A Wisconsin window on the ACA coverage gap in pandemic time

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To pick up a thread from deep in the prior post...

In Wisconsin, ACA marketplace enrollment as of June 30, 2021 had increased by less than two percentage since June 2019. In the other thirteen states that had not enacted the ACA Medicaid expansion as of June 30 of this year, enrollment increased by 41% over the same period.

What's the matter (or rather, what's right) with Wisconsin?

    Enrollment in nonexpansion states, 2019-2021

     Sources: CMS, Early Effectuated Enrollment Snapshot, 2020, 2021; SEP enrollment 7/14/21; KFF
     See the prior post for an explanation of how June 2021 enrollment is estimated.

A lot of factors affect marketplace enrollment, which varies widely by state. But the most salient factor would appear to be the fact that Wisconsin has no "coverage gap." 

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In the 38 states* that have enacted the Medicaid expansion, adults with incomes up to 138% of the Federal Poverty Level are eligible for Medicaid. In states that have not enacted the expansion, eligibility for marketplace subsidies begins at 100% FPL, and an estimated 2.2 million people with incomes below that level (as of 2019) are not eligible for Medicaid.  Wisconsin, however, grants Medicaid eligibility to adults with incomes up to 100% FPL -- so eligibility for Medicaid or subsidized marketplace coverage is continuous.

Why would the lack of a coverage gap affect marketplace enrollment? Eligibility for marketplace subsidies begins at the same income threshold in Wisconsin as in the other nonexpansion states. Wisconsin's starkly different enrollment track record in the pandemic may suggest that in the nonexpansion states with a coverage gap, more people with incomes below but near the poverty line are estimating incomes above that threshold and so qualifying for subsidies. 

Marketplace subsidies are based on the applicant's estimate of income for the coverage year. Low incomes are often difficult to estimate; they may depend on uncertain hours, tips, self-employment, frequent job changes, and like factors. That provides room for flexibility in the estimate.  

Various factors in the pandemic months may have contributed to more low income people estimating income over 100% FPL:

1. The pandemic provided intense motivation to get health coverage. 

2. The supplemental unemployment income provided by the CARES Act in March 2020 and the American Rescue Plan Act (ARP) in March 2021 pushed some incomes over 100% FPL.  Those who gained coverage because of UI income in 2020 may be motivated to keep it -- and become aware of the eligibility threshold.

3. The Biden administration opened an emergency Special Enrollment Period (SEP), effectively a second Open Enrollment Season, starting Feb. 15, 2021 and extending to Aug. 15. Back in March 2020, in response to the pandemic, 12 state exchanges ran emergency SEPs, and while CMS refused to open on on HealthCare.gov, they did smooth the application  process for an individual SEP. 

4. The American Rescue Plan, signed on March 11, 2021,  made coverage with strong Cost Sharing Reduction free to enrollees with incomes up to 150% FPL and to anyone who received any unemployment income this year. (ARP improved subsidies at every income level.) 

5. The Biden administration allocated $50 million to advertising coverage during the emergency SEP. 

6. In a rule change published in May (in compliance with a March 2021 court order), CMS stopped requiring income documentation from applicants whom "trusted data sources" indicated had an income below 100% FPL but who estimated income above that eligibility threshold on their applications. This rule change has probably not yet affected behavior, however. 

If there were, say, five states that like Wisconsin had expanded Medicaid only up to 100% FPL, we'd have a stronger basis for comparison and for the inference that the 100% FPL eligibility threshold has become more porous since the pandemic struck. That seems pretty plainly true to at least some degree. But we don't know how strong the effect is.

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* Oklahoma and Missouri passed referendums in 2020 mandating Medicaid expansion. Oklahoma's expansion went into effect on July 1 of this year, with enrollment beginning on June 1 -- early enough to perhaps modestly affect marketplace SEP enrollment numbers in June. Missouri's legislature refused to fund the expansion mandated by referendum, notwithstanding that the referendum altered the state Constitution. Just yesterday, the Missouri Supreme Court unanimously ordered the state to begin admitting applicants made eligible by the expansion criteria.

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