On June 30, Oklahomans will decide State Question 802 that would add Medicaid expansion to the Oklahoma Constitution. Arguments in favor of SQ 802 have rightly been centered around its well-documented health effects. Expansion, after all, will reduce the number of uninsured Oklahomans, make health care more accessible and affordable, and improve health outcomes. The populations who are most impacted include those who are fighting mental illness, mothers and babies, and those who’ve reached the middle years of life.
Expansion is a financial issue, as well. This is true both for the state and the families who will enroll in Medicaid. Without expansion, too many of our neighbors make health care decisions based on their finances rather than their health. The 1 in 7 who are uninsured must decide what they will give up to pay for medicine or a visit to the doctor, or if they want to risk more debt. The financial burden of health care leads many uninsured Americans to make do by relying on home remedies or over-the-counter medications, postponing medical care, and skipping a doctor’s visit altogether.
Because current Oklahoma Medicaid covers childless adults only if they are disabled or over 65, we will take a look at how expansion impacts Oklahoma families. To understand what a difference expansion can make in a family’s finances, we must understand how things look for low-income Oklahoma households. OK Policy’s forthcoming benefits simulator, which shows the relationship between a household’s monthly earnings and its total resources after taxes and assistance programs, will allow us to do just that. The simulator will show how earnings and resources change, either as wages change or as work hours change. This post uses that data to show how Medicaid expansion can dramatically improve family finances for three different family situations.
Low-wage retail workers will be better off financially if SQ 802 passes
The first household is a single, childless adult working in retail, which is typical of those most likely to be aided by expansion. Under expansion, this worker would have health care coverage and Supplemental Nutrition Assistance Program (SNAP) benefit until their wage reaches $10/hour. Many low-wage Oklahomans may take years to reach that wage level, or they never reach it. Until they do, SQ 802 provides both the health benefits of Medicaid, as well as the financial benefits.
In this example, the person is assumed to work 31 hours weekly, which is the average for retail workers. The chart shows how their resources change as wage level changes (moving from the left of the chart to the right). The green line, with white data labels, represents monthly earnings. The orange bars, at the bottom of the graph and labelled in black, is the after-tax income, including earnings, child support, and any other unearned income, less federal and state income and FICA taxes. The bars above the orange after-tax income bar show assistance and tax credits the family receives as indicated in the legend. In this and all the other examples in this post, households could benefit from Medicaid, child care subsidy, and state and income tax credits. We also look at the total resources available to the household, including earnings after taxes, cash assistance and tax credits, and the value of non-cash assistance for food and health care. The amount of total resources available is represented by the blue line at the top of the bars and is labelled in the yellow box.
The checkered green bar shows the impact of Medicaid expansion on the resources available to this worker. In this scenario, coverage through Medicaid expansion provides an additional 78 percent of total resources available to them. For Oklahomans in this scenario, Medicaid expansion would greatly improve the financial resources available to those who earn $10/hour or less, which represents more than 120,000 state residents.
Single-parent families will be more financially stable with expansion
In the chart below, we can see that after expansion a full-time working parent will qualify for Medicaid coverage as long as their hourly wage is $12 or less. Even working 40 hours weekly at minimum wage, the parent’s gross income is $1,213 monthly, far in excess of the current maximum income limit for Medicaid for a parent of two, which is $797 per month. The next example is a single parent working full-time and receiving child support, with two children. The solid green bars show the value of Medicaid for children (an average of $334 monthly), which the family receives under current law.
Again, the checkered green bars show the dramatic impact of expansion on this family’s resources. In this scenario, coverage through Medicaid expansion provides an additional 25 to 30 percent more total resources for this family.
Medicaid expansion will boost health and financial resources for low-income married couples
Under expansion, low-income married parents would be covered until one worked full-time and the other worked more than 25 hours per week. At that point, the family would become eligible for a $319 subsidy to pay more than three-fourths of the cost of insuring parents through the Affordable Care Act (ACA).
Before expansion, the family’s income would be too high for the parents to have Medicaid but too low to qualify for a subsidy under the ACA, even if only one was working. Those subsidies help families with incomes between 138 and 400 percent of the federal poverty level (FPL). This is because it was assumed states would expand Medicaid to cover those who are below the 138 percent FPL threshold. In non-expansion states like Oklahoma, this family would have to spend nearly $400 of the working parent’s $1,733 monthly pre-tax income on health insurance. That’s why families with incomes below 138 percent of FPL are in the “coverage crater” where health insurance is not financially viable.
The previous scenarios looked at how wage amounts impacted Oklahomans, while this one examines how the number of hours worked impacts their financial situation. One parent, labelled Adult 2, works full-time at $10/hour, while the hours for Adult 1 vary at a constant wage of $10/hour. The number of hours worked could vary based on child care needs, employer decisions, or, as many have learned in recent months, from a sudden job loss.
As the graph shows, Medicaid expansion has a tremendously positive advantage for families in this scenario. It is especially significant when weekly hours worked dips below 25 hours per week for the parent with variable work hours. In this scenario, coverage through Medicaid expansion provides an additional 45 percent of total resources available to them. This scenario represents about 12 percent of Oklahoma’s two-parent married families.
The solid green bars show that existing Medicaid would cover the children, but not the parents, even if Adult 1 has no income. If Adult 1’s employer does not provide insurance, the parents would have the choice of purchasing insurance on the Affordable Care Act (ACA) exchange or going uninsured.
SQ 802: A treatment for health, wallet, and peace of mind
Low-income families face a constant struggle to pay the costs of food, housing, utilities, transportation, and other basic necessities of life. Today, health and health care are at or near the top of the list of worries. Our public programs like Medicaid are meant to help reduce those struggles. This analysis, however, shows that Medicaid in Oklahoma is not living up to that goal. Instead, it’s discouraging work by cutting off health care coverage for Oklahomans who have very low incomes. None of these example families currently qualify for Medicaid coverage for adults, even with one full-time worker. As these examples show, Medicaid expansion strengthens the financial stability for working Oklahoma families while also encouraging them to earn more without the fear of losing much-needed health care coverage.
Thanks to State Question 802, Oklahomans have the opportunity to take health off the list of struggles for low-income families. Passing SQ 802 would mean that a year from now, many working families in Oklahoma will find their struggles a little easier, their finances a little better, and their health care will no longer be the mental and financial burden that it is today.
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This post is based on development and research funded by the Charles and Lynn Schusterman Family Foundation. Kenneth Kickham developed the benefit simulator tool that generates the scenarios in this post.