Millions trapped in Obamacare coverage gap

Nearly 5 million lower-income Americans are caught in a mismatch of state and federal rules that leave them with no help to buy insurance, while better-off workers can buy coverage with taxpayer-funded subsidies.

By Money Staff Feb 10, 2014 3:51PM

This post comes from Christopher Weaver at partner site The Wall Street Journal.


The Wall Street Journal on MSN MoneyErnest Maiden was dumbfounded to learn that he falls through the cracks of the health-care law because in a typical week he earns about $200 from the Happiness and Hair Beauty and Barber Salon.


Like millions of other Americans caught in a mismatch of state and federal rules, the 57-year-old hair stylist doesn't make enough money to qualify for federal subsidies to buy health insurance. If he earned another $1,300 a year, the government would pay the full cost. Instead, coverage would cost about what he earns.


"It's a Catch-22," said Mr. Maiden, an uninsured diabetic. Without help, he said, he must "choose between paying the bills and buying medicine."


The 2010 health law was meant to cover people in Mr. Maiden's income bracket by expanding Medicaid to workers earning up to the federal poverty line -- about $11,670 for a single person; more for families. People earning as much as four times the poverty line -- $46,680 for a single person -- can receive federal subsidies.


But the Supreme Court in 2012 struck down the law's requirement that states expand their Medicaid coverage.  Republican elected officials in 24 states, including Alabama, declined the expansion, triggering a coverage gap. Officials said an expansion would add burdensome costs and, in some cases, leave more people dependent on government.


The decision created a gap for Mr. Maiden and others at the lowest income levels who don't qualify for Medicaid coverage under varying state rules. The upshot is that lower-income people in half the states get no help, while better-off workers elsewhere can buy insurance with taxpayer-funded subsidies.


The federal government offered to pay the full cost of the expansion for three years, and then states would pay 10 percent of the annual expansion costs. The Congressional Budget Office estimates the current expansion will cost the federal government nearly $800 billion over the next 10 years.


Some GOP-led states are revisiting their decision as complaints pile up over the coverage gap -- and its consequences for businesses -- in such states as Utah and Florida. The state senate in New Hampshire last week reached a tentative deal to expand Medicaid. In Virginia, newly elected Democratic Gov. Terry McAuliffe hopes to get legislators to reverse his Republican predecessor's stance against expansion.


Lawmakers are also getting a push to boost Medicaid rolls from hospitals that expected a vast new pool of paying customers under the health care law. Instead, the failure to expand Medicaid coverage by some states not only adds fewer insured patients, it also eliminates the payments hospitals had long received to cover the cost of uninsured people they treat free.


Obama administration officials are touring some states that resisted the expansion, including Texas. "Expanding Medicaid will significantly increase the number of patients with insurance," said Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, the federal agency overseeing the law's implementation. "This is a critical opportunity to help millions more Americans gain access to quality, reliable health coverage."


For now, nearly five million people ages 18 to 64 get no financial help to buy coverage because of the gap, according to estimates by the Kaiser Family Foundation. Many of those people are clustered in the South, living in states where income limits for Medicaid coverage have historically been among the lowest in the U.S.


Eugene Steuerle, an Urban Institute economist and former Treasury Department official who served under presidents in both parties, said he couldn't recall a social program that excluded beneficiaries because they earn too little.


In Alabama, Gov. Robert Bentley, a physician, said in his annual address last month that Medicaid expansion carried costs he doubted the federal government or his state could afford. Medicaid accounts for more than one-third of Alabama's budget, the state's costliest service after education, and it would have to grow larger to comply with the health-care law.

A spokeswoman for Mr. Bentley said his position was clear in public statements.


One of Mr. Bentley's constituents, 27-year-old Tanisha Fields, who is uninsured, arrived at University of Alabama at Birmingham's flagship hospital on a recent evening for treatment after a miscarriage. Hospitals are obligated to treat emergency room patients, regardless of their ability to pay.


Ms. Fields, who has a 4-year-old son, earned about $7,000 last year working at a cleaning service. That is too little to qualify for federal help buying coverage in new health-law marketplaces, and too much for coverage in Alabama's Medicaid program, which has an income ceiling of $2,832 for a family of two, after deductions. If Ms. Fields could buy insurance for $50 a month, she said, "I definitely would."


