By: Christopher Weaver (Wallstreet Journal) Feburary 2014
BIRMINGHAM, Ala.—Ernest 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% 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.
