What happens to the poorest residents in states declining the Medicaid expansion?

The Washington Post’s Lena H. Sun writes about Obamacare implementation, and finds that it differs greatly between Maryland and Virginia, which share a border but have very different attitudes toward the Affordable Care Act. Both have large uninsured populations (around 800,000 in Maryland and 844,000 in Virginia), but Virginia’s opposition to the law means it’s getting far less federal money and leaving its poorest residents with fewer options for affordable insurance coverage.

The lawmakers who wrote the ACA included two main ways to help those without employer-sponsored health insurance get affordable coverage: Expanding Medicaid to all legal residents with incomes up to 133% of the federal poverty level, and creating state-based health-insurance exchanges where legal residents can buy a plan and subsidies are available those with incomes between 100% and 400% FPL. (Undocumented immigrants are ineligible for both of these, and authorized immigrants don’t qualify for Medicaid until they’ve been at the country for at least five years; lowering these barriers would benefit exchanges and safety-net providers, as well as the immigrants themselves.)

How well these two plans for covering the uninsured work out depends on state actions. Last year, the Supreme Court decided that the Medicaid expansion should be voluntary. Given that the federal government will cover at least 90% of the costs for these newly eligible enrollees (and 100% in the first three years), it’s hard to see any state’s rejection of the Medicaid expansion as anything other than a political statement against Obamacare. Maryland, along with 22 other states and the District of Columbia, is moving forward with the Medicaid expansion. Virginia is not.

Those who would qualify for Medicaid under the expansion but live in states that aren’t expanding Medicaid aren’t just missing out on that health coverage – they’re also not eligible for subsidies if they purchase insurance through exchanges. The law only provides subsidies for those of 100% - 400% FPL, because it was assumed that the Medicaid expansion would take care of the poorest residents.

The other way states influence Obamacare implementation is by running their own exchanges – or, if they don’t, letting the federal government deal with that. (The state-based nature of the exchanges seemed to be a provision that would enhance states’ autonomy – in fact, an earlier version of the bill had a single national exchange, which would have been far simpler.) Virginia is one of the 27 states letting the federal government run exchanges for their residents, while Maryland is running its own.

States that opted to run their own exchanges got access to large amounts of federal funding to establish the exchanges and to hire and train “navigators” who can help individuals understand their insurance options when the enrollment period starts on October 1. The pot of money available for educational efforts in states not running exchanges is far smaller. In her Post article, Sun describes how these vast differences in federal funding – $157 million for Maryland, less than $10 million for Virginia – have resulted in differing outreach efforts:

Maryland consumers who want to buy health insurance under Obamacare in the fall will be able to read glossy fact sheets that spell out the law in simple language. Or talk to one of 325 specially trained workers who will explain the intricacies and help them enroll. Or get information via Facebook, Twitter and YouTube.

In Virginia, it’s a different story. People can seek assistance from about two dozen special guides. Or they can go to their state legislators, who might refer them to phone numbers and Web sites operated by the federal government.

… Maryland received more than $157 million in federal grants. The state kicked in an additional $8 million. Out of the total, it is devoting $24 million to hire 175 navigators and an additional 150 helpers.

State officials have set up an extensive network for deploying these guides, with six geographical regions, each headed by one lead group, or “connector.” Each connector is teaming up with local partners. They include health clinics, immigrant-service organizations and consumer-focused nonprofit groups, all of whom are training and hiring staff members or volunteers to provide in-person guidance — especially to hard-to-reach populations — and to provide space for them to work.

For example, the Montgomery County Health Department will be trying to find and sign up the nearly 222,000 uninsured residents of Montgomery and Prince George’s counties, the largest concentration in the state.

Maryland’s navigators will receive 90 hours of training — more than the 20 hours of initial training planned for navigators in Virginia and other states under the federal government’s direction.

… By comparison, Virginia received about $6 million in federal funds because it declined to set up its own insurance exchange, defaulting to the federal government. … the federal Health and Human Services Department is giving $1.4 million to community groups in Virginia to hire navigators. The state’s federally funded community health centers also received $2.5 million in grants to help with outreach.

Consumer advocates say the navigator money will be enough to hire about 20 full-time guides. Navigators working one-on-one with applicants can probably enroll about 20 people a week.

And when someone with a household income below the federal poverty level asks a navigator about insurance options, she’ll get very different answer in Maryland than in Virginia. If this person is a Maryland resident, she’ll be eligible for Medicaid. If she’s a Virginia resident, she’ll be eligible for Medicaid if she’s pregnant or if she’s a parent with income under 25% FPL. If she doesn’t fall into one of these categories, she can buy insurance through the exchange – but, unlike her neighbors making between 100% and 400% FPL, she’ll be ineligible for subsidies.

This unintended problem is the subject of a Roll Call op-ed by Sara Rosenbaum of the George Washington University School of Public Health & Health Services (where I work) and Patricia Gabow of the University of Colorado School of Medicine. They suggest the following solution:

Is there a solution? With a relatively modest legislative fix — whose cost could be largely funded with savings realized from the states that have opted out of Medicaid — Congress could amend the law so that the exchanges could be opened up to all Americans regardless of family income. Implementing this change would be relatively simple, particularly since exchange premium subsidies already will be available to poor legal U.S. residents whose recent arrival prevents their Medicaid eligibility. (Ironically, in other words, the exchanges exclude only poor citizens.)

Congress can and should take steps to enact this solution now, which would provide a federal fallback to coverage, just as the act assures a federal fallback exchange system in any state that elects not to set up its own exchange. It is a solution that is consistent with the ACA’s structure, as well as honoring the deeply embedded principles of federalism that guide the federal-state relationship in health care. For those states that continue to maintain Medicaid, federal funding levels could be maintained at 100 percent rather than declining over time, in recognition of their commitment to being full partners in health care.

Amending the law to make subsidized exchange coverage available to legal residents with incomes below the poverty level is, as Rosenbaum and Gabow note, a relatively simple fix, and the costs could be covered by federal savings from declined Medicaid expansions. In other words, Congress has a chance to help the country’s poorest residents without spending more money. Will they do it?