The United States is 30 million people away from achieving universal coverage. The Affordable Care Act (ACA) and Medicaid have moved us closer to that goal, but they still contain programmatic design flaws that make coverage inaccessible and unaffordable for millions of Americans.

The main obstacles to achieving universal coverage are the “coverage gap” in non-Medicaid expansion states, the unaffordability of Marketplace insurance plans, and the administrative burdens faced by Medicaid applicants and recipients. While I have benefited from Medicaid’s comprehensive coverage, like millions of other low-income people, I have also experienced challenges due to its design.

To overcome these obstacles, the federal government should increase the incentives for non-expansion states to expand Medicaid, reduce administrative burdens, and offer more subsidies for Marketplace plans. By building on recent legislative and executive health reforms and permanently implementing these policies, the Biden administration and Congress can achieve universal health care coverage.

The Coverage Gap

The Affordable Care Act (ACA) expanded Medicaid eligibility to non-elderly adults with incomes at or below 138 percent of the federal poverty level (FPL); this is known as “Medicaid expansion.” In 2012, the Supreme Court ruled that states do not have to participate in Medicaid expansion to receive federal Medicaid funding. Twelve states subsequently chose not to expand Medicaid even though the federal government covers 90 percent of the Medicaid population’s costs. As a result, over 4 million people in non-expansion states are uninsured, because they earn slightly too much income to qualify for Medicaid but not enough to qualify for tax credits for Health Insurance Marketplace plans’ premiums. This is the Medicaid coverage gap.

Exploring the demographics of the coverage gap exposes that 60 percent of the uninsured living in non-expansion states are people of color. The majority of Medicaid-eligible people experience chronic conditions such as hypertension, arthritis, asthma, diabetes, and cancer, and a considerable number of recipients are disabled. These groups of people are particularly vulnerable in the health insurance market, where the costs for such conditions can be prohibitive, and depend on Medicaid to attain affordable coverage. Important to remember are the individuals who exist at the intersections of varying levels of disability, chronic illness, and income, along with marginalized gender, race, and ethnic identities. Medicaid is special because it provides comprehensive benefits and consumer protections that most private insurance plans do not. Despite an abundance of data that show recipients in Medicaid expansion states have better health outcomes than those in non-expansion states, many Southern states continue to resist enacting Medicaid expansion. As policymakers consider reforms to fill the gaps, a robust federal solution–one not contingent on the political ideology of the state legislature or governor–can address current coverage and health disparities.

To close the coverage gap, the federal government should continue to incentivize non-expansion states to expand Medicaid. The federal government’s most recent attempt to incentivize Medicaid expansion in non-expansion states offers a five percentage point increase of Medicaid’s federal medical assistance percentage (FMAP) rates to non-expansion states in the American Rescue Plan Act (ARPA). By increasing the FMAP rates, states receive greater federal funding for providing Medicaid services. Additionally, the ARPA offers non-expansion states the 90 percent matching rate Medicaid expansion states receive under the ACA.

There is a high likelihood that non-expansion states, especially those with Republican governors and legislatures who have historically refused to expand Medicaid, will continue to reject Medicaid expansion. Even with the generous incentives from the ARPA, not a single non-expansion state has decided to expand. If non-expansion states continue to refuse to expand Medicaid, the Commonwealth Fund suggests that the federal government should offer 100 percent FMAP rates. If this incentive is not compelling enough for non-expansion states, the federal government can offer Marketplace premium tax credits for people with incomes at 100 percent of the FPL. The ARPA created temporary subsidies for no-premium plans with lower, more affordable deductibles for lower-income households. As a result, it is projected that the population eligible for a subsidy has increased by 20 percent, making almost 4 million more individuals eligible for Marketplace insurance. Similarly, if the Marketplace premium tax credits are expanded for people with incomes at 100 percent of the FPL, an estimated 3 to 5 million people will become eligible for Marketplace coverage.

Administrative Challenges

Applying for and maintaining Medicaid or Marketplace coverage can pose major administrative challenges for low-income people because of its difficult renewal process and short enrollment window for lower-income people in the Marketplace.

An estimated 43 percent of those who experience “insurance churn”—moving between and out of coverage plans—annually are Medicaid recipients. The process of obtaining and renewing Medicaid coverage can be convoluted and places significant administrative burdens on Medicaid recipients who experience changes in household income. In some states, if a change in household income is detected, enrollees may only have about ten days to gather and submit the proper documentation, and if they fail to do so in the allotted time frame, their insurance is terminated. Beyond potential coverage termination, insurance churn exposes Medicaid recipients to other negative outcomes, such as skipping or stopping doses of medication and adverse health outcomes. Medicaid insurance churn disproportionately affects vulnerable populations, including people of color and pregnant/postpartum people, 55 percent of whom experience insurance churn six months after delivery.

