The Uninsured: A Primer - Key Facts about Health Insurance and the Uninsured in the Era of Health Reform
How did health coverage change under the ACA?
In January 2014, the major coverage provisions of the ACA went into effect, including the expansion of Medicaid and creation of Health Insurance Marketplaces with premium subsidies. The ACA also builds on employer-based coverage and introduced new requirements for almost all individuals to obtain insurance coverage or pay a penalty. Under the ACA, millions of people have gained insurance coverage, and the number and rate of uninsured has declined significantly.
The number of uninsured Americans declined significantly in 2014. Corresponding with implementation of the ACA coverage provisions, the total number of nonelderly uninsured individuals nationally dropped from 41.1 million in 2013 to 32.3 million in 2014.1 Nearly the entire decline in the number of uninsured people occurred among adults (Figure 3).
Coverage gains were largest among low-income people, people of color, and young adults groups that had high uninsured rates prior to 2014. While uninsured rates decreased across all income groups from 2013 to 2014, they declined most sharply for poor and near-poor people, dropping by 5.2 percentage points and 6.7 percentage points, respectively. Also over this period, the uninsured rate declined by 5.3 percentage points for adults age 19-34. Among racial and ethnic groups, Hispanics, Blacks, and Asian Americans had particularly large declines in uninsured rates, with each group seeing a drop of approximately 5 percentage points from 2013 to 2014 (Figure 4).2
Growth in Medicaid and directly-purchased coverage accounted for much of the decline in the uninsured rate. While the ACA was leading to major changes in health insurance coverage in 2014, these changes were occurring against the backdrop of the normal cycles of health coverage that people experience as their employment and income circumstances change. Therefore, though a plurality of nonelderly adults who gained coverage in 2014 did so through Medicaid (36%) or the Marketplace (22%), many people also gained other coverage, such as employer coverage (26%).3 In addition, some people who were insured before 2014 also enrolled in ACA coverage options. For example, some of the people who were purchasing coverage on their own instead purchased that coverage through the new Marketplaces, and some people who lost coverage and were low-income took up Medicaid.4
Even with the ACA, many remain uninsured. Of those who remained uninsured at the start of 2015, about half (15.7 million, or 49%) are eligible for financial assistance through either Medicaid or subsidized Marketplace coverage (Figure 5). However, many uninsured people remain outside the reach of the ACA. Some (4.9 million, or 15%) are ineligible due to their immigration status, and others (3.1 million, or 10%) are ineligible due to their state’s decision not to expand Medicaid. The remainder of the uninsured either has an offer of coverage through an employer or has income above the limit for Marketplace tax credits. These patterns of eligibility vary by state.5
The ACA expanded Medicaid eligibility to adults with incomes at or below 138% of poverty, but the 2012 Supreme Court ruling effectively made the expansion a state option. As of November 2015, 30 states and DC had adopted the Medicaid expansion (Figure 6).6 Among states that have implemented the expansion, median income eligibility levels for parents rose from 98% FPL before the ACA to 138% FPL, while the median income eligibility level for childless adults increased from 0% to 138% FPL.7 There is no deadline for states to expand Medicaid, and discussion about the Medicaid expansion continues in other states.8
Medicaid and CHIP also remain an important source of coverage for children, pregnant women, and people with disabilities. As of January 2015, all but two states cover children at or above 200% FPL through Medicaid and CHIP, with 19 states covering children at or above 300% FPL. Many (33) states cover pregnant women at or above 200% FPL.9 In addition, Medicaid covers many individuals with disabilities, who are generally eligible for Medicaid based on enrollment in the Supplemental Security Income (SSI) program. Under the ACA, people with disabilities who live in expansion states also may qualify for Medicaid based solely on their low-income status.10
In the twenty states that had not expanded Medicaid as of fall 2015, over three million poor adults fall into a “coverage gap.”11 These adults have incomes above Medicaid eligibility limits in their state but below the lower limit for Marketplace premium tax credits, which begin at 100% FPL. In non-expansion states, the median income eligibility level for parents is 44% FPL and 0% for childless adults. People in the coverage gap are concentrated in Southern states, with the largest number of people in the coverage gap in Texas (766,000 people) followed by Florida (567,000), Georgia (305,000), and North Carolina (244,000). State decisions about expanding coverage have implications for coverage gains: among people below poverty, Medicaid expansion states had a 9.3 percentage point drop in adult uninsured rates, versus a 4.8 point drop in non-expansion states.12
Undocumented immigrants and many recent lawfully present immigrants remain ineligible for Medicaid under the ACA. Many uninsured non-citizens are in the income range to qualify for the ACA Medicaid expansion. However, under federal rules, undocumented immigrants may not enroll in Medicaid. Many lawfully present non-citizens who would otherwise be eligible for Medicaid remain subject to a five-year waiting period before they may enroll, and some groups of lawfully present immigrants remain ineligible regardless of their length of time in the country.13
Medicaid enrollment has grown under the ACA. As of August 2015, national enrollment in Medicaid and CHIP had grown by over 14.5 million people since the period before open enrollment (which began October 2013), covering over 72 million people. This growth represents an increase of 24% in monthly Medicaid enrollment.14 In states that had adopted the Medicaid expansion, enrollment increased by roughly 30% since the period before open enrollment, compared to an average increase of 10% in states that had not.15
States have implemented modernized and streamlined enrollment processes under the ACA, but work continues in many areas. To implement these processes, states made major upgrades to or built new Medicaid eligibility and enrollment systems, with the federal government providing enhanced funding for these efforts.16 As of January 2015, individuals could apply online for Medicaid in all but one state, and 47 states accept Medicaid applications by phone. In addition, states established eligibility verification policies that rely on electronic data and minimize paperwork for individuals. However, efforts to implement the ACA’s vision of a modernized, streamlined enrollment system continue in many areas, including implementing streamlined renewal processes and enhancing and expanding system functionalities.17
Health Insurance Marketplaces and Non-Group Coverage
The ACA established Health Insurance Marketplaces where individuals and small employers can purchase insurance. Health Insurance Marketplaces are established in each state, but only some states run their own Marketplace.18 These Marketplaces are designed to ensure a more level competitive environment for insurers and to provide consumers with information on cost and quality to enable them to choose among plans. To help ensure that coverage purchased in these new Marketplaces is affordable, the federal government provides tax credits for people with incomes between 100% FPL ($20,090 for a family of three in 2015) and 400% FPL ($80,360 for a family of three in 2015).19,20 These tax credits limit the cost of the premium to a share of income and are offered on a sliding scale basis. In addition to the premium tax credits, the federal government also makes available cost-sharing subsidies to reduce what people with incomes between 100% and 250% of poverty have to pay out-of-pocket to access health services. The cost-sharing subsidies are also available on a sliding scale based on income.
