Closing the Medicaid Coverage Gap Through the Build Back Better Act

Andres De La Torre is a staff writer for Brief Policy Perspectives and a first-year MPP student.

The following is an op-ed and does not necessarily reflect the views of Policy Perspectives or the Trachtenberg school.

Much Congressional debate this past year has centered around President Joe Biden’s Build Back Better agenda, a monumental three-part legislative plan that covers nearly every sector of policy – from COVID-19 relief to infrastructure to healthcare – and could very well define this administration’s achievements. While the American Rescue Plan and the American Jobs Plan tackled the adverse effects of the pandemic and a development of our physical infrastructure, respectively, the American Families Plan – the third part of the BBB agenda – will invest in areas such as childcare, healthcare and climate. Some of the largest provisions in the American Families Plan will expand access to healthcare, close the Medicaid coverage gap and extend health insurance to millions. 

Medicaid Expansion and the Coverage Gap

The Patient Protection and Affordable Care Act of 2010 (ACA) marked one of the largest overhauls to the United States healthcare system since the introduction of the Medicare and Medicaid programs in the 1960s. Through a series of provisions aimed at further regulating the private insurance market, expanding public health programs and extending tax-credits to low and middle-income families and individuals, the ACA has extended coverage to almost 20 million people since 2014. The Medicaid expansion provision was aimed at expanding the joint federal-state program through a loosening of eligibility requirements, extending eligibility to all adults under 65 with incomes below 133% of the federal poverty level. In 2012, the Supreme Court ruled in the case of the National Federation of Independent Business v. Sebelius that the once- required provision be made optional for states, and while the majority of states have since expanded their Medicaid program, there still remains twelve hold-out states that have not and are leaving millions of Americans without any meaningful path towards health coverage.

Today, an estimated two million people are left in the coverage gap, a phenomenon where some people are unable to access affordable health insurance because they make too much to be eligible for the Medicaid program, but do not make enough to qualify for marketplace subsidies. Many of the people in the coverage gap reside in one of the twelve hold-out states, with 60% of them being people of color, and being uninsured is associated with numerous adverse health effects, including reduced rates of seeking preventative care, and contributes to higher healthcare expenditures for states. While the ACA made large strides in tackling the uninsured rate, millions of low-income, working-class Americans are still left unable to afford quality healthcare coverage; however, Congress now has the opportunity to permanently close the coverage gap.

The Reconciliation Package

The American Families Plan would address the coverage gap in a two-phase program beginning in January 2022. The first phase would extend subsidies towards poor and near-poor Americans to afford private plans on their state’s marketplace exchange. Currently, incomes between 100 and 138% of the federal poverty level are generally not eligible for market subsidies, alongside being over the income requirements for Medicaid. The American Rescue Plan had temporarily extended premium tax credits to those in the coverage gap, giving millions the opportunity to afford health insurance; however, these premium tax credits are set to expire in January 2022. Making these premium tax credits permanent would assist many low-income families and individuals, who would not have to pay premiums or deductibles on these plans, just minimal co-pays. Furthermore, enrollment would be open year-round and would cover the costs of transportation to medical appointments for many who would otherwise be unable to. 

The second phase of the program addresses the people left without coverage in the twelve non-expansion states. For people in non-expansion states on subsidized marketplace plans, a transition to a federally operated Medicaid program would occur in 2025. This would direct the Department of Health and Human Services to form contracts with managed care companies in these holdout states to cover these people. The federal plans differ from the subsidized plans in that people would be able to take advantage of ACA-backed health benefits, including additional services for those deemed ‘medically frail’ and retroactive coverage for three months prior to application. Currently, there exists numerous incentives for these states to expand Medicaid in their state, namely a larger federal matching of funds extended by the American Rescue Plan, and these incentives would stay in take place under this new federal plan.

Moving Forward on the Coverage Gap

    Congress has a once-in-a-generation opportunity to address the coverage gap and extend health insurance to 2.2 million people. Closing the coverage gap permanently is essential to addressing numerous public health issues, including reducing rates of deaths, giving people access to preventative care, and supporting low-income families with early prenatal care. As Congress nears the end of their deliberation on the reconciliation package, the coverage gap provisions are at risk of being cut out of the final bill; however, it is imperative that our lawmakers continue to advocate on behalf of millions of low-income Americans, recognizing that no one should have to forego their health in fear of financial ruin. It’s time to close the coverage gap once and for all. 

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