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September 11 2019

Fewer Americans Have Health Insurance - Why?

by Hadley Heath

New federal data show that the number of Americans without insurance increased in 2018 to 27.5 million. This is the first increase since 2009. Why is this happening? 

Let's take a look at recent history: In 2010, the Affordable Care Act (ACA) became law. Most of its major provisions didn't take effect until 2014. The law created new rules for insurance companies, provided income-based subsidies and tax credits for people who buy their own insurance, and expanded Medicaid, the government insurance program for low-income people. 

Most of the present decrease in the number of people with insurance is attributable to Medicaid. Some states have recently put more stringest eligibility rules in place. But there's another phenomenon at work: The strong economy has lifted the incomes of many low-income people to the point they are no longer eligibile. In the grand scheme of things, a good economy is, well, good. But for people who lose access to Medicaid, it doesn't feel good. While many public programs phase out benefits as income increases, Medicaid faces what we call a "benefit cliff." Either you're eligible or you're not. And if you're not, private insurnace can be hard to afford.

Because of the well-intended changes the ACA made to private insurance (an effort to make coverage more robust), premiums have soared. Most recently, they went up 34 percent just from 2018 to 2019. And in spite of the current Administration's efforts to expand access to more affordable insurnace options (like short-term or Association Health Plans), many people still face a very limited set of health insurance options at very high prices. 

Another one of the unintended consequences of the ACA was that, although the subsidies for private insurance plans *start* at 100 percent of the federal poverty line, not all Medicaid eligibility goes *up* to 100 percent FPL. For example, 100 percent of the federal poverty level for a single person is about $12,000 annual wages. Some states don't offer Medicaid to able-bodied childless adults, so a person who makes less than $12,000 per year would face a HIGHER premium than someone making $15,000 per year (who is eligible for a subsidy).  Importantly, all 50 states offer Medicaid to children, pregnant women, and parents (at varying income eligibility thresholds). You can see a state-by-state breakdown here

So changes to Medicaid eligibility, whether the result of public policy changes or increases in income, are mostly to blame for the uptick in uninsured people. Although exiting dependency on government is good, we don't want to see Americans lose public benefits if they lack other good options. This news is another reminder that policymakers should be working to improve the affordability of private health insurance, which will require rolling back some of the most counterproductive regulations in the ACA. It's a difficult political battle, but one worth fighting on behalf of the many Americans who are working hard to provide for themselves and their loved ones. 





Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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