Governors in some states that refused to expand Medicaid now say the coverage gap is hard to ignore. "I am not a fan of the Affordable Care Act," Utah Gov. Gary Herbert said in an interview. But, he said, he is working with state legislators on a plan to expand Medicaid after advisers calculated that about 60,000 of his constituents would fall through the gap.


Medical doctor © Corbis/SuperStock"That is not fair," Mr. Herbert said. "When I say doing nothing is not an option, I'm talking about the 60,000 people in Utah who live below the poverty line and don't have access to health care."


Mr. Maiden, the hair stylist, learned in a Dec. 23 letter from the federal government that he wasn't eligible for help. The cheapest "bronze"-level insurance plan available to Mr. Maiden, who is single and a smoker, costs $437 a month. That plan, from Blue Cross & Blue Shield of Alabama, has a $6,350 annual deductible.


Mr. Maiden would have to spend about $11,600 a year -- more than his entire annual income -- on premiums and the deductible before Blue Cross would begin paying for most services. If he earned an extra $1,300 a year, he would qualify for about $470 a month in federal subsidies under the health-care law to pay premiums, and additional subsidies that would reduce the deductible for certain plans to as little as $100 a year.


Earning more, he said, is a challenge. Demand in Birmingham for his styling services is low, he said: "These are difficult times."


A Blue Cross spokeswoman said the insurer offered "some of the most cost-effective health insurance premiums in the country" and noted that Alabama has among the lowest average rates of states using HealthCare.gov, the federal insurance exchange.


But higher-wage families in some cases pay less for coverage in Alabama. Cal Morris, 37 years old, opened Church Street Coffee & Books with his wife, Heather, in a wealthy Birmingham suburb nearly three years ago.


The coffee shop and Mr. Morris's second job as a church janitor yields about $35,000 a year for the couple, who have three children.


Under the law, the family qualifies for a subsidy of as much as $439 a month. They could pay as little as $83 a month for a midlevel -- or so-called silver -- Blue Cross plan that lists at $522.43 a month, according to HealthCare.gov. The couple's children are covered by the state's Medicaid program.


Mr. Morris, who has severe and untreated psoriasis, said he looked forward to seeing a doctor, now that he has coverage.


Federal census data show about two-thirds of nearly 30,000 uninsured people living in Jefferson County, which includes Birmingham, would qualify for Medicaid if the program was expanded to fit with the health-care law.


While Birmingham's unemployment rate is low, many of its workers are poor. The bottom 10 percent of local workers employed full-time in 32 professions -- including health-care aide and hairdresser -- earn less than $16,000 a year, according the Bureau of Labor Statistics.

Many of these people are only now learning of the health-care gap. Shunteria Taylor, 28 years old, lost a job as a personal-care aide in 2012. She lives on about $10,500 a year in child support and disability benefits for her 9-year-old son, Brandon. She said she was looking for work.


Based on her income, the cheapest insurance coverage would cost Ms. Taylor $146 a month, with a $6,350 deductible. "I have a lot of health problems," she said, "but I just can't afford" insurance.


Hospitals, including UAB Health System, see the coverage gap as a threat.


"All we see is our revenues going down," said Will Ferniany, UAB's chief executive. Like other hospitals, it faces deep cuts in federal reimbursement for treating uninsured patients under the health-care law, he said, but won't see many new paying patients without the Medicaid expansion.


On a recent evening, as a rare blizzard struck Birmingham, dozens of uninsured patients filed through the emergency room at UAB's main campus. Complaints ranged from headaches and swollen feet to broken bones. Such visits contribute to more than $100 million in uncompensated care costs at the hospital, according to 2012 Medicare data.


Seneca Womack, age 38, arrived that evening seeking treatment for an epileptic seizure. A couple of hours later, he was discharged but then slipped on a patch of ice on his way home, breaking his leg.


Since losing his last two jobs -- as a ride operator at an amusement park and restaurant cook -- Mr. Womack has had no regular income, leaving him below the threshold for health insurance subsidies.


