Assessing the uninsured in the coverage gap and their eligibility under a Medicaid expansion

usa map

Article published on March 31, 2023 on KFF

The end of the Medicaid continuous enrollment provision in March 2023 and the resumption of Medicaid disenrollments after a three-year pause during the pandemic are likely to refocus attention on gaps in Medicaid coverage in the ten states that have not adopted the Affordable Care Act’s (ACA) Medicaid expansion as of March 2023. 

During the pandemic, Medicaid enrollment increased and the uninsured rate dropped largely due to continuous enrollment. Once Medicaid disenrollments resume, the number of people who are uninsured is expected to increase and could rise more steeply in non-expansion states. In expansion states, because all adults with incomes up to 138% of the federal poverty level (FPL) are eligible for Medicaid, many current enrollees will remain eligible even if their incomes have risen.

However, in non-expansion states, with eligibility thresholds often quite low and largely limited to parents, many of those with incomes below poverty who are no longer eligible for Medicaid will not have access to an affordable coverage option and will likely become uninsured.

Once Medicaid disenrollments resume, the number of people who are uninsured is expected to increase and could rise more steeply in non-expansion states.

KFF

Notably, two states have taken recent action to adopt the Medicaid expansion. In November 2022, voters in South Dakota approved Medicaid expansion through a ballot measure and in March 2023, legislation adopting the Medicaid expansion in North Carolina was signed into law, although expansion is contingent on passage of a state budget later in the year. If expansion proceeds as expected in North Carolina, it will become the 41st expansion state (including the District of Columbia), leaving ten states that have not adopted the expansion. 

This brief presents estimates of the number and characteristics of uninsured people in the ten non-expansion states who could be reached by Medicaid if their states adopted the Medicaid expansion using data from 2021, the most recent year available. It should be noted that this analysis focuses on the number of uninsured people who would be newly eligible if non-expansion states adopted the expansion; the total number of people who would become eligible for Medicaid is larger because it includes people with incomes 100%-138% FPL who are currently enrolled in Marketplace coverage as well as some who may have other coverage. An overview of the methodology underlying the analysis can be found in the Data and Methods, and more detail is available in the Technical Appendices.

What is the Coverage Gap?

The coverage gap exists in states that have not adopted the ACA Medicaid expansion for adults who are not eligible for Medicaid coverage or subsidies in the Marketplace. The ACA expanded Medicaid to nonelderly adults with income up to 138% FPL ($20,120 annually for an individual in 2023) with enhanced federal matching funds (now at 90%). This expanded eligibility for low-income parents and newly established Medicaid coverage for adults without dependent children; however, the expansion is effectively optional for states as a result of a 2012 Supreme Court ruling. As of March 2023, 41 states including DC have expanded Medicaid (Figure 1). As noted above, North Carolina has adopted the Medicaid expansion contingent on passage of a state budget later this spring.

In the remaining ten states that have not adopted the Medicaid expansion an estimated 1.9 million individuals fall into the coverage gap. Adults who fall into the coverage gap have incomes above their state’s eligibility for Medicaid but below poverty, making them ineligible for subsidies in the ACA Marketplaces (Figure 2). When enacted, the ACA did not anticipate that states would be permitted to forgo Medicaid expansion; as such, subsidies in the Marketplaces are not available for people with incomes below poverty.

Medical eligibility for adults in states that have not expanded their programs is very low. In these states, the median income limit for parents is just 38% FPL, or an annual income of $9,447 for a family of three in 2023, and in nearly all states not expanding (except Wisconsin through a waiver), childless adults remain ineligible regardless of their income (Figure 3). In Texas, the state with the lowest eligibility threshold, parents in a family of three with incomes above $3,977 annually, or just $331 per month, are not eligible for Medicaid. Because there is no pathway for coverage for childless adults, except in Wisconsin, more than three-quarters (76%) of people in the coverage gap fall into this group.

States that have not implemented the expansion have uninsured rates that are nearly double the rate of expansion states (15.4% compared to 8.1%). People without insurance coverage have worse access to care than people who are insured. One in five uninsured adults in 2021 went without needed medical care due to cost and uninsured people are less likely than those with insurance to receive preventive care and services for major health conditions and chronic diseases.

Photo by Unsplash