In some states, if a change in household income is detected, enrollees may only have about ten days to gather and submit the proper documentation, and if they fail to do so in the allotted time frame, their insurance is terminated.

I myself have experienced challenges in maintaining Medicaid coverage, as I typically hold several jobs throughout the year, and because my income is variable, I am required to report and provide documentation of my earnings in a timely manner. If I fail to do so, my coverage will be terminated. During the pandemic, the mail and delivery services slowed as thousands of postal workers quarantined and holiday deliveries overwhelmed the postal service system. I recall receiving my notice from my state’s health department to provide proper documentation late and frantically calling the department to explain my situation. The Families First Coronavirus Recovery Act of 2020’s (FFCRA) “continuous eligibility requirement” reduced the insurance churn for Medicaid recipients by prohibiting states from terminating Medicaid benefits through the public health emergency if they accepted the 6.2 percentage point increase in FMAP rates offered through the act.

During the pandemic, President Biden also extended the special enrollment period (SEP) for Marketplace plans to August 15 through an executive order. The creation of the new SEP resulted in 1.5 million newly enrolled individuals. This demonstrates the very real effects of reducing the administrative burden to apply to the Marketplace. By making it easier for low- to lower-income people to access and maintain Medicaid and Marketplace insurance, we can continue to increase the national number of insured people.

Several reforms can make obtaining and maintaining coverage easier, and correspondingly, minimize the effects of insurance churn and increase the rate of insured people:

  • Adopt the Center for Medicare & Medicaid Services’ (CMS) proposed rule to extend the open enrollment period, but instead of CMS’s proposed end date of January 15, follow New Jersey’s and California’s lead and extend the enrollment end date to January 31. Extending the enrollment period ensures distractions of the holiday season are not a barrier to access.
  • Adopt CMS’s proposed rule to create a SEP for lower-income individuals to enroll at any time of the year on the Marketplace.
  • Include more qualifying life events (QLE) for SEP eligibility. The general list of QLE includes health coverage loss, household changes, residence changes, or unique events such as imprisonment or becoming a U.S. citizen. There are more circumstances that can occur in an individual’s life that require changes to health coverage.
  • Make the FFCRA’s continuous enrollment requirement permanent for vulnerable groups such as pregnant and postpartum people and people with complex and chronic health conditions.
  • Make ARPA’s temporary Medicaid coverage extension of up to one-year postpartum permanent.

Affordability Issues

Medicaid income thresholds are rigid. In most expansion states, the Medicaid eligibility threshold is 138 percent of the FPL; therefore, an individual cannot earn more than $17,131 before taxes. If one works full-time all year-round, this translates to about $8.25 an hour—a wage well-established as being below a livable wage.

This rigid threshold has negatively impacted my job opportunities. As a full-time graduate student, landing a job that offers $24 is great, but I pause before I celebrate because I could lose the health insurance I depend on. I do not have the option to go on one of my parents’ health insurance plans, and because I am seeking part-time work, those positions typically do not offer employer-based plans. If I were ineligible for Medicaid, I would barely be able to afford the deductibles, premiums, and copays of a Marketplace insurance plan. Health care expenses are so astronomically high that some recipients face the dilemma of declining new jobs, working less, or rejecting pay raises to maintain health care coverage. This was the experience of one of my coworkers from a past Emergency Medical Services agency. She couldn’t pick up more shifts because she needed to stay part-time in order for her and her children to maintain Medicaid coverage. The starting wage for an EMT at this agency was around $13 an hour. For a family of four, this is barely a living wage, yet if my coworker went full-time to earn more income and become eligible for our employer-sponsored insurance plan, she would have actually burdened her already strained household budget because of unaffordable co-pays, premiums, and deductibles.

Health care expenses are so astronomically high that some recipients face the dilemma of declining new jobs, working less, or rejecting pay raises to maintain health care coverage

To make it easier for people like my coworker who would not have been able to afford a Marketplace plan prior to the pandemic, the American Rescue Plan Act (ARPA) increased the ACA’s premium tax credits for every income bracket—households up to 400 percent of the federal poverty level are now eligible. As I previously mentioned, because of the ARPA, lower-income households qualify for no-premium plans and lower, more affordable deductibles. Such subsidies increase the economic mobility of low-income households while creating more pathways to health care coverage that are accessible and affordable.

In the future, we should make ARPA’s temporary subsidies for Marketplace plans permanent. Massachusetts, which provides subsidies for Marketplace plans to households up to 300% of the federal poverty level, illustrates that increasing subsidies for Marketplace plans insures more people. Unsurprisingly, Massachusetts has the lowest uninsured population in the country.

By expanding Medicaid in current non-expansion states, simplifying Medicaid’s renewal process, opening enrollment periods, and increasing subsidies permanently, we can achieve universal coverage that is affordable for the individuals and families most in need.