Millions of people have received financial assistance to purchase insurance through the Marketplaces. As of June 30, 2015, nearly 10 million individuals were enrolled in a Marketplace plan.21 The vast majority of Marketplace enrollees (84%) received premium subsidies, averaging $270 per person, and 56% additionally received cost-sharing subsidies.22 For a 40 year old non-smoker, the median price for the second-lowest cost Silver plan in 2015 is $258,23 with significant variation both across and within states. If this individual were earning $30,000, he or she would pay $208 after tax credits.24 Still, affordability remains a concern for people with Marketplace coverage. A third (33%) of people with Marketplace coverage said they found it difficult to pay their monthly premium, and 28% said they faced higher than expected costs under their plan.25 Affordability is a particular concern for people enrolled in Bronze plans, which carry high cost sharing. In 2015, the average annual deductible in a Bronze plan was $5,331,26 and plans could also impose additional co-pays. During the first two years of ACA coverage, 20% of Marketplace enrollees were enrolled in a Bronze Plan.27
Lawfully present immigrants may receive tax credits for Marketplace coverage; however, undocumented immigrants are prohibited from purchasing such coverage. Lawfully present immigrants are eligible for tax credits for coverage purchased through a Marketplace, regardless of the number of years they have been in the U.S.28 In addition, lawfully present immigrants who would be eligible for Medicaid but are in a five-year waiting period are also eligible for tax credits for Marketplace coverage. Undocumented immigrants are not eligible for premium tax credits and are prohibited from purchasing insurance in the Marketplace at full cost.
Some people continue to purchase non-group coverage outside the Marketplace. Among the entire non-group market in winter 2015, over half of individuals (59%) reported having coverage obtained from a state or federal Marketplace, 17% have ACA-compliant coverage purchased outside of the Marketplace, and 16% have non-ACA-compliant plans (those that have been in effect since before January 1, 2014).29 People purchasing coverage outside the Marketplace are not eligible for ACA premium tax credits.
Employer Sponsored Insurance Under the ACA
The ACA includes provisions to promote coverage in small firms. Recognizing the challenges that small employers, especially those with low-wage workers, face in providing coverage to their employees, the ACA established the Small Business Health Options Program (SHOP) Marketplace, where employers with no more than 50 full-time equivalent (FTE) employees can purchase coverage. Beginning in January 2016, states have the option to expand the SHOP to include employers with 100 or fewer FTEs.30 Small employers with no more than 25 FTEs employees and annual wages of less than $50,000 that purchase coverage through the SHOP may be eligible for tax credits to reduce the cost of that coverage.31 Eligible employers may take the tax credits for a maximum of two years.32
The ACA also extends dependent coverage. As of 2010, young adults may remain on their parents’ private plans (including non-group plans or employer-based plans) until age 26. This provision expanded coverage among young adults.33
Large employers now face penalties for not providing affordable coverage to full-time employees. As of 2015, employers with 100 or more employees are assessed a fee up to $2,000 per full-time employee (in excess of 30 employees) if they do not offer affordable coverage and have at least one employee who receives a premium tax credit through a Marketplace.34 These penalties will go into effect in 2016 for employers with 50-100 workers. To avoid penalties, employers must offer insurance that pays for at least 60% of covered health care expenses, and the employee share of the individual premium must not exceed 9.5% of family income. This requirement does not apply to employers with fewer than 50 workers.35 While the employer requirements may help many uninsured individuals with a worker in their family, the vast majority (81%) of uninsured workers in 2014 worked in firms with fewer than 50 employees, which are not required to provide insurance coverage.36
Offer, eligibility, and take-up rates of employer sponsored insurance have remained unchanged since 2013. Over half (57%) of firms offer health benefits to their employees in 2015, a rate that is unchanged from the offer rates in 2014 (55%) and 2013 (57%). Similarly, the percentage of workers eligible for health benefits at offering firms in 2015 (79%) is similar to 2014 (77%) and 2013 (77%), and take-up rates have also remained steady, with 79% of eligible workers taking up offered coverage in 2015, compared with 80% in 2014 and 2013.37,38,39What was happening to insurance coverage leading up to the ACA? Who remains uninsured after the ACA and why do they lack coverage?