off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
House Budget Committee Chairman Paul Ryan’s claim that health reform creates a “poverty trap” that discourages poor families from working has it backwards, as my colleague Jared Bernstein notes. Chairman Ryan’s proposals to repeal health reform and block-grant Medicaid would more likely increase work disincentives, particularly among poor parents with serious medical conditions and other ongoing health care needs. To see why, let’s consider a hypothetical Jane — a very poor working parent with two children and with income of 60 percent of the poverty line (about $11,875).
- If Jane lives in a state taking up health reform’s Medicaid expansion, she can significantly expand her hours or take a much higher-paying job, earning up to $27,310, and still retain Medicaid. Even if her income rises above $27,310, she can get subsidized coverage through the new health insurance marketplaces (also known as exchanges). As the Congressional Budget Office (CBO) states, “some people who would have been eligible for Medicaid under prior law — in particular, working parents with very low income — will work more as a result of the [Affordable Care Act’s] provisions.”
- Before health reform’s major coverage expansions took effect this year, Medicaid eligibility for working parents ended at just 61 percent of the poverty line in the typical state. So, if health reform (including the Medicaid expansion) were repealed, which Chairman Ryan supports, Jane would lose Medicaid if she worked more hours or took a higher-paying job (though her children would still be eligible for Medicaid or CHIP). She could receive transitional Medicaid for a limited time but would likely end up uninsured if her employer didn’t offer job-based coverage (very low-wage jobs mostly don’t come with health coverage) or she couldn’t afford that coverage. If Jane has a serious medical condition or other health needs that require ongoing treatment, she might feel that she had to retain Medicaid, even if that meant giving up a higher-paying job. She could thus be “trapped,” in Chairman Ryan’s words, but this would result from health reform’s repeal, not its enactment.
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