Before his latest mishap, Mr. Womack had piled up more than $50,000 in hospital bills for treatment of seizures and related injuries. He said he borrows $130 a month from his sister to buy drugs for high blood pressure, depression and epilepsy.


"I need insurance," he said.


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691Comments
Feb 10, 2014 4:13PM
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This can't possibly be true.  I am shocked at this news.  I can't believe there is any flaw with Obamacare.  It just can't be true, Obama promised everyone would be covered.  He wouldn't lie would he?
Feb 10, 2014 4:31PM
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LBJ:
We were attacked (in the Gulf of Tonkin)
 
Nixon:
I am not a crook
 
GHW Bush:
Read my lips - No new taxes
 
Clinton:
I did not have sex with that woman... Miss Lewinski
 
GW Bush:
Iraq has weapons of mass destruction
 
Obama:
I will have the most transparent administration in history.
The stimulus will fund shovel-ready jobs.
I am focused like a laser on creating jobs.
The IRS is not targeting anyone.
It was a spontaneous riot about a movie.
If I had a son.....
I will put an end to the type of politics that "breeds division, conflict and cynicism".
You didn't build that!
I will restore trust in Government.
The Cambridge cops acted stupidly.
The public will have 5 days to look at every bill that lands on my desk
It's not my red line - it is the world's red line.
Whistle blowers will be protected in my administration.
We got back every dime we used to rescue the banks and auto companies, with interest.
I am not spying on American citizens.
ObamaCare will be good for America
You can keep your family doctor.
Premiums will be lowered by $2500.
If you like it, you can keep your current healthcare plan
It's just like shopping at Amazon
I knew nothing about "Fast and Furious" gun-running to Mexican drug cartels
I knew nothing about IRS targeting conservative groups
I knew nothing about what happened in Benghazi
I have never seen my Uncle from Kenya who is in the country illegally and that was arrested and told to leave the country over 20 years ago
And, I have never lived with that uncle. (He finally admitted today, [12-05-2013] that he DID know his uncle and that he DID live with him.)
 
And the biggest one of all:
"I, Barrack Hussein Obama, pledge to preserve, protect and defend the Constitution of the United States of America."
Feb 10, 2014 4:35PM
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You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away people's initiative and independence.
You cannot help people permanently by doing for them, what they could and should do for themselves.

........Abraham Lincoln
Feb 10, 2014 4:18PM
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WHAT???   The UGLY truth coming out/??  ANY dem who supported this atrocity should be fired!!!  Take AMERICA back!!
Feb 10, 2014 4:32PM
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    "Negotiating with Obama is like playing chess with a pigeon….the pigeon knocks over all the pieces, **** on the board and then struts around like it won the game."

    Vladimir Putin



Feb 10, 2014 4:31PM
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WARNING: After a recent wave of identify thefts, the FBI estimates there are over 500 fake Obamacare websites set up for the sole purpose of stealing your personal information. So protect yourself and remember: the real one is the one that doesn't work.
Feb 10, 2014 4:28PM
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It must be somebody else's fault, I am sure it isn't any of Barack's policies, he truly cares about the folks. He is also smarter than anyone you know. God help this country if people don't wake up and realize this boob is destroying America.
Feb 10, 2014 4:35PM
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Seriously, the article is trying to blame this horrendous mess on the GOP who didn't vote for the law in the first place?
Feb 10, 2014 4:17PM
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There should be an incentive to those who are working, even if they don't make enough.  Take those off who do not work at all and give it to those who are at least working to get ahead.
Just like Govt to provide the wrong incentive. 
Feb 10, 2014 4:33PM
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Obama's ACA was meant for one thing:  create a medical welfare system to join the (financail) welfare, medicaid, food stamp, free school lunch and all other like give-away programs for those who don't work.   And like all these other programs, it will be riddled with waste, fraud and abuse as it spirals into bankrupting tax paying citizens.  If American industry was thriving and Americans had critical skills and jobs were plentiful, people would not need subsidies to buy insurance.  Someone needs to tell Obama:  It's all about jobs, stupid!
Feb 10, 2014 4:29PM
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NOW THAT OBAMA HAS PROVEN HIMSELF TO BE A LIAR SINCE WAY BACK WHEN!!!

