPL would significantly increase eligibility for parents in many states and end the exclusion of adults without dependent children from the program. The expansion was intended to occur nationwide as of January 2014 and serve as the base of coverage for low-income individuals, with premium tax credits available to moderate-income individuals above Medicaid limits to purchase Marketplace coverage. However, as a result of the Supreme Court decision on the ACA, implementation of the Medicaid expansion is now effectively a state choice. As of December 11, 2013, 26 states, including DC, are moving forward with the Medicaid expansion in 2014, while 25 states are not moving forward at this time (Figure 1).

Figure 1: Status of Medicaid Expansion Decisions, as of November 22, 2013

Figure 1: Status of Medicaid Expansion Decisions, as of November 22, 2013

In states that do not expand Medicaid, nearly five million poor uninsured adults will fall into a “coverage gap.” These individuals would have been eligible for Medicaid if their state had chosen to expand coverage. In the absence of the expansion, they remain ineligible for Medicaid and do not earn enough to qualify for premium tax credits to purchase Marketplace coverage, which begin at 100% FPL (Figure 2). Most of these individuals have very limited coverage options and are likely to remain uninsured.

Figure 2: In states that do not expand Medicaid under the ACA, there will be large gaps in coverage available for adults.

Figure 2: In states that do not expand Medicaid under the ACA, there will be large gaps in coverage available for adults.

This brief examines the impact of state Medicaid expansion decisions and the coverage gap by race and ethnicity. It is based on analysis of Current Population Survey data and Medicaid eligibility rules for adults effective January 2014. Undocumented immigrants are excluded from the analysis since they are ineligible for Medicaid and Marketplace coverage based on immigration status. (See Methods box for more information.)

FINDINGS

Today, there are significant racial and ethnic disparities in health coverage among nonelderly adults. Overall, among nonelderly adults, people of color are significantly more likely to be uninsured compared to Whites (27% vs. 15%). Hispanic nonelderly adults are at the highest risk of being uninsured, with one in three lacking coverage. Moreover, one in four (25%) nonelderly Black adults lacks coverage (Figure 3, Appendix Tables 1 and 2).

Figure 3: Percent of Nonelderly Adults who are Uninsured by Race/Ethnicity

Figure 3: Percent of Nonelderly Adults who are Uninsured by Race/Ethnicity

The Medicaid expansion offers a particularly important opportunity to increase health coverage rates among people of color. Among nonelderly adults, more than half of uninsured people of color (53%) have incomes at or below the Medicaid expansion limit of 138% FPL, and nearly six in ten (59%) nonelderly uninsured Black adults have incomes at or below the Medicaid expansion limit (Figure 4, Appendix Table 3). As such, the Medicaid expansion could significantly increase health coverage rates among people of color, enhancing their ability to access needed care and reducing longstanding disparities they face in health coverage.

Figure 4: Percent of Uninsured Nonelderly Adults who have Family Income At or Below the Medicaid Expansion Limit (138% FPL)

Figure 4: Percent of Uninsured Nonelderly Adults who have Family Income At or Below the Medicaid Expansion Limit (138% FPL)

In states that do not expand Medicaid, millions of poor adults will be left without a coverage option, particularly poor uninsured Black adults. Overall, nearly one-third of all uninsured adults with incomes at or below the Medicaid expansion limit (138% FPL) will fall into the coverage gap in states that do not expand Medicaid. These individuals have incomes above the limited Medicaid eligibility levels in these states but do not earn enough to qualify for premium tax credits to purchase Marketplace coverage, which begin at 100% FPL. The share of adults intended to be covered by the Medicaid expansion who fall into this gap varies widely by race and ethnicity (Figure 5). For example, four in ten (40%) uninsured Black adults with incomes at or below 138% FPL will fall into the coverage gap, reflecting the fact that they disproportionately reside in the southern region of the country where most states are not moving forward with the expansion. In contrast, about one-quarter (24%) of uninsured Hispanic adults targeted by the Medicaid expansion will fall into the coverage gap. Hispanics are less likely to fall into the gap since several key states that have high shares of uninsured Hispanics are moving forward with the expansion, including as California, New York, and Arizona.

