The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

While millions of people have gained coverage through the expansion of Medicaid under the Affordable Care Act (ACA), state decisions not to implement the expansion leave many without an affordable coverage option. Under the ACA, Medicaid eligibility is extended to nearly all low-income individuals with incomes at or below 138 percent of poverty ($17,236 for an individual in 2019).1 This expansion fills in historical gaps in Medicaid eligibility for adults and was envisioned as the vehicle for extending insurance coverage to low-income individuals, with premium tax credits for Marketplace coverage serving as the vehicle for covering people with moderate incomes. While the Medicaid expansion was intended to be national, the June 2012 Supreme Court ruling essentially made it optional for states. As of March 2019, 14 states had not expanded their programs.2

Nationally, 2.5 million poor uninsured adults fall into the “coverage gap” that results from state decisions not to expand Medicaid. They earn too much to qualify for Medicaid, but not enough to be eligible for ACA Marketplace premium tax credits.

Medicaid eligibility for adults in states that did not expand their programs is quite limited: the median income limit for parents in these states is just 43% of poverty, or an annual income of $8,935 for a family of three in 2018,3 and in nearly all states not expanding, childless adults remain ineligible.4 Further, because the ACA envisioned low-income people receiving coverage through Medicaid, it does not provide financial assistance to people below poverty for other coverage options. As a result, in states that do not expand Medicaid, many adults, including all childless adults, fall into a “coverage gap” of having incomes above Medicaid eligibility limits but below the lower limit for Marketplace premium tax credits (Figure 1).

Figure 1: Gap in Coverage for Adults in States that Do Not Expand Medicaid Under the ACA

This brief presents estimates of the number of people in non-expansion states who could have been reached by Medicaid but instead fall into the coverage gap and discusses the implications of them being left out of ACA coverage expansions. An overview of the methodology underlying the analysis can be found in the Data and Methods, and more detail is available in the Technical Appendices.

How Many Uninsured People Who Could Have Been Eligible for Medicaid Are in the Coverage Gap?

Nationally, more than two million5 poor uninsured adults fall into the “coverage gap” that results from state decisions not to expand Medicaid (Table 1), meaning their income is above current Medicaid eligibility but below the lower limit for Marketplace premium tax credits. These individuals would be eligible for Medicaid had their state chosen to expand coverage. Reflecting limits on Medicaid eligibility outside ACA pathways, most people in the coverage gap (76%) are adults without dependent children.

Adults left in the coverage gap are spread across the states not expanding their Medicaid programs but are concentrated in states with the largest uninsured populations. Nearly a third of people in the coverage gap reside in Texas, which has both a large uninsured population and very limited Medicaid eligibility (Figure 2). Eighteen percent live in Florida, eleven percent in Georgia, and nine percent in North Carolina. There are no uninsured adults in the coverage gap in Wisconsin because the state is providing Medicaid eligibility to adults up to the poverty level under a Medicaid waiver.

Figure 2: Distribution of Adults in the Coverage Gap, by State and Region

The geographic distribution of the population in the coverage gap reflects both population distribution and regional variation in state take-up of the ACA Medicaid expansion. The South has relatively higher numbers of poor uninsured adults than in other regions, has higher uninsured rates and more limited Medicaid eligibility than other regions, and accounts for the majority (9 out of 14) of states that opted not to expand Medicaid.6 As a result, more than nine in ten people in the coverage gap reside in the South (Figure 2).

What Would Happen if All States Expanded Medicaid?

If states that are currently not expanding their programs adopt the Medicaid expansion, all of the 2.5 million adults in the coverage gap would gain Medicaid eligibility. In addition, 2.0 million uninsured adults who are currently eligible for Marketplace coverage (those with incomes between 100 and 138% of poverty)7 would also gain Medicaid eligibility (Figure 3 and Table 1). Though most of these adults are eligible for tax credits to purchase Marketplace coverage,8 Medicaid coverage may provide lower premiums or cost-sharing than they would face under Marketplace coverage. For example, research from early implementation of the ACA showed that coverage of behavioral health services, prescription drugs, rehabilitative and habilitative services, and long-term services and supports may be more limited in the Marketplace compared to Medicaid.9,10 In addition, research examining the population with incomes between 100-138% FPL in expansion and non-expansion states finds that Medicaid expansion coverage produced far greater reductions than subsidized Marketplace coverage in average total out-of-pocket spending, average out-of-pocket premium spending, and average cost-sharing spending.11

Figure 3: Nonelderly Uninsured Adults in Non-Expansion States Who Would Be Eligible for Medicaid if Their States Expanded

A small number (about 409,000) of uninsured adults in non-expansion states are already eligible for Medicaid under eligibility pathways in place before the ACA. If all states expanded Medicaid, those in the coverage gap and those who are instead eligible for Marketplace coverage would bring the number of nonelderly uninsured adults eligible for Medicaid to nearly 4.9 million people in the fourteen current non-expansion states. The potential scope of Medicaid varies by state (Table 1).

