Throughout the county, opponents are screaming that the Affordable Care Act’s Marketplaces are failing; however, in states like Tennessee, the instability of the Marketplace is a direct result of the state’s refusal to accept federal funds to close the Medicaid coverage gap. By not closing the gap, the state is sabotaging its own health insurance Marketplace.
Right now, insurance companies are pulling out of Tennessee because they’re not making money. Why? Because the Tennesseans who are buying individual plans are often sicker and older than the companies expected. But many of those same Tennesseans would have been eligible for TennCare if Tennessee had accepted federal funding to close the coverage gap. The ACA offered states extra funding to offer Medicaid coverage to everyone with incomes below 138 percent of the federal poverty level, about $16,000 a year for an individual.
Because Tennessee refused to accept federal funding to close the gap, people with incomes below the federal poverty level have no options for subsidized coverage, because premium subsidies for individual plans are only available to people with incomes above the poverty level. (The ACA assumed that everyone below poverty would be eligible for Medicaid.) But people with incomes between 100 and 138 percent of the federal poverty level can receive premium subsidies for Marketplace plans, and many did in Tennessee. Research from the Department of Health and Human Services (HHS) suggests that these near-poor people, who would have been eligible for TennCare had the state accepted federal funding to expand coverage, account for a significant part of the unexpected costs to insurance companies.
Enrollees with incomes between 100 and 138 percent of the federal poverty level make up about 6 percent of Marketplace enrollees in states that expanded Medicaid, while they make up close to 40 percent of Marketplace enrollees in states that did not expand HHS researchers compared Marketplace premiums in states that accepted federal funding to expand Medicaid with states that refused to expand Medicaid. They found that Marketplace premiums were an average of 7 percent lower in states that accepted the federal funding to close the coverage gap.
It has long been clear that the decision to turn down federal funds to close the gap is costly for Tennessee. It denies coverage to 280,000 Tennesseans – many of whom are working, and many of whom have serious health conditions. And by rejecting the federal funds, Tennessee is giving up billions of dollars a year in economic benefits and putting our health care infrastructure at risk. But closing the coverage gap will also help stabilize the Marketplace and lower premiums for people buying coverage on their own. Tennessee should stop sabotaging its own health insurance Marketplace and accept federal funds to close the gap now.