From uninsured to covered and back again

Here's one consequence of the Supreme Court's healthcare-reform decision: States with low Medicaid eligibility thresholds that choose not to expand Medicaid would leave poor adults to churn between subsidized commercial insurance and no insurance whatsoever.

Yesterday's decision created a potential gap in coverage for poor adults. Here's how: The Supreme Court said that the federal government cannot enforce an expansion of Medicaid eligibility by threatening to cut off all Medicaid funding to states that fail to expand. That leaves states free to ignore Medicaid expansion under the law.

Poor adults were expected to benefit most from Medicaid expansion, which opens the safety-net insurer to everyone with incomes below 133% of the federal poverty guidelines starting in 2014.

As of January, eligibility for poor, working parents in 33 states is capped below 100% of the federal poverty guideline ($23,050 for a family of four), a survey by the Henry J. Kaiser Family Foundation shows. Adults without children are completely ineligible for Medicaid in all but eight states, but can receive limited health benefits or premium support in 17 states, the Kaiser Family Foundation said.

Meanwhile, subsidies for commercial insurance are available for those with incomes between 100% and 400% of the federal poverty guidelines.

So for adults with income below 100% of the federal poverty guideline but too much to qualify for Medicaid, the Supreme Court decision could potentially exclude the very people the Medicaid expansion was designed to aid, said Jennifer Kent, now a principal with Health Management Associates and formerly deputy legislative secretary for the California governor's office, where she oversaw development of the state health insurance exchange.

And for adults with income that wavers back and forth over the eligibility threshold for subsidies could then churn from uninsured to insured and back again. Prior to the Supreme Court's ruling, an estimated 29 million people were expected to churn between subsidized insurance and Medicaid.

For patients and their caregivers, that means intermittent access to insurance to pay for prescriptions, clinic visits, diagnostic tests and other care. “That's a very risky business and we know it has serious results for those who don't have continuous coverage,” said Stan Dorn, a senior fellow with the nonpartisan Urban Institute.

Sara Wilensky, special services faculty for undergraduate education and a professor of health policy at George Washington University, said Medicaid expansion may be less likely in states that already limit Medicaid eligibility, which may suggest budget distress or a lack of political will to expand the safety net.

Those uncovered by Medicaid and too poor to qualify for the subsidized insurance would also not be subject to the law's mandate that nearly everyone carry insurance, she said. The mandate provides an exemption for those who would need to spend more than 8% of their income to buy the cheapest plan.

You can follow Melanie Evans on Twitter: @MHmevans.