Discussion

The ACA Medicaid expansion was designed to address the high uninsured rates among low-income adults, providing a coverage option for people with limited access to employer coverage and limited income to purchase coverage on their own. In states that expanded Medicaid, millions of people gained coverage, and the uninsured rate dropped significantly as a result of the expansion.12 However, with many states opting not to implement the Medicaid expansion, millions of uninsured adults remain outside the reach of the ACA and continue to have limited options for affordable health coverage. From 2016 to 2017, non-expansion states saw a significant increase in their uninsured rate, while expansion states saw a decrease.13

By definition, people in the coverage gap have limited family income and live below the poverty level. They are likely in families employed in very low wage jobs, employed part-time, or with a fragile or unpredictable connection to the workforce. Given limited offer rates of employer-based coverage for employees with these work characteristics, it is likely that they will continue to fall between the cracks in the employer-based system.

It is unlikely that people who fall into the coverage gap will be able to afford ACA coverage, as they are not eligible for premium subsidies: in 2019, the national average unsubsidized premium for a 40-year-old non-smoking individual purchasing coverage through the Marketplace was $478 per month for the lowest-cost silver plan and $340 per month for a bronze plan,14 which equates to nearly eighty percent of income for those at the lower income range of people in the gap and more than a third of income for those at the higher income range of people in the gap.

If they remain uninsured, adults in the coverage gap are likely to face barriers to needed health services or, if they do require medical care, potentially serious financial consequences. Many are in fair or poor health or are in the age range when health problems start to arise but lack of coverage may lead them to postpone needed care due to the cost. While the safety net of clinics and hospitals that has traditionally served the uninsured population will continue to be an important source of care for the remaining uninsured under the ACA, this system has been stretched in recent years due to increasing demand and limited resources.

Most people in the coverage gap live in the South, leading state decisions about Medicaid expansion to exacerbate geographic disparities in health coverage. In addition, because several states that have not expanded Medicaid have large populations of people of color, state decisions not to expand their programs disproportionately affect people of color, particularly Black Americans.15 As a result, state decisions about whether to expand Medicaid have implications for efforts to address disparities in health coverage, access, and outcomes among people of color.

There is no deadline for states to opt to expand Medicaid under the ACA and debate continues in some states about whether to expand. The November 2018 election led to additional states taking up the ACA Medicaid expansion,16 but subsequent political debate in some states has called into question the scale or structure of expansion.17 In addition, the Trump Administration has indicated to states that it is open to state Medicaid waiver proposals, which may lead some states that have not yet expanded Medicaid under the ACA to develop Medicaid expansion waivers and further extend coverage. However, some proposed waivers that could expand coverage for some people in the coverage gap also place new restrictions or requirements on that coverage.18 Thus, it is uncertain what insurance options, if any, adults in the coverage gap may have in the future, and these adults are likely to remain uninsured without policy action to develop affordable coverage options.

Table 1: Uninsured Adults in Non-Expansion States Who Would Be Eligible for Medicaid if Their States Expanded by Current Eligibility for Coverage, 2017
State Total Currently Eligible for Medicaid Currently in the Coverage Gap
(<100% FPL)
Currently May Be Eligible for Marketplace Coverage
(100%-138% FPL**)
All States Not Expanding Medicaid 4,861,000 409,000 2,479,000 1,973,000
Alabama 235,000 12,000 140,000 83,000
Florida 884,000 48,000 445,000 392,000
Georgia 503,000 46,000 267,000 190,000
Kansas 86,000 6,000 46,000 34,000
Mississippi 176,000 13,000 103,000 61,000
Missouri 232,000 13,000 124,000 95,000
North Carolina 412,000 33,000 215,000 164,000
Oklahoma 216,000 19,000 111,000 85,000
South Carolina 240,000 30,000 124,000 86,000
South Dakota 32,000 3,000 20,000 9,000
Tennessee 244,000 37,000 113,000 94,000
Texas 1,498,000 89,000 759,000 649,000
Wisconsin* 79,000 57,000 0 22,000
Wyoming 24,000 N/A 12,000 9,000
NOTES: * Wisconsin provides Medicaid eligibility to adults up the poverty level under a Medicaid waiver. As a result, there is no one in the coverage gap in Wisconsin. ** The “100%-138% FPL” category presented here uses a Marketplace eligibility determination for the lower bound (100% FPL) and a Medicaid eligibility determination for the upper bound (138% FPL) in order to appropriately isolate individuals within the range of potential Medicaid expansions but also with sufficient resources to avoid the coverage gap. Totals may not sum due to rounding. N/A: Sample size too small for reliable estimate.
SOURCE: KFF analysis based on 2018 Medicaid eligibility levels and 2017 American Community Survey.

Rachel Garfield and Kendal Orgera are with the Kaiser Family Foundation. Anthony Damico is an independent consultant to the Kaiser Family Foundation.

Data and Methods