Wisconsin lawmakers still refuse to expand BadgerCare. Instead they are relying on the Affordable Care Act Marketplace to cover low-income individuals and parents who would otherwise be eligible for BadgerCare if Wisconsin joined the 38 states that have expanded Medicaid (known in Wisconsin as BadgerCare). This decision leaves thousands of Wisconsinites without access to affordable health coverage; more than half of the 91,000 people who would gain coverage under expansion are uninsured. If Wisconsin expanded BadgerCare, more Wisconsinites would have access to the affordable, comprehensive health insurance they need.
The ACA has resulted in a tremendous increase in the number of people who have insurance, but it is far from perfect; many people still fall through the cracks and end up without coverage. That’s especially true for lower-income Wisconsinites. Here are three illustrative examples of low-wage workers and families who earn too much money for BadgerCare, but for whom ACA plans are unaffordable.
Out of pocket costs for ACA plans burden people who are trying to make ends meet
The income cutoff for BadgerCare eligibility is 100 percent of the federal poverty level, about $12,800 per year for a single adult. Let’s consider what that means for Howard, a single adult who has a full-time minimum wage job and no kids. Howard’s income of about $15,000 per year makes him ineligible for BadgerCare. Because his employer doesn’t offer health insurance his only option is the ACA Marketplace through healthcare.gov.
Under the ACA, Howard qualifies for financial assistance that yields a substantial discount on his premium, and until the end of 2022 the American Rescue Plan likely reduces it to zero dollars per month (except for smokers, whose premiums will continue to be much higher). However, premiums are only one part of the cost of health insurance and health care. Marketplace plans have other cost-sharing, such as $15-50 copays for doctor’s visits and prescription drugs, deductibles, and a $100 plus copay for going to the emergency room.
Imagine making $15,000 per year and paying for rent, car insurance, gas, food, utilities, clothing and other household supplies. Adding in even a modest amount for premiums, copays, and deductibles isn’t feasible for Howard, and there is a stark difference between copays for Marketplace plans compared to BadgerCare. Seeing a therapist on an ACA plan might cost $15-50 per visit compared to fifty cents to $3 for the same service covered by BadgerCare. That’s a substantial difference for low-income earners.
Faced with these seemingly small, but unaffordable costs, many people like Howard remain uninsured and desperately hope they won’t need expensive medical care.
Many residents can’t afford their “affordable” job-based health insurance but are still locked out of the ACA Marketplace
An important factor that many state lawmakers overlook is that people who have offers of employer-based insurance are ineligible for subsidized Marketplace plans if their employer plan is deemed to be “affordable.” The ACA defines an affordable offer of job-based health insurance as one that meets certain coverage requirements, and has monthly premiums no higher than 9.83 percent of the household’s income. This means a single adult with a minimum wage job could be required to pay premiums of as much as $123 per month, without taking into account copays or deductibles, which are likely much higher than Marketplace plans. If they declined that coverage, because they couldn’t afford it, they wouldn’t qualify for financial assistance on the ACA Marketplace because they are technically eligible for coverage through their employer.
Consider, for example, Gail, a single parent who has one child and works full-time at $9 per hour. She has an offer of job-based coverage with a $3,000 deductible and a $150 monthly premium. Regardless of her best efforts, Gail cannot afford to pay for that coverage. But because the ACA deems that plan affordable, she isn’t eligible for any financial assistance on the Marketplace. Going uninsured might be her only realistic option.
If Wisconsin expanded BadgerCare, a parent in this situation would have access to affordable, comprehensive health insurance, with little or no out-of-pocket costs.
Spouses and other household members get caught in the ACA’s “family glitch”
The ACA has a gaping a hole in its safety net that impacts families of individuals with “affordable” offers of job-based coverage. According to the ACA, if one income earner in the household has an offer of employer-sponsored coverage judged to be affordable, then no one in the household is eligible for financial assistance through the Marketplace. Employers often contribute much less to insurance coverage for spouses and dependents. For example, they might pay 80 percent of the premium costs for an employee, but only half of those costs for a spouse. This means that even if the monthly premiums for family coverage are dramatically higher than the 9.83 percent of household income, the whole family is barred from receiving financial assistance on the Marketplace. A new report from Kaiser Family Foundation estimates that 113,000 people in Wisconsin are impacted by the “family glitch.”
Susan and Bob, who are married, have one child and both have minimum wage jobs, making their income too high to be eligible for BadgerCare. Because Susan has the ability to get “affordable” insurance through her job, neither parent is eligible for a subsidized Marketplace plan, even though the premiums for a family plan aren’t truly affordable (even before taking into account the copays and deductibles). In this scenario, it’s likely that one or both of the parents would remain uninsured.
Expanding eligibility for Medicaid is one pillar of the Affordable Care Act’s effort to provide coverage to millions of uninsured adults, but about a dozen states have refused to do so. In all those states, including Wisconsin, many people who need coverage are not eligible or can’t afford it. By using the ACA to expand BadgerCare, Wisconsin’s Medicaid program, state policymakers can help families make ends meet, significantly reduce the number of uninsured Wisconsinites, and make our state healthier.
William Parke-Sutherland
