By Martha Heberlein
Our blog post from last week gave the high-level numbers of CBO’s updated score on the ACA, but we wanted to pass along a few more nuggets.
- If a state fails to extend Medicaid to low-income uninsured adults, it will increase the cost of covering Exchange participants. In states that elect to leave their uninsured adults without Medicaid coverage, a significant share of people with income between 100% and 138% are likely to enroll in the Exchanges. (As most Say Ahhh! readers know, uninsured adults below 100% of the FPL are not eligible for Exchange subsidies so are expected to remain entirely without coverage in most cases.) The average cost of covering these low-income adults through the Exchange is expected to be higher than that of other Exchange participants. This is both because they will have lower income (necessitating higher premium subsidies) and often are in worse health. As a result, CBO assumes that including them in subsidized Exchange coverage – as well as in the individual market outside of the Exchange – will result in premiums 2% higher than previously estimated.Note: It’s important to highlight that the higher cost of Exchange coverage will mostly be borne by the federal government, as well as to a much lesser extent by more affluent Exchange participants who do not qualify for subsidies. For Exchange participants receiving subsidies, the out-of-pocket cost of buying a plan will not change. This is because the amount of their premium payment obligations is based on their family income (e.g., a family at 150% of the FPL must contribute 4% of its income toward Exchange coverage), not on the cost of the coverage. Families will still be expected to pay the same share of income towards the cost of coverage, with the federal government picking up any increase in the cost.
- States that leave their low-income adults uninsured still will experience a “welcome mat” effect. As a result of some states choosing not to extend eligibility to more low-income adults, the “welcome mat effect” will be reduced, but would not be eliminated. (The welcome mat effect captures the idea that many of the people who already are eligible for Medicaid or CHIP, but not yet enrolled, will sign up for public programs after January 1, 2014, when they hear about new coverage opportunities and the responsibility to secure coverage and as states simplify Medicaid and CHIP enrollment procedures). Specifically, CBO estimates that about 80% of the already-eligible people, who would have enrolled in Medicaid or CHIP still will do so.Of course, this also means that CBO thinks that 20% of this group will no longer pick up coverage. As a large share of these already eligible is likely to be children, this could have serious consequences on improvements to their coverage going forward. Success in covering more children really hinges on their ability to secure the Medicaid and CHIP coverage already available to them. The chilling effect that not extending coverage to more of their parents and other adults in their lives could dampen the promise that the ACA holds for children.