Figure 5: Share of Nonelderly Uninsured Adults <138% FPL in the Coverage Gap by Race/Ethnicity

Figure 5: Share of Nonelderly Uninsured Adults <138% FPL in the Coverage Gap by Race/Ethnicity

In total, nearly 2.6 million uninsured adults who fall into the coverage gap are people of color, making up over half (53%) of the total 4.8 million uninsured adults in the coverage gap. Hispanics make up over a fifth (21%) of uninsured adults in the gap, Blacks account for over a quarter (25%), other people of color make up another 5%, while the remaining 47% are White (Figure 6).

Figure 6: Distribution of Poor Nonelderly Uninsured Adults in the Coverage Gap by Race/Ethnicity, 2011-2012

Figure 6: Distribution of Poor Nonelderly Uninsured Adults in the Coverage Gap by Race/Ethnicity, 2011-2012

Large shares of adults who fall into the coverage gap reside in a small number of states, although the distribution of people in the gap across states varies by racial and ethnic group. Poor adults in the coverage gap are concentrated in several states, including Texas, Florida, and Georgia (Table 1). However, this distribution varies by racial and ethnic group.  For example, over one-third (34%) of the 2.2 million uninsured White adults in the coverage gap reside in Florida (14%), Texas (12%), and Pennsylvania (8%), while over four in ten (43%) of the 1.3 million uninsured Black adults in the coverage gap reside in Florida (16%), Georgia (15%) and Texas (12%) (Figure 7). For Hispanics, the significant majority (82%) of the 1 million uninsured adults in the coverage gap reside in just three states, with nearly six in ten (59%) in Texas alone, 20% in Florida, and 3% residing in Pennsylvania.

Figure 7: Distribution of Uninsured Poor Nonelderly Adults in the Coverage Gap by Race/Ethnicity and State

Figure 7: Distribution of Uninsured Poor Nonelderly Adults in the Coverage Gap by Race/Ethnicity and State

Table 1: Nonelderly Poor Uninsured Adults in the Coverage Gap in States Not Expanding Medicaid by Race/Ethnicity
All Races/Ethnicities White Black Hispanic Other People of Color
United States 4,832,000 2,248,000 1,327,000 992,000 265,000 2,584,000
Alabama 191,000 108,000 70,000 83,000
Alaska 17,000 9,000 7,000 9,000
Florida 764,000 320,000 214,000 200,000 31,000 444,000
Georgia 409,000 161,000 195,000 26,000 27,000 248,000
Idaho 55,000 36,000 13,000 5,000 19,000
Indiana* 182,000 137,000 29,000 45,000
Kansas 78,000 55,000 23,000
Louisiana 242,000 81,000 129,000 7,000 162,000
Maine 24,000 23,000
Mississippi 138,000 50,000 85,000 88,000
Missouri 193,000 130,000 50,000 64,000
Montana 40,000 31,000
Nebraska 33,000 18,000 8,000 15,000
New Hampshire 26,000 25,000
North Carolina 319,000 146,000 117,000 32,000 172,000
Oklahoma 144,000 84,000 14,000 36,000 60,000
Pennsylvania* 281,000 180,000 62,000 29,000 102,000
South Carolina 194,000 104,000 83,000 91,000
South Dakota 25,000 16,000 10,000
Tennessee 162,000 103,000 52,000 59,000
Texas 1,046,000 273,000 160,000 583,000 31,000 774,000
Utah 58,000 41,000 9,000 17,000
Virginia 191,000 105,000 58,000 86,000
Wyoming 17,000 13,000 2,000

*Indiana and Pennsylvania have pending waivers for Medicaid expansion plans that would be implemented post-2014.
“–” = Sample size is not sufficient for a reliable estimate.
SOURCE: Kaiser Family Foundation analysis based on 2014 Medicaid eligibility levels and 2012-2013 Current Population Survey. See Methods Box for more detail.

