Editorial: Supreme Error; Court Ruling Created Coverage Gap

Yes, there are technical glitches with the health insurance exchanges that opened last week. But they are nothing to the biggest and most consequential glitch of all: Millions of poor uninsured people are barred from receiving benefits, eligible neither for free coverage through Medicaid nor for federal tax credits through the online marketplaces selling private insurance.

In other words, the most vulnerable people, and a significant share of the population for whom the 2010 Affordable Care Act was written, are unlikely to get help with insurance coverage.

Call it the “supreme error,” a perverse though possibly not unintended consequence of last year’s historic U.S. Supreme Court ruling on the constitutionality of the Affordable Care Act. The court narrowly upheld the individual mandate — the federal rule requiring all individuals to carry health insurance and a necessary component of a law that also requires commercial insurers to cover everyone. That momentous ruling allowed the law to fly.

But the court also clipped one of its wings. Justices struck down the law’s mandate directing states to expand Medicaid or risk losing their federal funding. The court argued that Congress could not compel states to enlarge their programs, even though lawmakers offered full federal funding for expansion in the first three years and 90 percent thereafter.

Thus, states were left with a choice to expand Medicaid or not. To date, 24 states, including Vermont, have chosen to extend benefits to individuals making up to almost $16,000 a year, or 138 percent of the federal poverty level, as the law intended. Twenty-six other states, most governed by Republicans deeply hostile to Obamacare, are not expanding their programs now. New Hampshire is among several that are studying the possibility of doing so, with a bipartisan commission endorsing expansion yesterday.

The result is that a crucial provision of the Affordable Care Act — as necessary to the structure and functioning of the whole as the individual mandate — is unevenly applied across the country, leaving some uninsured people stranded between restrictive rules for Medicaid eligibility and rules governing subsidies on the exchanges.

As we argued in this space on Sunday, those subsidies might not be adequate for the working poor, especially relatively young and healthy people who would rather forgo coverage than pay some or all of the cost of premiums. However, there are no subsidies available at all for the poorest of the uninsured poor living in states refusing to expand Medicaid. The Affordable Care Act makes tax credits available only to individuals making between 100 percent and 400 percent of the federal poverty level (currently between $11,500 and $46,000). It makes no allowance for subsidies for those earning less than $11,500, because the assumption was that all states would extend Medicaid benefits to more people both below and above the poverty line.

According to an analysis by The New York Times, the rocky national effort to reduce the uninsured will exclude two-thirds of poor blacks and single mothers, and more than half of low-wage workers who do not have insurance. The 26 states that have rejected Medicaid expansion represent half the country’s population but 68 percent of poor uninsured blacks, the Times reported — workers such as cashiers, cooks and nurses’ aides living on the economic edge. The Kaiser Family Foundation estimates that roughly 7 million uninsured adults will be affected by the coverage gap. In New Hampshire, where Medicaid excludes most childless adults, some 23,000 are affected, unless state legislators act quickly to expand the program, one of the country’s least generous.

Medicaid expansion was not meant to be optional. States that don’t enlarge their programs not only undermine the purpose of the Affordable Care Act. They also put a further burden on a segment of the population already weighed down by the hardships of poverty and deprive hospitals and other institutions caring for the poor of the reimbursements they could otherwise have expected.