The Constitution and the Public’s Health
A centerpiece of the Affordable Care Act was the expansion of Medicaid to cover low-income nonelderly adults, most of whom had been excluded from the traditional program. But in 2012, as part of a landmark legal ruling upholding the constitutionality of the act’s individual mandate, the US Supreme Court derailed the nationwide Medicaid expansion, effectively turning this crucial pathway to health insurance coverage for the nation’s poorest residents from a mandate to an option.1 In this short commentary, we examine how this decision by the Court has played out for the poorest Americans nationally, especially those in Kentucky and Tennessee.
Background
Medicaid Expansion Under the Affordable Care Act
As part of the Affordable Care Act’s sweeping insurance reforms, the law established a system of advance, refundable, premium tax credits to make health care coverage affordable for low- and moderate-income individuals and families who (1) lack access to government insurance or affordable employer-sponsored benefits and (2) buy an individual policy through the health insurance marketplace. The act envisioned that all nonelderly low-income citizens and long-term legal US residents with incomes ≤138% of the federal poverty level (FPL) would be covered through Medicaid—just as all children with incomes below this level are also now entitled to it. People with incomes exceeding Medicaid’s upper-income threshold would qualify for tax credits.2
In states that have not expanded Medicaid, eligibility for premium tax credits begins for people with incomes >100% of the FPL. However, even at this low-income level, the subsidy does not cover the entire premium; even the poorest tax credit recipients must pay 2% of their incomes toward premiums.3 By contrast, Medicaid bars premiums for people with incomes <150% of the FPL and permits only nominal patient cost sharing.4 (In some states that operate their Medicaid expansions on a demonstration basis, however, the federal government permits premiums and enrollment fees for beneficiaries with incomes <150% of the FPL.) In effect, without a Medicaid expansion, individuals with incomes <100% of the FPL have no pathway to affordable coverage. They are ineligible for Medicaid, but their incomes are too low to meet the premium tax credit lower threshold of 100% of the FPL. Their only pathway to coverage is if they qualify for Medicaid on traditional grounds (pregnancy, disability, or status as an exceptionally poor parent or caretaker of minor children).
The US Supreme Court’s decision
In NFIB v Sebelius, a 5-4 Court majority upheld the individual mandate, a legislative requirement that people either have health insurance coverage or face a financial penalty, which was essential to maintaining a viable private insurance market. But by a wider vote, 7-2, a Court majority also struck down the Medicaid expansion as an unconstitutional exercise of Congress’s spending clause powers. Writing for the Court, Chief Justice John Roberts characterized the Medicaid expansion as a “new program,” even though the new eligibility group was added as a simple amendment to the existing statute, just as children and pregnant women had previously been added. By declaring the Affordable Care Act expansion to be a new program rather than simply an expansion of the existing program, the Court effectively declared the expansion to be beyond the reach of traditional Medicaid program rules, which is a mixture of mandates and options. Under traditional program rules, states can risk loss of all federal funding for failing to comply with program requirements. But states cannot constitutionally be made to participate in a new program or risk losing funding for an entirely separate program. According to Chief Justice Roberts, conditioning funding under one program on participation in a second program amounted to an unconstitutional coercion, or a “gun to the head” of the states.5
At the same time, the majority ruled that the proper remedy was to treat the expansion as if it were a state option, rather than to repeal the Medicaid expansion entirely. In this way, the majority preserved the expansion funding while barring the secretary of the US Department of Health and Human Services from withholding traditional Medicaid program funds from states that declined to cover newly eligible adults. This decision was unprecedented in terms of (1) striking down a spending clause program as exceeding Congress’s constitutional powers and (2) effectively saving federal funding by introducing a remedy that enables states to spend the federal funds appropriated by Congress but at their option.
