Obamacare Gap Traps Millions With Coverage Who Can’t Afford Care
Policy + Politics

Obamacare Gap Traps Millions With Coverage Who Can’t Afford Care

While the Affordable Care Act has succeeded in slicing down the uninsured rate to historic lows, many Americans--mostly the working poor--still can’t afford health coverage and are delaying medical treatment.

Many of these people rely heavily on community health centers—exclusively designed for uninsured people and those with coverage through Medicaid.  The federal government funds the centers on a sliding scale for uninsured low income people, and provides regular Medicaid reimbursements for patients on Medicaid.

Related: Obamacare’s Dirty Secret: 31 Million Still Can’t Afford Treatment

Though many expected Obamacare to reduce the number of patients utilizing these community health centers, many of the centers are actually experiencing more patients—especially in states that have not expanded their Medicaid programs.

A recent study by George Washington University found that more than one million low-income, uninsured Americans depend on community health centers. The researchers noted that about 35 percent of those people live in Alabama, Florida, Georgia, Louisiana and Mississippi—states that have not expanded their Medicaid programs.

After a 2012 Supreme Court ruling, states could opt out of Medicaid expansion, which widens eligibility to every childless adult earning 138 percent of the federal poverty level and below regardless of their ability to work.

The idea was that under the law, people earning at or below that threshold could qualify for Medicaid, while those earning between 100 to 400 percent of the federal poverty level could qualify for subsidized coverage on the state or federal exchanges. The Supreme Court changed that.

Related: High Deductible Plans Have More People Delaying Treatment

The ruling created a so-called “coverage gap” in the 21 states that decided not to expand their programs. The people in the gap earn too much to qualify for Medicaid, but not enough to qualify for subsidies on the state or federal health exchanges. 

Many of these people turn to community health centers when their options for coverage are limited—even in states that did expand Medicaid, there are still plenty of people who can’t afford to buy coverage, or can only afford to buy coverage with high out-of-pocket costs.

A recent study from the Commonwealth Fund revealed that about 23 percent of Americans with health coverage—or 31 million-- fall into this category.

Luisa Buada runs Ravenswood Family Health Clinic, a community health center in Palo Alto, California. She describes her center’s role as helping people that Obamacare doesn’t reach.

“We’re filling in the gaps that the ACA doesn’t provide for people…we try to catch the people falling through the cracks,” she said.

Related: Obamacare 2015: Low Premium Increases, High Deductibles

Though Buada’s facility is located in a state that did opt to expand its Medicaid program, she explains that there are still plenty of people who fall threw the cracks of the law intended to expand access to coverage to millions of Americans.

“The problem with the Affordable Care Act, is that it’s not affordable for my patients,” Buada said. Ravenswood Family Health Clinic is right in the heart of Silicon Valley, where the average rent for a one-bedroom apartment generally goes for about $2,500, according to Zumper.com. She explains that with astronomical living costs in the area, even people earning just above the Medicaid expansion threshold have problems affording coverage—even with subsidies.

“People earning 139 percent of the federal poverty line, or about $35,000-36,000, they’re going to have a hard time” affording coverage on the exchanges.

She said many patients coming to the center are uninsured for now, but she questions what will happen when the penalty for not having coverage through the individual mandate increases. Last year, the penalty was just $95 or one percent of annual income. That ticked up to $323 or 2 percent of annual income in 2015 and will gradually increase.

A study from Avalere Health this year found that the tax penalties for not having health care are far less expensive than the actual costs of obtaining coverage for many low to middle-income families—persuading some to opt out of coverage. The problem with this, Buada explains, is that many might be surprised to find the penalty increases each year—presenting, what could be, a huge financial burden down the road.

Related: Obamacare in 2015 by the Numbers

The people still opting out of coverage are relying on community health centers, like Buada’s—which has seen a recent uptick in patients.

Of course, the ACA also provided more funding to these community health centers. In May, the Obama administration announced $101 million to build 164 new health centers in 33 states and two U.S. territories in order to increase access to services for about 650,000 patients. Existing centers also received waves of federal funding to expand.

Ravenswood Family Health Center, for example, just built a new 38,000 square foot medical facility, after outgrowing its old 700 square foot building. Buada says they’re anticipating reaching the new facility’s capacity of 25,000 patients in the next three years. She said much of the money for the expansion came through donations, on top of federal funding.

There are millions of Americans who rely on community health centers even now that the uninsured rate has plunged to historic lows. That’s because high deductible policies and out-of-pocket costs still prevent people from actually being able to cover treatment.

A Gallup poll late last year reported that about one in three Americans say they have put off treatment for themselves or a family member because of cost—the highest rate recorded in Gallup’s history.

The pollsters attributed the uptick to the shift in high-deductible policies being sold both on and off the Obamacare exchanges.

As Tom Scully, former CMS administrator under President George H.W. Bush noted during a Wall Street Journal breakfast last Thursday, “It’s important to distinguish between coverage and access to care...there is still a problem with access. It’s sobering how many people don’t have the resources to cover $200,00 emergency costs and still don’t have access to care when they need it.”

Buada agrees. “Under the ACA, everyone thought everyone’s going to be covered… all these people thought they could get covered…that’s baloney,” she said.

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