I FEAR THAT THE REAL DANGER IS NEVER FINDING OUT HOW MANY LIES HE HAS REALLY TOLD!!!!!!!!!

 "The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally. Leadership means that, 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."
   ~ Senator Barack H. Obama, March 2006


"PERIOD"
Feb 10, 2014 4:15PM
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Sounds like they need to move to Blue states that expanded Medicaid that is until these states go bankrupt.   However, with this administration that would just mean another bailout of a socialist leaning entity.
Feb 10, 2014 4:25PM
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Hey America, When are you going to get tired of this Whitehouse, pushing their Gay agenda, their Obama forced care, Their blatant in your face America, He thinks he will soon be the dictator and if Some more of you don't step to the plate in Home town grass root politics, he's going to make.
Feb 10, 2014 4:20PM
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Like Hillary said, who cares?  At least these people didn't get killed,  Obama said , OH forget what he said it isn't true anyhow.
Feb 10, 2014 4:32PM
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Hope and Change ..... And this is what he gave us.....one good phucken
Feb 10, 2014 4:37PM
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Also the comment where the guy says he needs insurance doesn't make sense. The deductible alone is an obstacle most people cannot overcome with normal income.
Feb 10, 2014 4:33PM
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THIS SHOWS HOW STUPID OBAMA IS - ALONG WITH ALL WHO VOTED FOR HIM!!!!

HOW CAN THERE EVER BE AFFORDABLE HEALTH CARE?????

DOCTORS AND LAWYERS AND THE DRUG COMPANIES ARE THE CEMENT WHICH HOLDS FAST THE HIGH COST OF MEDICINE TO THE

AMERICAN PEOPLE!!!

HOW MANY DOCTORS AND LAWYERS DO YOU SEE DRIVING AROUND IN A KIA??????????

HOW MANY PATIENTS DO YOU SEE DRIVING AROUND IN KIA'S??????????

IF YOU HAVE COMPREHENDED WHAT YOU HAVE JUST READ YOU WILL SEE THE TRUTH IN THE PROSPECT OF

AFFORDABLE HEALTH CARE!!!!!!!!!!

OBAMA IS SELLING SNAKE OIL - -  UNION MADE SNAKE OIL!!!!!!!!!!!!!!
Feb 10, 2014 4:37PM
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SO MANY THINGS WOULD HELP!!!!!

WE "NEED" TO FIGURE OUT WHY THE IRS IS DONATING BILLIONS TO MEXICAN CITIZENS!!!!

WE "NEED" TO FIND OUT HOW TO STOP CRIMINALS FROM GETTING ELECTED!!!!!

WE "NEED" TO FIGURE OUT WHO SPENT (I MEAN WASTED) 300+ MILLION DOLLARS ON AN OBVIOUS JOKE OF A COMPUTER SYSTEM THAT DOESN'T EVEN WORK!!!!! 

WE "NEED" TO START PUTTING SOME OF THESE GOVERNMENT GENIUSES IN JAIL INSTEAD OF PAYING THEM THEIR RETIREMENT BENEFITS!!!!!!

WE "NEED" SOME FAIRLY COMMON SENSE CITIZENS (VOTERS) IN THIS COUNTRY INSTEAD OF IMPORTING A BUNCH OF HALF-**** THIRD WORLD MORONS!!!!

WE "NEED" SOME ELECTED OFFICIALS WHO HAVE A CONSCIENCE!!!!!

WE "NEED" MANY MORE CITIZENS WHO HAVE A CONSCIENCE - AND PAY ATTENTION TO IT!!!!!!

WE "NEED" LAWMAKERS AND A PRESIDENT WHO RESPECT, PRACTICE, AND ENFORCE THE LAWS WE LIVE BY!!!!!

OBVIOUSLY - - -  WE DON'T NEED A MIDDLE CLASS PARTY - -  THEY'RE THE ONES WHO GOT US WHERE WE ARE!!!!!   THEY PUT THE CURRENT PROBLEMS IN PLACE!!!!!


Feb 10, 2014 4:27PM
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Boy am I glad Democrats blew up the healthcare system.
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