The Uninsured Population in Texas: Understanding Coverage Needs and the Potential Impact of the Affordable Care Act

In January 2014, the major coverage provisions of the 2010 Affordable Care Act (ACA) went into full effect. These provisions include the creation of a new Health Insurance Marketplace where moderate-income families can receive premium tax credits to purchase coverage and, in states that opted to expand their Medicaid program, the expansion of Medicaid eligibility to low-income adults. In Texas, the federal government operates the Marketplace, as the state opted not to run its own. In addition, as of June 2014, Texas had not expanded its Medicaid program, leaving many low-income uninsured adults in Texas who would have been newly-eligible for Medicaid without a coverage option. With very limited Medicaid eligibility for adults, and with only 23% of the eligible Marketplace population enrolling as of April 19, 2014¹, many uninsured remain in Texas.While much attention has recently focused on the population that is newly-enrolled in coverage, a focus on the uninsured population, their needs, and the consequences they face because they lack coverage can inform ongoing efforts to meet the needs of this population and implementation of the ACA in the state.  This report uses findings from the 2013 Kaiser Survey of Low-Income Americans and the ACA to explore who the uninsured in Texas are and understand their ongoing health care and health coverage needs. The survey, conducted between July and September 2013, is a nationally representative survey that also includes a state-representative sample of over 1,800 nonelderly (ages 19-64) adults in Texas. While the data were collected prior to national ACA implementation, early enrollment reports indicate that the vast majority of people who were uninsured in the state prior to the ACA still lack coverage. Thus, the survey can provide insight into the challenges that the uninsured in Texas face and how the ACA will shape coverage in the state. More detail on the survey and methods underlying the analysis in this report can be found in the Appendix.

Background

Lack of insurance coverage has been a longstanding policy challenge both nationwide and especially in Texas. Prior to the ACA, the uninsured rate in Texas was 27%, the highest in the nation and well above the national rate of 18%.² This high uninsured rate reflects limited availability of both private and public coverage. Private coverage is closely tied to employment, but not all workers are offered affordable coverage through their jobs. In particular, people who work in certain industries (such as service or agriculture), who work part-time, or who earn low wages are less likely to be offered coverage than other workers.³ Private coverage purchased directly from insurers (nongroup coverage) was not guaranteed in Texas prior to the ACA, and insurance companies could charge higher premiums for sicker or older individuals, making coverage unaffordable for many uninsured adults.⁴ Last, Medicaid eligibility in the state has historically been very limited for adults. While children in the state may be eligible for Medicaid or CHIP if their family income is below 206% of poverty (about $40,800 for a family of three in 2014), parents must have income below  20% of poverty, or about $3,900 a year for a family of three, to qualify for coverage. Further, adults without dependent children and undocumented immigrants are ineligible for Medicaid in Texas, regardless of their income.⁵

To address the challenge of the uninsured, the Affordable Care Act (ACA) includes an expansion of Medicaid and the creation of new Health Insurance Marketplaces. With the Supreme Court ruling in June 2012, the Medicaid expansion essentially became optional for states, and as of June 2014, Texas had opted not to expand its Medicaid program. This decision has created a “coverage gap” among low-income adults. Under the ACA, people with incomes between 100% and 400% of poverty may be eligible for premium tax credits when they purchase coverage in a Marketplace. Because the ACA envisioned low-income people receiving coverage through Medicaid, people below poverty are not eligible for Marketplace subsidies. Thus, some poor adults in Texas will fall into a “coverage gap” of earning too much to qualify for Medicaid but not enough to qualify for premium tax credits. People in the coverage gap, all of whom have incomes below 100% of poverty, are ineligible for financial assistance under the ACA, while people with higher incomes will be eligible for tax credits to purchase coverage.

While the state is not expanding Medicaid eligibility under the ACA, there are some ACA-related changes to the state’s Medicaid program. Changes to the Medicaid enrollment process occurred in 2014, regardless of expansion decisions. Texas must make Medicaid determinations based on new modified adjusted gross income (MAGI) eligibility levels. The ACA also established a streamlined enrollment process for all states that allows people to use one single application for Marketplace or Medicaid coverage. Individuals are able to apply for coverage through HealthCare.gov, the state Medicaid/CHIP website, in person, on the phone, or through the mail. In addition, Medicaid eligibility determinations will now use verification based on existing data sources such as Social Security Administration data, rather than requiring families to provide paper documentation.⁶