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 January 2020, 14 states had not expanded their programs.2

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 40% of poverty, or an annual income of $8,532 for a family of three in 2019, and in nearly all states not expanding, childless adults remain ineligible.3 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 poverty level, which is 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 be reached by Medicaid if their states adopted the expansion, 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 million4 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.5

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. 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). Seventeen percent live in Florida, eleven percent in Georgia, and eight 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.

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).

Figure 2: Distribution of Adults in the Coverage Gap, by State and Region, 2018

What Would Happen if All States Expanded Medicaid?

If states that are currently not expanding their programs adopt the Medicaid expansion, all of the 2.3 million adults in the coverage gap would gain Medicaid eligibility. In addition, 2.1 million uninsured adults with incomes between 100 and 138% of poverty7 (most of whom are currently eligible for Marketplace coverage) would also gain Medicaid eligibility (Figure 3 and Table 1). Though most of these adults are eligible for substantial tax credits to purchase Marketplace coverage,8 Medicaid coverage would likely provide more comprehensive benefits and 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, 2018

A smaller number (about 418,000) 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 more than 4.8 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 2017 to 2018, non-expansion states saw a significant increase in their uninsured rate, while expansion states did not.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 2020, the national average unsubsidized premium for a 40-year-old non-smoking individual purchasing coverage through the Marketplace was $442 per month for the lowest-cost silver plan and $331 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 (below 40% FPL) and nearly 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 and receive medical care, potentially serious financial consequences. 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. For example, legislatures in Kansas and Wyoming are likely to take up the issue in the upcoming 2020 session.16 Further, initiatives in several states, including Missouri, Oklahoma, and South Dakota, may put the question of Medicaid expansion on the ballot in upcoming elections. The three states (Idaho, Nebraska, and Utah) that adopted the Medicaid expansion via ballot initiative in the November 2018 election all plan to implement expansion in 2020 with state Medicaid waiver proposals that condition the scope and structure of expansion. The Trump Administration has indicated to states that it is open to these types of proposals, which may lead additional states to consider extending 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.17 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, 2018
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 4,850,000 418,000 2,324,000 2,108,000
Alabama 242,000 17,000 134,000 91,000
Florida 846,000 42,000 391,000 414,000
Georgia 518,000 44,000 255,000 219,000
Kansas 87,000 7,000 40,000 40,000
Mississippi 186,000 16,000 100,000 70,000
Missouri 217,000 13,000 113,000 92,000
North Carolina 389,000 32,000 194,000 163,000
Oklahoma 197,000 20,000 95,000 82,000
South Carolina 214,000 20,000 101,000 93,000
South Dakota 35,000 5,000 14,000 16,000
Tennessee 260,000 39,000 117,000 103,000
Texas 1,553,000 99,000 761,000 693,000
Wisconsin* 88,000 64,000 0 24,000
Wyoming 18,000 N/A 9,000 7,000
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 2019 Medicaid eligibility levels and 2018 American Community Survey.
Data and Methods