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Steve Contorno
By Steve Contorno March 25, 2015
Angie Drobnic Holan
By Angie Drobnic Holan March 25, 2015

5 years later, Medicaid opt-outs create holes in ‘universal’ bill

As the Affordable Care Act turns five, we thought it was time to look again at how its coverage provisions are doing. Overall, it's been a mixed picture.

Undoubtedly, the law has led to fewer uninsured Americans. The percentage of uninsured adults in the United States in 2010 was 16.4 percent; at the end of 2014, it had fallen to 12.9 percent, its lowest point since Gallup started tracking the insured population in 2008.

But once expected to insure 32 million new Americans by the end of the decade, the projected target has now been downgraded to 27 million — far from the universal coverage many proponents hoped for. The nonpartisan Congressional Budget Office projects there will still be roughly 31 million uninsured adults in the United States by 2025, demonstrating that any notion the law would create universal coverage was a pipedream.

Part of this is because in 2012, the U.S. Supreme Court gave made it optional for states to expand Medicaid, a health insurance program intended for the very poor.

"I don't think anyone anticipated when the law was written that states would have the opportunity to opt-out of the Medicaid expansion," said Christine Eibner, senior economist at the Rand Corporation. "That's a major departure from the law's initial intent, and it leaves an estimated 4 million people in a coverage gap."

Twenty-two states — including Florida — have so far refused expansion, and health care advocates continue to hope legislatures will act to embrace provisions of the law affecting Medicaid. Florida is one of six states currently considering a Medicaid expansion; it's estimated that embracing the program would cover 800,000 more people there.

In addition to those who are left out of Medicaid, about 30 percent of the remaining uninsured are illegal immigrants; the law never intended to cover them. But about 40 to 45 percent are people who will choose not to purchase insurance offered to them either through the marketplaces or through an employer, in many cases because they still can't afford it. The law exempts people from paying a penalty who have incomes so low they don't file tax returns.

Finally, we should mention uncertainty about people who buy private insurance through health care marketplaces or exchanges. The Supreme Court is considering King vs. Burwell, in which plaintiffs allege the law says people are not eligible for subsidies if they buy from a marketplace run by the federal government, as opposed to a state. The law's supporters say the argument is without merit, but it's not clear if the court will see it the same way. A decision is expected in June.

If the court does rule against the Obama administration, millions of people could lose their subsidies for coverage. The Rand corporation estimates that sort of change would lead to a 47 percent increase in individual market premiums in the affected states, and 8 million people could become uninsured.

For right now, we're basing our rating on the outcome of the Medicaid provisions, which haven't been enacted as the law envisioned. There's also greater clarity about the population that will remain uninsured despite the law's mandates and coverage provisions. We rate this promise Compromise.

Our Sources

By Lukas Pleva June 22, 2010

Passed, signed into law, and headed for a court fight

On the campaign trail, Barack Obama promised to sign a "universal" health care bill. The last time we looked at how the president was doing, we rated the promise In the Works, since all three health care reform bills then being considered by Congress included a requirement for people to buy health insurance, often called an "individual mandate."

On March 23, 2010, after months of deliberation, Obama signed the Patient Protection and Affordable Care Act. (Read our summary of the new health care law.) For purposes of this promise, however, section 5000A is the most important. Titled "Requirement to Maintain Minimum Essential Coverage," it reads: "An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month. ... In general, if an applicable individual fails to meet the requirement ... for one or more months during any calendar year beginning after 2013, then, except (for hardship cases) there is hereby imposed a penalty" on a predetermined schedule.

In other words, unless the insurance premiums exceed 8 percent of your income, you're a religious objector, a taxpayer with income below the tax-filing threshold, or a member of an Indian tribe, you're required to have insurance. That is, unless you'd rather pay the penalty, which is enforced through the tax code system.

Starting in 2014, the penalty for not having coverage is $95 per individual or 1 percent of income, whichever is greater. By 2016, that amount climbs to $695 per individual, or 2.5 percent of income. All of this is assuming that the penalty does not exceed the price of a basic health care plan.

Some health care experts, however, argue that the penalty is too low to push Americans into buying a health care plan. According to an April 2010 report by the Congressional Budget Office, "about 4 million people are projected to pay a penalty because they will be uninsured in 2016."

There is also a pending lawsuit challenging the constitutionality of the individual mandate. On March 23, 2010, the same day that Obama signed the health care reform bill, Florida Attorney General Bill McCollum, along with 13 other Republican AGs, filed a lawsuit against the federal government. "The federal government cannot mandate that all citizens buy qualifying health care coverage or be forced to pay a tax penalty -- this is unconstitutional," McCollum said. The case will likely end up before the Supreme Court, according to legal experts. The White House, along with the U.S. Justice Department, maintains that the suit will fail.

President Obama signed a bill earlier this year that mandates -- with certain exemptions -- that every American buy health insurance. Not doing so means paying a penalty. The bill's intent is that as many Americans as possible have health insurance, getting very close to universal coverage. On the other hand, there's a pending lawsuit against the individual mandate. There are also questions about the penalty for the uninsured, and how effectively it will push the uninsured to buy or sign up for health insurance. Still, a future mandate for health insurance is now enshrined in law. We'll keep watching how things unfold, but for now, this is a Promise Kept.

Editor's note: This promise originally read, "I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family's premium by up to $2,500 a year." We decided to make the second part of Obama's promise about premium costs into a separate promise, since cost and coverage are not necessarily related. It's now promise 521, "Cut the cost of a typical family's health insurance premium by up to $2,500 a year".

Our Sources

The White House, summary of health care bill ("Hardship Waiver"), accessed May 7, 2010

The White House, summary of health care bill ("Shared Responsibility"), accessed May 7, 2010

Congressional Budget Office, Payments of Penalties for Being Uninsured Under the Patient Protection and Affordable Care Act, April 22, 2010

Reuters, Georgia joins lawsuit against healthcare overhaul, by Tom Brown, April 13, 2010

PolitiFact Florida,Wasserman Schultz says health care law doesn't require Americans to get health insurance, by Louis Jacobson and Carol Rosenberg, April 22, 2010

CNN, Some may face penalty for shunning health insurance, by Dugald McConnell, March 24, 2010.

Angie Drobnic Holan
By Angie Drobnic Holan September 21, 2009

Health care plans would require coverage for all

President Barack Obama has urged Congress to approve health care reform in 2009. As of September, three major proposals were under consideration in the House and Senate, and all three included an individual mandate that would require people to have health insurance.

Obama has said he supports the individual mandate as long as it includes a hardship exemption for a people who are genuinely unable to find affordable coverage after health reform passes. (In fact, Obama changed position on this issue. As a candidate he did not support the individual mandate.) Some might argue that only a single-payer system is a truly universal health care plan.

The standard for universal coverage we use here is a health reform plan that includes an individual mandate with limited exemptions. This was the standard for universal coverage that was widely discussed during the presidential campaign, especially in the Democratic primary.

All of the Democratic health proposals under consideration include an individual mandate. We'll be watching this provision to see if it survives the legislative process. So we rate this promise In the Works.

Our Sources

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