CONCLUSION

To date, states have significantly expanded coverage for children through Medicaid and CHIP. As such, today, Medicaid and CHIP provide a key source of coverage for low-income children, particularly children of color who are more likely to live in low-income families and lack access to private coverage, helping to significantly improve their access to care. While there has been significant progress achieved in covering low-income children, coverage options for low-income adults have remained limited, contributing to higher uninsured rates, particularly among people of color. As enacted, the ACA created a new continuum of coverage options to significantly reduce the number of uninsured, including a Medicaid expansion to adults with incomes at or below 138% FPL, which would fill the longstanding gaps in the program for adults and create a nationwide base of coverage. The Medicaid expansion offers a particularly important opportunity to increase coverage among low-income adults who are people of color given that they are disproportionately likely to lack health insurance and have low incomes. Increasing their health coverage rates would not only help ensure their access to needed care but also begin to make strides in reducing the persistent disparities they face in securing health coverage. As a result of the Supreme Court decision on the ACA, implementation of the Medicaid expansion is effectively a state option and as of October 24, 2013, 25 states are not moving forward with the expansion at this time. In states that do not implement the expansion, there will be a significant gap in coverage for poor adults who will remain ineligible for Medicaid but earn too little to qualify for premium tax credits for Marketplace coverage, which begin at 100% FPL. These adults will not gain access to a new affordable coverage option and likely remain uninsured. Given their high uninsured rates and low incomes, people of color will be disproportionately impacted by this coverage gap, particularly poor uninsured Black adults residing in the southern region of the country where most states are not moving forward with the expansion. These continued coverage gaps and their varied impacts across groups will result in millions of poor adults remaining uninsured and likely lead to widening racial and ethnic as well as geographic disparities in coverage and access to care.

This brief was prepared by Samantha Artiga, Jessica Stephens, and Anthony Damico with the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured.

METHODS

This analysis uses pooled data from the 2012 and 2013 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). The CPS ASEC provides socioeconomic and demographic information for the United Sates population and specific subpopulations. Importantly, the CPS ASEC provides detailed data on families and households, which we use to determine income for ACA eligibility purposes . We merge two years of data in order to increase the precision of our estimates.

Medicaid and Marketplaces have different rules about household composition and income for eligibility. For this analysis, we calculate household membership and income for both Medicaid and Marketplace premium tax credits for each person individually, using the rules for each program.  For more detail on how we construct Medicaid and Marketplace households and count income, see the detailed technical Appendix A available here. Undocumented immigrants are ineligible for Medicaid and Marketplace coverage. Since CPS data do not directly indicate whether an immigrant is undocumented, we impute documentation status for each person in the sample. To do so, we draw on the methodology in the State Health Access Data Assistance Center (SHADAC) paper, “State Estimates of the Low-Income Uninsured Not Eligible for the ACA Medicaid Expansion.”1  This approach uses the Survey of Income and Program Participation (SIPP) to develop a model that predicts immigration status; it then applies the model to CPS, controlling to state-level estimates of total undocumented population from Department of Homeland Security. For more detail on the immigration imputation used in this analysis, see the technical Appendix B available here. As of January 2014, Medicaid financial eligibility for most nonelderly adults will be based on modified adjusted gross income (MAGI). To determine whether each individual is eligible for Medicaid, we use each state’s MAGI eligibility level that will be effective as of 2014.2 Some nonelderly adults with incomes above MAGI levels may be eligible for Medicaid through other pathways; however, we only assess eligibility through the MAGI pathway.3 An individual’s income is likely to fluctuate throughout the year, impacting his or her eligibility for Medicaid. Our estimates are based on annual income and thus represent a snapshot of the number of people in the coverage gap at a given point in time. Over the course of the year, a larger number of people are likely to move and out of the coverage gap as their income fluctuates.

The Impact of the Coverage Gap in States not Expanding Medicaid by Race and Ethnicity - Appendicies