Nearly 182,000 Kansans in the ‘Eligibility Gap’

Key Points

• • The eligibility gap includes adults whose income is too high for Medicaid eligibility but too low to qualify for premium tax credits to purchase health insurance through the marketplace.
  • Approximately 182,000 Kansans fall into this eligibility gap, and 78,400 of them currently do not have health insurance. Nearly half (47 percent) of Kansans in the gap are also employed.
  • Closing the eligibility gap has many policy considerations that legislators must weigh along with the potential benefit to low-income Kansans.

However, in its June 2012 ruling on the ACA, the U.S. Supreme Court made Medicaid expansion essentially optional for states.

As of January 2014, Kansas and 24 other states have not expanded Medicaid, creating a gap between existing Medicaid eligibility and eligibility for premium tax credit assistance.

In Kansas, the existing Medicaid eligibility level for non-elderly adults is among the lowest in the country. For parents and guardians, income must be less than 33 percent of FPL, or about $7,770 annual income for a family of four. And in most cases, childless adults who are not disabled or elderly cannot qualify for Medicaid in Kansas regardless of how poor they are, as shown in Figure 1 .

Who Falls into the Eligibility Gap?

In Kansas, adults with annual incomes below the FPL — $23,550 for a family of four and $11,490 for an individual — are not eligible for premium tax credits when purchasing insurance through the marketplace. Childless adults (regardless of income) and parents with incomes above 33 percent of FPL also do not qualify for Medicaid. The lack of access to premium tax credits, while also not being eligible for Medicaid, creates what is called the eligibility gap. There is no eligibility gap for children because Kansans age 18 and younger in families with annual income up to 245 percent of FPL are eligible for Medicaid or CHIP. Kansans age 65 and older are eligible for insurance through Medicare. Therefore, all Kansans in the eligibility gap are age 19–64.

While Kansans in the eligibility gap are exempt from the ACA’s penalties for not obtaining health insurance, they continue to be financially responsible for the health care they need.

How Many People Fall into the Eligibility Gap?

Nearly 182,000 Kansans fall into the eligibility gap. Figure 2 shows the number and percent of non-elderly Kansas adults in the eligibility gap across the state. The City of Wichita has the highest number of adults, 28,300 — 13 percent of the city’s adult population — in the eligibility gap.

The regions with the highest percentages of adults falling within the gap are Southeast Kansas, Wyandotte County, and Douglas and Miami Counties, each with 16 percent.

The lack of insurance among those non-elderly adults in the eligibility gap varies widely across the state. For example, in Wyandotte County, more than 60 percent of those in the eligibility gap are uninsured, compared to just 14 percent in North Central Kansas.

Many Kansans in the eligibility gap who are employed have incomes near the poverty line. Sometimes people near eligibility thresholds move in and out of health insurance coverage as their income changes. When their income is higher, possibly because of a new job or seasonal changes in earnings, individuals near the poverty line could be eligible for subsidies to purchase health insurance through the marketplace. When their income drops, perhaps due to a job loss or reduction in work hours, the subsidy for health insurance could be lost. This fluctuation in eligibility is often referred to as “churning.” About half (46 percent) of those in the eligibility gap are between 67 and 100 percent of FPL, as shown in Figure 4.

This suggests that a large number of Kansans are likely to experience changes in eligibility for premium tax credits during the year.

Such churning affects individuals, providers and insurance companies. It can be more difficult for individuals to receive good preventive care and continuous care for chronic diseases if their eligibility for insurance coverage varies. Physicians may lose track of patients who unexpectedly lose insurance coverage. It becomes more complex and expensive for insurance companies to track who is eligible for services or not.

• • A question of equity is raised when public funds are used to provide assistance gaining health insurance to higher income persons, in the form of premium tax credits, but assistance is not provided to lower income persons who are eligible for neither premium tax credits nor Medicaid.
  • Without expansion, hospitals and other providers will be affected by the large number of people who will not gain health insurance and therefore add to the cost of uncompensated care they provide.
  • With Medicaid expansion, the federal government covers much of the cost for newly eligible citizens. These funds are provided from federal taxpayer dollars even in those states that do not expand Medicaid. However, none of the economic benefit of those additional federal dollars will come to states that are not expanding their Medicaid program. Estimates of Medicaid expansion in Kansas suggest federal contributions could be $392 million per year, increasing to $935 million per year over a ten-year period.
  • Expanding Medicaid in Kansas would be expected to cover an additional 226,000 people at a cost to the state of $1.1 billion over ten years. Even without expansion, Kansas is expected to enroll an additional 41,500 people through the “welcome mat” effect at a cost of $513 million over ten years.

Conclusion

As Kansas policymakers consider whether to expand Medicaid, it is important for them to consider the makeup of the population within the eligibility gap, the financial and non-financial costs to the state, and the potential benefit to the 182,000 Kansans within the eligibility gap who may have more difficulty getting health insurance coverage.