When Congress approved a prescription drug benefit for the Medicare program in the mid-2000s, it created the infamous ‘Medicare donut hole‘ – a large gap in coverage of prescription drug costs.
The Affordable Care Act (ACA), the landmark health care law, brought about important changes that gradually eliminates the ‘donut hole’ by 2020. But now, as a result of the Supreme Court’s recent ruling, low-income Oklahomans could find themselves in a similar situation, stuck in a ‘coverage crater’, without access to public or private coverage and consigned to the ranks of the uninsured.
The ACA adopts two primary mechanisms to cover the uninsured. The first is to expand Medicaid, the federal-state insurance program that primarily covers low-income children, seniors, and persons with disabilities. In Oklahoma, like in many states, Medicaid coverage for working-age adults is extremely limited. Only parents of dependent children with incomes below roughly $7,000 per year for a family of three (37 percent of the federal poverty level) are eligible. Working-age adults without children are ineligible for Medicaid regardless of how little they earn. The uninsured rate for this population is extremely high, nearing 50 percent in Oklahoma. This population is especially likely to suffer from chronic physical and mental health conditions that make earning a steady income difficult.
The ACA makes adults with income up to 133 percent of poverty eligible for Medicaid as of January 1, 2014. To ensure that states go along with the expansion, the law provided both a large carrot and a heavy stick. The incentive is a federal commitment to cover the lion’s share of the costs of the newly-eligible Medicaid population – 100 percent for three years, then phasing down to 90 percent in 2020 and subsequent years. For states that didn’t adopt the expansion, the federal government could withdraw all federal funds for the Medicaid program.
The Supreme Court, however, ruled that the threat of withholding all federal Medicaid funds for a state that does not expand coverage for low-income adults was unconstitutional. As SCOTUSblog explains:
continue reading Avoiding the Medicaid 'coverage crater'