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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, 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 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.

More from The Wall Street Journal

Feb 10, 2014 4:13PM
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 4:18PM
WHAT???   The UGLY truth coming out/??  ANY dem who supported this atrocity should be fired!!!  Take AMERICA back!!
Feb 10, 2014 4:28PM
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
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
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
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 4:15PM
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 4:20PM
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
Hope and Change ..... And this is what he gave good phucken
Feb 10, 2014 4:37PM
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 4:27PM
Boy am I glad Democrats blew up the healthcare system.
Feb 10, 2014 4:42PM

Sounds like the best move for low income folks would be:

1. Quit your job

2. Apply for Section 8 housing

3. Apply for food stamps

4. Get a medical card for your kids

5. Use the ER for all your medical issues.

Those already doing this may be lazy, but they are not stupid.

Feb 10, 2014 4:44PM
God what an abortion this law is. Only mindless zombies still think that Obamacare will work.

Obamacare will cost nearly four times the original estimate, it makes millions of Americans uninsurable and wastes billions of taxpayer dollars on a mega-bureaucracy that laughably is trying to implement this failed, impossible law.

To vote Democrat is to vote for failure and corruption!

Feb 10, 2014 4:49PM
We need to pass this bill so we can find out whats in it...yeah well...we're finding out it a huge lie wrapped up in a ball of crap
Feb 10, 2014 4:51PM
I tried to tell all you A..hole Obama care lovers how expensive this sh..t really was and that all those millions signing up are the ones getting free Medicaid or heavily subsidized free premiums. I told you how insurance companies now have a built in 20% admin/profit allowance on policies and want you on more expensive Obama care plans and will cancel  your existing insurance coverage in order to get you on those more expensive plans . Now you know that you only get  free or heavily subsidized insurance if your a freeloader who pays little or no income tax, while the rest of us pay through the nose for a crappy bronze 70% plan, or double premiums for any real coverage. If you've got cancer you can get pre-existing coverage now, but your healthy neighbor must pay double with  rates skyrocketing due to their age in order to pay for you. In spite of what "O"A..hole tells you, nothing is free. When your neighbor gets free insurance yours will double to pay for it.
Lets put a big CHECKmark next to page 2,942 of the ACA..

Cause we just found out WHATS IN IT...  Wonder if Pelosi has read that far yet.....

Smoke, mirrors and snake oil is all this guy is selling...

The ACA is going to be a curse for generations to come and bankrupt our once great nation.

Feb 10, 2014 4:33PM
I know a lot of low income people. Some through no fault of their own but very few fall into that category. Most are there because of their bad choices. Sex without being married produces single parents. Drugs and alcohol produce unemployable underachievers. I do not claim to have the answer, wish I did, I see kids setting themselves up for this everyday. People encourage your kids to live moral lives, setting goals, at the very least finishing high school.  Sometimes low income people need to consider what they did to get where they are (or what they didn't) before looking to others. Every one of these people can get health care now through their hospital. They always could. What did our grandparents do?
Feb 10, 2014 4:35PM

the young, healthy are not signing up, this mess is only going to get worse.

good luck to all the dems in the midterms that lied or were mis-informed

about you can keep this and that








Feb 10, 2014 5:05PM
This is all by design.  First you create the coverage template under the assumption of "health insurance/care for all".  Then later, when the drummed up expectations don't pan out, you go and pass MORE legislation to fill the "gaps".  Then after it becomes a giant federal patchwork fiasco, you roll out unified single payer "reform".

Then everything is in place for the steady decline of health care quality and ever increasing costs to whatever tax payers are left.

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