Closing Coverage Gap and Making Premium Subsidies Permanent Could Cover 7 Million Uninsured

Enacting key health insurance provisions like those in the Build Back Better legislation could cover 7 million uninsured people in 2022, an Urban Institute study finds. This striking gain — nearly a quarter of the uninsured non-elderly population — would result from closing the Medicaid coverage gap and making premium subsidies enacted in the American Rescue Plan permanent.

The Urban Institute’s estimate assumes that Congress permanently closes the Medicaid coverage gap by extending eligibility for marketplace subsidies to those under the federal poverty level (FPL) in the 12 states that haven’t adopted the Affordable Care Act’s (ACA) Medicaid expansion. Currently, adults in the coverage gap have income too low to qualify for subsidized coverage in the ACA marketplaces, yet they don’t qualify for Medicaid because their states have refused to expand Medicaid. The estimate also assumes Congress makes permanent the Rescue Plan’s expanded premium tax credit subsidies, which are set to expire after 2022. House committees recently passed legislation that includes both policy changes.

Reductions in the number of uninsured would be greatest among low-income groups. Some 3.3 million of those who would gain coverage earn less than 138 percent of the FPL (or below about $17,700 a year for a single person), and about 6.2 million – nearly 9 in 10 of those who would gain coverage – earn less than 400 percent of the FPL (about $51,500 for a single person). While the number of uninsured non-elderly people would fall across all racial and ethnic groups, uninsured non-elderly Black people would see the largest percentage change, with more than 1 in 3 gaining coverage.

All states would see significant reductions in the uninsured, but the greatest reductions would occur in the 12 states that haven’t expanded Medicaid, narrowing the persistent gap in uninsured rates between expansion and non-expansion states. In fact, the ten states with the largest percentage reductions in the uninsured would all be non-expansion states. Alabama and Mississippi would lead with way with the number of non-elderly uninsured falling by 44 and 43 percent, respectively, and the number would fall by about 40 percent each in Georgia, South Carolina, and Tennessee. In Texas alone, 1.6 million non-elderly uninsured people would gain coverage.

In addition to major coverage gains, the policies under consideration would reap financial benefits. Uncompensated care costs — the cost of providing health care that goes unpaid by patients or insurers — would fall in 2022 by $7.5 billion for the federal government and by an additional $4.7 billion for states, a result consistent with sharp declines in uncompensated care among states that have expanded Medicaid.