BEYOND THE NUMBERS
House Health Bill Will Force Some Low-Wage Workers to Choose: Better Job or Health Coverage?
By effectively ending the Affordable Care Act’s (ACA) Medicaid expansion, the House-passed health bill would take coverage away from millions of people. What’s more, the way the House bill ends expansion would have the perverse effect of discouraging low-wage workers from taking better jobs.
Thirty-one states and Washington, D.C. have expanded their Medicaid programs under the ACA, and that’s dramatically improved access to care and financial security for low-income adults. One important way is by bridging coverage gaps. Most Medicaid expansion enrollees are low-wage workers, and Medicaid helps them cope with high turnover in the low-wage labor market. When their earnings rise or they get a new job, they can transition to employer coverage or the ACA marketplaces — while knowing that Medicaid will be there for them again if they need it.
Under the House-passed bill, workers would lose that security, which could discourage some from taking better jobs. Specifically, states that want to keep enrolling low-income adults in expanded Medicaid coverage after 2019 would have to pay three to five times as much as under current law for each new enrollee. Realistically, most states couldn’t afford those higher costs, and so most or all expansion states would likely close their expansions to new enrollees starting in 2020.
House Republicans claim that their bill protects people now enrolled in Medicaid, since states’ costs would rise only for “new” enrollees. But in fact, many current enrollees would be affected. For example, a low-wage worker continuously employed in a minimum-wage job without health insurance would likely to be able to stay covered after 2019. But a low-wage worker who gets a better job in 2019 and then loses it in 2020 wouldn’t be able to get her Medicaid coverage back when she needs it: under the House bill, she’d be a “new” enrollee.
That means that any low-wage worker who leaves Medicaid — whether for a higher-paying job or to enroll in employer coverage — will be taking a big risk: she probably won’t be able to get Medicaid coverage again if she needs it. And given the job insecurity low-wage workers typically face, the chance that she’ll need Medicaid again isn’t small. For example, among Medicaid-eligible adults whose incomes rise above the Medicaid income limits, more than one-fifth are again eligible for Medicaid within two years.
Over the next few years, the House bill could thus force many low-income adults now covered through Medicaid expansion to make a hard choice: should they take a higher-paying job and risk ending up uninsured if they lose it? Forcing people into that bind could discourage them from taking better jobs.
The House bill would also strongly discourage Medicaid-eligible workers from accepting employer-sponsored health insurance if offered. Just like taking a better job, enrolling in employer coverage could mean giving up the option of having Medicaid again in the future.
Any plan that takes the House bill’s approach to phasing out Medicaid expansion will have the same problems. Whether expanded Medicaid programs close to new enrollees in 2020 or in some later year, the incentive effects are the same.
And other features of the House plan only make these problems worse. In particular, because the plan’s premium tax credits don’t adjust for people’s incomes, they would do very little for lower-income people. As a result, expansion enrollees who take higher-paying jobs without employer coverage would likely end up uninsured: they wouldn’t qualify for Medicaid and couldn’t afford individual-market coverage. That creates another disincentive for low-wage workers to leave Medicaid, as conservative health policy expert Avik Roy has stressed.
For example, under the ACA, a 50-year-old worker with income just above the Medicaid expansion income cutoff could get benchmark coverage in the individual market in 2020 for no more than $750 per year in any state. Under the House plan, that same coverage would cost her more than $4,000 (24 percent of her income) if she faced the average HealthCare.gov benchmark premium. It would cost her more than a quarter of her income in 18 states, and more than a third of her income in Alabama, Alaska, Arizona, Montana, Nebraska, North Carolina, Oklahoma, South Dakota, Tennessee, West Virginia, and Wyoming.
If affordable health insurance is only available to people who maintain continuous Medicaid coverage, not only will millions of people end up uninsured, but some — especially those with pre-existing conditions and serious health needs — will do whatever it takes to stay covered. That includes turning down a better job.