Wednesday, June 24, 2015

A quarter of those who stand to lose ACA subsidies should be in Medicaid

Greg Sargent and Charles Gaba have been pointing out repeatedly (after a prompt from Jonathan Cohn) that the majority of private plan buyers who stand to lose their subsidies if the Supreme Court rules in favor of the King plaintiffs are in Republican congressional districts. I have noted that most of them are low income -- 83% of private plan buyers have incomes below 250% of the Federal Poverty Line (FPL). That may affect the degree to which Republicans consider them constituents.

There's an irony in that low income profile. In states that refused to expand Medicaid, all but one of which rely on, private plan enrollments were swelled by those who would have been at the upper end of Medicaid eligibility if their states had accepted the expansion.  In expansion states, residents with incomes below 138% FPL are eligible for Medicaid, and eligibility for subsidized private plans begins at that threshold. In states that refused the expansion, eligibility for private plan subsidies begins at 100% FPL; all those with incomes below that level are left out in the cold.

In states using that expanded Medicaid, 34% of enrollees had income under 150% FPL.  In states that refused to expand Medicaid, 50% had incomes below 150% FPL. I have calculated that some two thirds of them would have been Medicaid-eligible had their states expanded. That estimate may be low: in Pennsylvania, which refused the Medicaid expansion in 2014 but implemented it in 2015, CMS determined about half of 2014 enrollees had incomes that would qualify them for Medicaid in 2015 (that is, incomes between 100 and 138% FPL).

Three quarters of enrollees are in states that refused the expansion. Based on HHS enrollment statistics released in March 2015, I calculated that about 1.9 million of them would have been Medicaid-eligible if their states had accepted the expansion. Enrollment has dropped from 11.7 million to 10.2 million since then, so perhaps 1.6 million current enrollees should have been Medicaid-eligible. That's about a quarter of those who stand to lose their subsidies.

We like to say that Congress could remedy an adverse King ruling with a one-sentence (or four-word) fix to the ACA provision regarding calculation of tax credits. A much slower remedy would be for every state to establish its own exchange. It's also true that about a quarter of those harmed by an adverse King  ruling could be covered by Medicaid if all states embraced the expansion.

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