Bubbling Up

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When I was working at Bellevue Hospital in New York City after college, it felt like national health insurance was “just around the corner.” Multiple plans were introduced in Congress and President Nixon offered his own proposal. Most knowledgeable observers assumed the country would have health insurance for everyone, the only question was which plan – Medicare for all, a new national health insurance plan, a private insurance mandate plus Medicaid, or some other hybrid of combined coverage. More than five decades later the country is still struggling with how to make the same commitment that was made in 1965 to everyone over 65 through Medicare, to everyone under 65. Put another way, since most Americans under 65 have health insurance coverage, how do we reach the approximately 10 percent of us, almost all poor and working-class people, that don’t?

The Affordable Care Act (ACA) was designed to be a big step toward that commitment, and it has made substantial progress. The uninsured rate declined from 49 million (16 percent) in 2010 to 29 million (9.1 percent) in 2015. But there are problems. Nineteen states, including Missouri, have not expanded Medicaid (public health insurance for people with limited resources) under the provisions of the ACA. Medicaid expansion was designed to be one piece in the puzzle of public and private health insurance payers that would, in combination, achieve the goal of near-universal coverage. Not expanding Medicaid creates a big “coverage gap” for people with incomes below the poverty level, but above the threshold for current Medicaid eligibility. For example in a state like Missouri, if a single parent with two children currently makes below $20,160 a year (the poverty line), but more than $3,612 (Medicaid eligibility), then they are trapped in the gap, and are offered little to no help paying for insurance.

But the absence of Medicaid expansion has done more than fail to close a “coverage gap,” it also has undermined the health insurance marketplaces in those 19 states. Under the ACA, people with incomes between 100 and 138 percent of the poverty line can sign up for Medicaid or enroll in their state’s insurance marketplace. Most of those who qualify in states that have seen Medicaid expansion opt to enroll in it, but in states without an expansion (and hence without the option to enroll in Medicaid) these people are only able to access private health insurance through the marketplace. It turns out this has had a huge effect on the risk pool of the people enrolled in the marketplaces in non-expansion states like Missouri. In these states, almost 40 percent of marketplace enrollees would have been eligible for Medicaid with expansion. Many of these people did not have insurance before and were sicker and in need of health services. This drove up the costs to insurance companies, who miscalculated how much money they would need to pay for these customers. As a result, premiums are 7 percent higher in non-expansion states. So not only are some citizens not eligible for insurance, those that are eligible for marketplace coverage pay even more than folks who live in a state that expanded Medicaid. These higher costs have influenced some insurance companies to pull out of the health insurance marketplaces, reducing the competitive underpinnings of the market.

To put it in simpler terms, not having Medicaid expansion in 19 states is keeping many people uninsured and makes private insurance less available and more expensive, all while damaging the function of a competitive, market-based health insurance exchange in those states.

So, what does the future hold? We aren’t quite back to President Nixon’s proposal, but new ideas are starting to get attention, including some old ones like Medicare-for-all or a single payer system. A “public option,” sometimes described as a Medicare-like plan available to everyone, is viewed as one pathway to reaching equity in health insurance. Today, ideas for strengthening the ACA are more visible, such as giving non-expansion states 100 percent federal funding for the first three years of expansion.

The most important point is that the fundamental fairness we need as the bedrock of our country – that everyone should have basic health insurance coverage – is a problem that remains. Five decades after the country made the commitment to our elderly, it is time to include the rest of the people who remain left out. These people are less healthy, and we as a country end up paying the price either way.