Senate Bill Wouldn’t Help People in Coverage Gap

Some Republican senators, including Majority Whip John Cornyn and Bill Cassidy, claim that their health bill’s extension of premium tax credits for people with income below the poverty line will provide new help for people in the Medicaid “coverage gap” — those with income below the poverty line in states that haven’t expanded Medicaid under the Affordable Care Act (ACA).  But the Congressional Budget Office (CBO) has said that’s highly unlikely, because even with premium tax credit assistance, people living in poverty couldn’t afford the insurance available under the Senate bill. 

In states that haven’t expanded Medicaid coverage, millions of people fall into a “coverage gap”:  their incomes are too high to qualify for Medicaid but too low to qualify for the ACA’s premium tax credit, which starts at the poverty line for most people. The Senate’s bill to repeal the ACA would make this population eligible for tax credits. 

But even with tax credits, the coverage available to this group would be unaffordable, as I explain in an updated paper.  The Senate bill cuts premium tax credits by linking them to cheaper “bronze plans” and eliminates the cost-sharing subsidies that reduce deductibles, copays, and coinsurance for lower-income marketplace consumers.  As a result, low-income consumers would need to pay 2 percent of their incomes in premiums for plans with deductibles averaging $6,100, or more than half the income of someone at the poverty line ($12,060 in 2017).  Enrolling in the coverage available under the Senate bill would leave low-income people with an insurance card they couldn’t use.  To buy “silver plans” with still-unaffordable deductibles of around $3,000, these consumers would have to pay thousands in premiums.

As CBO has explained:

[E]ven with the net [bronze] premium of $300 shown in the illustrative examples for a person with income at 75 percent of the [federal poverty line] ($11,400 in 2026), the deductible would be more than half their annual income. The net premium of a silver plan for a 40-year-old would be about 15 percent of their annual income, and the deductible would be more than one-third of their annual income.

As a result, CBO concluded, “few low-income people would purchase any plan.” Meanwhile, current non-expansion states would be prevented from ever taking up Medicaid expansion and offering poor- and near-poor adults robust coverage.

Out-of-pocket costs would be even higher and coverage skimpier for people in poverty who live in states that adopt the Senate bill’s waivers to eliminate or weaken the ACA requirement that insurers cover what are known as “essential health benefits.”  The benefits at risk, according to CBO, include: maternity care, mental health and substance use disorder treatment, rehabilitative and habilitative services, and pediatric dental care.  CBO noted that out-of-pocket costs associated with mental health and substance use services could cost “thousands of dollars,” in addition to premiums and deductibles.

That’s particularly harmful to low-income adults who often need these services.  Ohio’s Department of Medicaid found that nearly one-third of expansion enrollees screened positive for depression or anxiety disorders. In addition, one-third had been diagnosed with substance abuse or dependence. Poor adults are five times likelier to report being in fair or poor health than higher-income people. Low-income people have higher rates of heart disease, diabetes, stroke, and other chronic conditions and are three times likelier than higher-income people to have activity limitations due to chronic illness than higher-income people.

As we’ve explained, adding some additional funding for state grants wouldn’t undo the Senate bill’s harm to low-income people. Senate Republicans are reportedly considering giving states $200 billion that they could use to provide “coverage wraps” that would supplement the inadequate coverage that their bill offers people in or near poverty. But $200 billion represents just 17 percent of the Senate bill’s cuts to Medicaid and marketplace subsidies to help for low- and moderate-income consumers buy coverage, and it’s no substitute for Medicaid funding and marketplace subsidies that respond to changes in enrollment and need.

The Senate bill will not help people in the coverage gap get insurance and will cause millions more people from Medicaid expansion states to lose the comprehensive coverage they have.