As of June 2016, 31 states and the District of Columbia had adopted the Medicaid expansion, either as a state option or as a federal demonstration.6 The remaining 19 states—which are predominantly in the South and home to a disproportionate percentage of low-income African Americans—have left their poorest residents without a coverage pathway because eligibility for premium tax credits under the Affordable Care Act does not begin until the “100% of the FPL” criterion is met. Nearly 3 million people fall into this so-called coverage gap.7
Kentucky and Tennessee: A Study in Contrasts
Kentucky was one of the first states to embrace the Medicaid expansion, extending coverage to all nonelderly low-income citizens and long-term legal US residents, not just people in traditional eligibility categories. According to the March 2016 Medicaid enrollment report issued by the Centers for Medicare & Medicaid Services, by adopting the new eligibility category, Kentucky added >416000 people to its Medicaid program who were previously ineligible for Medicaid per traditional program rules.8
In contrast with Kentucky, Tennessee did not adopt a Medicaid expansion but instead chose to restrict coverage only to traditional adult eligibility groups. This decision had the effect of leaving poor adults with incomes below the 100% premium tax credit threshold without a pathway to affordable coverage. As a result, the 2016 Centers for Medicare & Medicaid Services report showed that no newly eligible adults gained coverage under Tennessee’s program. The only people who gained coverage in Tennessee between late 2013 and spring 2016 were 34000 children and adults who met traditional eligibility standards but had not previously enrolled.9 Complicating matters further, Tennessee restricted its Medicaid enrollment process, ending direct enrollment through the program and requiring applicants to seek coverage through the federal health insurance marketplace (ie, Healthcare.gov). Although the federal marketplace functions well for people seeking subsidized plans, its ability to coordinate with state Medicaid programs remains limited, particularly where the transfer of online applications filed by potentially eligible people is concerned.10 In May 2016, a federal appeals court halted Tennessee’s enrollment policy, ruling that the state’s decision to virtually close down its Medicaid enrollment system and rely exclusively on Healthcare.gov violated federal law.11
In addition to collecting data on Medicaid enrollment, the federal government collects data on marketplace enrollment into subsidized plans. As of March 2016, about 228000 Tennessee residents had used the federal marketplace to obtain coverage (like most states, Tennessee does not operate its own health insurance marketplace but instead relies on Healthcare.gov). Among Tennessee residents insured through the marketplace, nearly 9 in 10 enrolled in subsidized coverage. By contrast, a lower percentage of Kentucky marketplace enrollees (about half of those considered qualified to purchase a marketplace plan) received subsidies as of March 2016.12 This finding is not surprising, because in Medicaid expansion states such as Kentucky, individuals with incomes up to 138% of the FPL are Medicaid eligible and therefore not entitled to tax subsidies. As a result, a smaller percentage of people qualify for tax subsidies, and a higher proportion enroll in Medicaid.
These enrollment patterns are associated with substantial differences in the proportion of the population without health insurance. In a 2016 report, the National Center for Health Statistics (NCHS) found that from 2014 to 2015, the overall proportion of uninsured people in the United States declined by almost 25%, from 16.3% in 2014 to 12.7% in 2015. According to the report, adults in Medicaid expansion states were more likely than adults in nonexpansion states to have public insurance (21.5% vs 14.9%) and nearly half as likely to be uninsured (9.8% vs 17.5%). In contrast, a similar percentage of adults had private insurance coverage in Medicaid expansion states (70.0%) and nonexpansion states (69.4%).13 In other words, the NCHS data suggest that changes in Medicaid coverage, rather than changes in private insurance, account for the decline in the percentage of low-income uninsured people.
NCHS data for Kentucky and Tennessee support this finding. In 2015 in Kentucky, an estimated 5.9% of people were uninsured; 47.4% were publicly insured; and 54.6% were privately insured (the proportions do not total to 100, because it is possible to have both public and private insurance coverage under certain circumstances). That same year, in Tennessee, 16.8% of the population was uninsured; 28.3% was publicly insured; and 60.2% was privately insured. The data for these 2 states suggest that Medicaid expansion accounted for the difference in the proportions of uninsured people during this period. Nationwide, subsidized marketplace enrollment has brought insurance coverage to >11 million people; in non-Medicaid expansion states, this group includes people with incomes between 100% of the FPL and 138% of the FPL who, in expansion states, would be eligible for Medicaid and therefore barred from receiving marketplace subsidies. However, because marketplace subsidies are not available to people with incomes <100% of the FPL, in nonexpansion states such as Tennessee, the uninsured population is far larger, even though Kentucky and Tennessee have similarly poor populations; respectively, the 2 states rank 47th and 44th nationally in terms of the proportion of the population living in poverty. When a state does not expand Medicaid, the impact on insurance coverage among its poorest populations is enormous.14
Implications for Public Health Policy and Practice
Health insurance plays a strong role in determining who has access to health care. Studies suggest that Medicaid not only improves health care access but also makes a measurable difference in certain health outcomes.4,15 One of the nation’s poorest states, Kentucky, chose to embrace Medicaid expansion as a fundamental population health reform. Its bordering state, Tennessee, which is nearly as poor, rejected the expansion. By 2015, the rates of the uninsured and publicly insured populations in the 2 states differed substantially; prior to implementation of the Affordable Care Act, their coverage rates were approximately the same. The NCHS data suggest that each state’s Medicaid policy made the difference.
Public health increasingly emphasizes health equity as a core aim of any health system. Although population health turns on social, economic, cultural, and behavioral factors that extend beyond health care, there is no question that unless everyone has an equal chance of access to health care, health equity is unachievable. In the remaining 19 states that lack coverage for the poorest Americans, the public health voice for expansion needs to continue to be the loudest one in the room.
Footnotes
Declaration of Conflicting Interests: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding: The author(s) received no financial support for the research, authorship, and/or publication of this article.